CNB Financial Corporation (CCNE) is a financial holding company that conducts business primarily through its principal subsidiary, CNB Bank. Founded in 1934, CNB Bank is a full-service bank engaging in a wide range of banking activities and services, including trust and wealth management, for individual, business, governmental, and institutional customers. With a strong presence in Central and Northwest Pennsylvania, Central and Northeast Ohio, Western New York, and Southwest Virginia, CNB Financial has steadily expanded its footprint and diversified its revenue streams over the years, cementing its position as a resilient community banking institution.
Business Overview CNB Financial Corporation was incorporated under the laws of the Commonwealth of Pennsylvania in 1983 as a financial holding company registered under the Bank Holding Company Act of 1956. In 1984, CNB acquired all of the outstanding capital stock of County National Bank, a national banking chartered institution. A significant milestone occurred in 2006 when County National Bank changed its name to CNB Bank and transitioned from a national banking charter to a state bank charter in Pennsylvania, subject to regulation by the Pennsylvania Department of Banking and Securities.
The company's growth trajectory has been marked by strategic acquisitions and expansions. Today, CNB operates 55 full-service branch offices located in various communities across its market area. This includes presence in the Pennsylvania counties of Blair, Cambria, Centre, Clearfield, Elk, Indiana, Jefferson, and McKean, as well as select counties in Ohio, New York, and Virginia.
CNB's resilience has been tested through various economic cycles, including the 2008 financial crisis, which the company successfully navigated. The company has also demonstrated adaptability in the face of changing regulatory environments, consistently evolving its practices to remain compliant and competitive.
A key strength of CNB Financial is its diversified business model. In addition to traditional banking services, the company offers wealth management and insurance services. This diversification has proven crucial in helping CNB weather economic fluctuations and maintain its competitive edge in the financial services industry.
Expansion through Strategic Acquisitions CNB Financial's growth story is marked by a series of strategic acquisitions that have strengthened its regional presence and market share. In 2013, the company acquired FC Banc Corp. and its subsidiary, The Farmers Citizens Bank, expanding its footprint into Central Ohio. This was followed by the acquisition of Lake National Bank in 2016, adding two full-service branches in Mentor, Ohio, and the acquisition of Bank of Akron in 2020, which brought 12 branch locations, one mobile branch, and one drive-up office under the BankOnBuffalo division in Western New York.
Most recently, in January 2025, CNB Financial announced plans to acquire ESSA Bancorp, Inc. (ESSA) in an all-stock transaction valued at approximately $214 million. This strategic move will significantly expand CNB's presence in eastern Pennsylvania, adding 20 new locations and approximately $1.8 billion in assets to the combined entity. The merger is expected to close in the third quarter of 2025, subject to regulatory approvals and shareholder approvals.
Financials Diversified Revenue Streams and Resilient Financial Performance CNB Financial's diversified business model has enabled the company to deliver consistent financial performance over the years. As of December 31, 2024, the company reported total assets of $6.19 billion, up from $5.75 billion at the end of 2023, reflecting a 7.6% year-over-year increase. This growth was primarily driven by a 7.5% increase in total deposits, which reached $5.37 billion, as well as a 3.1% increase in the loan portfolio, which stood at $4.56 billion, net of the allowance for credit losses.
The company's net interest income for the full year 2024 was $187.47 million, a slight decrease of 1.24% compared to 2023, as the rise in interest expense due to targeted deposit rate increases more than offset the increase in interest income from loan growth and the impact of higher interest rates. Non-interest income, on the other hand, grew by 17.4% to $39.11 million, driven by higher pass-through income from small business investment companies (SBICs), increased net realized and unrealized gains on equity securities, and a rise in wealth and asset management fees.
Despite the challenges posed by the rising interest rate environment, CNB Financial maintained a strong net interest margin (NIM) of 3.41% in 2024, compared to 3.63% in 2023. The company's efficiency ratio, a measure of its operational efficiency, stood at 66.20% in 2024, compared to 65.13% in the previous year, as the increase in deposit costs and higher personnel and technology expenses offset the benefits of revenue growth.
For the fourth quarter of 2024, CNB Financial reported revenue of $56.08 million and net income of $13.95 million. These results demonstrate the company's ability to generate solid earnings even in a challenging economic environment.
Liquidity Robust Asset Quality and Capital Position CNB Financial's asset quality remained strong, with nonperforming assets (NPAs) at 0.96% of total assets as of December 31, 2024, up from 0.55% at the end of 2023. The increase in NPAs was primarily due to one commercial multifamily relationship totaling $20.4 million with a specific reserve balance of $885,000. The corporation's allowance for credit losses on loans was 1.03% of total loans as of December 31, 2024, unchanged from the prior year.
The company's capital position remained well-capitalized, with a Common Equity Tier 1 (CET1) ratio of 11.76%, a Tier 1 capital ratio of 13.41%, and a total risk-based capital ratio of 16.16% as of December 31, 2024. These ratios exceeded the regulatory well-capitalized thresholds, providing a solid foundation for future growth and resilience in the face of potential economic challenges.
CNB Financial maintains a strong liquidity position, with $443 million in cash and cash equivalents as of December 31, 2024. Additionally, the company has access to $4.6 billion in available borrowing capacity from the Federal Home Loan Bank (FHLB) and the Federal Reserve, providing ample resources to support its operations and growth initiatives.
Disciplined Risk Management and Focus on Shareholder Value CNB Financial's management team has demonstrated a strong commitment to disciplined risk management and a focus on delivering long-term shareholder value. The company's robust underwriting standards, diversified loan portfolio, and proactive approach to managing credit risk have enabled it to navigate various economic cycles with resilience.
In addition to its organic growth initiatives, CNB Financial has a history of returning capital to shareholders through quarterly cash dividends. The company's Board of Directors declared a quarterly cash dividend of $0.18 per share of common stock payable on March 14, 2025, to common stock shareholders of record as of February 28, 2025.
Geographic Performance CNB Financial's operations span across multiple states, with each division catering to specific market areas. The company's primary market areas include the Pennsylvania counties of Blair, Cambria, Centre, Clearfield, Elk, Indiana, Jefferson, and McKean. ERIEBANK, a division of CNB Bank, operates in Pennsylvania and Ohio, while FCBank, another division, focuses on the Ohio market. BankOnBuffalo, the company's New York-based division, serves customers in Western New York. Ridge View Bank, the newest division, caters to customers in Virginia. This geographic diversification allows CNB Financial to tap into various regional economies and mitigate risks associated with localized economic fluctuations.
Looking Ahead Opportunities and Challenges As CNB Financial continues to execute its growth strategy, the company faces both opportunities and challenges. The pending acquisition of ESSA Bancorp represents a significant opportunity to expand the company's presence in eastern Pennsylvania and leverage synergies to drive additional revenue and cost savings. However, the integration of the two organizations will require careful planning and execution to ensure a seamless transition for customers and employees.
Moreover, the continued rise in interest rates and the potential for an economic slowdown pose challenges for the banking industry as a whole. CNB Financial will need to navigate these headwinds through disciplined asset-liability management, prudent credit underwriting, and a focus on diversifying its revenue streams, including its wealth management and fee-based businesses.
Despite these challenges, CNB Financial's strong capital position, diversified business model, and experienced management team position the company well to capitalize on growth opportunities and continue delivering value to its shareholders. The company's ability to maintain a robust liquidity position, with significant cash reserves and access to substantial borrowing capacity, provides a solid foundation for navigating potential economic uncertainties and pursuing strategic growth initiatives.