CNB Financial Corporation Reports First Quarter Earnings for 2015

CLEARFIELD, Pa.--()--CNB Financial Corporation (“CNB”) (NASDAQ: CCNE), the parent company of CNB Bank, today announced its earnings for the first quarter of 2015. Highlights include the following:

  • Net income of $5.6 million, or $0.39 per share, compared to net income of $5.2 million, or $0.36 per share, in the first quarter of 2014.
  • Loans of $1.36 billion at March 31, 2015, an increase of $62.0 million, or 4.8%, compared to March 31, 2014.
  • Annualized returns on average assets and equity of 1.02% and 11.47%, respectively, for the quarter ended March 31, 2015.
  • Tangible book value per share of $11.49 per share as of March 31, 2015, an increase of 18.1% over tangible book value per share of $9.73 at March 31, 2014.
  • Net interest margin of 3.82% for the quarter ended March 31, 2015, compared to 3.79% for the quarter ended March 31, 2014.
  • Non-performing assets of $10.2 million, or 0.47% of total assets as of March 31, 2015, compared to $13.1 million, or 0.62% of total assets, at March 31, 2014.

Joseph B. Bower, Jr., President and CEO commented, “This year, CNB is celebrating 150 years in banking. Having been in one community for that long, many of our customers are also shareholders and friends. We look forward to continuing to contribute to all of our communities through involvement in community events as well as providing financial services.”

Net Interest Margin

Net interest margin on a fully tax equivalent basis was 3.82% for the quarter ended March 31, 2015, compared to 3.79% for the quarter ended March 31, 2014. Net accretion included in loan interest income in the first quarter of 2015 related to loans acquired in the fourth quarter of 2013 was $1.06 million, resulting in an increase in the net interest margin of 21 basis points. Net accretion included in loan interest income in the first quarter of 2014 related to loans acquired in the fourth quarter of 2013 was $740 thousand, resulting in an increase in the net interest margin of 15 basis points.

Asset Quality

During the quarter ended March 31, 2015, CNB recorded a provision for loan losses of $943 thousand, as compared to a provision for loan losses of $1.0 million during the quarter ended March 31, 2014. In the first quarter of 2015, a commercial and industrial loan that was modified in a troubled debt restructuring in 2014 deteriorated, resulting in an additional provision for loan losses of $620 thousand. Net chargeoffs in the first quarter of 2015 were $634 thousand, compared to net chargeoffs of $579 thousand in the first quarter of 2014.

Non-Interest Income

Non-interest income was $3.1 million for the quarter ended March 31, 2015, compared to $3.2 million for the quarter ended March 31, 2014. Wealth and asset management fees increased from $672 thousand for the quarter ended March 31, 2014 to $766 thousand for the quarter ended March 31, 2015 as CNB continues to implement its strategic plan to grow assets under management.

Non-Interest Expenses

Total non-interest expenses were $13.1 million and $13.3 million during the quarters ended March 31, 2015 and 2014, respectively, and the ratio of non-interest expenses to average assets was 2.41% and 2.49% during the quarters ended March 31, 2015 and 2014, respectively.

About CNB Financial Corporation

CNB Financial Corporation is a financial holding company with consolidated assets of approximately $2.2 billion that conducts business primarily through CNB Bank, CNB’s principal subsidiary. CNB Bank is a full-service bank engaging in a full range of banking activities and services, including trust and wealth management services, for individual, business, governmental, and institutional customers. CNB Bank operations include a private banking division, loan production offices in Hollidaysburg, Pennsylvania and Ashtabula, Ohio, and 29 full-service offices in Pennsylvania, including ERIEBANK, a division of CNB Bank, as well as 9 full-service offices in central Ohio conducting business as FCBank, a division of CNB Bank. More information about CNB and CNB Bank may be found on the internet at www.bankcnb.com.

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to CNB’s financial condition, liquidity, results of operations, future performance and business. These forward-looking statements are intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those that are not historical facts. Forward-looking statements include statements with respect to beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions that are subject to significant risks and uncertainties and are subject to change based on various factors (some of which are beyond CNB’s control). Forward-looking statements often include the words “believes,” “expects,” “anticipates,” “estimates,” “forecasts,” “intends,” “plans,” “targets,” “potentially,” “probably,” “projects,” “outlook” or similar expressions or future conditional verbs such as “may,” “will,” “should,” “would” and “could.” CNB’s actual results may differ materially from those contemplated by the forward-looking statements, which are neither statements of historical fact nor guarantees or assurances of future performance. For more information about factors that could cause actual results to differ from those discussed in the forward-looking statements, please refer to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of and forward-looking statement disclaimers in CNB’s annual and quarterly reports.

The forward-looking statements are based upon management’s beliefs and assumptions and are made as of the date of this press release. CNB undertakes no obligation to publicly update or revise any forward-looking statements included in this press release or to update the reasons why actual results could differ from those contained in such statements, whether as a result of new information, future events or otherwise, except to the extent required by law. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this press release might not occur and you should not put undue reliance on any forward-looking statements.

Financial Tables

The following tables supplement the financial highlights described previously for CNB Financial Corporation.

     
(unaudited)
Three Months Ended
March 31,
(Dollars in thousands, except share and per share data)    

2015

2014

%
change

Income Statement

Interest income $ 21,641 $ 21,437 1.0 %
Interest expense   3,051     3,157   -3.4 %
Net interest income 18,590 18,280 1.7 %
Provision for loan losses   943     1,019   -7.5 %
Net interest income after provision for loan losses   17,647     17,261   2.2 %
 
Non-interest income
Wealth and asset management fees 766 672 14.0 %
Service charges on deposit accounts 1,017 1,041 -2.3 %
Other service charges and fees 624 568 9.9 %
Net realized gains on available-for-sale securities 19 66 -71.2 %
Net realized and unrealized gains (losses) on trading securities (39 ) (25 ) -56.0 %
Mortgage banking 113 175 -35.4 %
Bank owned life insurance 276 240 15.0 %
Other   314     468   -32.9 %
 
Total non-interest income   3,090     3,205   -3.6 %
 
Non-interest expenses
Salaries and benefits 6,625 6,835 -3.1 %
Net occupancy expense of premises 1,799 1,761 2.2 %
FDIC insurance premiums 296 340 -12.9 %
Core Deposit Intangible amortization 259 303 -14.5 %
Other   4,107     4,022   2.1 %
Total non-interest expenses   13,086     13,261   -1.3 %
 
Income before income taxes 7,651 7,205 6.2 %
Income tax expense   2,086     2,039   2.3 %
Net income $ 5,565   $ 5,166   7.7 %
 
Average diluted shares outstanding 14,357,366 14,394,265
 
Diluted earnings per share $ 0.39 $ 0.36 8.3 %
Cash dividends per share $ 0.165 $ 0.165 0.0 %
 
Payout ratio 42 % 46 %
 

Average Balances

Loans, net of unearned income $ 1,362,679 $ 1,291,985
Total earning assets 2,035,650 1,989,707
Total assets 2,174,538 2,126,225
Total deposits 1,844,178 1,818,335
Shareholders' equity 194,059 172,615
 

Performance Ratios (quarterly information annualized)

Return on average assets 1.02 % 0.97 %
Return on average equity 11.47 % 11.97 %
Net interest margin (FTE) 3.82 % 3.79 %
 

Loan Charge-Offs

Net loan charge-offs $ 634 $ 579
Net loan charge-offs / average loans 0.19 % 0.18 %
 
         
(unaudited) (unaudited)
March 31, December 31, March 31, % change versus

2015

2014

2014

12/31/14

3/31/14

(Dollars in thousands, except share and per share data)

Ending Balance Sheet

Loans, net of unearned income $ 1,356,126 $ 1,355,289 $ 1,294,096 0.1 % 4.8 %
Loans held for sale 1,661 887 329 87.3 % 404.9 %
Investment securities 659,902 690,225 691,935 -4.4 % -4.6 %
FHLB and other equity interests 4,923 6,695 7,519 -26.5 % -34.5 %
Other earning assets   4,098     3,633     3,311   12.8 % 23.8 %
Total earning assets 2,026,710 2,056,729 1,997,190 -1.5 % 1.5 %
 
Allowance for loan losses (17,682 ) (17,373 ) (16,674 ) 1.8 % 6.0 %
Goodwill 27,194 27,194 27,194 0.0 % 0.0 %
Core deposit intangible 3,144 3,403 4,280 -7.6 % -26.5 %
Other assets   140,774     119,260     122,071   18.0 % 15.3 %
Total assets $ 2,180,140   $ 2,189,213   $ 2,134,061   -0.4 % 2.2 %
 
Non interest-bearing deposits $ 259,512 $ 244,743 $ 221,831 6.0 % 17.0 %
Interest-bearing deposits   1,607,869     1,602,336     1,606,827   0.3 % 0.1 %
Total deposits 1,867,381 1,847,079 1,828,658 1.1 % 2.1 %
 
Borrowings 75,652 111,695 91,149 -32.3 % -17.0 %
Subordinated debt 20,620 20,620 20,620 0.0 % 0.0 %
Other liabilities 20,605 21,271 21,353 -3.1 % -3.5 %
 
Common stock - - - NA NA
Additional paid in capital 77,339 78,022 77,641 -0.9 % -0.4 %
Retained earnings 113,800 110,619 99,845 2.9 % 14.0 %
Treasury stock (1,205 ) (1,152 ) (113 ) 4.6 % 966.4 %
Accumulated other comprehensive income (loss)   5,948     1,059     (5,092 ) 461.7 % -216.8 %
Total shareholders' equity   195,882     188,548     172,281   3.9 % 13.7 %
 
Total liabilities and shareholders' equity $ 2,180,140   $ 2,189,213   $ 2,134,061   -0.4 % 2.2 %
 
Ending shares outstanding 14,402,362 14,404,416 14,464,842
 
Book value per share $ 13.60 $ 13.09 $ 11.91
Tangible book value per share (*) $ 11.49 $ 10.97 $ 9.73
 

Capital Ratios

Tangible common equity / tangible assets (*) 7.70 % 7.32 % 6.70 %
Tier 1 leverage ratio 8.59 % 8.39 % 8.15 %
Common equity tier 1 ratio 11.45 % NA NA
Tier 1 risk based ratio 12.84 % 13.05 % 12.76 %
Total risk based ratio 14.07 % 14.30 % 14.00 %
 

Asset Quality

Non-accrual loans $ 9,158 $ 9,190 $ 11,644
Loans 90+ days past due and accruing   57     213     456  
Total non-performing loans 9,215 9,403 12,100
Other real estate owned   977     806     1,047  
Total non-performing assets $ 10,192   $ 10,209   $ 13,147  
 
Loans modified in a troubled debt restructuring (TDR):
Performing TDR loans $ 15,198 $ 14,771 $ 7,893
Non-performing TDR loans **   3,816     3,887     4,052  
Total TDR loans $ 19,014   $ 18,658   $ 11,945  
 
Non-performing assets / Loans + OREO 0.75 % 0.75 % 1.02 %
Non-performing assets / Total assets 0.47 % 0.47 % 0.62 %
Allowance for loan losses / Loans 1.30 % 1.28 % 1.29 %
 
* - Tangible common equity, tangible assets and tangible book value per share are non-GAAP financial measures calculated using GAAP amounts. Tangible common equity is calculated by excluding the balance of goodwill and other intangible assets from the calculation of stockholders’ equity. Tangible assets is calculated by excluding the balance of goodwill and other intangible assets from the calculation of total assets. Tangible book value per share is calculated by dividing tangible common equity by the number of shares outstanding. CNB believes that these non-GAAP financial measures provide information to investors that is useful in understanding its financial condition. Because not all companies use the same calculation of tangible common equity and tangible assets, this presentation may not be comparable to other similarly titled measures calculated by other companies. A reconciliation of these non-GAAP financial measures is provided below (dollars in thousands, except per share data).
 
** - Nonperforming TDR loans are also included in the balance of non-accrual loans in the previous table.
 
  (Dollars in thousands, except share and per share data)
(unaudited)     (unaudited)
March 31, December 31, March 31,

2015

2014

2014

 
Shareholders' equity $ 195,882 $ 188,548 $ 172,281
Less goodwill 27,194 27,194 27,194
Less core deposit intangible   3,144     3,403     4,280  
Tangible common equity $ 165,544   $ 157,951   $ 140,807  
 
Total assets $ 2,180,140 $ 2,189,213 $ 2,134,061
Less goodwill 27,194 27,194 27,194
Less core deposit intangible   3,144     3,403     4,280  
Tangible assets $ 2,149,802   $ 2,158,616   $ 2,102,587  
 
Ending shares outstanding 14,402,362 14,404,416 14,464,842
 
Tangible book value per share $ 11.49 $ 10.97 $ 9.73
Tangible common equity/Tangible assets 7.70 % 7.32 % 6.70 %

Contacts

CNB Financial Corporation
Brian W. Wingard, 814-765-9621
Treasurer

Contacts

CNB Financial Corporation
Brian W. Wingard, 814-765-9621
Treasurer