CNB Financial Corporation Reports Third Quarter Earnings for 2013

      CNB Financial Corporation Reports Third Quarter Earnings for 2013

PR Newswire

CLEARFIELD, Pa., Oct. 22, 2013

CLEARFIELD, Pa., Oct. 22, 2013 /PRNewswire/ -- CNB Financial Corporation
("CNB") (NASDAQ: CCNE), the parent company of CNB Bank, today announced its
earnings for the third quarter and first nine months of 2013. Highlights
include the following:

  oExcluding the effects of realized gains on the sale of available-for-sale
    securities and merger costs, pre-tax income of $7.1 million for the three
    months ended September 30, 2013, compared to pre-tax income of $6.3
    million in the third quarter of 2012.
  oExcluding the effects of realized gains on the sale of available-for-sale
    securities and merger costs, pre-tax income of $17.3 million for the nine
    months ended September 30, 2013, compared to pre-tax income of $16.9
    million for the nine months ended September 30, 2012.
  oNet interest income of $14.6 million for the third quarter of 2013, an
    increase of 7.2% over the third quarter of 2012.
  oNet interest income of $41.9 million for the nine months ended September
    30, 2013, an increase of 5.8% over the nine months ended June 30, 2012.
  oAnnualized returns on average assets and equity of 0.88% and 11.42%,
    respectively, for the nine months ended September 30, 2013.
  oLoans of $1,029.0 million at September 30, 2013, an increase of $118.8
    million, or 13.0%, compared to September 30, 2012.
  oDeposits of $1.55 billion at September 30, 2013, an increase of $72.0
    million, or 4.9%, compared to September 30, 2012.
  oTotal non-performing assets of $14.5 million, or 0.79% of total assets as
    of September 30, 2013.

CNB Financial Corporation also successfully closed its previously announced
acquisition of FC Banc Corp. ("FC") on October 11, 2013. Under the terms of
the merger agreement, FC merged with and into CNB, with CNB being the
surviving corporation of the merger. Additionally, Farmers Citizens Bank, the
wholly owned subsidiary of FC, merged with and into CNB Bank, with CNB Bank
continuing as the surviving entity.

Joseph B. Bower, Jr., President and CEO, commented, "We are pleased to report
strong third quarter earnings to our shareholders. Excluding the effects of
merger costs and securities transactions, CNB was able to increase earnings
while also growing total assets. In addition, we are excited about the
ability to expand our banking franchise to central Ohio following the
acquisition of FC Banc Corp."

Net Interest Income and Margin

During the nine months ended September 30, 2013, net interest income increased
$2.3 million, or 5.8%, compared to the nine months ended September 30, 2012.
Net interest margin on a fully tax equivalent basis was 3.38% for both the
three and nine months ended September 30, 2013, compared to 3.53% and 3.49%
for the three and nine months ended September 30, 2012.

Although the yield on earnings assets decreased from 4.45% during the nine
months ended September 30, 2012 to 4.08% during the nine months ended
September 30, 2013, CNB's average earning assets increased from $1.61 billion
to $1.72 billion, or 7.2%. Due to growth in core deposits, interest-bearing
deposits have increased $51.5 million, or 3.9%, as compared to September 30,
2012. However, interest expense for the nine months ended September 30, 2013
decreased by $2.5 million, or 22.0%, compared to the nine months ended
September 30, 2012, as a result of decreases in the cost of core deposits.

CNB's strong and growing deposit base and low cost of funds has offset the
decline in yield on earning assets as the company has been prudent in managing
its deposit rates, resulting in the increase in net interest income.

Asset Quality

During the nine months ended September 30, 2013, CNB recorded a provision for
loan losses of $4.9 million, as compared to a provision for loan losses of
$4.0 million for the nine months ended September 30, 2012.

A commercial mortgage loan with a carrying value of $3.3 million defaulted in
the second quarter. Based on management's evaluation of the fair value of the
associated collateral, no provision for loan losses was required to be
recorded for this loan relationship as of June 30, 2013. During the third
quarter of 2013, this loan was modified in a troubled debt restructuring,
which will result in the Corporation receiving reduced monthly payments that
will be applied entirely to the loan's principal balance. The Corporation
also obtained an updated appraisal for the loan collateral in October 2013
and, as a result, recorded a provision for loan losses of $562 thousand for
the quarter ended September 30, 2013.

In July 2013, CNB recorded a loan loss recovery of $1.4 million related to an
impaired commercial mortgage loan. A partial chargeoff had been recorded for
this loan in a prior period. At the recovery date, the carrying amount of the
loan was $5.2 million, which was satisfied in full by CNB's participation in
the issuance of a loan at market terms to a new borrower who purchased the
property securing the loan.

Non-Interest Income

Excluding the effects of securities transactions, non-interest income was $9.3
million for the nine months ended September 30, 2013, compared to $7.9 million
for the nine months ended September 30, 2012. Net realized gains on
available-for-sale securities were $0 and $328 thousand during the three and
nine months ended September 30, 2013, compared to $103 thousand and $1.4
million during the three and nine months ended September 30, 2012. Net
realized and unrealized gains on trading securities were $166 thousand and
$497 thousand during the three and nine months ended September 30, 2013,
compared to $275 thousand and $455 thousand during the three and nine months
ended September 30, 2012.

Wealth and asset management fees increased from $1.3 million during the nine
months ended September 30, 2012 to $1.7 million during the nine months ended
September 30, 2013 due to increases in assets under management resulting from
CNB's strategic focus to grow its Wealth and Asset Management Division.
During the nine months ended September 30, 2013, CNB recorded $1.4 million in
income from bank owned life insurance policies, including $576 thousand
representing the excess of the face value of certain policies over their cash
surrender values resulting from the maturity of the policies.

Non-Interest Expenses

Total non-interest expenses increased $3.8 million, or 13.9%, during the nine
months ended September 30, 2013 compared to the nine months ended September
30, 2012. Non-interest expenses for the three and nine months ended September
30, 2013 include merger related expenses of $398 thousand and $1.3 million,
respectively.

Salaries and benefits expenses increased $1.6 million, or 11.6%, during the
nine months ended September 30, 2013 compared to the nine months ended
September 30, 2012, in part due to routine merit increases, an increase in
average full-time equivalent employees, and increases in certain employee
benefit expenses, such as health insurance premiums, which continue to
increase in line with market conditions. Net occupancy expenses increased
$438 thousand, or 12.9%, during the nine months ended September 30, 2013
compared to the nine months ended September 30, 2012, as a result of
anticipated increases in repair, maintenance, and utility expenses, as well as
increases in depreciation expense for recently completed projects and asset
purchases.

About CNB Financial Corporation

CNB Financial Corporation is a financial holding company with consolidated
post-merger 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, a loan production office, and 29 full-service
offices in Pennsylvania, including ERIEBANK, a division of CNB Bank, as well
as 8 full-service offices in 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
Section27A of the Securities Act of 1933, as amended, and Section21E 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." 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:changes in
general business, industry or economic conditions or competition; 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; adverse changes or
conditions in capital and financial markets; changes in interest rates; higher
than expected costs or other difficulties related to integration of combined
or merged businesses; the inability to realize expected cost savings or
achieve other anticipated benefits in connection with business combinations
and other acquisitions, including the acquisition of FC Banc Corp.; changes in
the quality or composition of CNB's loan and investment portfolios; adequacy
of loan loss reserves; increased competition; loss of certain key officers;
continued relationships with major customers; deposit attrition; rapidly
changing technology; unanticipated regulatory or judicial proceedings and
liabilities and other costs; changes in the cost of funds, demand for loan
products or demand for financial services; and other economic, competitive,
governmental or technological factors affecting CNB's operations, markets,
products, services and prices. Some of these and other factors are discussed
in CNB's annual and quarterly reports previously filed with the SEC. Such
factors could cause actual results to differ materially from those in the
forward-looking statements.

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)                   (unaudited)
                    Three Months Ended            Nine Months Ended
                    September 30,                 September 30,
                    (Dollars in thousands, except share and per share data)
                    2013       2012       %       2013       2012       %
                                          change                        change
Income Statement
Interest income     $         $         1.9%    $         $         -0.5%
                    17,465    17,133            50,927    51,164
Interest expense    2,817      3,463      -18.7%  9,002      11,543     -22.0%
 Net interest       14,648     13,670     7.2%    41,925     39,621     5.8%
 income
Provision for loan  846        1,188      -28.8%  4,891      4,038      21.1%
losses
 Net interest
 income after       13,802     12,482     10.6%   37,034     35,583     4.1%
 provision for loan
 losses
Non-interest income
 Wealth and asset   615        498        23.5%   1,727      1,311      31.7%
 management fees
 Service charges on 1,102      1,049      5.1%    3,063      3,020      1.4%
 deposit accounts
 Other service      607        467        30.0%   1,561      1,367      14.2%
 charges and fees
 Net realized gains
 on                 -          103        n/a     328        1,400      -76.6%
 available-for-sale
 securities
 Net realized and
 unrealized gains   166        275        -39.6%  497        455        9.2%
 on trading
 securities
 Mortgage banking   107        225        -52.4%  633        686        -7.7%
 Bank owned life    365        229        59.4%   1,442      752        91.8%
 insurance
 Other              286        233        22.7%   839        767        9.4%
     Total
     non-interest   3,248      3,079      5.5%    10,090     9,758      3.4%
     income
Non-interest
expenses
 Salaries and       5,288      4,831      9.5%    15,817     14,175     11.6%
 benefits
 Net occupancy
 expense of         1,234      1,138      8.4%    3,832      3,394      12.9%
 premises
 FDIC insurance     332        283        17.3%   930        816        14.0%
 premiums
 Merger costs       398        -          n/a     1,329      -          n/a
 Other              3,091      2,956      4.6%    8,910      8,670      2.8%
     Total
     non-interest   10,343     9,208      12.3%   30,818     27,055     13.9%
     expenses
Income before       6,707      6,353      5.6%    16,306     18,286     -10.8%
income taxes
Income tax expense  2,004      1,790      12.0%   4,355      5,040      -13.6%
Net income          $        $        3.1%    $         $         -9.8%
                    4,703     4,563             11,951    13,246
Average diluted     12,463,867 12,411,449         12,454,285 12,391,178
shares outstanding
Diluted earnings    $0.38      $0.37      2.7%    $0.96      $1.06      -9.4%
per share
Cash dividends per  $0.165     $0.165     0.0%    $0.495     $0.495     0.0%
share
Payout ratio        43%        45%                52%        47%
Average Balances
Loans, net of       $1,020,524 $ 910,214         $ 972,745 $ 884,946
unearned income
Total earning       1,741,547  1,638,483          1,721,899  1,605,806
assets
Total assets        1,831,937  1,735,532          1,814,857  1,700,846
Total deposits      1,554,816  1,468,485          1,537,688  1,434,085
Shareholders'       130,224    143,606            139,575    139,036
equity
Performance Ratios
Return on average   1.03%      1.05%              0.88%      1.04%
assets
Return on average   14.45%     12.71%             11.42%     12.70%
equity
Net interest margin 3.38%      3.53%              3.38%      3.49%
(FTE)
Loan Charge-Offs
Net loan                       $                $        $  
charge-offs         $  (875) 1,228             1,730     3,004
(recoveries)
Net loan
charge-offs /       -0.34%     0.54%              0.24%      0.45%
average loans
The following is a non-GAAP disclosure of pre-tax net income excluding
the effects of net realized gains on the sale of available for sale
securities and one-time merger costs:
                    (unaudited)                   (unaudited)
                    Three Months Ended            Nine Months Ended
                    September 30,                 September 30,
                    (Dollars in thousands, except share and per share data)
                    2013       2012       %       2013       2012       %
                                          change                        change
Pre-tax net income, $        $        5.6%    $         $         -10.8%
GAAP basis          6,707     6,353             16,306    18,286
Net realized gains
on                  -          (103)      n/a     (328)      (1,400)    -76.6%
available-for-sale
securities
Merger costs        398        -          n/a     1,329      -          n/a
Pre-tax net income, $        $        13.7%   $         $         2.5%
non-GAAP            7,105     6,250             17,307    16,886



                 (unaudited) (unaudited)            (unaudited)
                                         December                % change
                 September   June 30,    31,        September    versus
                 30,                                30,
                 2013        2013        2012       2012         6/30/13 9/30/12
                 (Dollars in thousands, except share and per
                 share data)
Ending Balance
Sheet
Loans, net of    $        $       $        $        4.7%    13.0%
unearned income  1,028,971  982,947     927,824   910,217
Loans held for   399         53          2,398      3,847        652.8%  -89.6%
sale
Investment       704,889     729,027     741,770    722,904      -3.3%   -2.5%
securities
FHLB and other   7,580       7,565       6,684      6,755        0.2%    12.2%
equity interests
Other earning    4,375       4,298       3,536      4,050        1.8%    8.0%
assets
 Total earning 1,746,214   1,723,890   1,682,212  1,647,773    1.3%    6.0%
assets
Allowance for    (17,221)    (15,500)    (14,060)   (13,649)     11.1%   26.2%
loan losses
Goodwill         10,946      10,946      10,946     10,946       0.0%    0.0%
Other assets     97,480      90,109      93,981     96,127       8.2%    1.4%
 Total assets  $        $         $         $         1.5%    5.5%
                 1,837,419  1,809,445  1,773,079  1,741,197
Non              $      $       $        $    
interest-bearing 189,362     176,700     175,239   168,888     7.2%    12.1%
deposits
Interest-bearing 1,362,919   1,369,846   1,309,764  1,311,382    -0.5%   3.9%
deposits
 Total         1,552,281   1,546,546   1,485,003  1,480,270    0.4%    4.9%
deposits
Borrowings       122,976     100,477     97,806     74,336       22.4%   65.4%
Subordinated     20,620      20,620      20,620     20,620       0.0%    0.0%
debt
Other            10,776      10,822      24,286     22,280       -0.4%   -51.6%
liabilities
Common stock     -           -           -          -            n/a     n/a
Additional paid  44,065      43,950      44,223     44,150       0.3%    -0.2%
in capital
Retained         94,718      92,080      88,960     87,128       2.9%    8.7%
earnings
Treasury stock   (1,179)     (1,222)     (1,743)    (1,828)      -3.5%   -35.5%
Accumulated
other            (6,838)     (3,828)     13,924     14,241       78.6%   n/a
comprehensive
income (loss)
 Total
shareholders'    130,766     130,980     145,364    143,691      -0.2%   -9.0%
equity
 Total
liabilities and  $        $         $         $         1.5%    5.5%
shareholders'    1,837,419  1,809,445  1,773,079  1,741,197
equity
Ending shares    12,514,138  12,511,095  12,475,904 12,470,371
outstanding
Book value per   $      $      $      $     
share              10.45    10.47     11.65      11.52
Tangible book    $      $      $      $     
value per share     9.57    9.59    10.77      10.64
(*)
Capital Ratios
Tangible common
equity /         6.56%       6.67%       7.63%      7.67%
tangible assets
(*)
Leverage ratio   8.05%       7.94%       8.06%      8.03%
Tier 1 risk      13.71%      13.86%      14.03%     14.10%
based ratio
Total risk based 14.96%      15.11%      15.28%     15.36%
ratio
Asset Quality
Non-accrual      $      $      $       $     
loans             14,188    19,582      14,445    18,557
Loans 90+ days
past due and     123         212         357        454
accruing
 Total
non-performing   14,311      19,794      14,802     19,011
loans
Other real       176         174         325        491
estate owned
 Total         $      $      $       $     
non-performing    14,487    19,968      15,127    19,502
assets
Loans modified
in a troubled
debt
restructuring
(TDR):
 Performing    $      $      $      $     
TDR loans          7,985    8,102     9,961      8,726
 Non-accrual   5,271       2,128       1,660      1,657
TDR loans **
 Total    $      $      $       $     
TDR loans         13,256    10,230      11,621    10,383
Non-performing
assets / Loans + 1.41%       2.03%       1.63%      2.14%
OREO
Non-performing
assets / Total   0.79%       1.10%       0.85%      1.12%
assets
Allowance for
loan losses /    1.67%       1.58%       1.52%      1.50%
Loans
* 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).
 ** Non-accrual 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)            (unaudited)
                 September   June 30,    December   September
                 30,                     31,        30,
                 2013        2013        2012       2012
Shareholders'    $      $       $       $    
equity           130,766     130,980     145,364    143,691
 Less        10,946      10,946      10,946     10,946
goodwill
Tangible common  $      $       $       $    
equity           119,820     120,034     134,418    132,745
Total assets     $        $         $         $   
                 1,837,419  1,809,445  1,773,079 1,741,197
 Less        10,946      10,946      10,946     10,946
goodwill
Tangible assets  $        $         $         $   
                 1,826,473  1,798,499  1,762,133 1,730,251
Ending shares    12,514,138  12,511,095  12,475,904 12,470,371
outstanding
Tangible book    $      $      $      $     
value per share     9.57    9.59     10.77     10.64
Tangible common
equity/Tangible  6.56%       6.67%       7.63%      7.67%
assets

SOURCE CNB Financial Corporation

Website: http://www.bankcnb.com
Contact: Brian W. Wingard, Treasurer, (814) 765-9621
 
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