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CF

CNB FINANCIAL CORP/PA (CCNE)·Q4 2024 Earnings Summary

Executive Summary

  • EPS of $0.66 rose 8% q/q and 6% y/y as net interest income increased and operating costs fell; total revenue was $59.365M vs $58.459M (Q3) and $56.831M (Q4’23) .
  • Net interest margin (GAAP) ticked up to 3.44% (from 3.43% in Q3) as targeted deposit rate decreases outpaced modest yield pressure on floating-rate loans following Fed cuts; efficiency ratio improved to 63.68% vs 66.34% in Q3 .
  • Asset quality weakened: nonperforming assets rose to $59.485M (0.96% of assets) largely due to one multifamily relationship; provision increased to $2.930M and net charge-offs to $2.144M .
  • Deposits grew 3% q/q and 7% y/y to $5.371B, with adjusted uninsured deposits stable (18% of CNB Bank deposits); on‑hand and contingent liquidity ($4.975B) covered adjusted uninsured deposits ~5x .
  • Strategic catalyst: CNB announced an all‑stock merger with ESSA Bancorp (expected close Q3 2025), adding ~$2B assets and projected ~35% EPS accretion in 2026; common dividend maintained at $0.18 (payable Mar 14, 2025) .

What Went Well and What Went Wrong

What Went Well

  • Operating leverage: Total revenue up q/q while non‑interest expense fell to $37.805M; efficiency ratio improved to 63.68% (FTE: 63.02%) .
  • Deposit cost management: Cost of interest‑bearing liabilities fell 18 bps q/q to 3.03% as CNB lowered deposit rates following Fed cuts; NIM (GAAP) edged up to 3.44% .
  • Strategic growth: Loans (ex‑syndicated) rose q/q and 3.9% y/y, driven by commercial and residential real estate in Cleveland and Roanoke and Private Banking; CEO emphasized disciplined underwriting and risk‑based pricing: “continued favorable trend of increased earnings… deepening existing relationships… disciplined loan and deposit pricing” .

What Went Wrong

  • Asset quality: Nonperforming assets jumped to $59.485M (0.96% of assets) vs $42.035M (0.70%) in Q3, primarily due to one multifamily relationship ($20.4M; $885K specific reserve) .
  • Credit costs: Provision increased to $2.930M (vs $2.381M in Q3), and net charge‑offs rose to $2.144M (0.19% annualized) vs $1.220M (0.11%) in Q3 .
  • Securities marks: Pre‑tax unrealized losses on AFS/HTM widened q/q to $74.8M (12.25% of equity) from $62.5M (10.30%), reflecting yield curve changes, though capital ratios remain well‑capitalized .

Financial Results

Income Statement and EPS vs Prior Periods

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Total Revenue ($USD Millions)$56.831 $54.582 $58.459 $59.365
Net Interest Income ($USD Millions)$47.694 $45.717 $47.486 $49.044
Non‑Interest Income ($USD Millions)$9.137 $8.865 $10.973 $10.321
Net Income to Common ($USD Millions)$12.901 $11.882 $12.878 $13.988
Diluted EPS ($)$0.62 $0.56 $0.61 $0.66

Margins and Efficiency

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Net Interest Margin (GAAP) %3.54% 3.36% 3.43% 3.44%
Efficiency Ratio %67.66% 65.94% 66.34% 63.68%
ROAE (annualized) %9.97% 8.94% 9.28% 9.79%
Yield on Earning Assets %5.82% 5.89% 5.98% 5.84%
Cost of Interest‑Bearing Liabilities %2.89% 3.17% 3.21% 3.03%

Balance Sheet and Credit KPIs

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Total Deposits ($USD Billions)$4.999 $5.111 $5.217 $5.371
Total Loans Receivable ($USD Billions)$4.468 $4.480 $4.592 $4.609
PPNR (non‑GAAP) ($USD Millions)$18.381 $18.593 $19.675 $21.560
Provision for Credit Losses ($USD Millions)$1.242 $2.591 $2.381 $2.930
Net Loan Charge‑Offs ($USD Millions)$1.234 $2.804 $1.220 $2.144
Nonperforming Assets ($USD Millions)$31.805 $36.541 $42.035 $59.485
NPA / Total Assets %0.55% 0.62% 0.70% 0.96%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per common shareQ1 2025 payable Mar 14, 2025$0.18 (Q3–Q4 2024 actuals) $0.18 declared Feb 11, 2025 Maintained
Merger timeline (ESSA Bancorp)Close expectedN/ATargeted Q3 2025 closing; 0.8547 CCNE shares per ESSA share New announcement
Other financial guidance (revenue, margins, OpEx, tax rate)FY25None providedNone providedN/A

Earnings Call Themes & Trends

Note: A Q4 2024 earnings call transcript was not available; themes are derived from management’s press releases.

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
Deposit cost managementQ2: rising deposit costs pressured NIM; Q3: brokered deposits repositioned to 4.37% APY, ~$2.5M annualized savings Targeted deposit rate decreases lowered cost of interest‑bearing liabilities by 18 bps q/q to 3.03% Improving cost of funds
Net interest margin driversQ2: NIM 3.36%; Q3: NIM 3.43% on higher earning asset yields NIM 3.44% as deposit repricing outpaced modest loan yield decline post Fed cuts Slight improvement
Asset qualityQ2: two larger relationships drove NPA increase; Q3: one commercial relationship added One multifamily relationship ($20.4M) added; NPA 0.96% of assets; specific reserve $885K Deteriorated, managed exposure
Market expansion & loan growthGrowth in Cleveland, Roanoke, Columbus, Erie, Private Banking across Q2–Q3 Continued growth in commercial/residential real estate and Private Banking; loans +3.9% y/y Sustained expansion
Technology investmentHigher year‑over‑year tech expenses to enhance digital channels and CRM Additional technology expenses tied to CRM implementations; efficiency improved despite investments Ongoing investments
Liquidity and uninsured depositsAdjusted uninsured ~18% of deposits; contingent liquidity ~5x adjusted uninsured Adjusted uninsured ~18.01%; on‑hand & contingent liquidity ~5x Stable coverage
M&A strategy—Announced ESSA Bancorp merger; projected ~35% EPS accretion in 2026 Strategic acceleration

Management Commentary

  • “CNB’s performance for the fourth quarter of 2024 continued the favorable trend of increased earnings for each of the most recent three quarters… deepening existing customer relationships… disciplined loan and deposit pricing… solid risk measurement and management practices.” — Michael Peduzzi, President & CEO .
  • “We are very excited by the prospect of… adding over $2 billion in assets with our intended acquisition of ESSA Bancorp… realizing even greater back‑office efficiencies of operating scale.” — Michael Peduzzi .

Q&A Highlights

  • A Q4 2024 earnings call transcript was not available in the document repository; therefore, Q&A highlights and guidance clarifications could not be assessed [ListDocuments result: 0 earnings-call-transcript].

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue was unavailable due to data access limitations, so a beat/miss assessment versus consensus cannot be provided at this time. Coverage for smaller regional banks can be limited in certain data feeds [GetEstimates error].

Key Takeaways for Investors

  • Earnings momentum with three consecutive quarterly EPS increases; operating leverage improved via expense control and lower deposit costs, supporting NIM resilience .
  • Watch asset quality: NPA rose to 0.96% of assets due to one multifamily relationship; provisioning and NCOs increased—monitor resolution of the property sale and reserve adequacy .
  • Deposits and liquidity solid: deposits +3% q/q, adjusted uninsured ~18%, liquidity ~5x adjusted uninsured—a cushion if funding markets tighten .
  • Efficiency gains and PPNR growth point to improved core earnings power despite continued technology investments .
  • Strategic upside from ESSA Bancorp merger (expected close Q3 2025): pro forma ~$8B assets, Top‑10 PA deposit franchise; management projects ~35% EPS accretion in 2026—key medium‑term catalyst .
  • Dividend stability maintained at $0.18—supports income thesis while merger integration and credit outcomes unfold .
  • Near‑term trading: positive bias on spread normalization and cost of funds tailwinds; risks include credit headlines from CRE/multifamily and broader rate volatility affecting securities marks .