CNB Financial Corporation Reports Second Quarter 2010 Earnings of $0.34 Per Share, a 26% Increase Over Second Quarter 2009

CLEARFIELD, Pa., July 26 /PRNewswire-FirstCall/ -- CNB Financial Corporation ("CNB") (Nasdaq: CCNE), the parent company of CNB Bank, today announced its earnings for the second quarter and first six months of 2010.  Highlights include the following:

• Net income of $3.1 million for the quarter ended June 30, 2010, or $0.34 per share, a 25.6% increase over the quarter ended June 30, 2009.
• Net income of $5.3 million for the six months ended June 30, 2010, or $0.58 per share, a 12.1% increase over the six months ended June 30, 2009.
• Returns on average assets and equity of 0.85% and 13.32%, respectively, for the six months ended June 30, 2010.
• Net interest margin of 3.67% for the six months ended June 30, 2010 and 3.77% for the quarter ended June 30, 2010.
• Total loans of $741.2 million at June 30, 2010, an increase of $67.0 million, or 9.9% compared to June 30, 2009, and an increase of $29.8 million, or 4.2%, compared to March 31, 2010.
• Deposits of $1,095.0 million at June 30, 2010, an increase of $250.0 million, or 29.6%, compared to June 30, 2009.
• Total non-performing assets of $13.1 million, or 1.77% of loans + OREO as of June 30, 2010, down from $15.0 million, or 2.11% of loans + OREO as of March 31, 2010.

In addition, as previously announced by CNB, on June 18, 2010, CNB closed a common stock offering resulting in the issuance of 3,365,853 shares of common stock at $10.25 per share and net proceeds of $32.1 million after deducting underwriting commissions and discounts and estimated offering expenses.  

Joseph B. Bower, Jr., President and CEO, commented, "We were pleased to report to you the consummation of a successful capital raise.  With the additional capital and the solid core earnings, we believe CNB is prepared for continued growth within our markets."

Net Interest Income and Margin

During the six months ended June 30, 2010, net interest income increased $1.6 million, or 8.4%, compared to the comparable period in 2009.  Net interest margin on a fully tax equivalent basis was 3.67% for the six months ended June 30, 2010, compared to 4.07% for the comparable period in 2009.  Although earning assets continue to grow, these increases have been offset by decreases in the yield on earning assets as a result of the current interest rate environment, and the composition of earning assets has shifted to a greater percentage of investment securities as deposit growth is outpacing loan growth given the current economic environment.  Due to significant growth in core deposits, interest-bearing liabilities have grown significantly during the last twelve months. Although interest-bearing deposits as of June 30, 2010 grew $217.4 million, or 29.4%, as compared to June 30, 2009, interest expense for the six months ended June 30, 2010 increased $152 thousand, or 1.6%, over the comparable period in 2009. CNB's focus on deposit mix and active management of deposit rates resulted in moderation of interest expense.  Net interest margin increased from 3.57% in the first quarter of 2010 to 3.77% in the second quarter of 2010 as CNB continued to attract and deploy low cost core deposits into both loans within our markets and securities.  

Non-Interest Income

Net securities losses realized during the six months ended June 30, 2010 were $529 thousand, compared to net realized securities gains of $35 thousand for the comparable period in 2009.  During the six months ended June 30, 2010, an other-than-temporary impairment charge of $1.1 million was recorded in earnings on three structured pooled trust preferred securities.  The amount of impairment charge recognized represents the expected credit loss on these securities.  CNB's remaining exposure to loss in structured pooled trust preferred securities is $3.5 million at June 30, 2010.  

Excluding the effects of these securities transactions, non-interest income was $4.6 million for the six months ended June 30, 2010, compared to $4.7 million for the six months ended June 30, 2009.  Mortgage banking income decreased $248 thousand from the six months ended June 30, 2009 compared to the six months ended June 30, 2010, primarily as a result of CNB's decision not to sell loans in the secondary market in the second quarter of 2010.  

Non-Interest Expense

Non-interest expense increased $322 thousand, or 2.1%, during the six months ended June 30, 2010 compared to the comparable period in 2009.  Salaries and benefits expenses increased $628 thousand, or 8.9%, during the six months ended June 30, 2010 compared to the comparable period in 2009, primarily as a result of an increase in full-time equivalent employees from 276 at June 30, 2009 to 286 at June 30, 2010.  

Insurance premiums due to the Federal Deposit Insurance Corporation ("FDIC") decreased by $308 thousand, or 28.4%, for the six months ended June 30, 2010 compared to the comparable period in 2009 due to the special assessment in the amount of $475 thousand that was incurred during the quarter ended June 30, 2009.  Excluding this special assessment, FDIC insurance premiums increased $167 thousand during the six months ended June 30, 2010 as compared to the six months ended June 30, 2009, as a result of increases in the deposits on which the premium assessment is based and higher assessment rates in 2010.

Non-GAAP Financial Measures

The non-GAAP measures in this press release are not measures that are defined in generally accepted accounting principles ("GAAP").  Tangible book value per share, tangible common equity and tangible assets are non-GAAP financial measures calculated using GAAP amounts.  Tangible book value per share is calculated by dividing tangible common equity by the number of shares outstanding.  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.  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.

About CNB Financial Corporation

CNB Financial Corporation is a financial holding company with consolidated assets of approximately $1.3 billion that conducts business primarily through CNB Bank, the Corporation's principal subsidiary.  CNB Bank is a full-service bank engaging in a full range of banking activities and services for individual, business, governmental, and institutional customers.  CNB Bank operations include a loan production office, a private banking division, and 26 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 the Corporation'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 the Corporation'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 principals 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 the Corporation'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 the Corporation's operations, markets, products, services and prices.  Some of these and other factors are discussed in the Corporation's annual and quarterly reports previously filed with the SEC.  Such developments could have an adverse impact on the Corporation's financial position and the Corporation's results of operations.

The forward-looking statements are based upon management's beliefs and assumptions and are made as of the date of this press release.  The Corporation 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 federal securities laws.  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.

SOURCE CNB Financial Corporation