CNB Financial Corporation Reports Second Quarter 2022 Earnings Per Share Of $0.85 Compared To $0.76 For Second Quarter 2021

Rhea-AI Summary

CNB Financial Corporation (NASDAQ: CCNE) reported strong earnings for Q2 2022, with net income of $14.4 million ($0.85 per diluted share), up 11.2% from Q2 2021. Loan growth, mainly in the commercial sector, contributed significantly to profitability despite a decrease in PPP-related fees. The total revenue increased by 17.9% year-over-year, reaching $54.4 million. Nonperforming assets remained low at 0.39% of total assets. However, total deposits slightly declined by 0.3%, and book value per share decreased by 1.5%. The bank continues to manage its capital effectively with a strong liquidity position.

Positive

• Net income increased 11.2% year-over-year to $14.4 million for Q2 2022.
• Total revenue rose 17.9% year-over-year to $54.4 million, driven by loan growth.
• Low nonperforming assets at 0.39% of total assets, reflecting stable credit quality.
• Net loan charge-offs decreased to 0.05% of average total loans, indicating improved asset quality.

Negative

• Total deposits decreased by $13.8 million, or 0.3%, from December 31, 2021.
• Book value per share fell by 1.5% compared to June 30, 2021.

CLEARFIELD, Pa., July 19, 2022 (GLOBE NEWSWIRE) -- CNB Financial Corporation (“CNB” or the “Corporation”) (NASDAQ: CCNE), the parent company of CNB Bank, today announced its earnings for the quarter and six months ended June 30, 2022.

Joseph B. Bower, Jr., President and CEO, stated, "Loan growth continues to exceed our already robust projections for 2022, resulting in higher earnings and profitability. Through our multi-bank branding approach, shareholders and communities continue to benefit. Our Region Presidents’ autonomy and local decision making is truly community based banking."

Executive Summary

• Net income available to common shareholders was $14.4 million, or $0.85 per diluted share, for the three months June 30, 2022, compared to $12.9 million, or $0.76 per diluted share, for the three months ended June 30, 2021, reflecting increases of $1.4 million, or 11.2%, and $0.09 per diluted share, or 11.8%. Earnings for the quarter ended June 30, 2022 benefited primarily from growth in commercial loans and investment securities, stable credit quality, and an asset sensitive balance sheet supporting increased net interest income in the current rising rate environment.
    
  
  • Processing fees on Paycheck Protection Program ("PPP") loans (“PPP-related fees”) totaled approximately $559 thousand for the three months ended June 30, 2022, compared to $1.6 million for the three months ended June 30, 2021. At June 30, 2022, remaining deferred PPP-related fees totaled approximately $96 thousand.
      
• Net income available to common was $28.5 million, or $1.69 per diluted share, for the six months ended June 30, 2022, compared to $26.0 million, or $1.54 per diluted share, for the six months ended June 30, 2021, reflecting increases of $2.5 million, or 9.7%, and $0.15 per diluted share, or 9.7%.
    
  
  • PPP-related fees totaled approximately $1.8 million for the six months ended June 30, 2022, compared to $4.4 million for the six months ended June 30, 2021.
      
• At June 30, 2022, loans, excluding the impact of (i) syndicated loans, and (ii) PPP loans, net of PPP-related fees (such loans being referred to as the "PPP-related loans"), totaled $3.8 billion, representing an increase of $290.5 million, or 8.4% (16.9% annualized), from December 31, 2021. The growth was primarily driven by the Corporation's ongoing expansion in the Cleveland and Southwest Virginia regions, combined with continued loan growth in its Private Banking division, and increased lending opportunities in all other regions in which the Corporation operates.
    
  
  • As part a continued targeted liquidity management strategy to invest excess funds in credit-quality assets, for the six months ended June 30, 2022, the Corporation's balance sheet reflected an increase in syndicated lending balances of $27.4 million compared to December 31, 2021. The syndicated loan portfolio totaled $153.2 million, or 3.9% of total loans, excluding PPP-related loans, at June 30, 2022. The Corporation expects the level of this syndicated loan portfolio to remain stable or decrease going forward.
      
• At June 30, 2022, total deposits were $4.7 billion, reflecting a decrease of $13.8 million, or 0.3%, from December 31, 2021. While noninterest-bearing deposits increased approximately $59.1 million, or 7.5%, total interest-bearing deposits, decreased approximately $72.9 million, or 1.9%, from December 31, 2021.
    
• Total nonperforming assets totaled approximately $20.7 million, or 0.39% of total assets, as of June 30, 2022, compared to $20.3 million, or 0.38% of total assets, as of December 31, 2021, and decreased from $33.2 million, or 0.64% of total assets, as of June 30, 2021. In addition, for the three months ended June 30, 2022, net loan charge-offs were $479 thousand, or 0.05% of average total loans and loans held for sale, compared to $614 thousand, or 0.07% of average total loans and loans held for sale, during the three months ended June 30, 2021.
    
• Pre-provision net revenue ("PPNR"), a non-GAAP measure, was $21.8 million for the three months ended June 30, 2022, compared to $19.2 million for the three months ended June 30, 2021, reflecting an increase of $2.6 million, or 13.8%.¹
    
• PPNR, a non-GAAP measure, was $42.2 million for the six months ended June 30, 2022, compared to $38.8 million for the six months ended June 30, 2021, reflecting an increase of $3.5 million, or 8.9%.¹

¹ This release contains references to certain financial measures that are not defined under U.S. Generally Accepted Accounting Principles ("GAAP"). Management believes that these non-GAAP measures provide a greater understanding of ongoing operations, enhance comparability of results of operations with prior periods and show the effects of significant gains and charges in the periods presented. A reconciliation of these non-GAAP financial measures is provided in the "Non-GAAP Reconciliations" section.

Balance Sheet and Liquidity Highlights

• At June 30, 2022, the Corporation’s cash and equivalents position was approximately $284.2 million, including excess liquidity of $217.8 million held at the Federal Reserve, reflecting, in management's view, a strong liquidity level.
    
• During January 2022, investments with an amortized cost of approximately $100.6 million and a fair value of $101.1 million were transferred from available-for-sale to held-to-maturity as a result of the Corporation's asset/liability management strategies. The transfer included $95.7 million of U.S. Government agency securities and $4.9 million of U.S. Treasury notes. During April 2022, mortgage backed securities with an amortized cost of approximately $120.2 million and a fair value of $112.6 million were transferred from available-for-sale to held-to-maturity as a result of the Corporation's asset/liability management strategies. These bonds continue to provide liquidity through pledging and can be utilized as collateral against borrowings. In addition to these internal portfolio transfers, some of the investment purchases made by the Corporation during the first half of 2022 were also classified as held-to-maturity securities. As of June 30, 2022, the total balance of investments classified as held-to-maturity was $413.3 million. There were no securities classified as held-to-maturity at either December 31, 2021 or June 30, 2021.
    
• Book value per common share was $21.70 at June 30, 2022, representing a decrease of 1.5% from $22.04 at June 30, 2021. Tangible book value per common share, a non-GAAP measure, was $19.08 as of June 30, 2022, reflecting a decrease of 1.8% from a tangible book value per common share of $19.42 as of June 30, 2021.¹ The decreases in book value per common share and tangible book value per common share were mostly due to a $49.3 million decrease in accumulated other comprehensive income primarily from the temporary unrealized valuation changes in the available-for-sale investment portfolio, which was substantially, but not completely, offset by a $44.2 million increase in retained earnings.

Performance Ratios

• Annualized return on average equity was 14.55% and 14.26% for the three and six months ended June 30, 2022, respectively, compared to 13.22% and 13.45% for the three and six months ended June 30, 2021, respectively.
    
• Annualized return on average tangible common equity, a non-GAAP measure, was 17.81% and 17.34% for the three and six months ended June 30, 2022, respectively, compared to 16.06% and 16.38% for the comparable periods in 2021, respectively.¹
    
• Efficiency ratio, a non-GAAP ratio, was 59.47% and 59.99% for the three and six months ended June 30, 2022, respectively, compared to 57.91% and 58.04% for the three and six months ended June 30, 2021, respectively. The increases for the 2022 periods were primarily a result of expected increasing costs associated with the Corporation’s expanding franchise investments into the Cleveland and Southwest Virginia markets, coupled with its continued strategic investments in technologies focused on customer sales management, while expanding and improving customer connectivity capabilities.¹

Revenue

• Total revenue (comprised of net interest income plus non-interest income) was $54.4 million for the three months ended June 30, 2022, an increase of $8.3 million, or 17.9%, compared to the three months ended June 30, 2021, primarily due to the following:
    
  
  • Net interest income of $46.3 million for the three months ended June 30, 2022 increased $8.0 million, or 20.9%, from the three months ended June 30, 2021, primarily as a result of loan growth and the net benefit of higher interest rates. Included in net interest income were PPP-related fees, which totaled approximately $559 thousand for the three months ended June 30, 2022, compared to $1.6 million for the three months ended June 30, 2021.
      
  • Net interest margin on a fully tax-equivalent basis, a non-GAAP measure, was 3.73% and 3.28% for the three months ended June 30, 2022 and 2021, respectively.¹
      
    
    • The yield on earning assets of 4.01% for the three months ended June 30, 2022 increased 29 basis points from 3.72% for the three months ended June 30, 2021, primarily as a result of the Corporation redeploying excess cash at the Federal Reserve to investment securities and loan growth. Net interest income also reflected the net benefit of higher interest rates, partially offset by lower PPP-related fees in 2022 compared to 2021. The cost of interest-bearing liabilities decreased 20 basis points from 0.55% for the three months ended June 30, 2021 to 0.35% for the three months ended June 30, 2022, primarily as a result of the Corporation’s targeted deposit rate reductions.
        
• Total revenue (comprised of net interest income plus non-interest income) was $106.7 million for the six months ended June 30, 2022, an increase of $13.2 million, or 14.1%, from the six months ended June 30, 2021, primarily due to the following:
    
  
  • Net interest income of $88.9 million for the six months ended June 30, 2022 increased $11.5 million, or 14.8%, from the six months ended June 30, 2021, primarily as a result of loan growth and the benefits of higher interest rates in 2022 from variable-rate loans and new investments. Included in net interest income were PPP-related fees, which totaled approximately $1.8 million for the six months ended June 30, 2022, compared to $4.4 million for the six months ended June 30, 2021.
      
  • Net interest margin on a fully tax-equivalent basis, a non-GAAP measure, was 3.61% and 3.42% for the six months ended June 30, 2022 and 2021, respectively.¹
      
    
    • The yield on earning assets of 3.90% for the six months ended June 30, 2022 increased 3 basis points from 3.87% for the six months ended June 30, 2021, primarily as a result of the Corporation redeploying excess cash at the Federal Reserve to investment securities and loan growth. Net interest income also reflected the net benefit of higher interest rates, partially offset by lower PPP-related fees in 2022 compared to 2021. The cost of interest-bearing liabilities decreased 20 basis points from 0.56% for the six months ended June 30, 2021 to 0.36% for the six months ended June 30, 2022, primarily as a result of the Corporation’s targeted deposit rate reductions.
        
• Total non-interest income was $8.1 million for the three months ended June 30, 2022, representing an increase of $289 thousand, or 3.7%, from the same period in 2021. The increase was primarily comprised of a $508 thousand increase in income from charges on deposits and an $886 thousand increase in bank owned life insurance mostly due to an $830 gain resulting from death benefit proceeds. These increases were partially offset by a $991 increase in unrealized losses on equity securities and a $244 decrease in mortgage banking activity.
    
• Total non-interest income was $17.8 million for the six months ended June 30, 2022, representing an increase of $1.7 million, or 10.6%, from the same period in 2021. Included in non-interest income for the six months ended June 30, 2022 was $651 thousand in net realized gains on available-for-sale securities. Excluding the impact of the realized gains on available-for-sale securities, a non-GAAP measure, for the six months ended June 30, 2022, total non-interest income increased $1.1 million or 6.5%, from the same period in 2021.¹ During the six months ended June 30, 2022, Wealth and Asset Management fees increased $299 thousand, or 9.1%, compared to the six months ended June 30, 2021. Other notable increases during the six months ended June 30, 2022 included increased income from charges on deposits and pass through income from small business investment companies ("SBIC"). These were partially offset by unrealized losses on equity securities and decreased mortgage banking activity.

Non-Interest Expense

• For the three months ended June 30, 2022, total non-interest expense was $32.6 million, reflecting an increase of $5.6 million, or 20.9%, from the three months ended June 30, 2021. The second quarter of 2022 included the expenses related to expanding the Corporation's remote workforce and additional personnel in the Corporation's growth regions of Cleveland and Southwest Virginia, as well as increased investments in technology aimed at enhancing both customer experience and the Corporation’s sales management. Also, included in the second quarter of 2022 is approximately $1.3 million in accelerated retirement benefit expenses related to a pending executive retirement, coupled with additional personnel costs primarily from increased incentive compensation accruals related to a higher financial performance level.
    
• For the six months ended June 30, 2022, total non-interest expense was $64.5 million, reflecting an increase of $9.7 million, or 17.8%, from the six months ended June 30, 2021, primarily as a result of the same drivers discussed above.

Income Taxes

• Income tax expense was $7.0 million, representing a 18.5% effective tax rate, and $6.5 million, representing a 18.7% effective tax rate, for the six months ended June 30, 2022 and 2021, respectively.

Asset Quality

• Total nonperforming assets were $20.7 million, or 0.39% of total assets, as of June 30, 2022, compared to $20.3 million, or 0.38% of total assets, as of December 31, 2021, and $33.2 million, or 0.64% of total assets as of June 30, 2021. The reduction in non-performing assets compared to June 30, 2021 resulted primarily from the resolution of an $8.7 million commercial real estate loan relationship and a $1.4 million non-performing commercial real estate loan relationship with no additional loss to the Corporation in the fourth quarter of 2021.
    
• The allowance for credit losses measured as a percentage of total loans was 1.04% as of June 30, 2022, compared to 1.03% as of December 31, 2021 and 1.06% as of June 30, 2021. In addition, the allowance for credit losses as a percentage of nonaccrual loans was 213.9% as of June 30, 2022, compared to 193.6% at December 31, 2021 and 114.3% as of June 30, 2021.
    
• Provision for credit losses was $2.9 million and $4.5 million for the three and six months ended June 30, 2022, respectively, compared to $2.0 million and $4.1 million for June 30, 2021, respectively. The increase in provision for the three months ended June 30, 2022 was primarily due to the growth in commercial loans. Included in the provision for credit losses for the six months ended June 30, 2022 was $586 thousand related to the allowance for unfunded commitments compared to no accrual towards the allowance for unfunded commitments for the six months ended June 30, 2021.
    
• For the three months ended June 30, 2022, net loan charge-offs were $479 thousand, or 0.05% (annualized) of average total loans including loans held for sale, compared to $614 thousand, or 0.07% (annualized), during the three months ended June 30, 2021.
    
• For the six months ended June 30, 2022, net loan charge-offs were $1.0 million, or 0.05% (annualized) of average total loans including loans held for sale, compared to $1.5 million, or 0.09% (annualized), during the six months ended June 30, 2021.

Capital

• As of June 30, 2022, the Corporation’s total shareholders’ equity was $423.6 million, representing a decrease of $19.3 million, or 4.3%, from December 31, 2021, mostly due to a decrease in accumulated other comprehensive income, resulting primarily from the temporary unrealized reduction in the value of the available-for-sale investment portfolio exceeding the amount added to retained earnings during the six months ended June 30, 2022.
    
• Regulatory capital ratios for the Corporation continue to exceed regulatory “well-capitalized” levels as of June 30, 2022.
    
• As of June 30, 2022, the Corporation’s ratio of tangible common equity to tangible assets, a non-GAAP measure, was 6.12%, and reflected the above-noted impact of the Corporation's decrease in accumulated other comprehensive income.¹

About CNB Financial Corporation

CNB Financial Corporation is a financial holding company with consolidated assets of approximately $5.3 billion. CNB Financial Corporation conducts business primarily through its principal subsidiary, CNB Bank. 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, two loan production offices, one drive-up office and 45 full-service offices in Pennsylvania, Ohio, New York and Virginia. CNB Bank’s divisions include ERIEBANK, based in Erie, Pennsylvania, with offices in Northwest Pennsylvania and Northeast Ohio; FCBank, based in Worthington, Ohio, with offices in Central Ohio; BankOnBuffalo, based in Buffalo, New York, with offices in Western New York; and Ridge View Bank, with loan production offices in the Southwest Virginia region. CNB Bank is headquartered in Clearfield, Pennsylvania, with offices in Central and North Central Pennsylvania. Additional information about CNB Financial Corporation may be found at www.CNBBank.bank.

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. 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) adverse changes or conditions in capital and financial markets; (ii) changes in interest rates; (iii) the duration and scope of the COVID-19 pandemic and the local, national and global impact of COVID-19; (iv) actions governments, businesses and individuals take in response to the pandemic; (v) the speed and effectiveness of vaccine and treatment developments and deployment; (vi) variations of COVID-19, such as the Delta and Omicron variants, and the response thereto, (vii) the pace of recovery when the COVID-19 pandemic subsides; (vii) changes in general business, industry or economic conditions or competition; (ix) 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 principles or otherwise; (x) higher than expected costs or other difficulties related to integration of combined or merged businesses; (xi) the effects of business combinations and other acquisition transactions, including the inability to realize our loan and investment portfolios; (xii) changes in the quality or composition of our loan and investment portfolios; (xiii) adequacy of loan loss reserves; (xiv) increased competition; (xv) loss of certain key officers; (xvi) deposit attrition; (xvii) rapidly changing technology; (xviii) unanticipated regulatory or judicial proceedings and liabilities and other costs; (xix) changes in the cost of funds, demand for loan products or demand for financial services; and (xx) other economic, competitive, governmental or technological factors affecting our operations, markets, products, services and prices. Such developments could have an adverse impact on CNB's financial position and results of operations. 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. All dollars are stated in thousands, except share and per share data.

		(unaudited)									(unaudited)
		Three Months Ended									Six Months Ended
		June 30,									June 30,
								%									%
			2022			2021		change				2022			2021		change
Income Statement
Interest and fees on loans		$	44,666		$	38,895		14.8	%		$	85,816		$	77,303		11.0	%
Processing fees on PPP loans			559			1,639		(65.9	)%			1,796			4,370		(58.9	)%
Interest and dividends on securities and cash and cash equivalents			4,516			2,994		50.8	%			8,383			6,150		36.3	%
Interest expense			(3,440	)		(5,223	)	(34.1	)%			(7,077	)		(10,397	)	(31.9	)%
Net interest income			46,301			38,305		20.9	%			88,918			77,426		14.8	%
Provision for credit losses			2,905			1,967		47.7	%			4,548			4,089		11.2	%
Net interest income after provision for credit losses			43,396			36,338		19.4	%			84,370			73,337		15.0	%
Non-interest income
Service charges on deposit accounts			1,771			1,446		22.5	%			3,528			2,794		26.3	%
Other service charges and fees			784			601		30.4	%			1,439			1,091		31.9	%
Wealth and asset management fees			1,803			1,765		2.2	%			3,586			3,287		9.1	%
Net realized gains on available-for-sale securities			0			0		NA				651			0		NA
Net realized and unrealized gains (losses) on equity securities			(641	)		350		(283.1	)%			(1,035	)		470		(320.2	)%
Mortgage banking			292			536		(45.5	)%			767			1,771		(56.7	)%
Bank owned life insurance			1,390			504		175.8	%			2,084			1,444		44.3	%
Card processing and interchange income			1,992			2,079		(4.2	)%			3,801			3,913		(2.9	)%
Other			755			576		31.1	%			2,979			1,326		124.7	%
Total non-interest income			8,146			7,857		3.7	%			17,800			16,096		10.6	%
Non-interest expenses
Salaries and benefits			16,771			13,518		24.1	%			33,759			28,091		20.2	%
Net occupancy expense of premises			3,335			2,935		13.6	%			6,565			6,204		5.8	%
Technology expense			4,024			2,888		39.3	%			7,396			5,558		33.1	%
State and local taxes			1,037			1,029		0.8	%			2,085			2,046		1.9	%
Legal, professional, and examination fees			1,176			897		31.1	%			2,013			2,050		(1.8	)%
FDIC insurance premiums			710			557		27.5	%			1,433			1,173		22.2	%
Core Deposit Intangible amortization			25			28		(10.7	)%			50			56		(10.7	)%
Card processing and interchange expenses			1,256			1,408		(10.8	)%			2,285			2,088		9.4	%
Other			4,275			3,705		15.4	%			8,915			7,503		18.8	%
Total non-interest expenses			32,609			26,965		20.9	%			64,501			54,769		17.8	%
Income before income taxes			18,933			17,230		9.9	%			37,669			34,664		8.7	%
Income tax expense			3,495			3,240		7.9	%			6,986			6,493		7.6	%
Net income			15,438			13,990		10.4	%			30,683			28,171		8.9	%
Preferred stock dividends			1,075			1,075		NA				2,150			2,150		NA
Net income available to common stockholders		$	14,363		$	12,915		11.2	%		$	28,533		$	26,021		9.7	%
Average diluted common shares outstanding			16,815,124			16,824,700						16,829,535			16,811,836
Diluted earnings per common share		$	0.85		$	0.76		11.8	%		$	1.69		$	1.54		9.7	%
Cash dividends per common share		$	0.175		$	0.170		2.9	%		$	0.350		$	0.340		2.9	%
Dividend payout ratio			21	%		22	%					21	%		22	%
		(unaudited)									(unaudited)
		Three Months Ended									Six Months Ended
		June 30,									June 30,
			2022			2021						2022			2021
Average Balances
Total loans and loans held for sale		$	3,836,562		$	3,436,151					$	3,753,149		$	3,411,299
Investment securities			839,169			642,394						822,230			628,489
Total earning assets			4,967,597			4,734,660						4,974,964			4,622,299
Total assets			5,291,987			5,017,734						5,291,851			4,900,128
Noninterest-bearing deposits			839,009			712,725						822,007			682,649
Interest-bearing deposits			3,856,539			3,824,216						3,865,177			3,652,697
Shareholders' equity			425,450			424,534						433,753			422,472
Tangible common shareholders' equity(1)			323,490			322,471						331,780			320,395
Average Yields
Total loans and loans held for sale			4.75	%		4.76	%					4.74	%		4.86	%
Investment securities			1.80	%		1.84	%					1.83	%		1.97	%
Total earning assets			4.01	%		3.72	%					3.90	%		3.87	%
Interest-bearing deposits			0.26	%		0.44	%					0.27	%		0.46	%
Interest-bearing liabilities			0.35	%		0.55	%					0.36	%		0.56	%
Performance Ratios (annualized)
Return on average assets			1.17	%		1.12	%					1.17	%		1.16	%
Return on average equity			14.55	%		13.22	%					14.26	%		13.45	%
Return on average tangible common equity(1)			17.81	%		16.06	%					17.34	%		16.38	%
Net interest margin, fully tax equivalent basis(1)			3.73	%		3.28	%					3.61	%		3.42	%
Efficiency Ratio(1)			59.47	%		57.91	%					59.99	%		58.04	%
Net Loan Charge-Offs
CNB Bank net loan charge-offs		$	161		$	430					$	319		$	1,082
Holiday Financial net loan charge-offs			318			184						688			439
Total Corporation net loan charge-offs		$	479		$	614					$	1,007		$	1,521
Annualized net loan charge-offs / average total loans and loans held for sale			0.05	%		0.07	%					0.05	%		0.09	%

	(unaudited)						(unaudited)				% change	% change
	June 30,			December 31,			June 30,				versus	versus
		2022			2021			2021			12/31/21	06/30/21
Ending Balance Sheet
PPP loans, net of deferred processing fees	$	2,287		$	45,203		$	139,653			(94.9)%	(98.4)%
Syndicated loans		153,154			125,761			68,926			21.8%	122.2%
Loans		3,754,312			3,463,828			3,261,266			8.4%	15.1%
Total Loans		3,909,753			3,634,792			3,469,845			7.6%	12.7%
Loans held for sale		843			849			10,528			(0.7)%	(92.0)%
Investment securities - available for sale & equities		413,946			707,557			685,060			(41.5)%	(39.6)%
Investment securities - held to maturity		413,310			0			0			NA	NA
FHLB and other restricted stock holdings		3,134			2,966			3,230			5.7%	(3.0)%
Other earning assets		222,569			689,758			687,910			(67.7)%	(67.6)%
Total earning assets		4,963,555			5,035,922			4,856,573			(1.4)%	2.2%
Allowance for credit losses		(40,543	)		(37,588	)		(36,908	)		7.9%	9.8%
Goodwill		43,749			43,749			43,749			0.0%	0.0%
Core deposit intangible		410			460			511			(10.9)%	(19.8)%
Other assets		332,144			286,396			285,979			16.0%	16.1%
Total assets	$	5,299,315		$	5,328,939		$	5,149,904			(0.6)%	2.9%
Noninterest-bearing demand deposits	$	851,172		$	792,086		$	727,177			7.5%	17.1%
Interest-bearing demand deposits		1,147,376			1,079,336			1,003,228			6.3%	14.4%
Savings		2,398,995			2,457,745			2,330,102			(2.4)%	3.0%
Certificates of deposit		304,277			386,452			444,258			(21.3)%	(31.5)%
Total deposits		4,701,820			4,715,619			4,504,765			(0.3)%	4.4%
Subordinated debentures		20,620			20,620			20,620			0.0%	0.0%
Subordinated notes, net of issuance costs		83,812			83,661			135,000			0.2%	(37.9)%
Other liabilities		69,475			66,192			59,570			5.0%	16.6%
Total liabilities		4,875,727			4,886,092			4,719,955			(0.2)%	3.3%
Common stock		0			0			0			NA	NA
Preferred stock		57,785			57,785			57,785			NA	NA
Additional paid in capital		126,986			127,351			126,875			(0.3)%	0.1%
Retained earnings		283,204			260,582			239,017			8.7%	18.5%
Treasury stock		(3,026	)		(2,477	)		(1,672	)		22.2%	81.0%
Accumulated other comprehensive income (loss)		(41,361	)		(394	)		7,944			10,397.7%	(620.7)%
Total shareholders' equity		423,588			442,847			429,949			(4.3)%	(1.5)%
Total liabilities and shareholders' equity	$	5,299,315		$	5,328,939		$	5,149,904			(0.6)%	2.9%
Ending shares outstanding		16,859,586			16,855,062			16,884,519
Book value per common share	$	21.70		$	22.85		$	22.04			(5.0)%	(1.5)%
Tangible book value per common share(1)	$	19.08		$	20.22		$	19.42			(5.6)%	(1.8)%
Capital Ratios
Tangible common equity / tangible assets(1)		6.12	%		6.45	%		6.42	%
Tier 1 leverage ratio(3)		8.53	%		8.22	%		8.16	%
Common equity tier 1 ratio(3)		9.30	%		9.65	%		9.71	%
Tier 1 risk-based ratio(3)		11.25	%		11.79	%		12.00	%
Total risk-based ratio(3)		14.23	%		14.92	%		16.83	%
	(unaudited)						(unaudited)
	June 30,			December 31,			June 30,
		2022			2021			2021
Asset Quality
Nonaccrual loans(2)	$	18,954		$	19,420		$	32,299
Loans 90+ days past due and accruing		1,060			168			611
Total nonperforming loans		20,014			19,588			32,910
Other real estate owned		686			707			294
Total nonperforming assets	$	20,700		$	20,295		$	33,204
Loans modified in a troubled debt restructuring ("TDR"):
Performing TDR loans	$	10,596		$	9,006		$	9,115
Nonperforming TDR loans(2)		7,236			7,600			7,854
Total TDR loans	$	17,832		$	16,606		$	16,969
Nonperforming assets / Total loans + OREO		0.53	%		0.56	%		0.96	%
Nonperforming assets / Total assets		0.39	%		0.38	%		0.64	%
Ratio of allowance for credit losses on loans to nonaccrual loans		213.90	%		193.55	%		114.27	%
Allowance for credit losses / Total loans		1.04	%		1.03	%		1.06	%
Allowance for credit losses / Total loans, net of PPP-related loans(1)		1.04	%		1.05	%		1.11	%
(1)Management uses non-GAAP financial information in its analysis of the Corporation’s performance. Management believes that these non-GAAP measures provide a greater understanding of ongoing operations, enhance comparability of results of operations with prior periods and show the effects of significant gains and charges in the periods presented. The Corporation’s management believes that investors may use these non-GAAP measures to analyze the Corporation’s financial performance without the impact of unusual items or events that may obscure trends in the Corporation’s underlying performance. This non-GAAP data should be considered in addition to results prepared in accordance with GAAP, and is not a substitute for, or superior to, GAAP results. Limitations associated with non-GAAP financial measures include the risks that persons might disagree as to the appropriateness of items included in these measures and that different companies might calculate these measures differently. A reconciliation of these non-GAAP financial measures is provided below (dollars in thousands, except per share data).
(2) Nonperforming TDR loans are also included in the balance of nonaccrual loans in the previous table.
(3) Capital ratios as of June 30, 2022 are estimated pending final regulatory filings.

Non-GAAP Reconciliations(1):
	(unaudited)						(unaudited)
	June 30,			December 31,			June 30,
		2022			2021			2021
Calculation of tangible book value per share and tangible common equity/tangible assets:
Shareholders' equity	$	423,588		$	442,847		$	429,949
Less: preferred equity		57,785			57,785			57,785
Less: goodwill		43,749			43,749			43,749
Less: core deposit intangible		410			460			511
Tangible common equity	$	321,644		$	340,853		$	327,904
Total assets	$	5,299,315		$	5,328,939		$	5,149,904
Less: goodwill		43,749			43,749			43,749
Less: core deposit intangible		410			460			511
Tangible assets	$	5,255,156		$	5,284,730		$	5,105,644
Ending shares outstanding		16,859,586			16,855,062			16,884,519
Tangible book value per common share	$	19.08		$	20.22		$	19.42
Tangible common equity/Tangible assets		6.12	%		6.45	%		6.42	%

Non-GAAP Reconciliations(1):
	(unaudited)						(unaudited)
	June 30,			December 31,			June 30,
		2022			2021			2021
Calculation of allowance / total loans, net of PPP-related loans:
Total allowance for credit losses	$	40,543		$	37,588		$	36,908
Total loans	$	3,909,753		$	3,634,792		$	3,469,845
Less: PPP-related loans		2,287			45,203			139,653
Adjusted total loans, net of PPP-related loans (non-GAAP)	$	3,907,466		$	3,589,589		$	3,330,192
Adjusted allowance / total loans, net of PPP-related loans (non-GAAP)		1.04	%		1.05	%		1.11	%

Non-GAAP Reconciliations(1):
		(unaudited)							(unaudited)
		Three Months Ended							Six Months Ended
		June 30,							June 30,
			2022			2021				2022			2021
Calculation of net interest margin:
Interest income		$	49,741		$	43,528			$	95,995		$	87,823
Interest expense			3,440			5,223				7,077			10,397
Net interest income		$	46,301		$	38,305			$	88,918		$	77,426
Average total earning assets		$	4,967,597		$	4,734,660			$	4,974,964		$	4,622,299
Net interest margin, fully tax equivalent basis (non-GAAP) (annualized)			3.74	%		3.25	%			3.60	%		3.38	%
Calculation of net interest margin (fully tax equivalent basis):
Interest income (fully tax equivalent basis) (non-GAAP)		$	49,741		$	43,528			$	95,995		$	87,823
Tax equivalent adjustment (non-GAAP)			306			308				650			631
Adjusted interest income (fully tax equivalent basis) (non-GAAP)			50,047			43,836				96,645			88,454
Interest expense			3,440			5,223				7,077			10,397
Net interest income (fully tax equivalent basis) (non-GAAP)		$	46,607		$	38,613			$	89,568		$	78,057
Average total earning assets		$	4,967,597		$	4,734,660			$	4,974,964		$	4,622,299
Less: average mark to market adjustment on investments			(37,519	)		9,238				(24,101	)		13,246
Adjusted average total earning assets, net of mark to market (non-GAAP)		$	5,005,116		$	4,725,422			$	4,999,065		$	4,609,053
Net interest margin, fully tax equivalent basis (non-GAAP) (annualized)			3.73	%		3.28	%			3.61	%		3.42	%

Non-GAAP Reconciliations(1):
		(unaudited)							(unaudited)
		Three Months Ended							Six Months Ended
		June 30,							June 30,
			2022			2021				2022			2021
Calculation of efficiency ratio:
Non-interest expense		$	32,609		$	26,965			$	64,501		$	54,769
Less: core deposit intangible amortization			25			28				50			56
Adjusted non-interest expense (non-GAAP)		$	32,584		$	26,937			$	64,451		$	54,713
Non-interest income		$	8,146		$	7,857			$	17,800		$	16,096
Net interest income		$	46,301		$	38,305			$	88,918		$	77,426
Less: tax exempt investment and loan income, net of TEFRA (non-GAAP)			1,208			1,221				2,535			2,525
Add: tax exempt investment and loan income (non-GAAP) (tax-equivalent)			1,549			1,576				3,252			3,265
Adjusted net interest income (non-GAAP)			46,642			38,660				89,635			78,166
Adjusted net revenue (non-GAAP) (tax-equivalent)		$	54,788		$	46,517			$	107,435		$	94,262
Efficiency ratio			59.47	%		57.91	%			59.99	%		58.04	%

Non-GAAP Reconciliations(1):
		(unaudited)					(unaudited)
		Three Months Ended					Six Months Ended
		June 30,					June 30,
			2022		2021			2022		2021
Calculation of PPNR:(2)
Net interest income		$	46,301	$	38,305		$	88,918	$	77,426
Add: Non-interest income			8,146		7,857			17,800		16,096
Less: Non-interest expense			32,609		26,965			64,501		54,769
PPNR (non-GAAP)		$	21,838	$	19,197		$	42,217	$	38,753
(2)Management believes that this is an important metric as it illustrates the underlying performance of the Corporation, it enables investors and others to assess the Corporation's ability to generate capital to cover credit losses through the credit cycle and provides consistent reporting with a key metric used by bank regulatory agencies.

Non-GAAP Reconciliations(1):
		(unaudited)							(unaudited)
		Three Months Ended							Six Months Ended
		June 30,							June 30,
			2022			2021				2022			2021
Calculation of return on average tangible common equity:
Net income available to common stockholders		$	14,363		$	12,915			$	28,533		$	26,021
Average tangible common shareholders' equity			323,490			322,471				331,780			320,395
Return on average tangible common equity (non-GAAP) (annualized)			17.81	%		16.06	%			17.34	%		16.38	%

Non-GAAP Reconciliations(1):
		(unaudited)					(unaudited)
		Three Months Ended					Six Months Ended
		June 30,					June 30,
			2022		2021			2022		2021
Calculation of non-interest income excluding net realized gains on available-for-sale securities:
Non-interest income		$	8,146	$	7,857		$	17,800	$	16,096
Less: net realized gains on available-for-sale securities			0		0			651		0
Adjusted non-interest income		$	8,146	$	7,857		$	17,149	$	16,096

FAQ

What were CNB Financial Corporation's earnings for Q2 2022?

CNB Financial reported net income of $14.4 million for Q2 2022, or $0.85 per diluted share.

How much did total revenue increase for CNB Financial in Q2 2022?

Total revenue for CNB Financial increased by 17.9% year-over-year to $54.4 million in Q2 2022.

What is the current status of nonperforming assets at CNB Financial?

Nonperforming assets at CNB Financial were 0.39% of total assets as of June 30, 2022.

How did CNB Financial's net loan charge-offs change in Q2 2022?

Net loan charge-offs decreased to 0.05% of average total loans for Q2 2022.

What impact did PPP loans have on CNB Financial's earnings?

PPP-related fees dropped to approximately $559 thousand for Q2 2022 compared to $1.6 million in the previous year.