10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

F O R M 1 0 – K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2017 Commission File Number 0-13396

CNB FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

Pennsylvania	25-1450605
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)

1 South Second Street

P.O. Box 42

Clearfield, Pennsylvania 16830

(Address of principal executive office)

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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, no par value per share	The NASDAQ Stock Market LLC
	(NASDAQ Global Select Market)

Securities registered pursuant to Section 12 (g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

☐  Yes  ☒  No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

☐  Yes  ☒  No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒  Yes  ☐  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒  Yes  ☐  No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  ☐ Accelerated filer  ☒ Non-accelerated filer  ☐ Smaller reporting company  ☐

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐  Yes  ☒  No

Aggregate market value of the common stock held by nonaffiliates of the registrant as of June 30, 2017:

$344,353,260

The number of shares outstanding of the registrant’s common stock as of March 5, 2018:

15,284,339 shares

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the proxy statement for the annual shareholders’ meeting to be held on April 17, 2018 are incorporated by reference into Part III.

TABLE OF CONTENTS

		Page Number
PART I.
ITEM 1.	Business		1
ITEM 1A.	Risk Factors		19
ITEM 1B.	Unresolved Staff Comments		28
ITEM 2.	Properties		28
ITEM 3.	Legal Proceedings		28
ITEM 4.	Mine Safety Disclosures		28
PART II.
ITEM 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		29
ITEM 6.	Selected Financial Data		31
ITEM 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		32
ITEM 7A.	Quantitative and Qualitative Disclosures about Market Risk		47
ITEM 8.	Financial Statements and Supplementary Data		48
ITEM 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		106
ITEM 9A.	Controls and Procedures		106
ITEM 9B.	Other Information		108
PART III.
ITEM 10.	Directors, Executive Officers and Corporate Governance		108
ITEM 11.	Executive Compensation		108
ITEM 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		108
ITEM 13.	Certain Relationships and Related Transactions, and Director Independence		108
ITEM 14.	Principal Accountant Fees and Services		108
PART IV.
ITEM 15.	Exhibits and Financial Statement Schedules		109
ITEM 16.	Form 10-K Summary		110
SIGNATURES			111

PART I.

ITEM 1.  BUSINESS

CNB Financial Corporation (the “Corporation”) is a financial holding company registered under the Bank Holding Company Act of 1956, as amended (the “BHC Act”). It was incorporated under the laws of the Commonwealth of Pennsylvania in 1983 for the purpose of engaging in the business of a financial holding company. On April 26, 1984, the Corporation acquired all of the outstanding capital stock of County National Bank, a national banking chartered institution. In December 2006, County National Bank changed its name to CNB Bank, referred to herein as the Bank, and became a state bank chartered in Pennsylvania and subject to regulation by the Pennsylvania Department of Banking and the Federal Deposit Insurance Corporation. In October 2013, the Corporation acquired FC Banc Corp. and its subsidiary, The Farmers Citizens Bank. In July 2016, the Corporation acquired Lake National Bank.

In addition to the Bank, the Corporation has three other subsidiaries. CNB Securities Corporation is incorporated in Delaware and currently maintains investments in debt and equity securities. CNB Insurance Agency, incorporated in Pennsylvania, provides for the sale of nonproprietary annuities and other insurance products. Holiday Financial Services Corporation, incorporated in Pennsylvania, offers small balance unsecured loans and secured loans, primarily collateralized by automobiles and equipment, to borrowers with higher risk characteristics.

CNB Bank

CNB Bank (the “Bank”) was originally chartered as a national bank in 1934 and is now a a Pennsylvania-chartered bank. In February 2017, the Bank completed construction of a full service branch location in Duncansville, Pennsylvania and concurrently closed its loan production office in Hollidaysburg, Pennsylvania. The full service branch is being operated as part of the CNB Bank franchise.

ERIEBANK, a division of CNB Bank, began operations in 2005. In July 2016, the Corporation acquired Lake National Bank, which operated two full service branches in Mentor, Ohio, approximately 20 miles east of Cleveland, Ohio. The Bank is continuing to operate these 2 branch locations within its ERIEBANK franchise. In February 2017, the Corporation completed construction of a full service branch location in Ashtabula, Ohio, which is also operating within the ERIEBANK franchise.

In October 2013, the Corporation acquired FC Banc Corp. and its subsidiary, Farmers Citizens Bank. In 2017, the Bank sold its Mount Hope branch of FCBank to First Federal Community Bank of Dover, Ohio. The Bank currently operates seven branch locations and one loan production office as FCBank, a division of CNB Bank, with its headquarters in Worthington, Ohio.

In 2016, the Bank received regulatory approval to conduct business in the state of New York as BankOnBuffalo, a division of CNB Bank. The Bank opened a loan production office in Buffalo, New York in May 2016, which was closed in February 2017 with the concurrent opening of a full service location in downtown Buffalo in February 2017. Full service locations in Williamsville, New York and Orchard Park, New York were opened in the fourth quarter of 2017.

The Bank has 41 full service branch offices and one loan production offices located in various communities in its market area. CNB Bank’s primary market area includes the Pennsylvania counties

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of Blair, Cambria, Cameron, Centre, Clearfield, Crawford, Elk, Indiana, Jefferson, and McKean. As ERIEBANK, a division of CNB Bank, the Bank operates in the Pennsylvania counties of Crawford, Erie, and Warren and the Ohio counties of Ashtabula and Lake. As FCBank, a division of CNB Bank, the Bank operates in the Ohio counties of Crawford, Richland, Ashland, Wayne, Marion, Morrow, Knox, Delaware, and Franklin. As BankOnBuffalo, a division of CNB Bank, the Bank operates in Erie and Niagara counties, New York.

The Bank is a full service bank engaging in 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.

Holiday Financial Services Corporation

In 2005, the Corporation entered the consumer discount loan and finance business, which is conducted through a wholly owned subsidiary, Holiday Financial Services Corporation. Holiday currently has ten offices within the Corporation’s footprint.

Competition

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 the 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 resources greater 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.

Supervision and Regulation

The Corporation is a bank holding company that has elected financial holding company status, and the Bank is a Pennsylvania state-chartered bank that is not a member of the Federal Reserve System. Accordingly, the Corporation is subject to the oversight of the Board of Governors of the Federal Reserve System (Federal Reserve Board) and the Pennsylvania Department of Banking and is regulated under the Bank Holding Company Act of 1956, as amended (the “BHC Act”), and the Bank is subject to the oversight of the Pennsylvania Department of Banking and Federal Deposit Insurance Corporation (“FDIC”), as its primary federal regulator. The Corporation and Bank are also subject to various requirements and restrictions under federal and state law, such as requirements to maintain reserves against deposits, restrictions on the types, amounts and terms and conditions of loans that may be granted, and limitations on the types of investments that may be made and the types of services that may be offered. Various consumer financial protection laws and regulations also affect the operation of the Bank and, pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (the

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“Dodd-Frank Act”), the Consumer Financial Protection Bureau (“CFPB”) is authorized to write rules on consumer financial products and services which could affect the operations of the Bank and Holiday Financial Services Corporation. In addition to the impact of regulation, commercial banks are significantly affected by the actions of the Federal Reserve Board, including actions taken with respect to interest rates, as the Federal Reserve Board attempts to control the money supply and credit availability in the U.S. in order to influence the economy.

The following summary sets forth certain of the material elements of the regulatory framework applicable to bank holding companies and their subsidiaries and provides certain specific information about us and our subsidiaries. It does not describe all of the provisions of the statutes, regulations and policies that are identified. To the extent that the following information describes statutory and regulatory provisions, it is qualified in its entirety by express reference to each of the particular statutory and regulatory provisions. A change in applicable statutes, regulations or regulatory policy may have a material effect on our business.

Bank Holding Company Regulation

As a bank holding company that controls a Pennsylvania state-chartered bank, the Corporation is subject to regulation and examination by the Pennsylvania Department of Banking and the Federal Reserve Board. We are required to file with the Federal Reserve Board an annual report and such additional information as the Federal Reserve Board may require pursuant to the BHC Act, and applicable regulations. For instance, the BHC Act requires each bank holding company to obtain the approval of the Federal Reserve Board before it may acquire substantially all the assets of any bank, or before it may acquire ownership or control of any voting shares of any bank if, after such acquisition, it would own or control, directly or indirectly, more than five percent of any class of voting shares of such bank. Such a transaction may also require approval of the Pennsylvania Department of Banking.

Pursuant to provisions of the BHC Act and regulations promulgated by the Federal Reserve Board thereunder, the Corporation may only engage in, or own companies that engage in, activities deemed by the Federal Reserve Board to be permissible for bank holding companies or financial holding companies. Activities permissible for bank holding companies are those that are so closely related to the business of banking or managing or controlling banks as to be a proper incident thereto. Permissible activities for financial holding companies include those “so closely related to banking as to be a proper incident thereto” as well as certain additional activities deemed “financial in nature or incidental to such financial activity” or complementary to a financial activity and that does not pose a substantial risk to the safety and soundness of the depository institution or the financial system. The Corporation must obtain permission from or provide notice to the Federal Reserve Board prior to engaging in most new business activities.

Regulation of CNB Bank

CNB Bank is a Pennsylvania-chartered bank and is subject to regulation, supervision and regular examination by the Pennsylvania Department of Banking and the FDIC, as its primary federal regulator. Federal and state banking laws and regulations govern, among other things, the scope of a bank’s business, the investments a bank may make, the reserves against deposits a bank must maintain, the loans a bank makes and collateral it takes, the activities of a bank with respect to mergers and acquisitions, the establishment of branches, management practices, and numerous other aspects of banking operations.

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Source of Strength Doctrine

Under Section 616 of the Dodd-Frank Act, a bank holding company is required to serve as a source of financial strength to its subsidiary banks and may not conduct its operations in an unsafe or unsound manner. In addition, it is the Federal Reserve Board’s policy that in serving as a source of financial and managerial strength to its subsidiary banks, a bank holding company should stand ready to use available resources to provide adequate capital funds to its subsidiary banks during periods of financial stress or adversity and should maintain the financial flexibility and capital-raising capacity to obtain additional resources for assisting its subsidiary banks. A bank holding company’s failure to meet its obligations to serve as a source of strength to its subsidiary banks will generally be considered by the Federal Reserve Board to be an unsafe and unsound banking practice or a violation of the Federal Reserve Board regulations or both. This doctrine is commonly known as the “source of strength” doctrine.

Identity Theft

The Securities and Exchange Commission and the Commodity Futures Trading Commission (together, the “Commissions”) jointly issued final rules and guidelines to require certain regulated entities to establish programs to address risks of identity theft. The rules and guidelines implement provisions of the Dodd-Frank Act. These provisions amend Section 615(e) of the Fair Credit Reporting Act and directed the Commissions to adopt rules requiring entities that are subject to the Commissions’ jurisdiction to address identity theft in two ways. First, the rules require financial institutions and creditors to develop and implement a written identity theft prevention program that is designed to detect, prevent, and mitigate identity theft in connection with certain existing accounts or the opening of new accounts. The rules include guidelines to assist entities in the formulation and maintenance of programs that would satisfy the requirements of the rules. Second, the rules establish special requirements for any credit and debit card issuers that are subject to the Commissions’ jurisdiction, to assess the validity of notifications of changes of address under certain circumstances.

Capital Adequacy

The Capital Rules of the Federal Reserve Board, the FDIC, and the Office of the Comptroller of the Currency, generally implement the Basel Committee on Banking Supervision’s capital framework, referred to as Basel III, for strengthening international capital standards. The Capital Rules revise the definitions and components of regulatory capital, increase risk-based capital requirements, and make selected changes to the calculation of risk-weighted assets.

The Capital Rules, among other things:

• revise minimum capital requirements and adjust prompt corrective action thresholds;

• revise the components of regulatory capital, add a new minimum common equity Tier 1 capital ratio of 4.5% of risk-weighted assets, increase the minimum Tier 1 capital ratio requirement from 4% to 6%;

• retain the existing risk-based capital treatment for 1-4 family residential mortgage exposures;

• permit most banking organizations to retain, through a one-time permanent election, the existing capital treatment for accumulated other comprehensive income;

• implement the capital conservation buffer beginning January 1, 2016 at the 0.625% level and will increase by 0.625% on each subsequent January 1, until it reaches 2.5% on January 1,

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2019. The risk-weighting categories in the Capital Rules are standardized and include a risk-sensitive number of categories, depending on the nature of the assets, generally ranging from 0% for U.S. government and agency securities, to 600% for certain equity exposures, and resulting in higher risk weights for a variety of assets.

• require a minimum leverage ratio of 4%;

• require a total capital ratio of 8%;

• increase capital requirements for past-due loans, high volatility commercial real estate exposures, and certain short-term loan commitments;

• require the deduction of mortgage servicing assets and deferred tax assets that exceed 10% of common equity Tier 1 capital in each category and 15% of common equity Tier 1 capital in the aggregate; and

• remove references to credit ratings consistent with the Dodd-Frank Act and establish due diligence requirements for securitization exposures.

Compliance with the Capital Rules was required beginning January 1, 2015, for most banking organizations including the Corporation, subject to a transition period for several aspects of the final rules, including the new minimum capital ratio requirements, the capital conservation buffer, and the regulatory capital adjustments and deductions. The Corporation implemented the Capital Rules on January 1, 2015, and continues to exceed all estimated well-capitalized regulatory requirements on a fully phased-in basis.

In November 2017, the FRB finalized a rule extending the currently applicable capital rules for non-advanced approaches institutions, including the treatment of mortgage servicing assets. This rule is in effect pending the comment period and review of the general proposal to simplify the Capital Rules for non-advanced approaches institutions.

Dividend Restrictions

The Corporation is a legal entity separate and distinct from the Bank. Declaration and payment of cash dividends depends upon cash dividend payments to the Corporation by the Bank, which is our primary source of revenue and cash flow. Accordingly, the right of the Corporation, and consequently the right of our creditors and shareholders, to participate in any distribution of the assets or earnings of any subsidiary is necessarily subject to the prior claims of creditors of the Bank, except to the extent that claims of the Corporation in its capacity as a creditor may be recognized.

As a Pennsylvania state-chartered bank, the Bank is subject to regulatory restrictions on the payment and amounts of dividends under the Pennsylvania Banking Code. Further, the ability of banking subsidiaries to pay dividends is also subject to their profitability, financial condition, capital expenditures and other cash flow requirements.

The payment of dividends by the Bank and the Corporation may also be affected by other factors, such as the requirement to maintain adequate capital above regulatory requirements. The federal banking agencies have indicated that paying dividends that deplete a depository institution’s capital base to an inadequate level would be an unsafe and unsound banking practice. A depository institution may not pay any dividend if payment would cause it to become undercapitalized or if it already is undercapitalized. Moreover, the federal banking agencies have issued policy statements that provide

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that bank holding companies and insured banks should generally only pay dividends out of current operating earnings. Federal banking regulators have the authority to prohibit banks and bank holding companies from paying a dividend if the regulators deem such payment to be an unsafe or unsound practice.

Prompt Corrective Action and Safety and Soundness

Under applicable “prompt corrective action” (“PCA”) statutes and regulations, depository institutions are placed into one of five capital categories, ranging from “well capitalized” to “critically undercapitalized.” The PCA statute and regulations provide for progressively more stringent supervisory measures as an insured depository institution’s capital category declines. An institution that is not well capitalized is generally prohibited from accepting brokered deposits and offering interest rates on deposits higher than the prevailing rate in its market. An undercapitalized depository institution must submit an acceptable restoration plan to the appropriate federal banking agency. One requisite element of such a plan is that the institution’s parent holding company must guarantee compliance by the institution with the plan, subject to certain limitations.

At December 31, 2017, the Bank qualified as “well capitalized” under applicable regulatory capital standards.

Bank holding companies and insured depository institutions may also be subject to potential enforcement actions of varying levels of severity by the federal banking agencies for unsafe or unsound practices in conducting their business, or for violation of any law, rule, regulation, condition imposed in writing by the agency or term of a written agreement with the agency. In more serious cases, enforcement actions may include the issuance of directives to increase capital; the issuance of formal and informal agreements; the imposition of civil monetary penalties; the issuance of a cease and desist order that can be judicially enforced; the issuance of removal and prohibition orders against officers, directors, and other institution affiliated parties; the termination of the insured depository institution’s deposit insurance; the appointment of a conservator or receiver for the insured depository institution; and the enforcement of such actions through injunctions or restraining orders based upon a judicial determination that the FDIC, as receiver, would be harmed if such equitable relief was not granted.

Community Reinvestment Act

Under the Community Reinvestment Act of 1977 (“CRA”), the FDIC is required to assess the record of all financial institutions it supervises to determine if these institutions are meeting the credit needs of the community (including low and moderate income neighborhoods) which they serve. CRA performance evaluations are based on a four-tiered rating system: Outstanding, Satisfactory, Needs to Improve and Substantial Noncompliance. CRA performance evaluations are considered in evaluating applications for such things as mergers, acquisitions and applications to open branches. The Bank received a CRA rating of “Satisfactory” at its most recent CRA exam.

Restrictions on Transactions with Affiliates and Insiders

The Bank and Corporation are subject to the restrictions of Sections 23A and 23B of the Federal Reserve Act and their implementing Regulation W. Section 23A requires that loans or extensions of credit by the Bank to an affiliate, purchases by the Bank of securities issued by an affiliate, purchases by the Bank of assets from an affiliate (except as may be exempted by order or regulation), the Bank’s

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acceptance of securities issued by an affiliate as collateral and the Bank’s acceptance of a guarantee, the Bank’s acceptance of letters of credit on behalf of an affiliate (collectively, “Covered Transactions”) be on terms and conditions consistent with safe and sound banking practices. Section 23A also imposes quantitative restrictions on the amount of and collateralization requirements on such transactions. Section 23B requires that all Covered Transactions and certain other transactions, including the sale of securities or other assets by the Bank to an affiliate and the payment of money or the furnishing of services by the Bank to an affiliate, be on terms comparable to those prevailing for similar transactions with nonaffiliates.

The Bank is also subject to Sections 22(g) and 22(h) of the Federal Reserve Act, and their implementing Regulation O issued by the Federal Reserve Board. These provisions impose limitations on loans and extensions of credit by the Bank to its executive officers, directors and principal shareholders and their related interests as well as to the Corporation and any subsidiary of the Corporation. The limitations restrict the terms and aggregate amount of such transactions. Regulation O also imposes certain recordkeeping and reporting requirements.

Deposit Insurance and Premiums

The deposits of the Bank are insured up to applicable limits per insured depositor by the FDIC. The standard maximum deposit insurance amount is $250,000 per depositor per insured depository institution.

The FDIC uses a risk-based assessment system that imposes insurance premiums based on a risk matrix that takes into account the bank’s capital level and supervisory rating. The base for insurance assessments is the average consolidated total assets less tangible equity capital of a financial institution. Assessment rates are calculated using formulas that take into account the risk of the institution being assessed. FDIC deposit insurance expense also includes deposit insurance assessments and FICO assessments related to outstanding FICO bonds.

Financial Privacy and Data Security

The Corporation is subject to federal laws, including the Gramm-Leach-Bliley Act and certain state laws containing consumer privacy protection provisions. These provisions limit the ability of banks and other financial institutions to disclose nonpublic information about consumers to affiliated and non-affiliated third parties and limit the reuse of certain consumer information received from non-affiliated financial institutions. These provisions require notice of privacy policies to consumers and, in some circumstances, allow consumers to prevent disclosure of certain nonpublic personal information to affiliates or non-affiliated third parties by means of opt-out or opt-in authorizations.

The Gramm-Leach-Bliley Act requires that financial institutions implement comprehensive written information security programs that include administrative, technical, and physical safeguards to protect consumer information. Federal banking agencies have also adopted guidelines for establishing information security standards and programs to protect such information. Further, pursuant to interpretive guidance issued under the Gramm-Leach-Bliley Act and certain state laws, financial institutions are required to notify customers of security breaches that result in unauthorized access to their nonpublic personal information.

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Incentive Compensation

The Dodd-Frank Act requires the federal banking agencies and the SEC to establish joint regulations or guidelines prohibiting incentive-based payment arrangements at specified regulated entities, including the Corporation and the Bank, with at least $1 billion in total consolidated assets that encourage inappropriate risks by providing an executive officer, employee, director or principal shareholder with excessive compensation, fees, or benefits that could lead to material financial loss to the entity. The federal banking agencies and the SEC most recently proposed such regulations in 2016, but the regulations have not yet been finalized. If the regulations are adopted in the form initially proposed, they will restrict the manner in which executive compensation is structured.

The Dodd-Frank Act also requires publicly traded companies to give stockholders a non-binding vote on executive compensation at their first annual meeting taking place six months after the date of enactment and at least every three years thereafter and on so-called “golden parachute” payments in connection with approvals of mergers and acquisitions.

USA PATRIOT Act

Under Title III of the USA PATRIOT Act, all financial institutions are required to take certain measures to identify their customers, prevent money laundering, monitor customer transactions, and report suspicious activity to U.S. law enforcement agencies. Financial institutions also are required to respond to requests for information from federal banking agencies and law enforcement agencies. Information sharing among financial institutions for the above purposes is encouraged by an exemption granted to complying financial institutions from the privacy provisions of the Gramm-Leach-Bliley Act and other privacy laws. Financial institutions that hold correspondent accounts for foreign banks or provide private banking services to foreign individuals are required to take measures to avoid dealing with certain foreign individuals or entities, including foreign banks with profiles that raise money laundering concerns, and are prohibited from dealing with foreign “shell banks” and persons from jurisdictions of particular concern. The primary federal banking agencies and the Secretary of the Treasury have adopted regulations to implement several of these provisions. All financial institutions also are required to establish internal anti-money laundering programs. The effectiveness of a financial institution in combating money laundering activities is a factor to be considered in any application submitted by the financial institution under the Bank Merger Act. The Bank has in place a Bank Secrecy Act and USA PATRIOT Act compliance program and engages in very few transactions of any kind with foreign financial institutions or foreign persons.

Office of Foreign Assets Control Regulation

The United States government has imposed economic sanctions that affect transactions with designated foreign countries, nationals, and others. These are typically known as the “OFAC” rules based on their administration by the U.S. Treasury Department Office of Foreign Assets Control. The Office of Foreign Assets Control-administered sanctions targeting countries take many different forms. Generally, they contain one or more of the following elements: (i) restrictions on trade with or investment in a sanctioned country, including prohibitions against direct or indirect imports from and exports to a sanctioned country and prohibitions on U.S. persons engaging in financial transactions relating to making investments in, or providing investment-related advice or assistance to, a sanctioned country; and (ii) a blocking of assets in which the government or specially designated nationals of the sanctioned country have an interest, by prohibiting transfers of property subject to U.S. jurisdiction

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(including property in the possession or control of U.S. persons). Blocked assets (property and bank deposits) cannot be paid out, withdrawn, set off, or transferred in any manner without a license from the Office of Foreign Assets Control. Failure to comply with these sanctions could have serious legal and reputational consequences.

Other Federal Laws and Regulations

State usury and other credit laws limit the amount of interest and various other charges collected or contracted by a bank on loans. The Bank is also subject to lending limits on loans to one borrower and regulatory guidance on concentrations of credit. The Bank’s loans and other products and services are also subject to numerous federal and state consumer financial protection laws, including, but not limited to, the following:

• Truth-In-Lending Act, which governs disclosures of credit terms to consumer borrowers;

• Truth-in-Savings Act, which governs disclosures of the terms of deposit accounts to consumers;

• Home Mortgage Disclosure Act, requiring financial institutions to provide information to regulators to enable determinations as to whether financial institutions are fulfilling their obligations to meet the home lending needs of the communities they serve and not discriminating in their lending practices;

• Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, sex or other prohibited factors in extending credit;

• Real Estate Settlement Procedures Act, which imposes requirements relating to real estate settlements, including requiring lenders to disclose certain information regarding the nature and cost of real estate settlement services;

• Fair Credit Reporting Act, covering numerous areas relating to certain types of consumer information and identity theft;

• Privacy provisions of the Gramm-Leach-Bliley Act and related regulations, which require that financial institutions provide privacy policies to consumers, to allow customers to “opt out” of certain sharing of their nonpublic personal information, and to safeguard sensitive and confidential customer information.

• Electronic Funds Transfer Act, which is a consumer protection law regarding electronic fund transfers; and

• Numerous other federal and state laws and regulations, including those related to consumer protection and bank operations.

Sarbanes-Oxley Act of 2002

The Sarbanes-Oxley Act is applicable to all companies with equity securities registered or that file reports under the Securities Exchange Act of 1934, as amended, including publicly-held financial holding companies such as the Corporation. In particular, the Sarbanes-Oxley Act establishes: (i) requirements for audit committees, including independence, expertise, and responsibilities; (ii) additional responsibilities regarding financial statements for the Chief Executive Officer and Chief Financial Officer of the reporting company; (iii) standards for auditors and regulation of audits; (iv) increased disclosure and reporting obligations for the reporting company and its directors and executive officers; and (v) new and increased civil and criminal penalties for violations of the securities laws.

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Governmental Policies

Our earnings are significantly affected by the monetary and fiscal policies of governmental authorities, including the Federal Reserve Board. Among the instruments of monetary policy used by the Federal Reserve Board to implement these objectives are open-market operations in U.S. Government securities and federal funds, changes in the discount rate on member bank borrowings and changes in reserve requirements against member bank deposits. These instruments of monetary policy are used in varying combinations to influence the overall level of bank loans, investments and deposits, and the interest rates charged on loans and paid for deposits. The Federal Reserve Board frequently uses these instruments of monetary policy, especially its open-market operations and the discount rate, to influence the level of interest rates and to affect the strength of the economy, the level of inflation or the price of the dollar in foreign exchange markets. The monetary policies of the Federal Reserve Board have had a significant effect on the operating results of banking institutions in the past and are expected to continue to do so in the future. It is not possible to predict the nature of future changes in monetary and fiscal policies, or the effect which they may have on our business and earnings.

Other Legislative Initiatives

Proposals may be introduced in the United States Congress, in the Pennsylvania Legislature, and/or by various bank regulatory authorities that could alter the powers of, and restrictions on, different types of banking organizations and which could restructure part or all of the existing regulatory framework for banks, bank and financial holding companies and other providers of financial services. Moreover, other bills may be introduced in Congress which would further regulate, deregulate or restructure the financial services industry, including proposals to substantially reform the regulatory framework. It is not possible to predict whether any such proposals will be enacted into law or, even if enacted, what effect such action may have on our business and earnings.

Employees

As of December 31, 2017, the Corporation had a total of 528 employees of which 481 were full time and 47 were part time.

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Executive Officers

The Corporation’s named executive officers, their ages, and their principal occupations are as follows:

Name	Age	Principal Occupation
Joseph B. Bower, Jr.	54	President and Chief Executive Officer, CNB Bank and CNB Financial Corporation, since January 1, 2010; and previously, Secretary, CNB Financial Corporation and Executive Vice President and Chief Operating Officer, CNB Bank.
Richard L. Greslick, Jr.	41	Senior Executive Vice President/Chief Operating Officer, CNB Bank since December 2012 and Secretary, CNB Financial Corporation, since July 2010; previously, Senior Vice President/Administration since July 2010; Vice President/Operations since 2007; and previously Controller, CNB Bank and CNB Financial Corporation.
Mark D. Breakey	59	Senior Executive Vice President and Chief Credit Officer, CNB Bank since 2003.
Joseph E. Dell, Jr.	61	Senior Executive Vice President and Chief Commercial Banking Officer, CNB Bank since December 31, 2013; previously, Senior Vice President and Senior Commercial Lending Officer since February 2013; previously, Chief Lending Officer and Commercial Line of Business Manager for First Security Group, Inc. and FSG Bank, N.A. from 2011 to February 2013; and previously served in various executive level positions with First Commonwealth Bank, including Chief Lending Officer and Commercial Line of Business Leader since 2008.
Brian W. Wingard	43	Treasurer, Principal Financial Officer and Principal Accounting Officer, CNB Financial Corporation, since March 2012; Executive Vice President/Chief Financial Officer, CNB Bank, since March 2012; previously Controller, CNB Bank and CNB Financial Corporation, since 2007; and previously a Certified Public Accountant in public practice.

Officers are elected annually at the reorganization meeting of the Board of Directors. There are no arrangements or understandings between any officer and any other persons pursuant to which he was selected as an officer.

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Available Information

The Corporation makes available free of charge on its website (www.cnbbank.bank) its Annual Report on Form 10-K, its quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as practicable after it electronically files such material with, or furnishes it to, the Securities and Exchange Commission, the SEC. Information on the Corporation’s website is not incorporated by reference into this report.

Shareholders may obtain a copy of the Corporation’s Annual Report on Form 10-K free of charge by writing to: CNB Financial Corporation, 1 South Second Street, PO Box 42, Clearfield, PA 16830, Attn: Shareholder Relations.

Interested persons may also read and copy materials the Corporation files with, or furnishes to, the SEC at the SEC’s Public Reference Room at 100 F Street, NE Washington, DC 20549. Information concerning the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains an internet site that contains reports, proxy statements and other information about electronic filers such as the Corporation. The site is available at http://www.sec.gov.

Statistical Disclosure

The following tables set forth statistical information relating to the Corporation and its wholly owned subsidiaries. The tables should be read in conjunction with the consolidated financial statements of the Corporation.

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Average Balances and Net Interest Margin

(Dollars in thousands)

	December 31, 2017								December 31, 2016								December 31, 2015
	Average Balance			Annual Rate			Interest Inc./ Exp.		Average Balance			Annual Rate			Interest Inc./ Exp.		Average Balance			Annual Rate			Interest Inc./ Exp.
Assets
Securities:
Taxable (1)	$	318,481			2.58	%	$	8,165	$	380,534			2.44	%	$	9,134	$	485,792			2.29	%	$	10,977
Tax-Exempt (1, 2)		109,630			4.18	%		4,493		124,360			4.24	%		5,103		133,789			4.32	%		5,680
Equity Securities (1, 2)		26,270			3.72	%		976		19,277			4.09	%		788		14,108			5.84	%		824
Total Securities		454,381			3.02	%		13,634		524,171			2.93	%		15,025		633,689			2.80	%		17,481
Loans
Commercial (2)		645,357			4.93	%		31,844		522,345			4.63	%		24,201		449,970			4.78	%		21,507
Mortgage (2)		1,296,548			4.54	%		58,899		1,110,287			4.54	%		50,437		937,978			4.62	%		43,341
Consumer		81,383			9.42	%		7,668		84,592			9.14	%		7,730		72,215			10.68	%		7,714
Total Loans (3)		2,023,288			4.86	%		98,411		1,717,224			4.80	%		82,368		1,460,163			4.97	%		72,562
Total earning assets		2,477,669			4.53	%	$	112,045		2,241,395			4.37	%	$	97,393		2,093,852			4.32	%	$	90,043
Non-Interest Earning Assets
Cash & Due From Banks		28,204								29,869								26,787
Premises & Equipment		50,377								43,758								37,683
Other Assets		138,754								121,554								91,046
Allowance for Loan Losses		(17,473	)							(16,336	)							(17,487	)
Total Non-Interest Earning Assets		199,862								178,845								138,029
Total Assets	$	2,677,531							$	2,420,240							$	2,231,881
Liabilities and Shareholders’ Equity
Interest Bearing Deposits
Demand – interest bearing	$	550,922			0.36	%	$	1,976	$	513,445			0.35	%	$	1,801	$	451,784			0.35	%	$	1,602
Savings		953,960			0.49	%		4,643		954,010			0.46	%		4,429		942,916			0.50	%		4,734
Time		252,176			1.07	%		2,693		214,684			1.04	%		2,240		196,661			1.10	%		2,162
Total interest bearing deposits		1,757,058			0.53	%		9,312		1,682,139			0.50	%		8,470		1,591,361			0.53	%		8,498
Short-term borrowings		122,758			1.09	%		1,344		99,075			0.57	%		565		62,136			0.26	%		161
Long-term borrowings		158,782			1.69	%		2,677		81,937			2.95	%		2,416		77,874			3.93	%		3,061
Subordinated Debentures		70,620			5.71	%		4,032		33,120			4.76	%		1,577		20,620			3.64	%		751
Total interest bearing liabilities		2,109,218			0.82	%	$	17,365		1,896,271			0.69	%	$	13,028		1,751,991			0.71	%	$	12,471
Demand – non-interest bearing		300,942								267,876								257,842
Other liabilities		28,148								44,035								24,361
Total Liabilities		2,438,308								2,208,182								2,034,194
Shareholders’ Equity		239,223								212,058								197,687
Total Liabilities and Shareholders’ Equity	$	2,677,531							$	2,420,240							$	2,231,881
Interest Income/Earning Assets					4.53	%	$	112,045					4.37	%	$	97,393					4.32	%	$	90,043
Interest Expense/Interest Bearing Liabilities					0.82	%		17,365					0.69	%		13,028					0.71	%		12,471
Net Interest Spread					3.71	%	$	94,680					3.68	%	$	84,365					3.61	%	$	77,572
Interest Income/Earning Assets					4.53	%	$	112,045					4.37	%	$	97,393					4.32	%	$	90,043
Interest Expense/Earning Assets					0.71	%		17,365					0.59	%		13,028					0.59	%		12,471
Net Interest Margin					3.82	%	$	94,680					3.78	%	$	84,365					3.73	%	$	77,572

1. Includes unamortized discounts and premiums. Average balance is computed using the amortized cost of securities. The average yield has been computed using the historical amortized cost average balance for available for sale securities.

2. Average yields and interest income are stated on a fully taxable equivalent basis using the Corporation’s marginal federal income tax rate of 35%. Interest income has been increased by $3,488, $3,078, and $2,865 for the years ended December 31, 2017, 2016, and 2015, respectively, as a result of the effect of tax-exempt interest and dividends earned by the Corporation.

3. Average outstanding includes the average balance outstanding of all nonaccrual loans. Loans consist of the average of total loans less average unearned income. Included in loan interest income is loan fees of $3,001, $3,170, and $2,447 for the years ended December 31, 2017, 2016, and 2015, respectively.

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Net Interest Income Rate-Volume Variance (Dollars in thousands)	For Twelve Months Ended December 31, 2017 over (under) 2016 Due to Change In (1)									For Twelve Months Ended December 31, 2016 over (under) 2015 Due to Change In (1)
	Volume			Rate			Net			Volume			Rate			Net
Assets
Securities:
Taxable	$	(1,392	)	$	423		$	(969	)	$	(2,404	)	$	561		$	(1,843	)
Tax-Exempt (2)		(541	)		(69	)		(610	)		(472	)		(105	)		(577	)
Equity Securities (2)		286			(98	)		188			302			(338	)		(36	)
Total Securities		(1,647	)		256			(1,391	)		(2,574	)		118			(2,456	)
Loans
Commercial (2)		5,699			1,944			7,643			3,459			(765	)		2,694
Mortgage (2)		8,461			1			8,462			7,962			(866	)		7,096
Consumer		(293	)		231			(62	)		1,322			(1,306	)		16
Total Loans		13,867			2,176			16,043			12,743			(2,937	)		9,806
Total Earning Assets	$	12,220		$	2,432		$	14,652		$	10,169		$	(2,819	)	$	7,350
Liabilities and Shareholders’ Equity
Interest Bearing Deposits
Demand – Interest Bearing	$	131		$	44		$	175		$	219		$	(20	)	$	199
Savings		0			214			214			56			(361	)		(305	)
Time		391			62			453			198			(120	)		78
Total Interest Bearing Deposits		522			320			842			473			(501	)		(28	)
Short-Term Borrowings		135			644			779			96			308			404
Long-Term Borrowings		2,266			(2,005	)		261			160			(805	)		(645	)
Subordinated Debentures		1,786			669			2,455			455			371			826
Total Interest Bearing Liabilities	$	4,709		$	(372	)	$	4,337		$	1,184		$	(627	)	$	557
Change in Net Interest Income	$	7,511		$	2,804		$	10,315		$	8,985		$	(2,192	)	$	6,793

1. The change in interest due to both volume and rate have been allocated entirely to volume changes.

2. Changes in interest income on tax-exempt securities and loans are presented on a fully taxable-equivalent basis, using the Corporation’s marginal federal income tax rate of 35%.

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Securities

(Dollars In Thousands)	December 31, 2017								December 31, 2016								December 31, 2015
	Amortized Cost		Unrealized				Market Value		Amortized Cost		Unrealized				Market Value		Amortized Cost		Unrealized				Market Value
			Gains		Losses						Gains		Losses						Gains		Losses
Securities Available for Sale
U.S. Government Sponsored Entities		$108,578		$478		$(908)		$108,148		$139,823		$1,107		$(579)		$140,351		$141,300		$1,579		$(1,128)		$141,751
State and Political Subdivisions		134,428		3,609		(314)		137,723		153,492		4,194		(649)		157,037		165,828		6,234		(243)		171,819
Residential and multi-family mortgage		111,214		304		(1,882)		109,636		136,807		551		(2,382)		134,976		160,316		1,060		(3,394)		157,982
Corporate notes and bonds		17,610		52		(462)		17,200		18,299		77		(962)		17,414		19,794		165		(1,271)		18,688
Pooled trust preferred		0		0		0		0		800		1,249		0		2,049		800		2,613		0		3,413
Pooled SBA		36,260		355		(575)		36,040		43,450		505		(918)		43,037		51,556		760		(907)		51,409
Other securities		1,020		0		(58)		962		1,020		0		(49)		971		1,020		0		(39)		981
		$409,110		$4,798		$(4,199)		$409,709		$493,691		$7,683		$(5,539)		$495,835		$540,614		$12,411		$(6,982)		$546,043

Maturity Distribution of Investment Securities

(Dollars In Thousands)

December 31, 2017

	Within One Year		After One But Within Five Years						After Five But Within Ten Years				After Ten Years				Pooled SBA, Residential and Multi- Family Mortgage and Commercial Mortgage
	$ Amt.		Yield (1)		$ Amt.		Yield (1)		$ Amt.		Yield (1)		$ Amt.		Yield (1)		$ Amt.		Yield (1)
Securities Available for Sale (2)
U.S. Government Sponsored Entities		$24,063		1.30%		$72,131		2.07%		$11,954		2.14%
State and Political Subdivisions		18,617		4.23%		75,914		4.33%		38,028		4.56%		$5,164		4.83%
Corporate notes and bonds		7,459		2.73%		7,030		2.45%		1,771		2.68%		940		2.60%
Pooled SBA																		$36,040		2.67%
Residential and multi-family mortgage																		109,636		2.26%
TOTAL		$50,139		2.60%		$155,075		3.19%		$51,753		3.94%		$6,104		4.49%		$145,676		2.36%

(1) The weighted average yields are based on market value and effective yields weighted for the scheduled maturity with tax-exempt securities adjusted to a taxable-equivalent basis using a tax rate of 35%.

(2) The portfolio contains no holdings of a single issuer that exceeds 10% of shareholders’ equity other than the US Treasury and governmental sponsored entities.

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LOAN PORTFOLIO

(Dollars in thousands)

A. TYPE OF LOAN

	2017		2016		2015		2014		2013
Commercial, industrial and agricultural	$	749,138	$	567,800	$	475,364	$	428,458	$	427,715
Commercial mortgages		600,065		574,826		448,179		352,752		343,465
Residential real estate		713,347		652,883		574,225		502,317		459,114
Consumer		80,193		74,816		78,345		69,648		63,491
Credit cards		6,753		6,046		5,201		5,233		5,065
Overdrafts		352		595		1,040		1,188		409
Gross loans		2,149,848		1,876,966		1,582,354		1,359,596		1,299,259
Less: unearned income		3,889		3,430		4,556		4,307		3,896
Total loans net of unearned	$	2,145,959	$	1,873,536	$	1,577,798	$	1,355,289	$	1,295,363

B. LOAN MATURITIES AND INTEREST SENSITIVITY

	December 31, 2017
	One Year or Less		One Through Five Years		Over Five Years		Total Gross Loans
Commercial, industrial and agricultural
Loans With Fixed Interest Rate	$	9,310	$	70,215	$	70,972	$	150,497
Loans With Floating Interest Rate		27,018		70,207		501,416		598,641
	$	36,328	$	140,422	$	572,388	$	749,138

C. RISK ELEMENTS

	2017		2016		2015		2014		2013
Loans on nonaccrual basis	$	19,232	$	15,329	$	12,159	$	9,190	$	11,573
Accruing loans which are contractually past due 90 days or more as to interest or principal payment		477		10		105		213		344
Performing troubled debt restructurings		8,344		8,710		9,304		14,771		8,006
	$	28,053	$	24,049	$	21,568	$	24,174	$	19,923

Interest income recorded on the nonaccrual loans for the year ended December 31, 2017 was $660. Additional interest income which would have been recorded on nonaccrual loans had they been on accrual status was $198 for the year ended December 31, 2017.

Loans are placed in nonaccrual status when the interest or principal is 90 days past due, unless the loan is in collection, well secured and it is believed that there will be no loss of interest or principal.

16

At December 31, 2017, there were $20,795 in special mention loans, $33,325 in substandard loans, and $0 in doubtful loans which are considered problem loans. These loans are not included in the table above. In the opinion of management, these loans are adequately secured and losses are believed to be minimal.

SUMMARY OF LOAN LOSS EXPERIENCE

(Dollars in Thousands)

Analysis of the Allowance for Loan Losses
Years Ended December 31,	2017			2016			2015			2014			2013
Balance at beginning of Period	$	16,330		$	16,737		$	17,373		$	16,234		$	14,060
Charge-Offs:
Commercial, industrial and agricultural		544			601			307			618			958
Commercial mortgages		116			201			486			50			1,931
Residential real estate		466			499			632			436			467
Consumer		2,555			3,324			1,956			1,744			1,919
Credit cards		144			96			116			78			97
Overdrafts		252			240			221			256			258
		4,077			4,961			3,718			3,182			5,630
Recoveries:
Commercial, industrial and agricultural		235			89			267			1			7
Commercial mortgages		197			8			52			210			1,430
Residential real estate		78			93			8			41			5
Consumer		161			122			96			93			114
Credit cards		27			22			14			25			16
Overdrafts		87			71			85			111			94
		785			405			522			481			1,666
Net charge-offs		(3,292	)		(4,556	)		(3,196	)		(2,701	)		(3,964	)
Provision for loan losses		6,655			4,149			2,560			3,840			6,138
Balance at end of period	$	19,693		$	16,330		$	16,737		$	17,373		$	16,234
Percentage of net charge-offs during the period to average loans outstanding		0.16	%		0.27	%		0.22	%		0.21	%		0.38	%

The provision for loan losses reflects the amount deemed appropriate by management to establish an adequate reserve for probable incurred losses. Management’s judgment is based on the evaluation of individual loans, the overall risk characteristics of various portfolio segments, past experience with losses, the impact of economic conditions on borrowers, and other relevant factors.

ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES

(Dollars In Thousands)

	2017					2016					2015					2014					2013
	Amount		% of Loans in each Category			Amount		% of Loans in each Category			Amount		% of Loans in each Category			Amount		% of Loans in each Category			Amount		% of Loans in each Category
Commercial, industrial, and agricultural	$	6,160		34.85	%	$	5,428		30.25	%	$	6,035		30.25	%	$	7,114		30.04	%	$	8,212		32.92	%
Commercial mortgages		9,007		27.91	%		6,753		30.63	%		5,605		30.63	%		5,310		28.32	%		3,536		26.44	%
Residential real estate		2,033		33.18	%		1,653		34.78	%		2,475		34.78	%		2,479		36.29	%		2,450		35.34	%
Consumer		2,179		3.73	%		2,215		3.99	%		2,371		3.99	%		2,205		4.95	%		1,763		4.89	%
Credit Cards		120		0.31	%		93		0.32	%		90		0.32	%		71		0.33	%		66		0.38	%
Overdrafts		194		0.02	%		188		0.03	%		161		0.03	%		194		0.07	%		207		0.03	%
Total	$	19,693		100.00	%	$	16,330		100.00	%	$	16,737		100.00	%	$	17,373		100.00	%	$	16,234		100.00	%

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In determining the allocation of the allowance for loan losses, the Corporation considers economic trends, historical patterns and specific credit reviews.

With regard to the credit reviews, a “watchlist” is evaluated on a monthly basis to determine potential commercial losses. Consumer and mortgage loans are allocated using historical loss experience.

DEPOSITS

(Dollars In Thousands)

	Year Ended December 31,
	2017					2016					2015
	Average Amount		Annual Rate			Average Amount		Annual Rate			Average Amount		Annual Rate
Demand – Non-Interest Bearing	$	300,942				$	267,876				$	257,842
Demand – Interest Bearing		550,922		0.36	%		513,445		0.35	%		451,784		0.35	%
Savings Deposits		953,960		0.49	%		954,010		0.46	%		942,916		0.50	%
Time Deposits		252,176		1.07	%		214,684		1.04	%		196,661		1.10	%
TOTAL	$	2,058,000				$	1,950,015				$	1,849,203

The maturity of certificates of deposits and other time deposits in denominations of $100,000 or more as of December 31, 2017 is as follows:
Three months or less	$	26,435
Greater than three months and through twelve months		36,617
Greater than one year and through three years		152,186
Greater than three years		2,083
	$	217,321

RETURN ON EQUITY AND ASSETS

	Year Ended December 31,
	2017			2016			2015
Return on average assets		0.89	%		0.85	%		0.99	%
Return on average equity		9.97	%		9.69	%		11.23	%
Dividend payout ratio		42.31	%		46.48	%		42.86	%
Average equity to average assets ratio		8.93	%		8.76	%		8.86	%

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ITEM 1A. RISK FACTORS

The Corporation’s financial condition and results of operations are subject to various risks inherent in its business. The material risks and uncertainties that management believes affect the Corporation are described below. If any of these risks actually occur, the Corporation’s business, financial condition, liquidity, results of operations and prospects could be materially and adversely affected. The following risks together with all of the other information in this Annual Report on Form 10-K should be considered.

The possibility of the economy’s return to recessionary conditions and the possibility of further turmoil or volatility in the financial markets would likely have an adverse effect on the Corporation’s business, financial position and results of operations.

The Corporation continues to face risks resulting from the aftermath of the severe recession generally and the moderate pace of the current recovery. A slowing or failure of the economic recovery would likely aggravate the adverse effects of these difficult economic and market conditions on the Corporation and on others in the financial services industry. In particular, the Corporation may face the following risks in connection with the economic or market environment:

● The Corporation’s and the Bank’s ability to borrow from other financial institutions or to access the debt or equity capital markets on favorable terms or at all could be adversely affected by further disruptions in the capital markets or other events, including actions by rating agencies and deteriorating investor expectations.

● The Corporation faces increased regulation of the banking and financial services industry. Compliance with such regulation may increase its costs and limit its ability to pursue business opportunities.

● Market developments may affect customer confidence levels and may cause increases in loan delinquencies and default rates, which management expects would adversely impact the Bank’s charge-offs and provision for loan losses.

● Market developments may adversely affect the Bank’s securities portfolio by causing other-than-temporary-impairments, prompting write-downs and securities losses.

● Competition in banking and financial services industry could intensify as a result of the consolidation of financial services companies in connection with current market conditions.

The Bank’s allowance for loan losses may not be adequate to cover loan losses which could have a material adverse effect on the Corporation’s business, financial condition and results of operations.

A significant source of risk for the Corporation arises from the possibility that losses will be sustained because borrowers, guarantors and related parties may fail to perform in accordance with the terms of their loan agreements. Most loans originated by the Bank are secured, but some loans are unsecured based upon management’s evaluation of the creditworthiness of the borrowers. With respect to secured loans, the collateral securing the repayment of these loans principally includes a wide variety of real estate, and to a lesser extent personal property, either of which may be insufficient to cover the obligations owed under such loans.

Collateral values and the financial performance of borrowers may be adversely affected by changes in prevailing economic, environmental and other conditions, including declines in the value of real estate, changes in interest rates and debt service levels, changes in oil and gas prices, changes in monetary and fiscal policies of the federal government, widespread disease, terrorist activity, environmental

19

contamination and other external events, which are beyond the control of the Bank. In addition, collateral appraisals that are out of date or that do not meet industry recognized standards might create the impression that a loan is adequately collateralized when in fact it is not. Although the Bank may acquire any real estate or other assets that secure defaulted loans through foreclosures or other similar remedies, the amounts owed under the defaulted loans may exceed the value of the assets acquired.

The allowance for loan losses is subject to a formal analysis by the Credit Administration and Finance Departments of the Corporation using a methodology whereby loan pools are segregated into special mention, substandard, doubtful and unclassified categories and the pools are evaluated based on historical loss factors. The Bank monitors delinquencies and losses on a monthly basis. The Bank has adopted underwriting and credit monitoring policies and procedures, including the review of borrower financial statements and collateral appraisals, which management believes are appropriate to mitigate the risk of loss by assessing the likelihood of borrower nonperformance and the value of available collateral. The Bank also manages credit risk by diversifying its loan portfolio. An ongoing independent review, subsequent to management’s review, of individual credits is performed by an independent loan review function, which reports to the Loan Committee of the Corporation’s Board of Directors. However, such policies and procedures have limitations, including judgment errors in management’s risk analysis, and may not prevent unexpected losses that could have a material adverse effect on the Corporation’s business, financial condition and results of operations.

Interest rate volatility could significantly reduce the Corporation’s profitability.

The Corporation’s earnings largely depend on the relationship between the yield on its earning assets, primarily loans and investment securities, and the cost of funds, primarily deposits and borrowings. This relationship, commonly known as the net interest margin, is susceptible to significant fluctuation and is affected by economic and competitive factors that influence the yields and rates, and the volume and mix of the Bank’s interest earning assets and interest bearing liabilities.

Interest rate risk can be defined as the sensitivity of net interest income and of the market value of financial instruments to the direction and frequency of changes in interest rates. Interest rate risk arises from the imbalance in the re-pricing, maturity and/or cash flow characteristics of assets and liabilities. The Corporation is subject to interest rate risk to the degree that its interest bearing liabilities re-price or mature more slowly or more rapidly or on a different basis than its interest earning assets. Changes in interest rates, including those due to federal monetary policy, will affect the levels of income and expense recorded on a large portion of the Bank’s assets and liabilities, and fluctuations in interest rates will impact the market value of all interest sensitive assets. Significant fluctuations in interest rates could have a material adverse impact on the Corporation’s business, financial condition, results of operations, or liquidity.

The Bank’s interest rate risk measurement and management techniques incorporate the re-pricing and cash flow attributes of its balance sheet and off-balance sheet instruments as they relate to current and potential changes in interest rates. The level of interest rate risk, measured in terms of the potential future effect on earnings, is determined through the use of static gap analysis and earnings simulation modeling under multiple interest rate scenarios. Management’s objectives are to measure, monitor and develop strategies in response to the interest rate risk profile inherent in the Bank’s balance sheet in order to preserve the sensitivity of net interest income to actual or potential changes in interest rates. At December 31, 2017, the interest rate sensitivity position was asset sensitive in the short-term. For further information on risk relating to interest rates, refer to Part I, Item 7a, “Quantitative and Qualitative Disclosures about Market Risk,” herein.

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The Bank’s loans are principally concentrated in certain areas of Pennsylvania and Ohio, and adverse economic conditions in those markets could adversely affect the Corporation’s business, financial condition and results of operations.

The Corporation’s success is dependent to a significant extent upon general economic conditions in the United States and, in particular, the local economies in central and northwest Pennsylvania, central and northeast Ohio, and western New York the primary markets served by the Bank. The Bank is particularly exposed to real estate and economic factors in these geographic areas, as most of its loan portfolio is concentrated among borrowers in these markets. Furthermore, because a substantial portion of the Bank’s loan portfolio is secured by real estate in these areas, the value of the associated collateral is also subject to regional real estate market conditions.

The Bank is not immune to negative consequences arising from overall economic weakness and, in particular, a sharp downturn in the local real estate markets served by the Bank. While the Bank’s loan portfolio has not shown significant signs of credit quality deterioration despite continued challenges in the U.S. economy, we cannot assure you that no deterioration will occur. An economic recession in the markets served by the Bank, and the nation as a whole, could negatively impact household and corporate incomes. This impact could lead to decreased loan demand and increase the number of borrowers who fail to pay the Bank interest or principal on their loans, and accordingly, could have a material adverse effect on the Corporation’s business, financial condition, results of operations, or liquidity.

The Corporation’s investment securities portfolio is subject to credit risk, market risk, and liquidity risk, and declines in value in its investment securities portfolio may require it to record other-than-temporary impairment charges that could have a material adverse effect on its results of operations and financial condition.

The Corporation’s investment securities portfolio has risks beyond its control that can significantly influence the portfolio’s fair value. These factors include, but are not limited to, rating agency downgrades of the securities, defaults of the issuers of the securities, lack of market pricing of the securities, and continued instability in the credit markets. Recent lack of market activity with respect to certain of the securities has, in certain circumstances, required the Corporation to base its fair market valuation on unobservable inputs. The Corporation has engaged valuation experts to price these certain securities using proprietary models, which incorporate assumptions that market participants would use in pricing the securities, including bid/ask spreads and liquidity and credit premiums. Any change in current accounting principles or interpretations of these principles could impact the Corporation’s assessment of fair value and thus its determination of other-than-temporary impairment of the securities in its investment securities portfolio.

The Bank may be required to record other-than-temporary impairment charges on its investment securities if they suffer declines in value that are considered other-than-temporary. Numerous factors, including collateral deterioration underlying certain private label mortgage-backed securities, lack of liquidity for re-sales of certain investment securities, absence of reliable pricing information for certain investment securities, adverse changes in business climate, adverse actions by regulators, or unanticipated changes in the competitive environment could negatively effect the Bank’s securities portfolio in future periods. An other-than-temporary impairment charge could have a material adverse effect on the Corporation’s results of operations and financial condition.

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The Corporation is subject to extensive government regulation and supervision, which may interfere with its ability to conduct its business and may negatively impact its financial results.

The Corporation, primarily through the Bank and its non-bank subsidiary, is subject to extensive federal and state regulation and supervision. Banking regulations are primarily intended to protect depositors’ funds, the Federal Deposit Insurance Fund and the safety and soundness of the banking system as a whole, not stockholders. These regulations affect the Corporation’s lending practices, capital structure, investment practices, dividend policy and growth, among other things. Congress and federal regulatory agencies continually review banking laws, regulations and policies for possible changes. Changes to statutes, regulations or regulatory policies, including changes in interpretation or implementation of statutes, regulations or policies, could affect the Corporation in substantial and unpredictable ways. Such changes could subject it to additional costs, limit the types of financial services and products the Corporation may offer, and/or limit the pricing it may charge on certain banking services, among other things. Additionally, the Dodd-Frank Act has and will continue to change the current bank regulatory structure and affect the lending, investment, trading and operating activities of financial institutions and their holding companies. In addition to the self-implementing provisions of the statute, the Dodd-Frank Act calls for many administrative rulemakings by various federal agencies to implement various parts of the legislation, some of which have yet to be implemented. The Corporation cannot be certain when final rules affecting it will be issued through such rulemakings and what the specific content of such rules will be. The financial reform legislation and any implementing rules that are ultimately issued could have adverse implications on the financial industry, the competitive environment, and the Corporation’s ability to conduct business. The Corporation will have to apply resources to ensure that it is in compliance with all applicable provisions of the Dodd-Frank Act and any implementing rules, which may increase its costs of operations and adversely impact its earnings. Additionally, revised capital adequacy guidelines and prompt corrective action rules applicable to it became effective January 1, 2015. Compliance with these rules have imposed additional costs on the Corporation.

Failure to comply with laws, including the Bank Secrecy Act and USA Patriot Act, regulations or policies could result in sanctions by regulatory agencies, restrictions, civil money penalties and/or reputation damage, which could have a material adverse effect on the Corporation’s business, financial condition and results of operations and/or cause the Corporation to lose its financial holding company status. While the Corporation has policies and procedures designed to prevent any such violations, there can be no assurance that such violations will not occur. See the section captioned “Supervision and Regulation” in Part I, Item 1 of this report for further information.

The Corporation relies on its management and other key personnel, and the loss of any of them may adversely affect its operations.

The Corporation is and will continue to be dependent upon the services of its executive management team. In addition, it will continue to depend on its ability to retain and recruit key client relationship managers. The unexpected loss of services of any key management personnel, or the inability to recruit and retain qualified personnel in the future, could have an adverse effect on its business and financial condition.

Strong competition within the Corporation’s markets and technological change may have a material adverse impact on its profitability.

The Corporation competes with an ever-increasing array of financial service providers. As noted above, as a financial holding company and state-chartered financial institution, respectively, the

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Corporation and the Bank are subject to extensive regulation and supervision, including, in many cases, regulations that limit the type and scope of activities. The non-bank financial service providers that compete with the Corporation and the Bank may not be subject to such extensive regulation, supervision, and tax burden. Competition from nationwide banks, as well as local institutions, is strong in the Corporation’s markets.

The financial services industry is undergoing rapid technological change and technological advances are likely to intensify competition. In addition to improving customer services, effective use of technology increases efficiency and enables financial institutions to reduce costs. Accordingly, the Corporation’s future success will depend in part on its ability to address customer needs by using technology. The Corporation cannot assure you that it will be able to successfully take advantage of technological changes or advances or develop and market new technology driven products and services to its customers.

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 it can. We cannot assure you that we will continue to be able to compete effectively with other financial institutions in the future. Furthermore, developments increasing the nature or level of competition could have a material adverse effect on the Corporation’s business, financial condition, results of operations, or liquidity. For further information on competition, refer to Part I, Item 1, “Competition” herein.

A failure in or breach of the Corporation’s or any of its subsidiaries’ operational or security systems or infrastructure, or those of third party vendors and other service providers, including as a result of cyber attacks, could disrupt the Corporation’s or any of its subsidiaries’ businesses, result in the disclosure or misuse of confidential or proprietary information, damage its reputation, increase its costs and cause losses.

The Corporation, primarily through the Bank, depends on its ability to continuously process, record and monitor a large number of customer transactions and customer, public and regulatory expectations regarding operational and information security have increased over time. Accordingly, its and its subsidiaries’ operational systems and infrastructure must continue to be safeguarded and monitored for potential failures, disruptions and breakdowns. Although the Corporation has business continuity plans and other safeguards in place, disruptions or failures in the physical infrastructure or operating systems that support its businesses and customers, or cyber attacks or security breaches of the networks, systems or devices on which customers’ personal information is stored and that customers use to access the Corporation’s and its subsidiaries products and services could result in customer attrition, regulatory fines, penalties or intervention, reputational damage, reimbursement or other compensation costs, and/or additional compliance costs, any of which could materially adversely affect the Corporation’s results of operations or financial condition.

Although to date the Corporation has not experienced any material losses relating to cyber attacks or other information security breaches, there can be no assurance that it or its subsidiaries will not suffer such losses in the future. The Corporation’s risk and exposure to these matters remains heightened because of, among other things, the evolving nature of these threats, our plans to continue to implement our Internet banking and mobile banking channel strategies and develop additional remote connectivity solutions to serve our customers when and how they want to be served. As a result, cybersecurity and the continued development and enhancement of the Corporation’s controls, processes and practices designed to protect its and its subsidiaries systems, computers, software, data and networks from attack, damage or unauthorized access remain a priority for the Corporation. As

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cyber threats continue to evolve, the Corporation may be required to expend significant additional resources to continue to modify or enhance its protective measures or to investigate and remediate any information security vulnerabilities.

The Corporation may not be able to meet its cash flow needs on a timely basis at a reasonable cost, and the Corporation’s cost of funds for banking operations may significantly increase as a result of general economic conditions, interest rates and competitive pressures.

Liquidity is the ability to meet cash flow obligations as they come due and cash flow needs on a timely basis and at a reasonable cost. The liquidity of the Bank is used to make loans and to repay deposit and borrowing liabilities as they become due, or are demanded by customers and creditors. Many factors affect the Bank’s ability to meet liquidity needs, including variations in the markets served by its network of offices, its mix of assets and liabilities, reputation and standing in the marketplace, and general economic conditions.

The Bank’s primary source of funding is retail deposits, gathered throughout its network of banking offices. Periodically, the Corporation utilizes term borrowings from the Federal Home Loan Bank of Pittsburgh, or FHLB, of which the Bank is a member, and other lenders to meet funding obligations. The Bank’s securities and loan portfolios provide a source of contingent liquidity that could be accessed in a reasonable time period through sales.

Significant changes in general economic conditions, market interest rates, competitive pressures or otherwise, could cause the Bank’s deposits to decrease relative to overall banking operations, and it would have to rely more heavily on brokered funds and borrowings in the future, which are typically more expensive than deposits.

Management and the Board of Directors of the Corporation, through its Asset/Liability Committee, or the ALCO, monitor liquidity and the ALCO establishes and monitors acceptable liquidity ranges. The Bank actively manages its liquidity position through target ratios. Continual monitoring of these ratios, both historical and through forecasts under multiple rate scenarios, allows the Bank to employ strategies necessary to maintain adequate liquidity.

Changes in economic conditions, including consumer savings habits and availability of or access to capital, could potentially have a significant impact on the Bank’s liquidity position, which in turn could materially impact the Corporation’s financial condition, results of operations and cash flows.

A substantial decline in the value of the Bank’s FHLB common stock may adversely affect the Corporation’s results of operations, liquidity and financial condition.

As a requirement of membership in the FHLB of Pittsburgh, the Bank must own a minimum required amount of FHLB stock, calculated periodically based primarily on its level of borrowings from the FHLB. Borrowings from the FHLB represent the Bank’s primary source of short-term and long-term wholesale funding.

In an extreme situation, it is possible that the capitalization of an FHLB, including the FHLB of Pittsburgh, could be substantially diminished or reduced to zero. Consequently, given that there is no trading market for the Bank’s FHLB common stock, the Corporation’s management believes that there is a risk that the Corporation’s investment could be deemed impaired at some time in the future. If this occurs, it may adversely affect the Corporation’s results of operations and financial condition.

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In addition, if the capitalization of the FHLB of Pittsburgh is substantially diminished, the Bank’s liquidity may be adversely impacted if it is not able to obtain alternative sources of funding.

There are 12 banks of the FHLB, including Pittsburgh. The 12 FHLB banks are jointly liable for the consolidated obligations of the FHLB system. To the extent that one FHLB bank cannot meet its obligations to pay its share of the system’s debt, other FHLB banks can be called upon to make the payment. The Corporation cannot assure you, however, that the FHLB system will be able to meet these obligations.

The Bank could be held responsible for environmental liabilities relating to properties acquired through foreclosure, resulting in significant financial loss.

In the event the Bank forecloses on a defaulted commercial or residential mortgage loan to recover its investment, it may be subject to environmental liabilities in connection with the underlying real property, which could significantly exceed the value of the real property. Although the Bank exercises due diligence to discover potential environmental liabilities prior to acquiring any property through foreclosure, hazardous substances or wastes, contaminants, pollutants, or their sources may be discovered on properties during its ownership or after a sale to a third party. The Corporation cannot assure you that the Bank would not incur full recourse liability for the entire cost of any removal and cleanup on an acquired property, that the cost of removal and cleanup would not exceed the value of the property, or that the Bank could recover any of the costs from any third party. Losses arising from environmental liabilities could have a material adverse impact on the Corporation’s business, financial condition, results of operations, or liquidity.

Federal and state governments could pass legislation responsive to current credit conditions which could cause the Corporation to experience higher credit losses.

The Corporation could experience higher credit losses because of federal or state legislation or regulatory action that reduces the amount the Bank’s borrowers are otherwise contractually required to pay under existing loan contracts. Also, the Corporation could experience higher credit losses because of federal or state legislation or regulatory action that limits the Bank’s ability to foreclose on property or other collateral or makes foreclosure less economically feasible. The Corporation cannot assure you that future legislation will not significantly and adversely impact its ability to collect on its current loans or foreclose on collateral.

The preparation of the Corporation’s financial statements requires the use of estimates that could significantly vary from actual results, which could have a material adverse effect on the Corporation’s business, financial condition, results of operations or liquidity.

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make significant estimates that affect the financial statements. For example, one of these significant estimates is the allowance for loan losses. Due to the inherent nature of estimates, the Corporation cannot provide absolute assurance that it will not significantly increase the allowance for loan losses and/or sustain credit losses that are significantly higher than the provided allowance, which could have a material adverse effect on the Corporation’s business, financial condition, results of operations or liquidity.

The Corporation’s financial results may be subject to the impact of changes in accounting standards or interpretation in new or existing standards.

From time to time the Financial Accounting Standards Board, or FASB, and the SEC change accounting regulations and reporting standards that govern the preparation of the Corporation’s

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financial statements. In addition, the FASB, SEC, and bank regulators may revise their previous interpretations regarding existing accounting regulations and the application of these accounting standards. These revisions in their interpretations are out of the Corporation’s control and may have a material impact on its financial statements.

The unsoundness of other financial institutions with which the Corporation does business could adversely affect the Corporation’s business, financial condition or results of operations.

Our ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions. Financial institutions are interrelated as a result of trading, clearing, counterparty, investment or other relationships. The Corporation routinely executes transactions with counterparties in the financial services industry such as commercial banks, brokers and dealers, investment banks and other institutional clients for a range of transactions including loan participations, derivatives and hedging transactions. In addition, the Corporation invests in securities or loans originated or issued by financial institutions or supported by the loans they originate. As a result, defaults by, or even rumors or questions about, one or more financial institutions, or the financial industry generally, have led to market-wide liquidity problems and could lead to losses or defaults by us or other institutions. Many of these transactions expose the Corporation to credit or investment risk in the event of default by the Corporation’s counterparty. In addition, the Corporation’s credit risk may be exacerbated if the collateral it holds cannot be realized or is liquidated at prices not sufficient to recover the full amount of the loan or other exposure to the Corporation. The Corporation could incur losses to its securities portfolio as a result of these issues. These types of losses may have a material adverse effect on the Corporation’s business, financial condition or results of operation.

Some provisions contained in the Corporation’s articles of incorporation and its bylaws and under Pennsylvania law could deter a takeover attempt or delay changes in control or management of the Corporation.

Certain anti-takeover provisions of the Pennsylvania Business Corporation Law of 1988, as amended, apply to Pennsylvania registered corporations (e.g., publicly traded companies) including, but not limited to, those relating to (1) control share acquisitions, (2) disgorgement of profits by certain controlling persons, (3) business combination transactions with interested shareholders, and (4) the rights of shareholders to demand fair value for their stock following a control transaction. Pennsylvania law permits corporations to opt-out of these anti-takeover provisions, but the Corporation has not done so. Such provisions could have the effect of deterring takeovers or delaying changes in control or management of the Corporation. Additionally, such provisions could limit the price that some investors might be willing to pay in the future for shares of the Corporation’s common stock.

For example, the Corporation’s amended and restated articles of incorporation require the affirmative vote of 66% of the outstanding shares entitled to vote to effect a business combination. In addition, the

Corporation’s amended and restated articles of incorporation, subject to the limitations prescribed in such articles and subject to limitations prescribed by Pennsylvania law, authorize the Corporation’s board of directors, from time to time by resolution and without further shareholder action, to provide for the issuance of shares of preferred stock, in one or more series, and to fix the designation, powers, preferences and other rights of the shares and to fix the qualifications, limitations and restrictions thereof. As a result of its broad discretion with respect to the creation and issuance of preferred stock without shareholder approval, the board of directors could adversely affect the voting power and other rights of the holders of common stock and, by issuing shares of preferred stock with certain voting, conversion and/or redemption rights, could discourage any attempt to obtain control of the Corporation.

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The Corporation’s bylaws, as amended and restated, provide for the division of the Corporation’s board of directors into three classes of directors, with each serving staggered terms. In addition, any amendment to the Corporation’s bylaws must be approved by the affirmative vote of a majority of the votes cast by all shareholders entitled to vote thereon and, if any shareholders are entitled to vote thereon as a class, upon receiving the affirmative vote of a majority of the votes cast by the shareholders entitled to vote as a class.

Any of the foregoing provisions may have the effect of deterring takeovers or delaying changes in control or management of the Corporation.

The price of the Corporation’s common stock may fluctuate significantly, and this may make it difficult for you to resell shares of common stock owned by you at times or at prices you find attractive.

The price of the Corporation’s common stock on the NASDAQ constantly changes. The Corporation expects that the market price of its common stock will continue to fluctuate, and the Corporation cannot give you any assurances regarding any trends in the market prices for its common stock.

The Corporation’s stock price may fluctuate as a result of a variety of factors, many of which are beyond its control. These factors include the Corporation’s:

• past and future dividend practice;

• financial condition, performance, creditworthiness and prospects;

• quarterly variations in the Corporation’s operating results or the quality of the Corporation’s assets;

• operating results that vary from the expectations of management, securities analysts and investors;

• changes in expectations as to the Corporation’s future financial performance;

• announcements of innovations, new products, strategic developments, significant contracts, acquisitions and other material events by the Corporation or its competitors;

• the operating and securities price performance of other companies that investors believe are comparable to the Corporation;

• future sales of the Corporation’s equity or equity-related securities;

• the credit, mortgage and housing markets, the markets for securities relating to mortgages or housing, and developments with respect to financial institutions generally; and

• instability in global financial markets and global economies and general market conditions, such as interest or foreign exchange rates, stock, commodity or real estate valuations or volatility, budget deficits or sovereign debt level concerns and other geopolitical, regulatory or judicial events.

The Corporation’s ability to pay dividends is limited by law and regulations.

The future declaration of dividends by the Corporation’s Board of Directors will depend on a number of factors, including capital requirements, regulatory limitations, the Corporation’s operating results and financial condition and general economic conditions. The Corporation’s ability to pay dividends depends primarily on the receipt of dividends from the Bank. Dividend payments from the Bank are subject to legal and regulatory limitations, generally based on retained earnings, imposed by bank regulatory agencies. The ability of the Bank to pay dividends is also subject to financial condition, regulatory capital requirements, capital expenditures and other cash flow requirements. The Corporation cannot assure you that the Bank will be able to pay dividends to the Corporation in the

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future. The Corporation may decide to limit the payment of dividends to its stockholders even when the Corporation has the legal ability to pay them in order to retain earnings for use in the Corporation’s business.

The risks presented by acquisitions could adversely affect our financial condition and results of operations.

Any acquisitions will be accompanied by the risks commonly encountered in acquisitions including, among other things: our ability to realize anticipated cost savings and avoid unanticipated costs relating to the merger, the difficulty of integrating operations and personnel, the potential disruption of our or the acquired company’s ongoing business, the inability of our management to maximize our financial and strategic position, the inability to maintain uniform standards, controls, procedures and policies, and the impairment of relationships with the acquired company’s employees and customers as a result of changes in ownership and management. These risks may prevent the Corporation from fully realizing the anticipated benefits of an acquisition or cause the realization of such benefits to take longer than expected.

ITEM 1B.  UNRESOLVED STAFF COMMENTS

None

ITEM 2.  PROPERTIES

The headquarters of the Corporation and the Bank are located at 1 South Second Street, Clearfield, Pennsylvania, in a building owned by the Corporation. The Bank operates 41 full-service offices and one loan production office. Of these 42 offices, 24 are owned and 18 are leased from independent owners. Holiday Financial Services Corporation has ten full-service offices which nine are leased from independent owners and one is leased from the Bank. There are no encumbrances on the offices owned and the rental expense on the leased property is immaterial in relation to operating expenses. The initial lease terms range from one to twenty years.

ITEM 3.  LEGAL PROCEEDINGS

There are no material pending legal proceedings to which the Corporation or any of its subsidiaries is a party, or of which any of their property is the subject, except ordinary routine proceedings which are incidental to the business.

ITEM 4.  MINE SAFETY DISCLOSURES

None

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PART II.

ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Quarterly Share Data; Holders

Our common stock is traded on the Global Select Market of The NASDAQ Stock Market LLC under the symbol CCNE. The following tables set forth, for the periods indicated, the quarterly high and low sales price of the Corporation’s common stock as reported by the NASDAQ Global Select Market and actual cash dividends paid per share. As of December 31, 2017, the approximate number of shareholders of record of the Corporation’s common stock was 4,087.

Price Range of Common Stock

	2017				2016
	High		Low		High		Low
First quarter	$	27.00	$	22.55	$	18.49	$	16.51
Second quarter		26.07		20.90		18.41		17.05
Third quarter		27.68		23.50		21.70		17.33
Fourth quarter		29.76		25.92		28.43		18.01

Cash Dividends Paid

	2017		2016
First quarter	$	0.165	$	0.165
Second quarter		0.165		0.165
Third quarter		0.165		0.165
Fourth quarter		0.165		0.165

See Note 18 to the consolidated financial statements in Item 8 and “Supervision and Regulation—Dividend Restrictions” in Part I, Item 1 for a discussion of dividend restrictions.

Issuer Purchases of Equity Securities

The following table provides information with respect to any purchase of shares of the Corporation’s common stock made by or on behalf of the Corporation for the quarter ended December 31, 2017.

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number (or approximate dollar value) of Shares that May Yet Be Purchased Under the Plans or Programs
October 1 – 31, 2017		-		-		-		400,026	(1)
November 1 – 31, 2017		-		-		-		400,026	(1)
December 1 – 31, 2017		19,397	$	26.31		19,397		380,629	(1)

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(1) The Corporation’s new stock repurchase program, which was announced on November 12, 2014, authorizes the repurchase of up to 500,000 shares of common stock. The program will remain in effect until fully utilized or until modified, suspended or terminated. As of December 31, 2017, there were 380,629 shares remaining in the program.

Performance Graph

Set forth below is a chart comparing the Corporation’s cumulative return to stockholders against the cumulative return of the NASDAQ Composite Index and a Peer Group Index of banking organizations for the five-year period commencing December 31, 2012 and ending December 31, 2017.

	Period Ending
Index		12/31/12	12/31/13	12/31/14	12/31/15	12/31/16	12/31/17
CNB Financial Corporation		100.00	120.46	121.79	123.27	189.10	190.60
NASDAQ Composite		100.00	140.12	160.78	171.97	187.22	242.71
SNL Bank NASDAQ		100.00	143.73	148.86	160.70	222.81	234.58

Source : S&P Global Market Intelligence

^© 2017

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ITEM 6.  SELECTED FINANCIAL DATA

	Year ended December 31,
(Dollars in thousands, except per share data)	2017		2016		2015		2014		2013
INTEREST AND DIVIDEND INCOME:
Loans including fees	$	97,005	$	81,209	$	71,814	$	69,512	$	53,927
Securities:
Taxable		8,165		9,134		10,977		13,257		13,456
Tax-exempt		2,983		3,390		3,778		3,713		3,828
Dividends		721		582		609		400		205
Total interest and dividend income		108,874		94,315		87,178		86,882		71,416
INTEREST EXPENSE:
Deposits		9,312		8,470		8,498		8,300		7,995
Borrowed funds		4,021		2,981		3,222		3,241		3,447
Subordinated debentures		4,032		1,577		751		746		770
Total interest expense		17,365		13,028		12,471		12,287		12,212
NET INTEREST INCOME		91,509		81,287		74,707		74,595		59,204
PROVISION FOR LOAN LOSSES		6,655		4,149		2,560		3,840		6,138
Net interest income after provision for loan losses		84,854		77,138		72,147		70,755		53,066
NON-INTEREST INCOME		21,435		17,691		14,799		14,321		13,766
NON-INTEREST EXPENSES		70,037		67,118		56,457		52,688		43,813
INCOME BEFORE INCOME TAXES		36,252		27,711		30,489		32,388		23,019
INCOME TAX EXPENSE		12,392		7,171		8,292		9,314		6,340
NET INCOME	$	23,860	$	20,540	$	22,197	$	23,074	$	16,679
PER SHARE DATA:
Basic	$	1.57	$	1.42	$	1.54	$	1.60	$	1.29
Fully diluted		1.57		1.42		1.54		1.60		1.29
Dividends declared		0.66		0.66		0.66		0.66		0.66
Book value per share at year end		15.98		14.64		13.87		13.09		11.43
AT END OF PERIOD:
Total assets	$	2,768,773	$	2,573,821	$	2,285,136	$	2,189,213	$	2,131,289
Securities		416,859		500,693		550,619		690,225		690,118
Loans, net of unearned discount		2,145,959		1,873,536		1,577,798		1,355,289		1,295,363
Allowance for loan losses		19,693		16,330		16,737		17,373		16,234
Deposits		2,167,815		2,017,522		1,815,053		1,847,079		1,835,314
FHLB and other borrowings		222,943		102,926		104,243		75,715		75,000
Subordinated debentures		70,620		70,620		20,620		20,620		20,620
Deposits held for sale		0		6,456		0		0		0
Shareholders’ equity		243,910		211,784		201,913		188,548		164,911
KEY RATIOS:
Return on average assets		0.89%		0.85%		0.99%		1.07%		0.88%
Return on average equity		9.97%		9.69%		11.23%		12.76%		11.38%
Loan to deposit ratio		98.99%		92.86%		86.93%		73.37%		70.58%
Dividend payout ratio		42.31%		46.48%		42.86%		41.26%		51.40%
Average equity to average assets ratio		8.93%		8.76%		8.86%		8.37%		7.73%

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ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the consolidated financial statements of CNB Financial Corporation (the “Corporation”) is presented to provide insight into management’s assessment of financial results. The Corporation’s subsidiary, CNB Bank (the “Bank”), provides financial services to individuals and businesses primarily within its primary market area of the Pennsylvania counties of Blair, Cambria, Cameron, Centre, Clearfield, Crawford, Elk, Indiana, Jefferson, and McKean. As ERIEBANK, a division of CNB Bank, the Bank operates in the Pennsylvania counties of Crawford, Erie, and Warren and in the Ohio counties of Ashtabula and Lake. As FCBank, a division of CNB Bank, the Bank operates in the Ohio counties of Crawford, Richland, Ashland, Wayne, Marion, Morrow, Knox, Delaware, and Franklin. As BankOnBuffalo, a division of CNB Bank, the Bank operates in Erie and Niagara counties, New York. The Bank is subject to regulation, supervision and examination by the Pennsylvania State Department of Banking as well as the Federal Deposit Insurance Corporation.

CNB Securities Corporation is incorporated in Delaware and currently maintains investments in debt and equity securities. CNB Insurance Agency, incorporated in Pennsylvania, provides for the sale of nonproprietary annuities and other insurance products. Holiday Financial Services Corporation (“Holiday”), incorporated in Pennsylvania, offers small balance unsecured loans and secured loans, primarily collateralized by automobiles and equipment, to borrowers with higher risk characteristics.

The financial condition and results of operations of the Corporation and its consolidated subsidiaries are not necessarily indicative of future performance. Management’s discussion and analysis should be read in conjunction with the audited consolidated financial statements and related notes.

Risk identification and management are essential elements for the successful management of the Corporation. In the normal course of business, the Corporation is subject to various types of risk, including interest rate, credit, and liquidity risk. These risks are controlled through policies and procedures established by the Corporation.

Interest rate risk is the sensitivity of net interest income and the market value of financial instruments to the direction and frequency of changes in interest rates. Interest rate risk results from various repricing frequencies and the maturity structure of the financial instruments owned by the Corporation. The Corporation uses its asset/liability management policy and systems to control, monitor and manage interest rate risk.

Credit risk represents the possibility that a customer may not perform in accordance with contractual terms. Credit risk results from loans to customers and the purchase of securities. The Corporation manages credit risk by following an established credit policy and using a disciplined evaluation of the adequacy of the allowance for loan losses. Also, the investment policy limits the amount of credit risk that may be taken in the securities portfolio.

Liquidity risk represents the inability to generate or otherwise obtain funds at reasonable rates to satisfy commitments to borrowers and obligations to depositors. The Corporation has established guidelines within its asset-liability management policy to manage liquidity risk. These guidelines include contingent funding alternatives.

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Forward-Looking Statements

The information below 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 the financial condition, liquidity, results of operations, future performance and our 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 our 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.” Such known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from the statements, include, but are not limited to, (i) changes in general business, industry or economic conditions or competition; (ii) changes in any applicable law, rule, regulation, policy, guideline or practice governing or affecting financial holding companies and their subsidiaries or with respect to tax or accounting principals or otherwise; (iii) adverse changes or conditions in capital and financial markets; (iv) changes in interest rates; (v) higher than expected costs or other difficulties related to integration of combined or merged businesses; (vi) the inability to realize expected cost savings or achieve other anticipated benefits in connection with business combinations and other acquisitions; (vii) changes in the quality or composition of our loan and investment portfolios; (viii) adequacy of loan loss reserves; (ix) increased competition; (x) loss of certain key officers; (xi) deposit attrition; (xii) rapidly changing technology; (xiii) unanticipated regulatory or judicial proceedings and liabilities and other costs; (xiv) changes in the cost of funds, demand for loan products or demand for financial services; and (xv) other economic, competitive, governmental or technological factors affecting our operations, markets, products, services and prices. Such developments could have an adverse impact on our financial position and our results of operations.

The forward-looking statements contained herein are based upon management’s beliefs and assumptions. Any forward-looking statement made herein speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

General Overview

Management concentrates on return on average equity, earnings per share, asset quality, and other metrics to measure the performance of the Corporation. The interest rate environment will continue to play an important role in the future earnings of the Corporation. During the past several years, in order to address the historic lows on interest rates that are primarily tied to short-term rates, such as the Prime Rate, the Corporation has taken a variety of measures including instituting rate floors on our commercial lines of credit and home equity lines.

Non-interest costs are expected to increase with the growth of the Corporation; however, management’s growth strategies are expected to also result in an increase in earning assets as well as

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enhanced non-interest income which is expected to more than offset increases in non-interest expenses in 2018 and beyond. While past results are not an indication of future earnings, management believes the Corporation is well positioned to sustain core earnings during 2018.

Financial Condition

The following table presents ending balances, growth, and the percentage change of certain measures of our financial condition for specified years (dollars in millions):

	2017 Balance		$ Change vs. prior year			% Change vs. prior year			2016 Balance		$ Change vs. prior year			% Change vs. prior year			2015 Balance
Total assets	$	2,768.8	$	195.0			7.6	%	$	2,573.8	$	288.7			12.6	%	$	2,285.1
Total loans, net		2,126.3		269.1			14.5			1,857.2		296.1			19.0			1,561.1
Total securities		416.9		(83.8	)		(16.7	)		500.7		(49.9	)		(9.1	)		550.6
Total deposits		2,167.8		150.3			7.4			2,017.5		202.4			11.2			1,815.1
Total shareholders’ equity		243.9		32.1			15.2			211.8		9.9			4.9			201.9

Cash and Cash Equivalents

Cash and cash equivalents totaled $35.3 million at December 31, 2017 compared to $29.2 million at December 31, 2016. Cash and cash equivalents fluctuate based on the timing and amount of liquidity events that occur in the normal course of business.

We believe the liquidity needs of the Corporation are satisfied by the current balance of cash and cash equivalents, readily available access to traditional funding sources, Federal Home Loan Bank financing, and the portion of the securities and loan portfolios that matures within one year. These sources of funds will enable the Corporation to meet cash obligations and off-balance sheet commitments as they come due.

Securities

Securities available for sale and trading securities totaled $416.9 million and $500.7 million at December 31, 2017 and 2016, respectively. Note 4 to the consolidated financial statements provides more detail concerning the composition of the Corporation’s securities portfolio, the process for evaluating securities for other-than-temporary impairment, and for valuation of structured pooled trust preferred securities.

The Corporation generally buys into the market over time and does not attempt to “time” its transactions. In doing this, the highs and lows of the market are averaged into the portfolio and the overall effect of different rate environments is minimized. The Corporation monitors the earnings performance and the effectiveness of the liquidity of the securities portfolio on a regular basis through meetings of the Asset/Liability Committee of the Corporation’s Board of Directors (“ALCO”). The ALCO also reviews and manages interest rate risk for the Corporation. Through active balance sheet management and analysis of the securities portfolio, we maintain a sufficient level of liquidity to satisfy depositor requirements and various credit needs of our customers.

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Loans

As detailed in the table below, at December 31, 2017, the Corporation had $2.1 billion in loans outstanding, net of unearned discount, an increase of $272.4 million, or 14.5%, since December 31, 2016.

(dollars in thousands)	2017			2016
Commercial, industrial, and agricultural	$	749,138		$	567,800
Commercial mortgages		600,065			574,826
Residential real estate		713,347			652,883
Consumer		80,193			74,816
Credit cards		6,753			6,046
Overdrafts		352			595
Less: unearned discount		(3,889	)		(3,430	)
Total loans, net of unearned discount	$	2,145,959		$	1,873,536

The Corporation has not underwritten any hybrid loans, payment option loans, or low documentation/no documentation loans. Variable rate loans are generally underwritten at the fully indexed rate. Loan underwriting policies and procedures have not changed materially between any periods presented.

The Corporation expects strong loan growth in 2018 as it expands within the Buffalo, New York market and expands commercial lending relationships in its Pennsylvania and Ohio markets.

Loan Concentration

The Corporation monitors loan concentrations by individual industries in order to track potential risk exposures resulting from industry related downturns. At December 31, 2017, no concentration existed within our commercial or real estate loan portfolio that exceeded 10% of the total loans.

Loan Quality

The Corporation has established written lending policies and procedures that require underwriting standards, loan documentation, and credit analysis standards to be met prior to funding a loan. Subsequent to the funding of a loan, ongoing review of credits is required. Credit reviews are performed annually on approximately 65% of the commercial loan portfolio by an outsourced loan review firm. In addition, classified assets, past due loans and nonaccrual loans are reviewed by the loan review partner semiannually by our credit administration staff.

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The following table presents information concerning loan delinquency and other nonperforming assets at December 31, 2017, 2016, and 2015 (dollars in thousands):

	2017		2016		2015
Nonaccrual loans	$	19,232	$	15,329	$	12,159
Accrual loans greater than 90 days past due		485		10		105
Total nonperforming loans		19,717		15,339		12,264
Other real estate owned		710		1,015		654
Total nonperforming assets	$	20,427	$	16,354	$	12,918
Loans modified in a troubled debt restructuring (TDR):
Performing TDR loans	$	8,344	$	8,710	$	9,304
Nonperforming TDR loans *		8,959		3,120		5,637
Total TDR loans	$	17,303	$	11,830	$	14,941
Total loans, net of unearned income	$	2,145,959	$	1,873,536	$	1,577,798
Nonperforming loans as a percentage of loans, net		0.92%		0.82%		0.78%
Total assets	$	2,768,773	$	2,573,821	$	2,285,136
Nonperforming assets as a percentage of total assets		0.71%		0.64%		0.57%

* - Nonperforming TDR loans are also included in the balance of nonaccrual loans in the previous table.

Management continues to closely monitor nonperforming loans, and the Corporation’s nonperforming loans to total loans ratio continues to be favorable compared to peer institutions. See the “Allowance for Loan Losses” section for further discussion of credit review procedures and changes in nonperforming loans.

Allowance for Loan Losses

The allowance for loan losses is established by provisions for losses in the loan portfolio as well as overdrafts in deposit accounts. These provisions are charged against current income. Loans and overdrafts deemed not collectible are charged off against the allowance while any subsequent collections are recorded as recoveries and increase the allowance.

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The following table presents activity within the allowance for loan losses during the years ended December 31, 2017, 2016, and 2015 (dollars in thousands):

	2017			2016			2015
Balance at beginning of period	$	16,330		$	16,737		$	17,373
Charge-offs:
Commercial, industrial, and agricultural		(544	)		(601	)		(307	)
Commercial mortgages		(116	)		(201	)		(486	)
Residential real estate		(466	)		(499	)		(632	)
Consumer		(2,555	)		(3,324	)		(1,956	)
Credit cards		(144	)		(96	)		(116	)
Overdrafts		(252	)		(240	)		(221	)
		(4,077	)		(4,961	)		(3,718	)
Recoveries:
Commercial, industrial, and agricultural		235			89			267
Commercial mortgages		197			8			52
Residential real estate		78			93			8
Consumer		161			122			96
Credit cards		27			22			14
Overdrafts		87			71			85
		785			405			522
Net charge-offs		(3,292	)		(4,556	)		(3,196	)
Provision for loan losses		6,655			4,149			2,560
Balance at end of period	$	19,693		$	16,330		$	16,737
Loans, net of unearned income	$	2,145,959		$	1,873,536		$	1,577,798
Allowance to net loans		0.92%			0.87%			1.06%

The adequacy of the allowance for loan losses is subject to a formal analysis by the Credit Administration and Finance Departments of the Corporation. As part of the formal analysis, delinquencies and losses are monitored monthly. The loan portfolio is divided into several categories in order to better analyze the entire pool. First, impaired loans are selected and that group of loans is given a specific reserve. The remaining loans are pooled, by category, into these segments:

Reviewed

• Commercial, industrial, and agricultural

• Commercial mortgages

Homogeneous

• Residential real estate

• Consumer

• Credit cards

• Overdrafts

The reviewed loan pools are further segregated into three categories: special mention, substandard, and doubtful. Historical loss factors are calculated for each reviewed pool, excluding overdrafts, based on the previous eight quarters of experience. The homogeneous pools are evaluated by analyzing the historical loss factors from the most previous quarter end and the two most recent year ends.

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The historical loss factors for both the reviewed and homogeneous pools are adjusted based on these six qualitative factors:

• Levels of and trends in delinquencies, nonaccrual loans, and classified loans;

• Trends in volume and terms of loans;

• Effects of any changes in lending policies and procedures;

• Experience, ability and depth of management;

• National and local economic trends and conditions; and

• Concentrations of credit.

The methodology described above was created using the experience of our Credit Administration and Finance Departments, guidance from the regulatory agencies, expertise of our third party loan review provider, and discussions with our peers. The resulting factors are applied to the pool balances in order to estimate the probable risk of loss within each pool.

As a result of the application of these procedures, the allocation of the allowance for loan losses was as follows at December 31, 2017, 2016, and 2015 (in thousands):

	2017		2016		2015
Commercial, industrial, and agricultural	$	6,160	$	5,428	$	6,035
Commercial mortgages		9,007		6,753		5,605
Residential real estate		2,003		1,653		2,475
Consumer		2,179		2,215		2,371
Credit cards		120		93		90
Overdrafts		194		188		161
Total	$	19,693	$	16,330	$	16,737

Throughout 2017, the Corporation evaluated its provision and allowance for loan losses in light of changes in reserves required for impaired loans, changes in nonperforming loans, and growth in loans outstanding. Note 5 to the consolidated financial statements provides further disclosure of loan balances by portfolio segment as of December 31, 2017 and 2016, as well as the nature and scope of loans modified in a troubled debt restructuring during 2017 and 2016 and the related effect on the provision and allowance for loan losses.

During the year ended December 31, 2017, the Corporation recorded a provision for loan losses of $6.7 million, as compared to a provision for loan losses of $4.1 million for the year ended December 31, 2016. Net chargeoffs during the year ended December 31, 2017 were $3.3 million, compared to net chargeoffs of $4.6 million during the year ended December 31, 2016, and the ratio of net chargeoffs to average loans was 0.16% and 0.27% for the years ended December 31, 2017 and 2016, respectively.

CNB Bank net chargeoffs totaled $2.2 million and $1.7 million during the years ended December 31, 2017 and 2016, or 0.06% and 0.10%, respectively, of average CNB Bank loans. Holiday Financial Services Corporation, CNB’s consumer discount company, recorded net chargeoffs totaling $1.1 million and $2.9 million during the years ended December 31, 2017 and 2016, respectively.

In 2017, one commercial real estate loan that was impaired at year end 2016 but still on accrual status was placed on nonaccrual status as a result of further deterioration in the financial condition of the

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borrower. The additional provision for loan losses recorded in 2017 related to this loan was $2.9 million, including $1.6 million in the fourth quarter of 2017, which was based on the most current financial information available from the borrower. In 2017, CNB also increased its provision for loan losses as a result of stronger organic loan growth compared to 2016.

Prudent business practices dictate that the level of the allowance, as well as corresponding charges to the provision for loan losses, should be commensurate with identified areas of risk within the loan portfolio and the attendant risks inherent therein. The quality of the credit risk management function and the overall administration of this vital segment of the Corporation’s assets are critical to the ongoing success of the Corporation.

The previously mentioned analysis considered numerous historical and other factors to analyze the adequacy of the allowance and charges against the provision for loan losses. Management paid special attention to a section of the analysis that compared and plotted the actual level of the allowance against the aggregate amount of loans adversely classified in order to compute the estimated probable losses associated with those loans. By noting the “spread” at that time, as well as prior periods, management can evaluate the current adequacy of the allowance as well as evaluate trends that may be developing. The volume and composition of the Corporation’s loan portfolio continue to reflect growth in commercial credits including commercial real estate loans.

As mentioned in the “Loans” section of this analysis, management continues to focus on commercial lending as part of its strategic growth initiatives. However, management must also consider the fact that the inherent risk is more pronounced in these types of credits and is also driven by the economic environment of its market areas.

Management believes that both its 2017 provision and allowance for loan losses were reasonable and adequate to absorb probable incurred losses in its portfolio at December 31, 2017.

Premises and Equipment

During the years ended December 31, 2017 and 2016, the Corporation invested $5.2 million and $10.1 million, respectively, in its physical infrastructure through the purchase of land, buildings, and equipment. The Corporation completed the construction of a full-service banking facility in Worthington, Ohio in 2016 that also houses the FCBank leadership and administrative teams. In addition, the construction of full-service branches in Altoona, Pennsylvania and Ashtabula, Ohio were substantially complete by December 31, 2016, and both locations opened for business in February 2017. Premises and equipment with a fair value of $3.2 million were recorded in 2016 in conjunction with the acquisition of Lake National Bank.

Bank Owned Life Insurance

The Corporation has periodically purchased Bank Owned Life Insurance (“BOLI”). The policies cover executive officers and a select group of other employees with the Bank being named as beneficiary. Earnings from BOLI assist the Corporation in offsetting its benefit costs. Additional BOLI of $10.0 million was purchased during the year ended December 31, 2017, no BOLI was purchased during the year ended December 31, 2016, and BOLI with a fair value of $2.2 million was acquired from Lake National Bank during the year ended December 31, 2016.

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Funding Sources

Although the Corporation considers short-term borrowings and long-term debt when evaluating funding sources, traditional deposits continue to be the main source for funding.

(dollars in thousands)	Percentage change 2017 vs. 2016			Percentage change 2016 vs. 2015			2017		2016		2015
Demand, Non interest bearing		11.0	%		10.0	%	$	321,858	$	289,922	$	263,639
Demand, Interest bearing		4.1	%		23.4	%		565,399		543,388		440,174
Savings deposits		(4.0	%)		2.8	%		915,587		953,438		927,074
Time deposits		58.2	%		25.3	%		364,971		230,774		184,166
Total		7.4	%		11.2	%	$	2,167,815	$	2,017,522	$	1,815,053

During the year of 2017, the Corporation ran time deposit specials resulting in the both new deposit inflow and a transfer from savings balances. Organic deposit growth in 2016 was 3.2%, and the Corporation acquired deposits from Lake National Bank in 2016 totaling $139.8 million.

Periodically, the Corporation utilizes term borrowings from the Federal Home Loan Bank (FHLB) and other lenders to meet funding obligations or match fund certain loan assets. The terms of these borrowings are detailed in Note 11 to the consolidated financial statements.

During the year of 2016, the Corporation repaid FHLB long-term borrowings totaling $40.0 million which carried interest rates ranging from 3.97% to 4.60% and incurred an early repayment penalty of $1.5 million. Resulting interest expense savings for 2016 and 2017 totaled an aggregate of $1.9 million.

In September 2016, the Corporation completed a private placement of $50 million in aggregate principal amount of fixed-to-floating rate subordinated notes. The notes will mature in October 2026, and will initially bear interest at a fixed rate of 5.75% per annum, payable semi-annually in arrears, to, but excluding, October 15, 2021, and thereafter to, but excluding, the maturity date or earlier redemption, the interest rate shall reset quarterly to an interest rate per annum equal to the then current three-month LIBOR rate plus 455 basis points. These subordinated notes were designed to qualify as Tier 2 capital under the Federal Reserve’s capital guidelines and were given an investment grade rating of BBB- by Kroll Bond Rating Agency. The Corporation injected the net proceeds from the subordinated notes into its bank subsidiary, CNB Bank, and intends to use the capital for general corporate purposes, including loan growth, additional liquidity, and working capital.

Shareholders’ Equity and Capital Ratios and Metrics

The Corporation’s capital continues to provide a base for profitable growth. In 2017, the Corporation earned $23.9 million and declared dividends of $10.1 million, resulting in a dividend payout ratio of 42.3% of net income.

In February 2017, the Corporation completed an at-the-market common stock issuance. A total of 834,896 shares of the Corporation’s common stock were sold at a weighted average price of approximately $23.96, representing gross proceeds to the Corporation of $20.0 million. Net proceeds from the transaction, after the sales commission and other expenses, were $19.3 million, which will be used for general corporate purposes, including loan growth, additional liquidity, and working capital.

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The Corporation has complied with the standards of capital adequacy mandated by government regulations. Bank regulators have established “risk-based” capital requirements designed to measure capital adequacy. Risk-based capital ratios reflect the relative risks of various assets banks hold in their portfolios. A weight category of 0% (lowest risk assets), 20%, 50%, 100% or 150% (highest risk assets), is assigned to each asset on the balance sheet.

The Corporation’s capital ratios and book value per common share at December 31, 2017 and 2016 are as follows:

	2017			2016
Total risk-based capital ratio		14.32	%		14.05	%
Tier 1 capital ratio		10.97	%		10.49	%
Common equity tier 1 ratio		10.00	%		9.41	%
Leverage ratio		8.45	%		7.85	%
Tangible common equity/tangible assets (1)		7.46	%		6.72	%
Book value per share	$	15.98		$	14.64
Tangible book value per share (1)	$	13.33		$	11.76

(1) 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. The Corporation 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).

	December 31, 2017		December 31, 2016
Shareholders’ equity	$	243,910	$	211,784
Less goodwill		38,730		38,730
Less core deposit intangible		1,625		2,854
Tangible common equity	$	203,555	$	170,200
Total assets	$	2,768,773	$	2,573,821
Less goodwill		38,730		38,730
Less core deposit intangible		1,625		2,854
Tangible assets	$	2,728,418	$	2,532,237
Ending shares outstanding		15,264,740		14,467,815
Tangible book value per share	$	13.33	$	11.76
Tangible common equity/tangible assets		7.46%		6.72%

Liquidity

Liquidity measures an organization’s ability to meet its cash obligations as they come due. The consolidated statements of cash flows included in the accompanying financial statements provide

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analysis of the Corporation’s cash and cash equivalents and the sources and uses of cash. Additionally, the portion of the loan portfolio that matures within one year and securities with maturities within one year in the investment portfolio are considered part of the Corporation’s liquid assets. Liquidity is monitored by both management and the Board’s ALCO, which establishes and monitors ranges of acceptable liquidity. Also, the Bank is a member of FHLB which provides the Bank with a total borrowing line of approximately $790 million with approximately $533 million available at December 31, 2017. Management believes that the Corporation’s current liquidity position is acceptable.

Year Ended December 31, 2017 vs. Year Ended December 31, 2016

Overview of the Income Statement

The Corporation had net income of $23.9 million for 2017 compared to $20.5 million for 2016. Net interest income increased $10.2 million, or 12.6%, and non-interest income increased $3.7 million, or 21.2%. The provision for loan losses increased by $2.5 million, or 60.4%, and non-interest expenses increased by $2.9 million, or 4.3%. The earnings per diluted share were $1.57 in 2017 and $1.42 in 2016. The return on assets and the return on equity for 2017 were 0.89% and 9.97% as compared to 0.85% and 9.69% for 2016.

Interest Income and Expense

Net interest margin on a fully tax equivalent basis was 3.82% and 3.78% for the years ended December 31, 2017 and 2016, respectively.

As described in the Funding Sources section of Management’s Discussion and Analysis, the Corporation issued $50 million of subordinated debt on September 30, 2016. The interest expense on this subordinated debt was $3.2 million for the 2017 compared to $783 thousand for 2016.

Provision for Loan Losses

The Corporation recorded a provision for loan losses of $6.7 million in 2017 compared to $4.1 million in 2016. Net loan charge-offs were $3.3 million during the year ended December 31, 2017 compared to $4.6 million during the year ended December 31, 2016. As disclosed in the Allowance for Loan Losses section of Management’s Discussion and Analysis, the Corporation recorded the provision for loan losses based on management’s evaluation of impaired loans and consideration of trends in criticized and classified loans and historical loan losses.

Management believes the charges to the provision in 2017 are appropriate and the allowance for loan losses is adequate to absorb probable incurred losses in our portfolio as of December 31, 2017.

Non-Interest Income

Excluding the effects of securities transactions, non-interest income was $19.0 million for the year ended December 31, 2017, compared to $16.2 million for the year ended December 31, 2016. Net realized gains on available-for-sale securities were $1.5 million during the year ended December 31, 2017, compared to $1.0 million during the year ended December 31, 2016. Net realized and unrealized gains on trading securities were $881 thousand during the year ended December 31, 2017, compared to net realized and unrealized gains of $503 thousand during the year ended December 31, 2016.

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As a result of CNB’s continued focus on growing its Private Client Solutions division, wealth and asset management revenues were $3.7 million in 2017, an increase of 20.6% from $3.1 million in 2016. During 2017, CNB recorded $1.7 million in income from bank owned life insurance policies, including $387 thousand representing the death proceeds on life insurance policies in excess of the cash surrender value, compared to $1.1 million in 2016.

On May 19, 2017, CNB completed its previously announced sale of the Mt. Hope, Ohio branch to First Federal Community Bank. CNB transferred loans totaling $7,800, fixed assets totaling $100, and deposits totaling $7,400 in conjunction with the sale of the branch and realized a gain of $536 based on the 8% deposit premium paid by First Federal Community Bank.

Non-Interest Expense

Throughout 2017 and 2016, CNB made numerous infrastructure, personnel, and technology investments to facilitate its continued growth. Total non-interest expenses were $70.0 million during the year ended December 31, 2017, compared to $67.1 million during the year ended December 31, 2016. In order to better serve our customers and improve operational efficiencies, CNB completed a core processing system upgrade in May 2016. Included in non-interest expenses in 2016 are $3.7 million of non-recurring items, with costs associated with our core processing system upgrade of $1.7 million, merger related expenses of $486 thousand, and a prepayment penalty associated with the early payoff of long-term borrowings of $1.5 million.

Salaries and benefits expense increased $3.8 million, or 11.9%, during the year ended December 31, 2017 compared to the year ended December 31, 2016. As of December 31, 2017, the Corporation had 512 full-time equivalent staff, compared to 486 full-time equivalent staff as of December 31, 2016. The staff added during this period included both customer-facing personnel such as business development and wealth management officers, as well as support department personnel.

Year Ended December 31, 2016 vs. Year Ended December 31, 2015

Overview of the Income Statement

The Corporation had net income of $20.5 million for 2016 compared to $22.2 million for 2015. Net interest income increased $6.6 million, or 8.8%, and non-interest income increased $597 thousand, or 3.5%. The provision for loan losses increased by $1.6 million, or 62.1%, and non-interest expenses increased by $8.4 million, or 14.2%. The earnings per diluted share were $1.42 in 2016 and $1.54 in 2015. The return on assets and the return on equity for 2016 were 0.85% and 9.69% as compared to 0.99% and 11.23% for 2015. As described in Note 2 to the consolidated financial statements, Lake National Bank’s results of operations were included in the Corporation’s results beginning July 16, 2016.

Interest Income and Expense

Net interest margin on a fully tax equivalent basis was 3.78% and 3.73% for the years ended December 31, 2016 and 2015, respectively. Net accretion included in loan interest income in 2016 was $1.8 million, resulting in an increase in the net interest margin of 8 basis points. Net accretion included in loan interest income in 2015 was $2.2 million, resulting in an increase in the net interest margin of 11 basis points.

43

As described in the Funding Sources section of Management’s Discussion and Analysis, the Corporation issued $50 million of subordinated debt on September 30, 2016. The interest expense on this subordinated debt was $783 thousand for the year ended December 31, 2016.

Changes in average earning assets, interest bearing liabilities, and resulting net interest income in 2016 compared to 2015 were a result of organic growth, the issuance of the subordinated debt described previously, and the acquisition of Lake National Bank in the third quarter of 2016.

Provision for Loan Losses

The Corporation recorded a provision for loan losses of $4.1 million in 2016 compared to $2.6 million in 2015. Net loan charge-offs were $4.6 million during the year ended December 31, 2016 compared to $3.2 million during the year ended December 31, 2015. As disclosed in the Allowance for Loan Losses section of Management’s Discussion and Analysis, the Corporation recorded the provision for loan losses based on management’s evaluation of impaired loans and consideration of trends in criticized and classified loans and historical loan losses.

Management believes the charges to the provision in 2016 are appropriate and the allowance for loan losses are adequate to absorb probable incurred losses in our portfolio as of December 31, 2016.

Non-Interest Income

Excluding the effects of securities transactions, non-interest income was $16.2 million for the year ended December 31, 2016, compared to $16.6 million for the year ended December 31, 2015. Net realized gains on available-for-sale securities were $1.0 million during the year ended December 31, 2016, compared to $666 thousand during the year ended December 31, 2015. Net realized and unrealized gains on trading securities were $503 thousand during the year ended December 31, 2016, compared to net realized and unrealized losses of $213 thousand during the year ended December 31, 2015.

Mortgage banking fees increased to $1.1 million for the year ended December 31, 2016, from $746 thousand during the year ended December 31, 2015 as the Corporation focused on selling an increased volume of mortgage loans in the secondary market, while retaining the servicing of the mortgages and resulting customer relationships.

Non-Interest Expense

Throughout 2016 and 2015, CNB made numerous infrastructure, personnel, and technology investments to facilitate its continued growth. Total non-interest expenses were $67.1 million during the year ended December 31, 2016, compared to $58.8 million during the year ended December 31, 2015. In order to better serve our customers and improve operational efficiencies, CNB completed a core processing system upgrade in May 2016. Included in non-interest expenses in 2016 are $3.7 million of non-recurring items, with costs associated with our core processing system upgrade of $1.7 million, merger related expenses of $486 thousand, and a prepayment penalty associated with the early payoff of long-term borrowings of $1.5 million. Costs for similar items in 2015 totaled $416 thousand in the aggregate.

Salaries and benefits expense increased $2.6 million, or 8.9%, during the year ended December 31, 2016 compared to the year ended December 31, 2015. As of December 31, 2016, the Corporation had 486 full-time equivalent staff, compared to 436 full-time equivalent staff as of December 31, 2015. The staff added during this period included both customer-facing personnel such as business development

44

and wealth management officers, as well as support department personnel. In addition, the Corporation retained 20 employees in connection with its acquisition of Lake National Bank.

Income Tax Expense

Income taxes were $12.4 million in 2017, compared to $7.2 million in 2016 and $8.3 million in 2015. The effective tax rates were 34.2%, 25.9%, and 27.2% for 2017, 2016, and 2015, respectively. The effective tax rate for the periods differed from the federal statutory rate of 35.0% principally as a result of tax-exempt income from securities and loans as well as earnings from bank owned life insurance. In addition, the impact of the recent reduction in the federal corporate income tax rate to 21%, effective January 1, 2018, resulted in a $3.01 million income tax expense in 2017 related to the reduction in the carrying value of the net deferred tax asset.

Contractual Obligations and Commitments

The Corporation has various financial obligations, including contractual obligations and commitments that may require future cash payments. The following table presents, as of December 31, 2017, significant fixed and determinable contractual obligations to third parties by payment date.

Further discussion of the nature of each obligation is included in the referenced note to the consolidated financial statements.

	Payments Due In
(dollars in thousands)	Note Reference		One Year or Less		One to Three Years		Three to Five Years		Over Five Years		Total
Deposits without a stated maturity			$	1,802,844	$	0	$	0	$	0	$	1,802,844
Certificates of deposit		10		125,809		220,401		14,835		3,926		364,971
FHLB and other borrowings		11		62,242		85,067		156,671		23,999		327,979
Operating leases		7		1,167		1,857		1,314		3,530		7,868
Sale-leaseback		7		105		210		210		420		945
Subordinated debentures		11		0		0		0		70,620		70,620

The Corporation’s operating lease obligations represent short and long-term lease and rental payment for facilities. The Corporation’s sale-leaseback obligation represents a long-term real estate lease associated with one of the Corporation’s branch office locations.

The Corporation also has obligations under its postretirement plan for health care and supplemental executive retirement plan as described in Note 14 to the consolidated financial statements. The postretirement benefit payments represent actuarially determined future benefit payments to eligible plan participants. The supplemental executive retirement plan allocates expenses over the participant’s service period. The Corporation reserves the right to terminate these plans at any time.

Off-Balance Sheet Arrangements

See Note 19 to the consolidated financial statements for information about our off-balance sheet arrangements.

Applications of Critical Accounting Policies

The Corporation’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the U.S. and follow general practices within the industries in which the

45

Corporation operates. Application of these principles requires management to make estimates or judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates are based on information available as of the date of the financial statements; accordingly, as this information changes, the financial statements could reflect different estimates or judgments. Certain policies inherently have a greater reliance on the use of estimates, and as such have a greater possibility of producing results that could be materially different than originally reported. Estimates or judgments are necessary when assets and liabilities are required to be recorded at fair value, when a decline in the value of an asset not carried on the financial statements at fair value warrants an impairment write-down or valuation reserve to be established, or when an asset or liability needs to be recorded contingent upon a future event. Carrying assets and liabilities at fair value inherently results in more financial statement volatility. The fair values and the information used to record valuation adjustments for certain assets and liabilities are based either on quoted market prices or are provided by other third party sources, when available. When third-party information is not available, valuation adjustments are estimated in good faith by management primarily through the use of internal cash flow modeling techniques.

The most significant accounting policies used by the Corporation are presented in Note 1 to the consolidated financial statements. These policies, along with the disclosures presented in the other financial statement notes and in this financial review, provide information on how significant assets and liabilities are valued in the financial statements and how those values are determined. Management views critical accounting policies to be those which are highly dependent on subjective or complex judgments, estimates and assumptions, and where changes in those estimates and assumptions could have a significant impact on the financial statements.

A material estimate that is susceptible to significant change is the determination of the allowance for loan losses. The Corporation’s methodology for determining the allowance for loan losses is described previously in Management’s Discussion and Analysis. Given the subjective nature of identifying and valuing loan losses, it is likely that well-informed individuals could make materially different assumptions and could therefore calculate a materially different allowance value. While management uses available information to recognize losses on loans, changes in economic conditions may necessitate revisions in future years. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Corporation’s allowance for loan losses. Such agencies may require the Corporation to recognize adjustments to the allowance based on their judgments of information available to them at the time of their examination.

Another material estimate is the calculation of fair values of the Corporation’s debt securities. For most of the Corporation’s debt securities, the Corporation receives estimated fair values from an independent valuation service or from brokers. In developing fair values, the valuation service and the brokers use estimates of cash flows, based on historical performance of similar instruments in similar interest rate environments. Based on experience, management is aware that estimated fair values of debt securities tend to vary among brokers and other valuation services.

Finally, the fair value of assets acquired and liabilities assumed in connection with the acquisition of FC Banc Corp. and Lake National Bank, including the associated goodwill that was recorded, required the use of material estimates. Specifically, the fair values of loans, the core deposit intangible asset, premises and equipment, and time deposits were susceptible to estimation and management’s judgment about real estate and equipment values, as well as the amount and timing of future cash flows associated with loans and deposits.

46

ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a financial institution, the Corporation’s primary source of market risk is interest rate risk, which is the exposure to fluctuations in the Corporation’s future earnings resulting from changes in interest rates. This exposure is correlated to the repricing characteristics of the Corporation’s portfolio of assets and liabilities. Each asset or liability reprices either at maturity or during the life of the instrument.

The principal purpose of asset/liability management is to maximize current and future net interest income within acceptable levels of interest rate risk while satisfying liquidity and capital requirements. Net interest income is enhanced by increasing the net interest margin and by the growth in earning assets. As a result, the primary goal of interest rate risk management is to maintain a balance between risk and reward such that net interest income is maximized while risk is maintained at an acceptable level.

The Corporation uses an asset-liability management model to measure the effect of interest rate changes on its net interest income. The Corporation’s management also reviews asset-liability maturity gap and repricing analyses regularly. The Corporation does not always attempt to achieve a precise match between interest sensitive assets and liabilities because it believes that an actively managed amount of interest rate risk is inherent and appropriate in the management of the Corporation’s profitability.

Asset-liability modeling techniques and simulation involve assumptions and estimates that inherently cannot be measured with precision. Key assumptions in these analyses include maturity and repricing characteristics of assets and liabilities, prepayments on amortizing assets, non-maturing deposit sensitivity, and loan and deposit pricing. These assumptions are inherently uncertain due to the timing, magnitude, and frequency of rate changes and changes in market conditions and management strategies, among other factors. However, the analyses are useful in quantifying risk and provide a relative gauge of the Corporation’s interest rate risk position over time.

Management reviews interest rate risk on a quarterly basis and reports to the ALCO. This review includes earnings shock scenarios whereby interest rates are immediately increased and decreased by 100, 300, and 400 basis points. These scenarios, detailed in the table below, indicate that there would not be a significant variance in net interest income over a one-year period due to interest rate changes; however, actual results could vary significantly. At December 31, 2017 and 2016, all interest rate risk levels according to the model were within the tolerance limits of ALCO approved policy. In addition, the table does not take into consideration changes that management would make to realign its assets and liabilities in the event of an unexpected changing interest rate environment. Due to the historically low interest rate environment, the 300 and 400 basis point declining interest rate scenarios have been excluded from the table.

December 31, 2017				December 31, 2016
Change in Basis Points	% Change in Net Interest Income			Change in Basis  Points			% Change in Net Interest Income
400		6.4	%		400			(4.9	%)
300		5.1	%		300			(2.9	%)
100		1.9	%		100			0.7	%
(100)		(2.4	%)		(100	)		(1.4	%)

47

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

CONSOLIDATED BALANCE SHEETS

Dollars in thousands, except share data

	December 31,
	2017			2016
ASSETS
Cash and due from banks	$	33,146		$	26,937
Interest bearing deposits with other banks		2,199			2,246
Total cash and cash equivalents		35,345			29,183
Securities available for sale		409,709			495,835
Trading securities		7,150			4,858
Loans held for sale		852			7,528
Loans		2,149,848			1,876,966
Less: unearned discount		(3,889	)		(3,430	)
Less: allowance for loan losses		(19,693	)		(16,330	)
Net loans		2,126,266			1,857,206
FHLB and other equity interests		21,517			19,186
Premises and equipment, net		50,715			49,522
Bank owned life insurance		55,035			44,273
Mortgage servicing rights		1,387			1,391
Goodwill		38,730			38,730
Core deposit intangible		1,625			2,854
Accrued interest receivable and other assets		20,442			23,255
Total Assets	$	2,768,773		$	2,573,821
LIABILITIES AND SHAREHOLDERS’ EQUITY
Non-interest bearing deposits	$	321,858		$	289,922
Interest bearing deposits		1,845,957			1,727,600
Total deposits		2,167,815			2,017,522
Short-term borrowings		34,416			103,969
FHLB and other long-term borrowings		222,943			133,035
Subordinated debentures		70,620			70,620
Deposits held for sale		0			6,456
Accrued interest payable and other liabilities		29,069			30,435
Total liabilities		2,524,863			2,362,037
Commitments and contingent liabilities		0			0
Common stock, $0 par value; authorized 50,000,000 shares; issued 15,308,378 shares at December 31, 2017 and 14,473,482 shares at December 31, 2016		0			0
Additional paid in capital		97,042			77,737
Retained earnings		148,298			134,295
Treasury stock, at cost (43,638 shares for 2017 and 5,667 for 2016)		(1,087	)		(127	)
Accumulated other comprehensive loss		(343	)		(121	)
Total shareholders’ equity		243,910			211,784
Total Liabilities and Shareholders’ Equity	$	2,768,773		$	2,573,821

See Notes to Consolidated Financial Statements

48

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

Dollars in thousands, except per share data

	Year ended December 31,
	2017			2016			2015
Interest and Dividend Income:
Loans including fees	$	97,005		$	81,209		$	71,814
Securities:
Taxable		8,165			9,134			10,977
Tax-exempt		2,983			3,390			3,778
Dividends		721			582			609
Total interest and dividend income		108,874			94,315			87,178
Interest Expense:
Deposits		9,312			8,470			8,498
Borrowed funds		4,021			2,981			3,222
Subordinated debentures (includes $288, $340, and $378 accumulated other comprehensive income reclassification for change in fair value of interest rate swap agreements in 2017, 2016, and 2015)		4,032			1,577			751
Total interest expense		17,365			13,028			12,471
Net Interest Income		91,509			81,287			74,707
Provision for Loan Losses		6,655			4,149			2,560
Net Interest Income After Provision for Loan Losses		84,854			77,138			72,147
Non-Interest Income:
Service charges on deposit accounts		4,809			4,297			4,442
Other service charges and fees		2,454			2,539			3,089
Wealth and asset management fees		3,724			3,087			2,977
Net realized gains on available-for-sale securities (includes $1,543, $1,005, and $666 accumulated other comprehensive income reclassifications for net realized gains on available-for-sale securities in 2017, 2016, and 2015)		1,543			1,005			666
Net realized gains (losses) on trading securities		93			70			(211	)
Net unrealized gains (losses) on trading securities		788			433			(2	)
Mortgage banking		906			1,095			746
Bank owned life insurance		1,659			1,082			1,194
Card processing and interchange income		3,763			3,396			3,417
Gain on sale of branch		536			0			0
Other		1,160			687			776
Total non-interest income		21,435			17,691			17,094
Non-Interest Expenses:
Salaries		26,205			23,472			21,652
Employee benefits (includes $192, $184, and $173 accumulated other comprehensive income reclassifications for net amortization of actuarial losses in 2017, 2016, and 2015)		9,821			8,722			7,911
Net occupancy expense		9,546			8,064			7,000
Amortization of core deposit intangible		1,229			1,125			1,008
Data processing		3,944			4,447			4,297
State and local taxes		2,815			2,171			1,868
Legal, professional and examination fees		1,819			1,772			1,553
Advertising		2,243			1,799			1,580
FDIC insurance		1,182			1,229			1,278
Directors fees and benefits		915			1,582			812
Prepayment penalties — long-term borrowings		0			1,506			0
Core processing conversion costs		0			1,693			108
Merger costs		0			486			308
Card processing and interchange expenses		2,116			1,889			2,295
Other		8,202			7,161			7,082
Total non-interest expenses		70,037			67,118			58,752
Income Before Income Taxes		36,252			27,711			30,489
Income Tax Expense (includes $372, $168, and $40 income tax expense reclassification items in 2017, 2016, and 2015)		12,392			7,171			8,292
Net Income		23,860			20,540			22,197
Other Comprehensive Income (Loss):
Net change in unrealized (losses) gains on available-for-sale securities, net of reclassification and tax		(1,004	)		(2,136	)		793
Change in actuarial gain (loss), for post-employment health care plan, net of amortization and tax		825			(64	)		(90	)
Change in fair value of interest rate swap agreements designated as a cash flow hedge, net of interest and tax		194			180			137
Total other comprehensive (loss) income		15			(2,020	)		840
Comprehensive Income	$	23,875		$	18,520		$	23,037
Earnings Per Share:
Basic	$	1.57		$	1.42		$	1.54
Diluted		1.57			1.42			1.54

See Notes to Consolidated Financial Statements

49

CONSOLIDATED STATEMENTS OF CASH FLOWS

Dollars in thousands

	Year ended December 31,
	2017			2016			2015
Cash Flows From Operating Activities:
Net income	$	23,860		$	20,540		$	22,197
Adjustments to reconcile net income to net cash provided by operations:
Provision for loan losses		6,655			4,149			2,560
Depreciation and amortization of premises and equipment, core deposit intangible, and mortgage servicing rights		5,242			4,484			4,039
Amortization and accretion of securities premiums and discounts, deferred loan fees and costs, net yield and credit mark on acquired loans, and unearned income		(1,202	)		(1,328	)		993
Deferred taxes		3,385			1,023			376
Net realized gains on sales of available-for-sale securities		(1,543	)		(1,005	)		(666	)
Net realized and unrealized losses (gains) on trading securities		(881	)		(503	)		213
Proceeds from sale of trading securities		1,091			540			2,129
Purchase of trading securities		(2,502	)		(319	)		(2,413	)
Gain on sale of branch		(536	)		0			0
Gain on sale of loans		(545	)		(818	)		(630	)
Net losses on dispositions of premises and equipment and foreclosed assets		(107	)		134			7
Proceeds from sale of loans		24,285			33,045			14,927
Origination of loans held for sale		(25,231	)		(31,255	)		(15,171	)
Income on bank owned life insurance, including death benefit of proceeds in excess of cash surrender value		(1,659	)		(1,082	)		(1,194	)
Stock-based compensation expense		928			820			621
Contribution of treasury stock		0			150			120
Changes in:
Accrued interest receivable and other assets		(1,175	)		(3,906	)		93
Accrued interest payable and other liabilities		698			2,095			5,435
Net Cash Provided By Operating Activities		30,763			26,764			33,636
Cash Flows from Investing Activities:
Net decrease in interest bearing time deposits with other banks		0			0			225
Proceeds from maturities, prepayments and calls of available-for-sale securities		92,302			63,837			78,707
Proceeds from sales of available-for-sale securities		16,340			4,420			105,066
Purchase of available-for-sale securities		(23,689	)		(21,513	)		(45,120	)
Loan origination and payments, net		(273,972	)		(182,566	)		(224,470	)
Purchase of bank owned life insurance		(10,000	)		0			0
Proceeds from death benefit of BOLI policies		897			0			0
Net cash received from sale of branch		1,079			0			0
Net cash paid for Lake National Bank acquisition		0			(2,866	)		0
Purchase of FHLB and other equity interests		(2,331	)		(2,628	)		(9,226	)
Purchase of premises and equipment		(5,215	)		(10,125	)		(6,751	)
Proceeds from the sale of premises and equipment and foreclosed assets		938			558			855
Net Cash Used In Investing Activities		(203,651	)		(150,883	)		(100,714	)
Cash Flows From Financing Activities:
Net change in:
Checking, money market and savings accounts		16,096			79,745			(39,285	)
Certificates of deposit		134,197			(10,603	)		7,259
Deposits held for sale		1,079			0			0
Purchase of treasury stock		(1,877	)		(44	)		(868	)
Proceeds from stock offering, net of issuance costs		19,294			0			0
Cash dividends paid		(10,094	)		(9,546	)		(9,515	)
Proceeds from long-term borrowings		160,000			80,000			50,000
Repayments on long-term borrowings		(70,092	)		(81,317	)		(21,472	)
Net change in short-term borrowings		(69,553	)		17,806			80,292
Proceeds from subordinated debentures		0			50,000			0
Net Cash Provided By Financing Activities		179,050			126,041			66,411
Net Increase (Decrease) in Cash and Cash Equivalents		6,162			1,922			(667	)
Cash and Cash Equivalents, Beginning		29,183			27,261			27,928
Cash and Cash Equivalents, Ending	$	35,345		$	29,183		$	27,261
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest	$	17,481		$	13,284		$	12,502
Income taxes		7,810			3,966			5,431
Supplemental Noncash Disclosures:
Transfers to other real estate owned	$	630		$	120		$	806
Grant of restricted stock awards from treasury stock		984			896			803
Net liabilities assumed from Lake National Bank, excluding cash and cash equivalents		0			8,670			0
Net loans transferred to held for sale		0			7,319			0
Net deposits transferred to held for sale		0			6,456			0

See Notes to Consolidated Financial Statements

50

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

Dollars in thousands, except share and per share data

	Additional Paid-In Capital			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Total Share- holders’ Equity
Balance, January 1, 2015	$	78,022		$	110,619		$	(1,152	)	$	1,059		$	188,548
Net income					22,197									22,197
Other comprehensive income											840			840
Restricted stock award grants (48,300 shares)		(803	)					803
Stock based compensation expense		621												621
Purchase of treasury stock (51,052 shares)								(868	)					(868	)
Reissue of treasury stock (6,766 shares)		(13	)					103						90
Cash dividends declared ($0.66 per share)					(9,515	)								(9,515	)
Balance, December 31, 2015		77,827			123,301			(1,114	)		1,899			201,913
Net income					20,540									20,540
Other comprehensive loss											(2,020	)		(2,020	)
Restricted stock award grants (52,750 shares)		(896	)					896
Stock based compensation expense		820												820
Purchase of treasury stock (1,298 shares)								(44	)					(44	)
Reissue of treasury stock (7,933 shares)		(14	)					135						121
Cash dividends declared ($0.66 per share)					(9,546	)								(9,546	)
Balance, December 31, 2016		77,737			134,295			(127	)		(121	)		211,784
Net income					23,860									23,860
Reclassification of certain tax effects from accumulated other comprehensive income to retained earnings					237						(237	)
Other comprehensive income											15			15
Forfeiture of restricted stock award grants (2,482 shares)		67						(67	)
Restricted stock award grants (39,673 shares)		(984	)					984
Stock based compensation expense		928												928
Issuance of common stock, net of issuance costs (834,896 shares)		19,294												19,294
Purchase of treasury stock (75,162 shares)								(1,877	)					(1,877	)
Cash dividends declared ($0.66 per share)					(10,094	)								(10,094	)
Balance, December 31, 2017	$	97,042		$	148,298		$	(1,087	)	$	(343	)	$	243,910

See Notes to Consolidated Financial Statements

51

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)

1.  Summary of Significant Accounting Policies

Unless otherwise indicated, dollar amounts are in thousands, except per share data.

Business and Organization

CNB Financial Corporation (the “Corporation”) is headquartered in Clearfield, Pennsylvania, and provides a full range of banking and related services through its wholly owned subsidiary, CNB Bank (the “Bank”). In addition, the Bank provides trust and asset management services, including the administration of trusts and estates, retirement plans, and other employee benefit plans as well as a full range of wealth management services. The Bank serves individual and corporate customers and is subject to competition from other financial institutions and intermediaries with respect to these services. In addition to the Bank, the Corporation also operates a consumer discount loan and finance business through its wholly owned subsidiary, Holiday Financial Services Corporation (“Holiday”). The Corporation and these and its other subsidiaries are subject to examination by federal and state regulators. The Corporation’s market area is primarily concentrated in the central and northwest regions of the Commonwealth of Pennsylvania, the central and northeast regions of the state of Ohio and western New York.

Basis of Financial Presentation

The financial statements are consolidated to include the accounts of the Corporation and the Bank, CNB Securities Corporation, Holiday, and CNB Insurance Agency. All significant intercompany accounts and transactions have been eliminated in the consolidated financial statements. Certain prior period amounts have been reclassified to conform to the current period presentation. Reclassifications had no effect on prior year net income or shareholders’ equity.

Use of Estimates

To prepare financial statements in conformity with accounting principles generally accepted in the U.S., management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ.

Operating Segments

While the chief decision-makers monitor the revenue streams of the various products and services, operations are managed and financial performance is evaluated on a Corporation-wide basis, and operating segments are aggregated into one as operating results for all segments are similar. Accordingly, all of the financial service operations are considered by management to be aggregated in one reportable operating segment.

Securities

When purchased, securities are classified as held to maturity, trading or available for sale. Debt securities are classified as held to maturity when the Corporation has the positive intent and ability to

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hold the securities to maturity. Held to maturity securities are carried at amortized cost. Debt or equity securities are classified as trading when purchased principally for the purpose of selling them in the near term, or when the fair value option has been elected. Trading securities are recorded at fair value with changes in fair value included in earnings in non-interest income. Available for sale securities are those securities not classified as held to maturity or trading and are carried at their fair value. Unrealized gains and losses, net of deferred tax, on securities classified as available for sale are recorded as other comprehensive income. Management has not classified any debt securities as held to maturity.

The amortized cost of debt securities classified as held to maturity or available for sale is adjusted for the amortization of premiums and the accretion of discounts over the period through contractual maturity or, in the case of mortgage-backed securities and collateralized mortgage obligations, over the estimated life of the security. Such amortization is included in interest income from securities. Gains and losses on securities sold are recorded on the trade date and based on the specific identification method.

Declines in the fair value of debt securities below their cost that are other-than-temporary and attributable to credit losses are reflected in earnings. Other-than-temporary impairment losses that are not attributable to credit losses are reported as a component of accumulated other comprehensive income. In estimating other-than-temporary losses, management considers: the length of time and extent that fair value has been less than cost, the financial condition and near term prospects of the issuer, and the Corporation’s intent to sell, or whether it is more likely than not that it will be required to sell a security in an unrealized loss position before recovery of its amortized cost basis. If the Corporation intends to sell a security or it is more likely than not it will be required to sell a security before recovery of its amortized cost basis, the entire difference between amortized cost and fair value is recognized as impairment through earnings.

Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding.

Interest income is reported on the interest method and includes amortization of net deferred loan fees and costs over the loan term. Interest income on commercial, industrial, and agricultural loans, commercial mortgage loans, and residential real estate loans is discontinued at the time the loan is 90 days delinquent unless the credit is well-secured and in process of collection. Consumer loans are typically charged off no later than 180 days past due. Past due status is based on the contractual terms of the loan. Loans, including loans modified in a troubled debt restructuring, are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful. Nonaccrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.

All interest accrued but not received on loans placed on nonaccrual is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Under the cost-recovery method, interest income is not recognized until the loan balance is reduced to zero. Under the cash-basis method, interest income is recorded when the payment is received in cash. For all portfolio segments, loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

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Concentration of Credit Risk

Most of the Corporation’s business activity is with customers located within the Commonwealth of Pennsylvania and the states of Ohio and New York. Therefore, the Corporation’s exposure to credit risk is significantly affected by changes in the economies of Pennsylvania, Ohio, and New York.

Purchased Loans

The Corporation purchased loans in connection with its acquisition of FC Banc Corp. in 2013 and Lake National Bank in 2016, some of which had, at the acquisition date, shown evidence of credit deterioration since origination. These purchased credit impaired loans were recorded at the amount paid, such that there was no carryover of the seller’s allowance for loan losses.

Such purchased credit impaired loans are accounted for individually, and the Corporation estimates the amount and timing of expected cash flows for each loan. The expected cash flows in excess of the amount paid is recorded as interest income over the remaining life of the loan (accretable yield). The excess of the loan’s contractual principal and interest over expected cash flows is not recorded (nonaccretable difference).

Over the life of the loan, expected cash flows continue to be estimated. If the present value of expected cash flows is less than the carrying amount, a loss is recorded. If the present value of the expected cash flows is greater than the carrying amount, it is recognized as part of future interest income.

For loans purchased that did not show evidence of credit deterioration, the difference between the fair value of the loan at the acquisition date and the loan’s face value is being amortized as a yield adjustment over the estimated remaining life of the loan using the effective interest method.

Loans Held for Sale

Loans originated and intended for sale in the secondary market are carried at the lower of aggregate cost or fair value, as determined by outstanding commitments from investors. Net unrealized losses, if any, are recorded as a valuation allowance and charged to earnings.

Mortgage loans held for sale are generally sold with servicing rights retained. The carrying value of the mortgage loan sold is reduced by the amount allocated to the servicing right. Gains and losses on sales of mortgage loans are based on the difference between the selling price and the carrying value of the related loan sold.

Allowance for Loan Losses

The allowance for loan losses is a valuation allowance for probable incurred credit losses. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance account.

Management determines the adequacy of the allowance based on historical patterns of charge-offs and recoveries, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, industry experience, economic conditions, and other qualitative factors relevant to the collectability of the loan portfolio. While management believes that the allowance is adequate to absorb probable loan losses incurred at the balance sheet date, future adjustments may be necessary due to circumstances that differ substantially from the assumptions used in evaluating the adequacy of the allowance for loan losses.

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The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired. A loan is impaired when, based on current information and events, it is probable that the Corporation will be unable to collect all amounts due according to the contractual terms of the loan agreement. Loans for which the terms have been modified, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings and classified as impaired.

Commercial and commercial real estate loans are individually evaluated for impairment. If a loan is impaired, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Large groups of smaller balance homogeneous loans, such as consumer and residential real estate loans, are collectively evaluated for impairment, and accordingly, they are not separately identified for impairment disclosures. Troubled debt restructurings are measured at the present value of estimated future cash flows using the loan’s effective rate at inception. If a troubled debt restructuring is considered to be a collateral dependent loan, the loan is reported, net, at the fair value of the collateral. For troubled debt restructurings that subsequently default, the Corporation determines the amount of reserve in accordance with the accounting policy for the allowance for loan losses.

The general component of the allowance for loan losses covers non-impaired loans and loans collectively evaluated for impairment and is based on historical loss experience adjusted for current factors. The historical loss experience is determined by portfolio segment and is based on the migration analysis performed. This actual loss experience is supplemented with other factors based on the risks present for each portfolio segment. These historical loss factors include consideration of the following: levels of and trends in delinquencies, nonaccrual loans, and classified loans; trends in volume and terms of loans; effects of any changes in lending policies and procedures; experience, ability, and depth of management; national and local economic trends and conditions; and concentrations of credit.

The following portfolio segments, which are the same as the Corporation’s portfolio classifications and associated risk characteristics, have been identified:

● Commercial, industrial, and agricultural – risk characteristics include below average economic and employment conditions in many of the markets served by the Corporation, which has limited consumer spending.

● Commercial mortgages – the most significant risk characteristic is the subjectivity involved in real estate valuations for properties located in areas with low growth economies.

● Residential real estate – risk characteristics include slightly higher than historical levels of delinquencies and less than robust housing markets.

● Consumer – risk characteristics include continuing weakness in industrial employment in many of the markets served by the Corporation and low wage growth.

● Credit cards – the most significant risk characteristic is the unsecured nature of credit card loans.

● Overdrafts – risk characteristics include the Corporation’s continued deposit growth and overall economic conditions which may lead to a greater likelihood of overdrawn deposit accounts.

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Federal Home Loan Bank (FHLB) Stock

As a member of the Federal Home Loan Bank of Pittsburgh (“FHLB”), the Corporation is required to purchase and hold stock in the FHLB to satisfy membership and borrowing requirements. This stock is restricted in that it can only be sold to the FHLB or to another member institution, and all sales of FHLB stock must be at par. As a result of these restrictions, FHLB stock is unlike other investment securities insofar as there is no trading market for FHLB stock and the transfer price is determined by FHLB membership rules and not by market participants.

FHLB stock is held as a long-term investment, is valued at its cost basis and is analyzed for impairment based on the ultimate recoverability of the par value. The Company evaluates impairment quarterly. The decision of whether impairment exists is a matter of judgment that reflects our view of the FHLB’s long-term performance, which includes factors such as the following:

● its operating performance;

● the severity and duration of declines in the fair value of its net assets related to its capital stock amount;

● its commitment to make payments required by law or regulation and the level of such payments in relation to its operating performance;

● the impact of legislative and regulatory changes on the FHLB, and accordingly, on the members of FHLB; and

● its liquidity and funding position.

Premises and Equipment

Premises and equipment are stated at cost less accumulated depreciation. Depreciation of premises and equipment is computed principally by the straight line method. In general, useful lives range from 3 to 39 years with lives for furniture, fixtures and equipment ranging from 3 to 10 years and lives of buildings and building improvements ranging from 15 to 39 years. Amortization of leasehold improvements is computed using the straight-line method over useful lives of the leasehold improvements or the term of the lease, whichever is shorter. Maintenance, repairs and minor renewals are charged to expense as incurred.

Foreclosed Assets

Assets acquired through or in lieu of loan foreclosure are initially recorded at fair value less estimated selling costs when acquired, establishing a new cost basis. Physical possession of residential real estate property collateralizing a consumer mortgage loan occurs when legal title is obtained upon completion of foreclosure or when the borrower conveys all interest in the property to satisfy the loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. These assets are subsequently accounted for at the lower of cost or fair value, less estimated costs to sell. If fair value declines, a valuation allowance is recorded through expense. Costs after acquisition are expensed.

Bank Owned Life Insurance

The Corporation has purchased life insurance policies on certain key employees. Bank owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement.

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Goodwill and Other Intangible Assets

Goodwill resulting from business combinations prior to January 1, 2009 represents the excess of the purchase price over the fair value of the net assets of businesses acquired. Goodwill resulting from business combinations after January 1, 2009 is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interest in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but tested for impairment at least annually or more frequently if events and circumstances exist that indicate an impairment test should be performed.

The Corporation has selected December 31 as the date to perform the annual impairment test. Intangible assets with definite useful lives are amortized over their estimated useful lives. Goodwill is the only intangible asset with an indefinite life on the Corporation’s balance sheet. Other intangible assets consist of core deposit intangible assets arising from the acquisition of FC Banc Corp. in 2013 and Lake National Bank in 2016. The core deposit intangible assets from these acquisitions are amortized using an accelerated method over their estimated useful lives of 7 years and 4 years, respectively.

Long-term Assets

Premises and equipment, goodwill and other intangible assets, and other long-term assets are reviewed for impairment when events indicate their carrying amount may not be recoverable from future undiscounted cash flows. If impaired, the assets are recorded at fair value.

Loan Commitments and Related Financial Instruments

Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded when they are funded.

Derivatives

Derivative financial instruments are recognized as assets or liabilities at fair value. The Corporation has interest rate swap agreements which are used as part of its asset liability management to help manage interest rate risk. The Corporation does not use derivatives for trading purposes.

At the inception of a derivative contract, the Corporation designates the derivative as one of three types based on the purpose of the contract and belief as to its effectiveness as a hedge. These three types are (1) a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (“fair value hedge”), (2) a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow hedge”), or (3) an instrument with no hedging designation (“stand-alone derivative”). For a fair value hedge, the gain or loss on the derivative, as well as the offsetting loss or gain on the hedged item, are recognized in current earnings as fair values change. For a cash flow hedge, the gain or loss on the derivative is reported in other comprehensive income and is reclassified into earnings in the same periods during which the hedged transaction affects earnings. For both types of hedges, changes in the fair value of derivatives that are

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not highly effective in hedging the changes in fair value or expected cash flows of the hedged item are recognized immediately in current earnings. Changes in the fair value of derivatives that do not qualify for hedge accounting are reported currently in earnings, as non-interest income.

Net cash settlements on derivatives that qualify for hedge accounting are recorded in interest income or interest expense, based on the item being hedged. Net cash settlements on derivatives that do not qualify for hedge accounting are reported in non-interest income. Cash flows on hedges are classified in the cash flow statement the same as the cash flows of the items being hedged.

The Corporation formally documents the relationship between derivatives and hedged items, as well as the risk-management objective and the strategy for undertaking hedge transactions, at the inception of the hedging relationship. This documentation includes linking fair value or cash flow hedges to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. The Corporation also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivative instruments that are used are highly effective in offsetting changes in fair values or cash flows of the hedged items. The Corporation discontinues hedge accounting when it determines that the derivative is no longer effective in offsetting changes in the fair value or cash flows of the hedged item, the derivative is settled or terminates, a hedged forecasted transaction is no longer probable, a hedged firm commitment is no longer firm, or treatment of the derivative as a hedge is no longer appropriate or intended.

When hedge accounting is discontinued, subsequent changes in fair value of the derivative are recorded as non-interest income. When a fair value hedge is discontinued, the hedged asset or liability is no longer adjusted for changes in fair value and the existing basis adjustment is amortized or accreted over the remaining life of the asset or liability. When a cash flow hedge is discontinued but the hedged cash flows or forecasted transactions are still expected to occur, gains or losses that were accumulated in other comprehensive income are amortized into earnings over the same periods which the hedged transactions will affect earnings.

Advertising Costs

Advertising costs are generally expensed as incurred and amounted to $2,243, $1,799 and $1,580, for 2017, 2016, and 2015, respectively.

Mortgage Servicing Rights

Servicing rights are recognized separately when they are acquired through sales of loans. Servicing rights are initially recorded at fair value with the income statement effect recorded in mortgage banking. Fair value is based on market prices for comparable mortgage servicing contracts, when available, or alternatively, is based on a valuation model that calculates the present value of estimated future net servicing income. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income, such as the cost to service, the discount rate, the custodial earnings rate, an inflation rate, ancillary income, prepayment speeds and default rates and losses. The Corporation compares the valuation model inputs and results to published industry data in order to validate the model results and assumptions. All classes of servicing assets are subsequently measured using the amortization method which requires servicing rights to be amortized into non-interest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans.

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Servicing rights are evaluated for impairment based upon the fair value of the rights as compared to carrying amount. Impairment is determined by stratifying rights into groupings based on predominant risk characteristics, such as interest rate, loan type and investor type. Impairment is recognized through a valuation allowance for an individual grouping, to the extent that fair value is less than the carrying amount. If the Corporation later determines that all or a portion of the impairment no longer exists for a particular grouping, a reduction of the allowance may be recorded as an increase to income. Changes in valuation allowances are reported with mortgage banking income on the income statement. The fair values of servicing rights are subject to significant fluctuations as a result of changes in estimated and actual prepayment speeds and default rates and losses.

Servicing fee income, which is reported on the income statement as mortgage banking income, is recorded for fees earned for servicing loans. The fees are based on a contractual percentage of the outstanding principal or a fixed amount per loan and are recorded as income when earned. The amortization of mortgage servicing rights is netted against loan servicing fee income. Late fees and ancillary fees related to loan servicing are not material.

Treasury Stock

The purchase of the Corporation’s common stock is recorded at cost. Purchases of the stock are made in the open market based on market prices. At the date of subsequent reissue, the treasury stock account is reduced by the cost of such stock on a first-in-first-out basis.

Stock-Based Compensation

The Corporation has a stock incentive plan for key employees and independent directors. The Stock Incentive Plan, which is administered by a committee of the Board of Directors, provides for up to 500,000 shares of common stock to be awarded in the form of nonqualified options or restricted stock. For key employees, the plan vesting schedule is one-fourth of granted stock-based awards per year beginning one year after the grant date with 100% vested on the fourth anniversary. For independent directors, the vesting schedule is one-third of granted stock-based awards per year beginning one year after the grant date with 100% vested on the third anniversary.

At December 31, 2017 and 2016, there was no unrecognized compensation cost related to nonvested stock options granted under this plan, and no stock options were granted during the years ended December 31, 2017, 2016, and 2015.

During 2017, 2016, and 2015, the Executive Compensation and Personnel Committee of the Board of Directors granted a total of 39,673, 52,750 and 48,300 shares, respectively, of restricted common stock to certain key employees and all independent directors of the Corporation. Compensation expense for the restricted stock awards is recognized over the requisite service period based on the fair value of the shares at the date of grant on a straight-line basis. Compensation expense resulting from these restricted stock awards was $928, $820 and $621 for the years ended December 31, 2017, 2016, and 2015, respectively.

Comprehensive Income

The Corporation presents comprehensive income as part of the Consolidated Statement of Income and Comprehensive Income. Other comprehensive income (loss) consists of unrealized holding gains

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(losses) on the available for sale securities portfolio, changes in the unrecognized actuarial gain and transition obligation related to the Corporation’s post retirement benefits plans, and changes in the fair value of the Corporation’s interest rate swaps, net of tax.

Income Taxes

The Corporation files a consolidated U.S. income tax return that includes all subsidiaries. Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.

A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.

The Corporation recognizes interest and/or penalties related to income tax matters in income tax expense.

Retirement Plans

The Corporation’s expense associated with its 401(k) plan is determined under the provisions of the plan document and includes both matching and profit sharing components. Deferred compensation and supplemental retirement plan expenses allocate the benefits over years of service.

Earnings Per Share

Basic earnings per share is computed by dividing net income available to common shareholders by the weighted average number of shares outstanding during the applicable period, excluding outstanding participating securities. Diluted earnings per share is computed using the weighted average number of shares determined for the basic computation plus the dilutive effect of potential common shares issuable under certain stock compensation plans. Unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and are included in the computation of earnings per share pursuant to the two-class method. The Corporation has determined that its outstanding non-vested stock awards are participating securities.

Cash and Cash Equivalents

For purposes of the consolidated statement of cash flows, the Corporation defines cash and cash equivalents as cash and due from banks, interest bearing deposits with other banks, and Federal funds sold. Net cash flows are reported for customer loan and deposit transactions, interest bearing time deposits with other banks and borrowings with original maturities of 90 days or less.

Restrictions on Cash

The Bank is required to maintain average reserve balances with the Federal Reserve Bank or in vault cash. The average amount of these non-interest bearing reserve balances for the year ended

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December 31, 2017 and 2016 was $50, which was maintained in vault cash. Note 12 to the consolidated financial statements discloses the cash collateral balances required to be maintained in connection with the Corporation’s interest rate swaps.

Loss Contingencies

Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there are any such matters that will have a material effect on the financial statements.

Fair Value of Financial Instruments

Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in a separate note. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect the estimates.

Adoption of New Accounting Standards

In March 2016, the FASB issued Accounting Standards Update 2016-09, “Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting.” ASU 2016-09 will require recognition of the income tax effects of share-based awards in the income statement when the awards vest or are settled (i.e., Additional Paid-in-Capital pools will be eliminated). The guidance was effective for interim and annual reporting periods beginning after December 15, 2016. The Corporation adopted ASU 2016-09 on January 1, 2017. The adoption did not have a material effect on the Corporation’s financial statements.

In August 2016, the FASB issued an update (ASU 2016-15, Statement of Cash Flows) which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments in this Update apply to all entities, including business entities and not-for-profit entities that are required to present a statement of cash flows, and are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Corporation adopted ASU 2016-15 on January 1, 2018. The adoption did not have a material effect on the Corporation’s financial statements.

On February 14, 2018, the Financial Accounting Standard Board issued Accounting Standards Update (ASU) No. 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments in this ASU allow, but do not require, entities to reclassify certain income tax effects in accumulated other comprehensive income (AOCI) to retained earnings that resulted from the Tax Cuts and Jobs Act (Act). The Corporation adopted this ASU and elected to reclassify the income tax effects of the Act from accumulated other comprehensive income to retained earnings at December 31, 2017. There were no other income tax effects related to the Act that were reclassified as a result of the adoption of the accounting standard.

Effect of Newly Issued But Not Yet Effective Accounting Standards

In June 2016, the FASB issued an update (ASU 2016-13, Financial Instruments – Credit Losses) which will require recognition of an entity’s current estimate of all expected credit losses for assets measured

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at amortized cost. The amendments in ASU 2016-13 eliminate the probable initial recognition threshold in current U.S. Generally Accepted Accounting Principles. In addition, the amendments in ASU 2016-13 broaden the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually, such as loans. The update will be effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted for interim and annual reporting periods beginning after December 15, 2018. Management is currently in the developmental stages of evaluating the impact of the adoption of ASU 2016-13 on the Corporation’s financial statements and is collecting available historical information in order to assess the expected credit losses. However, the impact to the financial statements is yet to be determined.

In February 2016, the FASB issued Accounting Standards Update 2016-02, “Leases (Topic 842)”. ASU 2016-02 requires a lessee to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (1) A lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) A right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. The update will be effective for reporting periods beginning after December 15, 2018. Early adoption is permitted. Management is currently evaluating the impact of the adoption of ASU 2016-02 on the Corporation’s financial statements and anticipates an increase in the Corporation’s assets and liabilities. However, the amounts that will be adjusted are still to be determined.

In January 2016, the FASB issued Accounting Standards Update 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities”. ASU 2016-01 provides updated accounting and reporting requirements for both public and non-public entities. The most significant provisions that will impact the Corporation are: 1) equity securities available for sale will be measured at fair value, with the changes in fair value recognized in the income statement; 2) eliminate the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments at amortized cost on the balance sheet; 3) utilization of exit price notion when measuring the fair value of financial instruments for disclosure purposes; 4) require separate presentation of both financial assets and liabilities by measurement category and form of financial asset on the balance sheet or accompanying notes to the financial statements. The update will be effective for interim and annual reporting periods beginning after December 15, 2017, using a cumulative-effect adjustment to the balance sheet as of the beginning of the year adoption. The adoption of ASU 2016-01 did not have a material effect on the Corporation’s financial statements. The Corporation adopted ASU 2016-01 on January 1, 2018.

In May 2014, FASB issued Accounting Standards Update 2014-09, “Revenue from Contracts with Customers (Topic 606).” The ASU creates a new topic, Topic 606, to provide guidance on revenue recognition for entities that enter into contracts with customers to transfer goods or services or enter into contracts for the transfer of nonfinancial assets. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additional disclosures are required to provide quantitative and qualitative information regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new guidance is effective for annual reporting periods, and interim

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reporting periods within those annual periods, beginning after December 15, 2017. The adoption of ASU 2014-09 did not have a material effect on the Corporation’s financial statements as most of the revenue relates to loans and other financial instruments which are scoped out. However, management does expect expansion to disclosures. The Corporation adopted ASU 2014-09 on January 1, 2018.

2.  Business Combination and Branch Sale

On December 30, 2015, the Corporation announced the signing of a definitive merger agreement to acquire Lake National Bank (LNB) of Mentor, Ohio for $22.50 per share in cash, or approximately $24.75 million in the aggregate. LNB served the northeastern Ohio market with two branches located in Mentor, Ohio. On July 15, 2016, the transaction closed and the Corporation began including LNB’s results of operations in its consolidated results. The two LNB offices now operate as part of the ERIEBANK division of CNB Bank.

As disclosed in the accompanying consolidated statements of income, the Corporation incurred merger costs of $486 thousand and $308 thousand for the twelve months ended December 31, 2016 and 2015, respectively. All merger costs have been expensed as incurred.

The following table summarizes the consideration paid for LNB and the amounts of the assets acquired and liabilities assumed that were recognized at the acquisition date:

Consideration paid:
Cash	$	24,750
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents		21,884
Securities available for sale		450
Loans		122,206
FHLB and other equity interests		637
Premises and equipment		3,242
Bank owned life insurance		2,152
Mortgage servicing rights		367
Core deposit intangible		1,583
Accrued interest receivable and other assets		3,110
Total assets acquired		155,631
Demand deposits		81,472
Time deposits		58,311
Accrued interest payable and other liabilities		2,634
Total liabilities assumed		142,417
Total identifiable net assets		13,214
Goodwill	$	11,536

Included in accrued interest receivable and other assets is a deferred tax asset of $58 which represents the tax effect of temporary differences between the tax basis and fair values assigned to the assets and liabilities.

Acquired loans were recorded at fair value with no carryover of the related allowance for loan losses. Determining the fair value of loans involved estimating the amount and timing of principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of

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interest. The Corporation acquired $126,134 of gross loans and recognized a net combined yield and credit mark of $3,928.

Goodwill of $11,536 arising from the acquisition consisted largely of synergies and the cost savings resulting from the combining of the operations of the Corporation and Lake National Bank. None of the goodwill is expected to be deductible for income tax purposes.

On May 19, 2017, CNB completed its previously announced sale of the Mt. Hope, Ohio branch to First Federal Community Bank. CNB transferred loans totaling $7,800, fixed assets totaling $100, and deposits totaling $7,400 in conjunction with the sale of the branch and realized a gain of $536 based on the 8% deposit premium paid by First Federal Community Bank.

3.  Earnings Per Share

The computation of basic and diluted earnings per share is shown below (in thousands, except per share data). There were no anti-dilutive stock options for the years ended December 31, 2017, 2016, and 2015.

	Years Ended December 31
	2017			2016			2015
Basic earnings per common share computation
Net income per consolidated statements of income	$	23,860		$	20,540		$	22,197
Net earnings allocated to participating securities		(135	)		(129	)		(117	)
Net earnings allocated to common stock	$	23,725		$	20,411		$	22,080
Distributed earnings allocated to common stock	$	10,030		$	9,480		$	9,460
Undistributed earnings allocated to common stock		13,695			10,931			12,620
Net earnings allocated to common stock	$	23,725		$	20,411		$	22,080
Weighted average common shares outstanding, including shares considered participating securities		15,212			14,457			14,408
Less: Average participating securities		(80	)		(82	)		(70	)
Weighted average shares		15,132			14,375			14,338
Basic earnings per common share	$	1.57		$	1.42		$	1.54
Diluted earnings per common share computation
Net earnings allocated to common stock	$	23,725		$	20,411		$	22,080
Weighted average common shares outstanding for basic earnings per common share		15,132			14,375			14,338
Add: Dilutive effects of assumed exercises of stock options		0			0			0
Weighted average shares and dilutive potential common shares		15,132			14,375			14,338
Diluted earnings per common share	$	1.57		$	1.42		$	1.54

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4.  Securities

Securities available-for-sale at December 31, 2017 and 2016 are as follows:

	December 31, 2017									December 31, 2016
	Amortized Cost		Unrealized					Fair Value		Amortized Cost		Unrealized					Fair Value
			Gains		Losses							Gains		Losses
U.S. Gov’t sponsored entities		$108,578	$	478	$	(908	)		$108,148		$139,823		$1,107	$	(579	)		$140,351
State & political subdivisions		134,428		3,609		(314)			137,723		153,492		4,194		(649	)		157,037
Residential & multi-family mortgage		111,214		304		(1,882)			109,636		136,807		551		(2,382	)		134,976
Corporate notes & bonds		17,610		52		(462)			17,200		18,299		77		(962	)		17,414
Pooled trust preferred		0		0		0			0		800		1,249		0			2,049
Pooled SBA		36,260		355		(575)			36,040		43,450		505		(918	)		43,037
Other equity securities		1,020		0		(58)			962		1,020		0		(49	)		971
Total		$409,110	$	4,798	$	(4,199	)		$409,709		$493,691		$7,683		$(5,539)			$495,835

At December 31, 2017 and 2016, there were no holdings of securities by any one issuer, other than U.S. Government sponsored entities, in an amount greater than 10% of shareholders’ equity. The Corporation’s residential and multi-family mortgage securities are issued by government sponsored entities, and the Corporation holds one commercial mortgage security that is private label.

Trading securities at December 31, 2017 and 2016 are as follows:

	2017		2016
Corporate equity securities	$	5,125	$	3,312
Mutual Funds		1,499		1,037
Certificates of deposit		220		202
Corporate notes and bonds		254		254
U.S. Government sponsored entities		52		53
Total	$	7,150	$	4,858

Securities with unrealized losses at December 31, 2017 and 2016, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are as follows:

December 31, 2017	Less than 12 Months					12 Months or More					Total
Description of Securities	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
U.S. Gov’t sponsored entities	$	55,696	$	(540	)	$	34,754	$	(368	)	$	90,450	$	(908	)
State & political subdivisions		15,890		(69	)		4,104		(245	)		19,994		(314	)
Residential & multi-family mortgage		30,144		(153	)		63,699		(1,729	)		93,843		(1,882	)
Corporate notes & bonds		5,005		(9	)		9,042		(453	)		14,047		(462	)
Pooled SBA		0		(0	)		22,270		(575	)		22,270		(575	)
Other equity securities		0		(0	)		962		(58	)		962		(58	)
	$	106,735	$	(771	)	$	134,831	$	(3,428	)	$	241,566	$	(4,199	)

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	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
December 31, 2016
U.S. Gov’t sponsored entities	$	90,380	$	(579	)	$	0	$	(0	)	$	90,380	$	(579	)
State & political subdivisions		32,353		(448	)		264		(201	)		32,617		(649	)
Residential and multi-family mortgage		65,598		(1,255	)		34,611		(1,127	)		100,209		(2,382	)
Corporate notes & bonds		2,089		(11	)		8,476		(951	)		10,565		(962	)
Pooled SBA		6,481		(126	)		20,560		(792	)		27,041		(918	)
Other equity securities		0		(0	)		971		(49	)		971		(49	)
	$	196,901	$	(2,419	)	$	64,882	$	(3,120	)	$	261,783	$	(5,539	)

The Corporation evaluates securities for other-than-temporary impairment on a quarterly basis, or more frequently when economic or market conditions warrant such an evaluation.

At December 31, 2016 the Corporation evaluated the pooled trust preferred securities for other-than-temporary impairment by estimating the cash flows expected to be received, taking into account future estimated levels of deferrals and defaults by the underlying issuers and discounting those cash flows at the appropriate accounting yield. During 2017, two structured pooled trust preferred securities with an adjusted amortized cost of $800 were sold, resulting in a gain of $1,383. During 2016, two structured pooled trust preferred securities with an adjusted amortized cost of $0 were sold, resulting in a gain of $922.

A roll-forward of the other-than-temporary impairment amount related to credit losses for the years ended December 31, 2017, 2016, and 2015 is as follows:

	2017			2016			2015
Balance of credit losses on debt securities for which a portion of other-than-temporary impairment was recognized in earnings, beginning of period	$	2,071		$	4,054		$	4,054
Credit losses previously recognized on securities sold during the period		(2,071	)		(1,983	)		0
Additional credit loss for which other-than-temporary impairment was not previously recognized		0			0			0
Additional credit loss for which other-than-temporary impairment was previously recognized		0			0			0
Balance of credit losses on debt securities for which a portion of other-than-temporary impairment was recognized in earnings, end of period	$	0		$	2,071		$	4,054

For the securities that comprise corporate notes and bonds and the securities that are issued by state and political subdivisions, management monitors publicly available financial information, such as filings with the Securities and Exchange Commission, in order to evaluate the securities for other-than-temporary impairment. For financial institution issuers, management monitors information from quarterly “call” report filings that are used to generate Uniform Bank Performance Reports. All other securities that were in an unrealized loss position at the balance sheet date were reviewed by management, and issuer-specific documents were reviewed, as appropriate given the following considerations. When reviewing securities for other-than-temporary impairment, management considers the financial condition and near-term prospects of the issuer and whether downgrades by bond rating agencies have occurred. Management also considers the length of time and extent to which fair value has been less than cost, and whether management does not have the intent to sell these

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securities and it is likely that it will not be required to sell the securities before their anticipated recovery.

As of December 31, 2017 and 2016, management concluded that the securities described in the previous paragraph were not other-than-temporarily impaired for the following reasons:

● There is no indication of any significant deterioration of the creditworthiness of the institutions that issued the securities.

● All contractual interest payments on the securities have been received as scheduled, and no information has come to management’s attention through the processes previously described which would lead to a conclusion that future contractual payments will not be timely received.

The Corporation does not intend to sell and it is not more likely than not that it will be required to sell the securities in an unrealized loss position before recovery of its amortized cost basis.

On December 31, 2017 and 2016, securities carried at $319,575 and $329,379, respectively, were pledged to secure public deposits and for other purposes as provided by law.

The following is a schedule of the contractual maturity of securities available for sale, excluding equity securities, at December 31, 2017:

	December 31, 2017
	Amortized Cost		Fair Value
1 year or less	$	50,368	$	50,139
1 year – 5 years		153,512		155,075
5 years – 10 years		50,552		51,753
After 10 years		6,184		6,104
		260,616		263,071
Residential and multi-family mortgage		111,214		109,636
Pooled SBA		36,260		36,040
Total debt securities	$	408,090	$	408,747

Mortgage securities and pooled SBA securities are not due at a single date; periodic payments are received based on the payment patterns of the underlying collateral.

Information pertaining to security sales is as follows:

Year ended December 31	Proceeds		Gross Gains		Gross Losses
2017	$	16,340	$	1,614	$	71
2016		4,420		1,005		0
2015		105,066		1,032		366

The tax provision related to these net realized gains was $540, $352 and $233, respectively.

During 2017, 2016, and 2015, the Corporation sold trading securities. Proceeds were $1,091 in 2017, $540 in 2016 and $2,129 in 2015, resulting in net realized gains (losses) of $93 in 2017, $70 in 2016, and ($211) in 2015.

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5.  Loans

Total net loans at December 31, 2017 and 2016 are summarized as follows:

	2017			2016
Commercial, industrial, and agricultural	$	749,138		$	567,800
Commercial mortgages		600,065			574,826
Residential real estate		713,347			652,883
Consumer		80,193			74,816
Credit cards		6,753			6,046
Overdrafts		352			595
Less: unearned discount		(3,889	)		(3,430	)
allowance for loan losses		(19,693	)		(16,330	)
Loans, net	$	2,126,266		$	1,857,206

At December 31, 2017 and 2016 net unamortized loan (fees) costs of ($2,574) and ($1,507), respectively, have been included in the carrying value of loans.

The Corporation’s outstanding loans and related unfunded commitments are primarily concentrated within central and northwest Pennsylvania, central and northeast Ohio, and western New York. The Bank attempts to limit concentrations within specific industries by utilizing dollar limitations to single industries or customers, and by entering into participation agreements with third parties. Collateral requirements are established based on management’s assessment of the customer. The Corporation maintains lending policies to control the quality of the loan portfolio. These policies delegate the authority to extend loans under specific guidelines and underwriting standards. These policies are prepared by the Corporation’s management and reviewed and ratified annually by the Corporation’s Board of Directors.

Pursuant to the Corporation’s lending policies, management considers a variety of factors when determining whether to extend credit to a customer, including loan-to-value ratios, FICO scores, quality of the borrower’s financial statements, and the ability to obtain personal guarantees.

Commercial, industrial, and agricultural loans comprised 35% and 30% of the Corporation’s total loan portfolio at December 31, 2017 and 2016, respectively. Commercial mortgage loans comprised 28% and 31% of the Corporation’s total loan portfolio at December 31, 2017 and 2016, respectively. Management assigns a risk rating to all commercial loans at loan origination. The loan-to-value policy guidelines for commercial, industrial, and agricultural loans are generally a maximum of 80% of the value of business equipment, a maximum of 75% of the value of accounts receivable, and a maximum of 60% of the value of business inventory at loan origination. The loan-to-value policy guideline for commercial mortgage loans is generally a maximum of 85% of the appraised value of the real estate.

Residential real estate loans comprised 33% and 35% of the Corporation’s total loan portfolio at December 31, 2017 and 2016, respectively. The loan-to-value policy guidelines for residential real estate loans vary depending on the collateral position and the specific type of loan. Higher loan-to-value terms may be approved with the appropriate private mortgage insurance coverage. The Corporation also originates and prices loans for sale into the secondary market. Loans so originated are classified as loans held for sale and are excluded from residential real estate loans reported above. The

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rationale for these sales is to mitigate interest rate risk associated with holding lower rate, long-term residential mortgages in the loan portfolio and to generate fee revenue from sales and servicing the loan. The Corporation also offers a variety of unsecured and secured consumer loan and credit card products which represent less than 10% of the total loan portfolio at both December 31, 2017 and 2016. Terms and collateral requirements vary depending on the size and nature of the loan.

Transactions in the allowance for loan losses for the year ended December 31, 2017 were as follows:

	Commercial, Industrial, and Agricultural			Commercial Mortgages			Residential Real Estate			Consumer			Credit Cards			Overdrafts			Total
Allowance for loan losses, January 1, 2017	$	5,428		$	6,753		$	1,653		$	2,215		$	93		$	188		$	16,330
Charge-offs		(544	)		(116	)		(466	)		(2,555	)		(144	)		(252	)		(4,077	)
Recoveries		235			197			78			161			27			87			785
Provision for loan losses		1,041			2,173			768			2,358			144			171			6,655
Allowance for loan losses, December 31, 2017	$	6,160		$	9,007		$	2,033		$	2,179		$	120		$	194		$	19,693

Transactions in the allowance for loan losses for the year ended December 31, 2016 were as follows:

	Commercial, Industrial, and Agricultural			Commercial Mortgages			Residential Real Estate			Consumer			Credit Cards			Overdrafts			Total
Allowance for loan losses, January 1, 2016	$	6,035		$	5,605		$	2,475		$	2,371		$	90		$	161		$	16,737
Charge-offs		(601	)		(201	)		(499	)		(3,324	)		(96	)		(240	)		(4,961	)
Recoveries		89			8			93			122			22			71			405
Provision for loan losses		(95	)		1,341			(416	)		3,046			77			196			4,149
Allowance for loan losses, December 31, 2016	$	5,428		$	6,753		$	1,653		$	2,215		$	93		$	188		$	16,330

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Transactions in the allowance for loan losses for the year ended December 31, 2015 were as follows:

	Commercial, Industrial, and Agricultural			Commercial Mortgages			Residential Real Estate			Consumer			Credit Cards			Overdrafts			Total
Allowance for loan losses, January 1, 2015	$	7,114		$	5,310		$	2,479		$	2,205		$	71		$	194		$	17,373
Charge-offs		(307	)		(486	)		(632	)		(1,956	)		(116	)		(221	)		(3,718	)
Recoveries		267			52			8			96			14			85			522
Provision for loan losses		(1,039	)		729			620			2,026			121			103			2,560
Allowance for loan losses, December 31, 2015	$	6,035		$	5,605		$	2,475		$	2,371		$	90		$	161		$	16,737

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and is based on the Corporation’s impairment method as of December 31, 2017 and 2016. The recorded investment in loans excludes accrued interest and unearned discounts due to their insignificance.

December 31, 2017	Commercial, Industrial, and Agricultural		Commercial Mortgages		Residential Real Estate		Consumer		Credit Cards		Overdrafts		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	47	$	0	$	0	$	0	$	0	$	0	$	47
Collectively evaluated for impairment		5,868		3,563		2,033		2,179		120		194		13,957
Acquired with deteriorated credit quality		0		0		0		0		0		0		0
Modified in a troubled debt restructuring		245		5,444		0		0		0		0		5,689
Total ending allowance balance	$	6,160	$	9,007	$	2,033	$	2,179	$	120	$	194	$	19,693
Loans:
Individually evaluated for impairment	$	1,187	$	51	$	0	$	0	$	0	$	0	$	1,238
Collectively evaluated for impairment		742,738		586,845		713,347		80,193		6,753		352		2,130,228
Acquired with deteriorated credit quality		0		1,079		0		0		0		0		1,079
Modified in a troubled debt restructuring		5,213		12,090		0		0		0		0		17,303
Total ending loans balance	$	749,138	$	600,065	$	713,347	$	80,193	$	6,753	$	352	$	2,149,848

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December 31, 2016	Commercial, Industrial, and Agricultural		Commercial Mortgages		Residential Real Estate		Consumer		Credit Cards		Overdrafts		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	188	$	996	$	0	$	0	$	0	$	0	$	1,184
Collectively evaluated for impairment		5,115		3,543		1,653		2,215		93		188		12,807
Acquired with deteriorated credit quality		0		0		0		0		0		0		0
Modified in a troubled debt restructuring		125		2,214		0		0		0		0		2,339
Total ending allowance balance	$	5,428	$	6,753	$	1,653	$	2,215	$	93	$	188	$	16,330
Loans:
Individually evaluated for impairment	$	775	$	6,176	$	0	$	0	$	0	$	0	$	6,951
Collectively evaluated for impairment		564,180		557,932		652,883		74,816		6,046		595		1,856,452
Acquired with deteriorated credit quality		205		1,527		0		0		0		0		1,732
Modified in a troubled debt restructuring		2,640		9,191		0		0		0		0		11,831
Total ending loans balance	$	567,800	$	574,826	$	652,883	$	74,816	$	6,046	$	595	$	1,876,966

The following tables present information related to loans individually evaluated for impairment, including loans modified in troubled debt restructurings, by portfolio segment as of December 31, 2017 and 2016 and for the years ended December 31, 2017, 2016, and 2015:

December 31, 2017	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With an allowance recorded:
Commercial, industrial, and agricultural	$	1,915	$	1,915	$	292
Commercial mortgage		9,940		9,731		5,444
Residential real estate		0		0		0
With no related allowance recorded:
Commercial, industrial, and agricultural		5,264		4,485		0
Commercial mortgage		3,211		2,410		0
Residential real estate		0		0		0
Total	$	20,330	$	18,541	$	5,736

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December 31, 2016	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With an allowance recorded:
Commercial, industrial, and agricultural	$	1,644	$	1,644	$	313
Commercial mortgage		16,200		15,367		3,210
Residential real estate		0		0		0
With no related allowance recorded:
Commercial, industrial, and agricultural		2,669		1,771		0
Commercial mortgage		0		0		0
Residential real estate		0		0		0
Total	$	20,513	$	18,782	$	3,523

The unpaid principal balance of impaired loans includes the Corporation’s recorded investment in the loan and amounts that have been charged off.

	Year Ended December 31, 2017
	Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized
With an allowance recorded:
Commercial, industrial, and agricultural	$	1,513	$	97	$	97
Commercial mortgage		11,944		327		327
Residential real estate		0		0		0
With no related allowance recorded:
Commercial, industrial, and agricultural		2,438		114		114
Commercial mortgage		2,474		122		122
Residential real estate		0		0		0
Total	$	18,369	$	660	$	660

	Year Ended December 31, 2016
	Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized
With an allowance recorded:
Commercial, industrial, and agricultural	$	2,616	$	2	$	2
Commercial mortgage		8,138		0		0
Residential real estate		50		6		6
With no related allowance recorded:
Commercial, industrial, and agricultural		2,290		0		0
Commercial mortgage		2,773		0		0
Residential real estate		0		0		0
Total	$	15,867	$	8	$	8

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	Year Ended December 31, 2015
	Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized
With an allowance recorded:
Commercial, industrial, and agricultural	$	5,667	$	44	$	44
Commercial mortgage		8,154		0		0
Residential real estate		370		21		21
With no related allowance recorded:
Commercial, industrial, and agricultural		1,831		14		14
Commercial mortgage		4,806		0		0
Residential real estate		103		6		6
Total	$	20,931	$	85	$	85

The following table presents the recorded investment in nonaccrual loans and loans past due over 90 days still on accrual by class of loans as of December 31, 2017 and 2016:

	December 31, 2017				December 31, 2016
	Nonaccrual		Past Due Over 90 Days Still on Accrual		Nonaccrual		Past Due Over 90 Days Still on Accrual
Commercial, industrial, and agricultural	$	1,869	$	78	$	2,734	$	0
Commercial mortgages		11,065		0		5,996		0
Residential real estate		5,470		338		5,600		0
Consumer		828		17		999		0
Credit cards		0		44		0		10
Total	$	19,232	$	477	$	15,329	$	10

Nonaccrual loans and loans past due over 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.

The following table presents the aging of the recorded investment in past due loans as of December 31, 2017 and 2016 by class of loans.

December 31, 2017	30-59 Days Past Due		60-89 Days Past Due		Greater Than 89 Days Past Due		Total Past Due		Loans Not Past Due		Total
Commercial, industrial, and agricultural	$	2,745	$	646	$	748	$	4,139	$	744,999	$	749,138
Commercial mortgages		233		0		292		525		599,540		600,065
Residential real estate		2,290		1,494		4,655		8,439		704,908		713,347
Consumer		454		307		812		1,573		78,620		80,193
Credit cards		31		10		44		85		6,668		6,753
Overdrafts		0		0		0		0		352		352
Total	$	5,753	$	2,457	$	6,551	$	14,761	$	2,135,087	$	2,149,848

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December 31, 2016	30-59 Days Past Due		60-89 Days Past Due		Greater Than 89 Days Past Due		Total Past Due		Loans Not Past Due		Total
Commercial, industrial, and agricultural	$	1,558	$	299	$	1,294	$	3,151	$	564,649	$	567,800
Commercial mortgages		559		0		1,516		2,075		572,751		574,826
Residential real estate		2,155		737		3,710		6,602		646,281		652,883
Consumer		648		890		974		2,512		72,304		74,816
Credit cards		105		0		10		115		5,931		6,046
Overdrafts		0		0		0		0		595		595
Total	$	5,025	$	1,926	$	7,504	$	14,455	$	1,862,511	$	1,876,966

Troubled Debt Restructurings

During the years ended December 31, 2017 and 2016, the terms of certain loans were modified as troubled debt restructurings. The modification of the terms of such loans included either or both of the following: a reduction of the stated interest rate of the loan; or an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk.

The following table presents the number of loans, loan balances, and specific reserves for loans that have been restructured in a troubled debt restructuring as of December 31, 2017 and December 31, 2016.

	December 31, 2017						December 31, 2016
	Number of Loans		Loan Balance		Specific Reserve		Number of Loans		Loan Balance		Specific Reserve
Commercial, industrial, and agricultural		10	$	5,213	$	245		7	$	2,640	$	125
Commercial mortgages		9		12,090		5,444		8		9,191		2,214
Residential real estate		0		0		0		0		0		0
Consumer		0		0		0		0		0		0
Credit cards		0		0		0		0		0		0
Total		19	$	17,303	$	5,689		15	$	11,831	$	2,339

The following table presents loans by class modified as troubled debt restructurings that occurred during the years ended December 31, 2017, 2016, and 2015:

	Year Ended December 31, 2017
	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding  Recorded Investment
Commercial, industrial, and agricultural		4	$	2,750	$	2,750
Commercial mortgages		2		6,421		6,421
Residential real estate		0		0		0
Consumer		0		0		0
Credit cards		0		0		0
Total		6	$	9,171	$	9,171

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	Year Ended December 31, 2016
	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding  Recorded Investment
Commercial, industrial, and agricultural		1	$	109	$	109
Commercial mortgages		0		0		0
Residential real estate		0		0		0
Consumer		0		0		0
Credit cards		0		0		0
Total		1	$	109	$	109

	Year Ended December 31, 2015
	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding  Recorded Investment
Commercial, industrial, and agricultural		1	$	1,327	$	1,327
Commercial mortgages		0		0		0
Residential real estate		0		0		0
Consumer		0		0		0
Credit cards		0		0		0
Total		1	$	1,327	$	1,327

The troubled debt restructurings described above increased the allowance for loan losses by $4,024, $0 and $0 during the years ended December 31, 2017, 2016, and 2015, respectively.

Modifications involving a reduction of the stated interest rate of the loan were for periods ranging from 4-15 years. Modifications involving an extension of the maturity date were for periods ranging from 4-18 years.

A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms. Except as discussed below, all loans modified in troubled debt restructurings are performing in accordance with their modified terms as of December 31, 2017 and 2016 and no principal balances were forgiven in connection with the loan restructurings.

During the year ended December 31, 2017 four impaired commercial industrial loans totaling $2,750 were modified in troubled debt restructurings. The Corporation recorded an additional provision for loan losses of $129 and there were no chargeoffs for these loans during the year ended December 31, 2017.

During the year ended December 31, 2017 two impaired commercial real estate loans totaling $6,421 were modified in troubled debt restructurings. The Corporation recorded an additional provision for loan losses of $3,895 and there were no chargeoffs for these loans during the year ended December 31, 2017.

During the year ended December 31, 2016 one impaired commercial industrial loan having a balance of $109 was modified in troubled debt restructurings. The Corporation did not record any additional provision for loan losses and there were no chargeoffs for this loan during the year ended December 31, 2016.

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During the year ended December 31, 2015 one impaired commercial industrial loan having a balance of $1,327 was modified in troubled debt restructurings. The Corporation did not record any additional provision for loan losses and there were no chargeoffs for this loan during the year ended December 31, 2015.

In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without a loan modification. This evaluation is performed using the Corporation’s internal underwriting policies. The Corporation has no further loan commitments to customers whose loans are classified as a troubled debt restructuring.

Generally, nonperforming troubled debt restructurings are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time (generally six months) and the ultimate collectability of the total contractual principal and interest is no longer in doubt.

Credit Quality Indicators

The Corporation classifies commercial, industrial, and agricultural loans and commercial mortgage loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. Loans with outstanding balances greater than $1 million are analyzed at least semiannually and loans with outstanding balances of less than $1 million are analyzed at least annually.

The Corporation uses the following definitions for risk ratings:

Special Mention: Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Corporation’s credit position at some future date.

Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected.

Doubtful: Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

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Loans not rated as special mention, substandard, or doubtful are considered to be pass rated loans. All loans included in the following tables have been assigned a risk rating within 12 months of the balance sheet date.

December 31, 2017	Pass		Special Mention		Substandard		Doubtful		Total
Commercial, industrial, and agricultural	$	713,102	$	16,726	$	19,310	$	0	$	749,138
Commercial mortgages		581,631		4,419		14,015		0		600,065
Total	$	1,294,733	$	21,145	$	33,325	$	0	$	1,349,203

December 31, 2016	Pass		Special Mention		Substandard		Doubtful		Total
Commercial, industrial, and agricultural	$	531,320	$	14,638	$	21,831	$	11	$	567,800
Commercial mortgages		551,474		1,809		21,543		0		574,826
Total	$	1,082,794	$	16,447	$	43,374	$	11	$	1,142,626

The Corporation considers the performance of the loan portfolio and its impact on the allowance for loan losses. For residential real estate, consumer, and credit card loan classes, the Corporation also evaluates credit quality based on the performance status of the loan, which was previously presented, and by payment activity. Nonperforming loans include loans on nonaccrual status and loans past due over 90 days and still accruing interest. The following table presents the recorded investment in residential, consumer, and credit card loans based on performance status as of December 31, 2017 and December 31, 2016:

	December 31, 2017						December 31, 2016
	Residential Real Estate		Consumer		Credit Cards		Residential Real Estate		Consumer		Credit Cards
Performing	$	707,539	$	79,348	$	6,709	$	647,283	$	73,817	$	6,036
Nonperforming		5,808		845		44		5,600		999		10
Total	$	713,347	$	80,193	$	6,753	$	652,883	$	74,816	$	6,046

The Corporation’s portfolio of residential real estate and consumer loans maintained within Holiday Financial Services Corporation (“Holiday”), a subsidiary that offers small balance unsecured and secured loans, primarily collateralized by automobiles and equipment, to borrowers with higher risk characteristics than are typical in the Bank’s consumer loan portfolio, are considered to be subprime loans.

Holiday’s loan portfolio, included in consumer and residential loans above, is summarized as follows at December 31, 2017 and 2016:

	2017			2016
Consumer	$	23,428		$	24,026
Residential real estate		0			1,209
Less: unearned discount		(3,889	)		(3,430	)
Total	$	19,539		$	21,805

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6.  Secondary Market Mortgage Activities

The following summarizes secondary market mortgage activities for the years ended December 31, 2017, 2016 and 2015:

	2017		2016		2015
Loans originated for resale	$	25,231	$	31,255	$	15,171
Proceeds from sales of loans held for sale		24,285		33,045		14,927
Net gains on sales of loans held for sale		545		818		630
Loan servicing fees		563		421		390

Total loans serviced for others were $159,208 and $157,073 December 31, 2017 and 2016, respectively.

The following summarizes activity for capitalized mortgage servicing rights for the years ended December 31, 2017, 2016, and 2015:

	2017			2016			2015
Balance, beginning of year	$	1,391		$	962		$	856
Additions		198			200			380
Servicing rights acquired		0			367			0
Amortization		(202	)		(138	)		(274	)
Balance, end of year	$	1,387		$	1,391		$	962

The fair value of mortgage servicing rights is based on market prices for comparable mortgage servicing contracts, when available, or alternatively based on a valuation model that calculates the present value of estimated future net servicing income. The fair value of mortgage servicing rights was not materially different than amortized cost at December 31, 2017 and 2016, respectively. No valuation allowance is deemed necessary at December 31, 2017, 2016, or 2015. The fair value of interest rate lock commitments and forward commitments to sell loans was not material at December 31, 2017 or 2016.

7.  Premises and Equipment

The following summarizes premises and equipment at December 31, 2017 and 2016:

	2017		2016
Land	$	8,147	$	7,324
Premises and leasehold improvements		53,903		48,563
Furniture and equipment		31,238		30,125
Construction in process		71		4,014
		93,359		90,026
Less: accumulated depreciation		42,644		40,504
Premises and equipment, net	$	50,715	$	49,522

Depreciation on premises and equipment amounted to $3,811 in 2017, $3,215 in 2016 and $2,759 in 2015.

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The Corporation is committed under nineteen non-cancelable operating leases for facilities and eleven non-cancelable operating leases for vehicles with initial or remaining terms in excess of one year. The minimum annual rental commitments under these leases at December 31, 2017 are as follows:

2018	$	1,167
2019		1,021
2020		836
2021		736
2022		578
Thereafter		3,530
	$	7,868

Rental expense, net of rental income, charged to occupancy expense for 2017, 2016, and 2015 was $870, $773 and $699, respectively.

In December 2009, the Corporation entered into a sale-leaseback transaction for real estate used in the operations of one of its branch office locations. The lease term is seventeen years, with two automatic renewal terms of five years each. The Corporation sold the property for $1,200 but financed the entire sales amount. Because the buyer/lessor did not make an initial investment on the purchase of the real estate that is adequate to transfer the risks and rewards of ownership, the Corporation deferred the entire gain of $489 associated with this transaction, which is included in accrued interest payable and other liabilities in the accompanying consolidated balance sheet. The gain is being recognized over the term of the loan under the installment method, and the gain recognized was included in other income in the accompanying consolidated statements of income and comprehensive income and totaled $25, $25 and $22 in 2017, 2016, and 2015, respectively.

The minimum annual rental commitments under this sale-leaseback transaction at December 31, 2017 are as follows:

2018	$	105
2019		105
2020		105
2021		105
2022		105
Thereafter		420
	$	945

8.  Foreclosed Assets

Foreclosed real estate is reported net of a valuation allowance and included in accrued interest receivable and other assets in the accompanying consolidated balance sheets. Activity for the years ended December 31, 2017, 2016, and 2015 is as follows:

	2017			2016			2015
Balance, beginning of year	$	1,015		$	654		$	806
Acquired from Lake National Bank		0			665			0
Additions		630			120			806
Sales (at carrying value)		(935	)		(424	)		(958	)
Balance, end of year	$	710		$	1,015		$	654

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Expenses related to foreclosed real estate include:

	2017			2016			2015
Net (gain) loss on sale	$	(208	)	$	(134	)	$	3
Operating expenses, net of rental income		366			223			169
	$	158		$	89		$	172

9.  Goodwill and Intangible Assets

Goodwill

The change in the carrying amount of goodwill for the years ended December 31, 2017 and 2016 is as follows:

	2017		2016
Balance, beginning of year	$	38,730	$	27,194
Acquired during the year		0		11,536
Balance, end of year	$	38,730	$	38,730

Impairment exists when a reporting unit’s carrying value of goodwill exceeds its fair value, which is determined through a two-step impairment test. Step 1 includes the determination of the carrying value of our single reporting unit, including the existing goodwill and intangible assets, and estimating the fair value of the reporting unit. We determined the fair value of our reporting unit exceeded its carrying amount. If the carrying amount of the reporting unit exceeds its fair value, we are required to perform a second step to the impairment test. Our annual impairment analysis at December 31, 2017 and 2016 indicated that the Step 2 analysis was not necessary.

Intangible Assets

In connection with its acquisition of FC Banc Corp. in 2013, the Corporation recorded a core deposit intangible asset of $4,834. During the years ended December 31, 2017, 2016, and 2015, the Corporation recorded amortization expense of $662, $835 and $1,008, respectively. The net carrying values at December 31, 2017 and December 31, 2016 were $899 and $ 1,561, respectively. No other intangible assets were required to be recorded in connection with the acquisition of FC Banc Corp.

In connection with its acquisition of Lake National Bank in 2016, the Corporation recorded a core deposit intangible asset of $1,583. During the year ended December 31, 2017 and 2016, the Corporation recorded amortization expense of $567 and $290, respectively. The net carrying values at December 31, 2017 and 2016 were $726 and $1,293, respectively. No other intangible assets were required to be recorded in connection with the acquisition of Lake National Bank.

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Estimated amortization expense of core deposit intangible assets for each of the next five years is as follows:

2018	$	898
2019		567
2020		160
2021		0
2022		0

10.  Deposits

The following table reflects time certificates of deposit accounts included in total deposits and their remaining maturities at December 31, 2017:

Time deposits maturing:
2018	$	125,809
2019		128,602
2020		91,799
2021		7,954
2022		6,881
Thereafter		3,926
	$	364,971

Certificates of deposit of $250 thousand or more totaled $108,992 and $25,650 at December 31, 2017 and 2016, respectively. The Corporation had $3,500 and $0 in brokered deposits at December 31, 2017 and 2016.

11.  Borrowings

At December 31, 2017 and 2016, the Corporation had available one $10 million unsecured line of credit with an unaffiliated institution, at a variable interest rate with a floor as defined in the agreement. There were no borrowings on the line of credit at December 31, 2017 and 2016.

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FHLB Borrowings

At December 31, 2017, the Bank had remaining borrowing capacity with the FHLB of $532,809. At December 31, 2017, borrowings with the FHLB are secured by a pledge of selected securities in the amount of $8,068 and certain loans with a balance of $1,085,644. Borrowings from the FHLB at December 31, 2017 and 2016 are as follows:

Interest Rate	Maturity		2017		2016
(a)		n/a	$	34,416	$	103,969
(b)		09/06/17		0		15,016
(c)		12/15/17		0		15,093
(d)		09/06/18		7,550		17,523
(e)		06/28/19		30,000		0
(f)		09/06/19		11,752		18,360
(g)		09/16/19		8,883		13,865
(h)		06/29/20		30,000		0
(i)		09/08/20		13,859		18,780
(j)		06/28/21		30,000		0
(k)		06/29/22		50,000		0
(l)		09/06/22		15,976		19,201
(m)		12/05/22		20,000		0
(n)		07/03/23		700		700
(o)		09/05/23		1,797		1,925
(p)		03/11/24		814		852
(q)		06/11/24		435		462
(r)		05/04/26		217		240
(s)		10/14/26		231		252
(t)		02/11/33		729		766
			$	257,359	$	227,004

(a) – Open Repo borrowing at an interest rate of 1.54% at December 31, 2017 and 0.74% at December 31, 2016. The maximum amount of the Open Repo borrowing available is $150,000.

(b) – Fixed rate borrowing at an interest rate of 0.83%, with monthly principal and interest payments.

(c) – Fixed rate borrowing at an interest rate of 1.25%, with monthly principal and interest payments.

(d) – Fixed rate borrowing at an interest rate of 1.05%, with monthly principal and interest payments.

(e) – Fixed rate borrowing at interest rate of 1.66%. Interest only payments with principal due at maturity.

(f) – Fixed rate borrowing at an interest rate of 1.17%, with monthly principal and interest payments.

(g) – Fixed rate borrowing at an interest rate of 1.35%, with monthly principal and interest payments.

(h) – Fixed rate borrowing at interest rate of 1.82%. Interest only payments with principal due at maturity.

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(i) – Fixed rate borrowing at an interest rate of 1.27%, with monthly principal and interest payments.

(j) – Fixed rate borrowing at interest rate of 1.97%. Interest only payments with principal due at maturity.

(k) – Fixed rate borrowing at interest rate of 1.97%. Interest only payments with principal due at maturity.

(l) – Fixed rate borrowing at an interest rate of 1.47%, with monthly principal and interest payments.

(m) – Fixed rate borrowing at interest rate of 2.39%. Interest only payments with principal due at maturity.

(n) – Fixed rate borrowing at interest rate of 4.72%. Interest only payments with principal due at maturity.

(o) – Fixed rate borrowing at an interest rate of 4.31%, with monthly principal and interest payments and a balloon payment due at maturity.

(p) – Fixed rate borrowing at an interest rate of 3.05%, with monthly principal and interest payments and a balloon payment due at maturity.

(q) – Fixed rate borrowing at an interest rate of 5.24%, with monthly principal and interest payments and a balloon payment due at maturity.

(r) – Fixed rate borrowing at an interest rate of 3.35%, with monthly principal and interest payments.

(s) – Fixed rate borrowing at an interest rate of 4.00%, with monthly principal and interest payments.

(t) – Fixed rate borrowing at an interest rate of 2.96%, with monthly principal and interest payments.

Each advance is payable at its maturity date, with a prepayment penalty for fixed rate advances.

Other Borrowings

At December 31, 2017 and 2016, the Bank had no outstanding borrowings from unaffiliated institutions under overnight borrowing agreements.

The Bank entered into a borrowing transaction with an unaffiliated institution in March 2007. The proceeds of this borrowing were $10,000 and, as part of this transaction, the Bank pledged certain securities which had a carrying amount of $11,416 at December 31, 2016. The borrowing matured March 20, 2017. The interest rate was fixed and was 5.25% at December 31, 2016.

Subordinated Debentures

In 2007, the Corporation issued two $10,000 floating rate trust preferred securities as part of a pooled offering of such securities. The interest rate on each offering is determined quarterly and floats based on the 3 month LIBOR plus 1.55% and was 3.14% at December 31, 2017 and 2.51% at December 31, 2016. The Corporation issued subordinated debentures to the trusts in exchange for the proceeds of the

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offerings, which debentures represent the sole assets of the trusts. The subordinated debentures must be redeemed no later than 2037. The Corporation may redeem the debentures, in whole or in part, at face value at any time. The Corporation has the option to defer interest payments from time to time for a period not to exceed five consecutive years. Although the trusts are variable interest entities, the Corporation is not the primary beneficiary. As a result, because the trusts are not consolidated with the Corporation, the Corporation does not report the securities issued by the trusts as liabilities. Instead, the Corporation reports as liabilities the subordinated debentures issued by the Corporation and held by the trusts, since the liabilities are not eliminated in consolidation.

In September 2016, the Corporation completed a private placement of $50,000 in aggregate principal amount of fixed-to-floating rate subordinated notes. The notes will mature in October 2026, and will initially bear interest at a fixed rate of 5.75% per annum, payable semi-annually in arrears, to, but excluding, October 15, 2021, and thereafter to, but excluding, the maturity date or earlier redemption, the interest rate shall reset quarterly to an interest rate per annum equal to the then current three-month LIBOR rate plus 4.55%. These subordinated notes were designed to qualify as Tier 2 capital under the Federal Reserve’s capital guidelines and were given an investment grade rating of BBB- by Kroll Bond Rating Agency.

Maturity Schedule of All Borrowed Funds

The following is a schedule of maturities of all borrowed funds as of December 31, 2017:

2018	$	62,242
2019		47,562
2020		37,505
2021		33,740
2022		72,931
Thereafter		73,999
Total borrowed funds	$	327,979

12.  Interest Rate Swaps

On May 3, 2011, the Corporation executed an interest rate swap agreement with a 5 year term and an effective date of September 15, 2013 in order to hedge cash flows associated with $10 million of a subordinated note that was issued by the Corporation during 2007 and elected cash flow hedge accounting for the agreement. The Corporation’s objective in using this derivative is to add stability to interest expense and to manage its exposure to interest rate risk. The interest rate swap involves the receipt of variable-rate amounts in exchange for fixed-rate payments from September 15, 2013 to September 15, 2018 without exchange of the underlying notional amount. At December 31, 2017, the variable rate on the subordinated debt was 3.14% (LIBOR plus 155 basis points) and the Corporation was paying 5.57% (4.02% fixed rate plus 155 basis points).

As of December 31, 2017 and 2016, no derivatives were designated as fair value hedges or hedges of net investments in foreign operations. Additionally, the Corporation does not use derivatives for trading or speculative purposes and currently does not have any derivatives that are not designated as hedges.

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The following tables provide information about the amounts and locations of activity related to the interest rate swaps designated as cash flow hedges within the Corporation’s consolidated balance sheet and statement of income as of December 31, 2017 and 2016 and for the years ended December 31, 2017, 2016, and 2015:

As of December 31	Liability Derivative
	Balance Sheet	Fair value
	Location	2017	2016
Interest rate contract	Accrued interest payable and other liabilities	($161)	($459)
For the Year Ended December 31, 2017	(a)	(b)		(c)	(d)	(e)
Interest rate contract	$194	Interest expense – subordinated debentures		($288)	Other income	$0
For the Year Ended December 31, 2016
Interest rate contract	$180	Interest expense – subordinated debentures		($340)	Other income	$0
For the Year Ended December 31, 2015
Interest rate contract	$137	Interest expense – subordinated debentures		($378)	Other income	$0

(a) Amount of Gain Recognized in Other Comprehensive Loss on Derivative (Effective Portion), net of tax

(b) Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)

(c) Amount of Loss Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)

(d) Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)

(e) Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)

Amounts reported in accumulated other comprehensive loss related to the interest rate swap will be reclassified to interest expense as interest payments are made on the subordinated debentures. Such amounts reclassified from accumulated other comprehensive loss to interest expense in the next twelve months are expected to be $270.

As of December 31, 2017 and 2016, a cash collateral balance of $1,400 was maintained with the counterparty to the interest rate swaps. These balances are included in interest bearing deposits with other banks on the consolidated balance sheets.

During 2016, the Corporation entered into certain interest rate swap contracts that are not designated as hedging instruments. These derivative contracts relate to transactions in which the Corporation enters into an interest rate swap with a customer while at the same time entering into an offsetting interest rate swap with another financial institution. In connection with each swap transaction, the Corporation

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agrees to pay interest to the customer on a notional amount at a variable interest rate and receive interest from the customer on a similar notional amount at a fixed interest rate. Concurrently, the Corporation agrees to pay another financial institution the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount. The transaction allows the Corporation’s customers to effectively convert a variable rate loan to a fixed rate. Because the Corporation acts as an intermediary for its customer, changes in the fair value of the underlying derivative contracts offset each other and do not impact the Corporation’s results of operations.

The following table provides information about the amounts and locations of activity related to the back-to-back interest rate swaps within the Corporation’s consolidated balance sheet as of December 31, 2017 and 2016:

	Notional Amount			Average Maturity (in years)		Weighted Average Fixed Rate			Weighted Average Variable Rate	Fair Value
December 31, 2017
3rd Party interest rate swaps	$	11,848			8.0		4.51	%	1 month LIBOR + 2.37%	$	149 (a)
Customer interest rate swaps		(11,848	)		8.0		4.51	%	1 month LIBOR + 2.37%		(149) (b)
December 31, 2016
3rd Party interest rate swaps	$	14,814			9.7		4.43	%	1 month LIBOR + 2.35%	$	211 (a)
Customer interest rate swaps		(14,814	)		9.7		4.43	%	1 month LIBOR + 2.35%		(211) (b)

(a) Reported in accrued interest receivable and other assets within the consolidated balance sheets

(b) Reported in accrued interest payable and other liabilities within the consolidated balance sheets

13.  Income Taxes

The following is a summary of income tax expense for the years ended December 31, 2017, 2016, and 2015:

	2017		2016			2015
Current – federal	$	8,978	$	6,181		$	7,777
Current – state		29		(33	)		139
Deferred – federal		376		1,023			376
Deferred tax adjustment related to reduction in U.S. federal statutory income tax rate		3,009		0			0
Income tax expense	$	12,392	$	7,171		$	8,292

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The reconciliation of income tax attributable to pre-tax income at the federal statutory tax rates to income tax expense is as follows:

	2017			%			2016			%			2015			%
Tax at statutory rate	$	12,688			35.0		$	9,699			35.0		$	10,671			35.0
Tax exempt income, net		(1,899	)		(5.2	)		(2,054	)		(7.4	)		(1,816	)		(6.0	)
Deferred tax adjustment related to reduction in U.S. federal statutory income tax rate		3,009			8.3			0			0.00			0			0.0
Bank owned life insurance		(581	)		(1.6	)		(379	)		(1.3	)		(418	)		(1.4	)
Merger costs		0			0.0			170			0.6			30			0.1
Other		(825	)		(2.3	)		(265	)		(1.0	)		(175	)		(0.5	)
Income tax expense	$	12,392			34.2		$	7,171			25.9		$	8,292			27.2

Income tax expense for 2017 was impacted by the adjustment of our deferred tax assets and liabilities related to the reduction in the U.S. federal statutory income tax rate to 21% under the Tax Cuts and Jobs Act, which was enacted on December 22, 2017. As a result of the new law, which is more fully discussed below, the Corporation recognized additional tax expense totaling $3,009, as detailed in the table above.

Year-end deferred taxes are presented in the table below. As a result of the Tax Cuts and Jobs Act enacted on December 22, 2017 (discussed below), deferred taxes as of December 31, 2017 are based on the newly enacted U.S. statutory federal income tax rate of 21%. Deferred taxes as of December 31, 2016 are based on the previously enacted U.S. statutory federal income tax rate of 35%.

	2017		2016
Deferred tax assets:
Allowance for loan losses	$	2,840	$	4,679
Fair value adjustments – business combination		1,135		2,530
Deferred compensation		1,903		2,891
Impaired security valuation		0		379
Net operating loss carryover		71		627
Post-retirement benefits		892		1,688
Unrealized loss on interest rate swap		34		161
Nonaccrual loan interest		390		649
Accrued expenses		699		1,282
Deferred fees and costs		598		629
Other		344		465
		8,906		15,980
Deferred tax liabilities:
Unrealized gain on securities available for sale		126		750
Premises and equipment		1,413		2,258
Unrealized gain on trading securities		156		118
Intangibles – section 197		2,593		4,735
Mortgage servicing rights		291		487
Other		78		23
		4,657		8,371
Net deferred tax asset	$	4,249	$	7,609

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At December 31, 2017 and 2016, the Corporation has no unrecognized tax benefits. The Corporation does not expect the total amount of unrecognized tax benefits to significantly increase in the next twelve months.

The Corporation recognizes interest and/or penalties related to income tax matters as part of income tax expense. At December 31, 2017 and 2016, there were no amounts accrued for interest and/or penalties and no amounts recorded as expense for the years ending December 31, 2017, 2016, and 2015.

The Corporation and its subsidiaries are subject to U.S. federal income tax. The Corporation is no longer subject to examination by the taxing authorities for years prior to 2013. Tax years 2014 through 2016 remain open to federal examination.

In connection with its acquisition of FC Banc Corp., the Corporation assumed a federal net operating loss carryforward of $6,367, which expires in 2033. Under Section 382 of the Internal Revenue Code, the utilization of the loss carryforward in future years is limited based on the consideration paid and other factors. The annual limitation on the utilization of this loss carry forward is $1,455. As of December 31, 2017, the balance of the net operating loss carryforward is $338. Management believes that the net operating loss carryforward will be used in full before its expiration.

The Tax Cuts and Jobs Act was enacted on December 22, 2017. Among other things, the new law (i) establishes a new, flat corporate federal statutory income tax rate of 21%, (ii) eliminates the corporate alternative minimum tax and allows the use of any such carryforwards to offset regular tax liability for any taxable year, (iii) limits the deduction for net interest expense incurred by U.S. corporations, (iv) allows businesses to immediately expense, for tax purposes, the cost of new investments in certain qualified depreciable assets, (v) eliminates or reduces certain deductions related to meals and entertainment expenses, (vi) modifies the limitation on excessive employee remuneration to eliminate the exception for performance-based compensation and clarifies the definition of a covered employee and (vii) limits the deductibility of deposit insurance premiums. The Tax Cuts and Jobs Act also significantly changes U.S. tax law related to foreign operations, however, such changes do not currently impact us.

14.  Employee Benefit Plans

The Corporation sponsors a contributory defined contribution Section 401(k) plan in which substantially all employees participate. The plan permits employees to make pre-tax contributions which are matched by the Corporation at 100% for every 1% contributed up to 3% then 50% for every 1% contributed up to the next 2% in total of the employee’s compensation. The Corporation’s matching contribution and related expenses were $802, $652 and $508 in 2017, 2016, and 2015, respectively. Profit sharing contributions to this plan, based on current year compensation, are 6.0% of total compensation plus 5.7% of the compensation in excess of $127. The Corporation recognized profit sharing expense of $1,755, $1,276 and $868 in 2017, 2016, and 2015 respectively.

The Corporation has adopted a non-qualified supplemental executive retirement plan (“SERP”) for certain executives to compensate those executive participants in the Corporation’s retirement plan whose benefits are limited by compensation limitations under current tax law. The SERP is considered an unfunded plan for tax and ERISA purposes and all obligations arising under the SERP are payable from the general assets of the Corporation. At December 31, 2017 and 2016, obligations of $5,349 and $4,958, respectively, were included in other liabilities for this plan. Expenses related to this plan were $648 in 2017, $550 in 2016 and $608 in 2015.

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The Corporation has established a Survivor Benefit Plan for the benefit of outside directors. The purpose of the plan is to provide life insurance benefits to beneficiaries of the Corporation’s directors who at the time of their death are participants in the plan. The plan is considered an unfunded plan for tax and ERISA purposes and all obligations arising under the plan are payable from the general assets of the Corporation. At December 31, 2017 and 2016, obligations of $1,264 and $1,175, respectively, were included in other liabilities for this plan. Expenses related to this plan were $89 in 2017, $33 in 2016 and $155 in 2015.

The Corporation has an unfunded post retirement benefits plan which provides certain health care benefits for retired employees who have reached the age of 60 and retired with 30 years of service. The plan was amended in 2013 to include only employees hired prior to January 1, 2000. Benefits are provided for these retired employees and their qualifying dependents from the age of 60 through the age of 65.

The following table sets forth the change in the benefit obligation of the plan as of and for the years ended December 31, 2017, 2016, and 2015:

	2017			2016			2015
Benefit obligation at beginning of year	$	3,409		$	3,066		$	2,744
Interest cost		114			108			90
Service cost		103			103			96
Actual claims		(78	)		(151	)		(109	)
Actuarial (gain) loss		(808	)		283			245
Benefit obligation at end of year	$	2,740		$	3,409		$	3,066

Amounts recognized in accumulated other comprehensive income at December 31, 2017 and 2016 consist of:

	2017			2016
Net actuarial loss	$	(871	)	$	(1,871	)
Tax effect		183			654
	$	(688	)	$	(1,217	)

The accumulated benefit obligation was $2,740 and $3,409 at December 31, 2017 and 2016, respectively.

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The following table sets forth the components of net periodic benefit cost and other amounts recognized in other comprehensive income:

	2017			2016			2015
Service cost	$	103		$	103		$	96
Interest cost		114			108			90
Net amortization of transition obligation and actuarial loss		192			184			173
Net periodic benefit cost		409			395			359
Net (gain) loss		(808	)		282			311
Amortization of loss		(192	)		(184	)		(173	)
Total recognized in other comprehensive income		(1,000	)		98			138
Total recognized in net periodic benefit cost and other comprehensive income	$	(591	)	$	493		$	497

The estimated net loss that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year is $84.

The weighted average discount rate used to calculate net periodic benefit cost was 3.49% in 2017, 3.67% in 2016, and 3.42% in 2015. The weighted average rate used to calculate accrued benefit obligations was 3.13% in 2017, 3.49% in 2016, and 3.67% in 2015. The health care cost trend rate used to measure the expected costs of benefits is 5.0% for 2018 and thereafter. A one percent increase in the health care trend rates would result in an increase of $267 in the benefit obligation as of December 31, 2017, and would increase the service and interest costs by $19 in future periods. A similar one percent decrease in health care trend rates would result in a decrease of $218 and $15 in the benefit obligation and services and interest costs, respectively, at December 31, 2017.

15.  Deferred Compensation Plans

Deferred compensation plans cover all directors and certain officers. Under the plans, the Corporation pays each participant, or their beneficiary, the value of the participant’s account over a maximum period of 10 years, beginning with the individual’s termination of service. A liability is accrued for the obligation under these plans.

A summary of changes in the deferred compensation plan liability follows:

	2017			2016			2015
Balance, beginning of year	$	2,080		$	1,226		$	1,087
Deferrals, dividends, and changes in fair value recorded as an expense		444			936			209
Deferred compensation payments		(21	)		(82	)		(70	)
Balance, end of year	$	2,503		$	2,080		$	1,226

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16. Stock-Based Compensation

A summary of changes in nonvested restricted stock awards follows:

	Shares			Weighted-average Grant Date Fair Value
Nonvested at January 1, 2017		100,726			$17.36
Granted		39,673			25.94
Forfeited		(2,482	)		21.12
Vested		(43,445	)		17.54
Nonvested at December 31, 2017		94,472			$20.79

As of December 31, 2017 and 2016, there was $1,243 and $1,190, respectively, of total unrecognized compensation cost related to nonvested shares granted under the restricted stock award plan. The fair value of shares vesting during 2017, 2016, and 2015 was $1,035, $624 and $530, respectively. Compensation expense for restricted stock awards was $928 in 2017, $820 in 2016 and $621 in 2015.

The number of authorized stock-based awards still available for grant as of December 31, 2017 was 219,800.

In addition to the time-based restricted stock disclosed above, the Corporation’s Board of Directors granted performance-based restricted stock awards (“PBRSAs”) with a maximum of 10,000 shares to an employee in 2017. The number of PBRSAs will depend on certain performance conditions and are also subject to service-based vesting.

17.  Related Party Transactions

In the ordinary course of business, the Bank has transactions, including loans and credit cards, with its officers, directors, and their affiliated companies. The aggregate of such loans and credit cards totaled $5,331 on December 31, 2017 compared to $4,357 on December 31, 2016. During 2017, $1,816 in new loans were made, $25 were added for the net change in outstanding credit card balances, $200 were removed due to a change in the composition of related parties, and repayments totaled $667.

Deposits from principal officers, directors, and their affiliates were $11,982 and $14,434 at December 31, 2017 and 2016, respectively.

18.  Capital Requirements and Restrictions on Retained Earnings

Banks and financial holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, for the Bank, prompt corrective action (PCA) regulations involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can result in regulatory enforcement actions. Under the Basel III rules, the Corporation and Bank must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios. The capital conservation buffer is being phased in from 0.0% for 2015 to 2.50% by 2019. The capital conservation

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buffer for 2017 is 1.25% and for 2016 is 0.625%. The net unrealized gain or loss on available for sale securities are excluded from computing regulatory capital. Management believes as of December 31, 2017 the Corporation and Bank meet all capital adequacy requirements to which they are subject.

The PCA regulations provide five capital categories: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms alone do not represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion; brokered deposits may not be accepted, renewed or rolled over; and capital restoration plans are required. As of December 31, 2017 and 2016, the most recent regulatory notifications categorized the Bank as well capitalized under the PCA regulatory framework. There are no events or conditions since this notification that management believes have changed the Bank’s capital category.

Actual and required capital amounts and ratios are presented below as of December 31, 2017 and 2016. The capital adequacy ratio includes the capital conservation buffer.

	Actual					For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio		Amount		Ratio
December 31, 2017
Total Capital to Risk Weighted Assets
Consolidated		$297,708		14.32	%		$192,341		9.25%		N/A
Bank		$279,704		13.58	%		$190,513		9.25%		$205,960		10.00%
Tier 1 (Core) Capital to Risk Weighted Assets
Consolidated		$228,015		10.97	%		$150,754		7.25%		N/A
Bank		$261,643		12.70	%		$149,321		7.25%		$164,768		8.00%
Common equity Tier 1 to Risk Weighted Assets
Consolidated		$208,015		10.00	%		$119,563		5.75%		N/A
Bank		$254,264		12.35	%		$118,427		5.75%		$133,874		6.50%
Tier 1 (Core) Capital to Average Assets
Consolidated		$228,015		8.45	%		$107,969		4.00%		N/A
Bank		$261,643		9.80	%		$106,798		4.00%		$133,498		5.00%
December 31, 2016
Total Capital to Risk Weighted Assets
Consolidated		$261,530		14.05	%		$160,501		8.625%		N/A
Bank		$242,592		13.19	%		$158,590		8.625%		$183,873		10.00%
Tier 1 (Core) Capital to Risk Weighted Assets
Consolidated		$195,200		10.49	%		$123,283		6.625%		N/A
Bank		$228,109		12.41	%		$121,816		6.625%		$147,098		8.00%
Common equity Tier 1 to Risk Weighted Assets
Consolidated		$175,200		9.41	%		$95,370		5.125%		N/A
Bank		$220,730		12.00	%		$94,235		5.125%		$119,517		6.50%
Tier 1 (Core) Capital to Average Assets
Consolidated		$195,200		7.85	%		$99,430		4.00%		N/A
Bank		$228,109		9.36	%		$97,527		4.00%		$121,909		5.00%

The final rules implementing Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (Basel III rules) became effective for the Company on January 1, 2015 with full compliance with

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all of the requirements being phased in over a multi-year schedule, and fully phased in by January 1, 2019. The net unrealized gain or loss on available for sales securities is included in computing regulatory capital.

Certain restrictions exist regarding the ability of the Bank to transfer funds to the Corporation in the form of cash dividends, loans or advances. During 2018, $30,615 of accumulated net earnings of the Bank included in consolidated stockholders’ equity, plus any 2018 net profits retained to the date of the dividend declared, is available for distribution to the Corporation as dividends without prior regulatory approval, subject to regulatory capital requirements described above.

19.  Off-Balance Sheet Activities

Some financial instruments, such as loan commitments, credit lines, letters of credit, and overdraft protection, are issued to meet customer financing needs. These are agreements to provide credit or to support the credit of others, as long as conditions established in the contract are met, and usually have expiration dates. Commitments may expire without being used. Off-balance sheet risk to credit loss exists up to the face amount of these instruments, although material losses are not anticipated. The same credit policies are used to make such commitments as are used for loans, including obtaining collateral at exercise of the commitment.

The contractual amount of financial instruments with off-balance sheet risk was as follows at December 31, 2017 and 2016:

	2017				2016
	Fixed Rate		Variable Rate		Fixed Rate		Variable Rate
Commitments to make loans		$64,799		$210,987		$57,283		$202,883
Unused lines of credit		0		118,348		0		105,779
Standby letters of credit		0		14,985		0		4,618

Commitments to make loans are generally made for periods of 60 days or less. The fixed rate loan commitments at December 31, 2017 have interest rates ranging from 1.00% to 18.00% and maturities ranging from 8 months to 30 years. The fixed rate loan commitments at December 31, 2016 have interest rates ranging from 1.19% to 18.00% and maturities ranging from 6 months to 30 years.

In October 2015, the Corporation entered into a subscription agreement with Oxer BCP Mezzanine Fund, LP (“Oxer”) and committed to invest $5,000 as a limited partner in the fund. In February 2017, the Corporation entered into a subscription agreement with Tecum Capital Partners II, LP (“Tecum”) and committed to invest $3,000 as a limited partner in the fund. Oxer and Tecum are both Small Business Investment Company (SBIC) that are licensed and regulated by the Office of Investment at the Small Business Administration (SBA). The SBIC license allows SBICs to employ private capital and funds borrowed at a low cost using SBA-guaranteed securities to make investments in qualifying small businesses and similar enterprises as defined by SBA regulations. As of December 31, 2017, the Bank has made $3,290 of capital contributions to Oxer and $1,167 of capital contributions to Tecum.

20.  Fair Value

Fair Value Measurement

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an

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orderly transaction between market participants on the measurement date. A fair value hierarchy has also been established which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The following three levels of inputs are used to measure fair value:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The fair values of most trading securities and securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

The Corporation’s structured pooled trust preferred securities are priced using Level 3 inputs. The decline in the level of observable inputs and market activity in this class of investments by the measurement date has been significant and resulted in unreliable external pricing. Broker pricing and bid/ask spreads, when available, vary widely, and the once-active market has become comparatively inactive. The Corporation engaged a third party consultant who has developed a model for pricing these securities. Information such as historical and current performance of the underlying collateral, deferral and default rates, collateral coverage ratios, break in yield calculations, cash flow projections, liquidity and credit premiums required by a market participant, and financial trend analysis with respect to the individual issuing financial institutions and insurance companies are utilized in determining the security valuation. Due to the current market conditions as well as the limited trading activity of these types of securities, the market value of the Corporation’s structured pooled trust preferred securities are highly sensitive to assumption changes and market volatility.

The Corporation’s derivative instruments are interest rate swaps that are similar to those that trade in liquid markets. As such, significant fair value inputs can generally be verified and do not typically involve significant management judgments (Level 2 inputs).

The fair value of impaired loans with specific allocations of the allowance for loan losses is generally based on recent real estate appraisals prepared by third-parties. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Management also adjusts appraised values based on the length of time that has passed since the appraisal date and other factors. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

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Assets and liabilities measured at fair value on a recurring basis are as follows at December 31, 2017 and 2016:

				Fair Value Measurements at December 31, 2017 Using
Description	Total			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Assets:
Securities Available For Sale:
U.S. Government sponsored entities	$	108,148		$	0	$	108,148		$	0
States and political subdivisions		137,723			0		137,723			0
Residential and multi-family mortgage		109,636			0		109,636			0
Corporate notes and bonds		17,200			0		17,200			0
Pooled SBA		36,040			0		36,040			0
Other equity securities		962			962		0			0
Total Securities Available For Sale	$	409,709		$	962	$	408,747		$	0
Interest Rate swaps:	$	149		$	0	$	149		$	0
Trading Securities:
Corporate equity securities	$	5,125		$	5,125	$	0		$	0
Mutual funds		1,499			1,499		0			0
Certificates of deposit		220			220		0			0
Corporate notes and bonds		254			254		0			0
U.S. Government sponsored entities		52			0		52			0
Total Trading Securities	$	7,150		$	7,098	$	52		$	0
Liabilities
Interest rate swaps	$	(310	)	$	0	$	(310	)	$	0
				Fair Value Measurements at December 31, 2016 Using
Description	Total			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Assets:
Securities Available For Sale:
U.S. Government sponsored entities	$	140,351		$	0	$	140,351		$	0
States and political subdivisions		157,037			0		157,037			0
Residential and multi-family mortgage		134,976			0		134,976			0
Corporate notes and bonds		17,414			0		17,414			0
Pooled trust preferred		2,049			0		0			2,049
Pooled SBA		43,037			0		43,037			0
Other equity securities		971			971		0			0
Total Securities Available For Sale	$	495,835		$	971	$	492,815		$	2,049
Interest Rate swaps:	$	211		$	0	$	211		$	0
Trading Securities:
Corporate equity securities	$	3,312		$	3,312	$	0		$	0
Mutual funds		1,037			1,037		0			0
Certificates of deposit		202			202		0			0
Corporate notes and bonds		254			254		0			0
U.S. Government sponsored entities		53			0		53			0
Total Trading Securities	$	4,858		$	4,805	$	53		$	0
Liabilities
Interest rate swaps	$	(670	)	$	0	$	(670	)	$	0

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The table below presents a reconciliation and income statement classification of gains and losses for all securities available for sale measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the year ended December 31, 2017:

	Pooled trust preferred
Balance, January 1, 2017	$	2,049
Total gains or (losses):
Included in other comprehensive income (loss)		134
Sale of available-for-sale securities		(2,183	)
Balance, December 31, 2017	$	0

The table below presents a reconciliation and income statement classification of gains and losses for all securities available for sale measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the year ended December 31, 2016:

	Pooled trust preferred
Balance, January 1, 2016	$	3,413
Total gains or (losses):
Included in other comprehensive income (loss)		(442	)
Included in realized gains on available-for-sale securities		0
Sale of available-for-sale securities		(922	)
Balance, December 31, 2016	$	2,049

There were no Level 3 financial instruments carried at fair value on a recurring basis at December 31, 2017.

The following table presents quantitative information about Level 3 fair value measurements at December 31, 2016:

	Fair value	Valuation Technique	Unobservable Inputs	Input Utilized
Pooled trust preferred	$2,049	Discounted cash flow	Collateral default rate Yield	0.5% in 2016 and thereafter 10%
			Prepayment speed	2.0% constant prepayment rate in 2016 and thereafter

At December 31, 2016 the significant unobservable inputs used in the fair value measurement of the Corporation’s pooled trust preferred securities are collateral default rate, yield, and prepayment speed. Significant increases in specific-issuer default assumptions or decreases in specific-issuer recovery assumptions would result in a lower fair value measurement. Conversely, decreases in specific-issuer default assumptions or increases in specific-issuer recovery assumptions would result in a higher fair value measurement.

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Assets and liabilities measured at fair value on a non-recurring basis are as follows at December 31, 2017 and 2016:

			Fair Value Measurements at December 31, 2017 Using
Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Impaired loans:
Commercial mortgages	$	11		0		0	$	11
			Fair Value Measurements at December 31, 2016 Using
Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Impaired loans:
Commercial mortgages	$	2,067		0		0	$	2,067

Impaired loans measured for impairment using the fair value of collateral for collateral dependent loans had a recorded investment of $646, with a valuation allowance of $635 as of December 31, 2017, resulting in an additional provision for loan losses of ($418) for the year then ended. Impaired loans measured for impairment using the fair value of collateral for collateral dependent loans had a recorded investment of $3,120, with a valuation allowance of $1,053 as of December 31, 2016, resulting in an additional provision for loan losses of ($189) for the year then ended.

The estimated fair values of impaired collateral dependent loans such as commercial or residential mortgages are determined primarily through third-party appraisals. When a collateral dependent loan, such as a commercial or residential mortgage loan, becomes impaired, a decision is made regarding whether an updated certified appraisal of the real estate is necessary. This decision is based on various considerations, including the age of the most recent appraisal, the loan-to-value ratio based on the original appraisal, and the condition of the property. Appraised values are discounted to arrive at the estimated selling price of the collateral and a further reduction for estimated costs to sell the property is applied, which results in an amount that is considered to be the estimated fair value. If a loan becomes impaired and the appraisal of related loan collateral is outdated, management applies an appropriate adjustment factor based on its experience with current valuations of similar collateral in determining the loan’s estimated fair value and resulting allowance for loan losses. Third-party appraisals are not customarily obtained in respect of unimpaired loans, unless in management’s view changes in circumstances warrant obtaining an updated appraisal.

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The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at December 31, 2017:

	Fair value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Impaired loans – commercial mortgages	$	11	Discounted cash flow method	Discount used in discounted cash flow method	10% (10%)

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at December 31, 2016:

	Fair value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Impaired loans – commercial mortgages	$	2,067	Sales comparison approach and discounted cash flow method	Adjustment for differences between the comparable sales and discount used in discounted cash flows	10% – 14% (13%)

Fair Value of Financial Instruments

The following table presents the carrying amount and fair value of financial instruments at December 31, 2017:

	Carrying Amount			Fair Value Measurement Using:									Total Fair Value
				Level 1			Level 2			Level 3
ASSETS
Cash and cash equivalents	$	35,345		$	35,345		$	0		$	0		$	35,345
Securities available for sale		409,709			962			408,747			0			409,709
Trading securities		7,150			7,098			52			0			7,150
Loans held for sale		852			0			853			0			853
Net loans		2,126,266			0			0			2,126,824			2,126,824
FHLB and other equity interests		21,517			n/a			n/a			n/a			n/a
Interest rate swaps		149			0			149			0			149
Accrued interest receivable		9,254			6			2,651			6,597			9,254
LIABILITIES
Deposits	$	(2,167,815	)	$	(1,802,844	)	$	(362,756	)	$	0		$	(2,165,600	)
FHLB and other borrowings		(257,359	)		0			(257,361	)		0			(257,361	)
Subordinated debentures		(70,620	)		0			(63,575	)		0			(63,575	)
Deposits held for sale		0			0			0			0			0
Interest rate swaps		(310	)		0			(310	)		0			(310	)
Accrued interest payable		(554	)		0			(554	)		(0	)		(554	)

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The following table presents the carrying amount and fair value of financial instruments at December 31, 2016:

	Carrying Amount			Fair Value Measurement Using:								Total Fair Value
				Level 1			Level 2			Level 3
ASSETS
Cash and cash equivalents	$	29,183		$	29,183		$	0		$	0	$	29,183
Securities available for sale		495,835			971			492,815			2,049		495,835
Trading securities		4,858			4,805			53			0		4,858
Loans held for sale		7,528			0			7,553			0		7,553
Net loans		1,857,206			0			0			1,817,341		1,817,341
FHLB and other equity interests		19,186			n/a			n/a			n/a		n/a
Interest rate swaps		211			0			211			0		211
Accrued interest receivable		8,264			6			3,014			5,244		8,264
LIABILITIES
Deposits	$	(2,017,522	)	$	(1,785,649	)	$	(219,765	)	$	0	$	(2,005,414	)
FHLB and other borrowings		(237,004	)		0			(226,769	)		0		(226,769	)
Subordinated debentures		(70,620	)		0			(61,831	)		0		(61,831	)
Deposits held for sale		(6,456	)		0			(6,417	)		0		(6,417	)
Interest rate swaps		(670	)		0			(670	)		0		(670	)
Accrued interest payable		(510	)		0			(510	)		0		(510	)

The methods and assumptions, not otherwise presented, used to estimate fair values are described as follows:

Cash and cash equivalents: The carrying amounts of cash and cash equivalents approximate fair values and are classified as Level 1.

Loans held for sale: The fair value of loans held for sale is estimated based upon binding contracts and quotes from third party investors resulting in a Level 2 classification.

Loans: For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values, resulting in a Level 3 classification. Fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality, resulting in a Level 3 classification. Impaired loans are valued at the lower of cost or fair value as described previously. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.

Deposits held for sale: The fair value of deposits held for sale is estimated based upon binding contracts and quotes from third party investors resulting in a Level 2 classification.

FHLB and other equity interests: It is not practical to determine the fair value of Federal Home Loan Bank stock and other equity interests due to restrictions placed on the transferability of these instruments.

Accrued interest receivable: The carrying amount of accrued interest receivable approximates fair value resulting in a classification that is consistent with the asset with which it is associated.

Deposits: The fair values disclosed for demand deposits are, by definition, equal to the amount payable on demand at the reporting date (i.e. their carrying amount), resulting in a Level 1 classification. Fair

99

values for time deposits are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits, resulting in a Level 2 classification.

FHLB and other borrowings: The fair values of the Corporation’s FHLB and other borrowings are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements, resulting in a Level 2 classification.

Subordinated debentures: The fair value of the Corporation’s subordinated debentures are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of arrangements, resulting in a Level 3 classification.

Accrued interest payable: The carrying amount of accrued interest payable approximates fair value resulting in a classification that is consistent with the liability with which it is associated.

While estimates of fair value are based on management’s judgment of the most appropriate factors as of the balance sheet date, there is no assurance that the estimated fair values would have been realized if the assets had been disposed of or the liabilities settled at that date, since market values may differ depending on various circumstances. The estimated fair values would also not apply to subsequent dates.

In addition, other assets and liabilities that are not financial instruments, such as premises and equipment, are not included in the disclosures. Also, non-financial assets such as, among other things, the estimated earnings power of core deposits, the earnings potential of trust accounts, the trained workforce, and customer goodwill, which typically are not recognized on the balance sheet, may have value but are not included in the fair value disclosures.

21.   Parent Company Only Financial Information

CONDENSED BALANCE SHEETS	December 31,
	2017		2016
Assets
Cash	$	1,556	$	1,436
Trading securities		580		529
Investment in bank subsidiary		290,156		257,476
Investment in non-bank subsidiaries		21,781		23,324
Deferreds and Current Receivable		2,055		1,066
Other assets		2,059		2,666
Total assets	$	318,187	$	286,497
Liabilities
Borrowings from subsidiary	$	1,400	$	1,400
Subordinated debentures		70,620		70,620
Other liabilities		2,257		2,693
Total liabilities		74,277		74,713
Total shareholders’ equity		243,910		201,913
Total liabilities and shareholders’ equity	$	318,187	$	286,497

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CONDENSED STATEMENTS OF INCOME	Year Ended December 31,
Income:		2017			2016			2015
Dividends from:
Bank subsidiary	$	8,840		$	8,700		$	10,404
Non-bank subsidiaries		2,250			1,200			323
Other		220			230			157
Total income		11,310			10,130			10,884
Expenses		(4,957	)		(2,611	)		(1,708	)
Income before income taxes and equity in undistributed net income of subsidiaries:		6,353			7,519			9,176
Income tax benefit		1,614			813			547
Equity in undistributed net income of bank subsidiary		17,430			13,184			11,889
Distributions in excess of net income of non-bank subsidiaries		(1,537	)		(976	)		585
Net income	$	23,860		$	20,540		$	22,197

CONDENSED STATEMENTS OF CASH FLOWS	Year Ended December 31,
	2017			2016			2015
Net income
Adjustments to reconcile net income to net cash provided by	$	23,860		$	20,540		$	22,197
operating activities:
Equity in undistributed net income of bank subsidiary		(17,430	)		(13,184	)		(11,889	)
Equity in undistributed net income (distributions in excess of net income) of non-bank subsidiaries		1,537			976			(585	)
Net unrealized gains on trading securities		(12	)		(58	)		(11	)
Decrease (increase) in other assets		(549	)		(1,277	)		9
(Decrease) increase in other liabilities		791			1,645			663
Net cash provided by operating activities		8,197			8,642			10,384
Cash flows from investing activities
Investment in bank subsidiaries		(15,400	)		(49,223	)		0
Net cash used in investing activities		(15,400	)		(49,223	)		0
Cash flows from financing activities:
Dividends paid		(10,094	)		(9,546	)		(9,515	)
Proceeds from issuance of long term debt		0			50,000			0
Purchase of treasury stock		(1,877	)		(44	)		(868	)
Net proceeds from issuance of common stock		19,294			0			0
Net advance from subsidiary		0			50			0
Net cash provided by (used in) financing activities		7,323			40,460			(10,383	)
Net increase (decrease) in cash		120			(121	)		1
Cash beginning of year		1,436			1,557			1,556
Cash end of year	$	1,556		$	1,436		$	1,557

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22.   Other Comprehensive Income

Other comprehensive income components and related tax effects were as follows for the years ended December 31, 2017, 2016, and 2015:

	2017			2016			2015
Unrealized holding losses on available for sale securities	$	(136	)	$	(1,838	)	$	(623	)
Less reclassification adjustment for gains recognized in earnings		(160	)		(83	)		(666	)
Net unrealized losses		(296	)		(1,921	)		(1,289	)
Tax effect		104			672			452
Net-of-tax amount		(192	)		(1,249	)		(837	)
Unrealized holding gains on available for sale securities for which a portion of an other-than-temporary impairment has been recognized in earnings		134			(442	)		2,508
Less reclassification adjustment for gains recognized in earnings		(1,383	)		(922	)		0
Net unrealized gains		(1,249	)		(1,364	)		2,508
Tax effect		437			477			(878	)
Net-of-tax amount		(812	)		(887	)		1,630
Actuarial gain (loss) on postemployment health care plan		808			(282	)		(311	)
Net amortization of transition obligation and actuarial gain		192			184			173
Net unrealized gain (loss) on postemployment health care plan		1,000			(98	)		(138	)
Tax effect		(175	)		34			48
Net-of-tax amount		825			(64	)		(90	)
Unrealized gain (loss) on interest rate swap		10			(63	)		(168	)
Less reclassification adjustment for losses recognized in earnings		288			340			378
Net unrealized gain		298			277			210
Tax effect		(104	)		(97	)		(73	)
Net-of-tax amount		194			180			137
Other comprehensive income (loss)	$	15		$	(2,020	)	$	840

The following is a summary of the change in the accumulated other comprehensive income (loss) balance, net of tax, for the years ended December 31, 2017, 2016, and 2015.

		Balance			Comprehensive			Reclassification of Disproportionate			Balance
		12/31/16			Income (Loss)			Tax Effect			12/31/17
Unrealized gains (losses) on securities available for sale	$	1,393		$	(1,004	)	$	84		$	473
Unrealized gain (loss) on postretirement benefits plan		(1,217	)		825			(298	)		(690	)
Unrealized loss on interest rate swap		(297	)		194			(23	)		(126	)
Total	$	(121	)	$	15		$	(237	)	$	(343	)

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		Balance			Comprehensive			Reclassification of Disproportionate		Balance
		12/31/15			Income (Loss)			Tax Effect		12/31/16
Unrealized gains (losses) on securities available for sale	$	3,529		$	(2,136	)	$	0	$	1,393
Unrealized gain (loss) on postretirement benefits plan		(1,153	)		(64	)		0		(1,217	)
Unrealized loss on interest rate swap		(477	)		180			0		(297	)
Total	$	1,899		$	(2,020	)	$	0	$	(121	)

		Balance			Comprehensive			Reclassification of Disproportionate		Balance
		1/1/15			Income (Loss)			Tax Effect		12/31/15
Unrealized gains (losses) on securities available for sale	$	2,736		$	793		$	0	$	3,529
Unrealized gain (loss) on postretirement benefits plan		(1,063	)		(90	)		0		(1,153	)
Unrealized loss on interest rate swap		(614	)		137			0		(477	)
Total	$	1,059		$	840		$	0	$	1,899

23.   Quarterly Financial Data (Unaudited)

The unaudited quarterly results of operations for the years ended December 31, 2017 and 2016 are as follows:

	Quarters Ended in 2017								Quarters Ended in 2016
	Mar. 31		June 30		Sept. 30		Dec. 31		Mar. 31		June 30		Sept. 30		Dec. 31
Total interest and dividend income	$	25,104	$	27,003	$	28,069	$	28,698	$	22,066	$	22,473	$	24,958	$	24,818
Net interest income		21,202		22,989		23,517		23,801		18,942		19,403		21,933		21,009
Provision for loan losses		1,016		1,134		1,400		3,105		1,196		220		622		2,111
Non-interest income		5,773		5,089		5,032		5,541		3,777		4,819		4,473		4,622
Non-interest expense		17,034		17,797		17,618		17,588		14,814		18,753		17,096		16,455
Net income		6,480		6,683		7,246		3,451		5,019		4,065		6,416		5,040
Net income per share, basic		0.43		0.44		0.47		0.23		0.35		0.28		0.44		0.35
Net income per share, diluted		0.43		0.44		0.47		0.23		0.35		0.28		0.44		0.35

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Report of Independent Registered Public Accounting Firm

	Crowe Horwath LLP Independent Member Crowe Horwath International

Board of Directors and Shareholders

CNB Financial Corporation

Clearfield, Pennsylvania

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of CNB Financial Corporation (the “Corporation”) as of December 31, 2017 and 2016, the related consolidated statements of income and comprehensive income, cash flows and changes in shareholders’ equity for each of the years in the three-year period ended December 31, 2017 and the related notes (collectively referred to as the “financial statements”). We also have audited the Corporation’s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control – Integrated Framework: (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Corporation as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2017 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control – Integrated Framework: (2013) issued by COSO.

Basis for Opinions

The Corporation’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Corporation’s financial statements and an opinion on the Corporation’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Corporation Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material

104

weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

A corporation’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A corporation’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the corporation; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the corporation are being made only in accordance with authorizations of management and directors of the corporation; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the corporation’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Crowe Horwath LLP

Crowe Horwath LLP

We have served as the Corporation’s auditor since 2000.

Cleveland, Ohio

March 8, 2018

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None

ITEM 9A. CONTROLS AND PROCEDURES

The Corporation’s management, under the supervision of and with the participation of the Corporation’s Principal Executive Officer and Principal Financial Officer, has carried out an evaluation of the design and effectiveness of the Corporation’s disclosure controls and procedures as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Securities Exchange Act of 1934 as of the end of the period covered by this report. Based upon that evaluation, management, including the Principal Executive Officer and Principal Financial Officer, have concluded that, as of the end of such period, the Corporation’s disclosure controls and procedures are effective to provide reasonable assurance that all material information required to be disclosed in reports the Corporation files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms.

There was no significant change in the Corporation’s internal control over financial reporting that occurred during the quarter ended December 31, 2017 that has materially affected, or that is reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control Over Financial Reporting

The management of the Corporation is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. The Corporation’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the U.S.

The Corporation’s internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Corporation; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Corporation are being made only in accordance with authorizations of management and directors of the Corporation; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Corporation’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Corporation’s internal control over financial reporting as of December 31, 2017. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in the 2013 Internal

106

Control-Integrated Framework. Based on our assessment and those criteria, management concluded that the Corporation maintained effective internal control over financial reporting as of December 31, 2017. The effectiveness of our internal control over financial reporting as of December 31, 2017 has been audited by Crowe Horwath LLP, an independent registered public accounting firm that audited the Corporation’s financial statements, as stated in their report which is located in Item 8 of this Form 10-K.

Joseph B. Bower, Jr.	Brian W. Wingard
President and Chief Executive Officer	Treasurer and Principal Financial Officer
Date: March 8, 2018	Date: March 8, 2018

107

ITEM 9B. OTHER INFORMATION

None

PART III.

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

See “Part I — Item 1 — Executive Officers” for information about our executive officers, which is incorporated by reference in this Item 10. Other information required by this Item 10 is incorporated herein by reference from our definitive proxy statement for our 2018 annual meeting of stockholders (the “2018 proxy statement”), which we will file with the SEC on or before 120 days after our 2017 fiscal year-end, and which will appear in the 2018 proxy statement under the captions “Proposal 1. Election of Class 1 Directors,” “Corporate Governance – Meetings and Committees of the Board of Directors – Audit Committee” and “Section 16(a) Beneficial Ownership Reporting Compliance.”

The Corporation’s board of directors has approved a Code of Ethics for Officers and Directors. The Code of Ethics can be found at the Bank’s website, www.cnbbank.bank.

ITEM 11. EXECUTIVE COMPENSATION

Information required by this Item 11 is incorporated herein by reference from the 2018 proxy statement, including the information in the 2018 proxy statement appearing under the captions “Executive Compensation” and “Compensation of Directors.”

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information required by this Item 12 is incorporated herein by reference from the 2018 proxy statement, including the information in the 2018 proxy statement appearing under the captions “Stock Ownership” and “Equity Compensation Plan Information.”

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information required by this Item 13 is incorporated herein by reference from the 2018 proxy statement, including the information in the 2018 proxy statement appearing under the captions “Corporate Governance” and “Certain Transactions.”

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information required by this Item 14 is incorporated herein by reference from the 2018 proxy statement, including the information in the 2018 proxy statement appearing under the captions “Corporate Governance—Meetings and Committees of the Board of Directors – Audit Committee” and “Concerning the Independent Registered Public Accountants.”

108

PART IV.

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)(1) The following consolidated financial statements are set forth in Part II, Item 8:

Consolidated Balance Sheets as of December 31, 2017 and 2016

Consolidated Statements of Income and Comprehensive Income for the years ended December 31, 2017, 2016, and 2015

Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016, and 2015

Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2017, 2016, and 2015

Notes to Consolidated Financial Statements

(a)(2)Financial statement schedules are not applicable or are included in the consolidated financial statements or related notes.

(a)(3)The following exhibits (asterisk denotes management contract or compensatory plan) are filed as a part of this report:

Exhibit No.	Description
2.1	Agreement and Plan of Merger, dated as of December 29, 2015, by and between the Corporation, the Bank and Lake National Bank, filed with the SEC as Exhibit 2.1 to the Corporation’s Current Report on Form 8-K filed on December 30, 2015, and incorporated herein by reference.
3.1	Amended and Restated Articles of Incorporation of the Corporation, filed as Appendix B to the 2006 Proxy Statement, filed with the SEC on March 24, 2006, and incorporated herein by reference.
3.2	By-Laws of the Corporation, as amended and restated, filed with the SEC as Exhibit 3.1 to the Corporation’s Current Report on Form 8-K on April 24, 2017, and incorporated herein by reference.
10.1	Employment contract with Joseph B. Bower, Jr., President and Chief Executive Officer, filed as Exhibit 10.1 to Form 8-K, filed with the SEC on May 20, 2016, and incorporated herein by reference.*
10.2	1999 Stock Incentive Plan, filed as Exhibit A to the 1999 Proxy Statement, filed with the SEC on March 29, 1999, and incorporated herein by reference.*
10.3	2009 Stock Incentive Plan, filed as Exhibit 10(iii)-4 to Registration Statement No. 333-159941, filed with the SEC on November 12, 2009, and incorporated herein by reference.*
10.4	Employment contract with Mark D. Breakey, Executive Vice President/Chief Credit Officer, filed as Exhibit 10.4 to Form 8-K, filed with the SEC on March 9, 2012, and incorporated herein by reference.*
10.5	Employment contract with Richard L. Greslick, Jr., Executive Vice President/Chief Operating Officer, filed as Exhibit 10.2 to Form 8-K, filed with the SEC on March 9, 2012, and incorporated herein by reference.*

109

Exhibit No.	Description
10.6	Executive employment contract with Joseph E. Dell, Jr., Senior Vice President/Chief Lending Officer, filed as Exhibit 10.7 to Form 10-K, filed with the SEC on March 7, 2014, and incorporated herein by reference.*
10.7	Executive employment contract with Brian W. Wingard, Treasurer, filed as Exhibit 10.1 to Form 8-K, filed with the SEC on March 25, 2014, and incorporated herein by reference. *
21	Subsidiaries of the Registrant, filed as Exhibit 21 herewith.
23.1	Consent of Independent Registered Public Accounting Firm
31.1	Rule 13a – 14(a)/15d – 14(a) Certification of the Principal Executive Officer
31.2	Rule 13a – 14(a)/15d – 14(a) Certification of the Principal Financial Officer
32.1	Section 1350 Certification
32.2	Section 1350 Certification
99.1	Additional information mailed to shareholders with proxy statement and Form 10-K
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definitions Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

* Denotes management contract or compensatory plan.

ITEM 16. FORM 10-K SUMMARY

None

110

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

			CNB FINANCIAL CORPORATION
			(Registrant)
Date:	March 8, 2018	By:	/s/ Joseph B. Bower, Jr.
			JOSEPH B. BOWER, JR.
			President & Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March 8, 2018.

/s/ Joseph B. Bower, Jr.	/s/ Peter F. Smith
JOSEPH B. BOWER, JR.	PETER F. SMITH, Chairman
President and Director
(Principal Executive Officer)
/s/ Richard L. Greslick, Jr.	/s/ Richard B. Seager
RICHARD L. GRESLICK, JR.	RICHARD B. SEAGER, Director
Secretary and Director
/s/ Brian W. Wingard	/s/ Francis X. Straub, III
BRIAN W. WINGARD	FRANCIS X. STRAUB, III, Director
Treasurer
(Principal Financial and Accounting Officer)
/s/ Dennis L. Merrey	/s/ Peter C. Varischetti
DENNIS L. MERREY, Director	PETER C. VARISCHETTI, Director
/s/ Robert W. Montler
ROBERT W. MONTLER, Director
/s/ Joel E. Peterson
JOEL E. PETERSON, Director
/s/ Deborah Dick Pontzer
DEBORAH DICK PONTZER, Director
/s/ Jeffrey S. Powell
JEFFREY S. POWELL, Director
/s/ Nicholas N. Scott
NICHOLAS N. SCOTT, Director

111

EX-21

Exhibit 21

CNB FINANCIAL CORPORATION

Form 10-K For The Year Ended December 31, 2017

SUBSIDIARIES OF THE REGISTRANT

Name	Jurisdiction of Incorporation or Organization
CNB Bank	Banking Association Chartered in Pennsylvania Incorporated in Pennsylvania
CNB Securities Corporation	Investment Holding Company Incorporated in Delaware
Holiday Financial Services Corporation	Consumer Loan Company Incorporated in Pennsylvania
CNB Insurance Agency	Insurance and Annuity Agency Incorporated in Pennsylvania

EX-23.1

Exhibit 23.1

CNB FINANCIAL CORPORATION

Form 10-K For The Year Ended December 31, 2017

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement No. 333-159941 on Form S-8, Registration Statement No. 333-215449 on Form S-3 and Registration Statement No. 333-163047 on Form S-3D of CNB Financial Corporation of our report dated March 8, 2018 relating to the consolidated financial statements and effectiveness of internal control over financial reporting appearing in this Annual Report on Form 10-K.

/s/ Crowe Horwath LLP

Crowe Horwath LLP

Cleveland, Ohio

March 8, 2018

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Joseph B. Bower, Jr., certify that:

1. I have reviewed this report on Form 10-K of CNB Financial Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 8, 2018

/s/ Joseph B. Bower, Jr.

Joseph B. Bower, Jr.

President

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Brian W. Wingard, certify that:

1. I have reviewed this report on Form 10-K of CNB Financial Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 8, 2018

/s/ Brian W. Wingard

Brian W. Wingard

Treasurer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

SARBANES-OXLEY ACT SECTION 906

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

Pursuant to 18 U.S.C. section 1350, the undersigned officer of CNB Financial Corporation (the “Corporation”) hereby certifies, to such officer’s knowledge, that the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2017 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

	/s/ Joseph B. Bower, Jr.
	Joseph B. Bower, Jr.
Date: March 8, 2018	(President and Chief Executive Officer)

EX-32.2

Exhibit 32.2

SARBANES-OXLEY ACT SECTION 906

CERTIFICATION OF CHIEF FINANCIAL OFFICER

Pursuant to 18 U.S.C. section 1350, the undersigned officer of CNB Financial Corporation (the “Corporation”) hereby certifies, to such officer’s knowledge, that the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2017 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

	/s/ Brian W. Wingard
	Brian W. Wingard
Dated: March 8, 2018	(Treasurer and Chief Financial Officer)

EX-99.1

Exhibit 99.1

2017

ANNUAL REPORT

“When we were looking at putting up a new building or adding In June 2017, CNB Bank hosted its sixth annual charity golf tournament and significant equipment, ERIEBANK has always been our partner in raised $23,800 to benefit the local American Cancer Society (ACS) chapter. The helping us expand.” money raised was used to purchase a vehicle, for the second year in a row and

- Bill Witkowski, Owner of Port Erie Plastics was donated to the ACS Road to Recovery program. The vehicle will provide transportation to and from treatment for people with cancer who do not have a ride or are unable to drive themselves.

Over the past six years the CNB charity golf tournament has raised $130,350 for the ACS, which was used to support programs such as the Wig Program, Hope Lodge, and Road to Recovery.

to co -your workers customers, and community, every time.

Employee experience is a top priority for CNB and they utilize a reward and recognition program that enables employees to recognize their co-workers for exceptional customer service or going above and beyond for one other. In a social media style news feed, employees can post comments and send one another points for a job well done.

CNB acknowledges that happy employees make happy customers and incentivizes its staff to award these points to one another. The points can then be redeemed for gift cards, merchandise, or experiences, such as golf with the President, or donut delivery for the team.

Each month an exceptional experience is chosen by the market Presidents and that employee is awarded with an additional prize.

TABLE OF

CONTENTS

Message to the Shareholders 4-5 Consolidated Financial Highlights 6-7 Board of Directors and Executive Management    8 Shareholder Information    9 CNB Bank 2017 Highlights 10-11 ERIEBANK 2017 Highlights 12-13 FCBank 2017 Highlights 14 BankOnBuffalo 2017 Highlights 15

2017 ANNUAL REPORT HIGHLIGHTS 3

MESSAGE TO OUR SHAREHOLDERS

To Our Shareholders, Customers, Employees & Friends:

Change, challenge and opportunity were at the forefront as we entered 2017. The United States was in the midst of a political upheaval it hadn’t seen in recent history, if ever. The banking community, as well as the overall business world, was in very uncertain times. Eventually, we saw signs of regulatory relief through the very fact that the pace of new regulations virtually came to a halt. This slowdown was much needed by both the industry and our customers. It was time to assess whether the new rules and regulations that have bombarded Financial Institutions on behalf of customers are really having the effect that was intended. This evaluation process will result in some much-needed changes and adjustments to better serve the consumers of financial products. Later in the year, tax reform came. The boost that this new law put into every household and business will provide for additional opportunities, at least in the short run. As the year came to a close, 2017 was a year of very positive change for both employers and employees alike.

CNB’s primary focus has been on our customer’s experience with services and delivery options. We have worked hard to differentiate our offerings as well as to provide newer products such as online commercial treasury services, mobile access and new card technology, to name a few. Then there are the future payment technologies such as person to person (P2P), business to business (B2B), person to business (P2B) and business to person (B2P). These services will continually take more and more cash out of the payment system thus making our efforts against cybercrime more critical than ever. CNB has worked hard to solidify its cyber awareness. We have partnered with various experts to safeguard and monitor our e-commerce activities both internally and externally. Finally, as we consider customer experience, the evolution of delivery channels continues. Our offices have changed from traditional teller lines to universal associates who are trained to handle most customer needs efficiently at any of our locations. More and more optionality appears within our online solutions to allow customers to bank when they want, in the way they want.

Another focus laid out in our strategic plan has included leadership in our communities. CNB strongly believes in fostering an environment of leadership. Our team is encouraged to dedicate time to community organizations that are important to them. It is our mission to provide leadership, time and resources to causes that enhance our communities. A clear example of this is our financial commitment to the Erie Downtown Development Corporation through ERIEBANK. In addition, members of our team will participate in various aspects of this entity’s revitalization of downtown Erie to include being a director. It is an important aspect of our culture to aid our communities and assist them in providing better quality of life for all.

Our success exists within our team. A renewed approach to our team members began several years ago. Today, everyone at CNB has more benefit options available to them than ever before. Our starting wages increased at the beginning of 2018 again, for the third time in five years. More paid time off has been provided to all employees. Consistent, appropriate training is made available to every associate, every year. A group of our newest employees were asked to evaluate our benefits package to determine what, if anything, should be changed. Student loan debt was raised as an item that is hindering the ability of many to advance their lifestyle as the cost of a college education continues to soar out of control. As a result, a program is now being offered to help alleviate some of these mounting pressures. One of the biggest keys to our success has been the art of collaboration. Every team member has a voice in what we do for our customers. Together we make decisions to more effectively service our communities. This allows CNB to not only make decisions more quickly but to implement and ultimately get solutions to market faster as everyone is part of the process and each become change agents, not just task masters.

4 CNB FINANCIAL CORPORATION

The last strategic plan had five pillars of success, as was laid out in the shareholder letter for 2016’s annual report. This year, the focus is more concentrated on three key principles:

1. Be the source of exceptional experiences

2. Foster an environment of leadership

3. Position for long-term growth

I briefly touched on the first two elements which we believe tie into the third. Along with successful communities and valued team members, we have vibrant markets to provide for long-term organic growth opportunities. Buffalo, Cleveland, Columbus and Erie are all markets of growth. We’ve only just begun development of our franchise in these cities, with the exception of Erie, where we are celebrating twelve years and still going strong. Using our business model of four community banks working together, CNB has a sound organic opportunity that is moving in the right direction. These three principles provide the Corporation with the ability to produce significant financial rewards. The 2017 annual report provides you with the result of solid earnings and growth over another year. A few highlights are organic loan growth of 15%, ROE of 11.23% and EPS of $1.77. Both the ROE and EPS measures exclude the adjustment for the new tax law.

I would like to recognize and thank two board members who have recently retired, Bill Falger and Jim Ryan. Bill was the President & CEO for CNB and personally provided me with insight and a vision that helped move the Corporation forward. He has also provided much knowledge and experience as a member of the Board for the past eight years since his retirement from the Bank. Jim has been an inspiration and ambassador of the growth we’ve experienced over the past 19 years. His optimism and energy will be missed inside the boardroom. Jim’s drive was key to our BankOnBuffalo initiative. Gentleman, thank you for all your contributions and best of luck to you as you move toward your next adventures.

In closing, I want to extend a sincere thank you to our customers for doing business with us and the confidence you have in our products, services, and employees; to our first-class employees for their dedication and commitment to our customers and the financial services industry; and to our shareholders for your ownership and support of our strategic vision and execution.    

Joseph B. Bower, Jr.

President and Chief Executive Officer

2017 ANNUAL REPORT HIGHLIGHTS 5

CONSOLIDATED FINANCIAL

HIGHLIGHTS

(dollars in thousands, except per share data)

FOR THE YEAR

2017                2016                 % Change

Interest and Dividend Income    $108,874    $94,315    15.4% Interest Expense                17,365                13,028    33.3% Net Interest Income                91,509                81,287    12.6% Non-interest Income                21,435                17,691    21.2% Non-interest Expense                70,037                67,118    4.3% Net Income                23,860                20,540    16.2%

Net Income Return on:

Average Assets                0.89%                0.85%    4.7% Average Equity                9.97%                9.69%    2.9%

AT YEAR END

Assets $2,768,773 $2,573,821                7.6% Loans, Net of Unearned    2,145,959    1,873,536    14.5% Deposits    2,167,815    2,017,522                7.4% Shareholders’ Equity                243,910                211,784    15.2%

PER SHARE DATA

Net Income, Diluted                $1.57 $1.42    10.6% Dividends                0.66    0.66                -Book Value                15.98 14.64                9.2% Market Value                26.24 26.74    (1.9%)

6 CNB FINANCIAL CORPORATION

ASSET GROWTH (in thousands)

200 400 600 800 1,000 1,000 1,400 1,600 1,800 2,000 2,200 2,400 2,600

2013 $2,131,289 2014 $2,189,213 2015 $2,285,136 2016 $2,573,136 2017 $2,768,773

LOANS, NET OF UNEARNED (in thousands)

150 300 450 600 750 900 1,050 1,200 1,350 1,500 1,650 1,800 1,950 2,100

2013 $1,295,363

FINANCIALS 2014 $1,355,289

2015 $1,577,798

2016 $1,873,536

2017 $2,145,959

NET INTEREST INCOME (in thousands)

$ 10 $20 $30 $40 $ 50 $60 $70 $80 $90

2013 $59,204

2014 $74,595 2015 $74,707 2016 $81,287 2017 $91,509

EARNINGS PER SHARE (diluted)

$.20 .40 .60 .80 1.00 1.20 1.40 1.60

2013 $1.29

2014 $1.60 2015 $1.54 2016 $1.42 2017                

$1.57

BOARD OF DIRECTORS AND EXECUTIVE MANAGEMENT

CORPORATE OFFICERS, CNB FINANCIAL CORPORATION

Joseph B. Bower, Jr. Richard L. Greslick, Jr. Brian W. Wingard

President & Chief Executive Officer Secretary Treasurer & Principal Financial Officer

BOARD OF DIRECTORS

CNB Financial Corporation and CNB Bank

Peter F. Smith Robert W. Montler Nicholas N. Scott

Chairperson of the Board; Attorney at Law President and Chief Executive Officer, Vice President and Owner,                Lee Industries and Keystone Process Scott Enterprises

Joseph B. Bower, Jr.

Equipment Richard B. Seager

President and Chief Executive Officer,

CNB Financial Corporation; President                Joel E. Peterson President and Chief Executive Officer, and Chief Executive Officer, CNB Bank President, Clearfield Wholesale Paper Beacon Light Behavioral Health Systems

Richard L. Greslick, Jr. Deborah Dick Pontzer Francis X. Straub, III

Secretary, CNB Financial Corporation; Economic Development and Workforce Managing Officer and Director,                Senior Executive Vice President                Specialist, Office of Congressman St. Marys Pharmacy, Inc. and                 and Chief Operating Officer, CNB Bank Glenn Thompson Bennetts Valley Pharmacy, Inc.

Dennis L. Merrey Jeffrey S. Powell Peter C. Varischetti

Retired; Former President, Clearfield President, J.J. Powell, Inc. President, Varischetti Holdings, LLC Powdered Metals, Inc.

EXECUTIVE OFFICERS, CNB BANK

Joseph B. Bower, Jr. Richard L. Greslick, Jr. Steven R. Shilling

President and Chief Executive Officer Senior Executive Vice President                Executive Vice President,                 Mark D. Breakey and Chief Operating Officer Private Client Solutions Senior Executive Vice President                Mary Ann Conaway Brian W. Wingard and Chief Credit Officer Executive Vice President,                Executive Vice President                Joseph E. Dell, Jr. Human Resources and Chief Financial Officer Senior Executive Vice President                Leanne D. Kassab and Chief Commercial Banking Officer Executive Vice President,                Customer Experience

CNB SECURITIES CORPORATION, A SUBSIDIARY OF CNB FINANCIAL CORPORATION, WILMINGTON, DE

BOARD OF DIRECTORS CORPORATE OFFICERS BOARD OF DIRECTORS CORPORATE OFFICERS Joseph B. Bower, Jr. Joseph P. Strouse Michael A. Chimera Brian W. Wingard

Chairperson President Director President

Richard L. Greslick, Jr. Francis A. Goss Glenn R. Pentz Evan R. Pizzuto

Secretary Vice President Director Treasurer, Wilmington Trust

Mark D. Breakey Evan R. Pizzuto SP Services, Inc. Director Wilmington Trust SP Services, Elizabeth F. Bothner Inc. Secretary, Wilmington Trust SP Services, Inc.

8 CNB FINANCIAL CORPORATION

SHAREHOLDER

INFORMATION

ANNUAL MEETING QUARTERLY SHARE DATA

The Annual Meeting of the Shareholders of CNB Financial Corporation For information regarding the Corporation’s quarterly share data, will be held Tuesday, April 17, 2018 at 2:00 p.m. at the Corporation’s please refer to Item 5 in the 2017 Form 10-K. headquarters in Clearfield, PA. MARKET MAKERS

CORPORATE ADDRESS The following firm has chosen to make a market in the stock of the CNB Financial Corporation Corporation. Inquiries concerning their services should be directed to:

31 S. Second Street

Boenning & Scattergood, Inc. P.O. Box 42 1700 Market Street, Ste 1420 Clearfield, PA 16830 Philadelphia, PA 19103 (800) 492-3221 (800) 842-8928

STOCK TRANSFER AGENT & REGISTRAR

American Stock Transfer & Trust Company, LLC 6201 15th Avenue Brooklyn, NY 11219 (800) 937-5449

FORM 10-K

Shareholders may obtain a copy of the Annual Report to the Securities and Exchange Commission on Form 10-K by writing to: CNB Financial Corporation

31 S. Second Street P.O. Box 42 Clearfield, PA 16830 ATTN: Shareholder Relations

2017 ANNUAL REPORT HIGHLIGHTS 9

CNB BANK 2017 HIGHLIGHTS

On February 24, 2017, CNB expanded its market presence in Central Pennsyl-vania with a full-service office in Blair County. The new community office is conveniently located in Duncansville, off Plank Road, near Convention Center Boulevard. The facility signifies a multi-million dollar investment by CNB and features a customer and community focus throughout the branch that includes a local based team, images of the Blair County region, an Inter-net kiosk, coffee station, digital displays, open transaction areas with cash dispensers, a self-service coin counter, and a new ATM.

Nine local subcontractors, which together employ 135 individuals, worked on construction of the building for approximately eight months, from July 2016 through February 2017.

Interior of the new community office in Blair County.

In June, 2017 twenty employees successfully graduated as the inaugural class of the CNB Leadership Institute. Given the growth the Bank has been experiencing, and the additional leadership depth that was needed across the entire organization, in 2015 CNB’s senior leadership team felt that it was the right time to enhance the importance of management succession planning and select the inaugural class from within the organization.

CNB Leadership Institute Graduates

The six-session program spanned over the course of 18 months with each session lasting three days. The curriculum focuses on topics such as servant leadership, building self-awareness and individual development through the DiSC personal assessment tool, emotional intelligence, leading and working in high performing teams, effective presentation skills, project management, managing change and conflict, and effective feedback and coaching skills.

The program design also places a focus on leveraging senior leadership to support and reinforce key concepts, creates a long term focus on continuous learning and personal development, and uses simulations and collaborative activities to enhance competencies and reinforce CNB’s values and vision.

A subsidiary of CNB Financial Corporation, CNB Bank is a regional independent community bank with office locations in North Central and Nortwestern Pennsylvania, Northeast Ohio, and Buffalo, New York, with over 500 employees who make customer service more responsive and reliable. For 153 years, the Bank has strived to be more customer-driven than its competitors and to build long-term customer relationships by being reliable and competitively priced.

10 CNB FINANCIAL CORPORATION

CNB BANK SENIOR MANAGEMENT AND OFFICERS

Gregory M. Dixon Vickie L. Baker Tyler A. Kirkwood

Market Executive Assistant Vice President, Market Manager Commercial Banking Officer

Jeffrey W. Alabran James C. Davidson Jacklyn M. Lantzy

Senior Vice President, Commercial Banking Assistant Vice President, Private Banking Community Office Manager, Blair County

Christopher L. Stott Kay E. DellAntonio Lisa A. Marchiori

Senior Vice President, Director of Private Banking Assistant Vice President, Commercial Banking Community Office Manager, DuBois

Craig C. Ball Denise J. Greene James V. Masone

Vice President, Wealth & Asset Management Assistant Vice President, Private Banking Assistant Commercial Banking Officer

Timothy D. Clapper Heather Koptchak Alesia N. McElwee

Vice President, Commercial Banking Assistant Vice President, Market Manager Community Office Manager, Clearfield Main

Michael E. Haines Katie A. Penoyer Dustin A. Minarchick

Vice President, Commercial Banking Assistant Vice President, Treasury Services Commercial Banking Officer

Eric A. Johnson Heather D. Serafini Andrew V. Nedzinski

Vice President, Wealth & Asset Management Assistant Vice President, Private Banking Commercial Banking Officer

R. Michael Love Katie M. Whysong Nadine J. Rodgers

Vice President, Wealth & Asset Management Assistant Vice President, Commercial Banking Banking Officer

Glenn R. Pentz Judy L. Barry Douglas M. Shaffer

Vice President, Wealth & Asset Management Banking Officer, Portfolio Manager Community Office Manager, Punxsutawney

C. Brett Stewart Lori L. Curtis Lori D. Shimel

Vice President, Commercial Banking Community Office Manager, Philipsburg Plaza Community Office Manager, Houtzdale

Calvin R. Thomas, Jr. Danielle D. Daniels Dorthy M. Turner

Vice President, Wealth & Asset Management Commercial Banking Officer Wealth & Asset Management Officer

Joseph H. Yaros Autumn F. Farley Kevin C. Wain

Vice President, Commercial Banking Commercial Banking Officer Community Office Assistant Manager,                Mary A. Baker Caroline Henry Clearfield Industrial Park Road Assistant Vice President, Market Manager Community Office Manager, Karthaus and Kylertown Gregory R. Williams Banking Officer

ADMINISTRATIVE SERVICES

Cory K. Johnston Rebecca A. Coleman Erin L. Brimmeier

Vice President, Controller Assistant Vice President, Operations Operations Officer

Julie L. Martin Andrew D. Franson Michael A. Chimera

Vice President, Commercial Services Assistant Vice President, Wealth & Asset Operations Assistant Controller

Robin W. Mink Officer Thomas W. Grice

Vice President, Senior Treasury Product                Kylie L. Graham IT Branch/Project Manager, Officer and Sales Team Leader Assistant Vice President, Compliance Matthew J. Mills

Eileen F. Ryan Carla M. Higgins IT Manager, Officer Vice President, Mortgage Lending Assistant Vice President, Quality Assurance Manager Brenda L. Terry

Ruth Anne Ryan-Catalano Shannon L. Irwin Banking Officer Vice President, Retail Banking Assistant Vice President, Human Resources Sherry Wallace

John H. Sette Paul A. McDermott Mortgage Banking Officer Vice President, Information Technology Assistant Vice President, Facilities Jessica A. Zupich

Carolyn B. Smeal Amy B. Potter Enterprise Support Officer Vice President, Administration Assistant Vice President, Marketing Joel M. Zupich

Susan M. Warrick B.J. Sterndale Credit Officer Vice President, Operations Assistant Vice President, Training

2017 ANNUAL REPORT HIGHLIGHTS 11

ERIEBANK 2017 HIGHLIGHTS

2017 was a year of grand announcements for ERIEBANK. They kicked everything off with a new community office in Ashtabula, Ohio, in February 2017. The new 4,200 square foot facility represents a significant expansion of the commercial banking service ERIEBANK first began offering to Ashtabula businesses in 2014. The new facility signifie a multi-million dollar investment by ERIEBANK. Ten local subcontractors, which togethe employ more than 100 individuals, worked on construction of the building for approxi mately eight months, from May 2016 through January 2017.

In March, 2017, the formation of an Ohio Advisory Board and the appointment o seven inaugural members was announced. The board provides leadership and guidance as ERIEBANK continues to develop its presence in the northeast Ohio region. Ribbon cutting ceremony at new community office in Ashtabula, Ohio.

As a compliment to ERIEBANK’s sponsorship of 8 Great Tuesdays, a free concert series held annually at the Liberty Park Amphitheater in Erie and organized by the Erie Western PA Port Authority, a new initiative named 8 Great Charities was launched in July, 2017. The contest benefiting local non-profit organizations featured a nomination phase, open to the public via the Bank’s Facebook page, and resulted in eight different organizations receiving a total of $8,000 in donations.

In November, 2017 ERIEBANK announced its investment of $2.5 million in the Erie Downtown Equity Fund in support of the Erie Downtown Development Corporation (EDDC).    The EDDC is a privately funded non-profit organization led by business, university and community leaders seeking to drive economic growth in Erie’s downtown through real estate development.

8 Great Charities Finalists

ERIEBANK was the first financial services institution to announce its commitment to fund the collaborative effort. Karl Sanchack, president and CEO of the Erie Innovation District, emphasized the importance of ERIEBANK’s announcement. “The EDDC needs multi-entity engagement to achieve its goals, and adding the financial expertise of ERIEBANK to this collaboration is simply fantastic. It’s a signpost to a successful future.”

Ending the year with one last major announcement and further solidifying ERIEBANK’s commitment to the community, ERIEBANK and the Greater Regional Erie Athletic Team Training Inc. (G.R.E.A.T.T.) together announced that, through a partnership, the former Family First Sports Park will soon begin a $9.1 million renovation of the facility and be named ERIEBANK Sports Park.

ERIEBANK is supporting the park through financing as well as donations of funds and expertise to move the project forward, committing to a strategic partnership to strengthen the park’s success for years to come.

David Zimmer, ERIEBANK President announcing the naming of ERIEBANK Sports Park.

Headquartered in Erie, Pennsylvania, ERIEBANK is a division of CNB Bank. Presently, there are eight full service offices in Pennsylvania, which house its commercial, retail and private banking divisions, and three full service offices in Ohio. Five of those offices are in Erie, two in Meadville, and one in Warren, Penn-sylvania. The three offices in Ohio are located in Mentor and Ashtabula. In addition, ERIEBANK Investment Advisors provides wealth and asset management services, retirement plans and other employee benefit plans.

12 CNB FINANCIAL CORPORATION

ERIEBANK SENIOR MANAGEMENT AND OFFICERS

David J. Zimmer Timothy J. Roberts Russell G. Daniels

President Vice President, Commercial Banking Retail Banking Officer/Community Office Assistant

Steven M. Cappellino Paul D. Sallie Manager, West 12th Street Senior Vice President, Vice President, Private Banking Erin L. Bednaro

Regional Manager, Crawford County John M. Schulze Community Office Manager, Interchange

William L. DeLuca, Jr. Vice President, Commercial Banking Robert P. Cannon

Senior Vice President, Commercial Banking William J. Vitron, Jr. Community Office Manager, Midland Andrew L. Meinhold Vice President, ERIEBANK Investment Advisors Kimberly L. Coleman Senior Vice President, Regional Manager, Lake County Thomas J. Walker Banking Officer,                David P. Bogardus Vice President, Commercial Banking Commercial Loan Documentation Specialist Vice President, Commercial Banking J. Allen Weaver Tracie A. Harmon

Betsy C. Bort Vice President,                Community Office Manager, Vernon Vice President, Commercial Banking Commercial Banking Team Leader Jaclyn R. Italiani Scott O. Calhoun Kelly S. Buck Community Office Manager, Downtown Vice President, Commercial Banking Assistant Vice President, Private Banking Barbara V. Keim

Timothy A. Flenner Chrystal M. Fairbanks Banking Officer, Portfolio Manager Vice President, Commercial Banking Assistant Vice President, Community Office Manager/ Brenda G. Shaffer Christine Hartog Private Banking, Ashtabula Community Office Manager, Harborcreek Vice President, Market Manager,                Jessica A. Figoli Justin R. Singer

Community Office Manager, Mentor Assistant Vice President, Private Banking Commercial Banking Officer

Katie J. Jones Denise E. Gelofsack Helicia E. Sonney

Vice President, Market Manager Assistant Vice President, Portfolio Manager Community Office Manager, Asbury

Joshua P. Miller Allison M. Hodas Theresa L. Swanson

Vice President, ERIEBANK Investment Advisors Assistant Vice President, Commercial Banking Community Office Manager, Warren

Larry G. Morton, Jr. Bryan G. Kusich Mary J. Taormina

Vice President, ERIEBANK Investment Advisors Assistant Vice President, Commercial Banking Community Office Manager, Meadville

Gregory A. Noon Barbara A. Macks John R. VanTassel

Vice President, Commercial Banking Assistant Vice President,                Treasury Services Officer

Benjamin V. Palazzo ERIEBANK Investment Advisors Abigail L. Williams

Vice President, Commercial Banking James R. Miale Community Office Manager, West 12th Street Assistant Vice President, Commercial Banking Debra A. Masone Community Office Assistant Manager, Meadville

ERIEBANK BOARD OF ADVISORS

Joseph B. Bower, Jr. Jane M. Earll Jerome T. Osborne, III

President and Chief Executive Officer, Esquire; Retired Pennsylvania State Senator President, JTO, Inc. CNB Financial Corporation, CNB Bank David K. Galey Thomas W. Reams

Mark D. Breakey Retired; Former Treasurer and Chief Financial Vice President, C. H. Reams & Associates, Inc. Senior Executive Vice President and Officer, Greenleaf Corporation Nick Scott, Jr.

Chief Credit Officer, CNB Bank Richard L. Greslick, Jr.

Vice President & Owner, Scott Enterprises Gary L. Clark Senior Executive Vice President                James E. Spoden Chief Executive Officer,                and Chief Operating Officer, CNB Bank;                Esquire, MacDonald Illig Jones & Britton, LLP Reed Manufacturing Company Secretary, CNB Financial Corporation

David J. Zimmer Donald W. Damon                 Charles “Boo” Hagerty

Chairperson of the Board; President, ERIEBANK Retired; Former ERIEBANK Senior Vice President President, Hamot Health Foundation

Joseph E. Dell, Jr. Thomas M. Kennedy

Senior Executive Vice President                President, Professional Development Associates, Inc. and Chief Commercial Banking Officer

ERIEBANK OHIO ADVISORY BOARD

Dr. Lundon Albrecht Bryce A. Heinbaugh                Shawn Neece

Owner, Albrecht Family Dentistry;                Managing Partner and Founder,                Director, NMS Certified Public Accountants Dental Consultant, Coltene Whaledent IEN Risk Management Consultants Joseph T. Svete Jennifer Brown Richard J. Kessler President, Svete & McGee Company, LPA Economic Development Specialist, CT Consultants President, Society of Rehabilitation

Richard T. Flenner, Jr. Kevin D. Malecek

Retired; Former President, Lake National Bank Senior Development Officer, Lakeland Foundation and Lakeland Community College

2017 ANNUAL REPORT HIGHLIGHTS 13

The major announcement at FCBank in 2017 was the welcoming of Jenny Saunders as President. Jenny took over leadership of the FCBank team in October 2017. Jenny is a veteran banker with over 30 years of community banking experience.

FCBank, a division of CNB Bank, is headquartered in Worth-ington, Ohio with seven full service offices in the communities of Bucyrus, Shiloh, Cardington, Fredericktown, Worthington, Dublin, and Upper Arlington, plus one loan production office in Lancaster, Ohio. FCBank is driven by a strong focus on meeting the financial needs of businesses and individuals in a way only FCBank headquarters located in Worthington, Ohio. a community bank can deliver. FCBank offers commercial, retail, and private banking services, along with wealth and asset Jenny Saunders, FCBank President management services through FC Financial Services.

FCBANK SENIOR MANAGEMENT AND OFFICERS

Jenny L. Saunders Jack L. Trachtenberg Jared Butler

President Vice President, Private Banking Team Leader Senior Systems Adminstration Team Leader

Neal S. Clark Dean J. Vande Water Ashley N. Lutz

Senior Vice President, Commercial Banking Vice President,                Commercial Banking Officer Donna M. Conley Commercial Real Estate Team Leader Michelle P. Muchow Vice President, Commercial Banking Leader William R. Diehl Executive Assistant, Banking Officer John G. Hock Assistant Vice President, Commercial Banking J. Ralph Parker Vice President, Commercial Banking Annette D. Lester Senior Credit Officer

Steven W. Howard Assistant Vice President ,                Travis M. Smith

Vice President,                Community Office Manager, Cardington Commercial Banking Officer Wealth & Asset Management Team Leader Bernard J. McGuinness Elaine M. Wilson

Robert P. Linnabary Assistant Vice President, Business Development Community Office Manager, Fredericktown Vice President, Commercial Banking Jillian V. Price Christopher A. Winegardner

Linda K. Salters Assistant Vice President, Private Banking Community Office Manager, Worthington Vice President, Market Manager Sam P. Rawal Clara J. McClung Assistant Vice President, Private Banking Community Office Assistant Manager, Worthington

FCBANK BOARD OF ADVISORS

Joseph B. Bower, Jr. Richard L. Greslick, Jr. Jenny L. Saunders

President and Chief Executive Officer, Senior Executive Vice President & Chairperson of the Board, President, FCBank CNB Financial Corporation, CNB Bank Chief Operating Officer, CNB Bank;                Sam Shim Mark D. Breakey Secretary, CNB Financial Corporation Board Member, Worthington City Schools Senior Executive Vice President & Lawrence A. Morrison Julie Young Chief Credit Officer, CNB Bank CPA and Partner, Kleshinski, Morrison & Morris, LLP Human Resources Attorney, JMY Law, LLC

Jennifer Carney Jason Pohl

Partner and Co-Founder,                Partner and Co-Founder, Centric Consulting, LLC Carney Ranker Architects, Ltd.

14 CNB FINANCIAL CORPORATION

BankOnBuffalo, a division of CNB Bank, experienced major growth in 2017. The newest bank in the Buffalo area opened its first full-service office within the Electric Tower in downtown Buffalo on February 21, 2017.

Previously a loan production office, services now available include deposit accounts, private banking, real estate, commercial, industrial, residential and consumer loans and lines of credit, treasury services, online banking, mobile banking, merchant credit card processing, remote deposit and accounts receivable handling.

In April, 2017 the formation of a BankOnBuffalo Advisory Board and the appointment of eleven inaugural members was announced. The local Board will provide leader-

Ribbon Cutting ceremony at the Orchard Park

ship and guidance as BankOnBuffalo expands upon its initial entry into the Buffalo market community office that opened November 2, 2017. in serving the financial needs of the region’s small to middle market businesses.

November 2017 was a month of celebration. On November 2, 2017, the Bank expanded into Buffalo’s Southtowns by opening a full-service community office in Orchard Park. On November 16, 2017, a third branch location opened in Williamsville, New York.

BankOnBuffalo, a division of CNB Bank, is headquartered in Buffalo, New York with three full service offices in the communties of Buffalo, Orchard Park, and Williamsville. BankOnBuffalo is being developed by local people and businesses. This local decision-making will increase the level of service provided to the communities of Buffalo and bring growth to the entire region. BankOnBuffalo offers commercial, retail, and private banking services, along with wealth and asset management services through BankOnBuffalo Investment Advisors.

Interior of completely renovated Orchard Park community office.

BANK ON BUFFALO SENIOR MANAGEMENT AND OFFICERS

Martin T. Griffith Rosanne Faraci Annette A. Tomlin

President Vice President, Credit Administration Vice President, Regional Retail Banking Officer

Maria E. Barth Kathleen B. Kane David G. Hawker

Senior Vice President, Commercial Banking Vice President, Regional Retail Market Manager Assistant Vice President, Commercial Banking

David P. Paul Kelly A. Navagh Monica R. Neimeier

Senior Vice President, Wealth & Asset Management Vice President, Treasury Services Banking Officer, Portfolio Manager

Gregory G. Emminger Michael J. Noah

Vice President, Commercial Banking Vice President, Commercial Banking

BANK ON BUFFALO BOARD OF ADVISORS

Joseph B. Bower, Jr. Richard L. Greslick, Jr. Michael Newman

President and Chief Executive Officer, Senior Executive Vice President & Owner and Executive Vice President, NOCO, Inc. CNB Financial Corporation, CNB Bank Chief Operating Officer, CNB Bank; Secretary,    Peter J. Romano, Jr.

Mark D. Breakey CNB Financial Corporation President and CEO, United Materials, LLC Senior Executive Vice President & Martin T. Griffith Stephen J. Schop Chief Credit Officer, CNB Bank Chairperson of the Board,                Managing Partner, Schop, Powell & Associates Joseph E. Dell, Jr. President, BankOnBuffalo

Mark A. Tronconi

Senior Executive Vice President & Gerry Murak Partner at Tronconi, Segarra & Associates Chief Commercial Banking Officer, CNB Bank Principal and Founder, Murak & Associates, LLC; CEO and Board Chairman, SoPark Corporation; President, CEO, and Founder, Precision Scientific Instruments, Inc.

2017 ANNUAL REPORT HIGHLIGHTS 15

Each depositor insured to at least $250,000

Backed by the full faith and credit of the

United States FDIC government

Federal Deposit Insurance Corporation •www.fdic.gov

The common stock of the Corporation trades on the NASDAQ Global Select Market under the symbol CCNE.

XML

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2017	Mar. 05, 2018	Jun. 30, 2017
Document And Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	FY
Trading Symbol	CCNE
Entity Registrant Name	CNB FINANCIAL CORP/PA
Entity Central Index Key	0000736772
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		15,284,339
Entity Public Float			$ 344,353,260

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
ASSETS
Cash and due from banks	$ 33,146	$ 26,937
Interest bearing deposits with other banks	2,199	2,246
Total cash and cash equivalents	35,345	29,183
Securities available for sale	409,709	495,835
Trading securities	7,150	4,858
Loans held for sale	852	7,528
Loans	2,149,848	1,876,966
Less: unearned discount	(3,889)	(3,430)
Less: allowance for loan losses	(19,693)	(16,330)
Net loans	2,126,266	1,857,206
FHLB and other equity interests	21,517	19,186
Premises and equipment, net	50,715	49,522
Bank owned life insurance	55,035	44,273
Mortgage servicing rights	1,387	1,391
Goodwill	38,730	38,730
Core deposit intangible	1,625	2,854
Accrued interest receivable and other assets	20,442	23,255
Total Assets	2,768,773	2,573,821
LIABILITIES AND SHAREHOLDERS' EQUITY
Non-interest bearing deposits	321,858	289,922
Interest bearing deposits	1,845,957	1,727,600
Total deposits	2,167,815	2,017,522
Short-term borrowings	34,416	103,969
FHLB and other long-term borrowings	222,943	133,035
Subordinated debentures	70,620	70,620
Deposits held for sale	0	6,456
Accrued interest payable and other liabilities	29,069	30,435
Total liabilities	2,524,863	2,362,037
Commitments and contingent liabilities	0	0
Common stock, $0 par value; authorized 50,000,000 shares; issued 15,308,378 shares at December 31, 2017 and 14,473,482 shares at December 31, 2016	0	0
Additional paid in capital	97,042	77,737
Retained earnings	148,298	134,295
Treasury stock, at cost (43,638 shares for 2017 and 5,667 for 2016)	(1,087)	(127)
Accumulated other comprehensive loss	(343)	(121)
Total shareholders' equity	243,910	211,784
Total Liabilities and Shareholders' Equity	$ 2,768,773	$ 2,573,821

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Common stock, par value	$ 0	$ 0
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	15,308,378	14,473,482
Treasury stock, shares	43,638	5,667

XML

Consolidated Statements of Income and Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Interest and Dividend Income:
Loans including fees	$ 97,005	$ 81,209	$ 71,814
Securities:
Taxable	8,165	9,134	10,977
Tax-exempt	2,983	3,390	3,778
Dividends	721	582	609
Total interest and dividend income	108,874	94,315	87,178
Interest Expense:
Deposits	9,312	8,470	8,498
Borrowed funds	4,021	2,981	3,222
Subordinated debentures (includes $288, $340, and $378 accumulated other comprehensive income reclassification for change in fair value of interest rate swap agreements in 2017, 2016, and 2015)	4,032	1,577	751
Total interest expense	17,365	13,028	12,471
Net Interest Income	91,509	81,287	74,707
Provision for loan losses	6,655	4,149	2,560
Net Interest Income After Provision for Loan Losses	84,854	77,138	72,147
Non-Interest Income:
Service charges on deposit accounts	4,809	4,297	4,442
Other service charges and fees	2,454	2,539	3,089
Wealth and asset management fees	3,724	3,087	2,977
Net realized gains on available-for-sale securities (includes $1,543, $1,005, and $666 accumulated other comprehensive income reclassifications for net realized gains on available-for-sale securities in 2017, 2016, and 2015)	1,543	1,005	666
Net realized gains (losses) on trading securities	93	70	(211)
Net unrealized gains (losses) on trading securities	788	433	(2)
Mortgage banking	906	1,095	746
Bank owned life insurance	1,659	1,082	1,194
Card processing and interchange income	3,763	3,396	3,417
Gain on sale of branch	536	0	0
Other	1,160	687	776
Total non-interest income	21,435	17,691	17,094
Non-Interest Expenses:
Salaries	26,205	23,472	21,652
Employee benefits (includes $192, $184, and $173 accumulated other comprehensive income reclassifications for net amortization of actuarial losses in 2017, 2016, and 2015)	9,821	8,722	7,911
Net occupancy expense	9,546	8,064	7,000
Amortization of core deposit intangible	1,229	1,125	1,008
Data processing	3,944	4,447	4,297
State and local taxes	2,815	2,171	1,868
Legal, professional and examination fees	1,819	1,772	1,553
Advertising	2,243	1,799	1,580
FDIC insurance	1,182	1,229	1,278
Directors fees and benefits	915	1,582	812
Prepayment penalties - long-term borrowings	0	1,506	0
Core processing conversion costs	0	1,693	108
Merger costs	0	486	308
Card processing and interchange expenses	2,116	1,889	2,295
Other	8,202	7,161	7,082
Total non-interest expenses	70,037	67,118	58,752
Income Before Income Taxes	36,252	27,711	30,489
Income Tax Expense (includes $372, $168, and $40 income tax expense reclassification items in 2017, 2016, and 2015)	12,392	7,171	8,292
Net Income	23,860	20,540	22,197
Other Comprehensive Income (Loss):
Net change in unrealized (losses) gains on available-for-sale securities, net of reclassification and tax	(1,004)	(2,136)	793
Change in actuarial gain (loss), for post-employment health care plan, net of amortization and tax	825	(64)	(90)
Change in fair value of interest rate swap agreements designated as a cash flow hedge, net of interest and tax	194	180	137
Total other comprehensive (loss) income	15	(2,020)	840
Comprehensive Income	$ 23,875	$ 18,520	$ 23,037
Earnings Per Share:
Basic	$ 1.57	$ 1.42	$ 1.54
Diluted	$ 1.57	$ 1.42	$ 1.54

XML

Consolidated Statements of Income and Comprehensive Income (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Income Statement [Abstract]
Accumulated other comprehensive income reclassification for change in fair value of interest rate swap agreements	$ 288	$ 340	$ 378
Accumulated other comprehensive income reclassifications for net realized gains on available-for-sale securities	1,543	1,005	666
Accumulated other comprehensive income reclassifications for net amortization of actuarial losses	192	184	173
Income tax expense from reclassification	$ 372	$ 168	$ 40

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Cash Flows From Operating Activities:
Net income	$ 23,860	$ 20,540	$ 22,197
Adjustments to reconcile net income to net cash provided by operations:
Provision for loan losses	6,655	4,149	2,560
Depreciation and amortization of premises and equipment, core deposit intangible, and mortgage servicing rights	5,242	4,484	4,039
Amortization and accretion of securities premiums and discounts, deferred loan fees and costs, net yield and credit mark on acquired loans, and unearned income	(1,202)	(1,328)	993
Deferred taxes	3,385	1,023	376
Net realized gains on sales of available-for-sale securities	(1,543)	(1,005)	(666)
Net realized and unrealized losses (gains) on trading securities	(881)	(503)	213
Proceeds from sale of trading securities	1,091	540	2,129
Purchase of trading securities	(2,502)	(319)	(2,413)
Gain on sale of branch	(536)	0	0
Gain on sale of loans	(545)	(818)	(630)
Net losses on dispositions of premises and equipment and foreclosed assets	(107)	134	7
Proceeds from sale of loans	24,285	33,045	14,927
Origination of loans held for sale	(25,231)	(31,255)	(15,171)
Income on bank owned life insurance, including death benefit of proceeds in excess of cash surrender value	(1,659)	(1,082)	(1,194)
Stock-based compensation expense	928	820	621
Contribution of treasury stock	0	150	120
Changes in:
Accrued interest receivable and other assets	(1,175)	(3,906)	93
Accrued interest payable and other liabilities	698	2,095	5,435
Net Cash Provided By Operating Activities	30,763	26,764	33,636
Cash Flows from Investing Activities:
Net decrease in interest bearing time deposits with other banks	0	0	225
Proceeds from maturities, prepayments and calls of available-for-sale securities	92,302	63,837	78,707
Proceeds from sales of available-for-sale securities	16,340	4,420	105,066
Purchase of available-for-sale securities	(23,689)	(21,513)	(45,120)
Loan origination and payments, net	(273,972)	(182,566)	(224,470)
Purchase of bank owned life insurance	(10,000)	0	0
Proceeds from death benefit of BOLI policies	897	0	0
Net cash received from sale of branch	1,079	0	0
Net cash paid for Lake National Bank acquisition	0	(2,866)	0
Purchase of FHLB and other equity interests	(2,331)	(2,628)	(9,226)
Purchase of premises and equipment	(5,215)	(10,125)	(6,751)
Proceeds from the sale of premises and equipment and foreclosed assets	938	558	855
Net Cash Used In Investing Activities	(203,651)	(150,883)	(100,714)
Net change in:
Checking, money market and savings accounts	16,096	79,745	(39,285)
Certificates of deposit	134,197	(10,603)	7,259
Deposits held for sale	1,079	0	0
Purchase of treasury stock	(1,877)	(44)	(868)
Proceeds from stock offering, net of issuance costs	19,294	0	0
Cash dividends paid	(10,094)	(9,546)	(9,515)
Proceeds from long-term borrowings	160,000	80,000	50,000
Repayments on long-term borrowings	(70,092)	(81,317)	(21,472)
Net change in short-term borrowings	(69,553)	17,806	80,292
Proceeds from subordinated debentures	0	50,000	0
Net Cash Provided By Financing Activities	179,050	126,041	66,411
Net Increase (Decrease) in Cash and Cash Equivalents	6,162	1,922	(667)
Cash and Cash Equivalents, Beginning	29,183	27,261	27,928
Cash and Cash Equivalents, Ending	35,345	29,183	27,261
Cash paid during the period for:
Interest	17,481	13,284	12,502
Income taxes	7,810	3,966	5,431
Supplemental Noncash Disclosures:
Transfers to other real estate owned	630	120	806
Grant of restricted stock awards from treasury stock	984	896	803
Net liabilities assumed from Lake National Bank, excluding cash and cash equivalents	0	8,670	0
Net loans transferred to held for sale	0	7,319	0
Net deposits transferred to held for sale	$ 0	$ 6,456	$ 0

XML

Consolidated Statements of Changes in Shareholders' Equity - USD ($) $ in Thousands	Total	Additional Paid-In Capital [Member]	Retained Earnings [Member]	Treasury Stock [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
Beginning balance at Dec. 31, 2014	$ 188,548	$ 78,022	$ 110,619	$ (1,152)	$ 1,059
Net income	22,197		22,197
Reclassification of certain tax effects from accumulated other comprehensive income to retained earnings	0
Other comprehensive income (loss)	840				840
Restricted stock award grants		(803)		803
Stock based compensation expense	621	621
Purchase of treasury stock	(868)			(868)
Reissue of treasury stock	90	(13)		103
Cash dividends declared	(9,515)		(9,515)
Ending balance at Dec. 31, 2015	201,913	77,827	123,301	(1,114)	1,899
Net income	20,540		20,540
Reclassification of certain tax effects from accumulated other comprehensive income to retained earnings	0
Other comprehensive income (loss)	(2,020)				(2,020)
Restricted stock award grants		(896)		896
Stock based compensation expense	820	820
Purchase of treasury stock	(44)			(44)
Reissue of treasury stock	121	(14)		135
Cash dividends declared	(9,546)		(9,546)
Ending balance at Dec. 31, 2016	211,784	77,737	134,295	(127)	(121)
Net income	23,860		23,860
Reclassification of certain tax effects from accumulated other comprehensive income to retained earnings	(237)		237		(237)
Other comprehensive income (loss)	15				15
Forfeiture of restricted stock award grants		67		(67)
Restricted stock award grants		(984)		984
Stock based compensation expense	928	928
Issuance of common stock, net of issuance costs	19,294	19,294
Purchase of treasury stock	(1,877)			(1,877)
Cash dividends declared	(10,094)		(10,094)
Ending balance at Dec. 31, 2017	$ 243,910	$ 97,042	$ 148,298	$ (1,087)	$ (343)

XML

Consolidated Statements of Changes in Shareholders' Equity (Parenthetical) - $ / shares	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Forfeiture of restricted stock award grants shares	2,482
Restricted stock award grants, shares	39,673
Issuance of common stock, net of issuance costs,shares	894,896
Purchase of treasury stock, shares	75,162	1,298	51,052
Reissue of treasury stock, shares		7,933	6,766
Cash dividends declared, per share	$ 0.66	$ 0.66	$ 0.66
Additional Paid-In Capital [Member]
Forfeiture of restricted stock award grants shares	2,482
Restricted stock award grants, shares	39,673	52,750	48,300
Issuance of common stock, net of issuance costs,shares	834,896
Purchase of treasury stock, shares	75,162
Reissue of treasury stock, shares		7,933	6,766
Retained Earnings [Member]
Cash dividends declared, per share	$ 0.66	$ 0.66	$ 0.66
Treasury Stock [Member]
Forfeiture of restricted stock award grants shares	2,482
Restricted stock award grants, shares	39,673	52,750	48,300
Purchase of treasury stock, shares	75,162	1,298	51,052
Reissue of treasury stock, shares		7,933	6,766

XML

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Summary of Significant Accounting Policies

1.  Summary of Significant Accounting Policies

Unless otherwise indicated, dollar amounts are in thousands, except per share data.

Business and Organization

CNB Financial Corporation (the “Corporation”) is headquartered in Clearfield, Pennsylvania, and provides a full range of banking and related services through its wholly owned subsidiary, CNB Bank (the “Bank”). In addition, the Bank provides trust and asset management services, including the administration of trusts and estates, retirement plans, and other employee benefit plans as well as a full range of wealth management services. The Bank serves individual and corporate customers and is subject to competition from other financial institutions and intermediaries with respect to these services. In addition to the Bank, the Corporation also operates a consumer discount loan and finance business through its wholly owned subsidiary, Holiday Financial Services Corporation (“Holiday”). The Corporation and these and its other subsidiaries are subject to examination by federal and state regulators. The Corporation’s market area is primarily concentrated in the central and northwest regions of the Commonwealth of Pennsylvania, the central and northeast regions of the state of Ohio and western New York.

Basis of Financial Presentation

The financial statements are consolidated to include the accounts of the Corporation and the Bank, CNB Securities Corporation, Holiday, and CNB Insurance Agency. All significant intercompany accounts and transactions have been eliminated in the consolidated financial statements. Certain prior period amounts have been reclassified to conform to the current period presentation. Reclassifications had no effect on prior year net income or shareholders’ equity.

Use of Estimates

To prepare financial statements in conformity with accounting principles generally accepted in the U.S., management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ.

Operating Segments

While the chief decision-makers monitor the revenue streams of the various products and services, operations are managed and financial performance is evaluated on a Corporation-wide basis, and operating segments are aggregated into one as operating results for all segments are similar. Accordingly, all of the financial service operations are considered by management to be aggregated in one reportable operating segment.

Securities

When purchased, securities are classified as held to maturity, trading or available for sale. Debt securities are classified as held to maturity when the Corporation has the positive intent and ability to hold the securities to maturity. Held to maturity securities are carried at amortized cost. Debt or equity securities are classified as trading when purchased principally for the purpose of selling them in the near term, or when the fair value option has been elected. Trading securities are recorded at fair value with changes in fair value included in earnings in non-interest income. Available for sale securities are those securities not classified as held to maturity or trading and are carried at their fair value. Unrealized gains and losses, net of deferred tax, on securities classified as available for sale are recorded as other comprehensive income. Management has not classified any debt securities as held to maturity.

The amortized cost of debt securities classified as held to maturity or available for sale is adjusted for the amortization of premiums and the accretion of discounts over the period through contractual maturity or, in the case of mortgage-backed securities and collateralized mortgage obligations, over the estimated life of the security. Such amortization is included in interest income from securities. Gains and losses on securities sold are recorded on the trade date and based on the specific identification method.

Declines in the fair value of debt securities below their cost that are other-than-temporary and attributable to credit losses are reflected in earnings. Other-than-temporary impairment losses that are not attributable to credit losses are reported as a component of accumulated other comprehensive income. In estimating other-than-temporary losses, management considers: the length of time and extent that fair value has been less than cost, the financial condition and near term prospects of the issuer, and the Corporation’s intent to sell, or whether it is more likely than not that it will be required to sell a security in an unrealized loss position before recovery of its amortized cost basis. If the Corporation intends to sell a security or it is more likely than not it will be required to sell a security before recovery of its amortized cost basis, the entire difference between amortized cost and fair value is recognized as impairment through earnings.

Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding.

Interest income is reported on the interest method and includes amortization of net deferred loan fees and costs over the loan term. Interest income on commercial, industrial, and agricultural loans, commercial mortgage loans, and residential real estate loans is discontinued at the time the loan is 90 days delinquent unless the credit is well-secured and in process of collection. Consumer loans are typically charged off no later than 180 days past due. Past due status is based on the contractual terms of the loan. Loans, including loans modified in a troubled debt restructuring, are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful. Nonaccrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.

All interest accrued but not received on loans placed on nonaccrual is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Under the cost-recovery method, interest income is not recognized until the loan balance is reduced to zero. Under the cash-basis method, interest income is recorded when the payment is received in cash. For all portfolio segments, loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Concentration of Credit Risk

Most of the Corporation’s business activity is with customers located within the Commonwealth of Pennsylvania and the states of Ohio and New York. Therefore, the Corporation’s exposure to credit risk is significantly affected by changes in the economies of Pennsylvania, Ohio, and New York.

Purchased Loans

The Corporation purchased loans in connection with its acquisition of FC Banc Corp. in 2013 and Lake National Bank in 2016, some of which had, at the acquisition date, shown evidence of credit deterioration since origination. These purchased credit impaired loans were recorded at the amount paid, such that there was no carryover of the seller’s allowance for loan losses.

Such purchased credit impaired loans are accounted for individually, and the Corporation estimates the amount and timing of expected cash flows for each loan. The expected cash flows in excess of the amount paid is recorded as interest income over the remaining life of the loan (accretable yield). The excess of the loan’s contractual principal and interest over expected cash flows is not recorded (nonaccretable difference).

Over the life of the loan, expected cash flows continue to be estimated. If the present value of expected cash flows is less than the carrying amount, a loss is recorded. If the present value of the expected cash flows is greater than the carrying amount, it is recognized as part of future interest income.

For loans purchased that did not show evidence of credit deterioration, the difference between the fair value of the loan at the acquisition date and the loan’s face value is being amortized as a yield adjustment over the estimated remaining life of the loan using the effective interest method.

Loans Held for Sale

Loans originated and intended for sale in the secondary market are carried at the lower of aggregate cost or fair value, as determined by outstanding commitments from investors. Net unrealized losses, if any, are recorded as a valuation allowance and charged to earnings.

Mortgage loans held for sale are generally sold with servicing rights retained. The carrying value of the mortgage loan sold is reduced by the amount allocated to the servicing right. Gains and losses on sales of mortgage loans are based on the difference between the selling price and the carrying value of the related loan sold.

Allowance for Loan Losses

The allowance for loan losses is a valuation allowance for probable incurred credit losses. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance account.

Management determines the adequacy of the allowance based on historical patterns of charge-offs and recoveries, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, industry experience, economic conditions, and other qualitative factors relevant to the collectability of the loan portfolio. While management believes that the allowance is adequate to absorb probable loan losses incurred at the balance sheet date, future adjustments may be necessary due to circumstances that differ substantially from the assumptions used in evaluating the adequacy of the allowance for loan losses.

The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired. A loan is impaired when, based on current information and events, it is probable that the Corporation will be unable to collect all amounts due according to the contractual terms of the loan agreement. Loans for which the terms have been modified, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings and classified as impaired.

Commercial and commercial real estate loans are individually evaluated for impairment. If a loan is impaired, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Large groups of smaller balance homogeneous loans, such as consumer and residential real estate loans, are collectively evaluated for impairment, and accordingly, they are not separately identified for impairment disclosures. Troubled debt restructurings are measured at the present value of estimated future cash flows using the loan’s effective rate at inception. If a troubled debt restructuring is considered to be a collateral dependent loan, the loan is reported, net, at the fair value of the collateral. For troubled debt restructurings that subsequently default, the Corporation determines the amount of reserve in accordance with the accounting policy for the allowance for loan losses.

The general component of the allowance for loan losses covers non-impaired loans and loans collectively evaluated for impairment and is based on historical loss experience adjusted for current factors. The historical loss experience is determined by portfolio segment and is based on the migration analysis performed. This actual loss experience is supplemented with other factors based on the risks present for each portfolio segment. These historical loss factors include consideration of the following: levels of and trends in delinquencies, nonaccrual loans, and classified loans; trends in volume and terms of loans; effects of any changes in lending policies and procedures; experience, ability, and depth of management; national and local economic trends and conditions; and concentrations of credit.

The following portfolio segments, which are the same as the Corporation’s portfolio classifications and associated risk characteristics, have been identified:

● Commercial, industrial, and agricultural – risk characteristics include below average economic and employment conditions in many of the markets served by the Corporation, which has limited consumer spending.

● Commercial mortgages – the most significant risk characteristic is the subjectivity involved in real estate valuations for properties located in areas with low growth economies.

● Residential real estate – risk characteristics include slightly higher than historical levels of delinquencies and less than robust housing markets.

● Consumer – risk characteristics include continuing weakness in industrial employment in many of the markets served by the Corporation and low wage growth.

● Credit cards – the most significant risk characteristic is the unsecured nature of credit card loans.

● Overdrafts – risk characteristics include the Corporation’s continued deposit growth and overall economic conditions which may lead to a greater likelihood of overdrawn deposit accounts.

Federal Home Loan Bank (FHLB) Stock

As a member of the Federal Home Loan Bank of Pittsburgh (“FHLB”), the Corporation is required to purchase and hold stock in the FHLB to satisfy membership and borrowing requirements. This stock is restricted in that it can only be sold to the FHLB or to another member institution, and all sales of FHLB stock must be at par. As a result of these restrictions, FHLB stock is unlike other investment securities insofar as there is no trading market for FHLB stock and the transfer price is determined by FHLB membership rules and not by market participants.

FHLB stock is held as a long-term investment, is valued at its cost basis and is analyzed for impairment based on the ultimate recoverability of the par value. The Company evaluates impairment quarterly. The decision of whether impairment exists is a matter of judgment that reflects our view of the FHLB’s long-term performance, which includes factors such as the following:

● its operating performance;

● the severity and duration of declines in the fair value of its net assets related to its capital stock amount;

● its commitment to make payments required by law or regulation and the level of such payments in relation to its operating performance;

● the impact of legislative and regulatory changes on the FHLB, and accordingly, on the members of FHLB; and

● its liquidity and funding position.

Premises and Equipment

Premises and equipment are stated at cost less accumulated depreciation. Depreciation of premises and equipment is computed principally by the straight line method. In general, useful lives range from 3 to 39 years with lives for furniture, fixtures and equipment ranging from 3 to 10 years and lives of buildings and building improvements ranging from 15 to 39 years. Amortization of leasehold improvements is computed using the straight-line method over useful lives of the leasehold improvements or the term of the lease, whichever is shorter. Maintenance, repairs and minor renewals are charged to expense as incurred.

Foreclosed Assets

Assets acquired through or in lieu of loan foreclosure are initially recorded at fair value less estimated selling costs when acquired, establishing a new cost basis. Physical possession of residential real estate property collateralizing a consumer mortgage loan occurs when legal title is obtained upon completion of foreclosure or when the borrower conveys all interest in the property to satisfy the loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. These assets are subsequently accounted for at the lower of cost or fair value, less estimated costs to sell. If fair value declines, a valuation allowance is recorded through expense. Costs after acquisition are expensed.

Bank Owned Life Insurance

The Corporation has purchased life insurance policies on certain key employees. Bank owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement.

Goodwill and Other Intangible Assets

Goodwill resulting from business combinations prior to January 1, 2009 represents the excess of the purchase price over the fair value of the net assets of businesses acquired. Goodwill resulting from business combinations after January 1, 2009 is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interest in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but tested for impairment at least annually or more frequently if events and circumstances exist that indicate an impairment test should be performed.

The Corporation has selected December 31 as the date to perform the annual impairment test. Intangible assets with definite useful lives are amortized over their estimated useful lives. Goodwill is the only intangible asset with an indefinite life on the Corporation’s balance sheet. Other intangible assets consist of core deposit intangible assets arising from the acquisition of FC Banc Corp. in 2013 and Lake National Bank in 2016. The core deposit intangible assets from these acquisitions are amortized using an accelerated method over their estimated useful lives of 7 years and 4 years, respectively.

Long-term Assets

Premises and equipment, goodwill and other intangible assets, and other long-term assets are reviewed for impairment when events indicate their carrying amount may not be recoverable from future undiscounted cash flows. If impaired, the assets are recorded at fair value.

Loan Commitments and Related Financial Instruments

Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded when they are funded.

Derivatives

Derivative financial instruments are recognized as assets or liabilities at fair value. The Corporation has interest rate swap agreements which are used as part of its asset liability management to help manage interest rate risk. The Corporation does not use derivatives for trading purposes.

At the inception of a derivative contract, the Corporation designates the derivative as one of three types based on the purpose of the contract and belief as to its effectiveness as a hedge. These three types are (1) a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (“fair value hedge”), (2) a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow hedge”), or (3) an instrument with no hedging designation (“stand-alone derivative”). For a fair value hedge, the gain or loss on the derivative, as well as the offsetting loss or gain on the hedged item, are recognized in current earnings as fair values change. For a cash flow hedge, the gain or loss on the derivative is reported in other comprehensive income and is reclassified into earnings in the same periods during which the hedged transaction affects earnings. For both types of hedges, changes in the fair value of derivatives that are not highly effective in hedging the changes in fair value or expected cash flows of the hedged item are recognized immediately in current earnings. Changes in the fair value of derivatives that do not qualify for hedge accounting are reported currently in earnings, as non-interest income.

Net cash settlements on derivatives that qualify for hedge accounting are recorded in interest income or interest expense, based on the item being hedged. Net cash settlements on derivatives that do not qualify for hedge accounting are reported in non-interest income. Cash flows on hedges are classified in the cash flow statement the same as the cash flows of the items being hedged.

The Corporation formally documents the relationship between derivatives and hedged items, as well as the risk-management objective and the strategy for undertaking hedge transactions, at the inception of the hedging relationship. This documentation includes linking fair value or cash flow hedges to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. The Corporation also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivative instruments that are used are highly effective in offsetting changes in fair values or cash flows of the hedged items. The Corporation discontinues hedge accounting when it determines that the derivative is no longer effective in offsetting changes in the fair value or cash flows of the hedged item, the derivative is settled or terminates, a hedged forecasted transaction is no longer probable, a hedged firm commitment is no longer firm, or treatment of the derivative as a hedge is no longer appropriate or intended.

When hedge accounting is discontinued, subsequent changes in fair value of the derivative are recorded as non-interest income. When a fair value hedge is discontinued, the hedged asset or liability is no longer adjusted for changes in fair value and the existing basis adjustment is amortized or accreted over the remaining life of the asset or liability. When a cash flow hedge is discontinued but the hedged cash flows or forecasted transactions are still expected to occur, gains or losses that were accumulated in other comprehensive income are amortized into earnings over the same periods which the hedged transactions will affect earnings.

Advertising Costs

Advertising costs are generally expensed as incurred and amounted to $2,243, $1,799 and $1,580, for 2017, 2016, and 2015, respectively.

Mortgage Servicing Rights

Servicing rights are recognized separately when they are acquired through sales of loans. Servicing rights are initially recorded at fair value with the income statement effect recorded in mortgage banking. Fair value is based on market prices for comparable mortgage servicing contracts, when available, or alternatively, is based on a valuation model that calculates the present value of estimated future net servicing income. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income, such as the cost to service, the discount rate, the custodial earnings rate, an inflation rate, ancillary income, prepayment speeds and default rates and losses. The Corporation compares the valuation model inputs and results to published industry data in order to validate the model results and assumptions. All classes of servicing assets are subsequently measured using the amortization method which requires servicing rights to be amortized into non-interest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans.

Servicing rights are evaluated for impairment based upon the fair value of the rights as compared to carrying amount. Impairment is determined by stratifying rights into groupings based on predominant risk characteristics, such as interest rate, loan type and investor type. Impairment is recognized through a valuation allowance for an individual grouping, to the extent that fair value is less than the carrying amount. If the Corporation later determines that all or a portion of the impairment no longer exists for a particular grouping, a reduction of the allowance may be recorded as an increase to income. Changes in valuation allowances are reported with mortgage banking income on the income statement. The fair values of servicing rights are subject to significant fluctuations as a result of changes in estimated and actual prepayment speeds and default rates and losses.

Servicing fee income, which is reported on the income statement as mortgage banking income, is recorded for fees earned for servicing loans. The fees are based on a contractual percentage of the outstanding principal or a fixed amount per loan and are recorded as income when earned. The amortization of mortgage servicing rights is netted against loan servicing fee income. Late fees and ancillary fees related to loan servicing are not material.

Treasury Stock

The purchase of the Corporation’s common stock is recorded at cost. Purchases of the stock are made in the open market based on market prices. At the date of subsequent reissue, the treasury stock account is reduced by the cost of such stock on a first-in-first-out basis.

Stock-Based Compensation

The Corporation has a stock incentive plan for key employees and independent directors. The Stock Incentive Plan, which is administered by a committee of the Board of Directors, provides for up to 500,000 shares of common stock to be awarded in the form of nonqualified options or restricted stock. For key employees, the plan vesting schedule is one-fourth of granted stock-based awards per year beginning one year after the grant date with 100% vested on the fourth anniversary. For independent directors, the vesting schedule is one-third of granted stock-based awards per year beginning one year after the grant date with 100% vested on the third anniversary.

At December 31, 2017 and 2016, there was no unrecognized compensation cost related to nonvested stock options granted under this plan, and no stock options were granted during the years ended December 31, 2017, 2016, and 2015.

During 2017, 2016, and 2015, the Executive Compensation and Personnel Committee of the Board of Directors granted a total of 39,673, 52,750 and 48,300 shares, respectively, of restricted common stock to certain key employees and all independent directors of the Corporation. Compensation expense for the restricted stock awards is recognized over the requisite service period based on the fair value of the shares at the date of grant on a straight-line basis. Compensation expense resulting from these restricted stock awards was $928, $820 and $621 for the years ended December 31, 2017, 2016, and 2015, respectively.

Comprehensive Income

The Corporation presents comprehensive income as part of the Consolidated Statement of Income and Comprehensive Income. Other comprehensive income (loss) consists of unrealized holding gains (losses) on the available for sale securities portfolio, changes in the unrecognized actuarial gain and transition obligation related to the Corporation’s post retirement benefits plans, and changes in the fair value of the Corporation’s interest rate swaps, net of tax.

Income Taxes

The Corporation files a consolidated U.S. income tax return that includes all subsidiaries. Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.

A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.

The Corporation recognizes interest and/or penalties related to income tax matters in income tax expense.

Retirement Plans

The Corporation’s expense associated with its 401(k) plan is determined under the provisions of the plan document and includes both matching and profit sharing components. Deferred compensation and supplemental retirement plan expenses allocate the benefits over years of service.

Earnings Per Share

Basic earnings per share is computed by dividing net income available to common shareholders by the weighted average number of shares outstanding during the applicable period, excluding outstanding participating securities. Diluted earnings per share is computed using the weighted average number of shares determined for the basic computation plus the dilutive effect of potential common shares issuable under certain stock compensation plans. Unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and are included in the computation of earnings per share pursuant to the two-class method. The Corporation has determined that its outstanding non-vested stock awards are participating securities.

Cash and Cash Equivalents

For purposes of the consolidated statement of cash flows, the Corporation defines cash and cash equivalents as cash and due from banks, interest bearing deposits with other banks, and Federal funds sold. Net cash flows are reported for customer loan and deposit transactions, interest bearing time deposits with other banks and borrowings with original maturities of 90 days or less.

Restrictions on Cash

The Bank is required to maintain average reserve balances with the Federal Reserve Bank or in vault cash. The average amount of these non-interest bearing reserve balances for the year ended December 31, 2017 and 2016 was $50, which was maintained in vault cash. Note 12 to the consolidated financial statements discloses the cash collateral balances required to be maintained in connection with the Corporation’s interest rate swaps.

Loss Contingencies

Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there are any such matters that will have a material effect on the financial statements.

Fair Value of Financial Instruments

Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in a separate note. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect the estimates.

Adoption of New Accounting Standards

In March 2016, the FASB issued Accounting Standards Update 2016-09, “Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting.” ASU 2016-09 will require recognition of the income tax effects of share-based awards in the income statement when the awards vest or are settled (i.e., Additional Paid-in-Capital pools will be eliminated). The guidance was effective for interim and annual reporting periods beginning after December 15, 2016. The Corporation adopted ASU 2016-09 on January 1, 2017. The adoption did not have a material effect on the Corporation’s financial statements.

In August 2016, the FASB issued an update (ASU 2016-15, Statement of Cash Flows) which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments in this Update apply to all entities, including business entities and not-for-profit entities that are required to present a statement of cash flows, and are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Corporation adopted ASU 2016-15 on January 1, 2018. The adoption did not have a material effect on the Corporation’s financial statements.

On February 14, 2018, the Financial Accounting Standard Board issued Accounting Standards Update (ASU) No. 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments in this ASU allow, but do not require, entities to reclassify certain income tax effects in accumulated other comprehensive income (AOCI) to retained earnings that resulted from the Tax Cuts and Jobs Act (Act). The Corporation adopted this ASU and elected to reclassify the income tax effects of the Act from accumulated other comprehensive income to retained earnings at December 31, 2017. There were no other income tax effects related to the Act that were reclassified as a result of the adoption of the accounting standard.

Effect of Newly Issued But Not Yet Effective Accounting Standards

In June 2016, the FASB issued an update (ASU 2016-13, Financial Instruments – Credit Losses) which will require recognition of an entity’s current estimate of all expected credit losses for assets measured at amortized cost. The amendments in ASU 2016-13 eliminate the probable initial recognition threshold in current U.S. Generally Accepted Accounting Principles. In addition, the amendments in ASU 2016-13 broaden the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually, such as loans. The update will be effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted for interim and annual reporting periods beginning after December 15, 2018. Management is currently in the developmental stages of evaluating the impact of the adoption of ASU 2016-13 on the Corporation’s financial statements and is collecting available historical information in order to assess the expected credit losses. However, the impact to the financial statements is yet to be determined.

In February 2016, the FASB issued Accounting Standards Update 2016-02, “Leases (Topic 842)”. ASU 2016-02 requires a lessee to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (1) A lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) A right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. The update will be effective for reporting periods beginning after December 15, 2018. Early adoption is permitted. Management is currently evaluating the impact of the adoption of ASU 2016-02 on the Corporation’s financial statements and anticipates an increase in the Corporation’s assets and liabilities. However, the amounts that will be adjusted are still to be determined.

In January 2016, the FASB issued Accounting Standards Update 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities”. ASU 2016-01 provides updated accounting and reporting requirements for both public and non-public entities. The most significant provisions that will impact the Corporation are: 1) equity securities available for sale will be measured at fair value, with the changes in fair value recognized in the income statement; 2) eliminate the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments at amortized cost on the balance sheet; 3) utilization of exit price notion when measuring the fair value of financial instruments for disclosure purposes; 4) require separate presentation of both financial assets and liabilities by measurement category and form of financial asset on the balance sheet or accompanying notes to the financial statements. The update will be effective for interim and annual reporting periods beginning after December 15, 2017, using a cumulative-effect adjustment to the balance sheet as of the beginning of the year adoption. The adoption of ASU 2016-01 did not have a material effect on the Corporation’s financial statements. The Corporation adopted ASU 2016-01 on January 1, 2018.

In May 2014, FASB issued Accounting Standards Update 2014-09, “Revenue from Contracts with Customers (Topic 606).” The ASU creates a new topic, Topic 606, to provide guidance on revenue recognition for entities that enter into contracts with customers to transfer goods or services or enter into contracts for the transfer of nonfinancial assets. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additional disclosures are required to provide quantitative and qualitative information regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new guidance is effective for annual reporting periods, and interim reporting periods within those annual periods, beginning after December 15, 2017. The adoption of ASU 2014-09 did not have a material effect on the Corporation’s financial statements as most of the revenue relates to loans and other financial instruments which are scoped out. However, management does expect expansion to disclosures. The Corporation adopted ASU 2014-09 on January 1, 2018.

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Business Combination and Branch Sale

12 Months Ended

Dec. 31, 2017

Business Combinations [Abstract]

Business Combination and Branch Sale

2.  Business Combination and Branch Sale

On December 30, 2015, the Corporation announced the signing of a definitive merger agreement to acquire Lake National Bank (LNB) of Mentor, Ohio for $22.50 per share in cash, or approximately $24.75 million in the aggregate. LNB served the northeastern Ohio market with two branches located in Mentor, Ohio. On July 15, 2016, the transaction closed and the Corporation began including LNB’s results of operations in its consolidated results. The two LNB offices now operate as part of the ERIEBANK division of CNB Bank.

As disclosed in the accompanying consolidated statements of income, the Corporation incurred merger costs of $486 thousand and $308 thousand for the twelve months ended December 31, 2016 and 2015, respectively. All merger costs have been expensed as incurred.

The following table summarizes the consideration paid for LNB and the amounts of the assets acquired and liabilities assumed that were recognized at the acquisition date:

Consideration paid:
Cash	$	24,750
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents		21,884
Securities available for sale		450
Loans		122,206
FHLB and other equity interests		637
Premises and equipment		3,242
Bank owned life insurance		2,152
Mortgage servicing rights		367
Core deposit intangible		1,583
Accrued interest receivable and other assets		3,110
Total assets acquired		155,631
Demand deposits		81,472
Time deposits		58,311
Accrued interest payable and other liabilities		2,634
Total liabilities assumed		142,417
Total identifiable net assets		13,214
Goodwill	$	11,536

Included in accrued interest receivable and other assets is a deferred tax asset of $58 which represents the tax effect of temporary differences between the tax basis and fair values assigned to the assets and liabilities.

Acquired loans were recorded at fair value with no carryover of the related allowance for loan losses. Determining the fair value of loans involved estimating the amount and timing of principal and interest cash flows expected to be collected on the loans and discounting those cash flows at a market rate of interest. The Corporation acquired $126,134 of gross loans and recognized a net combined yield and credit mark of $3,928.

Goodwill of $11,536 arising from the acquisition consisted largely of synergies and the cost savings resulting from the combining of the operations of the Corporation and Lake National Bank. None of the goodwill is expected to be deductible for income tax purposes.

On May 19, 2017, CNB completed its previously announced sale of the Mt. Hope, Ohio branch to First Federal Community Bank. CNB transferred loans totaling $7,800, fixed assets totaling $100, and deposits totaling $7,400 in conjunction with the sale of the branch and realized a gain of $536 based on the 8% deposit premium paid by First Federal Community Bank.

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Earnings Per Share

12 Months Ended

Dec. 31, 2017

Earnings Per Share [Abstract]

Earnings Per Share

3.  Earnings Per Share

The computation of basic and diluted earnings per share is shown below (in thousands, except per share data). There were no anti-dilutive stock options for the years ended December 31, 2017, 2016, and 2015.

	Years Ended December 31
	2017			2016			2015
Basic earnings per common share computation
Net income per consolidated statements of income	$	23,860		$	20,540		$	22,197
Net earnings allocated to participating securities		(135	)		(129	)		(117	)
Net earnings allocated to common stock	$	23,725		$	20,411		$	22,080
Distributed earnings allocated to common stock	$	10,030		$	9,480		$	9,460
Undistributed earnings allocated to common stock		13,695			10,931			12,620
Net earnings allocated to common stock	$	23,725		$	20,411		$	22,080
Weighted average common shares outstanding, including shares considered participating securities		15,212			14,457			14,408
Less: Average participating securities		(80	)		(82	)		(70	)
Weighted average shares		15,132			14,375			14,338
Basic earnings per common share	$	1.57		$	1.42		$	1.54
Diluted earnings per common share computation
Net earnings allocated to common stock	$	23,725		$	20,411		$	22,080
Weighted average common shares outstanding for basic earnings per common share		15,132			14,375			14,338
Add: Dilutive effects of assumed exercises of stock options		0			0			0
Weighted average shares and dilutive potential common shares		15,132			14,375			14,338
Diluted earnings per common share	$	1.57		$	1.42		$	1.54

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Securities

12 Months Ended

Dec. 31, 2017

Cash and Cash Equivalents [Abstract]

Securities

4.  Securities

Securities available-for-sale at December 31, 2017 and 2016 are as follows:

	December 31, 2017									December 31, 2016
	Amortized Cost		Unrealized					Fair Value		Amortized Cost		Unrealized					Fair Value
			Gains		Losses							Gains		Losses
U.S. Gov’t sponsored entities		$108,578	$	478	$	(908	)		$108,148		$139,823		$1,107	$	(579	)		$140,351
State & political subdivisions		134,428		3,609		(314)			137,723		153,492		4,194		(649	)		157,037
Residential & multi-family mortgage		111,214		304		(1,882)			109,636		136,807		551		(2,382	)		134,976
Corporate notes & bonds		17,610		52		(462)			17,200		18,299		77		(962	)		17,414
Pooled trust preferred		0		0		0			0		800		1,249		0			2,049
Pooled SBA		36,260		355		(575)			36,040		43,450		505		(918	)		43,037
Other equity securities		1,020		0		(58)			962		1,020		0		(49	)		971
Total		$409,110	$	4,798	$	(4,199	)		$409,709		$493,691		$7,683		$(5,539)			$495,835

At December 31, 2017 and 2016, there were no holdings of securities by any one issuer, other than U.S. Government sponsored entities, in an amount greater than 10% of shareholders’ equity. The Corporation’s residential and multi-family mortgage securities are issued by government sponsored entities, and the Corporation holds one commercial mortgage security that is private label.

Trading securities at December 31, 2017 and 2016 are as follows:

	2017		2016
Corporate equity securities	$	5,125	$	3,312
Mutual Funds		1,499		1,037
Certificates of deposit		220		202
Corporate notes and bonds		254		254
U.S. Government sponsored entities		52		53
Total	$	7,150	$	4,858

Securities with unrealized losses at December 31, 2017 and 2016, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are as follows:

December 31, 2017	Less than 12 Months					12 Months or More					Total
Description of Securities	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
U.S. Gov’t sponsored entities	$	55,696	$	(540	)	$	34,754	$	(368	)	$	90,450	$	(908	)
State & political subdivisions		15,890		(69	)		4,104		(245	)		19,994		(314	)
Residential & multi-family mortgage		30,144		(153	)		63,699		(1,729	)		93,843		(1,882	)
Corporate notes & bonds		5,005		(9	)		9,042		(453	)		14,047		(462	)
Pooled SBA		0		(0	)		22,270		(575	)		22,270		(575	)
Other equity securities		0		(0	)		962		(58	)		962		(58	)
	$	106,735	$	(771	)	$	134,831	$	(3,428	)	$	241,566	$	(4,199	)

	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
December 31, 2016
U.S. Gov’t sponsored entities	$	90,380	$	(579	)	$	0	$	(0	)	$	90,380	$	(579	)
State & political subdivisions		32,353		(448	)		264		(201	)		32,617		(649	)
Residential and multi-family mortgage		65,598		(1,255	)		34,611		(1,127	)		100,209		(2,382	)
Corporate notes & bonds		2,089		(11	)		8,476		(951	)		10,565		(962	)
Pooled SBA		6,481		(126	)		20,560		(792	)		27,041		(918	)
Other equity securities		0		(0	)		971		(49	)		971		(49	)
	$	196,901	$	(2,419	)	$	64,882	$	(3,120	)	$	261,783	$	(5,539	)

The Corporation evaluates securities for other-than-temporary impairment on a quarterly basis, or more frequently when economic or market conditions warrant such an evaluation.

At December 31, 2016 the Corporation evaluated the pooled trust preferred securities for other-than-temporary impairment by estimating the cash flows expected to be received, taking into account future estimated levels of deferrals and defaults by the underlying issuers and discounting those cash flows at the appropriate accounting yield. During 2017, two structured pooled trust preferred securities with an adjusted amortized cost of $800 were sold, resulting in a gain of $1,383. During 2016, two structured pooled trust preferred securities with an adjusted amortized cost of $0 were sold, resulting in a gain of $922.

A roll-forward of the other-than-temporary impairment amount related to credit losses for the years ended December 31, 2017, 2016, and 2015 is as follows:

	2017			2016			2015
Balance of credit losses on debt securities for which a portion of other-than-temporary impairment was recognized in earnings, beginning of period	$	2,071		$	4,054		$	4,054
Credit losses previously recognized on securities sold during the period		(2,071	)		(1,983	)		0
Additional credit loss for which other-than-temporary impairment was not previously recognized		0			0			0
Additional credit loss for which other-than-temporary impairment was previously recognized		0			0			0
Balance of credit losses on debt securities for which a portion of other-than-temporary impairment was recognized in earnings, end of period	$	0		$	2,071		$	4,054

For the securities that comprise corporate notes and bonds and the securities that are issued by state and political subdivisions, management monitors publicly available financial information, such as filings with the Securities and Exchange Commission, in order to evaluate the securities for other-than-temporary impairment. For financial institution issuers, management monitors information from quarterly “call” report filings that are used to generate Uniform Bank Performance Reports. All other securities that were in an unrealized loss position at the balance sheet date were reviewed by management, and issuer-specific documents were reviewed, as appropriate given the following considerations. When reviewing securities for other-than-temporary impairment, management considers the financial condition and near-term prospects of the issuer and whether downgrades by bond rating agencies have occurred. Management also considers the length of time and extent to which fair value has been less than cost, and whether management does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery.

As of December 31, 2017 and 2016, management concluded that the securities described in the previous paragraph were not other-than-temporarily impaired for the following reasons:

● There is no indication of any significant deterioration of the creditworthiness of the institutions that issued the securities.

● All contractual interest payments on the securities have been received as scheduled, and no information has come to management’s attention through the processes previously described which would lead to a conclusion that future contractual payments will not be timely received.

The Corporation does not intend to sell and it is not more likely than not that it will be required to sell the securities in an unrealized loss position before recovery of its amortized cost basis.

On December 31, 2017 and 2016, securities carried at $319,575 and $329,379, respectively, were pledged to secure public deposits and for other purposes as provided by law.

The following is a schedule of the contractual maturity of securities available for sale, excluding equity securities, at December 31, 2017:

	December 31, 2017
	Amortized Cost		Fair Value
1 year or less	$	50,368	$	50,139
1 year – 5 years		153,512		155,075
5 years – 10 years		50,552		51,753
After 10 years		6,184		6,104
		260,616		263,071
Residential and multi-family mortgage		111,214		109,636
Pooled SBA		36,260		36,040
Total debt securities	$	408,090	$	408,747

Mortgage securities and pooled SBA securities are not due at a single date; periodic payments are received based on the payment patterns of the underlying collateral.

Information pertaining to security sales is as follows:

Year ended December 31	Proceeds		Gross Gains		Gross Losses
2017	$	16,340	$	1,614	$	71
2016		4,420		1,005		0
2015		105,066		1,032		366

The tax provision related to these net realized gains was $540, $352 and $233, respectively.

During 2017, 2016, and 2015, the Corporation sold trading securities. Proceeds were $1,091 in 2017, $540 in 2016 and $2,129 in 2015, resulting in net realized gains (losses) of $93 in 2017, $70 in 2016, and ($211) in 2015.

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Loans

12 Months Ended

Dec. 31, 2017

Receivables [Abstract]

Loans

5.  Loans

Total net loans at December 31, 2017 and 2016 are summarized as follows:

	2017			2016
Commercial, industrial, and agricultural	$	749,138		$	567,800
Commercial mortgages		600,065			574,826
Residential real estate		713,347			652,883
Consumer		80,193			74,816
Credit cards		6,753			6,046
Overdrafts		352			595
Less: unearned discount		(3,889	)		(3,430	)
allowance for loan losses		(19,693	)		(16,330	)
Loans, net	$	2,126,266		$	1,857,206

At December 31, 2017 and 2016 net unamortized loan (fees) costs of ($2,574) and ($1,507), respectively, have been included in the carrying value of loans.

The Corporation’s outstanding loans and related unfunded commitments are primarily concentrated within central and northwest Pennsylvania, central and northeast Ohio, and western New York. The Bank attempts to limit concentrations within specific industries by utilizing dollar limitations to single industries or customers, and by entering into participation agreements with third parties. Collateral requirements are established based on management’s assessment of the customer. The Corporation maintains lending policies to control the quality of the loan portfolio. These policies delegate the authority to extend loans under specific guidelines and underwriting standards. These policies are prepared by the Corporation’s management and reviewed and ratified annually by the Corporation’s Board of Directors.

Pursuant to the Corporation’s lending policies, management considers a variety of factors when determining whether to extend credit to a customer, including loan-to-value ratios, FICO scores, quality of the borrower’s financial statements, and the ability to obtain personal guarantees.

Commercial, industrial, and agricultural loans comprised 35% and 30% of the Corporation’s total loan portfolio at December 31, 2017 and 2016, respectively. Commercial mortgage loans comprised 28% and 31% of the Corporation’s total loan portfolio at December 31, 2017 and 2016, respectively. Management assigns a risk rating to all commercial loans at loan origination. The loan-to-value policy guidelines for commercial, industrial, and agricultural loans are generally a maximum of 80% of the value of business equipment, a maximum of 75% of the value of accounts receivable, and a maximum of 60% of the value of business inventory at loan origination. The loan-to-value policy guideline for commercial mortgage loans is generally a maximum of 85% of the appraised value of the real estate.

Residential real estate loans comprised 33% and 35% of the Corporation’s total loan portfolio at December 31, 2017 and 2016, respectively. The loan-to-value policy guidelines for residential real estate loans vary depending on the collateral position and the specific type of loan. Higher loan-to-value terms may be approved with the appropriate private mortgage insurance coverage. The Corporation also originates and prices loans for sale into the secondary market. Loans so originated are classified as loans held for sale and are excluded from residential real estate loans reported above. The rationale for these sales is to mitigate interest rate risk associated with holding lower rate, long-term residential mortgages in the loan portfolio and to generate fee revenue from sales and servicing the loan. The Corporation also offers a variety of unsecured and secured consumer loan and credit card products which represent less than 10% of the total loan portfolio at both December 31, 2017 and 2016. Terms and collateral requirements vary depending on the size and nature of the loan.

Transactions in the allowance for loan losses for the year ended December 31, 2017 were as follows:

	Commercial, Industrial, and Agricultural			Commercial Mortgages			Residential Real Estate			Consumer			Credit Cards			Overdrafts			Total
Allowance for loan losses, January 1, 2017	$	5,428		$	6,753		$	1,653		$	2,215		$	93		$	188		$	16,330
Charge-offs		(544	)		(116	)		(466	)		(2,555	)		(144	)		(252	)		(4,077	)
Recoveries		235			197			78			161			27			87			785
Provision for loan losses		1,041			2,173			768			2,358			144			171			6,655
Allowance for loan losses, December 31, 2017	$	6,160		$	9,007		$	2,033		$	2,179		$	120		$	194		$	19,693

Transactions in the allowance for loan losses for the year ended December 31, 2016 were as follows:

	Commercial, Industrial, and Agricultural			Commercial Mortgages			Residential Real Estate			Consumer			Credit Cards			Overdrafts			Total
Allowance for loan losses, January 1, 2016	$	6,035		$	5,605		$	2,475		$	2,371		$	90		$	161		$	16,737
Charge-offs		(601	)		(201	)		(499	)		(3,324	)		(96	)		(240	)		(4,961	)
Recoveries		89			8			93			122			22			71			405
Provision for loan losses		(95	)		1,341			(416	)		3,046			77			196			4,149
Allowance for loan losses, December 31, 2016	$	5,428		$	6,753		$	1,653		$	2,215		$	93		$	188		$	16,330

Transactions in the allowance for loan losses for the year ended December 31, 2015 were as follows:

	Commercial, Industrial, and Agricultural			Commercial Mortgages			Residential Real Estate			Consumer			Credit Cards			Overdrafts			Total
Allowance for loan losses, January 1, 2015	$	7,114		$	5,310		$	2,479		$	2,205		$	71		$	194		$	17,373
Charge-offs		(307	)		(486	)		(632	)		(1,956	)		(116	)		(221	)		(3,718	)
Recoveries		267			52			8			96			14			85			522
Provision for loan losses		(1,039	)		729			620			2,026			121			103			2,560
Allowance for loan losses, December 31, 2015	$	6,035		$	5,605		$	2,475		$	2,371		$	90		$	161		$	16,737

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and is based on the Corporation’s impairment method as of December 31, 2017 and 2016. The recorded investment in loans excludes accrued interest and unearned discounts due to their insignificance.

December 31, 2017	Commercial, Industrial, and Agricultural		Commercial Mortgages		Residential Real Estate		Consumer		Credit Cards		Overdrafts		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	47	$	0	$	0	$	0	$	0	$	0	$	47
Collectively evaluated for impairment		5,868		3,563		2,033		2,179		120		194		13,957
Acquired with deteriorated credit quality		0		0		0		0		0		0		0
Modified in a troubled debt restructuring		245		5,444		0		0		0		0		5,689
Total ending allowance balance	$	6,160	$	9,007	$	2,033	$	2,179	$	120	$	194	$	19,693
Loans:
Individually evaluated for impairment	$	1,187	$	51	$	0	$	0	$	0	$	0	$	1,238
Collectively evaluated for impairment		742,738		586,845		713,347		80,193		6,753		352		2,130,228
Acquired with deteriorated credit quality		0		1,079		0		0		0		0		1,079
Modified in a troubled debt restructuring		5,213		12,090		0		0		0		0		17,303
Total ending loans balance	$	749,138	$	600,065	$	713,347	$	80,193	$	6,753	$	352	$	2,149,848

December 31, 2016	Commercial, Industrial, and Agricultural		Commercial Mortgages		Residential Real Estate		Consumer		Credit Cards		Overdrafts		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	188	$	996	$	0	$	0	$	0	$	0	$	1,184
Collectively evaluated for impairment		5,115		3,543		1,653		2,215		93		188		12,807
Acquired with deteriorated credit quality		0		0		0		0		0		0		0
Modified in a troubled debt restructuring		125		2,214		0		0		0		0		2,339
Total ending allowance balance	$	5,428	$	6,753	$	1,653	$	2,215	$	93	$	188	$	16,330
Loans:
Individually evaluated for impairment	$	775	$	6,176	$	0	$	0	$	0	$	0	$	6,951
Collectively evaluated for impairment		564,180		557,932		652,883		74,816		6,046		595		1,856,452
Acquired with deteriorated credit quality		205		1,527		0		0		0		0		1,732
Modified in a troubled debt restructuring		2,640		9,191		0		0		0		0		11,831
Total ending loans balance	$	567,800	$	574,826	$	652,883	$	74,816	$	6,046	$	595	$	1,876,966

The following tables present information related to loans individually evaluated for impairment, including loans modified in troubled debt restructurings, by portfolio segment as of December 31, 2017 and 2016 and for the years ended December 31, 2017, 2016, and 2015:

December 31, 2017	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With an allowance recorded:
Commercial, industrial, and agricultural	$	1,915	$	1,915	$	292
Commercial mortgage		9,940		9,731		5,444
Residential real estate		0		0		0
With no related allowance recorded:
Commercial, industrial, and agricultural		5,264		4,485		0
Commercial mortgage		3,211		2,410		0
Residential real estate		0		0		0
Total	$	20,330	$	18,541	$	5,736

December 31, 2016	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With an allowance recorded:
Commercial, industrial, and agricultural	$	1,644	$	1,644	$	313
Commercial mortgage		16,200		15,367		3,210
Residential real estate		0		0		0
With no related allowance recorded:
Commercial, industrial, and agricultural		2,669		1,771		0
Commercial mortgage		0		0		0
Residential real estate		0		0		0
Total	$	20,513	$	18,782	$	3,523

The unpaid principal balance of impaired loans includes the Corporation’s recorded investment in the loan and amounts that have been charged off.

	Year Ended December 31, 2017
	Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized
With an allowance recorded:
Commercial, industrial, and agricultural	$	1,513	$	97	$	97
Commercial mortgage		11,944		327		327
Residential real estate		0		0		0
With no related allowance recorded:
Commercial, industrial, and agricultural		2,438		114		114
Commercial mortgage		2,474		122		122
Residential real estate		0		0		0
Total	$	18,369	$	660	$	660

	Year Ended December 31, 2016
	Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized
With an allowance recorded:
Commercial, industrial, and agricultural	$	2,616	$	2	$	2
Commercial mortgage		8,138		0		0
Residential real estate		50		6		6
With no related allowance recorded:
Commercial, industrial, and agricultural		2,290		0		0
Commercial mortgage		2,773		0		0
Residential real estate		0		0		0
Total	$	15,867	$	8	$	8

	Year Ended December 31, 2015
	Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized
With an allowance recorded:
Commercial, industrial, and agricultural	$	5,667	$	44	$	44
Commercial mortgage		8,154		0		0
Residential real estate		370		21		21
With no related allowance recorded:
Commercial, industrial, and agricultural		1,831		14		14
Commercial mortgage		4,806		0		0
Residential real estate		103		6		6
Total	$	20,931	$	85	$	85

The following table presents the recorded investment in nonaccrual loans and loans past due over 90 days still on accrual by class of loans as of December 31, 2017 and 2016:

	December 31, 2017				December 31, 2016
	Nonaccrual		Past Due Over 90 Days Still on Accrual		Nonaccrual		Past Due Over 90 Days Still on Accrual
Commercial, industrial, and agricultural	$	1,869	$	78	$	2,734	$	0
Commercial mortgages		11,065		0		5,996		0
Residential real estate		5,470		338		5,600		0
Consumer		828		17		999		0
Credit cards		0		44		0		10
Total	$	19,232	$	477	$	15,329	$	10

Nonaccrual loans and loans past due over 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.

The following table presents the aging of the recorded investment in past due loans as of December 31, 2017 and 2016 by class of loans.

December 31, 2017	30-59 Days Past Due		60-89 Days Past Due		Greater Than 89 Days Past Due		Total Past Due		Loans Not Past Due		Total
Commercial, industrial, and agricultural	$	2,745	$	646	$	748	$	4,139	$	744,999	$	749,138
Commercial mortgages		233		0		292		525		599,540		600,065
Residential real estate		2,290		1,494		4,655		8,439		704,908		713,347
Consumer		454		307		812		1,573		78,620		80,193
Credit cards		31		10		44		85		6,668		6,753
Overdrafts		0		0		0		0		352		352
Total	$	5,753	$	2,457	$	6,551	$	14,761	$	2,135,087	$	2,149,848

December 31, 2016	30-59 Days Past Due		60-89 Days Past Due		Greater Than 89 Days Past Due		Total Past Due		Loans Not Past Due		Total
Commercial, industrial, and agricultural	$	1,558	$	299	$	1,294	$	3,151	$	564,649	$	567,800
Commercial mortgages		559		0		1,516		2,075		572,751		574,826
Residential real estate		2,155		737		3,710		6,602		646,281		652,883
Consumer		648		890		974		2,512		72,304		74,816
Credit cards		105		0		10		115		5,931		6,046
Overdrafts		0		0		0		0		595		595
Total	$	5,025	$	1,926	$	7,504	$	14,455	$	1,862,511	$	1,876,966

Troubled Debt Restructurings

During the years ended December 31, 2017 and 2016, the terms of certain loans were modified as troubled debt restructurings. The modification of the terms of such loans included either or both of the following: a reduction of the stated interest rate of the loan; or an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk.

The following table presents the number of loans, loan balances, and specific reserves for loans that have been restructured in a troubled debt restructuring as of December 31, 2017 and December 31, 2016.

	December 31, 2017						December 31, 2016
	Number of Loans		Loan Balance		Specific Reserve		Number of Loans		Loan Balance		Specific Reserve
Commercial, industrial, and agricultural		10	$	5,213	$	245		7	$	2,640	$	125
Commercial mortgages		9		12,090		5,444		8		9,191		2,214
Residential real estate		0		0		0		0		0		0
Consumer		0		0		0		0		0		0
Credit cards		0		0		0		0		0		0
Total		19	$	17,303	$	5,689		15	$	11,831	$	2,339

The following table presents loans by class modified as troubled debt restructurings that occurred during the years ended December 31, 2017, 2016, and 2015:

	Year Ended December 31, 2017
	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding  Recorded Investment
Commercial, industrial, and agricultural		4	$	2,750	$	2,750
Commercial mortgages		2		6,421		6,421
Residential real estate		0		0		0
Consumer		0		0		0
Credit cards		0		0		0
Total		6	$	9,171	$	9,171

	Year Ended December 31, 2016
	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding  Recorded Investment
Commercial, industrial, and agricultural		1	$	109	$	109
Commercial mortgages		0		0		0
Residential real estate		0		0		0
Consumer		0		0		0
Credit cards		0		0		0
Total		1	$	109	$	109

	Year Ended December 31, 2015
	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding  Recorded Investment
Commercial, industrial, and agricultural		1	$	1,327	$	1,327
Commercial mortgages		0		0		0
Residential real estate		0		0		0
Consumer		0		0		0
Credit cards		0		0		0
Total		1	$	1,327	$	1,327

The troubled debt restructurings described above increased the allowance for loan losses by $4,024, $0 and $0 during the years ended December 31, 2017, 2016, and 2015, respectively.

Modifications involving a reduction of the stated interest rate of the loan were for periods ranging from 4-15 years. Modifications involving an extension of the maturity date were for periods ranging from 4-18 years.

A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms. Except as discussed below, all loans modified in troubled debt restructurings are performing in accordance with their modified terms as of December 31, 2017 and 2016 and no principal balances were forgiven in connection with the loan restructurings.

During the year ended December 31, 2017 four impaired commercial industrial loans totaling $2,750 were modified in troubled debt restructurings. The Corporation recorded an additional provision for loan losses of $129 and there were no chargeoffs for these loans during the year ended December 31, 2017.

During the year ended December 31, 2017 two impaired commercial real estate loans totaling $6,421 were modified in troubled debt restructurings. The Corporation recorded an additional provision for loan losses of $3,895 and there were no chargeoffs for these loans during the year ended December 31, 2017.

During the year ended December 31, 2016 one impaired commercial industrial loan having a balance of $109 was modified in troubled debt restructurings. The Corporation did not record any additional provision for loan losses and there were no chargeoffs for this loan during the year ended December 31, 2016.

During the year ended December 31, 2015 one impaired commercial industrial loan having a balance of $1,327 was modified in troubled debt restructurings. The Corporation did not record any additional provision for loan losses and there were no chargeoffs for this loan during the year ended December 31, 2015.

In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without a loan modification. This evaluation is performed using the Corporation’s internal underwriting policies. The Corporation has no further loan commitments to customers whose loans are classified as a troubled debt restructuring.

Generally, nonperforming troubled debt restructurings are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time (generally six months) and the ultimate collectability of the total contractual principal and interest is no longer in doubt.

Credit Quality Indicators

The Corporation classifies commercial, industrial, and agricultural loans and commercial mortgage loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. Loans with outstanding balances greater than $1 million are analyzed at least semiannually and loans with outstanding balances of less than $1 million are analyzed at least annually.

The Corporation uses the following definitions for risk ratings:

Special Mention: Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Corporation’s credit position at some future date.

Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected.

Doubtful: Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans not rated as special mention, substandard, or doubtful are considered to be pass rated loans. All loans included in the following tables have been assigned a risk rating within 12 months of the balance sheet date.

December 31, 2017	Pass		Special Mention		Substandard		Doubtful		Total
Commercial, industrial, and agricultural	$	713,102	$	16,726	$	19,310	$	0	$	749,138
Commercial mortgages		581,631		4,419		14,015		0		600,065
Total	$	1,294,733	$	21,145	$	33,325	$	0	$	1,349,203

December 31, 2016	Pass		Special Mention		Substandard		Doubtful		Total
Commercial, industrial, and agricultural	$	531,320	$	14,638	$	21,831	$	11	$	567,800
Commercial mortgages		551,474		1,809		21,543		0		574,826
Total	$	1,082,794	$	16,447	$	43,374	$	11	$	1,142,626

The Corporation considers the performance of the loan portfolio and its impact on the allowance for loan losses. For residential real estate, consumer, and credit card loan classes, the Corporation also evaluates credit quality based on the performance status of the loan, which was previously presented, and by payment activity. Nonperforming loans include loans on nonaccrual status and loans past due over 90 days and still accruing interest. The following table presents the recorded investment in residential, consumer, and credit card loans based on performance status as of December 31, 2017 and December 31, 2016:

	December 31, 2017						December 31, 2016
	Residential Real Estate		Consumer		Credit Cards		Residential Real Estate		Consumer		Credit Cards
Performing	$	707,539	$	79,348	$	6,709	$	647,283	$	73,817	$	6,036
Nonperforming		5,808		845		44		5,600		999		10
Total	$	713,347	$	80,193	$	6,753	$	652,883	$	74,816	$	6,046

The Corporation’s portfolio of residential real estate and consumer loans maintained within Holiday Financial Services Corporation (“Holiday”), a subsidiary that offers small balance unsecured and secured loans, primarily collateralized by automobiles and equipment, to borrowers with higher risk characteristics than are typical in the Bank’s consumer loan portfolio, are considered to be subprime loans.

Holiday’s loan portfolio, included in consumer and residential loans above, is summarized as follows at December 31, 2017 and 2016:

	2017			2016
Consumer	$	23,428		$	24,026
Residential real estate		0			1,209
Less: unearned discount		(3,889	)		(3,430	)
Total	$	19,539		$	21,805

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Secondary Market Mortgage Activities

12 Months Ended

Dec. 31, 2017

Text Block [Abstract]

Secondary Market Mortgage Activities

6.  Secondary Market Mortgage Activities

The following summarizes secondary market mortgage activities for the years ended December 31, 2017, 2016 and 2015:

	2017		2016		2015
Loans originated for resale	$	25,231	$	31,255	$	15,171
Proceeds from sales of loans held for sale		24,285		33,045		14,927
Net gains on sales of loans held for sale		545		818		630
Loan servicing fees		563		421		390

Total loans serviced for others were $159,208 and $157,073 December 31, 2017 and 2016, respectively.

The following summarizes activity for capitalized mortgage servicing rights for the years ended December 31, 2017, 2016, and 2015:

	2017			2016			2015
Balance, beginning of year	$	1,391		$	962		$	856
Additions		198			200			380
Servicing rights acquired		0			367			0
Amortization		(202	)		(138	)		(274	)
Balance, end of year	$	1,387		$	1,391		$	962

The fair value of mortgage servicing rights is based on market prices for comparable mortgage servicing contracts, when available, or alternatively based on a valuation model that calculates the present value of estimated future net servicing income. The fair value of mortgage servicing rights was not materially different than amortized cost at December 31, 2017 and 2016, respectively. No valuation allowance is deemed necessary at December 31, 2017, 2016, or 2015. The fair value of interest rate lock commitments and forward commitments to sell loans was not material at December 31, 2017 or 2016.

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Premises and Equipment

12 Months Ended

Dec. 31, 2017

Property, Plant and Equipment [Abstract]

Premises and Equipment

7.  Premises and Equipment

The following summarizes premises and equipment at December 31, 2017 and 2016:

	2017		2016
Land	$	8,147	$	7,324
Premises and leasehold improvements		53,903		48,563
Furniture and equipment		31,238		30,125
Construction in process		71		4,014
		93,359		90,026
Less: accumulated depreciation		42,644		40,504
Premises and equipment, net	$	50,715	$	49,522

Depreciation on premises and equipment amounted to $3,811 in 2017, $3,215 in 2016 and $2,759 in 2015.

The Corporation is committed under nineteen non-cancelable operating leases for facilities and eleven non-cancelable operating leases for vehicles with initial or remaining terms in excess of one year. The minimum annual rental commitments under these leases at December 31, 2017 are as follows:

2018	$	1,167
2019		1,021
2020		836
2021		736
2022		578
Thereafter		3,530
	$	7,868

Rental expense, net of rental income, charged to occupancy expense for 2017, 2016, and 2015 was $870, $773 and $699, respectively.

In December 2009, the Corporation entered into a sale-leaseback transaction for real estate used in the operations of one of its branch office locations. The lease term is seventeen years, with two automatic renewal terms of five years each. The Corporation sold the property for $1,200 but financed the entire sales amount. Because the buyer/lessor did not make an initial investment on the purchase of the real estate that is adequate to transfer the risks and rewards of ownership, the Corporation deferred the entire gain of $489 associated with this transaction, which is included in accrued interest payable and other liabilities in the accompanying consolidated balance sheet. The gain is being recognized over the term of the loan under the installment method, and the gain recognized was included in other income in the accompanying consolidated statements of income and comprehensive income and totaled $25, $25 and $22 in 2017, 2016, and 2015, respectively.

The minimum annual rental commitments under this sale-leaseback transaction at December 31, 2017 are as follows:

2018	$	105
2019		105
2020		105
2021		105
2022		105
Thereafter		420
	$	945

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Foreclosed Assets

12 Months Ended

Dec. 31, 2017

Text Block [Abstract]

Foreclosed Assets

8.  Foreclosed Assets

Foreclosed real estate is reported net of a valuation allowance and included in accrued interest receivable and other assets in the accompanying consolidated balance sheets. Activity for the years ended December 31, 2017, 2016, and 2015 is as follows:

	2017			2016			2015
Balance, beginning of year	$	1,015		$	654		$	806
Acquired from Lake National Bank		0			665			0
Additions		630			120			806
Sales (at carrying value)		(935	)		(424	)		(958	)
Balance, end of year	$	710		$	1,015		$	654

Expenses related to foreclosed real estate include:

	2017			2016			2015
Net (gain) loss on sale	$	(208	)	$	(134	)	$	3
Operating expenses, net of rental income		366			223			169
	$	158		$	89		$	172

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Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

9.  Goodwill and Intangible Assets

Goodwill

The change in the carrying amount of goodwill for the years ended December 31, 2017 and 2016 is as follows:

	2017		2016
Balance, beginning of year	$	38,730	$	27,194
Acquired during the year		0		11,536
Balance, end of year	$	38,730	$	38,730

Impairment exists when a reporting unit’s carrying value of goodwill exceeds its fair value, which is determined through a two-step impairment test. Step 1 includes the determination of the carrying value of our single reporting unit, including the existing goodwill and intangible assets, and estimating the fair value of the reporting unit. We determined the fair value of our reporting unit exceeded its carrying amount. If the carrying amount of the reporting unit exceeds its fair value, we are required to perform a second step to the impairment test. Our annual impairment analysis at December 31, 2017 and 2016 indicated that the Step 2 analysis was not necessary.

Intangible Assets

In connection with its acquisition of FC Banc Corp. in 2013, the Corporation recorded a core deposit intangible asset of $4,834. During the years ended December 31, 2017, 2016, and 2015, the Corporation recorded amortization expense of $662, $835 and $1,008, respectively. The net carrying values at December 31, 2017 and December 31, 2016 were $899 and $ 1,561, respectively. No other intangible assets were required to be recorded in connection with the acquisition of FC Banc Corp.

In connection with its acquisition of Lake National Bank in 2016, the Corporation recorded a core deposit intangible asset of $1,583. During the year ended December 31, 2017 and 2016, the Corporation recorded amortization expense of $567 and $290, respectively. The net carrying values at December 31, 2017 and 2016 were $726 and $1,293, respectively. No other intangible assets were required to be recorded in connection with the acquisition of Lake National Bank.

Estimated amortization expense of core deposit intangible assets for each of the next five years is as follows:

2018	$	898
2019		567
2020		160
2021		0
2022		0

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Deposits

12 Months Ended

Dec. 31, 2017

Banking and Thrift [Abstract]

Deposits

10.  Deposits

The following table reflects time certificates of deposit accounts included in total deposits and their remaining maturities at December 31, 2017:

Time deposits maturing:
2018	$	125,809
2019		128,602
2020		91,799
2021		7,954
2022		6,881
Thereafter		3,926
	$	364,971

Certificates of deposit of $250 thousand or more totaled $108,992 and $25,650 at December 31, 2017 and 2016, respectively. The Corporation had $3,500 and $0 in brokered deposits at December 31, 2017 and 2016.

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Borrowings

12 Months Ended

Dec. 31, 2017

Text Block [Abstract]

Borrowings

11.  Borrowings

At December 31, 2017 and 2016, the Corporation had available one $10 million unsecured line of credit with an unaffiliated institution, at a variable interest rate with a floor as defined in the agreement. There were no borrowings on the line of credit at December 31, 2017 and 2016.

FHLB Borrowings

At December 31, 2017, the Bank had remaining borrowing capacity with the FHLB of $532,809. At December 31, 2017, borrowings with the FHLB are secured by a pledge of selected securities in the amount of $8,068 and certain loans with a balance of $1,085,644. Borrowings from the FHLB at December 31, 2017 and 2016 are as follows:

Interest Rate	Maturity		2017		2016
(a)		n/a	$	34,416	$	103,969
(b)		09/06/17		0		15,016
(c)		12/15/17		0		15,093
(d)		09/06/18		7,550		17,523
(e)		06/28/19		30,000		0
(f)		09/06/19		11,752		18,360
(g)		09/16/19		8,883		13,865
(h)		06/29/20		30,000		0
(i)		09/08/20		13,859		18,780
(j)		06/28/21		30,000		0
(k)		06/29/22		50,000		0
(l)		09/06/22		15,976		19,201
(m)		12/05/22		20,000		0
(n)		07/03/23		700		700
(o)		09/05/23		1,797		1,925
(p)		03/11/24		814		852
(q)		06/11/24		435		462
(r)		05/04/26		217		240
(s)		10/14/26		231		252
(t)		02/11/33		729		766
			$	257,359	$	227,004

(a) – Open Repo borrowing at an interest rate of 1.54% at December 31, 2017 and 0.74% at December 31, 2016. The maximum amount of the Open Repo borrowing available is $150,000.

(b) – Fixed rate borrowing at an interest rate of 0.83%, with monthly principal and interest payments.

(c) – Fixed rate borrowing at an interest rate of 1.25%, with monthly principal and interest payments.

(d) – Fixed rate borrowing at an interest rate of 1.05%, with monthly principal and interest payments.

(e) – Fixed rate borrowing at interest rate of 1.66%. Interest only payments with principal due at maturity.

(f) – Fixed rate borrowing at an interest rate of 1.17%, with monthly principal and interest payments.

(g) – Fixed rate borrowing at an interest rate of 1.35%, with monthly principal and interest payments.

(h) – Fixed rate borrowing at interest rate of 1.82%. Interest only payments with principal due at maturity.

(i) – Fixed rate borrowing at an interest rate of 1.27%, with monthly principal and interest payments.

(j) – Fixed rate borrowing at interest rate of 1.97%. Interest only payments with principal due at maturity.

(k) – Fixed rate borrowing at interest rate of 1.97%. Interest only payments with principal due at maturity.

(l) – Fixed rate borrowing at an interest rate of 1.47%, with monthly principal and interest payments.

(m) – Fixed rate borrowing at interest rate of 2.39%. Interest only payments with principal due at maturity.

(n) – Fixed rate borrowing at interest rate of 4.72%. Interest only payments with principal due at maturity.

(o) – Fixed rate borrowing at an interest rate of 4.31%, with monthly principal and interest payments and a balloon payment due at maturity.

(p) – Fixed rate borrowing at an interest rate of 3.05%, with monthly principal and interest payments and a balloon payment due at maturity.

(q) – Fixed rate borrowing at an interest rate of 5.24%, with monthly principal and interest payments and a balloon payment due at maturity.

(r) – Fixed rate borrowing at an interest rate of 3.35%, with monthly principal and interest payments.

(s) – Fixed rate borrowing at an interest rate of 4.00%, with monthly principal and interest payments.

(t) – Fixed rate borrowing at an interest rate of 2.96%, with monthly principal and interest payments.

Each advance is payable at its maturity date, with a prepayment penalty for fixed rate advances.

Other Borrowings

At December 31, 2017 and 2016, the Bank had no outstanding borrowings from unaffiliated institutions under overnight borrowing agreements.

The Bank entered into a borrowing transaction with an unaffiliated institution in March 2007. The proceeds of this borrowing were $10,000 and, as part of this transaction, the Bank pledged certain securities which had a carrying amount of $11,416 at December 31, 2016. The borrowing matured March 20, 2017. The interest rate was fixed and was 5.25% at December 31, 2016.

Subordinated Debentures

In 2007, the Corporation issued two $10,000 floating rate trust preferred securities as part of a pooled offering of such securities. The interest rate on each offering is determined quarterly and floats based on the 3 month LIBOR plus 1.55% and was 3.14% at December 31, 2017 and 2.51% at December 31, 2016. The Corporation issued subordinated debentures to the trusts in exchange for the proceeds of the offerings, which debentures represent the sole assets of the trusts. The subordinated debentures must be redeemed no later than 2037. The Corporation may redeem the debentures, in whole or in part, at face value at any time. The Corporation has the option to defer interest payments from time to time for a period not to exceed five consecutive years. Although the trusts are variable interest entities, the Corporation is not the primary beneficiary. As a result, because the trusts are not consolidated with the Corporation, the Corporation does not report the securities issued by the trusts as liabilities. Instead, the Corporation reports as liabilities the subordinated debentures issued by the Corporation and held by the trusts, since the liabilities are not eliminated in consolidation.

In September 2016, the Corporation completed a private placement of $50,000 in aggregate principal amount of fixed-to-floating rate subordinated notes. The notes will mature in October 2026, and will initially bear interest at a fixed rate of 5.75% per annum, payable semi-annually in arrears, to, but excluding, October 15, 2021, and thereafter to, but excluding, the maturity date or earlier redemption, the interest rate shall reset quarterly to an interest rate per annum equal to the then current three-month LIBOR rate plus 4.55%. These subordinated notes were designed to qualify as Tier 2 capital under the Federal Reserve’s capital guidelines and were given an investment grade rating of BBB- by Kroll Bond Rating Agency.

Maturity Schedule of All Borrowed Funds

The following is a schedule of maturities of all borrowed funds as of December 31, 2017:

2018	$	62,242
2019		47,562
2020		37,505
2021		33,740
2022		72,931
Thereafter		73,999
Total borrowed funds	$	327,979

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Interest Rate Swaps

12 Months Ended

Dec. 31, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Interest Rate Swaps

12.  Interest Rate Swaps

On May 3, 2011, the Corporation executed an interest rate swap agreement with a 5 year term and an effective date of September 15, 2013 in order to hedge cash flows associated with $10 million of a subordinated note that was issued by the Corporation during 2007 and elected cash flow hedge accounting for the agreement. The Corporation’s objective in using this derivative is to add stability to interest expense and to manage its exposure to interest rate risk. The interest rate swap involves the receipt of variable-rate amounts in exchange for fixed-rate payments from September 15, 2013 to September 15, 2018 without exchange of the underlying notional amount. At December 31, 2017, the variable rate on the subordinated debt was 3.14% (LIBOR plus 155 basis points) and the Corporation was paying 5.57% (4.02% fixed rate plus 155 basis points).

As of December 31, 2017 and 2016, no derivatives were designated as fair value hedges or hedges of net investments in foreign operations. Additionally, the Corporation does not use derivatives for trading or speculative purposes and currently does not have any derivatives that are not designated as hedges.

The following tables provide information about the amounts and locations of activity related to the interest rate swaps designated as cash flow hedges within the Corporation’s consolidated balance sheet and statement of income as of December 31, 2017 and 2016 and for the years ended December 31, 2017, 2016, and 2015:

As of December 31	Liability Derivative
	Balance Sheet	Fair value
	Location	2017	2016
Interest rate contract	Accrued interest payable and other liabilities	($161)	($459)
For the Year Ended December 31, 2017	(a)	(b)		(c)	(d)	(e)
Interest rate contract	$194	Interest expense – subordinated debentures		($288)	Other income	$0
For the Year Ended December 31, 2016
Interest rate contract	$180	Interest expense – subordinated debentures		($340)	Other income	$0
For the Year Ended December 31, 2015
Interest rate contract	$137	Interest expense – subordinated debentures		($378)	Other income	$0

(a) Amount of Gain Recognized in Other Comprehensive Loss on Derivative (Effective Portion), net of tax

(b) Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)

(c) Amount of Loss Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)

(d) Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)

(e) Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)

Amounts reported in accumulated other comprehensive loss related to the interest rate swap will be reclassified to interest expense as interest payments are made on the subordinated debentures. Such amounts reclassified from accumulated other comprehensive loss to interest expense in the next twelve months are expected to be $270.

As of December 31, 2017 and 2016, a cash collateral balance of $1,400 was maintained with the counterparty to the interest rate swaps. These balances are included in interest bearing deposits with other banks on the consolidated balance sheets.

During 2016, the Corporation entered into certain interest rate swap contracts that are not designated as hedging instruments. These derivative contracts relate to transactions in which the Corporation enters into an interest rate swap with a customer while at the same time entering into an offsetting interest rate swap with another financial institution. In connection with each swap transaction, the Corporation agrees to pay interest to the customer on a notional amount at a variable interest rate and receive interest from the customer on a similar notional amount at a fixed interest rate. Concurrently, the Corporation agrees to pay another financial institution the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount. The transaction allows the Corporation’s customers to effectively convert a variable rate loan to a fixed rate. Because the Corporation acts as an intermediary for its customer, changes in the fair value of the underlying derivative contracts offset each other and do not impact the Corporation’s results of operations.

The following table provides information about the amounts and locations of activity related to the back-to-back interest rate swaps within the Corporation’s consolidated balance sheet as of December 31, 2017 and 2016:

	Notional Amount			Average Maturity (in years)		Weighted Average Fixed Rate			Weighted Average Variable Rate	Fair Value
December 31, 2017
3rd Party interest rate swaps	$	11,848			8.0		4.51	%	1 month LIBOR + 2.37%	$	149 (a)
Customer interest rate swaps		(11,848	)		8.0		4.51	%	1 month LIBOR + 2.37%		(149) (b)
December 31, 2016
3rd Party interest rate swaps	$	14,814			9.7		4.43	%	1 month LIBOR + 2.35%	$	211 (a)
Customer interest rate swaps		(14,814	)		9.7		4.43	%	1 month LIBOR + 2.35%		(211) (b)

(a) Reported in accrued interest receivable and other assets within the consolidated balance sheets

(b) Reported in accrued interest payable and other liabilities within the consolidated balance sheets

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Income Taxes

12 Months Ended

Dec. 31, 2017

Income Tax Disclosure [Abstract]

Income Taxes

13.  Income Taxes

The following is a summary of income tax expense for the years ended December 31, 2017, 2016, and 2015:

	2017		2016			2015
Current – federal	$	8,978	$	6,181		$	7,777
Current – state		29		(33	)		139
Deferred – federal		376		1,023			376
Deferred tax adjustment related to reduction in U.S. federal statutory income tax rate		3,009		0			0
Income tax expense	$	12,392	$	7,171		$	8,292

The reconciliation of income tax attributable to pre-tax income at the federal statutory tax rates to income tax expense is as follows:

	2017			%			2016			%			2015			%
Tax at statutory rate	$	12,688			35.0		$	9,699			35.0		$	10,671			35.0
Tax exempt income, net		(1,899	)		(5.2	)		(2,054	)		(7.4	)		(1,816	)		(6.0	)
Deferred tax adjustment related to reduction in U.S. federal statutory income tax rate		3,009			8.3			0			0.00			0			0.0
Bank owned life insurance		(581	)		(1.6	)		(379	)		(1.3	)		(418	)		(1.4	)
Merger costs		0			0.0			170			0.6			30			0.1
Other		(825	)		(2.3	)		(265	)		(1.0	)		(175	)		(0.5	)
Income tax expense	$	12,392			34.2		$	7,171			25.9		$	8,292			27.2

Income tax expense for 2017 was impacted by the adjustment of our deferred tax assets and liabilities related to the reduction in the U.S. federal statutory income tax rate to 21% under the Tax Cuts and Jobs Act, which was enacted on December 22, 2017. As a result of the new law, which is more fully discussed below, the Corporation recognized additional tax expense totaling $3,009, as detailed in the table above.

Year-end deferred taxes are presented in the table below. As a result of the Tax Cuts and Jobs Act enacted on December 22, 2017 (discussed below), deferred taxes as of December 31, 2017 are based on the newly enacted U.S. statutory federal income tax rate of 21%. Deferred taxes as of December 31, 2016 are based on the previously enacted U.S. statutory federal income tax rate of 35%.

	2017		2016
Deferred tax assets:
Allowance for loan losses	$	2,840	$	4,679
Fair value adjustments – business combination		1,135		2,530
Deferred compensation		1,903		2,891
Impaired security valuation		0		379
Net operating loss carryover		71		627
Post-retirement benefits		892		1,688
Unrealized loss on interest rate swap		34		161
Nonaccrual loan interest		390		649
Accrued expenses		699		1,282
Deferred fees and costs		598		629
Other		344		465
		8,906		15,980
Deferred tax liabilities:
Unrealized gain on securities available for sale		126		750
Premises and equipment		1,413		2,258
Unrealized gain on trading securities		156		118
Intangibles – section 197		2,593		4,735
Mortgage servicing rights		291		487
Other		78		23
		4,657		8,371
Net deferred tax asset	$	4,249	$	7,609

At December 31, 2017 and 2016, the Corporation has no unrecognized tax benefits. The Corporation does not expect the total amount of unrecognized tax benefits to significantly increase in the next twelve months.

The Corporation recognizes interest and/or penalties related to income tax matters as part of income tax expense. At December 31, 2017 and 2016, there were no amounts accrued for interest and/or penalties and no amounts recorded as expense for the years ending December 31, 2017, 2016, and 2015.

The Corporation and its subsidiaries are subject to U.S. federal income tax. The Corporation is no longer subject to examination by the taxing authorities for years prior to 2013. Tax years 2014 through 2016 remain open to federal examination.

In connection with its acquisition of FC Banc Corp., the Corporation assumed a federal net operating loss carryforward of $6,367, which expires in 2033. Under Section 382 of the Internal Revenue Code, the utilization of the loss carryforward in future years is limited based on the consideration paid and other factors. The annual limitation on the utilization of this loss carry forward is $1,455. As of December 31, 2017, the balance of the net operating loss carryforward is $338. Management believes that the net operating loss carryforward will be used in full before its expiration.

The Tax Cuts and Jobs Act was enacted on December 22, 2017. Among other things, the new law (i) establishes a new, flat corporate federal statutory income tax rate of 21%, (ii) eliminates the corporate alternative minimum tax and allows the use of any such carryforwards to offset regular tax liability for any taxable year, (iii) limits the deduction for net interest expense incurred by U.S. corporations, (iv) allows businesses to immediately expense, for tax purposes, the cost of new investments in certain qualified depreciable assets, (v) eliminates or reduces certain deductions related to meals and entertainment expenses, (vi) modifies the limitation on excessive employee remuneration to eliminate the exception for performance-based compensation and clarifies the definition of a covered employee and (vii) limits the deductibility of deposit insurance premiums. The Tax Cuts and Jobs Act also significantly changes U.S. tax law related to foreign operations, however, such changes do not currently impact us.

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Employee Benefit Plans

12 Months Ended

Dec. 31, 2017

Retirement Benefits [Abstract]

Employee Benefit Plans

14.  Employee Benefit Plans

The Corporation sponsors a contributory defined contribution Section 401(k) plan in which substantially all employees participate. The plan permits employees to make pre-tax contributions which are matched by the Corporation at 100% for every 1% contributed up to 3% then 50% for every 1% contributed up to the next 2% in total of the employee’s compensation. The Corporation’s matching contribution and related expenses were $802, $652 and $508 in 2017, 2016, and 2015, respectively. Profit sharing contributions to this plan, based on current year compensation, are 6.0% of total compensation plus 5.7% of the compensation in excess of $127. The Corporation recognized profit sharing expense of $1,755, $1,276 and $868 in 2017, 2016, and 2015 respectively.

The Corporation has adopted a non-qualified supplemental executive retirement plan (“SERP”) for certain executives to compensate those executive participants in the Corporation’s retirement plan whose benefits are limited by compensation limitations under current tax law. The SERP is considered an unfunded plan for tax and ERISA purposes and all obligations arising under the SERP are payable from the general assets of the Corporation. At December 31, 2017 and 2016, obligations of $5,349 and $4,958, respectively, were included in other liabilities for this plan. Expenses related to this plan were $648 in 2017, $550 in 2016 and $608 in 2015.

The Corporation has established a Survivor Benefit Plan for the benefit of outside directors. The purpose of the plan is to provide life insurance benefits to beneficiaries of the Corporation’s directors who at the time of their death are participants in the plan. The plan is considered an unfunded plan for tax and ERISA purposes and all obligations arising under the plan are payable from the general assets of the Corporation. At December 31, 2017 and 2016, obligations of $1,264 and $1,175, respectively, were included in other liabilities for this plan. Expenses related to this plan were $89 in 2017, $33 in 2016 and $155 in 2015.

The Corporation has an unfunded post retirement benefits plan which provides certain health care benefits for retired employees who have reached the age of 60 and retired with 30 years of service. The plan was amended in 2013 to include only employees hired prior to January 1, 2000. Benefits are provided for these retired employees and their qualifying dependents from the age of 60 through the age of 65.

The following table sets forth the change in the benefit obligation of the plan as of and for the years ended December 31, 2017, 2016, and 2015:

	2017			2016			2015
Benefit obligation at beginning of year	$	3,409		$	3,066		$	2,744
Interest cost		114			108			90
Service cost		103			103			96
Actual claims		(78	)		(151	)		(109	)
Actuarial (gain) loss		(808	)		283			245
Benefit obligation at end of year	$	2,740		$	3,409		$	3,066

Amounts recognized in accumulated other comprehensive income at December 31, 2017 and 2016 consist of:

	2017			2016
Net actuarial loss	$	(871	)	$	(1,871	)
Tax effect		183			654
	$	(688	)	$	(1,217	)

The accumulated benefit obligation was $2,740 and $3,409 at December 31, 2017 and 2016, respectively.

The following table sets forth the components of net periodic benefit cost and other amounts recognized in other comprehensive income:

	2017			2016			2015
Service cost	$	103		$	103		$	96
Interest cost		114			108			90
Net amortization of transition obligation and actuarial loss		192			184			173
Net periodic benefit cost		409			395			359
Net (gain) loss		(808	)		282			311
Amortization of loss		(192	)		(184	)		(173	)
Total recognized in other comprehensive income		(1,000	)		98			138
Total recognized in net periodic benefit cost and other comprehensive income	$	(591	)	$	493		$	497

The estimated net loss that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year is $84.

The weighted average discount rate used to calculate net periodic benefit cost was 3.49% in 2017, 3.67% in 2016, and 3.42% in 2015. The weighted average rate used to calculate accrued benefit obligations was 3.13% in 2017, 3.49% in 2016, and 3.67% in 2015. The health care cost trend rate used to measure the expected costs of benefits is 5.0% for 2018 and thereafter. A one percent increase in the health care trend rates would result in an increase of $267 in the benefit obligation as of December 31, 2017, and would increase the service and interest costs by $19 in future periods. A similar one percent decrease in health care trend rates would result in a decrease of $218 and $15 in the benefit obligation and services and interest costs, respectively, at December 31, 2017.

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Deferred Compensation Plans

12 Months Ended

Dec. 31, 2017

Postemployment Benefits [Abstract]

Deferred Compensation Plans

15.  Deferred Compensation Plans

Deferred compensation plans cover all directors and certain officers. Under the plans, the Corporation pays each participant, or their beneficiary, the value of the participant’s account over a maximum period of 10 years, beginning with the individual’s termination of service. A liability is accrued for the obligation under these plans.

A summary of changes in the deferred compensation plan liability follows:

	2017			2016			2015
Balance, beginning of year	$	2,080		$	1,226		$	1,087
Deferrals, dividends, and changes in fair value recorded as an expense		444			936			209
Deferred compensation payments		(21	)		(82	)		(70	)
Balance, end of year	$	2,503		$	2,080		$	1,226

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Stock-Based Compensation

12 Months Ended

Dec. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

16. Stock-Based Compensation

A summary of changes in nonvested restricted stock awards follows:

	Shares			Weighted-average Grant Date Fair Value
Nonvested at January 1, 2017		100,726			$17.36
Granted		39,673			25.94
Forfeited		(2,482	)		21.12
Vested		(43,445	)		17.54
Nonvested at December 31, 2017		94,472			$20.79

As of December 31, 2017 and 2016, there was $1,243 and $1,190, respectively, of total unrecognized compensation cost related to nonvested shares granted under the restricted stock award plan. The fair value of shares vesting during 2017, 2016, and 2015 was $1,035, $624 and $530, respectively. Compensation expense for restricted stock awards was $928 in 2017, $820 in 2016 and $621 in 2015.

The number of authorized stock-based awards still available for grant as of December 31, 2017 was 219,800.

In addition to the time-based restricted stock disclosed above, the Corporation’s Board of Directors granted performance-based restricted stock awards (“PBRSAs”) with a maximum of 10,000 shares to an employee in 2017. The number of PBRSAs will depend on certain performance conditions and are also subject to service-based vesting.

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Related Party Transactions

12 Months Ended

Dec. 31, 2017

Related Party Transactions [Abstract]

Related Party Transactions

17.  Related Party Transactions

In the ordinary course of business, the Bank has transactions, including loans and credit cards, with its officers, directors, and their affiliated companies. The aggregate of such loans and credit cards totaled $5,331 on December 31, 2017 compared to $4,357 on December 31, 2016. During 2017, $1,816 in new loans were made, $25 were added for the net change in outstanding credit card balances, $200 were removed due to a change in the composition of related parties, and repayments totaled $667.

Deposits from principal officers, directors, and their affiliates were $11,982 and $14,434 at December 31, 2017 and 2016, respectively.

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Capital Requirements and Restrictions on Retained Earnings

12 Months Ended

Dec. 31, 2017

Banking and Thrift [Abstract]

Capital Requirements and Restrictions on Retained Earnings

18.  Capital Requirements and Restrictions on Retained Earnings

Banks and financial holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, for the Bank, prompt corrective action (PCA) regulations involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can result in regulatory enforcement actions. Under the Basel III rules, the Corporation and Bank must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios. The capital conservation buffer is being phased in from 0.0% for 2015 to 2.50% by 2019. The capital conservation buffer for 2017 is 1.25% and for 2016 is 0.625%. The net unrealized gain or loss on available for sale securities are excluded from computing regulatory capital. Management believes as of December 31, 2017 the Corporation and Bank meet all capital adequacy requirements to which they are subject.

The PCA regulations provide five capital categories: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms alone do not represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion; brokered deposits may not be accepted, renewed or rolled over; and capital restoration plans are required. As of December 31, 2017 and 2016, the most recent regulatory notifications categorized the Bank as well capitalized under the PCA regulatory framework. There are no events or conditions since this notification that management believes have changed the Bank’s capital category.

Actual and required capital amounts and ratios are presented below as of December 31, 2017 and 2016. The capital adequacy ratio includes the capital conservation buffer.

	Actual					For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio		Amount		Ratio
December 31, 2017
Total Capital to Risk Weighted Assets
Consolidated		$297,708		14.32	%		$192,341		9.25%		N/A
Bank		$279,704		13.58	%		$190,513		9.25%		$205,960		10.00%
Tier 1 (Core) Capital to Risk Weighted Assets
Consolidated		$228,015		10.97	%		$150,754		7.25%		N/A
Bank		$261,643		12.70	%		$149,321		7.25%		$164,768		8.00%
Common equity Tier 1 to Risk Weighted Assets
Consolidated		$208,015		10.00	%		$119,563		5.75%		N/A
Bank		$254,264		12.35	%		$118,427		5.75%		$133,874		6.50%
Tier 1 (Core) Capital to Average Assets
Consolidated		$228,015		8.45	%		$107,969		4.00%		N/A
Bank		$261,643		9.80	%		$106,798		4.00%		$133,498		5.00%
December 31, 2016
Total Capital to Risk Weighted Assets
Consolidated		$261,530		14.05	%		$160,501		8.625%		N/A
Bank		$242,592		13.19	%		$158,590		8.625%		$183,873		10.00%
Tier 1 (Core) Capital to Risk Weighted Assets
Consolidated		$195,200		10.49	%		$123,283		6.625%		N/A
Bank		$228,109		12.41	%		$121,816		6.625%		$147,098		8.00%
Common equity Tier 1 to Risk Weighted Assets
Consolidated		$175,200		9.41	%		$95,370		5.125%		N/A
Bank		$220,730		12.00	%		$94,235		5.125%		$119,517		6.50%
Tier 1 (Core) Capital to Average Assets
Consolidated		$195,200		7.85	%		$99,430		4.00%		N/A
Bank		$228,109		9.36	%		$97,527		4.00%		$121,909		5.00%

The final rules implementing Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (Basel III rules) became effective for the Company on January 1, 2015 with full compliance with

all of the requirements being phased in over a multi-year schedule, and fully phased in by January 1, 2019. The net unrealized gain or loss on available for sales securities is included in computing regulatory capital.

Certain restrictions exist regarding the ability of the Bank to transfer funds to the Corporation in the form of cash dividends, loans or advances. During 2018, $30,615 of accumulated net earnings of the Bank included in consolidated stockholders’ equity, plus any 2018 net profits retained to the date of the dividend declared, is available for distribution to the Corporation as dividends without prior regulatory approval, subject to regulatory capital requirements described above.

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Off Balance Sheet Activities

12 Months Ended

Dec. 31, 2017

Text Block [Abstract]

Off Balance Sheet Activities

19.  Off-Balance Sheet Activities

Some financial instruments, such as loan commitments, credit lines, letters of credit, and overdraft protection, are issued to meet customer financing needs. These are agreements to provide credit or to support the credit of others, as long as conditions established in the contract are met, and usually have expiration dates. Commitments may expire without being used. Off-balance sheet risk to credit loss exists up to the face amount of these instruments, although material losses are not anticipated. The same credit policies are used to make such commitments as are used for loans, including obtaining collateral at exercise of the commitment.

The contractual amount of financial instruments with off-balance sheet risk was as follows at December 31, 2017 and 2016:

	2017				2016
	Fixed Rate		Variable Rate		Fixed Rate		Variable Rate
Commitments to make loans		$64,799		$210,987		$57,283		$202,883
Unused lines of credit		0		118,348		0		105,779
Standby letters of credit		0		14,985		0		4,618

Commitments to make loans are generally made for periods of 60 days or less. The fixed rate loan commitments at December 31, 2017 have interest rates ranging from 1.00% to 18.00% and maturities ranging from 8 months to 30 years. The fixed rate loan commitments at December 31, 2016 have interest rates ranging from 1.19% to 18.00% and maturities ranging from 6 months to 30 years.

In October 2015, the Corporation entered into a subscription agreement with Oxer BCP Mezzanine Fund, LP (“Oxer”) and committed to invest $5,000 as a limited partner in the fund. In February 2017, the Corporation entered into a subscription agreement with Tecum Capital Partners II, LP (“Tecum”) and committed to invest $3,000 as a limited partner in the fund. Oxer and Tecum are both Small Business Investment Company (SBIC) that are licensed and regulated by the Office of Investment at the Small Business Administration (SBA). The SBIC license allows SBICs to employ private capital and funds borrowed at a low cost using SBA-guaranteed securities to make investments in qualifying small businesses and similar enterprises as defined by SBA regulations. As of December 31, 2017, the Bank has made $3,290 of capital contributions to Oxer and $1,167 of capital contributions to Tecum.

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Fair Value

12 Months Ended

Dec. 31, 2017

Fair Value Disclosures [Abstract]

Fair Value

20.  Fair Value

Fair Value Measurement

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A fair value hierarchy has also been established which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The following three levels of inputs are used to measure fair value:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The fair values of most trading securities and securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

The Corporation’s structured pooled trust preferred securities are priced using Level 3 inputs. The decline in the level of observable inputs and market activity in this class of investments by the measurement date has been significant and resulted in unreliable external pricing. Broker pricing and bid/ask spreads, when available, vary widely, and the once-active market has become comparatively inactive. The Corporation engaged a third party consultant who has developed a model for pricing these securities. Information such as historical and current performance of the underlying collateral, deferral and default rates, collateral coverage ratios, break in yield calculations, cash flow projections, liquidity and credit premiums required by a market participant, and financial trend analysis with respect to the individual issuing financial institutions and insurance companies are utilized in determining the security valuation. Due to the current market conditions as well as the limited trading activity of these types of securities, the market value of the Corporation’s structured pooled trust preferred securities are highly sensitive to assumption changes and market volatility.

The Corporation’s derivative instruments are interest rate swaps that are similar to those that trade in liquid markets. As such, significant fair value inputs can generally be verified and do not typically involve significant management judgments (Level 2 inputs).

The fair value of impaired loans with specific allocations of the allowance for loan losses is generally based on recent real estate appraisals prepared by third-parties. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Management also adjusts appraised values based on the length of time that has passed since the appraisal date and other factors. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

Assets and liabilities measured at fair value on a recurring basis are as follows at December 31, 2017 and 2016:

				Fair Value Measurements at December 31, 2017 Using
Description	Total			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Assets:
Securities Available For Sale:
U.S. Government sponsored entities	$	108,148		$	0	$	108,148		$	0
States and political subdivisions		137,723			0		137,723			0
Residential and multi-family mortgage		109,636			0		109,636			0
Corporate notes and bonds		17,200			0		17,200			0
Pooled SBA		36,040			0		36,040			0
Other equity securities		962			962		0			0
Total Securities Available For Sale	$	409,709		$	962	$	408,747		$	0
Interest Rate swaps:	$	149		$	0	$	149		$	0
Trading Securities:
Corporate equity securities	$	5,125		$	5,125	$	0		$	0
Mutual funds		1,499			1,499		0			0
Certificates of deposit		220			220		0			0
Corporate notes and bonds		254			254		0			0
U.S. Government sponsored entities		52			0		52			0
Total Trading Securities	$	7,150		$	7,098	$	52		$	0
Liabilities
Interest rate swaps	$	(310	)	$	0	$	(310	)	$	0
				Fair Value Measurements at December 31, 2016 Using
Description	Total			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Assets:
Securities Available For Sale:
U.S. Government sponsored entities	$	140,351		$	0	$	140,351		$	0
States and political subdivisions		157,037			0		157,037			0
Residential and multi-family mortgage		134,976			0		134,976			0
Corporate notes and bonds		17,414			0		17,414			0
Pooled trust preferred		2,049			0		0			2,049
Pooled SBA		43,037			0		43,037			0
Other equity securities		971			971		0			0
Total Securities Available For Sale	$	495,835		$	971	$	492,815		$	2,049
Interest Rate swaps:	$	211		$	0	$	211		$	0
Trading Securities:
Corporate equity securities	$	3,312		$	3,312	$	0		$	0
Mutual funds		1,037			1,037		0			0
Certificates of deposit		202			202		0			0
Corporate notes and bonds		254			254		0			0
U.S. Government sponsored entities		53			0		53			0
Total Trading Securities	$	4,858		$	4,805	$	53		$	0
Liabilities
Interest rate swaps	$	(670	)	$	0	$	(670	)	$	0

The table below presents a reconciliation and income statement classification of gains and losses for all securities available for sale measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the year ended December 31, 2017:

	Pooled trust preferred
Balance, January 1, 2017	$	2,049
Total gains or (losses):
Included in other comprehensive income (loss)		134
Sale of available-for-sale securities		(2,183	)
Balance, December 31, 2017	$	0

The table below presents a reconciliation and income statement classification of gains and losses for all securities available for sale measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the year ended December 31, 2016:

	Pooled trust preferred
Balance, January 1, 2016	$	3,413
Total gains or (losses):
Included in other comprehensive income (loss)		(442	)
Included in realized gains on available-for-sale securities		0
Sale of available-for-sale securities		(922	)
Balance, December 31, 2016	$	2,049

There were no Level 3 financial instruments carried at fair value on a recurring basis at December 31, 2017.

The following table presents quantitative information about Level 3 fair value measurements at December 31, 2016:

	Fair value	Valuation Technique	Unobservable Inputs	Input Utilized
Pooled trust preferred	$2,049	Discounted cash flow	Collateral default rate Yield	0.5% in 2016 and thereafter 10%
			Prepayment speed	2.0% constant prepayment rate in 2016 and thereafter

At December 31, 2016 the significant unobservable inputs used in the fair value measurement of the Corporation’s pooled trust preferred securities are collateral default rate, yield, and prepayment speed. Significant increases in specific-issuer default assumptions or decreases in specific-issuer recovery assumptions would result in a lower fair value measurement. Conversely, decreases in specific-issuer default assumptions or increases in specific-issuer recovery assumptions would result in a higher fair value measurement.

Assets and liabilities measured at fair value on a non-recurring basis are as follows at December 31, 2017 and 2016:

			Fair Value Measurements at December 31, 2017 Using
Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Impaired loans:
Commercial mortgages	$	11		0		0	$	11
			Fair Value Measurements at December 31, 2016 Using
Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Impaired loans:
Commercial mortgages	$	2,067		0		0	$	2,067

Impaired loans measured for impairment using the fair value of collateral for collateral dependent loans had a recorded investment of $646, with a valuation allowance of $635 as of December 31, 2017, resulting in an additional provision for loan losses of ($418) for the year then ended. Impaired loans measured for impairment using the fair value of collateral for collateral dependent loans had a recorded investment of $3,120, with a valuation allowance of $1,053 as of December 31, 2016, resulting in an additional provision for loan losses of ($189) for the year then ended.

The estimated fair values of impaired collateral dependent loans such as commercial or residential mortgages are determined primarily through third-party appraisals. When a collateral dependent loan, such as a commercial or residential mortgage loan, becomes impaired, a decision is made regarding whether an updated certified appraisal of the real estate is necessary. This decision is based on various considerations, including the age of the most recent appraisal, the loan-to-value ratio based on the original appraisal, and the condition of the property. Appraised values are discounted to arrive at the estimated selling price of the collateral and a further reduction for estimated costs to sell the property is applied, which results in an amount that is considered to be the estimated fair value. If a loan becomes impaired and the appraisal of related loan collateral is outdated, management applies an appropriate adjustment factor based on its experience with current valuations of similar collateral in determining the loan’s estimated fair value and resulting allowance for loan losses. Third-party appraisals are not customarily obtained in respect of unimpaired loans, unless in management’s view changes in circumstances warrant obtaining an updated appraisal.

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at December 31, 2017:

	Fair value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Impaired loans – commercial mortgages	$	11	Discounted cash flow method	Discount used in discounted cash flow method	10% (10%)

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at December 31, 2016:

	Fair value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Impaired loans – commercial mortgages	$	2,067	Sales comparison approach and discounted cash flow method	Adjustment for differences between the comparable sales and discount used in discounted cash flows	10% – 14% (13%)

Fair Value of Financial Instruments

The following table presents the carrying amount and fair value of financial instruments at December 31, 2017:

	Carrying Amount			Fair Value Measurement Using:									Total Fair Value
				Level 1			Level 2			Level 3
ASSETS
Cash and cash equivalents	$	35,345		$	35,345		$	0		$	0		$	35,345
Securities available for sale		409,709			962			408,747			0			409,709
Trading securities		7,150			7,098			52			0			7,150
Loans held for sale		852			0			853			0			853
Net loans		2,126,266			0			0			2,126,824			2,126,824
FHLB and other equity interests		21,517			n/a			n/a			n/a			n/a
Interest rate swaps		149			0			149			0			149
Accrued interest receivable		9,254			6			2,651			6,597			9,254
LIABILITIES
Deposits	$	(2,167,815	)	$	(1,802,844	)	$	(362,756	)	$	0		$	(2,165,600	)
FHLB and other borrowings		(257,359	)		0			(257,361	)		0			(257,361	)
Subordinated debentures		(70,620	)		0			(63,575	)		0			(63,575	)
Deposits held for sale		0			0			0			0			0
Interest rate swaps		(310	)		0			(310	)		0			(310	)
Accrued interest payable		(554	)		0			(554	)		(0	)		(554	)

The following table presents the carrying amount and fair value of financial instruments at December 31, 2016:

	Carrying Amount			Fair Value Measurement Using:								Total Fair Value
				Level 1			Level 2			Level 3
ASSETS
Cash and cash equivalents	$	29,183		$	29,183		$	0		$	0	$	29,183
Securities available for sale		495,835			971			492,815			2,049		495,835
Trading securities		4,858			4,805			53			0		4,858
Loans held for sale		7,528			0			7,553			0		7,553
Net loans		1,857,206			0			0			1,817,341		1,817,341
FHLB and other equity interests		19,186			n/a			n/a			n/a		n/a
Interest rate swaps		211			0			211			0		211
Accrued interest receivable		8,264			6			3,014			5,244		8,264
LIABILITIES
Deposits	$	(2,017,522	)	$	(1,785,649	)	$	(219,765	)	$	0	$	(2,005,414	)
FHLB and other borrowings		(237,004	)		0			(226,769	)		0		(226,769	)
Subordinated debentures		(70,620	)		0			(61,831	)		0		(61,831	)
Deposits held for sale		(6,456	)		0			(6,417	)		0		(6,417	)
Interest rate swaps		(670	)		0			(670	)		0		(670	)
Accrued interest payable		(510	)		0			(510	)		0		(510	)

The methods and assumptions, not otherwise presented, used to estimate fair values are described as follows:

Cash and cash equivalents: The carrying amounts of cash and cash equivalents approximate fair values and are classified as Level 1.

Loans held for sale: The fair value of loans held for sale is estimated based upon binding contracts and quotes from third party investors resulting in a Level 2 classification.

Loans: For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values, resulting in a Level 3 classification. Fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality, resulting in a Level 3 classification. Impaired loans are valued at the lower of cost or fair value as described previously. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.

Deposits held for sale: The fair value of deposits held for sale is estimated based upon binding contracts and quotes from third party investors resulting in a Level 2 classification.

FHLB and other equity interests: It is not practical to determine the fair value of Federal Home Loan Bank stock and other equity interests due to restrictions placed on the transferability of these instruments.

Accrued interest receivable: The carrying amount of accrued interest receivable approximates fair value resulting in a classification that is consistent with the asset with which it is associated.

Deposits: The fair values disclosed for demand deposits are, by definition, equal to the amount payable on demand at the reporting date (i.e. their carrying amount), resulting in a Level 1 classification. Fair values for time deposits are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits, resulting in a Level 2 classification.

FHLB and other borrowings: The fair values of the Corporation’s FHLB and other borrowings are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements, resulting in a Level 2 classification.

Subordinated debentures: The fair value of the Corporation’s subordinated debentures are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of arrangements, resulting in a Level 3 classification.

Accrued interest payable: The carrying amount of accrued interest payable approximates fair value resulting in a classification that is consistent with the liability with which it is associated.

While estimates of fair value are based on management’s judgment of the most appropriate factors as of the balance sheet date, there is no assurance that the estimated fair values would have been realized if the assets had been disposed of or the liabilities settled at that date, since market values may differ depending on various circumstances. The estimated fair values would also not apply to subsequent dates.

In addition, other assets and liabilities that are not financial instruments, such as premises and equipment, are not included in the disclosures. Also, non-financial assets such as, among other things, the estimated earnings power of core deposits, the earnings potential of trust accounts, the trained workforce, and customer goodwill, which typically are not recognized on the balance sheet, may have value but are not included in the fair value disclosures.

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Parent Company Only Financial Information

12 Months Ended

Dec. 31, 2017

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Parent Company Only Financial Information

21.   Parent Company Only Financial Information

CONDENSED BALANCE SHEETS	December 31,
	2017		2016
Assets
Cash	$	1,556	$	1,436
Trading securities		580		529
Investment in bank subsidiary		290,156		257,476
Investment in non-bank subsidiaries		21,781		23,324
Deferreds and Current Receivable		2,055		1,066
Other assets		2,059		2,666
Total assets	$	318,187	$	286,497
Liabilities
Borrowings from subsidiary	$	1,400	$	1,400
Subordinated debentures		70,620		70,620
Other liabilities		2,257		2,693
Total liabilities		74,277		74,713
Total shareholders’ equity		243,910		201,913
Total liabilities and shareholders’ equity	$	318,187	$	286,497

CONDENSED STATEMENTS OF INCOME	Year Ended December 31,
Income:		2017			2016			2015
Dividends from:
Bank subsidiary	$	8,840		$	8,700		$	10,404
Non-bank subsidiaries		2,250			1,200			323
Other		220			230			157
Total income		11,310			10,130			10,884
Expenses		(4,957	)		(2,611	)		(1,708	)
Income before income taxes and equity in undistributed net income of subsidiaries:		6,353			7,519			9,176
Income tax benefit		1,614			813			547
Equity in undistributed net income of bank subsidiary		17,430			13,184			11,889
Distributions in excess of net income of non-bank subsidiaries		(1,537	)		(976	)		585
Net income	$	23,860		$	20,540		$	22,197

CONDENSED STATEMENTS OF CASH FLOWS	Year Ended December 31,
	2017			2016			2015
Net income
Adjustments to reconcile net income to net cash provided by	$	23,860		$	20,540		$	22,197
operating activities:
Equity in undistributed net income of bank subsidiary		(17,430	)		(13,184	)		(11,889	)
Equity in undistributed net income (distributions in excess of net income) of non-bank subsidiaries		1,537			976			(585	)
Net unrealized gains on trading securities		(12	)		(58	)		(11	)
Decrease (increase) in other assets		(549	)		(1,277	)		9
(Decrease) increase in other liabilities		791			1,645			663
Net cash provided by operating activities		8,197			8,642			10,384
Cash flows from investing activities
Investment in bank subsidiaries		(15,400	)		(49,223	)		0
Net cash used in investing activities		(15,400	)		(49,223	)		0
Cash flows from financing activities:
Dividends paid		(10,094	)		(9,546	)		(9,515	)
Proceeds from issuance of long term debt		0			50,000			0
Purchase of treasury stock		(1,877	)		(44	)		(868	)
Net proceeds from issuance of common stock		19,294			0			0
Net advance from subsidiary		0			50			0
Net cash provided by (used in) financing activities		7,323			40,460			(10,383	)
Net increase (decrease) in cash		120			(121	)		1
Cash beginning of year		1,436			1,557			1,556
Cash end of year	$	1,556		$	1,436		$	1,557

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Other Comprehensive Income

12 Months Ended

Dec. 31, 2017

Equity [Abstract]

Other Comprehensive Income

22.   Other Comprehensive Income

Other comprehensive income components and related tax effects were as follows for the years ended December 31, 2017, 2016, and 2015:

	2017			2016			2015
Unrealized holding losses on available for sale securities	$	(136	)	$	(1,838	)	$	(623	)
Less reclassification adjustment for gains recognized in earnings		(160	)		(83	)		(666	)
Net unrealized losses		(296	)		(1,921	)		(1,289	)
Tax effect		104			672			452
Net-of-tax amount		(192	)		(1,249	)		(837	)
Unrealized holding gains on available for sale securities for which a portion of an other-than-temporary impairment has been recognized in earnings		134			(442	)		2,508
Less reclassification adjustment for gains recognized in earnings		(1,383	)		(922	)		0
Net unrealized gains		(1,249	)		(1,364	)		2,508
Tax effect		437			477			(878	)
Net-of-tax amount		(812	)		(887	)		1,630
Actuarial gain (loss) on postemployment health care plan		808			(282	)		(311	)
Net amortization of transition obligation and actuarial gain		192			184			173
Net unrealized gain (loss) on postemployment health care plan		1,000			(98	)		(138	)
Tax effect		(175	)		34			48
Net-of-tax amount		825			(64	)		(90	)
Unrealized gain (loss) on interest rate swap		10			(63	)		(168	)
Less reclassification adjustment for losses recognized in earnings		288			340			378
Net unrealized gain		298			277			210
Tax effect		(104	)		(97	)		(73	)
Net-of-tax amount		194			180			137
Other comprehensive income (loss)	$	15		$	(2,020	)	$	840

The following is a summary of the change in the accumulated other comprehensive income (loss) balance, net of tax, for the years ended December 31, 2017, 2016, and 2015.

		Balance			Comprehensive			Reclassification of Disproportionate			Balance
		12/31/16			Income (Loss)			Tax Effect			12/31/17
Unrealized gains (losses) on securities available for sale	$	1,393		$	(1,004	)	$	84		$	473
Unrealized gain (loss) on postretirement benefits plan		(1,217	)		825			(298	)		(690	)
Unrealized loss on interest rate swap		(297	)		194			(23	)		(126	)
Total	$	(121	)	$	15		$	(237	)	$	(343	)

		Balance			Comprehensive			Reclassification of Disproportionate		Balance
		12/31/15			Income (Loss)			Tax Effect		12/31/16
Unrealized gains (losses) on securities available for sale	$	3,529		$	(2,136	)	$	0	$	1,393
Unrealized gain (loss) on postretirement benefits plan		(1,153	)		(64	)		0		(1,217	)
Unrealized loss on interest rate swap		(477	)		180			0		(297	)
Total	$	1,899		$	(2,020	)	$	0	$	(121	)

		Balance			Comprehensive			Reclassification of Disproportionate		Balance
		1/1/15			Income (Loss)			Tax Effect		12/31/15
Unrealized gains (losses) on securities available for sale	$	2,736		$	793		$	0	$	3,529
Unrealized gain (loss) on postretirement benefits plan		(1,063	)		(90	)		0		(1,153	)
Unrealized loss on interest rate swap		(614	)		137			0		(477	)
Total	$	1,059		$	840		$	0	$	1,899

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Quarterly Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2017

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Data (Unaudited)

23.   Quarterly Financial Data (Unaudited)

The unaudited quarterly results of operations for the years ended December 31, 2017 and 2016 are as follows:

	Quarters Ended in 2017								Quarters Ended in 2016
	Mar. 31		June 30		Sept. 30		Dec. 31		Mar. 31		June 30		Sept. 30		Dec. 31
Total interest and dividend income	$	25,104	$	27,003	$	28,069	$	28,698	$	22,066	$	22,473	$	24,958	$	24,818
Net interest income		21,202		22,989		23,517		23,801		18,942		19,403		21,933		21,009
Provision for loan losses		1,016		1,134		1,400		3,105		1,196		220		622		2,111
Non-interest income		5,773		5,089		5,032		5,541		3,777		4,819		4,473		4,622
Non-interest expense		17,034		17,797		17,618		17,588		14,814		18,753		17,096		16,455
Net income		6,480		6,683		7,246		3,451		5,019		4,065		6,416		5,040
Net income per share, basic		0.43		0.44		0.47		0.23		0.35		0.28		0.44		0.35
Net income per share, diluted		0.43		0.44		0.47		0.23		0.35		0.28		0.44		0.35

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Business and Organization

Business and Organization

CNB Financial Corporation (the “Corporation”) is headquartered in Clearfield, Pennsylvania, and provides a full range of banking and related services through its wholly owned subsidiary, CNB Bank (the “Bank”). In addition, the Bank provides trust and asset management services, including the administration of trusts and estates, retirement plans, and other employee benefit plans as well as a full range of wealth management services. The Bank serves individual and corporate customers and is subject to competition from other financial institutions and intermediaries with respect to these services. In addition to the Bank, the Corporation also operates a consumer discount loan and finance business through its wholly owned subsidiary, Holiday Financial Services Corporation (“Holiday”). The Corporation and these and its other subsidiaries are subject to examination by federal and state regulators. The Corporation’s market area is primarily concentrated in the central and northwest regions of the Commonwealth of Pennsylvania, the central and northeast regions of the state of Ohio and western New York.

Basis of Financial Presentation

Basis of Financial Presentation

The financial statements are consolidated to include the accounts of the Corporation and the Bank, CNB Securities Corporation, Holiday, and CNB Insurance Agency. All significant intercompany accounts and transactions have been eliminated in the consolidated financial statements. Certain prior period amounts have been reclassified to conform to the current period presentation. Reclassifications had no effect on prior year net income or shareholders’ equity.

Use of Estimates

Use of Estimates

To prepare financial statements in conformity with accounting principles generally accepted in the U.S., management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ.

Operating Segments

Operating Segments

While the chief decision-makers monitor the revenue streams of the various products and services, operations are managed and financial performance is evaluated on a Corporation-wide basis, and operating segments are aggregated into one as operating results for all segments are similar. Accordingly, all of the financial service operations are considered by management to be aggregated in one reportable operating segment.

Securities

Securities

When purchased, securities are classified as held to maturity, trading or available for sale. Debt securities are classified as held to maturity when the Corporation has the positive intent and ability to hold the securities to maturity. Held to maturity securities are carried at amortized cost. Debt or equity securities are classified as trading when purchased principally for the purpose of selling them in the near term, or when the fair value option has been elected. Trading securities are recorded at fair value with changes in fair value included in earnings in non-interest income. Available for sale securities are those securities not classified as held to maturity or trading and are carried at their fair value. Unrealized gains and losses, net of deferred tax, on securities classified as available for sale are recorded as other comprehensive income. Management has not classified any debt securities as held to maturity.

The amortized cost of debt securities classified as held to maturity or available for sale is adjusted for the amortization of premiums and the accretion of discounts over the period through contractual maturity or, in the case of mortgage-backed securities and collateralized mortgage obligations, over the estimated life of the security. Such amortization is included in interest income from securities. Gains and losses on securities sold are recorded on the trade date and based on the specific identification method.

Declines in the fair value of debt securities below their cost that are other-than-temporary and attributable to credit losses are reflected in earnings. Other-than-temporary impairment losses that are not attributable to credit losses are reported as a component of accumulated other comprehensive income. In estimating other-than-temporary losses, management considers: the length of time and extent that fair value has been less than cost, the financial condition and near term prospects of the issuer, and the Corporation’s intent to sell, or whether it is more likely than not that it will be required to sell a security in an unrealized loss position before recovery of its amortized cost basis. If the Corporation intends to sell a security or it is more likely than not it will be required to sell a security before recovery of its amortized cost basis, the entire difference between amortized cost and fair value is recognized as impairment through earnings.

Loans

Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding.

Interest income is reported on the interest method and includes amortization of net deferred loan fees and costs over the loan term. Interest income on commercial, industrial, and agricultural loans, commercial mortgage loans, and residential real estate loans is discontinued at the time the loan is 90 days delinquent unless the credit is well-secured and in process of collection. Consumer loans are typically charged off no later than 180 days past due. Past due status is based on the contractual terms of the loan. Loans, including loans modified in a troubled debt restructuring, are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful. Nonaccrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.

All interest accrued but not received on loans placed on nonaccrual is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Under the cost-recovery method, interest income is not recognized until the loan balance is reduced to zero. Under the cash-basis method, interest income is recorded when the payment is received in cash. For all portfolio segments, loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Concentration of Credit Risk

Concentration of Credit Risk

Most of the Corporation’s business activity is with customers located within the Commonwealth of Pennsylvania and the states of Ohio and New York. Therefore, the Corporation’s exposure to credit risk is significantly affected by changes in the economies of Pennsylvania, Ohio, and New York.

Purchased Loans

Purchased Loans

The Corporation purchased loans in connection with its acquisition of FC Banc Corp. in 2013 and Lake National Bank in 2016, some of which had, at the acquisition date, shown evidence of credit deterioration since origination. These purchased credit impaired loans were recorded at the amount paid, such that there was no carryover of the seller’s allowance for loan losses.

Such purchased credit impaired loans are accounted for individually, and the Corporation estimates the amount and timing of expected cash flows for each loan. The expected cash flows in excess of the amount paid is recorded as interest income over the remaining life of the loan (accretable yield). The excess of the loan’s contractual principal and interest over expected cash flows is not recorded (nonaccretable difference).

Over the life of the loan, expected cash flows continue to be estimated. If the present value of expected cash flows is less than the carrying amount, a loss is recorded. If the present value of the expected cash flows is greater than the carrying amount, it is recognized as part of future interest income.

For loans purchased that did not show evidence of credit deterioration, the difference between the fair value of the loan at the acquisition date and the loan’s face value is being amortized as a yield adjustment over the estimated remaining life of the loan using the effective interest method.

Loans Held for Sale

Loans Held for Sale

Loans originated and intended for sale in the secondary market are carried at the lower of aggregate cost or fair value, as determined by outstanding commitments from investors. Net unrealized losses, if any, are recorded as a valuation allowance and charged to earnings.

Mortgage loans held for sale are generally sold with servicing rights retained. The carrying value of the mortgage loan sold is reduced by the amount allocated to the servicing right. Gains and losses on sales of mortgage loans are based on the difference between the selling price and the carrying value of the related loan sold.

Allowance for Loan Losses

Allowance for Loan Losses

The allowance for loan losses is a valuation allowance for probable incurred credit losses. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance account.

Management determines the adequacy of the allowance based on historical patterns of charge-offs and recoveries, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, industry experience, economic conditions, and other qualitative factors relevant to the collectability of the loan portfolio. While management believes that the allowance is adequate to absorb probable loan losses incurred at the balance sheet date, future adjustments may be necessary due to circumstances that differ substantially from the assumptions used in evaluating the adequacy of the allowance for loan losses.

The allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired. A loan is impaired when, based on current information and events, it is probable that the Corporation will be unable to collect all amounts due according to the contractual terms of the loan agreement. Loans for which the terms have been modified, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings and classified as impaired.

Commercial and commercial real estate loans are individually evaluated for impairment. If a loan is impaired, a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Large groups of smaller balance homogeneous loans, such as consumer and residential real estate loans, are collectively evaluated for impairment, and accordingly, they are not separately identified for impairment disclosures. Troubled debt restructurings are measured at the present value of estimated future cash flows using the loan’s effective rate at inception. If a troubled debt restructuring is considered to be a collateral dependent loan, the loan is reported, net, at the fair value of the collateral. For troubled debt restructurings that subsequently default, the Corporation determines the amount of reserve in accordance with the accounting policy for the allowance for loan losses.

The general component of the allowance for loan losses covers non-impaired loans and loans collectively evaluated for impairment and is based on historical loss experience adjusted for current factors. The historical loss experience is determined by portfolio segment and is based on the migration analysis performed. This actual loss experience is supplemented with other factors based on the risks present for each portfolio segment. These historical loss factors include consideration of the following: levels of and trends in delinquencies, nonaccrual loans, and classified loans; trends in volume and terms of loans; effects of any changes in lending policies and procedures; experience, ability, and depth of management; national and local economic trends and conditions; and concentrations of credit.

The following portfolio segments, which are the same as the Corporation’s portfolio classifications and associated risk characteristics, have been identified:

● Commercial, industrial, and agricultural – risk characteristics include below average economic and employment conditions in many of the markets served by the Corporation, which has limited consumer spending.

● Commercial mortgages – the most significant risk characteristic is the subjectivity involved in real estate valuations for properties located in areas with low growth economies.

● Residential real estate – risk characteristics include slightly higher than historical levels of delinquencies and less than robust housing markets.

● Consumer – risk characteristics include continuing weakness in industrial employment in many of the markets served by the Corporation and low wage growth.

● Credit cards – the most significant risk characteristic is the unsecured nature of credit card loans.

● Overdrafts – risk characteristics include the Corporation’s continued deposit growth and overall economic conditions which may lead to a greater likelihood of overdrawn deposit accounts.

Federal Home Loan Bank (FHLB) Stock

Federal Home Loan Bank (FHLB) Stock

As a member of the Federal Home Loan Bank of Pittsburgh (“FHLB”), the Corporation is required to purchase and hold stock in the FHLB to satisfy membership and borrowing requirements. This stock is restricted in that it can only be sold to the FHLB or to another member institution, and all sales of FHLB stock must be at par. As a result of these restrictions, FHLB stock is unlike other investment securities insofar as there is no trading market for FHLB stock and the transfer price is determined by FHLB membership rules and not by market participants.

FHLB stock is held as a long-term investment, is valued at its cost basis and is analyzed for impairment based on the ultimate recoverability of the par value. The Company evaluates impairment quarterly. The decision of whether impairment exists is a matter of judgment that reflects our view of the FHLB’s long-term performance, which includes factors such as the following:

● its operating performance;

● the severity and duration of declines in the fair value of its net assets related to its capital stock amount;

● its commitment to make payments required by law or regulation and the level of such payments in relation to its operating performance;

● the impact of legislative and regulatory changes on the FHLB, and accordingly, on the members of FHLB; and

● its liquidity and funding position.

Premises and Equipment

Premises and Equipment

Premises and equipment are stated at cost less accumulated depreciation. Depreciation of premises and equipment is computed principally by the straight line method. In general, useful lives range from 3 to 39 years with lives for furniture, fixtures and equipment ranging from 3 to 10 years and lives of buildings and building improvements ranging from 15 to 39 years. Amortization of leasehold improvements is computed using the straight-line method over useful lives of the leasehold improvements or the term of the lease, whichever is shorter. Maintenance, repairs and minor renewals are charged to expense as incurred.

Foreclosed Assets

Foreclosed Assets

Assets acquired through or in lieu of loan foreclosure are initially recorded at fair value less estimated selling costs when acquired, establishing a new cost basis. Physical possession of residential real estate property collateralizing a consumer mortgage loan occurs when legal title is obtained upon completion of foreclosure or when the borrower conveys all interest in the property to satisfy the loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. These assets are subsequently accounted for at the lower of cost or fair value, less estimated costs to sell. If fair value declines, a valuation allowance is recorded through expense. Costs after acquisition are expensed.

Bank Owned Life Insurance

Bank Owned Life Insurance

The Corporation has purchased life insurance policies on certain key employees. Bank owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement.

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

Goodwill resulting from business combinations prior to January 1, 2009 represents the excess of the purchase price over the fair value of the net assets of businesses acquired. Goodwill resulting from business combinations after January 1, 2009 is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interest in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but tested for impairment at least annually or more frequently if events and circumstances exist that indicate an impairment test should be performed.

The Corporation has selected December 31 as the date to perform the annual impairment test. Intangible assets with definite useful lives are amortized over their estimated useful lives. Goodwill is the only intangible asset with an indefinite life on the Corporation’s balance sheet. Other intangible assets consist of core deposit intangible assets arising from the acquisition of FC Banc Corp. in 2013 and Lake National Bank in 2016. The core deposit intangible assets from these acquisitions are amortized using an accelerated method over their estimated useful lives of 7 years and 4 years, respectively.

Long-term Assets

Long-term Assets

Premises and equipment, goodwill and other intangible assets, and other long-term assets are reviewed for impairment when events indicate their carrying amount may not be recoverable from future undiscounted cash flows. If impaired, the assets are recorded at fair value.

Loan Commitments and Related Financial Instruments

Loan Commitments and Related Financial Instruments

Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded when they are funded.

Derivatives

Derivatives

Derivative financial instruments are recognized as assets or liabilities at fair value. The Corporation has interest rate swap agreements which are used as part of its asset liability management to help manage interest rate risk. The Corporation does not use derivatives for trading purposes.

At the inception of a derivative contract, the Corporation designates the derivative as one of three types based on the purpose of the contract and belief as to its effectiveness as a hedge. These three types are (1) a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (“fair value hedge”), (2) a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow hedge”), or (3) an instrument with no hedging designation (“stand-alone derivative”). For a fair value hedge, the gain or loss on the derivative, as well as the offsetting loss or gain on the hedged item, are recognized in current earnings as fair values change. For a cash flow hedge, the gain or loss on the derivative is reported in other comprehensive income and is reclassified into earnings in the same periods during which the hedged transaction affects earnings. For both types of hedges, changes in the fair value of derivatives that are not highly effective in hedging the changes in fair value or expected cash flows of the hedged item are recognized immediately in current earnings. Changes in the fair value of derivatives that do not qualify for hedge accounting are reported currently in earnings, as non-interest income.

Net cash settlements on derivatives that qualify for hedge accounting are recorded in interest income or interest expense, based on the item being hedged. Net cash settlements on derivatives that do not qualify for hedge accounting are reported in non-interest income. Cash flows on hedges are classified in the cash flow statement the same as the cash flows of the items being hedged.

The Corporation formally documents the relationship between derivatives and hedged items, as well as the risk-management objective and the strategy for undertaking hedge transactions, at the inception of the hedging relationship. This documentation includes linking fair value or cash flow hedges to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. The Corporation also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivative instruments that are used are highly effective in offsetting changes in fair values or cash flows of the hedged items. The Corporation discontinues hedge accounting when it determines that the derivative is no longer effective in offsetting changes in the fair value or cash flows of the hedged item, the derivative is settled or terminates, a hedged forecasted transaction is no longer probable, a hedged firm commitment is no longer firm, or treatment of the derivative as a hedge is no longer appropriate or intended.

When hedge accounting is discontinued, subsequent changes in fair value of the derivative are recorded as non-interest income. When a fair value hedge is discontinued, the hedged asset or liability is no longer adjusted for changes in fair value and the existing basis adjustment is amortized or accreted over the remaining life of the asset or liability. When a cash flow hedge is discontinued but the hedged cash flows or forecasted transactions are still expected to occur, gains or losses that were accumulated in other comprehensive income are amortized into earnings over the same periods which the hedged transactions will affect earnings.

Advertising Costs

Advertising Costs

Advertising costs are generally expensed as incurred and amounted to $2,243, $1,799 and $1,580, for 2017, 2016, and 2015, respectively.

Mortgage Servicing Rights

Mortgage Servicing Rights

Servicing rights are recognized separately when they are acquired through sales of loans. Servicing rights are initially recorded at fair value with the income statement effect recorded in mortgage banking. Fair value is based on market prices for comparable mortgage servicing contracts, when available, or alternatively, is based on a valuation model that calculates the present value of estimated future net servicing income. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income, such as the cost to service, the discount rate, the custodial earnings rate, an inflation rate, ancillary income, prepayment speeds and default rates and losses. The Corporation compares the valuation model inputs and results to published industry data in order to validate the model results and assumptions. All classes of servicing assets are subsequently measured using the amortization method which requires servicing rights to be amortized into non-interest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans.

Servicing rights are evaluated for impairment based upon the fair value of the rights as compared to carrying amount. Impairment is determined by stratifying rights into groupings based on predominant risk characteristics, such as interest rate, loan type and investor type. Impairment is recognized through a valuation allowance for an individual grouping, to the extent that fair value is less than the carrying amount. If the Corporation later determines that all or a portion of the impairment no longer exists for a particular grouping, a reduction of the allowance may be recorded as an increase to income. Changes in valuation allowances are reported with mortgage banking income on the income statement. The fair values of servicing rights are subject to significant fluctuations as a result of changes in estimated and actual prepayment speeds and default rates and losses.

Servicing fee income, which is reported on the income statement as mortgage banking income, is recorded for fees earned for servicing loans. The fees are based on a contractual percentage of the outstanding principal or a fixed amount per loan and are recorded as income when earned. The amortization of mortgage servicing rights is netted against loan servicing fee income. Late fees and ancillary fees related to loan servicing are not material.

Treasury Stock

Treasury Stock

The purchase of the Corporation’s common stock is recorded at cost. Purchases of the stock are made in the open market based on market prices. At the date of subsequent reissue, the treasury stock account is reduced by the cost of such stock on a first-in-first-out basis.

Stock-Based Compensation

Stock-Based Compensation

The Corporation has a stock incentive plan for key employees and independent directors. The Stock Incentive Plan, which is administered by a committee of the Board of Directors, provides for up to 500,000 shares of common stock to be awarded in the form of nonqualified options or restricted stock. For key employees, the plan vesting schedule is one-fourth of granted stock-based awards per year beginning one year after the grant date with 100% vested on the fourth anniversary. For independent directors, the vesting schedule is one-third of granted stock-based awards per year beginning one year after the grant date with 100% vested on the third anniversary.

At December 31, 2017 and 2016, there was no unrecognized compensation cost related to nonvested stock options granted under this plan, and no stock options were granted during the years ended December 31, 2017, 2016, and 2015.

During 2017, 2016, and 2015, the Executive Compensation and Personnel Committee of the Board of Directors granted a total of 39,673, 52,750 and 48,300 shares, respectively, of restricted common stock to certain key employees and all independent directors of the Corporation. Compensation expense for the restricted stock awards is recognized over the requisite service period based on the fair value of the shares at the date of grant on a straight-line basis. Compensation expense resulting from these restricted stock awards was $928, $820 and $621 for the years ended December 31, 2017, 2016, and 2015, respectively.

Comprehensive Income

Comprehensive Income

The Corporation presents comprehensive income as part of the Consolidated Statement of Income and Comprehensive Income. Other comprehensive income (loss) consists of unrealized holding gains (losses) on the available for sale securities portfolio, changes in the unrecognized actuarial gain and transition obligation related to the Corporation’s post retirement benefits plans, and changes in the fair value of the Corporation’s interest rate swaps, net of tax.

Income Taxes

Income Taxes

The Corporation files a consolidated U.S. income tax return that includes all subsidiaries. Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.

A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.

The Corporation recognizes interest and/or penalties related to income tax matters in income tax expense.

Retirement Plans

Retirement Plans

The Corporation’s expense associated with its 401(k) plan is determined under the provisions of the plan document and includes both matching and profit sharing components. Deferred compensation and supplemental retirement plan expenses allocate the benefits over years of service.

Earnings Per Share

Earnings Per Share

Basic earnings per share is computed by dividing net income available to common shareholders by the weighted average number of shares outstanding during the applicable period, excluding outstanding participating securities. Diluted earnings per share is computed using the weighted average number of shares determined for the basic computation plus the dilutive effect of potential common shares issuable under certain stock compensation plans. Unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and are included in the computation of earnings per share pursuant to the two-class method. The Corporation has determined that its outstanding non-vested stock awards are participating securities.

Cash and Cash Equivalents

Cash and Cash Equivalents

For purposes of the consolidated statement of cash flows, the Corporation defines cash and cash equivalents as cash and due from banks, interest bearing deposits with other banks, and Federal funds sold. Net cash flows are reported for customer loan and deposit transactions, interest bearing time deposits with other banks and borrowings with original maturities of 90 days or less.

Restrictions on Cash

Restrictions on Cash

The Bank is required to maintain average reserve balances with the Federal Reserve Bank or in vault cash. The average amount of these non-interest bearing reserve balances for the year ended December 31, 2017 and 2016 was $50, which was maintained in vault cash. Note 12 to the consolidated financial statements discloses the cash collateral balances required to be maintained in connection with the Corporation’s interest rate swaps.

Loss Contingencies

Loss Contingencies

Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there are any such matters that will have a material effect on the financial statements.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in a separate note. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect the estimates.

Adoption of New Accounting Standards

Adoption of New Accounting Standards

In March 2016, the FASB issued Accounting Standards Update 2016-09, “Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting.” ASU 2016-09 will require recognition of the income tax effects of share-based awards in the income statement when the awards vest or are settled (i.e., Additional Paid-in-Capital pools will be eliminated). The guidance was effective for interim and annual reporting periods beginning after December 15, 2016. The Corporation adopted ASU 2016-09 on January 1, 2017. The adoption did not have a material effect on the Corporation’s financial statements.

In August 2016, the FASB issued an update (ASU 2016-15, Statement of Cash Flows) which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments in this Update apply to all entities, including business entities and not-for-profit entities that are required to present a statement of cash flows, and are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Corporation adopted ASU 2016-15 on January 1, 2018. The adoption did not have a material effect on the Corporation’s financial statements.

On February 14, 2018, the Financial Accounting Standard Board issued Accounting Standards Update (ASU) No. 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The amendments in this ASU allow, but do not require, entities to reclassify certain income tax effects in accumulated other comprehensive income (AOCI) to retained earnings that resulted from the Tax Cuts and Jobs Act (Act). The Corporation adopted this ASU and elected to reclassify the income tax effects of the Act from accumulated other comprehensive income to retained earnings at December 31, 2017. There were no other income tax effects related to the Act that were reclassified as a result of the adoption of the accounting standard.

Effect of Newly Issued But Not Yet Effective Accounting Standards

Effect of Newly Issued But Not Yet Effective Accounting Standards

In June 2016, the FASB issued an update (ASU 2016-13, Financial Instruments – Credit Losses) which will require recognition of an entity’s current estimate of all expected credit losses for assets measured at amortized cost. The amendments in ASU 2016-13 eliminate the probable initial recognition threshold in current U.S. Generally Accepted Accounting Principles. In addition, the amendments in ASU 2016-13 broaden the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually, such as loans. The update will be effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted for interim and annual reporting periods beginning after December 15, 2018. Management is currently in the developmental stages of evaluating the impact of the adoption of ASU 2016-13 on the Corporation’s financial statements and is collecting available historical information in order to assess the expected credit losses. However, the impact to the financial statements is yet to be determined.

In February 2016, the FASB issued Accounting Standards Update 2016-02, “Leases (Topic 842)”. ASU 2016-02 requires a lessee to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (1) A lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) A right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. The update will be effective for reporting periods beginning after December 15, 2018. Early adoption is permitted. Management is currently evaluating the impact of the adoption of ASU 2016-02 on the Corporation’s financial statements and anticipates an increase in the Corporation’s assets and liabilities. However, the amounts that will be adjusted are still to be determined.

In January 2016, the FASB issued Accounting Standards Update 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities”. ASU 2016-01 provides updated accounting and reporting requirements for both public and non-public entities. The most significant provisions that will impact the Corporation are: 1) equity securities available for sale will be measured at fair value, with the changes in fair value recognized in the income statement; 2) eliminate the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments at amortized cost on the balance sheet; 3) utilization of exit price notion when measuring the fair value of financial instruments for disclosure purposes; 4) require separate presentation of both financial assets and liabilities by measurement category and form of financial asset on the balance sheet or accompanying notes to the financial statements. The update will be effective for interim and annual reporting periods beginning after December 15, 2017, using a cumulative-effect adjustment to the balance sheet as of the beginning of the year adoption. The adoption of ASU 2016-01 did not have a material effect on the Corporation’s financial statements. The Corporation adopted ASU 2016-01 on January 1, 2018.

In May 2014, FASB issued Accounting Standards Update 2014-09, “Revenue from Contracts with Customers (Topic 606).” The ASU creates a new topic, Topic 606, to provide guidance on revenue recognition for entities that enter into contracts with customers to transfer goods or services or enter into contracts for the transfer of nonfinancial assets. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additional disclosures are required to provide quantitative and qualitative information regarding the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new guidance is effective for annual reporting periods, and interim reporting periods within those annual periods, beginning after December 15, 2017. The adoption of ASU 2014-09 did not have a material effect on the Corporation’s financial statements as most of the revenue relates to loans and other financial instruments which are scoped out. However, management does expect expansion to disclosures. The Corporation adopted ASU 2014-09 on January 1, 2018.

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Business Combination and Branch Sale (Tables)

12 Months Ended

Dec. 31, 2017

Business Combinations [Abstract]

Schedule of Consideration Paid and Amounts of Assets Acquired and Liabilities Assumed

The following table summarizes the consideration paid for LNB and the amounts of the assets acquired and liabilities assumed that were recognized at the acquisition date:

Consideration paid:
Cash	$	24,750
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents		21,884
Securities available for sale		450
Loans		122,206
FHLB and other equity interests		637
Premises and equipment		3,242
Bank owned life insurance		2,152
Mortgage servicing rights		367
Core deposit intangible		1,583
Accrued interest receivable and other assets		3,110
Total assets acquired		155,631
Demand deposits		81,472
Time deposits		58,311
Accrued interest payable and other liabilities		2,634
Total liabilities assumed		142,417
Total identifiable net assets		13,214
Goodwill	$	11,536

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Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2017

Earnings Per Share [Abstract]

Computation of Basic and Diluted Earnings Per Share

The computation of basic and diluted earnings per share is shown below (in thousands, except per share data). There were no anti-dilutive stock options for the years ended December 31, 2017, 2016, and 2015.

	Years Ended December 31
	2017			2016			2015
Basic earnings per common share computation
Net income per consolidated statements of income	$	23,860		$	20,540		$	22,197
Net earnings allocated to participating securities		(135	)		(129	)		(117	)
Net earnings allocated to common stock	$	23,725		$	20,411		$	22,080
Distributed earnings allocated to common stock	$	10,030		$	9,480		$	9,460
Undistributed earnings allocated to common stock		13,695			10,931			12,620
Net earnings allocated to common stock	$	23,725		$	20,411		$	22,080
Weighted average common shares outstanding, including shares considered participating securities		15,212			14,457			14,408
Less: Average participating securities		(80	)		(82	)		(70	)
Weighted average shares		15,132			14,375			14,338
Basic earnings per common share	$	1.57		$	1.42		$	1.54
Diluted earnings per common share computation
Net earnings allocated to common stock	$	23,725		$	20,411		$	22,080
Weighted average common shares outstanding for basic earnings per common share		15,132			14,375			14,338
Add: Dilutive effects of assumed exercises of stock options		0			0			0
Weighted average shares and dilutive potential common shares		15,132			14,375			14,338
Diluted earnings per common share	$	1.57		$	1.42		$	1.54

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Securities (Tables)

12 Months Ended

Dec. 31, 2017

Cash and Cash Equivalents [Abstract]

Securities Available for Sale

Securities available-for-sale at December 31, 2017 and 2016 are as follows:

	December 31, 2017									December 31, 2016
	Amortized Cost		Unrealized					Fair Value		Amortized Cost		Unrealized					Fair Value
			Gains		Losses							Gains		Losses
U.S. Gov’t sponsored entities		$108,578	$	478	$	(908	)		$108,148		$139,823		$1,107	$	(579	)		$140,351
State & political subdivisions		134,428		3,609		(314)			137,723		153,492		4,194		(649	)		157,037
Residential & multi-family mortgage		111,214		304		(1,882)			109,636		136,807		551		(2,382	)		134,976
Corporate notes & bonds		17,610		52		(462)			17,200		18,299		77		(962	)		17,414
Pooled trust preferred		0		0		0			0		800		1,249		0			2,049
Pooled SBA		36,260		355		(575)			36,040		43,450		505		(918	)		43,037
Other equity securities		1,020		0		(58)			962		1,020		0		(49	)		971
Total		$409,110	$	4,798	$	(4,199	)		$409,709		$493,691		$7,683		$(5,539)			$495,835

Trading Securities

Trading securities at December 31, 2017 and 2016 are as follows:

	2017		2016
Corporate equity securities	$	5,125	$	3,312
Mutual Funds		1,499		1,037
Certificates of deposit		220		202
Corporate notes and bonds		254		254
U.S. Government sponsored entities		52		53
Total	$	7,150	$	4,858

Securities with Unrealized Losses Aggregated by Investment Category and Length of Time that Individual Securities have been in Continuous Unrealized Loss Position

Securities with unrealized losses at December 31, 2017 and 2016, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are as follows:

December 31, 2017	Less than 12 Months					12 Months or More					Total
Description of Securities	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
U.S. Gov’t sponsored entities	$	55,696	$	(540	)	$	34,754	$	(368	)	$	90,450	$	(908	)
State & political subdivisions		15,890		(69	)		4,104		(245	)		19,994		(314	)
Residential & multi-family mortgage		30,144		(153	)		63,699		(1,729	)		93,843		(1,882	)
Corporate notes & bonds		5,005		(9	)		9,042		(453	)		14,047		(462	)
Pooled SBA		0		(0	)		22,270		(575	)		22,270		(575	)
Other equity securities		0		(0	)		962		(58	)		962		(58	)
	$	106,735	$	(771	)	$	134,831	$	(3,428	)	$	241,566	$	(4,199	)

	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
December 31, 2016
U.S. Gov’t sponsored entities	$	90,380	$	(579	)	$	0	$	(0	)	$	90,380	$	(579	)
State & political subdivisions		32,353		(448	)		264		(201	)		32,617		(649	)
Residential and multi-family mortgage		65,598		(1,255	)		34,611		(1,127	)		100,209		(2,382	)
Corporate notes & bonds		2,089		(11	)		8,476		(951	)		10,565		(962	)
Pooled SBA		6,481		(126	)		20,560		(792	)		27,041		(918	)
Other equity securities		0		(0	)		971		(49	)		971		(49	)
	$	196,901	$	(2,419	)	$	64,882	$	(3,120	)	$	261,783	$	(5,539	)

Roll-Forward of Other-Than-Temporary Impairment Amount Related to Credit Losses

A roll-forward of the other-than-temporary impairment amount related to credit losses for the years ended December 31, 2017, 2016, and 2015 is as follows:

	2017			2016			2015
Balance of credit losses on debt securities for which a portion of other-than-temporary impairment was recognized in earnings, beginning of period	$	2,071		$	4,054		$	4,054
Credit losses previously recognized on securities sold during the period		(2,071	)		(1,983	)		0
Additional credit loss for which other-than-temporary impairment was not previously recognized		0			0			0
Additional credit loss for which other-than-temporary impairment was previously recognized		0			0			0
Balance of credit losses on debt securities for which a portion of other-than-temporary impairment was recognized in earnings, end of period	$	0		$	2,071		$	4,054

Schedule of Contractual Maturity of Securities Available for Sale, Excluding Equity Securities

The following is a schedule of the contractual maturity of securities available for sale, excluding equity securities, at December 31, 2017:

	December 31, 2017
	Amortized Cost		Fair Value
1 year or less	$	50,368	$	50,139
1 year – 5 years		153,512		155,075
5 years – 10 years		50,552		51,753
After 10 years		6,184		6,104
		260,616		263,071
Residential and multi-family mortgage		111,214		109,636
Pooled SBA		36,260		36,040
Total debt securities	$	408,090	$	408,747

Information Pertaining to Security Sales

Information pertaining to security sales is as follows:

Year ended December 31	Proceeds		Gross Gains		Gross Losses
2017	$	16,340	$	1,614	$	71
2016		4,420		1,005		0
2015		105,066		1,032		366

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Loans (Tables)

12 Months Ended

Dec. 31, 2017

Receivables [Abstract]

Schedule of Net Loans

Total net loans at December 31, 2017 and 2016 are summarized as follows:

	2017			2016
Commercial, industrial, and agricultural	$	749,138		$	567,800
Commercial mortgages		600,065			574,826
Residential real estate		713,347			652,883
Consumer		80,193			74,816
Credit cards		6,753			6,046
Overdrafts		352			595
Less: unearned discount		(3,889	)		(3,430	)
allowance for loan losses		(19,693	)		(16,330	)
Loans, net	$	2,126,266		$	1,857,206

Allowance for Loan Losses

Transactions in the allowance for loan losses for the year ended December 31, 2017 were as follows:

	Commercial, Industrial, and Agricultural			Commercial Mortgages			Residential Real Estate			Consumer			Credit Cards			Overdrafts			Total
Allowance for loan losses, January 1, 2017	$	5,428		$	6,753		$	1,653		$	2,215		$	93		$	188		$	16,330
Charge-offs		(544	)		(116	)		(466	)		(2,555	)		(144	)		(252	)		(4,077	)
Recoveries		235			197			78			161			27			87			785
Provision for loan losses		1,041			2,173			768			2,358			144			171			6,655
Allowance for loan losses, December 31, 2017	$	6,160		$	9,007		$	2,033		$	2,179		$	120		$	194		$	19,693

Transactions in the allowance for loan losses for the year ended December 31, 2016 were as follows:

	Commercial, Industrial, and Agricultural			Commercial Mortgages			Residential Real Estate			Consumer			Credit Cards			Overdrafts			Total
Allowance for loan losses, January 1, 2016	$	6,035		$	5,605		$	2,475		$	2,371		$	90		$	161		$	16,737
Charge-offs		(601	)		(201	)		(499	)		(3,324	)		(96	)		(240	)		(4,961	)
Recoveries		89			8			93			122			22			71			405
Provision for loan losses		(95	)		1,341			(416	)		3,046			77			196			4,149
Allowance for loan losses, December 31, 2016	$	5,428		$	6,753		$	1,653		$	2,215		$	93		$	188		$	16,330

Transactions in the allowance for loan losses for the year ended December 31, 2015 were as follows:

	Commercial, Industrial, and Agricultural			Commercial Mortgages			Residential Real Estate			Consumer			Credit Cards			Overdrafts			Total
Allowance for loan losses, January 1, 2015	$	7,114		$	5,310		$	2,479		$	2,205		$	71		$	194		$	17,373
Charge-offs		(307	)		(486	)		(632	)		(1,956	)		(116	)		(221	)		(3,718	)
Recoveries		267			52			8			96			14			85			522
Provision for loan losses		(1,039	)		729			620			2,026			121			103			2,560
Allowance for loan losses, December 31, 2015	$	6,035		$	5,605		$	2,475		$	2,371		$	90		$	161		$	16,737

Allowance for Loan Losses and Recorded Investment in Loans by Portfolio Segment

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and is based on the Corporation’s impairment method as of December 31, 2017 and 2016. The recorded investment in loans excludes accrued interest and unearned discounts due to their insignificance.

December 31, 2017	Commercial, Industrial, and Agricultural		Commercial Mortgages		Residential Real Estate		Consumer		Credit Cards		Overdrafts		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	47	$	0	$	0	$	0	$	0	$	0	$	47
Collectively evaluated for impairment		5,868		3,563		2,033		2,179		120		194		13,957
Acquired with deteriorated credit quality		0		0		0		0		0		0		0
Modified in a troubled debt restructuring		245		5,444		0		0		0		0		5,689
Total ending allowance balance	$	6,160	$	9,007	$	2,033	$	2,179	$	120	$	194	$	19,693
Loans:
Individually evaluated for impairment	$	1,187	$	51	$	0	$	0	$	0	$	0	$	1,238
Collectively evaluated for impairment		742,738		586,845		713,347		80,193		6,753		352		2,130,228
Acquired with deteriorated credit quality		0		1,079		0		0		0		0		1,079
Modified in a troubled debt restructuring		5,213		12,090		0		0		0		0		17,303
Total ending loans balance	$	749,138	$	600,065	$	713,347	$	80,193	$	6,753	$	352	$	2,149,848

December 31, 2016	Commercial, Industrial, and Agricultural		Commercial Mortgages		Residential Real Estate		Consumer		Credit Cards		Overdrafts		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	188	$	996	$	0	$	0	$	0	$	0	$	1,184
Collectively evaluated for impairment		5,115		3,543		1,653		2,215		93		188		12,807
Acquired with deteriorated credit quality		0		0		0		0		0		0		0
Modified in a troubled debt restructuring		125		2,214		0		0		0		0		2,339
Total ending allowance balance	$	5,428	$	6,753	$	1,653	$	2,215	$	93	$	188	$	16,330
Loans:
Individually evaluated for impairment	$	775	$	6,176	$	0	$	0	$	0	$	0	$	6,951
Collectively evaluated for impairment		564,180		557,932		652,883		74,816		6,046		595		1,856,452
Acquired with deteriorated credit quality		205		1,527		0		0		0		0		1,732
Modified in a troubled debt restructuring		2,640		9,191		0		0		0		0		11,831
Total ending loans balance	$	567,800	$	574,826	$	652,883	$	74,816	$	6,046	$	595	$	1,876,966

Loans Individually Evaluated for Impairment Including Loans Modified in Troubled Debt Restructurings by Portfolio Segment

The following tables present information related to loans individually evaluated for impairment, including loans modified in troubled debt restructurings, by portfolio segment as of December 31, 2017 and 2016 and for the years ended December 31, 2017, 2016, and 2015:

December 31, 2017	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With an allowance recorded:
Commercial, industrial, and agricultural	$	1,915	$	1,915	$	292
Commercial mortgage		9,940		9,731		5,444
Residential real estate		0		0		0
With no related allowance recorded:
Commercial, industrial, and agricultural		5,264		4,485		0
Commercial mortgage		3,211		2,410		0
Residential real estate		0		0		0
Total	$	20,330	$	18,541	$	5,736

December 31, 2016	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With an allowance recorded:
Commercial, industrial, and agricultural	$	1,644	$	1,644	$	313
Commercial mortgage		16,200		15,367		3,210
Residential real estate		0		0		0
With no related allowance recorded:
Commercial, industrial, and agricultural		2,669		1,771		0
Commercial mortgage		0		0		0
Residential real estate		0		0		0
Total	$	20,513	$	18,782	$	3,523

Impaired Financing Receivables with Related and not Related Allowances

The unpaid principal balance of impaired loans includes the Corporation’s recorded investment in the loan and amounts that have been charged off.

	Year Ended December 31, 2017
	Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized
With an allowance recorded:
Commercial, industrial, and agricultural	$	1,513	$	97	$	97
Commercial mortgage		11,944		327		327
Residential real estate		0		0		0
With no related allowance recorded:
Commercial, industrial, and agricultural		2,438		114		114
Commercial mortgage		2,474		122		122
Residential real estate		0		0		0
Total	$	18,369	$	660	$	660

	Year Ended December 31, 2016
	Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized
With an allowance recorded:
Commercial, industrial, and agricultural	$	2,616	$	2	$	2
Commercial mortgage		8,138		0		0
Residential real estate		50		6		6
With no related allowance recorded:
Commercial, industrial, and agricultural		2,290		0		0
Commercial mortgage		2,773		0		0
Residential real estate		0		0		0
Total	$	15,867	$	8	$	8

	Year Ended December 31, 2015
	Average Recorded Investment		Interest Income Recognized		Cash Basis Interest Recognized
With an allowance recorded:
Commercial, industrial, and agricultural	$	5,667	$	44	$	44
Commercial mortgage		8,154		0		0
Residential real estate		370		21		21
With no related allowance recorded:
Commercial, industrial, and agricultural		1,831		14		14
Commercial mortgage		4,806		0		0
Residential real estate		103		6		6
Total	$	20,931	$	85	$	85

Nonaccrual Loans and Loans Past Due over 90 Days Still Accruing Interest by Class of Loans

The following table presents the recorded investment in nonaccrual loans and loans past due over 90 days still on accrual by class of loans as of December 31, 2017 and 2016:

	December 31, 2017				December 31, 2016
	Nonaccrual		Past Due Over 90 Days Still on Accrual		Nonaccrual		Past Due Over 90 Days Still on Accrual
Commercial, industrial, and agricultural	$	1,869	$	78	$	2,734	$	0
Commercial mortgages		11,065		0		5,996		0
Residential real estate		5,470		338		5,600		0
Consumer		828		17		999		0
Credit cards		0		44		0		10
Total	$	19,232	$	477	$	15,329	$	10

Aging of Recorded Investment in Past Due Loans

The following table presents the aging of the recorded investment in past due loans as of December 31, 2017 and 2016 by class of loans.

December 31, 2017	30-59 Days Past Due		60-89 Days Past Due		Greater Than 89 Days Past Due		Total Past Due		Loans Not Past Due		Total
Commercial, industrial, and agricultural	$	2,745	$	646	$	748	$	4,139	$	744,999	$	749,138
Commercial mortgages		233		0		292		525		599,540		600,065
Residential real estate		2,290		1,494		4,655		8,439		704,908		713,347
Consumer		454		307		812		1,573		78,620		80,193
Credit cards		31		10		44		85		6,668		6,753
Overdrafts		0		0		0		0		352		352
Total	$	5,753	$	2,457	$	6,551	$	14,761	$	2,135,087	$	2,149,848

December 31, 2016	30-59 Days Past Due		60-89 Days Past Due		Greater Than 89 Days Past Due		Total Past Due		Loans Not Past Due		Total
Commercial, industrial, and agricultural	$	1,558	$	299	$	1,294	$	3,151	$	564,649	$	567,800
Commercial mortgages		559		0		1,516		2,075		572,751		574,826
Residential real estate		2,155		737		3,710		6,602		646,281		652,883
Consumer		648		890		974		2,512		72,304		74,816
Credit cards		105		0		10		115		5,931		6,046
Overdrafts		0		0		0		0		595		595
Total	$	5,025	$	1,926	$	7,504	$	14,455	$	1,862,511	$	1,876,966

Restructured in Troubled Debt

The following table presents the number of loans, loan balances, and specific reserves for loans that have been restructured in a troubled debt restructuring as of December 31, 2017 and December 31, 2016.

	December 31, 2017						December 31, 2016
	Number of Loans		Loan Balance		Specific Reserve		Number of Loans		Loan Balance		Specific Reserve
Commercial, industrial, and agricultural		10	$	5,213	$	245		7	$	2,640	$	125
Commercial mortgages		9		12,090		5,444		8		9,191		2,214
Residential real estate		0		0		0		0		0		0
Consumer		0		0		0		0		0		0
Credit cards		0		0		0		0		0		0
Total		19	$	17,303	$	5,689		15	$	11,831	$	2,339

Loans by Class Modified as Troubled Debt Restructurings

The following table presents loans by class modified as troubled debt restructurings that occurred during the years ended December 31, 2017, 2016, and 2015:

	Year Ended December 31, 2017
	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding  Recorded Investment
Commercial, industrial, and agricultural		4	$	2,750	$	2,750
Commercial mortgages		2		6,421		6,421
Residential real estate		0		0		0
Consumer		0		0		0
Credit cards		0		0		0
Total		6	$	9,171	$	9,171

	Year Ended December 31, 2016
	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding  Recorded Investment
Commercial, industrial, and agricultural		1	$	109	$	109
Commercial mortgages		0		0		0
Residential real estate		0		0		0
Consumer		0		0		0
Credit cards		0		0		0
Total		1	$	109	$	109

	Year Ended December 31, 2015
	Number of Loans		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding  Recorded Investment
Commercial, industrial, and agricultural		1	$	1,327	$	1,327
Commercial mortgages		0		0		0
Residential real estate		0		0		0
Consumer		0		0		0
Credit cards		0		0		0
Total		1	$	1,327	$	1,327

Schedule of Loan Assigned Risk Rating within 12 Months of Balance Sheet Date

All loans included in the following tables have been assigned a risk rating within 12 months of the balance sheet date.

December 31, 2017	Pass		Special Mention		Substandard		Doubtful		Total
Commercial, industrial, and agricultural	$	713,102	$	16,726	$	19,310	$	0	$	749,138
Commercial mortgages		581,631		4,419		14,015		0		600,065
Total	$	1,294,733	$	21,145	$	33,325	$	0	$	1,349,203

December 31, 2016	Pass		Special Mention		Substandard		Doubtful		Total
Commercial, industrial, and agricultural	$	531,320	$	14,638	$	21,831	$	11	$	567,800
Commercial mortgages		551,474		1,809		21,543		0		574,826
Total	$	1,082,794	$	16,447	$	43,374	$	11	$	1,142,626

Recorded Investment in Residential, Consumer and Credit Card Loans Based on Payment Activity

The following table presents the recorded investment in residential, consumer, and credit card loans based on performance status as of December 31, 2017 and December 31, 2016:

	December 31, 2017						December 31, 2016
	Residential Real Estate		Consumer		Credit Cards		Residential Real Estate		Consumer		Credit Cards
Performing	$	707,539	$	79,348	$	6,709	$	647,283	$	73,817	$	6,036
Nonperforming		5,808		845		44		5,600		999		10
Total	$	713,347	$	80,193	$	6,753	$	652,883	$	74,816	$	6,046

Summary of Holiday's Loan Portfolio Included in Consumer and Residential Loans

Holiday’s loan portfolio, included in consumer and residential loans above, is summarized as follows at December 31, 2017 and 2016:

	2017			2016
Consumer	$	23,428		$	24,026
Residential real estate		0			1,209
Less: unearned discount		(3,889	)		(3,430	)
Total	$	19,539		$	21,805

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Secondary Market Mortgage Activities (Tables)

12 Months Ended

Dec. 31, 2017

Text Block [Abstract]

Summary of Secondary Market Mortgage Activities

The following summarizes secondary market mortgage activities for the years ended December 31, 2017, 2016 and 2015:

	2017		2016		2015
Loans originated for resale	$	25,231	$	31,255	$	15,171
Proceeds from sales of loans held for sale		24,285		33,045		14,927
Net gains on sales of loans held for sale		545		818		630
Loan servicing fees		563		421		390

Summary of Activity for Capitalized Mortgage Servicing Rights

The following summarizes activity for capitalized mortgage servicing rights for the years ended December 31, 2017, 2016, and 2015:

	2017			2016			2015
Balance, beginning of year	$	1,391		$	962		$	856
Additions		198			200			380
Servicing rights acquired		0			367			0
Amortization		(202	)		(138	)		(274	)
Balance, end of year	$	1,387		$	1,391		$	962

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Premises and Equipment (Tables)

12 Months Ended

Dec. 31, 2017

Property, Plant and Equipment [Abstract]

Summary of Premises and Equipment

The following summarizes premises and equipment at December 31, 2017 and 2016:

	2017		2016
Land	$	8,147	$	7,324
Premises and leasehold improvements		53,903		48,563
Furniture and equipment		31,238		30,125
Construction in process		71		4,014
		93,359		90,026
Less: accumulated depreciation		42,644		40,504
Premises and equipment, net	$	50,715	$	49,522

Summary of Minimum Annual Rental Commitments Under Operating Lease

The minimum annual rental commitments under these leases at December 31, 2017 are as follows:

2018	$	1,167
2019		1,021
2020		836
2021		736
2022		578
Thereafter		3,530
	$	7,868

Summary of Minimum Annual Rental Commitments Under Sale Lease Back

The minimum annual rental commitments under this sale-leaseback transaction at December 31, 2017 are as follows:

2018	$	105
2019		105
2020		105
2021		105
2022		105
Thereafter		420
	$	945

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Foreclosed Assets (Tables)

12 Months Ended

Dec. 31, 2017

Text Block [Abstract]

Summary of Foreclosed Assets Activity

Foreclosed real estate is reported net of a valuation allowance and included in accrued interest receivable and other assets in the accompanying consolidated balance sheets. Activity for the years ended December 31, 2017, 2016, and 2015 is as follows:

	2017			2016			2015
Balance, beginning of year	$	1,015		$	654		$	806
Acquired from Lake National Bank		0			665			0
Additions		630			120			806
Sales (at carrying value)		(935	)		(424	)		(958	)
Balance, end of year	$	710		$	1,015		$	654

Summary of Expenses Related to Foreclosed Real Estate

Expenses related to foreclosed real estate include:

	2017			2016			2015
Net (gain) loss on sale	$	(208	)	$	(134	)	$	3
Operating expenses, net of rental income		366			223			169
	$	158		$	89		$	172

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Goodwill and Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Summary of Change in Carrying Amount of Goodwill

The change in the carrying amount of goodwill for the years ended December 31, 2017 and 2016 is as follows:

	2017		2016
Balance, beginning of year	$	38,730	$	27,194
Acquired during the year		0		11,536
Balance, end of year	$	38,730	$	38,730

Estimated Amortization Expense of Core Deposit Intangible Assets

Estimated amortization expense of core deposit intangible assets for each of the next five years is as follows:

2018	$	898
2019		567
2020		160
2021		0
2022		0

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Deposits (Tables)

12 Months Ended

Dec. 31, 2017

Banking and Thrift [Abstract]

Summary of Time Certificates of Deposit Accounts Included in Total Deposits and Their Remaining Maturities

The following table reflects time certificates of deposit accounts included in total deposits and their remaining maturities at December 31, 2017:

Time deposits maturing:
2018	$	125,809
2019		128,602
2020		91,799
2021		7,954
2022		6,881
Thereafter		3,926
	$	364,971

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Borrowings (Tables)

12 Months Ended

Dec. 31, 2017

Text Block [Abstract]

Schedule of Remaining Borrowing Capacity with FHLB

Borrowings from the FHLB at December 31, 2017 and 2016 are as follows:

Interest Rate	Maturity		2017		2016
(a)		n/a	$	34,416	$	103,969
(b)		09/06/17		0		15,016
(c)		12/15/17		0		15,093
(d)		09/06/18		7,550		17,523
(e)		06/28/19		30,000		0
(f)		09/06/19		11,752		18,360
(g)		09/16/19		8,883		13,865
(h)		06/29/20		30,000		0
(i)		09/08/20		13,859		18,780
(j)		06/28/21		30,000		0
(k)		06/29/22		50,000		0
(l)		09/06/22		15,976		19,201
(m)		12/05/22		20,000		0
(n)		07/03/23		700		700
(o)		09/05/23		1,797		1,925
(p)		03/11/24		814		852
(q)		06/11/24		435		462
(r)		05/04/26		217		240
(s)		10/14/26		231		252
(t)		02/11/33		729		766
			$	257,359	$	227,004

(a) – Open Repo borrowing at an interest rate of 1.54% at December 31, 2017 and 0.74% at December 31, 2016. The maximum amount of the Open Repo borrowing available is $150,000.

(b) – Fixed rate borrowing at an interest rate of 0.83%, with monthly principal and interest payments.

(c) – Fixed rate borrowing at an interest rate of 1.25%, with monthly principal and interest payments.

(d) – Fixed rate borrowing at an interest rate of 1.05%, with monthly principal and interest payments.

(e) – Fixed rate borrowing at interest rate of 1.66%. Interest only payments with principal due at maturity.

(f) – Fixed rate borrowing at an interest rate of 1.17%, with monthly principal and interest payments.

(g) – Fixed rate borrowing at an interest rate of 1.35%, with monthly principal and interest payments.

(h) – Fixed rate borrowing at interest rate of 1.82%. Interest only payments with principal due at maturity.

(i) – Fixed rate borrowing at an interest rate of 1.27%, with monthly principal and interest payments.

(j) – Fixed rate borrowing at interest rate of 1.97%. Interest only payments with principal due at maturity.

(k) – Fixed rate borrowing at interest rate of 1.97%. Interest only payments with principal due at maturity.

(l) – Fixed rate borrowing at an interest rate of 1.47%, with monthly principal and interest payments.

(m) – Fixed rate borrowing at interest rate of 2.39%. Interest only payments with principal due at maturity.

(n) – Fixed rate borrowing at interest rate of 4.72%. Interest only payments with principal due at maturity.

(o) – Fixed rate borrowing at an interest rate of 4.31%, with monthly principal and interest payments and a balloon payment due at maturity.

(p) – Fixed rate borrowing at an interest rate of 3.05%, with monthly principal and interest payments and a balloon payment due at maturity.

(q) – Fixed rate borrowing at an interest rate of 5.24%, with monthly principal and interest payments and a balloon payment due at maturity.

(r) – Fixed rate borrowing at an interest rate of 3.35%, with monthly principal and interest payments.

(s) – Fixed rate borrowing at an interest rate of 4.00%, with monthly principal and interest payments.

(t) – Fixed rate borrowing at an interest rate of 2.96%, with monthly principal and interest payments.

Maturity Schedule of All Borrowed Funds

The following is a schedule of maturities of all borrowed funds as of December 31, 2017:

2018	$	62,242
2019		47,562
2020		37,505
2021		33,740
2022		72,931
Thereafter		73,999
Total borrowed funds	$	327,979

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Interest Rate Swaps (Tables)

12 Months Ended

Dec. 31, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Amounts and Locations of Activity Related to Interest Rate Swaps Designated as Cash Flow Hedges within Corporation's Consolidated Balance Sheet and Statement of Income

The following tables provide information about the amounts and locations of activity related to the interest rate swaps designated as cash flow hedges within the Corporation’s consolidated balance sheet and statement of income as of December 31, 2017 and 2016 and for the years ended December 31, 2017, 2016, and 2015:

As of December 31	Liability Derivative
	Balance Sheet	Fair value
	Location	2017	2016
Interest rate contract	Accrued interest payable and other liabilities	($161)	($459)
For the Year Ended December 31, 2017	(a)	(b)		(c)	(d)	(e)
Interest rate contract	$194	Interest expense – subordinated debentures		($288)	Other income	$0
For the Year Ended December 31, 2016
Interest rate contract	$180	Interest expense – subordinated debentures		($340)	Other income	$0
For the Year Ended December 31, 2015
Interest rate contract	$137	Interest expense – subordinated debentures		($378)	Other income	$0

(a) Amount of Gain Recognized in Other Comprehensive Loss on Derivative (Effective Portion), net of tax

(b) Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)

(c) Amount of Loss Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)

(d) Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)

(e) Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)

Amounts and Locations of Activity Related to Back-to-Back Interest Rate Swaps within Corporation's Consolidated Balance Sheet

The following table provides information about the amounts and locations of activity related to the back-to-back interest rate swaps within the Corporation’s consolidated balance sheet as of December 31, 2017 and 2016:

	Notional Amount			Average Maturity (in years)		Weighted Average Fixed Rate			Weighted Average Variable Rate	Fair Value
December 31, 2017
3rd Party interest rate swaps	$	11,848			8.0		4.51	%	1 month LIBOR + 2.37%	$	149 (a)
Customer interest rate swaps		(11,848	)		8.0		4.51	%	1 month LIBOR + 2.37%		(149) (b)
December 31, 2016
3rd Party interest rate swaps	$	14,814			9.7		4.43	%	1 month LIBOR + 2.35%	$	211 (a)
Customer interest rate swaps		(14,814	)		9.7		4.43	%	1 month LIBOR + 2.35%		(211) (b)

(a) Reported in accrued interest receivable and other assets within the consolidated balance sheets

(b) Reported in accrued interest payable and other liabilities within the consolidated balance sheets

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Income Tax Disclosure [Abstract]

Summary of Income Tax Expense

The following is a summary of income tax expense for the years ended December 31, 2017, 2016, and 2015:

	2017		2016			2015
Current – federal	$	8,978	$	6,181		$	7,777
Current – state		29		(33	)		139
Deferred – federal		376		1,023			376
Deferred tax adjustment related to reduction in U.S. federal statutory income tax rate		3,009		0			0
Income tax expense	$	12,392	$	7,171		$	8,292

Reconciliation of Income Tax Attributable to Pre-Tax Income at Federal Statutory Tax Rates to Income Tax Expense

The reconciliation of income tax attributable to pre-tax income at the federal statutory tax rates to income tax expense is as follows:

	2017			%			2016			%			2015			%
Tax at statutory rate	$	12,688			35.0		$	9,699			35.0		$	10,671			35.0
Tax exempt income, net		(1,899	)		(5.2	)		(2,054	)		(7.4	)		(1,816	)		(6.0	)
Deferred tax adjustment related to reduction in U.S. federal statutory income tax rate		3,009			8.3			0			0.00			0			0.0
Bank owned life insurance		(581	)		(1.6	)		(379	)		(1.3	)		(418	)		(1.4	)
Merger costs		0			0.0			170			0.6			30			0.1
Other		(825	)		(2.3	)		(265	)		(1.0	)		(175	)		(0.5	)
Income tax expense	$	12,392			34.2		$	7,171			25.9		$	8,292			27.2

Components of Net Deferred Tax Asset

	2017		2016
Deferred tax assets:
Allowance for loan losses	$	2,840	$	4,679
Fair value adjustments – business combination		1,135		2,530
Deferred compensation		1,903		2,891
Impaired security valuation		0		379
Net operating loss carryover		71		627
Post-retirement benefits		892		1,688
Unrealized loss on interest rate swap		34		161
Nonaccrual loan interest		390		649
Accrued expenses		699		1,282
Deferred fees and costs		598		629
Other		344		465
		8,906		15,980
Deferred tax liabilities:
Unrealized gain on securities available for sale		126		750
Premises and equipment		1,413		2,258
Unrealized gain on trading securities		156		118
Intangibles – section 197		2,593		4,735
Mortgage servicing rights		291		487
Other		78		23
		4,657		8,371
Net deferred tax asset	$	4,249	$	7,609

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Employee Benefit Plans (Tables)

12 Months Ended

Dec. 31, 2017

Retirement Benefits [Abstract]

Unfunded Post Retirement Benefits Plan

The following table sets forth the change in the benefit obligation of the plan as of and for the years ended December 31, 2017, 2016, and 2015:

	2017			2016			2015
Benefit obligation at beginning of year	$	3,409		$	3,066		$	2,744
Interest cost		114			108			90
Service cost		103			103			96
Actual claims		(78	)		(151	)		(109	)
Actuarial (gain) loss		(808	)		283			245
Benefit obligation at end of year	$	2,740		$	3,409		$	3,066

Accumulated Other Comprehensive Income

Amounts recognized in accumulated other comprehensive income at December 31, 2017 and 2016 consist of:

	2017			2016
Net actuarial loss	$	(871	)	$	(1,871	)
Tax effect		183			654
	$	(688	)	$	(1,217	)

Recognized Net Periodic Benefit Cost and Other Comprehensive Income

The following table sets forth the components of net periodic benefit cost and other amounts recognized in other comprehensive income:

	2017			2016			2015
Service cost	$	103		$	103		$	96
Interest cost		114			108			90
Net amortization of transition obligation and actuarial loss		192			184			173
Net periodic benefit cost		409			395			359
Net (gain) loss		(808	)		282			311
Amortization of loss		(192	)		(184	)		(173	)
Total recognized in other comprehensive income		(1,000	)		98			138
Total recognized in net periodic benefit cost and other comprehensive income	$	(591	)	$	493		$	497

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Deferred Compensation Plans (Tables)

12 Months Ended

Dec. 31, 2017

Postemployment Benefits [Abstract]

Summary of Changes in Deferred Compensation Plan Liability

A summary of changes in the deferred compensation plan liability follows:

	2017			2016			2015
Balance, beginning of year	$	2,080		$	1,226		$	1,087
Deferrals, dividends, and changes in fair value recorded as an expense		444			936			209
Deferred compensation payments		(21	)		(82	)		(70	)
Balance, end of year	$	2,503		$	2,080		$	1,226

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Stock-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of Changes in Nonvested Restricted Stock Awards

A summary of changes in nonvested restricted stock awards follows:

	Shares			Weighted-average Grant Date Fair Value
Nonvested at January 1, 2017		100,726			$17.36
Granted		39,673			25.94
Forfeited		(2,482	)		21.12
Vested		(43,445	)		17.54
Nonvested at December 31, 2017		94,472			$20.79

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Capital Requirements and Restrictions on Retained Earnings (Tables)

12 Months Ended

Dec. 31, 2017

Banking and Thrift [Abstract]

Summary of Actual and Required Capital Amounts and Ratios

Actual and required capital amounts and ratios are presented below as of December 31, 2017 and 2016. The capital adequacy ratio includes the capital conservation buffer.

	Actual					For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio		Amount		Ratio
December 31, 2017
Total Capital to Risk Weighted Assets
Consolidated		$297,708		14.32	%		$192,341		9.25%		N/A
Bank		$279,704		13.58	%		$190,513		9.25%		$205,960		10.00%
Tier 1 (Core) Capital to Risk Weighted Assets
Consolidated		$228,015		10.97	%		$150,754		7.25%		N/A
Bank		$261,643		12.70	%		$149,321		7.25%		$164,768		8.00%
Common equity Tier 1 to Risk Weighted Assets
Consolidated		$208,015		10.00	%		$119,563		5.75%		N/A
Bank		$254,264		12.35	%		$118,427		5.75%		$133,874		6.50%
Tier 1 (Core) Capital to Average Assets
Consolidated		$228,015		8.45	%		$107,969		4.00%		N/A
Bank		$261,643		9.80	%		$106,798		4.00%		$133,498		5.00%
December 31, 2016
Total Capital to Risk Weighted Assets
Consolidated		$261,530		14.05	%		$160,501		8.625%		N/A
Bank		$242,592		13.19	%		$158,590		8.625%		$183,873		10.00%
Tier 1 (Core) Capital to Risk Weighted Assets
Consolidated		$195,200		10.49	%		$123,283		6.625%		N/A
Bank		$228,109		12.41	%		$121,816		6.625%		$147,098		8.00%
Common equity Tier 1 to Risk Weighted Assets
Consolidated		$175,200		9.41	%		$95,370		5.125%		N/A
Bank		$220,730		12.00	%		$94,235		5.125%		$119,517		6.50%
Tier 1 (Core) Capital to Average Assets
Consolidated		$195,200		7.85	%		$99,430		4.00%		N/A
Bank		$228,109		9.36	%		$97,527		4.00%		$121,909		5.00%

XML

Off Balance Sheet Activities (Tables)

12 Months Ended

Dec. 31, 2017

Text Block [Abstract]

Schedule of Off-Balance Sheet Risks

The contractual amount of financial instruments with off-balance sheet risk was as follows at December 31, 2017 and 2016:

	2017				2016
	Fixed Rate		Variable Rate		Fixed Rate		Variable Rate
Commitments to make loans		$64,799		$210,987		$57,283		$202,883
Unused lines of credit		0		118,348		0		105,779
Standby letters of credit		0		14,985		0		4,618

XML

Fair Value (Tables)

12 Months Ended

Dec. 31, 2017

Fair Value Disclosures [Abstract]

Assets and Liabilities Measured at Fair Value on Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are as follows at December 31, 2017 and 2016:

				Fair Value Measurements at December 31, 2017 Using
Description	Total			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Assets:
Securities Available For Sale:
U.S. Government sponsored entities	$	108,148		$	0	$	108,148		$	0
States and political subdivisions		137,723			0		137,723			0
Residential and multi-family mortgage		109,636			0		109,636			0
Corporate notes and bonds		17,200			0		17,200			0
Pooled SBA		36,040			0		36,040			0
Other equity securities		962			962		0			0
Total Securities Available For Sale	$	409,709		$	962	$	408,747		$	0
Interest Rate swaps:	$	149		$	0	$	149		$	0
Trading Securities:
Corporate equity securities	$	5,125		$	5,125	$	0		$	0
Mutual funds		1,499			1,499		0			0
Certificates of deposit		220			220		0			0
Corporate notes and bonds		254			254		0			0
U.S. Government sponsored entities		52			0		52			0
Total Trading Securities	$	7,150		$	7,098	$	52		$	0
Liabilities
Interest rate swaps	$	(310	)	$	0	$	(310	)	$	0
				Fair Value Measurements at December 31, 2016 Using
Description	Total			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Assets:
Securities Available For Sale:
U.S. Government sponsored entities	$	140,351		$	0	$	140,351		$	0
States and political subdivisions		157,037			0		157,037			0
Residential and multi-family mortgage		134,976			0		134,976			0
Corporate notes and bonds		17,414			0		17,414			0
Pooled trust preferred		2,049			0		0			2,049
Pooled SBA		43,037			0		43,037			0
Other equity securities		971			971		0			0
Total Securities Available For Sale	$	495,835		$	971	$	492,815		$	2,049
Interest Rate swaps:	$	211		$	0	$	211		$	0
Trading Securities:
Corporate equity securities	$	3,312		$	3,312	$	0		$	0
Mutual funds		1,037			1,037		0			0
Certificates of deposit		202			202		0			0
Corporate notes and bonds		254			254		0			0
U.S. Government sponsored entities		53			0		53			0
Total Trading Securities	$	4,858		$	4,805	$	53		$	0
Liabilities
Interest rate swaps	$	(670	)	$	0	$	(670	)	$	0

Securities Available for Sale Measured at Fair Value on Recurring Basis Using Significant Unobservable Inputs (Level 3)

The table below presents a reconciliation and income statement classification of gains and losses for all securities available for sale measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the year ended December 31, 2017:

	Pooled trust preferred
Balance, January 1, 2017	$	2,049
Total gains or (losses):
Included in other comprehensive income (loss)		134
Sale of available-for-sale securities		(2,183	)
Balance, December 31, 2017	$	0

The table below presents a reconciliation and income statement classification of gains and losses for all securities available for sale measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the year ended December 31, 2016:

	Pooled trust preferred
Balance, January 1, 2016	$	3,413
Total gains or (losses):
Included in other comprehensive income (loss)		(442	)
Included in realized gains on available-for-sale securities		0
Sale of available-for-sale securities		(922	)
Balance, December 31, 2016	$	2,049

Quantitative Information about Level 3 Fair Value Measurements

The following table presents quantitative information about Level 3 fair value measurements at December 31, 2016:

	Fair value	Valuation Technique	Unobservable Inputs	Input Utilized
Pooled trust preferred	$2,049	Discounted cash flow	Collateral default rate Yield	0.5% in 2016 and thereafter 10%
			Prepayment speed	2.0% constant prepayment rate in 2016 and thereafter

Assets and Liabilities Measured at Fair Value on Non-Recurring Basis

Assets and liabilities measured at fair value on a non-recurring basis are as follows at December 31, 2017 and 2016:

			Fair Value Measurements at December 31, 2017 Using
Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Impaired loans:
Commercial mortgages	$	11		0		0	$	11
			Fair Value Measurements at December 31, 2016 Using
Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Impaired loans:
Commercial mortgages	$	2,067		0		0	$	2,067

Quantitative Information about Level 3 Fair Value Measurements for Financial Instruments Measured at Fair Value on Non Recurring Basis

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at December 31, 2017:

	Fair value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Impaired loans – commercial mortgages	$	11	Discounted cash flow method	Discount used in discounted cash flow method	10% (10%)

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at December 31, 2016:

	Fair value		Valuation Technique	Unobservable Inputs	Range (Weighted Average)
Impaired loans – commercial mortgages	$	2,067	Sales comparison approach and discounted cash flow method	Adjustment for differences between the comparable sales and discount used in discounted cash flows	10% – 14% (13%)

Carrying Amount and Fair Value of Financial Instruments

The following table presents the carrying amount and fair value of financial instruments at December 31, 2017:

	Carrying Amount			Fair Value Measurement Using:									Total Fair Value
				Level 1			Level 2			Level 3
ASSETS
Cash and cash equivalents	$	35,345		$	35,345		$	0		$	0		$	35,345
Securities available for sale		409,709			962			408,747			0			409,709
Trading securities		7,150			7,098			52			0			7,150
Loans held for sale		852			0			853			0			853
Net loans		2,126,266			0			0			2,126,824			2,126,824
FHLB and other equity interests		21,517			n/a			n/a			n/a			n/a
Interest rate swaps		149			0			149			0			149
Accrued interest receivable		9,254			6			2,651			6,597			9,254
LIABILITIES
Deposits	$	(2,167,815	)	$	(1,802,844	)	$	(362,756	)	$	0		$	(2,165,600	)
FHLB and other borrowings		(257,359	)		0			(257,361	)		0			(257,361	)
Subordinated debentures		(70,620	)		0			(63,575	)		0			(63,575	)
Deposits held for sale		0			0			0			0			0
Interest rate swaps		(310	)		0			(310	)		0			(310	)
Accrued interest payable		(554	)		0			(554	)		(0	)		(554	)

The following table presents the carrying amount and fair value of financial instruments at December 31, 2016:

	Carrying Amount			Fair Value Measurement Using:								Total Fair Value
				Level 1			Level 2			Level 3
ASSETS
Cash and cash equivalents	$	29,183		$	29,183		$	0		$	0	$	29,183
Securities available for sale		495,835			971			492,815			2,049		495,835
Trading securities		4,858			4,805			53			0		4,858
Loans held for sale		7,528			0			7,553			0		7,553
Net loans		1,857,206			0			0			1,817,341		1,817,341
FHLB and other equity interests		19,186			n/a			n/a			n/a		n/a
Interest rate swaps		211			0			211			0		211
Accrued interest receivable		8,264			6			3,014			5,244		8,264
LIABILITIES
Deposits	$	(2,017,522	)	$	(1,785,649	)	$	(219,765	)	$	0	$	(2,005,414	)
FHLB and other borrowings		(237,004	)		0			(226,769	)		0		(226,769	)
Subordinated debentures		(70,620	)		0			(61,831	)		0		(61,831	)
Deposits held for sale		(6,456	)		0			(6,417	)		0		(6,417	)
Interest rate swaps		(670	)		0			(670	)		0		(670	)
Accrued interest payable		(510	)		0			(510	)		0		(510	)

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Parent Company Only Financial Information (Tables)

12 Months Ended

Dec. 31, 2017

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Balance Sheets

CONDENSED BALANCE SHEETS	December 31,
	2017		2016
Assets
Cash	$	1,556	$	1,436
Trading securities		580		529
Investment in bank subsidiary		290,156		257,476
Investment in non-bank subsidiaries		21,781		23,324
Deferreds and Current Receivable		2,055		1,066
Other assets		2,059		2,666
Total assets	$	318,187	$	286,497
Liabilities
Borrowings from subsidiary	$	1,400	$	1,400
Subordinated debentures		70,620		70,620
Other liabilities		2,257		2,693
Total liabilities		74,277		74,713
Total shareholders’ equity		243,910		201,913
Total liabilities and shareholders’ equity	$	318,187	$	286,497

Condensed Statements of Income

CONDENSED STATEMENTS OF INCOME	Year Ended December 31,
Income:		2017			2016			2015
Dividends from:
Bank subsidiary	$	8,840		$	8,700		$	10,404
Non-bank subsidiaries		2,250			1,200			323
Other		220			230			157
Total income		11,310			10,130			10,884
Expenses		(4,957	)		(2,611	)		(1,708	)
Income before income taxes and equity in undistributed net income of subsidiaries:		6,353			7,519			9,176
Income tax benefit		1,614			813			547
Equity in undistributed net income of bank subsidiary		17,430			13,184			11,889
Distributions in excess of net income of non-bank subsidiaries		(1,537	)		(976	)		585
Net income	$	23,860		$	20,540		$	22,197

Condensed Statements of Cash Flows

CONDENSED STATEMENTS OF CASH FLOWS	Year Ended December 31,
	2017			2016			2015
Net income
Adjustments to reconcile net income to net cash provided by	$	23,860		$	20,540		$	22,197
operating activities:
Equity in undistributed net income of bank subsidiary		(17,430	)		(13,184	)		(11,889	)
Equity in undistributed net income (distributions in excess of net income) of non-bank subsidiaries		1,537			976			(585	)
Net unrealized gains on trading securities		(12	)		(58	)		(11	)
Decrease (increase) in other assets		(549	)		(1,277	)		9
(Decrease) increase in other liabilities		791			1,645			663
Net cash provided by operating activities		8,197			8,642			10,384
Cash flows from investing activities
Investment in bank subsidiaries		(15,400	)		(49,223	)		0
Net cash used in investing activities		(15,400	)		(49,223	)		0
Cash flows from financing activities:
Dividends paid		(10,094	)		(9,546	)		(9,515	)
Proceeds from issuance of long term debt		0			50,000			0
Purchase of treasury stock		(1,877	)		(44	)		(868	)
Net proceeds from issuance of common stock		19,294			0			0
Net advance from subsidiary		0			50			0
Net cash provided by (used in) financing activities		7,323			40,460			(10,383	)
Net increase (decrease) in cash		120			(121	)		1
Cash beginning of year		1,436			1,557			1,556
Cash end of year	$	1,556		$	1,436		$	1,557

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Other Comprehensive Income (Tables)

12 Months Ended

Dec. 31, 2017

Equity [Abstract]

Components of Other Comprehensive Income and Related Tax Effects

Other comprehensive income components and related tax effects were as follows for the years ended December 31, 2017, 2016, and 2015:

	2017			2016			2015
Unrealized holding losses on available for sale securities	$	(136	)	$	(1,838	)	$	(623	)
Less reclassification adjustment for gains recognized in earnings		(160	)		(83	)		(666	)
Net unrealized losses		(296	)		(1,921	)		(1,289	)
Tax effect		104			672			452
Net-of-tax amount		(192	)		(1,249	)		(837	)
Unrealized holding gains on available for sale securities for which a portion of an other-than-temporary impairment has been recognized in earnings		134			(442	)		2,508
Less reclassification adjustment for gains recognized in earnings		(1,383	)		(922	)		0
Net unrealized gains		(1,249	)		(1,364	)		2,508
Tax effect		437			477			(878	)
Net-of-tax amount		(812	)		(887	)		1,630
Actuarial gain (loss) on postemployment health care plan		808			(282	)		(311	)
Net amortization of transition obligation and actuarial gain		192			184			173
Net unrealized gain (loss) on postemployment health care plan		1,000			(98	)		(138	)
Tax effect		(175	)		34			48
Net-of-tax amount		825			(64	)		(90	)
Unrealized gain (loss) on interest rate swap		10			(63	)		(168	)
Less reclassification adjustment for losses recognized in earnings		288			340			378
Net unrealized gain		298			277			210
Tax effect		(104	)		(97	)		(73	)
Net-of-tax amount		194			180			137
Other comprehensive income (loss)	$	15		$	(2,020	)	$	840

Summary of Change in Accumulated Other Comprehensive Income (Loss)

The following is a summary of the change in the accumulated other comprehensive income (loss) balance, net of tax, for the years ended December 31, 2017, 2016, and 2015.

		Balance			Comprehensive			Reclassification of Disproportionate			Balance
		12/31/16			Income (Loss)			Tax Effect			12/31/17
Unrealized gains (losses) on securities available for sale	$	1,393		$	(1,004	)	$	84		$	473
Unrealized gain (loss) on postretirement benefits plan		(1,217	)		825			(298	)		(690	)
Unrealized loss on interest rate swap		(297	)		194			(23	)		(126	)
Total	$	(121	)	$	15		$	(237	)	$	(343	)

		Balance			Comprehensive			Reclassification of Disproportionate		Balance
		12/31/15			Income (Loss)			Tax Effect		12/31/16
Unrealized gains (losses) on securities available for sale	$	3,529		$	(2,136	)	$	0	$	1,393
Unrealized gain (loss) on postretirement benefits plan		(1,153	)		(64	)		0		(1,217	)
Unrealized loss on interest rate swap		(477	)		180			0		(297	)
Total	$	1,899		$	(2,020	)	$	0	$	(121	)

		Balance			Comprehensive			Reclassification of Disproportionate		Balance
		1/1/15			Income (Loss)			Tax Effect		12/31/15
Unrealized gains (losses) on securities available for sale	$	2,736		$	793		$	0	$	3,529
Unrealized gain (loss) on postretirement benefits plan		(1,063	)		(90	)		0		(1,153	)
Unrealized loss on interest rate swap		(614	)		137			0		(477	)
Total	$	1,059		$	840		$	0	$	1,899

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Quarterly Financial Data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2017

Quarterly Financial Information Disclosure [Abstract]

Unaudited Quarterly Results of Operations

The unaudited quarterly results of operations for the years ended December 31, 2017 and 2016 are as follows:

	Quarters Ended in 2017								Quarters Ended in 2016
	Mar. 31		June 30		Sept. 30		Dec. 31		Mar. 31		June 30		Sept. 30		Dec. 31
Total interest and dividend income	$	25,104	$	27,003	$	28,069	$	28,698	$	22,066	$	22,473	$	24,958	$	24,818
Net interest income		21,202		22,989		23,517		23,801		18,942		19,403		21,933		21,009
Provision for loan losses		1,016		1,134		1,400		3,105		1,196		220		622		2,111
Non-interest income		5,773		5,089		5,032		5,541		3,777		4,819		4,473		4,622
Non-interest expense		17,034		17,797		17,618		17,588		14,814		18,753		17,096		16,455
Net income		6,480		6,683		7,246		3,451		5,019		4,065		6,416		5,040
Net income per share, basic		0.43		0.44		0.47		0.23		0.35		0.28		0.44		0.35
Net income per share, diluted		0.43		0.44		0.47		0.23		0.35		0.28		0.44		0.35

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Summary of Significant Accounting Policies - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2017 USD ($) Segment shares	Dec. 31, 2016 USD ($) shares	Dec. 31, 2015 USD ($) shares
Summary Of Significant Accounting Policies [Line Items]
Number of reportable operating segment | Segment	1
Period of delinquent loan	90 days
Advertising costs	$ 2,243,000	$ 1,799,000	$ 1,580,000
Number of nonqualified options or restricted stock for key employees and independent director | shares	500,000
Description of award terms	For key employees, the plan vesting schedule is one-fourth of granted stock-based awards per year beginning one year after the grant date with 100% vested on the fourth anniversary. For independent directors, the vesting schedule is one-third of granted stock-based awards per year beginning one year after the grant date with 100% vested on the third anniversary.
Unrecognized compensation cost related to nonvested stock options granted	$ 0	$ 0
Stock options, granted | shares	0	0	0
Shares granted, restricted common stock | shares	39,673	52,750	48,300
Compensation expense restricted stock awards	$ 928,000	$ 820,000	$ 621,000
Average amount of non interest bearing reserve with federal reserve bank	$ 50,000	$ 50,000
Independent Directors [Member]
Summary Of Significant Accounting Policies [Line Items]
Starting period of vesting of stock based award	1 year
Aggregate percentage of stock based awards to be matured	100.00%
Stock incentive plan, vesting per year	33.33%
Award vesting period	3 years
Key Employees [Member]
Summary Of Significant Accounting Policies [Line Items]
Starting period of vesting of stock based award	1 year
Aggregate percentage of stock based awards to be matured	100.00%
Stock incentive plan, vesting per year	25.00%
Award vesting period	4 years
Minimum [Member]
Summary Of Significant Accounting Policies [Line Items]
Percentage of tax benefit realized	50.00%
Maximum [Member]
Summary Of Significant Accounting Policies [Line Items]
Period of Consumer loans charged off	180 days
Premises and Equipment [Member] | Minimum [Member]
Summary Of Significant Accounting Policies [Line Items]
Useful lives of premises and equipment	3 years
Premises and Equipment [Member] | Maximum [Member]
Summary Of Significant Accounting Policies [Line Items]
Useful lives of premises and equipment	39 years
Furniture, Fixtures and Equipment [Member] | Minimum [Member]
Summary Of Significant Accounting Policies [Line Items]
Useful lives of premises and equipment	3 years
Furniture, Fixtures and Equipment [Member] | Maximum [Member]
Summary Of Significant Accounting Policies [Line Items]
Useful lives of premises and equipment	10 years
Buildings and Building Improvements [Member] | Minimum [Member]
Summary Of Significant Accounting Policies [Line Items]
Useful lives of premises and equipment	15 years
Buildings and Building Improvements [Member] | Maximum [Member]
Summary Of Significant Accounting Policies [Line Items]
Useful lives of premises and equipment	39 years
Core Deposit [Member] | FC Banc Corp [Member]
Summary Of Significant Accounting Policies [Line Items]
Amortization of intangible assets	7 years
Core Deposit [Member] | Lake National Bank of Mentor, Ohio [Member]
Summary Of Significant Accounting Policies [Line Items]
Amortization of intangible assets	4 years

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Business Combination and Branch Sale - Additional Information (Detail) $ / shares in Units, $ in Thousands			12 Months Ended
	May 19, 2017 USD ($)	Dec. 30, 2015 USD ($) Location $ / shares	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Jul. 15, 2016 USD ($)
Business Acquisition [Line Items]
Merger costs			$ 0	$ 486	$ 308
Deferred tax asset included in accrued interest receivable and other assets			4,249	7,609
Gross loans acquired			126,134
Combined yield and credit mark			3,928
Goodwill arising from Acquisition			38,730	38,730	27,194
Gain from sale of branch			536	0	0
Lake National Bank of Mentor, Ohio [Member]
Business Acquisition [Line Items]
Share price | $ / shares		$ 22.50
Fair value of total consideration transferred		$ 24,750
Number of branch locations | Location		2
Merger costs				$ 486	$ 308
Deferred tax asset included in accrued interest receivable and other assets			58
Goodwill arising from Acquisition			$ 11,536			$ 11,536
First Federal Community Bank [Member]
Business Acquisition [Line Items]
Loans transferred	$ 7,800
Fixed assets	100
Deposits transferred	7,400
Gain from sale of branch	$ 536
Deposit Premium	8.00%

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Business Combination and Branch Sale - Schedule of Consideration Paid and Amounts of Assets Acquired and Liabilities Assumed (Detail) - USD ($) $ in Thousands	Jul. 15, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Recognized amounts of identifiable assets acquired and liabilities assumed:
Goodwill		$ 38,730	$ 38,730	$ 27,194
Lake National Bank of Mentor, Ohio [Member]
Consideration paid:
Cash	$ 24,750
Recognized amounts of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents	21,884
Securities available for sale	450
Loans	122,206
FHLB and other equity interests	637
Premises and equipment	3,242
Bank owned life insurance	2,152
Mortgage servicing rights	367
Core deposit intangible	1,583
Accrued interest receivable and other assets	3,110
Total assets acquired	155,631
Demand deposits	81,472
Time deposits	58,311
Accrued interest payable and other liabilities	2,634
Total liabilities assumed	142,417
Total identifiable net assets	13,214
Goodwill	$ 11,536	$ 11,536

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Earnings Per Share - Additional Information (Detail) - shares	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Earnings Per Share [Abstract]
Antidilutive shares excluded from the diluted earnings per share calculations	0	0	0

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Earnings Per Share - Computation of Basic and Diluted Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Basic earnings per common share computation
Net income per consolidated statements of income	$ 3,451	$ 7,246	$ 6,683	$ 6,480	$ 5,040	$ 6,416	$ 4,065	$ 5,019	$ 23,860	$ 20,540	$ 22,197
Net earnings allocated to participating securities									(135)	(129)	(117)
Net earnings allocated to common stock									$ 23,725	$ 20,411	$ 22,080
Weighted average common shares outstanding, including shares considered participating securities									15,212	14,457	14,408
Less: Average participating securities									(80)	(82)	(70)
Weighted average shares									15,132	14,375	14,338
Basic earnings per common share	$ 0.23	$ 0.47	$ 0.44	$ 0.43	$ 0.35	$ 0.44	$ 0.28	$ 0.35	$ 1.57	$ 1.42	$ 1.54
Diluted earnings per common share computation
Net earnings allocated to common stock									$ 23,725	$ 20,411	$ 22,080
Weighted average common shares outstanding for basic earnings per common share									15,132	14,375	14,338
Add: Dilutive effects of assumed exercises of stock options									0	0	0
Weighted average shares and dilutive potential common shares									15,132	14,375	14,338
Diluted earnings per common share	$ 0.23	$ 0.47	$ 0.44	$ 0.43	$ 0.35	$ 0.44	$ 0.28	$ 0.35	$ 1.57	$ 1.42	$ 1.54
Distributed Earnings Allocated to Common Stock [Member]
Basic earnings per common share computation
Net earnings allocated to common stock									$ 10,030	$ 9,480	$ 9,460
Undistributed Earnings Allocated to Common Stock [Member]
Basic earnings per common share computation
Net earnings allocated to common stock									$ 13,695	$ 10,931	$ 12,620

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Securities - Securities Available for Sale (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 409,110	$ 493,691
Unrealized Gains	4,798	7,683
Unrealized Losses	(4,199)	(5,539)
Fair Value	409,709	495,835
U.S. Government Sponsored Entities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	108,578	139,823
Unrealized Gains	478	1,107
Unrealized Losses	(908)	(579)
Fair Value	108,148	140,351
States and Political Subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	134,428	153,492
Unrealized Gains	3,609	4,194
Unrealized Losses	(314)	(649)
Fair Value	137,723	157,037
Residential and Multi-Family Mortgage [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	111,214	136,807
Unrealized Gains	304	551
Unrealized Losses	(1,882)	(2,382)
Fair Value	109,636	134,976
Corporate Notes and Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	17,610	18,299
Unrealized Gains	52	77
Unrealized Losses	(462)	(962)
Fair Value	17,200	17,414
Pooled Trust Preferred [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	0	800
Unrealized Gains	0	1,249
Unrealized Losses	0	0
Fair Value	0	2,049
Pooled SBA [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	36,260	43,450
Unrealized Gains	355	505
Unrealized Losses	(575)	(918)
Fair Value	36,040	43,037
Other Equity Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	1,020	1,020
Unrealized Gains	0	0
Unrealized Losses	(58)	(49)
Fair Value	$ 962	$ 971

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Securities - Additional Information (Detail) $ in Thousands	12 Months Ended
	Dec. 31, 2017 USD ($) Securities	Dec. 31, 2016 USD ($) Securities	Dec. 31, 2015 USD ($)
Schedule of Available-for-sale Securities [Line Items]
Number of securities holdings | Securities	0	0
Shareholders' equity percentage	10.00%	10.00%
Securities	$ 319,575	$ 329,379
Tax provision related to net realized gains	540	352	$ 233
Proceeds from sale of trading securities	1,091	540	2,129
Net realized (losses) gains on trading securities	93	70	$ (211)
Pooled Trust Preferred [Member]
Schedule of Available-for-sale Securities [Line Items]
Pooled trust preferred securities sold	800	0
Net realized (losses) gains on trading securities	$ 1,383	$ 922

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Securities - Trading Securities (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Schedule of Trading Securities and Other Trading Assets [Line Items]
Trading securities	$ 7,150	$ 4,858
Corporate Equity Securities [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Trading securities	5,125	3,312
Mutual Funds [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Trading securities	1,499	1,037
Corporate Notes and Bonds [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Trading securities	254	254
U.S. Government Sponsored Entities [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Trading securities	52	53
Certificates of Deposit [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Trading securities	$ 220	$ 202

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Securities - Securities with Unrealized Losses Aggregated by Investment Category and Length of Time that Individual Securities have been in Continuous Unrealized Loss Position (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months, Fair Value	$ 106,735	$ 196,901
Less than 12 Months, Unrealized Loss	(771)	(2,419)
12 Months or More, Fair Value	134,831	64,882
12 Months or More, Unrealized Loss	(3,428)	(3,120)
Total, Fair Value	241,566	261,783
Total, Unrealized Loss	(4,199)	(5,539)
U.S. Government Sponsored Entities [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months, Fair Value	55,696	90,380
Less than 12 Months, Unrealized Loss	(540)	(579)
12 Months or More, Fair Value	34,754	0
12 Months or More, Unrealized Loss	(368)	0
Total, Fair Value	90,450	90,380
Total, Unrealized Loss	(908)	(579)
States and Political Subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months, Fair Value	15,890	32,353
Less than 12 Months, Unrealized Loss	(69)	(448)
12 Months or More, Fair Value	4,104	264
12 Months or More, Unrealized Loss	(245)	(201)
Total, Fair Value	19,994	32,617
Total, Unrealized Loss	(314)	(649)
Residential and Multi-Family Mortgage [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months, Fair Value	30,144	65,598
Less than 12 Months, Unrealized Loss	(153)	(1,255)
12 Months or More, Fair Value	63,699	34,611
12 Months or More, Unrealized Loss	(1,729)	(1,127)
Total, Fair Value	93,843	100,209
Total, Unrealized Loss	(1,882)	(2,382)
Corporate Notes and Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months, Fair Value	5,005	2,089
Less than 12 Months, Unrealized Loss	(9)	(11)
12 Months or More, Fair Value	9,042	8,476
12 Months or More, Unrealized Loss	(453)	(951)
Total, Fair Value	14,047	10,565
Total, Unrealized Loss	(462)	(962)
Pooled SBA [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months, Fair Value	0	6,481
Less than 12 Months, Unrealized Loss	0	(126)
12 Months or More, Fair Value	22,270	20,560
12 Months or More, Unrealized Loss	(575)	(792)
Total, Fair Value	22,270	27,041
Total, Unrealized Loss	(575)	(918)
Other Equity Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Less than 12 Months, Fair Value	0	0
Less than 12 Months, Unrealized Loss	0	0
12 Months or More, Fair Value	962	971
12 Months or More, Unrealized Loss	(58)	(49)
Total, Fair Value	962	971
Total, Unrealized Loss	$ (58)	$ (49)

XML

Securities - Roll-Forward of Other-Than-Temporary Impairment Amount Related to Credit Losses (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Marketable Securities [Abstract]
Balance of credit losses on debt securities for which a portion of other-than-temporary impairment was recognized in earnings, beginning of period	$ 2,071	$ 4,054	$ 4,054
Credit losses previously recognized on securities sold during the period	(2,071)	(1,983)	0
Additional credit loss for which other-than-temporary impairment was not previously recognized	0	0	0
Additional credit loss for which other-than-temporary impairment was previously recognized	0	0	0
Balance of credit losses on debt securities for which a portion of other-than-temporary impairment was recognized in earnings, end of period	$ 0	$ 2,071	$ 4,054

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Securities - Schedule of Contractual Maturity of Securities Available for Sale, Excluding Equity Securities (Detail) $ in Thousands	Dec. 31, 2017 USD ($)
Schedule of Available-for-sale Securities [Line Items]
1 year or less, Amortized Cost	$ 50,368
1 year - 5 years, Amortized Cost	153,512
5 years - 10 years, Amortized Cost	50,552
After 10 years, Amortized Cost	6,184
Total, Amortized Cost	260,616
1 year or less, Fair Value	50,139
1 year - 5 years, Fair Value	155,075
5 years - 10 years, Fair Value	51,753
After 10 years, Fair Value	6,104
Total, Fair Value	263,071
Total debt securities, Amortized Cost	408,090
Total debt securities, Fair Value	408,747
Residential and Multi-Family Mortgage [Member]
Schedule of Available-for-sale Securities [Line Items]
Mortgage & asset backed securities, Amortized Cost	111,214
Mortgage & asset backed securities, Fair Value	109,636
Pooled SBA [Member]
Schedule of Available-for-sale Securities [Line Items]
Mortgage & asset backed securities, Amortized Cost	36,260
Mortgage & asset backed securities, Fair Value	$ 36,040

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Securities - Information Pertaining to Security Sales (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Investments, Debt and Equity Securities [Abstract]
Proceeds	$ 16,340	$ 4,420	$ 105,066
Gross Gains	1,614	1,005	1,032
Gross Losses	$ 71	$ 0	$ 366

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Loans - Schedule of Net Loans (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Loan Portfolio By Loan Grade [Line Items]
Commercial, industrial, and agricultural	$ 749,138	$ 567,800
Commercial mortgages	600,065	574,826
Residential real estate	713,347	652,883
Credit cards	6,753	6,046
Overdrafts	352	595
Less: unearned discount	(3,889)	(3,430)
Less: allowance for loan losses	(19,693)	(16,330)
Net loans	2,126,266	1,857,206
Consumer Portfolio Segment [Member]
Loan Portfolio By Loan Grade [Line Items]
Consumer	$ 80,193	$ 74,816

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Loans - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2017 USD ($) Loans	Dec. 31, 2016 USD ($) Loans	Dec. 31, 2015 USD ($) Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Net unamortized loan (fees) costs	$ (2,574,000)	$ (1,507,000)
Percentage of comprised loan, commercial, industrial and agricultural loans	35.00%	30.00%
Percentage of comprised loan, commercial mortgage loans	28.00%	31.00%
Percentage of loan-to-value to business equipment	80.00%
Percentage of loan-to-value to accounts receivable	75.00%
Percentage of loan-to-value to business inventory	60.00%
Percentage of loan-to-value to real estate	85.00%
Percentage of residential real estate loan in portfolio	33.00%	35.00%
Allowance for loan losses, period increase (decrease)	$ 4,024,000	$ 0	$ 0
Minimum period to be considered for loan to have defaulted	90 days
Principal balances forgiven in connection with loan restructuring	$ 0	0
Loans modified in a troubled debt restructuring	$ 17,303,000	$ 11,831,000
Number of Loans | Loans	19	15
Charge-offs	$ 4,077,000	$ 4,961,000	$ 3,718,000
Outstanding balance of semi annual loans	Greater than $1 million
Outstanding balance of annual loans	Less than $1 million
Trouble Debt Restructuring [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Loans | Loans	6	1	1
Maximum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Maximum percentage of consumer loan and credit card in portfolio	10.00%	10.00%
Reduction in stated interest rate modification having loan range period	15 years
Extension of maturity date modification having loan range period	18 years
Minimum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Reduction in stated interest rate modification having loan range period	4 years
Extension of maturity date modification having loan range period	4 years
Commercial and Industrial [Member] | Trouble Debt Restructuring [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans modified in a troubled debt restructuring	$ 2,750,000	$ 109,000	$ 1,327,000
Number of Loans | Loans	4	1	1
Additional provision for loan losses	$ 129,000	$ 0	$ 0
Charge-offs	0	0	0
Commercial Mortgages [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans modified in a troubled debt restructuring	$ 12,090,000	$ 9,191,000
Number of Loans | Loans	9	8
Charge-offs	$ 116,000	$ 201,000	$ 486,000
Commercial Mortgages [Member] | Trouble Debt Restructuring [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans modified in a troubled debt restructuring	$ 6,421,000
Number of Loans | Loans	2	0	0
Additional provision for loan losses	$ 3,895,000
Charge-offs	$ 0

XML

Loans - Allowance for Loan Losses (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Beginning Balance				$ 16,330				$ 16,737	$ 16,330	$ 16,737	$ 17,373
Charge-offs									(4,077)	(4,961)	(3,718)
Recoveries									785	405	522
Provision for loan losses	$ 3,105	$ 1,400	$ 1,134	1,016	$ 2,111	$ 622	$ 220	1,196	6,655	4,149	2,560
Allowance for loan losses, Ending Balance	19,693				16,330				19,693	16,330	16,737
Commercial, Industrial, and Agricultural [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Beginning Balance				5,428				6,035	5,428	6,035	7,114
Charge-offs									(544)	(601)	(307)
Recoveries									235	89	267
Provision for loan losses									1,041	(95)	(1,039)
Allowance for loan losses, Ending Balance	6,160				5,428				6,160	5,428	6,035
Commercial Mortgages [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Beginning Balance				6,753				5,605	6,753	5,605	5,310
Charge-offs									(116)	(201)	(486)
Recoveries									197	8	52
Provision for loan losses									2,173	1,341	729
Allowance for loan losses, Ending Balance	9,007				6,753				9,007	6,753	5,605
Residential Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Beginning Balance				1,653				2,475	1,653	2,475	2,479
Charge-offs									(466)	(499)	(632)
Recoveries									78	93	8
Provision for loan losses									768	(416)	620
Allowance for loan losses, Ending Balance	2,033				1,653				2,033	1,653	2,475
Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Beginning Balance				2,215				2,371	2,215	2,371	2,205
Charge-offs									(2,555)	(3,324)	(1,956)
Recoveries									161	122	96
Provision for loan losses									2,358	3,046	2,026
Allowance for loan losses, Ending Balance	2,179				2,215				2,179	2,215	2,371
Credit Cards [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Beginning Balance				93				90	93	90	71
Charge-offs									(144)	(96)	(116)
Recoveries									27	22	14
Provision for loan losses									144	77	121
Allowance for loan losses, Ending Balance	120				93				120	93	90
Overdrafts [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses, Beginning Balance				$ 188				$ 161	188	161	194
Charge-offs									(252)	(240)	(221)
Recoveries									87	71	85
Provision for loan losses									171	196	103
Allowance for loan losses, Ending Balance	$ 194				$ 188				$ 194	$ 188	$ 161

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Loans - Allowance for Loan Losses and Recorded Investment in Loans by Portfolio Segment (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Ending allowance balance attributable to loans:
Allowance for loan losses, Individually evaluated for impairment	$ 47	$ 1,184
Allowance for loan losses, Collectively evaluated for impairment	13,957	12,807
Allowance for loan losses, Modified in a troubled debt restructuring	5,689	2,339
Acquired with deteriorated credit quality	19,693	16,330	$ 16,737	$ 17,373
Loans:
Loans individually evaluated for impairment	1,238	6,951
Loans collectively evaluated for impairment	2,130,228	1,856,452
Acquired with deteriorated credit quality	1,349,203	1,142,626
Loans modified in a troubled debt restructuring	17,303	11,831
Total ending loans balance	2,149,848	1,876,966
Receivables Acquired with Deteriorated Credit Quality [Member]
Ending allowance balance attributable to loans:
Acquired with deteriorated credit quality	0	0
Loans:
Acquired with deteriorated credit quality	1,079	1,732
Commercial, Industrial, and Agricultural [Member]
Ending allowance balance attributable to loans:
Allowance for loan losses, Individually evaluated for impairment	47	188
Allowance for loan losses, Collectively evaluated for impairment	5,868	5,115
Allowance for loan losses, Modified in a troubled debt restructuring	245	125
Acquired with deteriorated credit quality	6,160	5,428	6,035	7,114
Loans:
Loans individually evaluated for impairment	1,187	775
Loans collectively evaluated for impairment	742,738	564,180
Acquired with deteriorated credit quality	749,138	567,800
Loans modified in a troubled debt restructuring	5,213	2,640
Total ending loans balance	749,138	567,800
Commercial, Industrial, and Agricultural [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Ending allowance balance attributable to loans:
Acquired with deteriorated credit quality	0	0
Loans:
Acquired with deteriorated credit quality	0	205
Commercial Mortgages [Member]
Ending allowance balance attributable to loans:
Allowance for loan losses, Individually evaluated for impairment	0	996
Allowance for loan losses, Collectively evaluated for impairment	3,563	3,543
Allowance for loan losses, Modified in a troubled debt restructuring	5,444	2,214
Acquired with deteriorated credit quality	9,007	6,753	5,605	5,310
Loans:
Loans individually evaluated for impairment	51	6,176
Loans collectively evaluated for impairment	586,845	557,932
Acquired with deteriorated credit quality	600,065	574,826
Loans modified in a troubled debt restructuring	12,090	9,191
Total ending loans balance	600,065	574,826
Commercial Mortgages [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Ending allowance balance attributable to loans:
Acquired with deteriorated credit quality	0	0
Loans:
Acquired with deteriorated credit quality	1,079	1,527
Residential Real Estate [Member]
Ending allowance balance attributable to loans:
Allowance for loan losses, Individually evaluated for impairment	0	0
Allowance for loan losses, Collectively evaluated for impairment	2,033	1,653
Allowance for loan losses, Modified in a troubled debt restructuring	0	0
Acquired with deteriorated credit quality	2,033	1,653	2,475	2,479
Loans:
Loans individually evaluated for impairment	0	0
Loans collectively evaluated for impairment	713,347	652,883
Loans modified in a troubled debt restructuring	0	0
Total ending loans balance	713,347	652,883
Residential Real Estate [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Ending allowance balance attributable to loans:
Acquired with deteriorated credit quality	0	0
Loans:
Acquired with deteriorated credit quality	0	0
Consumer [Member]
Ending allowance balance attributable to loans:
Allowance for loan losses, Individually evaluated for impairment	0	0
Allowance for loan losses, Collectively evaluated for impairment	2,179	2,215
Allowance for loan losses, Modified in a troubled debt restructuring	0	0
Acquired with deteriorated credit quality	2,179	2,215	2,371	2,205
Loans:
Loans individually evaluated for impairment	0	0
Loans collectively evaluated for impairment	80,193	74,816
Loans modified in a troubled debt restructuring	0	0
Total ending loans balance	80,193	74,816
Consumer [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Ending allowance balance attributable to loans:
Acquired with deteriorated credit quality	0	0
Loans:
Acquired with deteriorated credit quality	0	0
Credit Cards [Member]
Ending allowance balance attributable to loans:
Allowance for loan losses, Individually evaluated for impairment	0	0
Allowance for loan losses, Collectively evaluated for impairment	120	93
Allowance for loan losses, Modified in a troubled debt restructuring	0	0
Acquired with deteriorated credit quality	120	93	90	71
Loans:
Loans individually evaluated for impairment	0	0
Loans collectively evaluated for impairment	6,753	6,046
Loans modified in a troubled debt restructuring	0	0
Total ending loans balance	6,753	6,046
Credit Cards [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Ending allowance balance attributable to loans:
Acquired with deteriorated credit quality	0	0
Loans:
Acquired with deteriorated credit quality	0	0
Overdrafts [Member]
Ending allowance balance attributable to loans:
Allowance for loan losses, Individually evaluated for impairment	0	0
Allowance for loan losses, Collectively evaluated for impairment	194	188
Allowance for loan losses, Modified in a troubled debt restructuring	0	0
Acquired with deteriorated credit quality	194	188	$ 161	$ 194
Loans:
Loans individually evaluated for impairment	0	0
Loans collectively evaluated for impairment	352	595
Loans modified in a troubled debt restructuring	0	0
Total ending loans balance	352	595
Overdrafts [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Ending allowance balance attributable to loans:
Acquired with deteriorated credit quality	0	0
Loans:
Acquired with deteriorated credit quality	$ 0	$ 0

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Loans - Loans Individually Evaluated for Impairment Including Loans Modified in Troubled Debt Restructurings by Portfolio Segment (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance, Total	$ 20,330	$ 20,513
Recorded Investment, Total	18,541	18,782
Allowance for Loan Losses Allocated	5,736	3,523
Commercial, Industrial, and Agricultural [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance, Related Allowance	1,915	1,644
Recorded Investment, Related Allowance	1,915	1,644
Allowance for Loan Losses Allocated	292	313
Unpaid Principal Balance, No Related Allowance	5,264	2,669
Recorded Investment, No Related Allowance	4,485	1,771
Allowance for Loan Losses Allocated, No Related Allowance	0	0
Commercial Mortgages [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance, Related Allowance	9,940	16,200
Recorded Investment, Related Allowance	9,731	15,367
Allowance for Loan Losses Allocated	5,444	3,210
Unpaid Principal Balance, No Related Allowance	3,211	0
Recorded Investment, No Related Allowance	2,410	0
Allowance for Loan Losses Allocated, No Related Allowance	0	0
Residential Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Unpaid Principal Balance, Related Allowance	0	0
Recorded Investment, Related Allowance	0	0
Allowance for Loan Losses Allocated	0	0
Unpaid Principal Balance, No Related Allowance	0	0
Recorded Investment, No Related Allowance	0	0
Allowance for Loan Losses Allocated, No Related Allowance	$ 0	$ 0

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Loans - Impaired Financing Receivables with Related and not Related Allowances (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Financing Receivable, Impaired [Line Items]
Average Recorded Investment, Total	$ 18,369	$ 15,867	$ 20,931
Interest Income Recognized, Total	660	8	85
Cash Basis Interest Recognized, Total	660	8	85
Commercial, Industrial, and Agricultural [Member]
Financing Receivable, Impaired [Line Items]
Average Recorded Investment, Related Allowance	1,513	2,616	5,667
Interest Income Recognized, Related Allowance	97	2	44
Cash Basis Interest Recognized, Related Allowance	97	2	44
Average Recorded Investment, No Related Allowance	2,438	2,290	1,831
Interest Income Recognized, No Related Allowance	114	0	14
Cash Basis Interest Recognized, No Related Allowance	114	0	14
Commercial Mortgages [Member]
Financing Receivable, Impaired [Line Items]
Average Recorded Investment, Related Allowance	11,944	8,138	8,154
Interest Income Recognized, Related Allowance	327	0	0
Cash Basis Interest Recognized, Related Allowance	327	0	0
Average Recorded Investment, No Related Allowance	2,474	2,773	4,806
Interest Income Recognized, No Related Allowance	122	0	0
Cash Basis Interest Recognized, No Related Allowance	122	0	0
Residential Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Average Recorded Investment, Related Allowance	0	50	370
Interest Income Recognized, Related Allowance	0	6	21
Cash Basis Interest Recognized, Related Allowance	0	6	21
Average Recorded Investment, No Related Allowance	0	0	103
Interest Income Recognized, No Related Allowance	0	0	6
Cash Basis Interest Recognized, No Related Allowance	$ 0	$ 0	$ 6

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Loans - Nonaccrual Loans and Loans Past Due over 90 Days Still Accruing Interest by Class of Loans (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	$ 19,232	$ 15,329
Past Due Over 90 Days Still on Accrual	477	10
Commercial, Industrial, and Agricultural [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	1,869	2,734
Past Due Over 90 Days Still on Accrual	78	0
Commercial Mortgages [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	11,065	5,996
Past Due Over 90 Days Still on Accrual	0	0
Residential Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	5,470	5,600
Past Due Over 90 Days Still on Accrual	338	0
Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	828	999
Past Due Over 90 Days Still on Accrual	17	0
Credit Cards [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonaccrual	0	0
Past Due Over 90 Days Still on Accrual	$ 44	$ 10

XML

Loans - Aging of Recorded Investment in Past Due Loans (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	$ 14,761	$ 14,455
Loans Not Past Due	2,135,087	1,862,511
Total	2,149,848	1,876,966
30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	5,753	5,025
60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	2,457	1,926
Greater than 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	6,551	7,504
Commercial, Industrial, and Agricultural [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	4,139	3,151
Loans Not Past Due	744,999	564,649
Total	749,138	567,800
Commercial, Industrial, and Agricultural [Member] | 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	2,745	1,558
Commercial, Industrial, and Agricultural [Member] | 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	646	299
Commercial, Industrial, and Agricultural [Member] | Greater than 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	748	1,294
Commercial Mortgages [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	525	2,075
Loans Not Past Due	599,540	572,751
Total	600,065	574,826
Commercial Mortgages [Member] | 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	233	559
Commercial Mortgages [Member] | 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Commercial Mortgages [Member] | Greater than 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	292	1,516
Residential Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	8,439	6,602
Loans Not Past Due	704,908	646,281
Total	713,347	652,883
Residential Real Estate [Member] | 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	2,290	2,155
Residential Real Estate [Member] | 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	1,494	737
Residential Real Estate [Member] | Greater than 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	4,655	3,710
Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	1,573	2,512
Loans Not Past Due	78,620	72,304
Total	80,193	74,816
Consumer [Member] | 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	454	648
Consumer [Member] | 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	307	890
Consumer [Member] | Greater than 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	812	974
Credit Cards [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	85	115
Loans Not Past Due	6,668	5,931
Total	6,753	6,046
Credit Cards [Member] | 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	31	105
Credit Cards [Member] | 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	10	0
Credit Cards [Member] | Greater than 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	44	10
Overdrafts [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Loans Not Past Due	352	595
Total	352	595
Overdrafts [Member] | 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Overdrafts [Member] | 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Overdrafts [Member] | Greater than 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	$ 0	$ 0

XML

Loans - Restructured in Troubled Debt (Detail) $ in Thousands	12 Months Ended
	Dec. 31, 2017 USD ($) Loans	Dec. 31, 2016 USD ($) Loans
Financing Receivable, Modifications [Line Items]
Number of Loans | Loans	19	15
Loan Balance	$ 17,303	$ 11,831
Specific Reserve	$ 5,689	$ 2,339
Commercial, Industrial, and Agricultural [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans | Loans	10	7
Loan Balance	$ 5,213	$ 2,640
Specific Reserve	$ 245	$ 125
Commercial Mortgages [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans | Loans	9	8
Loan Balance	$ 12,090	$ 9,191
Specific Reserve	$ 5,444	$ 2,214
Residential Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans | Loans	0	0
Loan Balance	$ 0	$ 0
Specific Reserve	$ 0	$ 0
Consumer [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans | Loans	0	0
Loan Balance	$ 0	$ 0
Specific Reserve	$ 0	$ 0
Credit Cards [Member]
Financing Receivable, Modifications [Line Items]
Number of Loans | Loans	0	0
Loan Balance	$ 0	$ 0
Specific Reserve	$ 0	$ 0

XML

Loans - Loans by Class Modified as Troubled Debt Restructurings (Detail) $ in Thousands	12 Months Ended
	Dec. 31, 2017 USD ($) Loans	Dec. 31, 2016 USD ($) Loans	Dec. 31, 2015 USD ($) Loans
Schedule Of Financial Receivables [Line Items]
Number of Loans | Loans	19	15
Commercial, Industrial, and Agricultural [Member]
Schedule Of Financial Receivables [Line Items]
Number of Loans | Loans	10	7
Commercial Mortgages [Member]
Schedule Of Financial Receivables [Line Items]
Number of Loans | Loans	9	8
Residential Real Estate [Member]
Schedule Of Financial Receivables [Line Items]
Number of Loans | Loans	0	0
Consumer [Member]
Schedule Of Financial Receivables [Line Items]
Number of Loans | Loans	0	0
Credit Cards [Member]
Schedule Of Financial Receivables [Line Items]
Number of Loans | Loans	0	0
Trouble Debt Restructuring [Member]
Schedule Of Financial Receivables [Line Items]
Number of Loans | Loans	6	1	1
Pre-Modification Outstanding Recorded Investment | $	$ 9,171	$ 109	$ 1,327
Post-Modification Outstanding Recorded Investment | $	$ 9,171	$ 109	$ 1,327
Trouble Debt Restructuring [Member] | Commercial, Industrial, and Agricultural [Member]
Schedule Of Financial Receivables [Line Items]
Number of Loans | Loans	4	1	1
Pre-Modification Outstanding Recorded Investment | $	$ 2,750	$ 109	$ 1,327
Post-Modification Outstanding Recorded Investment | $	$ 2,750	$ 109	$ 1,327
Trouble Debt Restructuring [Member] | Commercial Mortgages [Member]
Schedule Of Financial Receivables [Line Items]
Number of Loans | Loans	2	0	0
Pre-Modification Outstanding Recorded Investment | $	$ 6,421	$ 0	$ 0
Post-Modification Outstanding Recorded Investment | $	$ 6,421	$ 0	$ 0
Trouble Debt Restructuring [Member] | Residential Real Estate [Member]
Schedule Of Financial Receivables [Line Items]
Number of Loans | Loans	0	0	0
Pre-Modification Outstanding Recorded Investment | $	$ 0	$ 0	$ 0
Post-Modification Outstanding Recorded Investment | $	$ 0	$ 0	$ 0
Trouble Debt Restructuring [Member] | Consumer [Member]
Schedule Of Financial Receivables [Line Items]
Number of Loans | Loans	0	0	0
Pre-Modification Outstanding Recorded Investment | $	$ 0	$ 0	$ 0
Post-Modification Outstanding Recorded Investment | $	$ 0	$ 0	$ 0
Trouble Debt Restructuring [Member] | Credit Cards [Member]
Schedule Of Financial Receivables [Line Items]
Number of Loans | Loans	0	0	0
Pre-Modification Outstanding Recorded Investment | $	$ 0	$ 0	$ 0
Post-Modification Outstanding Recorded Investment | $	$ 0	$ 0	$ 0

XML

Loans - Schedule of Loan Assigned Risk Rating within 12 Months of Balance Sheet Date (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Financing Receivable, Recorded Investment [Line Items]
Financing receivable recorded investment	$ 1,349,203	$ 1,142,626
Commercial, Industrial, and Agricultural [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivable recorded investment	749,138	567,800
Commercial Mortgages [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivable recorded investment	600,065	574,826
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivable recorded investment	1,294,733	1,082,794
Pass [Member] | Commercial, Industrial, and Agricultural [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivable recorded investment	713,102	531,320
Pass [Member] | Commercial Mortgages [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivable recorded investment	581,631	551,474
Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivable recorded investment	21,145	16,447
Special Mention [Member] | Commercial, Industrial, and Agricultural [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivable recorded investment	16,726	14,638
Special Mention [Member] | Commercial Mortgages [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivable recorded investment	4,419	1,809
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivable recorded investment	33,325	43,374
Substandard [Member] | Commercial, Industrial, and Agricultural [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivable recorded investment	19,310	21,831
Substandard [Member] | Commercial Mortgages [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivable recorded investment	14,015	21,543
Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivable recorded investment	0	11
Doubtful [Member] | Commercial, Industrial, and Agricultural [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivable recorded investment	0	11
Doubtful [Member] | Commercial Mortgages [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing receivable recorded investment	$ 0	$ 0

XML

Loans - Recorded Investment in Residential, Consumer and Credit Card Loans Based on Payment Activity (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Financing Receivable, Recorded Investment [Line Items]
Residential real estate	$ 713,347	$ 652,883
Credit cards	6,753	6,046
Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Consumer	80,193	74,816
Performing [Member]
Financing Receivable, Recorded Investment [Line Items]
Residential real estate	707,539	647,283
Credit cards	6,709	6,036
Performing [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Consumer	79,348	73,817
Non-Performing [Member]
Financing Receivable, Recorded Investment [Line Items]
Residential real estate	5,808	5,600
Credit cards	44	10
Non-Performing [Member] | Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Consumer	$ 845	$ 999

XML

Loans - Summary of Holiday's Loan Portfolio Included in Consumer and Residential Loans (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Accounts, Notes, Loans and Financing Receivable [Line Items]
Residential real estate	$ 713,347	$ 652,883
Less: unearned discount	(3,889)	(3,430)
Consumer Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Consumer	80,193	74,816
Holiday Financial Services Corporation [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Residential real estate	0	1,209
Less: unearned discount	(3,889)	(3,430)
Total	19,539	21,805
Holiday Financial Services Corporation [Member] | Consumer Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Consumer	$ 23,428	$ 24,026

XML

Secondary Market Mortgage Activities - Summary of Secondary Market Mortgage Activities (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Mortgage Banking [Abstract]
Loans originated for resale	$ 25,231	$ 31,255	$ 15,171
Proceeds from sales of loans held for sale	24,285	33,045	14,927
Net gains on sales of loans held for sale	545	818	630
Loan servicing fees	$ 563	$ 421	$ 390

XML

Secondary Market Mortgage Activities - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Debt Disclosure [Abstract]
Total loans serviced to others	$ 159,208,000	$ 157,073,000
Valuation allowance	$ 0	$ 0	$ 0

XML

Secondary Market Mortgage Activities - Summary of Activity for Capital Mortgage Servicing Rights (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Mortgage Banking [Abstract]
Balance, beginning of year	$ 1,391	$ 962	$ 856
Additions	198	200	380
Servicing rights acquired	0	367	0
Amortization	(202)	(138)	(274)
Balance, end of year	$ 1,387	$ 1,391	$ 962

XML

Premises and Equipment - Summary of Premises and Equipment (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Property, Plant and Equipment [Line Items]
Premises and equipment, gross	$ 93,359	$ 90,026
Less: accumulated depreciation	42,644	40,504
Premises and equipment, net	50,715	49,522
Land [Member]
Property, Plant and Equipment [Line Items]
Premises and equipment, gross	8,147	7,324
Premises and Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Premises and equipment, gross	53,903	48,563
Furniture, Fixtures and Equipment [Member]
Property, Plant and Equipment [Line Items]
Premises and equipment, gross	31,238	30,125
Construction in Process [Member]
Property, Plant and Equipment [Line Items]
Premises and equipment, gross	$ 71	$ 4,014

XML

Premises and Equipment - Additional Information (Detail) $ in Thousands	12 Months Ended
	Dec. 31, 2017 USD ($) Renewal_Terms Lease	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)
Property, Plant and Equipment [Line Items]
Depreciation on premises and equipment	$ 3,811	$ 3,215	$ 2,759
Rental expense, net of rental income	$ 870	773	699
Sale leaseback transaction, lease term	17 years
Sale leaseback transaction, number of automatic renewals | Renewal_Terms	2
Sale leaseback transaction, two automatic lease renewal, period	5 years
Sale leaseback transaction, sale of property, amount	$ 1,200
Sale leaseback transaction, deferred gain	489
Sale leaseback transaction, gain recognized	$ 25	$ 25	$ 22
Facilities [Member]
Property, Plant and Equipment [Line Items]
Non-cancelable operating leases having remaining term less than one year | Lease	19
Vehicles [Member]
Property, Plant and Equipment [Line Items]
Non-cancelable operating leases having remaining term less than one year | Lease	11

XML

Premises and Equipment - Summary of Minimum Annual Rental Commitments Under Operating Lease (Detail) $ in Thousands	Dec. 31, 2017 USD ($)
Property, Plant and Equipment [Abstract]
2018	$ 1,167
2019	1,021
2020	836
2021	736
2022	578
Thereafter	3,530
Total	$ 7,868

XML

Premises and Equipment - Summary of Minimum Annual Rental Commitments Under Sale Lease Back (Detail) $ in Thousands	Dec. 31, 2017 USD ($)
Property, Plant and Equipment [Abstract]
2018	$ 105
2019	105
2020	105
2021	105
2022	105
Thereafter	420
Total	$ 945

XML

Foreclosed Assets - Summary of Foreclosed Assets Activity (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Banking and Thrift [Abstract]
Balance, beginning of year	$ 1,015	$ 654	$ 806
Acquired from Lake National Bank	0	665	0
Additions	630	120	806
Sales (at carrying value)	(935)	(424)	(958)
Balance, end of year	$ 710	$ 1,015	$ 654

XML

Foreclosed Assets - Summary of Expenses Related to Foreclosed Real Estate (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Banking and Thrift [Abstract]
Net (gain) loss on sale	$ (208)	$ (134)	$ 3
Operating expenses, net of rental income	366	223	169
Total	$ 158	$ 89	$ 172

XML

Goodwill and Intangible Assets - Summary of Change in the Carrying Amount of Goodwill (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
Balance, beginning of year	$ 38,730	$ 27,194
Acquired during the year	0	11,536
Balance, end of year	$ 38,730	$ 38,730

XML

Goodwill and Intangible Assets - Additional Information (Detail) $ in Thousands	12 Months Ended
	Dec. 31, 2017 USD ($) Unit	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Dec. 31, 2013 USD ($)
Goodwill [Line Items]
Number of reporting unit | Unit	1
Core Deposit [Member]
Goodwill [Line Items]
Intangible asset				$ 4,834
Amortization expense	$ 662	$ 835	$ 1,008
Net carrying value	899	1,561
Core Deposit [Member] | Lake National Bank of Mentor, Ohio [Member]
Goodwill [Line Items]
Intangible asset		1,583
Amortization expense	567	290
Net carrying value	$ 726	$ 1,293

XML

Goodwill and Intangible Assets - Estimated Amortization Expense of Core Deposit Intangible Assets (Detail) $ in Thousands	Dec. 31, 2017 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2018	$ 898
2019	567
2020	160
2021	0
2022	$ 0

XML

Deposits - Summary of Time Certificates of Deposit Accounts Included in Total Deposits and Their Remaining Maturities (Detail) $ in Thousands	Dec. 31, 2017 USD ($)
Deposits [Abstract]
2018	$ 125,809
2019	128,602
2020	91,799
2021	7,954
2022	6,881
Thereafter	3,926
Total	$ 364,971

XML

Deposits - Additional Information (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Deposits [Abstract]
Certificates of deposit of $250 thousand or more	$ 108,992	$ 25,650
Brokered deposits	$ 3,500	$ 0

XML

Borrowings - Additional Information (Detail)	1 Months Ended		12 Months Ended
	Sep. 30, 2016 USD ($)	Mar. 31, 2007 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Dec. 31, 2007 USD ($) Security
Borrowings Under Repurchase Agreements [Line Items]
Unsecured line of credit facility, maximum borrowing capacity			$ 10,000,000	$ 10,000,000
Line of credit, outstanding amount			0	$ 0
FHLB borrowings, available capacity			532,809,000
FHLB borrowings, pledge of selected securities, loan covered amount			8,068,000
FHLB borrowings, pledge on certain loans, loan covered amount			1,085,644,000
Borrowings from unaffiliated entities, interest rate				5.25%
Issuance of preferred securities | Security						2
Proceeds from subordinated borrowings	$ 50,000,000		$ 0	$ 50,000,000	$ 0
Fixed Interest rate loan	5.75%
London Interbank Offered Rate (LIBOR) [Member]
Borrowings Under Repurchase Agreements [Line Items]
Interest rate	4.55%
Unaffiliated Institution [Member]
Borrowings Under Repurchase Agreements [Line Items]
Borrowings from unaffiliated entities, transaction amount		$ 10,000,000
Borrowings securities pledged under certain transaction				11,416,000
Borrowing maturity date			Mar. 20, 2017
Over Night Borrowings [Member] | Unaffiliated institution 1 [Member]
Borrowings Under Repurchase Agreements [Line Items]
Borrowings under US treasury			$ 0	$ 0
Subordinated Debentures [Member]
Borrowings Under Repurchase Agreements [Line Items]
Issue of floating rate trust preferred securities						$ 10,000,000
Trust preferred securities, interest payment deferment period maximum			5 years
Borrowings, floating interest rate description			Floats based on the 3 month LIBOR plus 1.55% and was 3.14% at December 31, 2017 and 2.51% at December 31, 2016.
Line of credit, basis spread on LIBOR			1.55%
Trust preferred securities, period end interest rate			3.14%	2.51%
Trust preferred securities, redemption year maximum			2037

XML

Borrowings - Schedule of Remaining Borrowing Capacity with FHLB (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Borrowings Under Repurchase Agreements [Line Items]
Borrowings	$ 257,359	$ 227,004
Interest Rate 1.54% and 0.74% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Borrowings	34,416	103,969
Interest Rate 0.83% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Borrowings	$ 0	15,016
Maturity date	Sep. 06, 2017
Interest Rate 1.25% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Borrowings	$ 0	15,093
Maturity date	Dec. 15, 2017
Interest Rate 1.05% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Borrowings	$ 7,550	17,523
Maturity date	Sep. 06, 2018
Interest Rate 1.66% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Borrowings	$ 30,000	0
Maturity date	Jun. 28, 2019
Interest Rate 1.17% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Borrowings	$ 11,752	18,360
Maturity date	Sep. 06, 2019
Interest Rate 1.35% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Borrowings	$ 8,883	13,865
Maturity date	Sep. 16, 2019
Interest Rate 1.82% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Borrowings	$ 30,000	0
Maturity date	Jun. 29, 2020
Interest Rate 1.27% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Borrowings	$ 13,859	18,780
Maturity date	Sep. 08, 2020
Interest Rate 1.97% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Borrowings	$ 30,000	0
Maturity date	Jun. 28, 2021
Interest Rate 1.97% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Borrowings	$ 50,000	0
Maturity date	Jun. 29, 2022
Interest Rate 1.47% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Borrowings	$ 15,976	19,201
Maturity date	Sep. 06, 2022
Interest Rate 2.39% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Borrowings	$ 20,000	0
Maturity date	Dec. 05, 2022
Interest Rate 4.72% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Borrowings	$ 700	700
Maturity date	Jul. 03, 2023
Interest Rate 4.31% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Borrowings	$ 1,797	1,925
Maturity date	Sep. 05, 2023
Interest Rate 3.05% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Borrowings	$ 814	852
Maturity date	Mar. 11, 2024
Interest Rate 5.24% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Borrowings	$ 435	462
Maturity date	Jun. 11, 2024
Interest Rate 3.35% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Borrowings	$ 217	240
Maturity date	May 04, 2026
Interest Rate 4.00% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Borrowings	$ 231	252
Maturity date	Oct. 14, 2026
Interest Rate 2.96% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Borrowings	$ 729	$ 766
Maturity date	Feb. 11, 2033

XML

Borrowings - Schedule of Remaining Borrowing Capacity with FHLB (Parenthetical) (Detail) - USD ($)	Dec. 31, 2017	Dec. 31, 2016
Interest Rate 1.54% and 0.74% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Fixed rate on borrowings	1.54%	0.74%
Interest Rate 1.54% and 0.74% [Member] | Maximum [Member]
Borrowings Under Repurchase Agreements [Line Items]
Borrowings	$ 150,000,000
Interest Rate 0.83% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Fixed rate on borrowings	0.83%
Interest Rate 1.25% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Fixed rate on borrowings	1.25%
Interest Rate 1.05% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Fixed rate on borrowings	1.05%
Interest Rate 1.66% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Fixed rate on borrowings	1.66%
Interest Rate 1.17% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Fixed rate on borrowings	1.17%
Interest Rate 1.35% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Fixed rate on borrowings	1.35%
Interest Rate 1.82% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Fixed rate on borrowings	1.82%
Interest Rate 1.27% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Fixed rate on borrowings	1.27%
Interest Rate 1.97% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Fixed rate on borrowings	1.97%
Interest Rate 1.97% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Fixed rate on borrowings	1.97%
Interest Rate 1.47% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Fixed rate on borrowings	1.47%
Interest Rate 2.39% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Fixed rate on borrowings	2.39%
Interest Rate 4.72% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Fixed rate on borrowings	4.72%
Interest Rate 4.31% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Fixed rate on borrowings	4.31%
Interest Rate 3.05% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Fixed rate on borrowings	3.05%
Interest Rate 5.24% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Fixed rate on borrowings	5.24%
Interest Rate 3.35% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Fixed rate on borrowings	3.35%
Interest Rate 4.00% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Fixed rate on borrowings	4.00%
Interest Rate 2.96% [Member]
Borrowings Under Repurchase Agreements [Line Items]
Fixed rate on borrowings	2.96%

XML

Borrowings - Maturity Schedule of All Borrowed Funds (Detail) $ in Thousands	Dec. 31, 2017 USD ($)
Borrowings [Abstract]
2018	$ 62,242
2019	47,562
2020	37,505
2021	33,740
2022	72,931
Thereafter	73,999
Total borrowed funds	$ 327,979

XML

Interest Rate Swaps - Additional Information (Detail) - USD ($)		12 Months Ended
	May 03, 2011	Dec. 31, 2017	Dec. 31, 2016
Schedule Of Loans And Allowance For Loan By Class Individually And Collectively Evaluated For Impairment [Line Items]
Term of interest rate swap agreement executed	5 years
Interest rate swap inception date	May 03, 2011
Value of subordinated note hedged	$ 10,000,000
Interest rate swap effective date	Sep. 15, 2013
Interest rate		The interest rate swap involves the receipt of variable-rate amounts in exchange for fixed-rate payments from September 15, 2013 to September 15, 2018 without exchange of the underlying notional amount.
Derivatives designated as fair value hedges		$ 0	$ 0
Accumulated other comprehensive loss estimated		270,000
Collateral amount for counterparty interest rate swap		$ 1,400,000	$ 1,400,000
LIBOR Plus 155 Basis Points [Member]
Schedule Of Loans And Allowance For Loan By Class Individually And Collectively Evaluated For Impairment [Line Items]
Variable rate on the subordinated debt on effective date in case of interest rate swap		LIBOR plus 155 basis points
Variable interest rate on subordinate debt		3.14%
4.02% Fixed Rate Plus 155 Basis Points [Member]
Schedule Of Loans And Allowance For Loan By Class Individually And Collectively Evaluated For Impairment [Line Items]
Variable rate on the subordinated debt on effective date in case of interest rate swap		4.02% fixed rate plus 155 basis points
Interest rate being paid by the corporation		5.57%
Interest Rate Swaps [Member]
Schedule Of Loans And Allowance For Loan By Class Individually And Collectively Evaluated For Impairment [Line Items]
Derivative basis spread on variable rate		1.55%
Derivative fixed interest rate rate basis		4.02%

XML

Interest Rate Swaps - Amounts and Locations of Activity Related to Interest Rate Swaps Designated as Cash Flow Hedges within Corporation's Consolidated Balance Sheet and Statement of Income (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Derivative [Line Items]
Interest rate contracts	$ 194	$ 180	$ 137
Accrued Interest Payable and Other Liabilities [Member]
Derivative [Line Items]
Interest rate contract, fair value	(161)	(459)
Interest Expense - Subordinated Debentures [Member]
Derivative [Line Items]
Interest expense, Fair Value	(288)	(340)	(378)
Other Income [Member]
Derivative [Line Items]
Other income	$ 0	$ 0	$ 0

XML

Interest Rate Swaps - Amounts and Locations of Activity Related to Back-to-Back Interest Rate Swaps within Corporation's Consolidated Balance Sheet (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
3rd Party Interest Rate Swaps [Member]
Schedule Of Loans And Allowance For Loan By Class Individually And Collectively Evaluated For Impairment [Line Items]
Notional Amount	$ 11,848,000	$ 14,814,000
Average Maturity (in years)	8 years	9 years 8 months 12 days
Weighted Average Fixed Rate	4.51%	4.43%
Weighted Average Variable Rate, description	1 month LIBOR + 2.37%	1 month LIBOR + 2.35%
Weighted Average Variable Rate	2.37%	2.35%
Fair Value	$ 149,000	$ 211,000
Customer Interest Rate Swaps [Member]
Schedule Of Loans And Allowance For Loan By Class Individually And Collectively Evaluated For Impairment [Line Items]
Notional Amount	$ (11,848,000)	$ (14,814,000)
Average Maturity (in years)	8 years	9 years 8 months 12 days
Weighted Average Fixed Rate	4.51%	4.43%
Weighted Average Variable Rate, description	1 month LIBOR + 2.37%	1 month LIBOR + 2.35%
Weighted Average Variable Rate	2.37%	2.35%
Fair Value	$ (149,000)	$ (211,000)

XML

Income Taxes - Summary of Income Tax Expense (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Income Tax Disclosure [Abstract]
Current - federal	$ 8,978	$ 6,181	$ 7,777
Current - state	29	(33)	139
Deferred - federal	376	1,023	376
Deferred tax adjustment related to reduction in U.S. federal statutory income tax rate	3,009	0	0
Income tax expense	$ 12,392	$ 7,171	$ 8,292

XML

Income Taxes - Reconciliation of Income Tax Attributable to Pre-tax Income at Federal Statutory Tax Rates to Income Tax Expense (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Income Tax Disclosure [Abstract]
Tax at statutory rate, value	$ 12,688	$ 9,699	$ 10,671
Tax exempt income, net value	(1,899)	(2,054)	(1,816)
Deferred tax adjustment related to reduction in U.S. federal statutory income tax rate, value	3,009	0	0
Bank owned life insurance, value	(581)	(379)	(418)
Merger costs, value	0	170	30
Other, value	(825)	(265)	(175)
Income tax expense	$ 12,392	$ 7,171	$ 8,292
Tax at statutory rate, percent	35.00%	35.00%	35.00%
Tax exempt income, net percent	(5.20%)	(7.40%)	(6.00%)
Deferred tax adjustment related to reduction in U.S. federal statutory income tax rate, percent	8.30%	0.00%	0.00%
Bank owned life insurance, percent	(1.60%)	(1.30%)	(1.40%)
Merger costs, percent	0.00%	0.60%	0.10%
Other, percent	(2.30%)	(1.00%)	(0.50%)
Income tax expense, percent	34.20%	25.90%	27.20%

XML

Income Taxes - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Business Acquisition [Line Items]
Deferred tax adjustment related to reduction in U.S. federal statutory income tax rate, value		$ 3,009,000	$ 0	$ 0
U.S. statutory federal income tax rate		35.00%	35.00%	35.00%
Unrecognized tax benefit		$ 0	$ 0
Income tax matters accrued interest or penalties		0	0
Expense relate to interest and penalties		$ 0	$ 0	$ 0
Income tax examination, open tax year description		Tax years 2014 through 2016 remain open to federal examination.
Net operating loss carryforward, amount		$ 338,000
Annual limit on utilization of operating loss carryforward		1,455,000
Scenario, Forecast [Member]
Business Acquisition [Line Items]
U.S. statutory federal income tax rate	21.00%
Farmers Citizens Bank [Member]
Business Acquisition [Line Items]
Net operating loss carryforward, amount		$ 6,367,000
Net operating loss carryforward, expiration year		2033

XML

Income Taxes - Components of Net Deferred Tax Asset (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Deferred tax assets:
Allowance for loan losses	$ 2,840	$ 4,679
Fair value adjustments - business combination	1,135	2,530
Deferred compensation	1,903	2,891
Impaired security valuation	0	379
Net operating loss carryover	71	627
Post-retirement benefits	892	1,688
Unrealized loss on interest rate swap	34	161
Nonaccrual loan interest	390	649
Accrued expenses	699	1,282
Deferred fees and costs	598	629
Other	344	465
Deferred tax assets	8,906	15,980
Deferred tax liabilities:
Unrealized gain on securities available for sale	126	750
Premises and equipment	1,413	2,258
Unrealized gain on trading securities	156	118
Intangibles - section 197	2,593	4,735
Mortgage servicing rights	291	487
Other	78	23
Deferred tax liabilities	4,657	8,371
Net deferred tax asset	$ 4,249	$ 7,609

XML

Employee Benefit Plans - Additional Information (Detail) $ in Thousands	12 Months Ended
	Dec. 31, 2017 USD ($) Age Services	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee pretax contribution percentage	100.00%
Employees compensation	50.00%
Corporation's matching contribution and related expenses	$ 802	$ 652	$ 508
Profit sharing contributions	6.00%
Compensation percentage in excess of specified amount	5.70%
Excess of compensation	$ 127
Recognized profit sharing expense	1,755	1,276	868
Obligations of other liabilities	5,349	4,958
Expenses related employee benefit plans	648	550	608
Obligations under survivor benefit plan	1,264	1,175
Other liabilities related to survivor benefit plan	$ 89	33	$ 155
Employee retirement health care benefits plan | Age	60
Minimum service period for participation in benefit plan | Services	30
Accumulated benefit obligation	$ 2,740	$ 3,409
Amortized from accumulated other comprehensive income into net periodic benefit cost	$ 84
Weighted average discount rate net periodic benefit cost	3.49%	3.67%	3.42%
Weighted average rate accrued benefit obligations	3.13%	3.49%	3.67%
Expected costs of benefit	5.00%
Percent rate of increase in the health care trend	1.00%
Increase in health care trend rates	$ 267
Increase service and interest costs	$ 19
Percent rate of decrease in the health care trend	1.00%
Decrease in health care trend rates	$ 218
Decrease service and interest costs	$ 15
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee contribution percentage	1.00%
Total contributed by employee percentage	1.00%
Qualifying dependents age group | Age	60
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee contribution percentage	3.00%
Total contributed by employee percentage	2.00%
Qualifying dependents age group | Age	65

XML

Employee Benefit Plans - Unfunded Post Retirement Benefits Plan (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Schedule Of Sale Of Subsidiary [Abstract]
Benefit obligation at beginning of year	$ 3,409	$ 3,066	$ 2,744
Interest cost	114	108	90
Service cost	103	103	96
Actual claims	(78)	(151)	(109)
Actuarial (gain) loss	(808)	283	245
Benefit obligation at end of year	$ 2,740	$ 3,409	$ 3,066

XML

Employee Benefit Plans - Accumulated Other Comprehensive Income (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Employee Benefit Plan [Line Items]
Net actuarial loss	$ (871)	$ (1,871)
Tax effect	183	654
Other comprehensive income (loss)	(690)	(1,217)	$ (1,153)	$ (1,063)
Employee Benefit Plan [Member]
Employee Benefit Plan [Line Items]
Other comprehensive income (loss)	$ (688)	$ (1,217)

XML

Employee Benefit Plans - Recognized Net Periodic Benefit Cost and Other Comprehensive Income (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Schedule Of Sale Of Subsidiary [Abstract]
Service cost	$ 103	$ 103	$ 96
Interest cost	114	108	90
Net amortization of transition obligation and actuarial loss	192	184	173
Net periodic benefit cost	409	395	359
Net (gain) loss	(808)	282	311
Amortization of loss	(192)	(184)	(173)
Total recognized in other comprehensive income	(1,000)	98	138
Total recognized in net periodic benefit cost and other comprehensive income	$ (591)	$ 493	$ 497

XML

Deferred Compensation Plans - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2017
Compensation Related Costs [Abstract]
Maximum period for deferred compensation plan payment after individual's termination of service	10 years

XML

Deferred Compensation Plans - Summary of Changes in Deferred Compensation Plan Liability (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Compensation Related Costs [Abstract]
Balance, beginning of year	$ 2,080	$ 1,226	$ 1,087
Deferrals, dividends, and changes in fair value recorded as an expense	444	936	209
Deferred compensation payments	(21)	(82)	(70)
Balance, end of year	$ 2,503	$ 2,080	$ 1,226

XML

Stock-Based Compensation - Summary of Changes in Nonvested Restricted Stock Awards (Detail) - $ / shares	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Nonvested at beginning of period, Shares	100,726
Granted, Shares	39,673	52,750	48,300
Forfeited, Shares	(2,482)
Vested, Shares	(43,445)
Nonvested at end of period, Shares	94,472	100,726
Nonvested at beginning of period, Weighted-average Grant Date Fair Value	$ 17.36
Granted, Weighted-average Grant Date Fair Value	25.94
Forfeited, Weighted-average Grant Date Fair Value	21.12
Vested, Weighted-average Grant Date Fair Value	17.54
Nonvested at end of period, Weighted-average Grant Date Fair Value	$ 20.79	$ 17.36

XML

Stock-Based Compensation - Additional Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of shares vesting during period	$ 1,035	$ 624	$ 530
Compensation expense	$ 928	$ 820	$ 621
Number of authorized stock-based awards available for grant	219,800
Shares, granted	0	0	0
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost related to nonvested restricted stock	$ 1,243	$ 1,190
Performance Based Restricted Stock Awards [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares, granted	10,000

XML

Related Party Transactions - Additional Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Related Party Transactions [Abstract]
Aggregate of loans and credit cards total	$ 5,331	$ 4,357
Payments to fund long-term loans to related parties	1,816
Repayment total	667
Net change in outstanding credit card	25
Change in related parties	200
Deposits	$ 11,982	$ 14,434

XML

Capital Requirements and Restrictions on Retained Earnings - Additional Information (Detail) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2017 Event CapitalCategory	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2018 USD ($)
Securities Financing Transaction [Line Items]
Capital conservation buffer phase ratio		1.25%	0.625%	0.00%
Number of capital categories provided by PCA regulation | CapitalCategory		5
Number of events resulting in change in Bank's capital category | Event		0
Scenario, Forecast [Member]
Securities Financing Transaction [Line Items]
Capital conservation buffer phase ratio	2.50%
Accumulated net earnings | $					$ 30,615

XML

Capital Requirements and Restrictions on Retained Earnings - Summary of Actual and Required Capital Amounts and Ratios (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total Capital to Risk Weighted Assets, Actual Amount	$ 297,708	$ 261,530
Total Capital to Risk Weighted Assets, Actual Ratio	14.32%	14.05%
Total Capital to Risk Weighted Assets, For Capital Adequacy Purposes Amount	$ 192,341	$ 160,501
Total Capital to Risk Weighted Assets, For Capital Adequacy Purposes Ratio	9.25%	8.625%
Tier 1 (Core) Capital to Risk Weighted Assets, Actual Amount	$ 228,015	$ 195,200
Tier 1 (Core) Capital to Risk Weighted Assets, Actual Ratio	10.97%	10.49%
Tier 1 (Core) Capital to Risk Weighted Assets, For Capital Adequacy Purposes Amount	$ 150,754	$ 123,283
Tier 1 (Core) Capital to Risk Weighted Assets, For Capital Adequacy Purposes Ratio	7.25%	6.625%
Common equity Tier 1 to Risk Weighted Assets, Actual Amount	$ 208,015	$ 175,200
Common equity Tier 1 to Risk Weighted Assets, Actual Ratio	10.00%	9.41%
Common equity Tier 1 to Risk Weighted Assets, For Capital Adequacy Purposes Amount	$ 119,563	$ 95,370
Common equity Tier 1 to Risk Weighted Assets, For Capital Adequacy Purposes Ratio	5.75%	5.125%
Tier 1 (Core) Capital to Average Assets, Actual Amount	$ 228,015	$ 195,200
Tier 1 (Core) Capital to Average Assets, Actual Ratio	8.45%	7.85%
Tier 1 (Core) Capital to Average Assets, For Capital Adequacy Purposes, Amount	$ 107,969	$ 99,430
Tier 1 (Core) Capital to Average Assets, For Capital Adequacy Purposes, Ratio	4.00%	4.00%
Bank [Member]
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total Capital to Risk Weighted Assets, Actual Amount	$ 279,704	$ 242,592
Total Capital to Risk Weighted Assets, Actual Ratio	13.58%	13.19%
Total Capital to Risk Weighted Assets, For Capital Adequacy Purposes Amount	$ 190,513	$ 158,590
Total Capital to Risk Weighted Assets, For Capital Adequacy Purposes Ratio	9.25%	8.625%
Total Capital to Risk Weighted Assets, To Be Well Capitalized Under Prompt Corrective Action Provisions Amount	$ 205,960	$ 183,873
Total Capital to Risk Weighted Assets, To Be Well Capitalized Under Prompt Corrective Action Provisions Ratio	10.00%	10.00%
Tier 1 (Core) Capital to Risk Weighted Assets, Actual Amount	$ 261,643	$ 228,109
Tier 1 (Core) Capital to Risk Weighted Assets, Actual Ratio	12.70%	12.41%
Tier 1 (Core) Capital to Risk Weighted Assets, For Capital Adequacy Purposes Amount	$ 149,321	$ 121,816
Tier 1 (Core) Capital to Risk Weighted Assets, For Capital Adequacy Purposes Ratio	7.25%	6.625%
Tier 1 (Core) Capital to Risk Weighted Assets, To Be Well Capitalized Under Prompt Corrective Action Provisions, Amount	$ 164,768	$ 147,098
Tier 1 (Core) Capital to Risk Weighted Assets, To Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio	8.00%	8.00%
Common equity Tier 1 to Risk Weighted Assets, Actual Amount	$ 254,264	$ 220,730
Common equity Tier 1 to Risk Weighted Assets, Actual Ratio	12.35%	12.00%
Common equity Tier 1 to Risk Weighted Assets, For Capital Adequacy Purposes Amount	$ 118,427	$ 94,235
Common equity Tier 1 to Risk Weighted Assets, For Capital Adequacy Purposes Ratio	5.75%	5.125%
Common equity Tier 1 to Risk Weighted Assets, To Be Well Capitalized Under Prompt Corrective Action Provisions, Amount	$ 133,874	$ 119,517
Common equity Tier 1 to Risk Weighted Assets, To Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio	6.50%	6.50%
Tier 1 (Core) Capital to Average Assets, Actual Amount	$ 261,643	$ 228,109
Tier 1 (Core) Capital to Average Assets, Actual Ratio	9.80%	9.36%
Tier 1 (Core) Capital to Average Assets, For Capital Adequacy Purposes, Amount	$ 106,798	$ 97,527
Tier 1 (Core) Capital to Average Assets, For Capital Adequacy Purposes, Ratio	4.00%	4.00%
Tier 1 (Core) Capital to Average Assets, To Be Well Capitalized Under Prompt Corrective Action Provisions, Amount	$ 133,498	$ 121,909
Tier 1 (Core) Capital to Average Assets, To Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio	5.00%	5.00%

XML

Off Balance Sheet Activities - Schedule of Off-Balance Sheet Risks (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Commitments to Make Loans [Member] | Fixed Rate [Member]
Fair Value Assets Measured On Recurring Basis Unobservable Input [Line Items]
Off-balance sheet risks, amount, liability	$ 64,799	$ 57,283
Commitments to Make Loans [Member] | Variable Rate [Member]
Fair Value Assets Measured On Recurring Basis Unobservable Input [Line Items]
Off-balance sheet risks, amount, liability	210,987	202,883
Unused Lines of Credit [Member] | Fixed Rate [Member]
Fair Value Assets Measured On Recurring Basis Unobservable Input [Line Items]
Off-balance sheet risks, amount, liability	0	0
Unused Lines of Credit [Member] | Variable Rate [Member]
Fair Value Assets Measured On Recurring Basis Unobservable Input [Line Items]
Off-balance sheet risks, amount, liability	118,348	105,779
Standby Letters of Credit [Member] | Fixed Rate [Member]
Fair Value Assets Measured On Recurring Basis Unobservable Input [Line Items]
Off-balance sheet risks, amount, liability	0	0
Standby Letters of Credit [Member] | Variable Rate [Member]
Fair Value Assets Measured On Recurring Basis Unobservable Input [Line Items]
Off-balance sheet risks, amount, liability	$ 14,985	$ 4,618

XML

Off Balance Sheet Activities - Additional Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Feb. 28, 2017	Sep. 30, 2016	Oct. 31, 2015
Fair Value Assets Measured On Recurring Basis Unobservable Input [Line Items]
Commitments to make loans periods	60 days or less
Fixed Interest rate loan				5.75%
Subscription Agreement [Member] | Oxer [Member]
Fair Value Assets Measured On Recurring Basis Unobservable Input [Line Items]
Capital contributions	$ 3,290
Subscription Agreement [Member] | Oxer [Member] | Commitments to Invest [Member]
Fair Value Assets Measured On Recurring Basis Unobservable Input [Line Items]
Off-balance sheet risks, amount, liability					$ 5,000
Subscription Agreement [Member] | Tecum [Member]
Fair Value Assets Measured On Recurring Basis Unobservable Input [Line Items]
Capital contributions	$ 1,167
Subscription Agreement [Member] | Tecum [Member] | Commitments to Invest [Member]
Fair Value Assets Measured On Recurring Basis Unobservable Input [Line Items]
Off-balance sheet risks, amount, liability			$ 3,000
Minimum [Member]
Fair Value Assets Measured On Recurring Basis Unobservable Input [Line Items]
Fixed Interest rate loan	1.00%	1.19%
Fixed rate loan Maturities range	8 months	6 months
Maximum [Member]
Fair Value Assets Measured On Recurring Basis Unobservable Input [Line Items]
Fixed Interest rate loan	18.00%	18.00%
Fixed rate loan Maturities range	30 years	30 years

XML

Fair Value - Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Securities Available For Sale:
Securities available for sale	$ 409,709	$ 495,835
Trading Securities:
Trading securities	7,150	4,858
Certificates of Deposit [Member]
Trading Securities:
Trading securities	220	202
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Securities Available For Sale:
Securities available for sale	962	971
Interest rate swaps	0	0
Trading Securities:
Trading securities	7,098	4,805
Liabilities
Interest rate swaps	0	0
Significant Other Observable Inputs (Level 2) [Member]
Securities Available For Sale:
Securities available for sale	408,747	492,815
Interest rate swaps	149	211
Trading Securities:
Trading securities	52	53
Liabilities
Interest rate swaps	(310)	(670)
Significant Unobservable Inputs (Level 3) [Member]
Securities Available For Sale:
Securities available for sale	0	2,049
Interest rate swaps	0	0
Trading Securities:
Trading securities	0	0
Liabilities
Interest rate swaps	0	0
Fair Value Measurement on Recurring Basis [Member]
Securities Available For Sale:
Securities available for sale	409,709	495,835
Interest rate swaps	149	211
Trading Securities:
Trading securities	7,150	4,858
Liabilities
Interest rate swaps	(310)	(670)
Fair Value Measurement on Recurring Basis [Member] | U.S. Government Sponsored Entities [Member]
Securities Available For Sale:
Securities available for sale	108,148	140,351
Trading Securities:
Trading securities	52	53
Fair Value Measurement on Recurring Basis [Member] | States and Political Subdivisions [Member]
Securities Available For Sale:
Securities available for sale	137,723	157,037
Fair Value Measurement on Recurring Basis [Member] | Residential and Multi-Family Mortgage [Member]
Securities Available For Sale:
Securities available for sale	109,636	134,976
Fair Value Measurement on Recurring Basis [Member] | Corporate Notes and Bonds [Member]
Securities Available For Sale:
Securities available for sale	17,200	17,414
Trading Securities:
Trading securities	254	254
Fair Value Measurement on Recurring Basis [Member] | Pooled Trust Preferred [Member]
Securities Available For Sale:
Securities available for sale		2,049
Fair Value Measurement on Recurring Basis [Member] | Pooled SBA [Member]
Securities Available For Sale:
Securities available for sale	36,040	43,037
Fair Value Measurement on Recurring Basis [Member] | Other Equity Securities [Member]
Securities Available For Sale:
Securities available for sale	962	971
Fair Value Measurement on Recurring Basis [Member] | Corporate Equity Securities [Member]
Trading Securities:
Trading securities	5,125	3,312
Fair Value Measurement on Recurring Basis [Member] | Mutual Funds [Member]
Trading Securities:
Trading securities	1,499	1,037
Fair Value Measurement on Recurring Basis [Member] | Certificates of Deposit [Member]
Trading Securities:
Trading securities	220	202
Fair Value Measurement on Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Securities Available For Sale:
Securities available for sale	962	971
Interest rate swaps	0	0
Trading Securities:
Trading securities	7,098	4,805
Liabilities
Interest rate swaps	0	0
Fair Value Measurement on Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | U.S. Government Sponsored Entities [Member]
Securities Available For Sale:
Securities available for sale	0	0
Trading Securities:
Trading securities	0	0
Fair Value Measurement on Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | States and Political Subdivisions [Member]
Securities Available For Sale:
Securities available for sale	0	0
Fair Value Measurement on Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Residential and Multi-Family Mortgage [Member]
Securities Available For Sale:
Securities available for sale	0	0
Fair Value Measurement on Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Corporate Notes and Bonds [Member]
Securities Available For Sale:
Securities available for sale	0	0
Trading Securities:
Trading securities	254	254
Fair Value Measurement on Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Pooled Trust Preferred [Member]
Securities Available For Sale:
Securities available for sale		0
Fair Value Measurement on Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Pooled SBA [Member]
Securities Available For Sale:
Securities available for sale	0	0
Fair Value Measurement on Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Other Equity Securities [Member]
Securities Available For Sale:
Securities available for sale	962	971
Fair Value Measurement on Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Corporate Equity Securities [Member]
Trading Securities:
Trading securities	5,125	3,312
Fair Value Measurement on Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Mutual Funds [Member]
Trading Securities:
Trading securities	1,499	1,037
Fair Value Measurement on Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Certificates of Deposit [Member]
Trading Securities:
Trading securities	220	202
Fair Value Measurement on Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member]
Securities Available For Sale:
Securities available for sale	408,747	492,815
Interest rate swaps	149	211
Trading Securities:
Trading securities	52	53
Liabilities
Interest rate swaps	(310)	(670)
Fair Value Measurement on Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | U.S. Government Sponsored Entities [Member]
Securities Available For Sale:
Securities available for sale	108,148	140,351
Trading Securities:
Trading securities	52	53
Fair Value Measurement on Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | States and Political Subdivisions [Member]
Securities Available For Sale:
Securities available for sale	137,723	157,037
Fair Value Measurement on Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Residential and Multi-Family Mortgage [Member]
Securities Available For Sale:
Securities available for sale	109,636	134,976
Fair Value Measurement on Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Corporate Notes and Bonds [Member]
Securities Available For Sale:
Securities available for sale	17,200	17,414
Trading Securities:
Trading securities	0	0
Fair Value Measurement on Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Pooled Trust Preferred [Member]
Securities Available For Sale:
Securities available for sale		0
Fair Value Measurement on Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Pooled SBA [Member]
Securities Available For Sale:
Securities available for sale	36,040	43,037
Fair Value Measurement on Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Other Equity Securities [Member]
Securities Available For Sale:
Securities available for sale	0	0
Fair Value Measurement on Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Corporate Equity Securities [Member]
Trading Securities:
Trading securities	0	0
Fair Value Measurement on Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Mutual Funds [Member]
Trading Securities:
Trading securities	0	0
Fair Value Measurement on Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Certificates of Deposit [Member]
Trading Securities:
Trading securities	0	0
Fair Value Measurement on Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member]
Securities Available For Sale:
Securities available for sale	0	2,049
Interest rate swaps	0	0
Trading Securities:
Trading securities	0	0
Liabilities
Interest rate swaps	0	0
Fair Value Measurement on Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | U.S. Government Sponsored Entities [Member]
Securities Available For Sale:
Securities available for sale	0	0
Trading Securities:
Trading securities	0	0
Fair Value Measurement on Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | States and Political Subdivisions [Member]
Securities Available For Sale:
Securities available for sale	0	0
Fair Value Measurement on Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | Residential and Multi-Family Mortgage [Member]
Securities Available For Sale:
Securities available for sale	0	0
Fair Value Measurement on Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | Corporate Notes and Bonds [Member]
Securities Available For Sale:
Securities available for sale	0	0
Trading Securities:
Trading securities	0	0
Fair Value Measurement on Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | Pooled Trust Preferred [Member]
Securities Available For Sale:
Securities available for sale		2,049
Fair Value Measurement on Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | Pooled SBA [Member]
Securities Available For Sale:
Securities available for sale	0	0
Fair Value Measurement on Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | Other Equity Securities [Member]
Securities Available For Sale:
Securities available for sale	0	0
Fair Value Measurement on Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | Corporate Equity Securities [Member]
Trading Securities:
Trading securities	0	0
Fair Value Measurement on Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | Mutual Funds [Member]
Trading Securities:
Trading securities	0	0
Fair Value Measurement on Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member] | Certificates of Deposit [Member]
Trading Securities:
Trading securities	$ 0	$ 0

XML

Fair Value - Securities Available for Sale Measured at Fair Value on Recurring Basis Using Significant Unobservable Inputs (Level 3) (Detail) - Pooled Trust Preferred [Member] - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning Balance	$ 2,049	$ 3,413
Total gains or (losses):
Included in other comprehensive income (loss)	134	(442)
Included in realized gains on available-for-sale securities		0
Sale of available-for-sale securities	(2,183)	(922)
Ending Balance	$ 0	$ 2,049

XML

Fair Value - Quantitative Information About Level 3 Fair Value Measurements (Detail) - Pooled Trust Preferred [Member] $ in Thousands	12 Months Ended
	Dec. 31, 2016 USD ($)
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair value	$ 2,049
Collateral Default Rate [Member] | Discounted Cash Flow [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Input utilized two	0.5% in 2016 and thereafter
Yield (Weighted Average) [Member] | Discounted Cash Flow [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Input utilized one	10.00%
Prepayment Speed [Member] | Discounted Cash Flow [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Input utilized two	2.0% constant prepayment rate in 2016 and thereafter

XML

Fair Value - Assets and Liabilities Measured at Fair Value on Non-Recurring Basis (Detail) - Commercial Mortgages [Member] - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Impaired loans:
Fair value assets and liabilities measured on a nonrecurring basis	$ 11	$ 2,067
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Impaired loans:
Fair value assets and liabilities measured on a nonrecurring basis	0	0
Significant Other Observable Inputs (Level 2) [Member]
Impaired loans:
Fair value assets and liabilities measured on a nonrecurring basis	0	0
Significant Unobservable Inputs (Level 3) [Member]
Impaired loans:
Fair value assets and liabilities measured on a nonrecurring basis	$ 11	$ 2,067

XML

Fair Value - Additional Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Impaired loans, recorded investment	$ 18,541	$ 18,782
Impaired loans allowance	5,736	3,523
Collateral Dependent Loans [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Impaired loans, recorded investment	646	3,120
Impaired loans allowance	635	1,053
Impaired loans, additional negative provisions	$ (418)	$ (189)

XML

Fair Value - Quantitative Information about Level 3 Fair Value Measurements for Financial Instruments Measured at Fair Value on Non Recurring Basis (Detail) - Impaired Loans - Commercial Mortgages [Member] - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Discounted Cash Flow [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair value	$ 11
Valuation Technique	10.00%
Sales Comparison Approach and Discounted Cash Flow Method [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair value		$ 2,067
Weighted Average [Member] | Discounted Cash Flow [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Valuation Technique	10.00%
Weighted Average [Member] | Sales Comparison Approach and Discounted Cash Flow Method [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Valuation Technique		13.00%
Minimum [Member] | Sales Comparison Approach and Discounted Cash Flow Method [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Valuation Technique		10.00%
Maximum [Member] | Sales Comparison Approach and Discounted Cash Flow Method [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Valuation Technique		14.00%

XML

Fair Value - Carrying Amount and Fair Value of Financial Instruments (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
ASSETS
Cash and cash equivalents	$ 35,345	$ 29,183	$ 27,261	$ 27,928
Securities available for sale	409,709	495,835
Trading securities	7,150	4,858
Loans held for sale	852	7,528
Net loans	2,126,266	1,857,206
FHLB and other equity interests	21,517	19,186
Liabilities
Deposits	(2,167,815)	(2,017,522)
Subordinated debentures	(70,620)	(70,620)
Deposits held for sale	0	(6,456)
Carrying Amount [Member]
ASSETS
Cash and cash equivalents	35,345	29,183
Securities available for sale	409,709	495,835
Trading securities	7,150	4,858
Loans held for sale	852	7,528
Net loans	2,126,266	1,857,206
FHLB and other equity interests	21,517	19,186
Interest rate swaps	149	211
Accrued interest receivable	9,254	8,264
Liabilities
Deposits	(2,167,815)	(2,017,522)
FHLB and other borrowings	(257,359)	(237,004)
Subordinated debentures	(70,620)	(70,620)
Deposits held for sale	0	(6,456)
Interest rate swaps	(310)	(670)
Accrued interest payable	(554)	(510)
Total Fair Value [Member]
ASSETS
Cash and cash equivalents	35,345	29,183
Securities available for sale	409,709	495,835
Trading securities	7,150	4,858
Loans held for sale	853	7,553
Net loans	2,126,824	1,817,341
Interest rate swaps	149	211
Accrued interest receivable	9,254	8,264
Liabilities
Deposits	(2,165,600)	(2,005,414)
FHLB and other borrowings	(257,361)	(226,769)
Subordinated debentures	(63,575)	(61,831)
Deposits held for sale	0	(6,417)
Interest rate swaps	(310)	(670)
Accrued interest payable	(554)	(510)
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
ASSETS
Cash and cash equivalents	35,345	29,183
Securities available for sale	962	971
Trading securities	7,098	4,805
Loans held for sale	0	0
Net loans	0	0
Interest rate swaps	0	0
Accrued interest receivable	6	6
Liabilities
Deposits	(1,802,844)	(1,785,649)
FHLB and other borrowings	0	0
Subordinated debentures	0	0
Deposits held for sale	0	0
Interest rate swaps	0	0
Accrued interest payable	0	0
Significant Other Observable Inputs (Level 2) [Member]
ASSETS
Cash and cash equivalents	0	0
Securities available for sale	408,747	492,815
Trading securities	52	53
Loans held for sale	853	7,553
Net loans	0	0
Interest rate swaps	149	211
Accrued interest receivable	2,651	3,014
Liabilities
Deposits	(362,756)	(219,765)
FHLB and other borrowings	(257,361)	(226,769)
Subordinated debentures	(63,575)	(61,831)
Deposits held for sale	0	(6,417)
Interest rate swaps	(310)	(670)
Accrued interest payable	(554)	(510)
Significant Unobservable Inputs (Level 3) [Member]
ASSETS
Cash and cash equivalents	0	0
Securities available for sale	0	2,049
Trading securities	0	0
Loans held for sale	0	0
Net loans	2,126,824	1,817,341
Interest rate swaps	0	0
Accrued interest receivable	6,597	5,244
Liabilities
Deposits	0	0
FHLB and other borrowings	0	0
Subordinated debentures	0	0
Deposits held for sale	0	0
Interest rate swaps	0	0
Accrued interest payable	$ 0	$ 0

XML

Parent Company Only Financial Information - Condensed Balance Sheets (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
ASSETS
Trading securities	$ 7,150	$ 4,858
Total Assets	2,768,773	2,573,821
Liabilities
Subordinated debentures	70,620	70,620
Total liabilities	2,524,863	2,362,037
Total shareholders' equity	243,910	211,784	$ 201,913	$ 188,548
Total Liabilities and Shareholders' Equity	2,768,773	2,573,821
Parent Company [Member]
ASSETS
Cash	1,556	1,436
Trading securities	580	529
Investment in bank subsidiary	290,156	257,476
Investment in non-bank subsidiaries	21,781	23,324
Deferreds and Current Receivable	2,055	1,066
Other assets	2,059	2,666
Total Assets	318,187	286,497
Liabilities
Borrowings from subsidiary	1,400	1,400
Subordinated debentures	70,620	70,620
Other liabilities	2,257	2,693
Total liabilities	74,277	74,713
Total shareholders' equity	243,910	201,913
Total Liabilities and Shareholders' Equity	$ 318,187	$ 286,497

XML

Parent Company Only Financial Information - Condensed Statements of Income (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Dividends from:
Income tax benefit									$ (12,392)	$ (7,171)	$ (8,292)
Net Income	$ 3,451	$ 7,246	$ 6,683	$ 6,480	$ 5,040	$ 6,416	$ 4,065	$ 5,019	23,860	20,540	22,197
Parent Company [Member]
Dividends from:
Bank subsidiary									8,840	8,700	10,404
Non-bank subsidiaries									2,250	1,200	323
Other									220	230	157
Total income									11,310	10,130	10,884
Expenses									(4,957)	(2,611)	(1,708)
Income before income taxes and equity in undistributed net income of subsidiaries:									6,353	7,519	9,176
Income tax benefit									1,614	813	547
Equity in undistributed net income of bank subsidiary									17,430	13,184	11,889
Distributions in excess of net income of non-bank subsidiaries									(1,537)	(976)	585
Net Income									$ 23,860	$ 20,540	$ 22,197

XML

Parent Company Only Financial Information - Condensed Statements of Cash Flows (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Condensed Financial Statements, Captions [Line Items]
Net income	$ 3,451	$ 7,246	$ 6,683	$ 6,480	$ 5,040	$ 6,416	$ 4,065	$ 5,019	$ 23,860	$ 20,540	$ 22,197
Adjustments to reconcile net income to net cash provided by operating activities:
Net unrealized gains on trading securities									(881)	(503)	213
Decrease (increase) in other assets									(1,175)	(3,906)	93
(Decrease) increase in other liabilities									698	2,095	5,435
Net Cash Provided By Operating Activities									30,763	26,764	33,636
Cash flows from investing activities
Net cash used in investing activities									(203,651)	(150,883)	(100,714)
Cash Flows From Financing Activities:
Dividends paid									(10,094)	(9,546)	(9,515)
Proceeds from issuance of long term debt									160,000	80,000	50,000
Purchase of treasury stock									(1,877)	(44)	(868)
Net proceeds from issuance of common stock									19,294	0	0
Net Cash Provided By Financing Activities									179,050	126,041	66,411
Net increase (decrease) in cash									6,162	1,922	(667)
Cash and Cash Equivalents, Beginning				29,183				27,261	29,183	27,261	27,928
Cash and Cash Equivalents, Ending	35,345				29,183				35,345	29,183	27,261
Parent Company [Member]
Condensed Financial Statements, Captions [Line Items]
Net income									23,860	20,540	22,197
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in undistributed net income of bank subsidiary									(17,430)	(13,184)	(11,889)
Equity in undistributed net income (distributions in excess of net income) of non-bank subsidiaries									1,537	976	(585)
Net unrealized gains on trading securities									(12)	(58)	(11)
Decrease (increase) in other assets									(549)	(1,277)	9
(Decrease) increase in other liabilities									791	1,645	663
Net Cash Provided By Operating Activities									8,197	8,642	10,384
Cash flows from investing activities
Investment in bank subsidiaries									(15,400)	(49,223)	0
Net cash used in investing activities									(15,400)	(49,223)	0
Cash Flows From Financing Activities:
Dividends paid									(10,094)	(9,546)	(9,515)
Proceeds from issuance of long term debt									0	50,000	0
Purchase of treasury stock									(1,877)	(44)	(868)
Net proceeds from issuance of common stock									19,294	0	0
Net advance from subsidiary									0	50	0
Net Cash Provided By Financing Activities									7,323	40,460	(10,383)
Net increase (decrease) in cash									120	(121)	1
Cash and Cash Equivalents, Beginning				$ 1,436				$ 1,557	1,436	1,557	1,556
Cash and Cash Equivalents, Ending	$ 1,556				$ 1,436				$ 1,556	$ 1,436	$ 1,557

XML

Other Comprehensive Income - Components of Other Comprehensive Income and Related Tax Effects (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Equity [Abstract]
Unrealized holding losses on available for sale securities	$ (136)	$ (1,838)	$ (623)
Less reclassification adjustment for gains recognized in earnings	(160)	(83)	(666)
Net unrealized losses	(296)	(1,921)	(1,289)
Tax effect	104	672	452
Net-of-tax amount	(192)	(1,249)	(837)
Unrealized holding gains on available for sale securities for which a portion of an other-than-temporary impairment has been recognized in earnings	134	(442)	2,508
Less reclassification adjustment for gains recognized in earnings	(1,383)	(922)	0
Net unrealized gains	(1,249)	(1,364)	2,508
Tax effect	437	477	(878)
Net-of-tax amount	(812)	(887)	1,630
Actuarial gain (loss) on postemployment health care plan	808	(282)	(311)
Net amortization of transition obligation and actuarial gain	192	184	173
Net unrealized gain (loss) on postemployment health care plan	1,000	(98)	(138)
Tax effect	(175)	34	48
Net-of-tax amount	825	(64)	(90)
Unrealized gain (loss) on interest rate swap	10	(63)	(168)
Less reclassification adjustment for losses recognized in earnings	288	340	378
Net unrealized gain	298	277	210
Tax effect	(104)	(97)	(73)
Net-of-tax amount	194	180	137
Total other comprehensive (loss) income	$ 15	$ (2,020)	$ 840

XML

Other Comprehensive Income - Summary of Change in Accumulated Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Equity [Abstract]
Unrealized gains (losses) on securities available for sale, Beginning Balance	$ 1,393	$ 3,529	$ 2,736
Unrealized gains (losses) on securities available for sale, Comprehensive Income (Loss)	(1,004)	(2,136)	793
Unrealized gains (losses) on securities available for sale, Reclassification of Disproportionate Tax Effect	84	0	0
Unrealized gains (losses) on securities available for sale, Ending Balance	473	1,393	3,529
Unrealized gain (loss) on postretirement benefits plan, Beginning Balance	(1,217)	(1,153)	(1,063)
Unrealized gain (loss) on postretirement benefits plan, Comprehensive Income (Loss)	825	(64)	(90)
Unrealized gain (loss) on postretirement benefits plan, Reclassification of Disproportionate Tax Effect	(298)	0	0
Unrealized gain (loss) on postretirement benefits plan, Ending Balance	(690)	(1,217)	(1,153)
Unrealized loss on interest rate swap, Beginning Balance	(297)	(477)	(614)
Unrealized loss on interest rate swap, Comprehensive Income (Loss)	194	180	137
Unrealized loss on interest rate swap, Reclassification of Disproportionate Tax Effect	(23)	0	0
Unrealized loss on interest rate swap, Ending Balance	(126)	(297)	(477)
Total, Beginning Balance	(121)	1,899	1,059
Total, Comprehensive Income (Loss)	15	(2,020)	840
Total, Reclassification of Disproportionate Tax Effect	(237)	0	0
Total, Ending Balance	$ (343)	$ (121)	$ 1,899

XML

Quarterly Financial Data (Unaudited) - Unaudited Quarterly Results of Operations (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Quarterly Financial Information Disclosure [Abstract]
Total interest and dividend income	$ 28,698	$ 28,069	$ 27,003	$ 25,104	$ 24,818	$ 24,958	$ 22,473	$ 22,066	$ 108,874	$ 94,315	$ 87,178
Net interest income	23,801	23,517	22,989	21,202	21,009	21,933	19,403	18,942	91,509	81,287	74,707
Provision for loan losses	3,105	1,400	1,134	1,016	2,111	622	220	1,196	6,655	4,149	2,560
Non-interest income	5,541	5,032	5,089	5,773	4,622	4,473	4,819	3,777	21,435	17,691	17,094
Non-interest expense	17,588	17,618	17,797	17,034	16,455	17,096	18,753	14,814	70,037	67,118	58,752
Net income	$ 3,451	$ 7,246	$ 6,683	$ 6,480	$ 5,040	$ 6,416	$ 4,065	$ 5,019	$ 23,860	$ 20,540	$ 22,197
Net income per share, basic	$ 0.23	$ 0.47	$ 0.44	$ 0.43	$ 0.35	$ 0.44	$ 0.28	$ 0.35	$ 1.57	$ 1.42	$ 1.54
Net income per share, diluted	$ 0.23	$ 0.47	$ 0.44	$ 0.43	$ 0.35	$ 0.44	$ 0.28	$ 0.35	$ 1.57	$ 1.42	$ 1.54