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CF

CNB FINANCIAL CORP/PA (CCNE)·Q2 2025 Earnings Summary

Executive Summary

  • EPS beat and revenue surprise: Adjusted diluted EPS of $0.63 vs S&P Global consensus $0.59; GAAP diluted EPS $0.61. Total revenue rose to $61.2M, driven by higher net interest income and non-interest income; net interest margin expanded 22 bps QoQ to 3.60% . EPS and revenue consensus values from S&P Global: $0.59 and $49.34M; adjusted EPS actual $0.63 and S&P revenue actual $56.87M*.
  • Credit quality inflection: Nonperforming assets fell sharply to $30.4M (0.48% of assets) from $56.1M (0.89%) QoQ, primarily due to workouts and charge-offs; allowance coverage of nonaccrual loans rose to 169.5% .
  • Growth catalysts: Loans grew 2.50% QoQ (10.0% annualized) to $4.73B and deposits increased 0.13% QoQ (1.55% excluding ~$77.7M high-cost municipal exits). FTE NIM improvement reflected higher loan yields and lower cost of interest-bearing liabilities .
  • Structural upside: Management expects positive operating leverage, margin accretion and earnings accretion from the ESSA Bancorp acquisition; legal close scheduled for July 23, 2025 (the day after the release) .

What Went Well and What Went Wrong

What Went Well

  • Net interest income and margin expansion: NII rose to $52.2M (+7.8% QoQ); GAAP NIM reached 3.60% (FTE 3.59%) on mix shift to loans and lower funding costs .
  • Deposit mix improvement and liquidity strength: Adjusted deposit growth was ~$84.7M QoQ excluding ~$77.7M high-cost municipal exits; contingent liquidity sources of ~$4.6B plus $332.2M at the Fed equated to ~5.1x adjusted uninsured deposits .
  • Credit clean-up: NPA reduction of $25.7M QoQ (to 0.48% of assets) was driven by workouts and specific charge-offs; coverage on nonaccruals improved to 169.5% . CEO tone: “positive momentum of continued commercial loan growth... opportunities for further cost-of-fund interest reductions... ready to close and begin the integration of ESSA” .

What Went Wrong

  • Provision and charge-offs elevated: Provision for credit losses increased to $4.3M (vs $1.6M in Q1); net charge-offs rose to $3.3M (0.28% annualized) with notable CRE workouts (owner-occupied $1.5M charge-off; multifamily $1.1M) .
  • Non-interest expense remains high YoY: Ex-merger costs, non-interest expense was $39.3M vs $36.0M in Q2’24, reflecting higher salaries/benefits, occupancy (new branches), and card processing costs from rewards program changes .
  • Syndicated loans inch higher: Syndicated balances increased $9.7M QoQ to $78.9M (1.67% of loans), adding a modest layer of non-core exposure (still small and actively managed) .

Financial Results

Income and EPS vs prior periods

MetricQ4 2024Q1 2025Q2 2025
Total Revenue ($USD Millions)$59.365 $56.938 $61.205
Net Interest Income ($USD Millions)$49.044 $48.431 $52.197
Non-Interest Income ($USD Millions)$10.321 $8.507 $9.008
Diluted EPS ($USD)$0.66 $0.50 $0.61
Adjusted Diluted EPS ($USD)N/A$0.57 $0.63
Net Interest Margin (GAAP) (%)3.44% 3.38% 3.60%
Provision for Credit Losses ($USD Millions)$2.930 $1.556 $4.338

Results vs S&P Global consensus (Q2 2025)

MetricConsensus EstimateActualBeat/Miss
EPS ($USD)$0.59*$0.63*Beat
Revenue ($USD Millions)$49.34*$56.87*Beat
Company-Reported Total Revenue ($USD Millions)—$61.205 —
Note: Values with asterisks (*) retrieved from S&P Global.

KPIs and credit metrics

MetricQ4 2024Q1 2025Q2 2025
Efficiency Ratio (GAAP) (%)63.68% 72.07% 64.73%
Efficiency Ratio (FTE, non-GAAP) (%)63.02% 71.28% 64.08%
ROAE (GAAP, annualized) (%)9.79% 7.52% 8.83%
ROATCE (non-GAAP, annualized) (%)10.90% 8.15% 9.71%
PPNR ($USD Millions, non-GAAP)$21.560 $15.900 $21.588
Nonperforming Assets ($USD Millions)$59.485 $56.051 $30.389
NPA / Total Assets (%)0.96% 0.89% 0.48%
Allowance for Credit Losses / Total Loans (%)1.03% 1.03% 1.02%
Coverage: ACL on Loans / Nonaccrual Loans (%)84.08% 87.57% 169.52%
Net Loan Charge-offs ($USD Millions)$2.144 $1.439 $3.303
Net Charge-offs / Avg Loans (annualized) (%)0.19% 0.13% 0.28%

Income mix (Q2 2025)

ComponentQ2 2025
Net Interest Income ($USD Millions)$52.197
Non-Interest Income ($USD Millions)$9.008
Total Revenue ($USD Millions)$61.205

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Formal financial guidance (revenue, margin, OpEx, tax)FY/Q3Not providedNot providedMaintained (no guidance)
Common dividend per shareQ2 2025$0.18 (Q1 2025) $0.18 declared May 13, payable Jun 13, 2025 Maintained
Preferred Series A dividend (per depositary share CCNEP)Q2 2025$0.4453125 (prior quarter cadence)$0.4453125 declared May 1, payable May 30, 2025 Maintained
Strategic: ESSA Bancorp acquisitionCloseExpected Q3 2025Legal close scheduled Jul 23, 2025; bank regulatory approvals/waivers received Jun 30 Firmed timing

Earnings Call Themes & Trends

Note: A Q2 2025 earnings call transcript was not available in the document repository. Themes below reflect management commentary from the Q2 press release and prior-quarter releases.

TopicPrevious Mentions (Q4 2024)Previous Mentions (Q1 2025)Current Period (Q2 2025)Trend
Net interest margin and funding costsNIM improved QoQ to 3.44% on deposit rate cuts post Fed easing NIM compressed to 3.38% with lower variable loan yields; funding cost down 10 bps QoQ NIM expanded to 3.60% GAAP; yield on earning assets up 16 bps QoQ; cost of interest-bearing liabilities down 5 bps QoQ Improving
Loan growthModest growth with higher payoffs; pipeline constructive Growth muted by unscheduled payoffs; pipeline strengthened late in quarter Loans +2.50% QoQ; growth across ERIEBANK, Ridge View, BankOnBuffalo, legacy CNB, Private Banking Accelerating
Deposit mix and Treasury ManagementDeposit growth across retail/business; time deposits up Growth in noninterest-bearing deposits via Treasury Mgmt relationships Exited/reduced ~$77.7M high-cost municipal deposits; adjusted deposits +$84.7M QoQ Mix improving
Credit qualityNPA increased due to a large multifamily loan; charge-offs rose NPA declined QoQ; one large multifamily nonaccrual persisted NPA fell sharply QoQ; workouts with specific charge-offs; coverage up Positive inflection
M&A / IntegrationAnnounced ESSA deal; expected to close in Q3 Process advancing; shareholder and regulatory approvals pending Regulatory approvals received; close scheduled Jul 23; synergies, scale and margin accretion emphasized Near-term catalyst
Fee income / WealthWealth fees higher YoY; SBIC pass-through contributed Lower SBIC pass-through and equity losses; wealth fees down QoQ Wealth/asset mgmt fees up QoQ; BOLI income; equity gains improved Stabilizing

Management Commentary

  • “Favorably, our second quarter earnings and growth reflected the positive momentum of continued commercial loan growth and demand... complemented by increases in our average loan yield and continued decreases in our cost of interest-bearing funds, resulting in a favorable 22 basis point increase in our taxable-equivalent net interest margin compared to the first quarter.”
  • “We are ready to close and begin the integration of our acquisition of ESSA Bancorp, Inc... The addition of this wonderful franchise... will add significantly to CNB’s earning-asset base and market footprint... realizing economies-of-scale cost efficiencies... further accretion to our net interest margin and overall earnings.”
  • Prior quarter tone: “We continued to realize deposit growth based primarily in expanded Treasury Management relationships... reduced our cost of interest-bearing liabilities by 10 basis points... fundamentals of well-priced and steadily growing loans and deposits position us well.”

Q&A Highlights

  • No Q2 2025 earnings call transcript was available in the document set; no Q&A content to report.

Estimates Context

  • EPS: CCNE delivered adjusted diluted EPS of $0.63 vs S&P Global consensus $0.59; GAAP diluted EPS was $0.61. The beat was driven by NII growth and a lower efficiency ratio QoQ despite higher provision expense* .
  • Revenue: S&P Global revenue consensus $49.34M vs S&P-reported actual $56.87M; company-reported GAAP total revenue was $61.2M (FTE adjusted net revenue $61.8M). Differences reflect reporting conventions (GAAP vs FTE vs S&P definition)* . Note: Values with asterisks (*) retrieved from S&P Global.

Key Takeaways for Investors

  • Margin trajectory improving: GAAP NIM rose to 3.60% (FTE 3.59%) on higher loan yields and lower funding costs—supports near-term EPS resilience even with elevated provisioning .
  • Credit clean-up likely reduces tail risk: NPA fell to 0.48% of assets; coverage on nonaccrual loans improved to ~170%, suggesting better loss absorption capacity .
  • Core growth remains healthy: Loans +2.50% QoQ and adjusted deposits +1.55% QoQ (excluding municipal exits) indicate momentum into Q3 .
  • Operating leverage opportunity: Efficiency ratio improved to 64.7% GAAP (63.5% adjusted, FTE), setting the stage for post-ESSA scale benefits .
  • ESSA close is a near-term catalyst: Regulatory approvals received; legal close Jul 23, 2025. Expect accretive earning-asset base, margin, and cost synergies through CY25 .
  • Watch credit costs: Provision rose to $4.3M; net charge-offs to $3.3M with CRE-specific workouts—monitor multifamily and owner-occupied CRE trends as integration proceeds .
  • Dividend stability: Common dividend maintained at $0.18; preferred dividend (CCNEP) maintained—signals capital discipline amid growth and integration .