SOURCE: CNB Financial Corporation

CNB Financial

January 29, 2016 11:04 ET

CNB Financial Corporation Reports Year End 2015 Earnings, Highlighted By Strong Organic Loan Growth

CLEARFIELD, PA--(Marketwired - January 29, 2016) - CNB Financial Corporation ("CNB") (NASDAQ: CCNE), the parent company of CNB Bank, today announced its earnings for the year ended December 31, 2015. Highlights include the following:

  • Total loans of $1.6 billion at December 31, 2015, an increase of $222.5 million, or 16.4%, as compared to December 31, 2014. All of CNB's loan growth in 2015 was organic.
  • Total deposits of $1.8 billion at December 31, 2015, which is down 1.7% from year-end 2014, but is comprised of an increase of 7.7% in non-interest bearing deposits and a decrease of 3.2% in interest-bearing deposits. CNB's loan to deposit ratio increased from 73.4% at December 31, 2014 to 86.9% at December 31, 2015.
  • Net interest margin of 3.73% for the year ended December 31, 2015, compared to 3.82% for the year ended December 31, 2014. Included in net interest income in 2015 was $2.2 million of net accretion related to acquired loans, which was down from $2.9 million included in 2014. Excluding the impact of the net accretion, net interest income increased by $800 thousand for 2015 as compared to 2014.
  • Net income of $22.2 million for the year ended December 31, 2015, or $1.54 per share, compared to net income of $23.1 million for the year ended December 31, 2014, or $1.60 per share. Impacting these results were approximately $700 thousand less in purchase accounting net accretion to loan interest income in 2015 versus 2014, $308 thousand of merger costs related to our pending acquisition of Lake National Bank, as well as the addition of staff and related expenses in 2015 to position our infrastructure for future growth.
  • Returns on average assets and equity of 0.99% and 11.23%, respectively, for the year ended December 31, 2015 compared to 1.07% and 12.76%, respectively, for the year ended December 31, 2014.
  • Tangible book value per share of $11.96 as of December 31, 2015, an increase of 9.0% over tangible book value per share of $10.97 at December 31, 2014.
  • Non-performing assets of $13.2 million, or 0.57% of total assets as of December 31, 2015, compared to $10.2 million, or 0.47% of total assets, at December 31, 2014.

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

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

Net Interest Margin

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

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

Asset Quality

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

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

Non-Interest Income

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

Non-Interest Expenses

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

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

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

About CNB Financial Corporation

CNB Financial Corporation is a financial holding company with consolidated assets of approximately $2.3 billion that conducts business primarily through CNB Bank, CNB's principal subsidiary. CNB Bank is a full-service bank engaging in a full range of banking activities and services, including trust and wealth management services, for individual, business, governmental, and institutional customers. CNB Bank operations include a private banking division, loan production offices in Hollidaysburg, Pennsylvania and Ashtabula, Ohio, and 29 full-service offices in Pennsylvania, including ERIEBANK, a division of CNB Bank, as well as 9 full-service offices in central Ohio conducting business as FCBank, a division of CNB Bank. More information about CNB and CNB Bank may be found on the internet at www.bankcnb.com.

Forward-Looking Statements

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

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

Financial Tables

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

  (unaudited)        
  Three Months Ended     Twelve Months Ended  
  December 31,     December 31,  
  (Dollars in thousands, except share and per share data)        
  2015     2014     % change     (unaudited) 2015     2014     % change  
Income Statement                                          
Interest income $ 21,994     $ 22,495     -2.2 %   $ 87,178     $ 86,882     0.3 %
Interest expense   3,066       3,063     0.1 %     12,471       12,287     1.5 %
  Net interest income   18,928       19,432     -2.6 %     74,707       74,595     0.2 %
Provision for loan losses   668       282     136.9 %     2,560       3,840     -33.3 %
  Net interest income after provision for loan losses   18,260       19,150     -4.6 %     72,147       70,755     2.0 %
                                           
Non-interest income                                          
  Wealth and asset management fees   749       725     3.3 %     2,977       2,860     4.1 %
  Service charges on deposit accounts   1,160       1,176     -1.4 %     4,442       4,560     -2.6 %
  Other service charges and fees   866       809     7.0 %     3,089       2,809     10.0 %
  Net realized gains on available-for-sale securities   102       184     -44.6 %     666       429     55.2 %
  Net realized and unrealized gains (losses) on trading securities   108       106     1.9 %     (213 )     121     NA  
  Mortgage banking   262       279     -6.1 %     746       781     -4.5 %
  Bank owned life insurance   342       340     0.6 %     1,195       1,041     14.8 %
  Other   557       487     14.4 %     1,897       1,720     10.3 %
                                           
    Total non-interest income   4,146       4,106     1.0 %     14,799       14,321     3.3 %
                                           
Non-interest expenses                                          
  Salaries and benefits   7,853       7,151     9.8 %     29,563       26,991     9.5 %
  Net occupancy expense of premises   1,643       1,695     -3.1 %     7,000       6,911     1.3 %
  FDIC insurance premiums   321       296     8.4 %     1,278       1,322     -3.3 %
  Core Deposit Intangible amortization   230       274     -16.1 %     1,007       1,180     -14.7 %
  Merger costs   308       -     NA       308       -     NA  
  Other   4,461       4,253     4.9 %     17,301       16,284     6.2 %
    Total non-interest expenses   14,816       13,669     8.4 %     56,457       52,688     7.2 %
                                           
Income before income taxes   7,590       9,587     -20.8 %     30,489       32,388     -5.9 %
Income tax expense   2,082       2,844     -26.8 %     8,292       9,314     -11.0 %
Net income $ 5,508     $ 6,743     -18.3 %   $ 22,197     $ 23,074     -3.8 %
                                           
Average diluted shares outstanding   14,345,926       14,340,919             14,338,737       14,360,278        
                                           
Diluted earnings per share $ 0.38     $ 0.47     -19.1 %   $ 1.54     $ 1.60     -3.8 %
Cash dividends per share $ 0.165     $ 0.165     0.0 %   $ 0.660     $ 0.660     0.0 %
                                           
Payout ratio   43 %     35 %           43 %     41 %      
                                           
Average Balances                                          
Loans, net of unearned income $ 1,553,980     $ 1,329,958           $ 1,460,163     $ 1,316,745        
Total earning assets   2,130,412       2,060,641             2,093,853       2,025,080        
Total assets   2,268,570       2,191,695             2,231,882       2,161,076        
Total deposits   1,827,710       1,855,266             1,849,202       1,843,476        
Shareholders' equity   202,130       188,501             197,688       180,776        
                                           
Performance Ratios (quarterly information annualized)                                          
Return on average assets   0.97 %     1.23 %           0.99 %     1.07 %      
Return on average equity   10.90 %     14.31 %           11.23 %     12.76 %      
Net interest margin (FTE)   3.73 %     3.94 %           3.73 %     3.82 %      
                                           
Loan Charge-Offs                                          
Net loan charge-offs $ 1,167     $ 751           $ 3,196     $ 2,701        
Net loan charge-offs / average loans   0.30 %     0.23 %           0.22 %     0.21 %      
                                           
                                           
  (unaudited)     (unaudited)                    
  December 31,     September 30,     December 31,     % change versus  
  2015     2015     2014     9/30/15     12/31/14  
  (Dollars in thousands, except share and per share data)              
Ending Balance Sheet                                  
Loans, net of unearned income $ 1,577,798     $ 1,516,121     $ 1,355,289     4.1 %   16.4 %
Loans held for sale   1,381       551       887     150.6 %   55.7 %
Investment securities   546,043       591,822       690,225     -7.7 %   -20.9 %
FHLB and other equity interests   15,921       13,438       6,695     18.5 %   137.8 %
Other earning assets   3,959       4,589       3,633     -13.7 %   9.0 %
  Total earning assets   2,145,102       2,126,521       2,056,729     0.9 %   4.3 %
                                   
Allowance for loan losses   (16,737 )     (17,236 )     (17,373 )   -2.9 %   -3.7 %
Goodwill   27,194       27,194       27,194     0.0 %   0.0 %
Core deposit intangible   2,395       2,626       3,403     -8.8 %   -29.6 %
Other assets   127,182       120,617       119,260     5.4 %   6.6 %
  Total assets $ 2,285,136     $ 2,259,722     $ 2,189,213     1.1 %   4.4 %
                                   
Non interest-bearing deposits $ 263,639     $ 270,816     $ 244,743     -2.7 %   7.7 %
Interest-bearing deposits   1,551,414       1,576,876       1,602,336     -1.6 %   -3.2 %
  Total deposits   1,815,053       1,847,692       1,847,079     -1.8 %   -1.7 %
                                   
Borrowings   220,515       166,030       111,695     32.8 %   97.4 %
Subordinated debt   20,620       20,620       20,620     0.0 %   0.0 %
Other liabilities   27,035       25,529       21,271     5.9 %   27.1 %
                                   
Common stock   -       -       -     NA     NA  
Additional paid in capital   77,827       77,677       78,022     0.2 %   -0.2 %
Retained earnings   123,301       120,170       110,619     2.6 %   11.5 %
Treasury stock   (1,114 )     (1,146 )     (1,152 )   -2.8 %   -3.3 %
Accumulated other comprehensive income   1,899       3,150       1,059     -39.7 %   79.3 %
  Total shareholders' equity   201,913       199,851       188,548     1.0 %   7.1 %
                                   
  Total liabilities and shareholders' equity $ 2,285,136     $ 2,259,722     $ 2,189,213     1.1 %   4.4 %
                                   
Ending shares outstanding   14,407,980       14,406,481       14,404,416              
                                   
Book value per share $ 14.01     $ 13.87     $ 13.09              
Tangible book value per share (*) $ 11.96     $ 11.80     $ 10.97              
                                   
Capital Ratios                                  
Tangible common equity / tangible assets (*)   7.64 %     7.63 %     7.32 %            
Tier 1 leverage ratio   8.73 %     8.64 %     8.39 %            
Common equity tier 1 ratio   11.07 %     11.17 %     NA              
Tier 1 risk based ratio   12.33 %     12.46 %     13.06 %            
Total risk based ratio   13.39 %     13.58 %     14.30 %            
                                   
Asset Quality                                  
Non-accrual loans $ 12,159     $ 12,161     $ 9,190              
Loans 90+ days past due and accruing   105       193       213              
  Total non-performing loans   12,264       12,354       9,403              
Other real estate owned   925       563       806              
  Total non-performing assets $ 13,189     $ 12,917     $ 10,209              
                                   
Loans modified in a troubled debt restructuring (TDR):                                  
  Performing TDR loans $ 9,304     $ 8,108     $ 14,771              
  Non-performing TDR loans **   5,637       5,833       3,887              
    Total TDR loans $ 14,941     $ 13,941     $ 18,658              
                                   
Non-performing assets / Loans + OREO   0.82 %     0.85 %     0.75 %            
Non-performing assets / Total assets   0.58 %     0.57 %     0.47 %            
Allowance for loan losses / Loans   1.06 %     1.14 %     1.28 %            
                                   
* - Tangible common equity, tangible assets and tangible book value per share are non-GAAP financial measures calculated using GAAP amounts. Tangible common equity is calculated by excluding the balance of goodwill and other intangible assets from the calculation of stockholders' equity. Tangible assets is calculated by excluding the balance of goodwill and other intangible assets from the calculation of total assets. Tangible book value per share is calculated by dividing tangible common equity by the number of shares outstanding. CNB believes that these non-GAAP financial measures provide information to investors that is useful in understanding its financial condition. Because not all companies use the same calculation of tangible common equity and tangible assets, this presentation may not be comparable to other similarly titled measures calculated by other companies. A reconciliation of these non-GAAP financial measures is provided below (dollars in thousands, except per share data).        
** - Nonperforming TDR loans are also included in the balance of non-accrual loans in the previous table.        
 
                                 
    (Dollars in thousands, except share and per share data )              
    (unaudited)       (unaudited)                      
    December 31,       September 30,       December 31,              
    2015       2015       2014              
                                   
Shareholders' equity $ 201,913     $ 199,851     $ 188,548              
  Less goodwill   27,194       27,194       27,194              
  Less core deposit intangible   2,395       2,626       3,403              
Tangible common equity $ 172,324     $ 170,031     $ 157,951              
                                   
Total assets $ 2,285,136     $ 2,259,722     $ 2,189,213              
  Less goodwill   27,194       27,194       27,194              
  Less core deposit intangible   2,395       2,626       3,403              
Tangible assets $ 2,255,547     $ 2,229,902     $ 2,158,616              
                                   
Ending shares outstanding   14,407,980       14,406,481       14,404,416              
                                   
Tangible book value per share $ 11.96     $ 11.80     $ 10.97              
Tangible common equity/Tangible assets   7.64 %     7.63 %     7.32 %            

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Contact Information

  • Brian W. Wingard
    Treasurer
    (814) 765-9621

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