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8-K - FORM 8-K - CNB FINANCIAL CORP/PAd478930d8k.htm

Exhibit 99

News Release

 

LOGO    Contact:   Brian W. Wingard
     Treasurer
     (814) 765-9621
     FOR IMMEDIATE RELEASE

CNB FINANCIAL CORPORATION REPORTS 2012 EARNINGS OF $17.1 MILLION, A 13% INCREASE OVER 2011

Clearfield, Pennsylvania – January 31, 2013

CNB Financial Corporation (“CNB”) (NASDAQ: CCNE), the parent company of CNB Bank, today announced its earnings for the year ended December 31, 2012. Highlights include the following:

 

   

Net income of $17.1 million for the year ended December 31, 2012, or $1.38 per share, a 13% increase in net income and a 12% increase in diluted earnings per share over the year ended December 31, 2011.

 

   

Loans of $927.8 million at December 31, 2012, an increase of $77.9 million, or 9.2%, compared to December 31, 2011.

 

   

Deposits of $1.49 billion at December 31, 2012, an increase of $131.2 million, or 9.7%, compared to December 31, 2011.

 

   

Returns on average assets and equity of 1.00% and 12.17%, respectively, for the year ended December 31, 2012.

 

   

Tangible book value per share of $10.77 per share as of December 31, 2012, an increase of 10.1% over tangible book value per share of $9.78 at December 31, 2011.

 

   

Cost of funds of 1.08% for the year ended December 31, 2012, compared to 1.44% for the year ended December 31, 2011.

 

   

Non-performing assets of $15.1 million, or 0.85% of total assets as of December 31, 2012, compared to $17.5 million, or 1.09% of total assets, at December 31, 2011.

Joseph B. Bower, Jr., President and CEO, commented, “We continue to be pleased with the overall asset growth of the Corporation of 11%, which has resulted in the 2012 net income growth of 13%. The Corporation’s enhanced credit quality in 2012 should also provide for continued earnings improvement in 2013.”

Net Interest Income and Margin

During the year ended December 31, 2012, net interest income increased $5.1 million, or 10.5%, compared to the year ended December 31, 2011. Net interest margin on a fully tax equivalent basis was 3.49% for the year ended December 31, 2012, compared to 3.59% for the year ended December 31, 2011. Net interest margin was 3.47% in the first and second quarters of 2012, 3.53% in the third quarter of 2012, and 3.49% in the fourth quarter of 2012 as CNB was able to attract and deploy low cost core deposits into loans within our markets.

Although the yield on earnings assets decreased from 4.84% during the year ended December 31, 2011 to 4.42% during the year ended December 31, 2012, CNB’s average earning assets increased from $1.41 billion to $1.62 billion, or 14.9%, resulting in an increase in interest income of $2.4 million, or 3.7%.

Due to growth in core deposits, interest-bearing liabilities have increased significantly during the last twelve months. Interest-bearing deposits as of December 31, 2012 grew $108.6 million, or 9.0%, as compared to December 31, 2011. However, CNB’s total interest expense for the year ended December 31, 2012 decreased by $2.7 million, or 15.1%, compared to the year ended December 31, 2011, primarily as a result of decreases in the cost of core deposits. CNB’s strong and growing deposit base and low cost of funds have, along with the increase in average earnings assets described above, offset the decline in yield on earning assets, resulting in the increase in net interest income.

Asset Quality

During the year ended December 31, 2012, CNB recorded a provision for loan losses of $6.4 million, as compared to a provision for loan losses of $4.9 million for the year ended December 31, 2011. The provision for loan losses was $2.3 million in both the three month periods ended December 31, 2012 and 2011.

During the fourth quarter of 2012, an impaired commercial loan was partially repaid in October, resulting in an additional chargeoff of $109 thousand and a reduction in nonperforming assets of $1.8 million. In December 2012, one impaired commercial and industrial loan with a balance of $1.4 million was charged off. As of September 30, 2012, a workout agreement with the borrower was probable, which would have resulted in no loss to CNB. As a result, no specific reserve was recorded as of the end of the third quarter of 2012. In December, CNB obtained new information from the borrower and determined that the likelihood of a workout agreement or any future payments from the borrower was remote. Therefore, the


loan was charged off and the provision for loan losses was increased by $1.4 million during the fourth quarter of 2012. In addition, the effect of increases in net chargeoffs in 2012 and the increase in the loan portfolio in 2012 had a significant impact on the allowance and provision for loan losses required for homogeneous loan pools as of and for the year ended December 31, 2012. The allowance for loan loss balance attributable to loans collectively evaluated for impairment increased from $11.1 million at December 31, 2011 to $12.2 million at December 31, 2012.

Non-Interest Income

Excluding the effects of the securities transactions described below, non-interest income was $10.7 million for the year ended December 31, 2012, compared to $10.4 million for the year ended December 31, 2011. Net realized gains on available-for-sale securities were $1.4 million during the year ended December 31, 2012, compared to $614 thousand during the year ended December 31, 2011. Net realized and unrealized gains on securities for which fair value was elected were $461 thousand and $64 thousand during the years ended December 31, 2012 and 2011, respectively. An other-than-temporary impairment charge of $398 thousand was recorded in earnings on structured pooled trust preferred securities during the year ended December 31, 2011.

Non-Interest Expenses

Total non-interest expenses increased $2.7 million, or 8.0%, during the year ended December 31, 2012 compared to the year ended December 31, 2011. Salaries and benefits expenses increased $1.6 million, or 9.3%, during the year ended December 31, 2012 compared to the year ended December 31, 2011, in part due to routine merit increases, an increase in full-time equivalent employees from 300 at December 31, 2011 to 323 at December 31, 2012, and increases in certain employee benefit expenses, such as health insurance costs, which continue to increase in line with market conditions. In addition, other non-interest expenses increased from $10.3 million for year ended December 31, 2011 to $11.3 million for the year ended December 31, 2012 as a result of CNB’s continued growth.

Total non-interest expenses in relation to CNB’s average asset size declined from 2.20% for the year ended December 31, 2011 to 2.10% for the year ended December 31, 2012.

About CNB Financial Corporation

CNB Financial Corporation is a financial holding company with consolidated assets of approximately $1.8 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 loan production office, a private banking division and 28 full-service offices in Pennsylvania, including ERIEBANK, 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.” 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; 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)
Three Months Ended
December 31,
    Twelve Months Ended
December 31,
 
                       (unaudited)              
     2012     2011     %
change
    2012     2011     %
change
 
     (Dollars in thousands, except share and per share data)  

Income Statement

            

Interest income

   $ 16,965      $ 16,808        0.9   $ 68,129      $ 65,712        3.7

Interest expense

     3,377        4,264        -20.8     14,920        17,579        -15.1
  

 

 

   

 

 

     

 

 

   

 

 

   

Net interest income

     13,588        12,544        8.3     53,209        48,133        10.5

Provision for loan losses

     2,343        2,264        3.5     6,381        4,937        29.2
  

 

 

   

 

 

     

 

 

   

 

 

   

Net interest income after provision for loan losses

     11,245        10,280        9.4     46,828        43,196        8.4
  

 

 

   

 

 

     

 

 

   

 

 

   

Non-interest income

            

Wealth and asset management fees

     508        466        9.0     1,819        1,691        7.6

Service charges on deposit accounts

     1,086        1,104        -1.6     4,106        4,233        -3.0

Other service charges and fees

     501        425        17.9     1,868        1,626        14.9

Net realized and unrealized gains on securities for which fair value was elected

     6        280        -97.9     461        64        620.3

Mortgage banking

     304        229        32.8     990        735        34.7

Bank owned life insurance

     221        256        -13.7     973        930        4.6

Other

     198        238        -16.8     965        1,224        -21.2

Total other-than-temporary impairment losses on available for sale securities

     —          —          NA        —          (398     NA   

Less portion of loss recognized in other comprehensive income

     —          —          NA        —          —          NA   
  

 

 

   

 

 

     

 

 

   

 

 

   

Net impairment losses recognized in earnings

     —          —          NA        —          (398     NA   

Net realized gains (losses) on available-for-sale securities

     (21     456        NA        1,379        614        124.6
  

 

 

   

 

 

     

 

 

   

 

 

   

Net impairment losses recognized in earnings and realized gains on available-for-sale securities

     (21     456        NA        1,379        216        538.4
  

 

 

   

 

 

     

 

 

   

 

 

   

Total non-interest income

     2,803        3,454        -18.8     12,561        10,719        17.2
  

 

 

   

 

 

     

 

 

   

 

 

   

Non-interest expenses

            

Salaries and benefits

     4,718        4,443        6.2     18,893        17,285        9.3

Net occupancy expense of premises

     1,257        1,038        21.1     4,651        4,416        5.3

FDIC insurance premiums

     299        290        3.1     1,115        1,259        -11.4

Other

     2,616        2,769        -5.5     11,286        10,322        9.3
  

 

 

   

 

 

     

 

 

   

 

 

   

Total non-interest expenses

     8,890        8,540        4.1     35,945        33,282        8.0
  

 

 

   

 

 

     

 

 

   

 

 

   

Income before income taxes

     5,158        5,194        -0.7     23,444        20,633        13.6

Income tax expense

     1,268        1,325        -4.3     6,308        5,529        14.1
  

 

 

   

 

 

     

 

 

   

 

 

   

Net income

   $ 3,890      $ 3,869        0.5   $ 17,136      $ 15,104        13.5
  

 

 

   

 

 

     

 

 

   

 

 

   

Average diluted shares outstanding

     12,438,228        12,332,755          12,403,110        12,279,617     

Diluted earnings per share

   $ 0.31      $ 0.31        0.0   $ 1.38      $ 1.23        12.2

Cash dividends per share

   $ 0.165      $ 0.165        0.0   $ 0.66      $ 0.66        0.0

Payout ratio

     53     53       48     54  

Average Balances

            

Loans, net of unearned income

   $ 916,796      $ 843,884        $ 892,908      $ 819,766     

Total earning assets

     1,652,019        1,486,356          1,617,359        1,407,744     

Total assets

     1,754,164        1,587,946          1,714,175        1,510,779     

Total deposits

     1,480,775        1,341,131          1,445,758        1,266,906     

Shareholders’ equity

     146,297        130,480          140,851        122,211     

Performance Ratios

            

Return on average assets

     0.89     0.97       1.00     1.00  

Return on average equity

     10.64     11.86       12.17     12.36  

Net interest margin (FTE)

     3.49     3.52       3.49     3.59  

Loan Charge-Offs

            

Net loan charge-offs

   $ 1,932      $ 1,901        $ 4,936      $ 3,142     

Net loan charge-offs / average loans

     0.84     0.90       0.55     0.38  


     (unaudited)
December 31,
    (unaudited)
September 30,
    December 31,     % change versus  
     2012     2012     2011     9/30/12     12/31/11  
     (Dollars in thousands, except share and per share data)              

Ending Balance Sheet

          

Loans, net of unearned income

   $ 927,824      $ 910,217      $ 849,883        1.9     9.2

Loans held for sale

     2,398        3,847        1,442        -37.7     66.3

Investment securities

     741,770        722,904        641,340        2.6     15.7

FHLB and other equity interests

     6,684        6,755        6,537        -1.1     2.2

Other earning assets

     3,536        4,050        3,895        -12.7     -9.2
  

 

 

   

 

 

   

 

 

     

Total earning assets

     1,682,212        1,647,773        1,503,097        2.1     11.9

Allowance for loan losses

     (14,060     (13,649     (12,615     3.0     11.5

Goodwill

     10,946        10,946        10,821        0.0     1.2

Other assets

     93,981        96,127        100,904        -2.2     -6.9
  

 

 

   

 

 

   

 

 

     

Total assets

   $ 1,773,079      $ 1,741,197      $ 1,602,207        1.8     10.7
  

 

 

   

 

 

   

 

 

     

Non interest-bearing deposits

   $ 175,239      $ 168,888      $ 152,732        3.8     14.7

Interest-bearing deposits

     1,309,764        1,311,382        1,201,119        -0.1     9.0
  

 

 

   

 

 

   

 

 

     

Total deposits

     1,485,003        1,480,270        1,353,851        0.3     9.7

Borrowings

     97,806        74,336        74,456        31.6     31.4

Subordinated debt

     20,620        20,620        20,620        0.0     0.0

Other liabilities

     24,286        22,280        21,391        9.0     13.5

Common stock

     —           —           —           NA        NA   

Additional paid in capital

     44,223        44,150        44,350        0.2     -0.3

Retained earnings

     88,960        87,128        80,038        2.1     11.1

Treasury stock

     (1,743     (1,828     (3,260     -4.6     -46.5

Accumulated other comprehensive income

     13,924        14,241        10,761        -2.2     29.4
  

 

 

   

 

 

   

 

 

     

Total shareholders’ equity

     145,364        143,691        131,889        1.2     10.2
  

 

 

   

 

 

   

 

 

     

Total liabilities and shareholders’ equity

   $ 1,773,079      $ 1,741,197      $ 1,602,207        1.8     10.7
  

 

 

   

 

 

   

 

 

     

Ending shares outstanding

     12,475,904        12,470,371        12,377,318       

Book value per share

   $ 11.65      $ 11.52      $ 10.66       

Tangible book value per share (*)

   $ 10.77      $ 10.64      $ 9.78       

Capital Ratios

          

Tangible common equity / tangible assets (*)

     7.63     7.67     7.61    

Leverage ratio

     8.06     8.03     8.22    

Tier 1 risk based ratio

     14.03     14.10     13.89    

Total risk based ratio

     15.28     15.36     15.14    

Asset Quality

          

Non-accrual loans

   $ 14,445      $ 18,557      $ 16,567       

Loans 90+ days past due and accruing

     357        454        441       
  

 

 

   

 

 

   

 

 

     

Total non-performing loans

     14,802        19,011        17,008       

Other real estate owned

     325        491        505       
  

 

 

   

 

 

   

 

 

     

Total non-performing assets

   $ 15,127      $ 19,502      $ 17,513       
  

 

 

   

 

 

   

 

 

     

Loans modified in a troubled debt restructuring (TDR):

          

Performing TDR loans

   $ 9,961      $ 8,726      $ 7,688       

Non-performing TDR loans **

     1,660        1,657        —          
  

 

 

   

 

 

   

 

 

     

Total TDR loans

   $ 11,621      $ 10,383      $ 7,688       
  

 

 

   

 

 

   

 

 

     

Non-performing assets / Loans + OREO

     1.63     2.14     2.06    

Non-performing assets / Total assets

     0.85     1.12     1.09    

Allowance for loan losses / Loans

     1.52     1.50     1.48    


* - 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)
December 31,
2012
    (unaudited)
September 30,
2012
    December 31,
2011
 

Shareholders’ equity

   $ 145,364      $ 143,691      $ 131,889   

Less goodwill

     10,946        10,946        10,821   
  

 

 

   

 

 

   

 

 

 

Tangible common equity

   $ 134,418      $ 132,745      $ 121,068   
  

 

 

   

 

 

   

 

 

 

Total assets

   $ 1,773,079      $ 1,741,197      $ 1,602,207   

Less goodwill

     10,946        10,946        10,821   
  

 

 

   

 

 

   

 

 

 

Tangible assets

   $ 1,762,133      $ 1,730,251      $ 1,591,386   
  

 

 

   

 

 

   

 

 

 

Ending shares outstanding

     12,475,904        12,470,371        12,377,318   

Tangible book value per share

   $ 10.77      $ 10.64      $ 9.78   

Tangible common equity/Tangible assets

     7.63     7.67     7.61