CNB Financial Corporation Reports First Quarter Earnings for 2013

CLEARFIELD, Pa., April 15, 2013 /PRNewswire/ -- CNB Financial Corporation ("CNB") (NASDAQ: CCNE), the parent company of CNB Bank, today announced its earnings for the first quarter of 2013.  Highlights include the following:

• Announced the acquisition of FC Banc Corp. and its subsidiary, The Farmers Citizens Bank, headquartered in Bucyrus, Ohio, expected to close in the fourth quarter of 2013.
• Net income of $4.3 million, or $0.34 per share, compared to net income of $4.3 million, or $0.35 per share, in the first quarter of 2012.
• Excluding the effect of securities transactions described under non-interest income, pre-tax earnings for the first quarter of 2013 was $5.5 million, an increase of 8.7% over the equivalent pre-tax earnings of $5.1 million for the first quarter of 2012.
• Annualized returns on average assets and equity of 0.96% and 11.76%, respectively, for the three months ended March 31, 2013. 
• Loans of $932.7 million at March 31, 2013, an increase of $72.7 million, or 8.5%, compared to March 31, 2012. 
• Deposits of $1.55 billion at March 31, 2013, an increase of $108.5 million, or 7.5%, compared to March 31, 2012. 
• Tangible book value per share of $10.80 per share as of March 31, 2013, an increase of 9.8% over tangible book value per share of $9.84 at March 31, 2012.
• Total non-performing assets of $16.9 million, or 0.93% of total assets as of March 31, 2013.

Joseph B. Bower, Jr., President and CEO, commented, "We continue to be pleased with the growth in earning assets that occurred in the first quarter.  This growth has helped to offset the effect of the contracting net interest margin.  Also, increases in assets under management have resulted in improved non-interest income."

Net Interest Income and Margin

During the three months ended March 31, 2013, net interest income increased $774 thousand, or 9.1%, compared to the three months ended March 31, 2012.  Net interest margin on a fully tax equivalent basis was 3.41% for the three months ended March 31, 2013, compared to 3.47% for the three months ended March 31, 2012. 

The yield on earnings assets decreased from 4.55% during the three months ended March 31, 2012 to 4.18% during the three months ended March 31, 2013 and CNB's average earning assets increased from $1.55 billion to $1.69 billion, or 9.0%, resulting in a decrease in interest income of $120 thousand, or 0.7%.  Due to growth in core deposits, interest-bearing liabilities have grown significantly during last twelve months. Interest-bearing deposits during the three months ended March 31, 2013 grew $110.6 million, or 8.7%, as compared to March 31, 2012.  However, interest expense for the three months ended March 31, 2013 decreased by $894 thousand, or 21.6%, compared to the three months ended March 31, 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 three months ended March 31, 2013, CNB recorded a provision for loan losses of $930 thousand, as compared to a provision for loan losses of $1.1 million for the three months ended March 31, 2012. 

A commercial mortgage loan that was impaired at December 31, 2012 was placed on nonaccrual status during the three months ended March 31, 2013, resulting in an increase in nonperforming assets of $2.9 million.  No loan loss reserve was required for this loan as of March 31, 2013 or December 31, 2012.  A loan modified in a troubled debt restructuring that was nonperforming at December 31, 2012 was partially charged off in the first quarter of 2013, resulting in a decrease in nonperforming assets of $595 thousand.  An additional provision for loan losses of $135 thousand was recorded for this loan during the three months ended March 31, 2013.

Non-Interest Income

Excluding the effects of the securities transactions described below, non-interest income was $2.7 million for the three months ended March 31, 2013, compared to $2.5 million for the three months ended March 31, 2012.  Net realized gains on available-for-sale securities were $76 thousand during the three months ended March 31, 2013, compared to $566 thousand during the three months ended March 31, 2012.  Net realized and unrealized gains on securities for which fair value was elected were $303 thousand and $320 thousand during the three months ended March 31, 2013 and 2012, respectively. 

Wealth and asset management fees increased from $387 thousand during the three months ended March 31, 2012 to $574 thousand during the three months ended March 31, 2013 due to increases in assets under management resulting from CNB's strategic focus to grow its Wealth and Asset Management Division.

Non-Interest Expenses

Total non-interest expenses increased $668 thousand, or 7.4%, during the three months ended March 31, 2013 compared to the three months ended March 31, 2012.  Salaries and benefits expenses increased $472 thousand, or 10.0%, during the three months ended March 31, 2013 compared to the three months ended March 31, 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. 

Total non-interest expenses on an annualized basis in relation to CNB's average asset size declined from 2.19% for the three months ended March 31, 2012 to 2.16% for the three months ended March 31, 2013.

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 private banking division and 29 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, including the previously announced 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.

SOURCE CNB Financial Corporation