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What changed in CNB FINANCIAL CORP/PA's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of CNB FINANCIAL CORP/PA's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+326 added−316 removedSource: 10-K (2025-03-06) vs 10-K (2024-03-07)

Top changes in CNB FINANCIAL CORP/PA's 2024 10-K

326 paragraphs added · 316 removed · 230 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

45 edited+30 added−40 removed71 unchanged
Biggest changeThe Capital Rules also preclude certain hybrid securities, such as trust preferred securities, from inclusion in bank holding companies’ Tier 1 capital, although bank holding companies that had total consolidated assets of less than $15 billion at December 31, 2009 may include trust preferred securities issued prior to May 19, 2010 as a component of Tier 1 capital.
Biggest changeThe Capital Rules also preclude certain hybrid securities, such as trust preferred securities, from inclusion in bank holding companies’ Tier 1 capital, although bank holding companies that had total consolidated assets of less than $15 billion at December 31, 2009 may include trust preferred securities issued prior to May 19, 2010 as a component of Tier 1 capital. 4 Table of Contents In September 2019, the OCC, the Federal Reserve Board and the FDIC adopted a final rule that is intended to further simplify the Capital Rules for depository institutions and their holding companies that have less than $10 billion in total consolidated assets, such as us, if such institutions meet certain qualifying criteria.
Accordingly, the Corporation is subject to the oversight of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board") and the Pennsylvania Department of Banking and is regulated under the BHC Act, and the Bank is subject to the oversight of the Pennsylvania Department of Banking and Federal Deposit Insurance Corporation ("FDIC"), as its primary federal regulator.
Accordingly, the Corporation is subject to the oversight of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board") and the Pennsylvania Department of Banking and is regulated under the BHC Act, and the Bank is subject to the oversight of the Pennsylvania Department of Banking and the Federal Deposit Insurance Corporation ("FDIC"), as its primary federal regulator.
Prompt Corrective Action and Safety and Soundness Under applicable "prompt corrective action" ("PCA") statutes and regulations, depository institutions are placed into one of five capital categories, ranging from "well capitalized" to "critically undercapitalized." The PCA statute and regulations provide for progressively more stringent supervisory measures as an insured depository institution’s capital category declines.
Prompt Corrective Action and Safety and Soundness Under applicable PCA statutes and regulations, depository institutions are placed into one of five capital categories, ranging from "well capitalized" to "critically undercapitalized." The PCA statute and regulations provide for progressively more stringent supervisory measures as an insured depository institution’s capital category declines.
If we opt into this framework, we will be considered to have satisfied the generally applicable risk-based and leverage capital requirements in the Capital Rules (as modified pursuant to the simplification rule) and will be considered to have met the well-capitalized ratio requirements for prompt corrective action purposes.
If we opt into this framework, we will be considered to have satisfied the generally applicable risk-based and leverage capital requirements in the Capital Rules (as modified pursuant to the simplification rule) and will be considered to have met the well-capitalized ratio requirements for Prompt Corrective Action ("PCA") purposes.
The CNB Bank franchise operates nineteen full-service branch locations in Central and North Central Pennsylvania. ERIEBANK, a division of the Bank, began operations in 2005. In July 2016, the Corporation acquired Lake National Bank, which operated two full-service branches in Mentor, Ohio, approximately 20 miles east of Cleveland, Ohio.
The CNB Bank franchise operates twenty full-service branch locations in Central and North Central Pennsylvania. ERIEBANK, a division of the Bank, began operations in 2005. In July 2016, the Corporation acquired Lake National Bank, which operated two full-service branches in Mentor, Ohio, approximately 20 miles east of Cleveland, Ohio.
One requisite element of such a plan is that the institution’s parent holding company must guarantee compliance by the institution with the plan, subject to certain limitations. At December 31, 2023, the Bank qualified as "well capitalized" under applicable regulatory capital standards.
One requisite element of such a plan is that the institution’s parent holding company must guarantee compliance by the institution with the plan, subject to certain limitations. At December 31, 2024, the Bank qualified as "well capitalized" under applicable regulatory capital standards.
A change in applicable statutes, regulations or regulatory policy may have a material effect on our business. 2 Table of Contents Bank Holding Company Regulation As a bank holding company that controls a Pennsylvania state-chartered bank, the Corporation is subject to regulation and examination by the Pennsylvania Department of Banking and the Federal Reserve Board.
A change in applicable statutes, regulations or regulatory policy may have a material effect on our business. Bank Holding Company Regulation As a bank holding company that controls a Pennsylvania state-chartered bank, the Corporation is subject to regulation and examination by the Pennsylvania Department of Banking and the Federal Reserve Board.
Pursuant to the Capital Rules, effective January 1, 2015, the minimum capital ratios are as follows: • 4.5% CET1 to risk-weighted assets; • 6.0% Tier 1 capital (that is, CET1 plus Additional Tier 1 capital) to risk-weighted assets; • 8.0% Total capital (that is, Tier 1 capital plus Tier 2 capital) to risk-weighted assets; and • 4.0% Tier 1 capital to average consolidated assets as reported on consolidated financial statements (called “leverage ratio”).
Pursuant to the Capital Rules, the minimum capital ratios are as follows: • 4.5% CET1 to risk-weighted assets; • 6.0% Tier 1 capital (that is, CET1 plus Additional Tier 1 capital) to risk-weighted assets; • 8.0% Total capital (that is, Tier 1 capital plus Tier 2 capital) to risk-weighted assets; and • 4.0% Tier 1 capital to average consolidated assets as reported on consolidated financial statements (called “leverage ratio”).
Community Involvement and Social Impacts The Corporation serves as a cornerstone institution of both financial support and community service in the markets in which we serve. The Corporation is committed to strengthening these communities through the active volunteering of its employees.
Community Involvement and Social Impacts The Corporation serves as a cornerstone institution of both financial support and community service in the markets in which it serves. The Corporation is committed to strengthening these communities through the active volunteering of its employees.
This women-focused commercial bank operates within the existing geographic footprint of each of CNB Bank’s other divisions and also has an online presence. 1 Table of Contents The Bank had two loan production offices, one drive-up office, one mobile office, and 51 full-service branch offices located in various communities in its market area at December 31, 2023.
This women-focused commercial bank operates within the existing geographic footprint of each of CNB Bank’s other divisions and also has an online presence. 1 Table of Contents The Bank had one loan production office, one drive-up office, one mobile office, and 55 full-service branch offices located in various communities in its market area at December 31, 2024.
The differences among the Board and employees, and its customers and community members, are respected and embraced to drive innovative products, services, and solutions that effectively meet the variety of needs among the Corporation’s diverse group of stakeholders.
The differences among the Corporation's Board of Directors and employees, and its customers and community members, are respected and embraced to drive innovative products, services, and solutions that effectively meet the variety of needs among the Corporation’s broad group of stakeholders.
Strategic Planning and Related Training The Corporation has established a formal Strategic Plan, and the framework of the Strategic Plan considers the core values and principles that have been fundamental to the Corporation's long-term success. These attributes include respect, integrity, accountability, leadership, professionalism, collaboration, client-focused, innovation, inclusion, and volunteerism.
Strategic Planning and Related Training The Corporation has established a formal Strategic Plan, the framework of which has, as its foundation, the core values and principles that have been fundamental to the Corporation’s long-term success. These attributes include respect, integrity, accountability, leadership, professionalism, collaboration, client-focused, innovation, inclusion, and volunteerism.
These activities and services principally include checking, savings, and time deposit accounts; real estate, commercial, industrial, residential and consumer loans; and a variety of other specialized financial services. The Bank’s Private Client Solutions division offers a full range of client services, including private banking and wealth and asset management.
These activities and services principally include checking, savings, and time deposit accounts; real estate, commercial, industrial, residential and consumer loans; and a variety of other specialized financial services. The Bank’s Private Client Solutions division offers a full range of client services, including private banking and wealth and asset management. Merger with ESSA Bancorp, Inc.
It is not possible to predict whether any such proposals will be enacted into law or, even if enacted, what effect such action may have on our business and earnings. 8 Table of Contents Human Capital As of December 31, 2023, the Corporation had a total of 801 employees, of which 765 were full time and 36 were part time.
It is not possible to predict whether any such proposals will be enacted into law or, even if enacted, what effect such action may have on our business and earnings. 8 Table of Contents Human Capital As of December 31, 2024, the Corporation had a total of 790 employees, of which 769 were full time and 21 were part time.
Holiday Financial Services Corporation ("Holiday"), incorporated in Pennsylvania, offers small balance unsecured loans and secured loans, primarily collateralized by automobiles and equipment, to borrowers with higher risk characteristics. CNB Bank The Bank was originally chartered as a national bank in 1934 and is now a Pennsylvania-chartered bank.
Holiday Financial Services Corporation ("Holiday"), incorporated in Pennsylvania, offers small balance unsecured loans and secured loans, primarily collateralized by automobiles and equipment, to borrowers with higher risk characteristics and currently has nine offices within the Corporation’s market area. CNB Bank The Bank was originally chartered as a national bank in 1934 and is now a Pennsylvania-chartered bank.
To support these objectives, the Corporation’s Employee Experience processes and programs are designed and operated to: • Attract and develop talented employees across the spectrum of professional experience, life experience, socio-economic background, gender, race, religion, skill set, and geographic representation; • Prepare all members of our team for critical roles and leadership positions both now and the future, in serving as employees and valuable community members; • Reward and support employees fairly and without discrimination based on successful performance and through competitive pay and benefit programs; • Enhance the Corporation’s culture through efforts to better understand, foster, promote, and preserve a culture of diversity and inclusion; and • Evolve and invest in technology, tools, and resources to better support employees of varying skills and backgrounds at work.
To support these objectives, the Corporation’s Employee Experience processes and programs are designed and operated to: • Attract and develop talented employees, specifically skilled for their position, from across the spectrum of professional experience, life experience, socio-economic background, and geographic representation; • Prepare all members of the Corporation's team for critical roles and leadership positions both now and the future, in serving as employees and valuable community members; • Reward and support employees fairly and without discrimination based on successful performance and through competitive pay and benefit programs; • Enhance the Corporation’s culture through efforts to better understand, foster, promote, and preserve a culture in alignment with the Corporation's core values; and • Evolve and invest in technology, tools, and resources to better support employees of varying skills and backgrounds at work.
In addition to the above-described Board attributes, the Corporation emphasizes relevant governance principles in strategic planning, human capital management and leadership development (which includes recruiting and retaining employees), and vendor management, as relationships with third parties represent critical connections to and extensions of the values and operating principles of the Corporation and Board.
The Corporation emphasizes relevant governance principles and compliance considerations in strategic planning, human capital management and leadership development (which includes recruiting and retaining employees), and vendor management, as relationships with third parties represent critical connections to and extensions of the values, operating principles, and the commitment to legal and regulatory compliance of the Corporation and the Board of Directors.
The Capital Rules revise the definitions and components of regulatory capital, increase risk-based capital requirements, and make selected changes to the calculation of risk-weighted assets.
The Capital Rules revised the definitions and components of regulatory capital, increased risk-based capital requirements, and made selected changes to the calculation of risk-weighted assets.
To the extent that the following information describes statutory and regulatory provisions, it is qualified in its entirety by express reference to each of the particular statutory and regulatory provisions.
It does not describe all of the provisions of the statutes, regulations and policies that are identified. To the extent that the following information describes statutory and regulatory provisions, it is qualified in its entirety by express reference to each of the particular statutory and regulatory provisions.
The Bank currently operates seven full-service branch locations as FCBank, a division of the Bank, with its headquarters in Worthington, Ohio. In 2016, the Bank received regulatory approval to conduct business in the state of New York as BankOnBuffalo, a division of the Bank. In July 2020, the Corporation acquired Bank of Akron, with its branch locations operating with BankOnBuffalo.
In October 2013, the Corporation acquired FC Banc Corp. and its subsidiary, The Farmers Citizens Bank. The Bank currently operates seven full-service branch locations as FCBank, a division of the Bank, with its headquarters in Worthington, Ohio. In 2016, the Bank received regulatory approval to conduct business in the State of New York as BankOnBuffalo, a division of the Bank.
Impressia Bank (“Impressia”) launched in May 2023 and is the sixth bank division of the Bank, and is dedicated to the professional and financial development and advancement of women business owners and leaders.
In 2023, the Bank launched Impressia Bank, a full-service banking division dedicated to the professional and financial development and advancement of women business owners and women leaders.
In more serious cases, enforcement actions may include the issuance of directives to increase capital; the issuance of formal and informal agreements; the imposition of civil monetary penalties; the issuance of a cease and desist order that can be judicially enforced; the issuance of removal and prohibition orders against officers, directors, and other institution affiliated parties; the termination of the insured depository institution’s deposit insurance; the appointment of a conservator or receiver for the insured depository institution; and the enforcement of such actions through injunctions or restraining orders based upon a judicial determination that the FDIC, as receiver, would be harmed if such equitable relief was not granted.
In more serious cases, enforcement actions may include the issuance of directives to increase capital; the issuance of formal and informal agreements; the imposition of civil monetary penalties; the issuance of a cease and desist order that can be judicially enforced; the issuance of removal and prohibition orders against officers, directors, and other institution affiliated parties; the termination of the insured depository institution’s deposit insurance; the appointment of a conservator or receiver for the insured depository institution; and the enforcement of such actions through injunctions or restraining orders based upon a judicial determination that the FDIC, as receiver, would be harmed if such equitable relief was not granted. 5 Table of Contents Community Reinvestment Act Under the Community Reinvestment Act of 1977 ("CRA"), the FDIC is required to assess the record of all financial institutions it supervises to determine if these institutions are meeting the credit needs of the community (including low and moderate income neighborhoods) which they serve.
The assessment base for the special assessment is equal to an insured depository institution’s ("IDI’s") estimated uninsured deposits reported as of December 31, 2022, adjusted to exclude the first $5 billion, applicable either to the IDI, if an IDI is not a subsidiary of a holding company, or at the banking organization level, to the extent that an IDI is part of a holding company with one or more subsidiary IDIs.
The assessment base for the special assessment is equal to an insured depository institution’s ("IDI’s") estimated uninsured deposits reported as of December 31, 2022, adjusted to exclude the first $5 billion, applicable either to the IDI, if an IDI is not a subsidiary of a holding company, or at the banking organization level, to the extent that an IDI is part of a holding company with one or more subsidiary IDIs. 6 Table of Contents Financial Privacy and Data Security The Corporation is subject to federal laws, including the Gramm-Leach-Bliley Act, and certain state laws containing consumer privacy protection provisions.
Further, pursuant to interpretive guidance issued under the Gramm-Leach-Bliley Act and certain state laws, financial institutions are required to notify customers of security breaches that result in unauthorized access to their nonpublic personal information. 6 Table of Contents Incentive Compensation The Dodd-Frank Act requires the federal banking agencies and the Securities and Exchange Commission (the "SEC") to establish joint regulations or guidelines prohibiting incentive-based payment arrangements at specified regulated entities, including the Corporation and the Bank, with at least $1 billion in total consolidated assets that encourage inappropriate risks by providing an executive officer, employee, director or principal shareholder with excessive compensation, fees, or benefits that could lead to material financial loss to the entity.
Incentive Compensation The Dodd-Frank Act requires the federal banking agencies and the Securities and Exchange Commission (the "SEC") to establish joint regulations or guidelines prohibiting incentive-based payment arrangements at specified regulated entities, including the Corporation and the Bank, with at least $1 billion in total consolidated assets that encourage inappropriate risks by providing an executive officer, employee, director or principal shareholder with excessive compensation, fees, or benefits that could lead to material financial loss to the entity.
The federal banking agencies and the SEC most recently proposed such regulations in 2016. The regulations have not yet been finalized, but it is expected that this rulemaking will be a priority in 2024. If the regulations are adopted in the form initially proposed or a similar form, they will restrict the manner in which executive compensation is structured.
The federal banking agencies and the SEC proposed such regulations in 2016, and issued re-proposed regulations in substantially the same form in May 2024, which have not been finalized. If the regulations are adopted in the form proposed or a similar form, they will restrict the manner in which executive compensation is structured.
The risk-weighting categories in the Capital Rules are standardized and include a risk-sensitive number of categories, depending on the nature of the assets, generally ranging from 0% for U.S. government and agency securities to 600% for certain equity exposures, and resulting in higher risk weights for a variety of assets. 3 Table of Contents The Capital Rules: (i) include “Common Equity Tier 1” (“CET1”) and a related regulatory capital ratio of CET1 to risk-weighted assets; (ii) specify that Tier 1 capital consists of CET1 and “Additional Tier 1 capital” instruments meeting certain revised requirements; (iii) mandate that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital; and (iv) expand the scope of the deductions from and adjustments to capital as compared to existing regulations.
The Capital Rules: (i) include “Common Equity Tier 1” (“CET1”) and a related regulatory capital ratio of CET1 to risk-weighted assets; (ii) specify that Tier 1 capital consists of CET1 and “Additional Tier 1 capital” instruments meeting certain revised requirements; (iii) mandate that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital; and (iv) expand the scope of the deductions from and adjustments to capital as compared to existing regulations.
The Corporation’s key human capital management objectives are to recruit, hire, develop and promote a deeply experienced and diverse employee team, supplemented by similarly inclusive and diversity-focused third-party vendors, that collectively translate into a strong workforce committed to fostering, promoting, and preserving the entire spectrum of our communities and culture, while successfully executing our business strategies and demonstrating our corporate values.
The Corporation’s key human capital management objectives are to recruit, hire, develop and promote a deeply and broadly experienced employee team that collectively translates into an exceptional workforce committed to fostering, promoting, preserving, and reflecting the entire spectrum of the Corporation’s communities and culture, while successfully executing the Corporation’s business strategies and exemplifying its corporate values.
The Bank currently operates eleven branch locations, one mobile branch, one drive-up office, and one loan production office as BankOnBuffalo, a division of the Bank, with its headquarters in Buffalo, New York. In 2021, the Bank received regulatory approval to conduct business in the state of Virginia as Ridge View Bank, a division of the Bank.
In 2021, the Bank received regulatory approval to conduct business in the Commonwealth of Virginia as Ridge View Bank, a division of the Bank. The Bank currently operates three full-serve branch locations and one loan production office in Southwest Virginia.
To date, we have not opted in to this community bank leverage ratio framework. 4 Table of Contents Dividend Restrictions The Corporation is a legal entity separate and distinct from the Bank.
To date, we have not opted in to this community bank leverage ratio framework. Dividend Restrictions The Corporation is a legal entity separate and distinct from the Bank. Declaration and payment of cash dividends by the Corporation depends upon cash dividend payments to the Corporation by the Bank, which is our primary source of revenue and cash flow.
The BankOnWheels rotates between four locations in the cities of Buffalo and Niagara Falls, which are located in communities underserved by banks. In May 2023, CNB Bank announced the launch of the At-Ease Program, a customized suite of products and solutions designed specifically for veterans and active members of the armed forces and their families.
The BankOnWheels rotates between four locations in the cities of Buffalo and Niagara Falls, which are located in communities underserved by banks. In May 2023, CNB Bank launched the At Ease Program, tailored to meet the unique financial needs of veterans, active-duty service members, and their families.
In addition to the impact of regulation, commercial banks are significantly affected by the actions of the Federal Reserve Board, including actions taken with respect to interest rates, as the Federal Reserve Board attempts to control the money supply and credit availability in the U.S. in order to influence the economy.
In addition to the impact of regulation, commercial banks are significantly affected by the actions of the Federal Reserve Board, including actions taken with respect to interest rates, as the Federal Reserve Board attempts to control the money supply and credit availability in the U.S. in order to influence the economy. 2 Table of Contents The following summary sets forth certain of the material elements of the regulatory framework applicable to bank holding companies and their subsidiaries and provides certain specific information about us and our subsidiaries.
Moreover, the federal banking agencies have issued policy statements that provide that bank holding companies and insured banks should generally only pay dividends out of current operating earnings. Federal banking regulators have the authority to prohibit banks and bank holding companies from paying a dividend if the regulators deem such payment to be an unsafe or unsound practice.
Federal banking regulators have the authority to prohibit banks and bank holding companies from paying a dividend if the regulators deem such payment to be an unsafe or unsound practice.
The Corporation’s employees actively participate in their local communities through volunteer activities in education, economic development, human and health services, and community reinvestment. During 2023, employees donated 22,486 hours in support of more than a thousand organizations, with 77% of employees actively participating.
The Corporation’s employees actively participate in their local communities through volunteer activities in education, economic development, human and health services, and community reinvestment. During 2024, the Corporation’s employees collectively contributed 34,741 hours in voluntary support to 1,397 organizations, with 88% of employees actively participating.
Further, the ability of banking subsidiaries to pay dividends is also subject to their profitability, financial condition, capital expenditures and other cash flow requirements. The payment of dividends by the Bank and the Corporation may also be affected by other factors, such as the requirement to maintain adequate capital above regulatory requirements.
As a Pennsylvania state-chartered bank, the Bank is subject to regulatory restrictions on the payment and amounts of dividends under the Pennsylvania Banking Code. Further, the ability of banking subsidiaries to pay dividends is also subject to their profitability, financial condition, capital expenditures and other cash flow requirements.
The Bank continues to operate one of these branch locations within its ERIEBANK franchise, with the other location ceasing operations in August 2020. In January 2020, the Corporation established a loan production office ("LPO") in Cleveland, Ohio. This LPO operated within the ERIEBANK division as of December 31, 2021 and has subsequently closed.
The Bank continues to operate one of these branch locations within its ERIEBANK franchise, with the other location ceasing operations in August 2020. In December 2021, the Corporation opened a full-service branch in Cleveland, Ohio. The Bank currently operates thirteen full-service branch locations within its ERIEBANK franchise, a division of the Bank, with its headquarters in Erie, Pennsylvania.
Capital Adequacy The Capital Rules adopted in 2013 by the Federal Reserve Board, the FDIC, and the Office of the Comptroller of the Currency ("OCC") generally implement the Basel Committee on Banking Supervision’s capital framework, referred to as Basel III, for strengthening international capital standards.
This program must include reasonable policies and procedures to detect suspicious patterns or practices that indicate the possibility of identity theft, such as inconsistencies in personal information or changes in account activity. 3 Table of Contents Capital Adequacy The Capital Rules adopted in 2013 by the Federal Reserve Board, the FDIC, and the Office of the Comptroller of the Currency ("OCC") generally implement the Basel Committee on Banking Supervision’s capital framework, referred to as Basel III, for strengthening international capital standards.
The Corporation accomplishes this by promoting economic development through investments in community-strengthening initiatives, such as affordable housing and revitalization efforts.
The Corporation also promotes economic development through investments in community-strengthening initiatives, such as affordable housing and revitalization efforts. In 2024, the Corporation invested in two new projects that demonstrate its commitment in this area.
The Bank's "affiliates" for purposes of these sections include, among other potential entities, the Corporation and its direct subsidiaries.
Restrictions on Transactions with Affiliates and Insiders The Bank is subject to the restrictions of Sections 23A and 23B of the Federal Reserve Act and the implementing Regulation W. The Bank's "affiliates" for purposes of these sections include, among other potential entities, the Corporation and its direct subsidiaries.
The federal banking agencies have indicated that paying dividends that deplete a depository institution’s capital base to an inadequate level would be an unsafe and unsound banking practice. A depository institution may not pay any dividend if payment would cause it to become undercapitalized or if it already is undercapitalized.
The payment of dividends by the Bank and the Corporation may also be affected by other factors, such as the requirement to maintain adequate capital above regulatory requirements. The federal banking agencies have indicated that paying dividends that deplete a depository institution’s capital base to an inadequate level would be an unsafe and unsound banking practice.
The special assessment will be collected beginning with the first quarterly assessment period of 2024.
The special assessment is being collected over an eight-quarter collection period (and potentially longer), beginning with the first quarterly assessment period of 2024.
The FDIC, along with other federal bank regulators, published in October 2023 substantially updated regulations regarding CRA, which will become effective on April 1, 2024, with various phase-in periods. 5 Table of Contents Restrictions on Transactions with Affiliates and Insiders The Bank is subject to the restrictions of Sections 23A and 23B of the Federal Reserve Act and the implementing Regulation W.
The FDIC, along with other federal bank regulators, published in October 2023 substantially updated regulations regarding CRA, as well as some amendments to this final rule in March 2024, which became effective on April 1, 2024, with various phase-in periods.
A critical measure is realizing increasing diversity in the Corporation's senior leadership positions, as those members of the Corporation’s management have greater ability to demonstrate their professional skills and experience, effectuate sustained change in the composition of its team, and provide the Corporation with their important financial services expertise to ensure The Corporation benefits from the relevant involvement of all groups within the spectrum of its workforce and communities.
A critical measure is the opportunity for individuals from all professional and demographic backgrounds to advance into senior leadership positions. These leaders have a greater ability to drive innovation and change and provide the Corporation with financial services expertise to ensure the Corporation benefits from the active engagement and perspectives of all groups within its workforce and communities.
The Corporation respects and values the responsibilities of the Corporation to be reasonably environmentally considerate, socially responsible including avoiding discrimination of any investors, customers, and employees by promoting an increasingly diverse and inclusive profile in our company, reflective of the communities we serve.
The Corporation respects and values the responsibilities of the Corporation to act with integrity in a number of community-focused areas, including being reasonably environmentally considerate, and avoiding discrimination of any investors, customers, or employees by promoting a company culture that reflects of the communities the Corporation serves.
Additionally, there were approximately $1.1 million in donations to community organizations and events within the communities the Corporation serves. Notably, in 2023, the Corporation’s Martin Luther King, Jr. “Take the Day On” efforts resulted in 158 employees donating 503 hours of their time across the communities the Corporation serves.
Additionally, there were approximately $1.5 million in donations to community organizations and events within the communities the Corporation serves.
Federal banking agencies have also adopted guidelines for establishing information security standards and programs to protect such information.
Federal banking agencies have also adopted guidelines for establishing information security standards and programs to protect such information. Further, pursuant to interpretive guidance issued under the Gramm-Leach-Bliley Act and certain state laws, financial institutions are required to notify customers of security breaches that result in unauthorized access to their nonpublic personal information.
Removed
In conjunction with the closing of the LPO, the Corporation opened a full-service branch in Cleveland, Ohio. The Bank currently operates twelve full-service branch locations within its ERIEBANK franchise, a division of the Bank, with its headquarters in Erie, Pennsylvania. In October 2013, the Corporation acquired FC Banc Corp. and its subsidiary, The Farmers Citizens Bank.
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In July 2020, the Corporation acquired Bank of Akron, with its branch locations operating with BankOnBuffalo. The Bank currently operates twelve branch locations, one mobile branch and one drive-up office as BankOnBuffalo, a division of the Bank, with its headquarters in Buffalo, New York.
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The Bank currently operates two full-serve branch locations and one LPO in Southwest Virginia. In 2023, the Bank launched Impressia Bank, a full-service banking division dedicated to the professional and financial development and advancement of women business owners and women leaders.
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On January 9, 2025, the Corporation and CNB Bank entered into a definitive merger agreement (the “Merger Agreement”) with ESSA Bancorp, Inc. (“ESSA”) and its subsidiary bank, ESSA Bank & Trust Company (“ESSA Bank”), pursuant to which the Corporation will acquire ESSA in an all-stock transaction.
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Holiday Financial Services Corporation In 2005, the Corporation entered the consumer discount loan and finance business, which is conducted through Holiday, a wholly-owned subsidiary. Holiday currently has nine offices within the Corporation’s market area.
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Subject to the terms and conditions of the Merger Agreement, which has been approved by the boards of directors of each party, ESSA will merge with and into the Corporation, with the Corporation as the surviving entity, and immediately thereafter, ESSA Bank will merge with and into the Bank, with the Bank as the surviving bank (the “Merger”).
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The following summary sets forth certain of the material elements of the regulatory framework applicable to bank holding companies and their subsidiaries and provides certain specific information about us and our subsidiaries. It does not describe all of the provisions of the statutes, regulations and policies that are identified.
Added
Under the terms of the Merger Agreement, each outstanding share of ESSA common stock will be converted into the right to receive 0.8547 shares of the Corporation’s common stock.
Removed
This program must include reasonable policies and procedures to detect suspicious patterns or practices that indicate the possibility of identity theft, such as inconsistencies in personal information or changes in account activity.
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The transaction is currently expected to close in the third quarter of 2025, subject to customary closing conditions, including the receipt of regulatory approvals and approvals by the shareholders of ESSA and the Corporation.
Removed
In September 2019, the OCC, the Federal Reserve Board and the FDIC adopted a final rule that is intended to further simplify the Capital Rules for depository institutions and their holding companies that have less than $10 billion in total consolidated assets, such as us, if such institutions meet certain qualifying criteria.
Added
The risk-weighting categories in the Capital Rules are standardized and include a risk-sensitive number of categories, depending on the nature of the assets, generally ranging from 0% for U.S. government and agency securities to 600% for certain equity exposures, and resulting in higher risk weights for a variety of assets.
Removed
Declaration and payment of cash dividends by the Corporation depends upon cash dividend payments to the Corporation by the Bank, which is our primary source of revenue and cash flow. As a Pennsylvania state-chartered bank, the Bank is subject to regulatory restrictions on the payment and amounts of dividends under the Pennsylvania Banking Code.
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A depository institution may not pay any dividend if payment would cause it to become undercapitalized or if it already is undercapitalized. Moreover, the federal banking agencies have issued policy statements that provide that bank holding companies and insured banks should generally only pay dividends out of current operating earnings.
Removed
Community Reinvestment Act Under the Community Reinvestment Act of 1977 ("CRA"), the FDIC is required to assess the record of all financial institutions it supervises to determine if these institutions are meeting the credit needs of the community (including low and moderate income neighborhoods) which they serve.
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Human Capital Management and Leadership Development The Corporation firmly believes in the importance of succession planning and, as such, has in place a formal succession planning process for all named executive officers, members of the executive management team, and regional presidents.
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Financial Privacy and Data Security The Corporation is subject to federal laws, including the Gramm-Leach-Bliley Act, and certain state laws containing consumer privacy protection provisions.
Added
The succession plan was successfully utilized in 2024 after the resignation of a named executive officer, resulting in a seamless transition to a senior executive within the Corporation.
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To ensure that the core values and corporate responsibility principles are understood, implemented, and demonstrated by the Corporation’s employee team on a sustained basis, the Corporation developed comprehensive communication processes and a training curriculum which was rolled out to all employees, including establishing a committee focused on ensuring diversity, equity, and inclusion issues are considered in our employee activities.
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A critical factor of the Corporation’s succession plan is the training and development of its management team to create a strong internal pipeline of talent to produce the future leaders of the Corporation.
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Our employee resources include a certified diversity and inclusion trainer, and external training courses. Employee experience committees were also formed in 2022 to explore and evaluate how various diversity, equity and inclusion ("DEI") topics impact our employees and how we can better address them. The Corporation conducted a company-wide survey on DEI to monitor progress and solicit feedback.
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The Corporation’s succession planning process is further strengthened by its presence in diversified markets that lead to opportunities to attract and retain talent with broad-based skills and experiences. The Corporation is dedicated to recognizing the unique contribution of each employee and is committed to supporting a workplace that understands, accepts and values the similarities and differences between individuals.
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The results of this survey were utilized to develop areas of focus for 2023.
Added
To monitor changes in the Corporation’s employee and management groups relative to both composition and growth, the Corporation uses, among other tools, recurring management and employee surveys, profile analyses, and summaries of year-over-year changes to the pools of employees and management within its various banking divisions and the Corporation as a whole, and utilizes the results to track progress and improve the effectiveness of the Corporation’s leadership development and workforce profile and personnel management practices. 9 Table of Contents The Corporation offers a robust range of training programs tailored to meet the needs of employees across all levels and departments.
Removed
Diversity, Equity and Inclusion Committee The Bank's Diversity, Equity and Inclusion Committee ("DEI Committee") plays a crucial role in providing a platform for employee members from underrepresented groups and their allies to have their voices heard, promote education and availability of resources, ensure fair representation, and contribute ideas for consideration by the Bank’s key decision-makers.
Added
Through the CNB Academy, the Corporation’s learning management system, the Corporation delivers targeted learning solutions that empower employees to excel in their roles while advancing their professional growth. The Corporation’s training programs are designed to support a culture of continuous learning and career progression.
Removed
The input to Senior Management from the DEI Committee, which generally meets monthly or more frequently as warranted, includes initiatives to address the unique challenges and opportunities faced by underrepresented groups. The DEI Committee reviews policies, practices, and procedures to identify and eliminate potentially discriminatory practices, potential bias, and inequality.
Added
From foundational skills in client interactions to advanced leadership development, employees are equipped with the tools and knowledge to succeed in their current roles and prepare for future opportunities. Career-focused programs like the Mentoring Program, Career Path Planning, and Rising Professionals enable employees to map and achieve their long-term aspirations.
Removed
The DEI Committee works toward promoting a culture of nondiscrimination and inclusion within the Bank, fostering a sense of belonging for employees from diverse backgrounds. In 2023, the Bank further demonstrated its continuing commitment to its organizational culture by establishing two employee resource groups ("ERGs") – "Bankers with Pride" and "CNB in Color".
Added
By aligning training programs with strategic planning, the Corporation ensures employees are empowered to deliver exceptional service and contribute to organizational success. Through the Corporation’s integrated approach, it builds a resilient, innovative workforce that is prepared to adapt to industry challenges and opportunities while upholding the core values that define its institution.
Removed
These ERGs provide a safe and inclusive space while fostering a culture that promotes diversity and acceptance. CNB in Color is an ERG focused on supporting employees from Black, Indigenous, and People of Color (BIPOC) communities, while Bankers with Pride is aimed at supporting employees who identify with the LGBTQIA+ community.
Added
To encourage employees to give back to their communities, the Corporation introduced the Volunteer Time Off Program, which provides employees with up to 16 hours of paid time off annually to volunteer for nonprofit organizations and local causes who may need volunteer assistance during typical weekday business hours.
Removed
The ERGs supplement the efforts of the Bank’s DEI Committee, helping to ensure representation, equity, and fairness for all employees, irrespective of their gender, identity, racial or ethnic background.
Added
In 2024, the program was met with tremendous enthusiasm, with employees dedicating a collective total of 3,585 hours to volunteer service across the communities the Corporation serves. Importantly, employees contributed nearly nine times of additional volunteering hours of their own time beyond those hours covered by the Volunteer Time Off Program.
Removed
Currently, there are 58 employees involved in DEI initiatives with the Bank through the DEI Committee and ERGs. 9 Table of Contents Human Capital Management and Leadership Development The Corporation seeks to recognize the unique contribution each employee brings to the Corporation, and the Corporation is fully committed to supporting a workplace that understands, accepts and values the similarities and differences between individuals.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

37 edited+31 added−15 removed101 unchanged
Biggest changeIf sustained or repeated, a system failure or service denial could result in a deterioration of our ability to process new and renewal loans, gather deposits and provide customer service, compromise our ability to operate effectively, damage our reputation, result in a loss of customer business and subject us to additional regulatory scrutiny and possible financial liability, any of which could have a material adverse effect on our financial condition and results of operations.
Biggest changeIf sustained or repeated, a system failure or service denial could result in a deterioration of our ability to process new and renewal loans, gather deposits and provide customer service, compromise our ability to operate effectively, damage our reputation, result in a loss of customer business and subject us to additional regulatory scrutiny and possible financial liability, any of which could have a material adverse effect on our financial condition and results of operations. 18 Table of Contents A failure in or breach of the Corporation’s or any of its subsidiaries’ information technology network and systems, or those of third party vendors and other service providers, including as a result of cyber attacks, could disrupt the Corporation’s or any of its subsidiaries’ businesses, result in the unauthorized disclosure or misuse of confidential or proprietary information, damage its reputation, increase its costs, and/or cause losses.
These risks may prevent the Corporation from fully realizing the anticipated benefits of an acquisition or cause the realization of such benefits to take longer than expected. 18 Table of Contents Strong competition within the Corporation’s markets and technological change may have a material adverse impact on its profitability. The Corporation competes with an ever-increasing array of financial service providers.
These risks may prevent the Corporation from fully realizing the anticipated benefits of an acquisition or cause the realization of such benefits to take longer than expected. Strong competition within the Corporation’s markets and technological change may have a material adverse impact on its profitability. The Corporation competes with an ever-increasing array of financial service providers.
The following risks together with all of the other information in this Annual Report on Form 10-K should be considered. Economic Risks Economic conditions could adversely affect our business and financial results. The Corporation’s financial condition and results of operations are impacted by global markets and economic conditions over which the Corporation has no control.
The following risks together with all of the other information in this Annual Report on Form 10-K should be considered. 11 Table of Contents Economic Risks Economic conditions could adversely affect our business and financial results. The Corporation’s financial condition and results of operations are impacted by global markets and economic conditions over which the Corporation has no control.
If the Corporation were unable to receive dividends from the Bank, it would materially and adversely affects the Corporation’s liquidity and its ability to service its debt, pay its other obligations, or pay cash dividends on its common stock.
If the Corporation were unable to receive dividends from the Bank, it would materially and adversely affect the Corporation’s liquidity and its ability to service its debt, pay its other obligations, or pay cash dividends on its common stock.
Although the Bank may acquire any real estate or other assets that secure defaulted loans through foreclosures or other similar remedies, the amounts owed under the defaulted loans may exceed the value of the assets acquired. 13 Table of Contents The allowance for credit losses is subject to a formal analysis by the Credit Administration and Finance Departments of the Corporation.
Although the Bank may acquire any real estate or other assets that secure defaulted loans through foreclosures or other similar remedies, the amounts owed under the defaulted loans may exceed the value of the assets acquired. The allowance for credit losses is subject to a formal analysis by the Credit Administration and Finance Departments of the Corporation.
Any of the foregoing provisions may have the effect of deterring takeovers or delaying changes in control or management of the Corporation. 16 Table of Contents The price of the Corporation’s common stock may fluctuate significantly, and this may make it difficult for you to resell shares of common stock owned by you at times or at prices you find attractive.
Any of the foregoing provisions may have the effect of deterring takeovers or delaying changes in control or management of the Corporation. The price of the Corporation’s common stock may fluctuate significantly, and this may make it difficult for you to resell shares of common stock owned by you at times or at prices you find attractive.
If conditions or circumstances arise that expose flaws or gaps in the Corporation's risk-management program, or if its controls break down, the Corporation's results of operations and financial condition may be adversely affected. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
If conditions or circumstances arise that expose flaws or gaps in the Corporation's risk-management program, or if its controls break down, the Corporation's results of operations and financial condition may be adversely affected.
A pandemic, such as the COVID-19 pandemic, and emergence of new variants could negatively impact the global economy, disrupt financial markets and international trade, and result in varying unemployment levels, all of which could negatively impact our business, results of operations, cash flows, and financial condition.
A pandemic could negatively impact the global economy, disrupt financial markets and international trade, and result in varying unemployment levels, all of which could negatively impact our business, results of operations, cash flows, and financial condition.
The Corporation could experience higher credit losses because of federal or state legislation or regulatory action that reduces the amount the Bank’s borrowers are otherwise contractually required to pay under existing loan contracts.
Federal and state governments could pass legislation responsive to current credit conditions which could cause the Corporation to experience higher credit losses. The Corporation could experience higher credit losses because of federal or state legislation or regulatory action that reduces the amount the Bank’s borrowers are otherwise contractually required to pay under existing loan contracts.
Pandemic outbreaks could lead (and the outbreak of COVID-19 led) governments and other authorities around the world, including federal, state and local authorities in the United States, to impose measures intended to mitigate its spread, including restrictions on freedom of movement and business operations such as issuing guidelines, travel bans, border closings, business closures and quarantine orders.
In response to pandemic outbreaks, governments and other authorities around the world, including federal, state and local authorities in the United States, have imposed, and may in the future impose measures intended to mitigate its spread, including restrictions on freedom of movement and business operations such as issuing guidelines, travel bans, border closings, business closures and quarantine orders.
The non-bank financial service providers that compete with the Corporation and the Bank may not be subject to such extensive regulation, supervision, and tax burden. Competition from nationwide banks, as well as local institutions, is strong in the Corporation’s markets. The financial services industry is undergoing rapid technological change and technological advances are likely to intensify competition.
The non-bank financial service providers that compete with the Corporation and the Bank may not be subject to such extensive regulation, supervision, and tax burden. Competition from nationwide banks, as well as local institutions, is strong in the Corporation’s markets.
The Bank’s interest rate risk measurement and management techniques incorporate the re-pricing and cash flow attributes of its balance sheet and off-balance sheet instruments as they relate to current and potential changes in interest rates.
Furthermore, elevated interest rates increase our cost of new debt or preferred capital. The Bank’s interest rate risk measurement and management techniques incorporate the re-pricing and cash flow attributes of its balance sheet and off-balance sheet instruments as they relate to current and potential changes in interest rates.
To the extent that one FHLB bank cannot meet its obligations to pay its share of the system’s debt, other FHLB banks can be called upon to make the payment. The Corporation cannot assure you, however, that the FHLB system will be able to meet these obligations.
To the extent that one FHLB bank cannot meet its obligations to pay its share of the system’s debt, other FHLB banks can be called upon to make the payment.
Compliance with such regulation may increase its costs and limit its ability to pursue business opportunities. • Market developments may affect customer confidence levels and may cause increases in loan delinquencies and default rates, which management expects would adversely impact the Bank’s charge-offs and provision for credit losses. • Market developments may adversely affect the Bank’s securities portfolio by causing other-than-temporary-impairments, prompting write-downs and securities losses. • Competition in the banking and financial services industry could intensify as a result of the consolidation of financial services companies in connection with current market conditions. 12 Table of Contents The Corporation may not be able to meet its cash flow needs on a timely basis at a reasonable cost, and the Corporation’s cost of funds for banking operations may significantly increase as a result of general economic conditions, interest rates and competitive pressures.
Compliance with such regulation may increase its costs and limit its ability to pursue business opportunities. • Market developments may affect customer confidence levels and may cause increases in loan delinquencies and default rates, which management expects would adversely impact the Bank’s charge-offs and provision for credit losses. • Market developments may adversely affect the Bank’s securities portfolio by causing other-than-temporary-impairments, prompting write-downs and securities losses. • Competition in the banking and financial services industry could intensify as a result of the consolidation of financial services companies in connection with current market conditions.
The Corporation is subject to interest rate risk to the degree that its interest bearing liabilities re-price or mature more slowly or more rapidly or on a different basis than its interest earning assets.
Interest rate risk arises from the imbalance in the re-pricing, maturity, and/or cash flow characteristics of assets and liabilities. The Corporation is subject to interest rate risk to the degree that its interest bearing liabilities re-price or mature more slowly or more rapidly or on a different basis than its interest earning assets.
Failure to comply with laws, including the Bank Secrecy Act and USA Patriot Act, regulations or policies could result in sanctions by regulatory agencies, restrictions, civil money penalties and/or reputation damage, which could have a material adverse effect on the Corporation’s business, financial condition and results of operations and/or cause the Corporation to lose its financial holding company status.
Such changes could subject it to additional costs, limit the types of financial services and products the Corporation may offer, and/or limit the pricing it may charge on certain banking services, among other things. 20 Table of Contents Failure to comply with laws, including the Bank Secrecy Act and USA Patriot Act, regulations or policies could result in sanctions by regulatory agencies, restrictions, civil money penalties and/or reputation damage, which could have a material adverse effect on the Corporation’s business, financial condition and results of operations and/or cause the Corporation to lose its financial holding company status.
This impact could lead to decreased loan demand and increase the number of borrowers who fail to pay the Bank interest or principal on their loans, and accordingly, could have a material adverse effect on the Corporation’s business, financial condition, results of operations, or liquidity.
This impact could lead to decreased loan demand and increase the number of borrowers who fail to pay the Bank interest or principal on their loans, and accordingly, could have a material adverse effect on the Corporation’s business, financial condition, results of operations, or liquidity. 16 Table of Contents Severe weather, flooding and other effects of climate change and other natural disasters, such as earthquakes, could adversely affect our financial condition, results of operations or liquidity.
For further information on risk relating to interest rates, refer to Part I, Item 7a, "Quantitative and Qualitative Disclosures about Market Risk," herein. 14 Table of Contents The Corporation’s investment securities portfolio is subject to credit risk, market risk, and liquidity risk, and declines in value in its investment securities portfolio may require it to record impairment charges that could have a material adverse effect on its results of operations and financial condition.
The Corporation’s investment securities portfolio is subject to credit risk, market risk, and liquidity risk, and declines in value in its investment securities portfolio may require it to record impairment charges that could have a material adverse effect on its results of operations and financial condition.
Losses arising from environmental liabilities could have a material adverse impact on the Corporation’s business, financial condition, results of operations, or liquidity. 15 Table of Contents Replacement of the LIBOR benchmark interest rate could adversely affect our business, financial condition, and results of operations.
Losses arising from environmental liabilities could have a material adverse impact on the Corporation’s business, financial condition, results of operations, or liquidity.
Furthermore, increased regulation of data collection, use and retention practices, including self-regulation and industry standards, changes in existing laws and regulations, enactment of new laws and regulations, increased enforcement activity, and changes in interpretation of laws, could increase our cost of compliance and operation, limit our ability to grow our business or otherwise harm the Corporation.
Furthermore, increased regulation of data collection, use and retention practices, including self-regulation and industry standards, changes in existing laws and regulations, enactment of new laws and regulations, increased enforcement activity, and changes in interpretation of laws, could increase our cost of compliance and operation, limit our ability to grow our business or otherwise harm the Corporation. 19 Table of Contents While we have purchased cybersecurity insurance, there are no assurances that the coverage would be adequate in relation to any incurred losses.
Changes in economic conditions, including consumer savings habits and availability of or access to capital, could potentially have a significant impact on the Bank’s liquidity position, which in turn could materially impact the Corporation’s financial condition, results of operations and cash flows.
Changes in economic conditions, including consumer savings habits and availability of or access to capital, could potentially have a significant impact on the Bank’s liquidity position, which in turn could materially impact the Corporation’s financial condition, results of operations and cash flows. 12 Table of Contents Credit and Interest Rate Risks The Bank’s allowance for credit losses may not be adequate to cover loan losses which could have a material adverse effect on the Corporation’s business, financial condition and results of operations.
This relationship, commonly known as the net interest margin, is susceptible to significant fluctuation and is affected by economic and competitive factors that influence the yields and rates, and the volume and mix of the Bank’s interest earning assets and interest bearing liabilities.
This relationship, commonly known as the net interest margin, is susceptible to significant fluctuation and is affected by economic and competitive factors that influence the yields and rates, and the volume and mix of the Bank’s interest earning assets and interest bearing liabilities. 13 Table of Contents Interest rate risk can be defined as the sensitivity of net interest income and of the market value of financial instruments to the direction and frequency of changes in interest rates.
If we are unable to find alternative sources for our vendors’ services and products quickly and cost-effectively, the failures of our vendors could have a material adverse impact on the Corporation’s business and, in turn, the Corporation’s financial condition and results of operations. 19 Table of Contents Additionally, our information technology and telecommunications systems interface with and depend on third-party systems, and we could experience service denials if demand for such services exceeds capacity or such third-party systems fail or experience interruptions.
If we are unable to find alternative sources for our vendors’ services and products quickly and cost-effectively, the failures of our vendors could have a material adverse impact on the Corporation’s business and, in turn, the Corporation’s financial condition and results of operations.
Many regional, national, and international competitors have far greater assets and capitalization than the Corporation has and greater resources to invest in technology and access to capital markets and can consequently offer a broader array of financial services than the Corporation can.
Failure to keep pace with technological change affecting the financial services industry could have a material adverse effect on the Corporation's financial condition, results of operations, or liquidity. 17 Table of Contents Many regional, national, and international competitors have far greater assets and capitalization than the Corporation has and greater resources to invest in technology and access to capital markets and can consequently offer a broader array of financial services than the Corporation can.
While the Bank’s loan portfolio has not shown significant signs of credit quality deterioration despite continued challenges in the U.S. economy, we cannot assure you that no deterioration will occur. An economic recession in the markets served by the Bank, and the nation as a whole, could negatively impact household and corporate incomes.
The Bank is not immune to negative consequences arising from overall economic weakness and, in particular, a sharp downturn in the local real estate markets served by the Bank. While the Bank’s loan portfolio has not shown significant signs of credit quality deterioration despite continued challenges in the U.S. economy, we cannot assure you that no deterioration will occur.
While the Corporation has policies and procedures designed to prevent any such violations, there can be no assurance that such violations will not occur.
While the Corporation has policies and procedures designed to prevent any such violations, there can be no assurance that such violations will not occur. See the section captioned "Supervision and Regulation" in Part I, Item 1 of this report for further information.
Furthermore, because a substantial portion of the Bank’s loan portfolio is secured by real estate in these areas, the value of the associated collateral is also subject to regional real estate market conditions. 17 Table of Contents The Bank is not immune to negative consequences arising from overall economic weakness and, in particular, a sharp downturn in the local real estate markets served by the Bank.
Furthermore, because a substantial portion of the Bank’s loan portfolio is secured by real estate in these areas, the value of the associated collateral is also subject to regional real estate market conditions.
The price of the Corporation’s common stock on the Global Select Market of The NASDAQ Stock Market LLC ("NASDAQ") constantly changes. The Corporation expects that the market price of its common stock will continue to fluctuate, and the Corporation cannot give you any assurances regarding any trends in the market prices for its common stock.
The Corporation expects that the market price of its common stock will continue to fluctuate, and the Corporation cannot give you any assurances regarding any trends in the market prices for its common stock. 15 Table of Contents The Corporation’s stock price may fluctuate as a result of a variety of factors, many of which are beyond its control.
As cyber threats continue to evolve, the Corporation may be required to expend further significant resources to continue to modify or enhance its protective measures or to investigate and remediate future information security vulnerabilities. 20 Table of Contents While we have purchased cybersecurity insurance, there are no assurances that the coverage would be adequate in relation to any incurred losses.
As cyber threats continue to evolve, the Corporation may be required to expend further significant resources to continue to modify or enhance its protective measures or to investigate and remediate future information security vulnerabilities.
The Bank could be held responsible for environmental liabilities relating to properties acquired through foreclosure, resulting in significant financial loss.
The Corporation cannot assure you, however, that the FHLB system will be able to meet these obligations. 14 Table of Contents The Bank could be held responsible for environmental liabilities relating to properties acquired through foreclosure, resulting in significant financial loss.
They could also cause a reduction in demand for lending or other services that we provide. Risks Related to Legal and Compliance Matters The Corporation is subject to extensive government regulation and supervision, which may affect its ability to conduct its business and may negatively impact its financial results.
Risks Related to Legal and Compliance Matters The Corporation is subject to extensive government regulation and supervision, which may affect its ability to conduct its business and may negatively impact its financial results. The Corporation, primarily through the Bank and its non-bank subsidiary, is subject to extensive federal and state regulation and supervision.
The Corporation cannot assure you that it will be able to successfully take advantage of technological changes or advances or develop and market new technology driven products and services to its customers. Failure to keep pace with technological change affecting the financial services industry could have a material adverse effect on the Corporation's financial condition, results of operations, or liquidity.
Accordingly, the Corporation’s future success will depend in part on its ability to address customer needs by using technology. The Corporation cannot assure you that it will be able to successfully take advantage of technological changes or advances or develop and market new technology driven products and services to its customers.
The Corporation, primarily through the Bank and its non-bank subsidiary, is subject to extensive federal and state regulation and supervision. Banking regulations are primarily intended to protect depositors’ funds, the Federal Deposit Insurance Fund and the safety and soundness of the banking system as a whole, not stockholders.
Banking regulations are primarily intended to protect depositors’ funds, the Federal Deposit Insurance Fund and the safety and soundness of the banking system as a whole, not stockholders. These regulations affect the Corporation’s lending practices, capital structure, investment practices, dividend policy and growth, among other things.
These regulations affect the Corporation’s lending practices, capital structure, investment practices, dividend policy and growth, among other things. Congress and federal regulatory agencies continually review banking laws, regulations and policies for possible changes. Changes to statutes, regulations or regulatory policies, including changes in interpretation or implementation of statutes, regulations or policies, could affect the Corporation in substantial and unpredictable ways.
Changes to statutes, regulations or regulatory policies, including changes in interpretation or implementation of statutes, regulations or policies, could affect the Corporation in substantial and unpredictable ways.
As interest rates rise, we experience competitive pressures to increase the rates we pay on deposits, which may decrease our net interest income. Furthermore, these increases in interest rates increase our cost of new debt or preferred capital.
Significant fluctuations in interest rates could have a material adverse impact on the Corporation’s business, financial condition, results of operations, or liquidity. Interest rates remain elevated compared to recent years and may increase. As interest rates rise, we experience competitive pressures to increase the rates we pay on deposits, which may decrease our net interest income.
In addition to improving customer services, effective use of technology increases efficiency and enables financial institutions to reduce costs. Accordingly, the Corporation’s future success will depend in part on its ability to address customer needs by using technology.
The financial services industry is undergoing rapid technological change, and technological advances, including those related to artificial intelligence, are likely to intensify competition. In addition to improving customer services, effective use of technology increases efficiency and enables financial institutions to reduce costs.
Although to date the Corporation has not experienced any material losses relating to cyber attacks or cybersecurity incidents, there can be no assurance that it or its subsidiaries will not suffer such losses in the future and our information systems remain a target of cyber attacks.
However, there can be no assurance that the Corporation or its subsidiaries will remain unaffected in the future.
Removed
Inflation has significantly increased since the start of 2021 and continues to remain at elevated levels compared to recent years prior to 2021, which has led to increased costs for businesses and consumers.
Added
Periods of high inflation since the start of 2021 have led to increased costs for businesses and consumers. In addition, international trade disputes, including threatened or implemented tariffs imposed by the U.S. and threatened or implemented tariffs imposed by foreign countries in retaliation, could result in further inflationary pressures that impact costs.
Removed
Credit and Interest Rate Risks The Bank’s allowance for credit losses may not be adequate to cover loan losses which could have a material adverse effect on the Corporation’s business, financial condition and results of operations.
Added
The Corporation may not be able to meet its cash flow needs on a timely basis at a reasonable cost, and the Corporation’s cost of funds for banking operations may significantly increase as a result of general economic conditions, interest rates and competitive pressures.
Removed
Interest rate risk can be defined as the sensitivity of net interest income and of the market value of financial instruments to the direction and frequency of changes in interest rates. Interest rate risk arises from the imbalance in the re-pricing, maturity, and/or cash flow characteristics of assets and liabilities.
Added
For further information on risk relating to interest rates, refer to Part I, Item 7a, "Quantitative and Qualitative Disclosures about Market Risk," herein.
Removed
Significant fluctuations in interest rates could have a material adverse impact on the Corporation’s business, financial condition, results of operations, or liquidity. In response to high inflation, the Federal Reserve significantly increased the benchmark federal funds rate since early 2022. These actions have significantly increased interest rates.
Added
The price of the Corporation’s common stock on the Global Select Market of The NASDAQ Stock Market LLC ("NASDAQ") constantly changes.
Removed
In March 2021, the United Kingdom’s Financing Conduct Authority and the Intercontinental Exchange Benchmark Administration, the administrator for the London Interbank Offered Rate (“LIBOR”), concurrently announced that certain settings of LIBOR would no longer be published on a representative basis after December 31, 2021, and the most commonly used U.S. dollar LIBOR settings would no longer be published on a representative basis after June 30, 2023.
Added
An economic recession in the markets served by the Bank, and the nation as a whole, could negatively impact household and corporate incomes.
Removed
The Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee, which identified the Secured Overnight Financing Rate ("SOFR") as its preferred alternative to LIBOR in derivatives and other financial contracts.
Added
Additionally, our information technology and telecommunications systems interface with and depend on third-party systems, and we could experience service denials if demand for such services exceeds capacity, or such third-party systems fail or experience interruptions.
Removed
We have a number of loans, derivative contracts, borrowings, and other financial instruments with attributes that are either directly or indirectly dependent on LIBOR. With the transition from LIBOR to SOFR as the preferred alternative to LIBOR, we have transitioned and amended our contracts and financial instruments to reference the SOFR rate where required.
Added
Further, new technologies such as artificial intelligence may be more capable at evading these safeguard measures.
Removed
Since proposed alternative rates (including SOFR) are calculated differently, payments under contracts referencing new rates will differ from those referencing LIBOR. The future performance of SOFR, including how changes in SOFR rates may differ from other rates during different economic conditions, cannot be predicted based on the limited historical performance.
Added
As of December 31, 2024, the Corporation has not experienced any material risks from cybersecurity threats, including as a result of any previous cybersecurity incidents or threats, that have materially affected the business strategy, results of operations or financial condition of the Corporation.
Removed
Further, we cannot predict how SOFR will perform in comparison to LIBOR in changing market conditions, what the effect of such rate’s implementation may be on the markets for floating-rate financial instruments or whether such rates will be vulnerable to manipulation.
Added
They could also cause a reduction in demand for lending or other services that we provide. Our use of artificial intelligence could expose us to various risks. We have begun to utilize artificial intelligence technologies in various aspects of our business, including internal training material creation.
Removed
The transition will change our market risk profiles, requiring changes to risk and pricing models, valuation tools, product design, and hedging strategies. Furthermore, failure to adequately manage this transition process with our customers could adversely impact our reputation and could have a material adverse effect on our business, financial condition and results of operations.
Added
Artificial intelligence technologies are susceptible to errors and other malfunctions which could lead to operational challenges and reputational risks. In addition, we may be subject to increasing regulations related to our use of artificial intelligence, including regulations related to privacy, data security, and intellectual property rights, which could expose us to legal risks.
Removed
The Corporation’s stock price may fluctuate as a result of a variety of factors, many of which are beyond its control.
Added
Congress and federal regulatory agencies continually review banking laws, regulations and policies for possible changes. Furthermore, political and policy goals of elected officials may change over time, which could impact the rulemaking, supervision, examination and enforcement priorities of federal banking agencies.
Removed
Severe weather, flooding and other effects of climate change and other natural disasters, such as earthquakes, could adversely affect our financial condition, results of operations or liquidity.
Added
Risks Related to the Merger with ESSA The market price of the Corporation’s common stock may decline as a result of the Merger and the market price of the Corporation’s common stock after the consummation of the Merger may be affected by factors different from those affecting the price of the Corporation’s common stock before the Merger.
Removed
A failure in or breach of the Corporation’s or any of its subsidiaries’ information technology network and systems, or those of third party vendors and other service providers, including as a result of cyber attacks, could disrupt the Corporation’s or any of its subsidiaries’ businesses, result in the unauthorized disclosure or misuse of confidential or proprietary information, damage its reputation, increase its costs, or cause losses.
Added
The market price of the Corporation’s common stock may decline as a result of the Merger if the Corporation does not achieve the perceived benefits of the Merger or the effect of the Merger on the Corporation’s financial results is not consistent with the expectations of financial or industry analysts.
Removed
Such changes could subject it to additional costs, limit the types of financial services and products the Corporation may offer, and/or limit the pricing it may charge on certain banking services, among other things.
Added
In addition, the consummation of the Merger will result in the combination of two companies that currently operate as independent companies. The business of the Corporation and the business of ESSA differ. As a result, while the Corporation expects to benefit from certain synergies following the Merger, the Corporation may also encounter new risks and liabilities associated with these differences.
Removed
See the section captioned "Supervision and Regulation" in Part I, Item 1 of this report for further information. 21 Table of Contents Federal and state governments could pass legislation responsive to current credit conditions which could cause the Corporation to experience higher credit losses.
Added
Following the Merger, shareholders of the Corporation and ESSA will own interests in a combined company operating an expanded business and may not wish to continue to invest in the Corporation, or for other reasons may wish to dispose of some or all of their shares of the Corporation’s common stock.
Added
If, following the effective time of the Merger, large amounts of the Corporation’s common stock are sold, the price of the Corporation’s common stock could decline. 21 Table of Contents Further, the results of operations of the Corporation and the market price of the Corporation’s common stock after the Merger may be affected by factors different from those currently affecting the independent results of operations of each of the Corporation and ESSA and the market price of the Corporation’s common stock.
Added
Accordingly, the Corporation’s historical market prices and financial results may not be indicative of these matters for the Corporation after the Merger. The Merger Agreement may be terminated in accordance with its terms and the Merger may not be completed.
Added
The Corporation and ESSA can mutually agree to terminate the Merger Agreement at any time before the Merger has been completed, and either company can terminate the Merger Agreement if: • any regulatory approval required for consummation of the Merger and the other transactions contemplated by the Merger Agreement has been denied by final, nonappealable action of any regulatory authority, or an application for regulatory approval has been permanently withdrawn at the request of a governmental authority; • the required approval of the issuance of common stock of the Corporation in connection with the Merger by the Corporation’s shareholders or the required approval of the Merger Agreement by the ESSA shareholders are not obtained; • the other party materially breaches any of its representations, warranties, covenants or other agreements set forth in the Merger Agreement (provided that the terminating party is not then in material breach of any representation, warranty, covenant or other agreement contained in the Merger Agreement), which breach is not cured within 30 days of written notice of the breach, or by its nature cannot be cured prior to the closing of the Merger, and such breach would entitle the non-breaching party not to consummate the Merger; or • the Merger is not consummated by January 9, 2026, unless the failure to consummate the Merger by such date is due to a material breach of the Merger Agreement by the terminating party.
Added
In addition, the Corporation may terminate the Merger Agreement if: • ESSA breaches the non-solicitation provisions in the Merger Agreement; or • the ESSA Board of Directors: ◦ fails to recommend approval of the Merger Agreement, or withdraws, modifies or changes such recommendation in a manner adverse to the Corporation’s interests; or ◦ recommends, proposes or publicly announces its intention to recommend or propose to engage in an acquisition transaction with any person other than the Corporation or any of its subsidiaries; or • ESSA fails to call, give notice of, convene and hold its special meeting.
Added
ESSA may terminate the Merger Agreement, subject to its compliance with the Merger Agreement, if ESSA has received an acquisition proposal, and the ESSA Board of Directors has made a determination that such proposal is a superior proposal and has determined to accept such proposal.
Added
Failure to complete the Merger could negatively impact the stock price of the Corporation and its future business and financial results. Completion of the Merger is subject to the satisfaction or waiver of a number of conditions, including approval by ESSA shareholders of the Merger.
Added
The Corporation cannot guarantee when or if these conditions will be satisfied or that the Merger will be successfully completed. The consummation of the Merger may be delayed, the Merger may be consummated on terms different than those contemplated by the Merger Agreement, or the Merger may not be consummated at all.
Added
If the Merger is not completed, the ongoing business of the Corporation may be adversely affected, and the Corporation will be subject to several risks, including the following: • the Corporation could incur substantial costs relating to the proposed Merger, such as legal, accounting, financial advisor, filing, printing and mailing fees; and • the Corporation’s management and employees’ attention may be diverted from their day-to-day business and operational matters as a result of efforts relating to the attempt to consummate the Merger. 22 Table of Contents In addition, if the Merger is not completed, the Corporation may experience negative reactions from the financial markets and from its customers and employees.
Added
The Corporation also could be subject to litigation related to any failure to complete the Merger or to enforcement proceedings commenced against the Corporation to perform its obligations under the Merger Agreement.
Added
If the Merger is not completed, the Corporation cannot assure its stockholders that the risks described above will not materialize and will not materially affect the Corporation’s business and financial results or the stock price of the Corporation.
Added
The integration of the Corporation and ESSA will present significant challenges and expenses that may result in the combined business not operating as effectively as expected, or in the failure to achieve some or all of the anticipated benefits of the transaction.
Added
The benefits and synergies expected to result from the proposed Merger will depend in part on whether the operations of ESSA can be integrated in a timely and efficient manner with those of the Corporation.
Added
The Corporation will face challenges and costs in consolidating its functions with those of ESSA, and integrating the organizations, procedures and operations of the two businesses. The integration of the Corporation and ESSA will be complex and time-consuming, and the management of both companies will have to dedicate substantial time and resources to it.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeHe also holds 20 industry recognized Technology and Security certifications. The VP of Information Security reports directly to the CITSO and has responsibility for leadership of the Bank’s cybersecurity program. He holds a bachelor’s degree in mathematics and computer science, as well as several industry recognized information security certifications.
Biggest changeThe VP of Information Security reports directly to the CITSO and has responsibility for leadership of the Bank’s cybersecurity program. He holds a bachelor’s degree in mathematics and computer science, as well as several industry recognized information security certifications. The VP of Information Technology reports directly to the CITSO and has responsibility for leadership of the Bank’s Information Technology program.
The risk of cybersecurity threats is integrated into its Enterprise Risk Management (“ERM”) program, led by the Corporation’s Chief Risk Officer. The ERM program includes an annual risk prioritization process to identify key enterprise risks. Each key risk is assigned a risk owner to establish action plans and implement risk mitigation strategies.
The risk of cybersecurity threats is integrated into the Corporation’s Enterprise Risk Management (“ERM”) program, led by the Corporation’s Chief Risk Officer. The ERM program includes an annual risk prioritization process to identify key enterprise risks. Each key risk is assigned a risk owner to establish action plans and implement risk mitigation strategies.
The cybersecurity threat risk action plan is managed at the enterprise level by the Chief Information Technology & Security Officer (the “CITSO”), the VP of Information Technology, and the VP of Information Security.
The Corporation’s cybersecurity threat risk action plan is managed at the enterprise level by the Chief Information Technology & Security Officer (the “CITSO”), the VP of Information Technology, and the VP of Information Security.
Management has not identified risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect the Corporation, including its business strategy, results of operations or financial condition. See “Item 1A. Risk Factors” above for more information.
Management has not identified risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect the Corporation, including its business strategy, results of operations or financial condition.
Management, including the CITSO, reports on cybersecurity matters regularly to the Board, primarily through the Audit and IT Committees, including an annual report regarding specific risks and mitigation efforts within the Bank and a 3-year cybersecurity threat assessment conducted by third party experts. Management provides benchmarking information and updates on key operational and compliance metrics to the Board.
Management, including the CITSO, reports on cybersecurity matters regularly to the Board, primarily through the Audit Committee and IT Committee, including an annual report regarding specific risks and mitigation efforts within the Bank and a 3-year cybersecurity threat assessment conducted by third party experts.
In addition, cybersecurity training is provided to the full Board of Directors to educate directors on the current cyber threat environment and measures companies can take to mitigate risk and impact of cyber attacks.
Management provides benchmarking information and updates on key operational and compliance metrics to the Board of Directors. In addition, cybersecurity training is provided to the full Board of Directors to educate directors on the current cyber threat environment and measures companies can take to mitigate risk and impact of cyber attacks.
The CITSO and the VP of Information Security primarily lead these efforts. The CITSO, who reports directly to the CEO, is responsible for the oversight of the Corporation’s IT operation, including the cybersecurity program, and holds a Bachelor of Science degree in Information Technology and Security and a Master of Science in Information Security and Assurance.
The CITSO, who reports directly to the CEO, is responsible for the oversight of the Corporation’s IT operation, including the cybersecurity program, and holds a Bachelor of Science degree in Information Technology and Security and a Master of Science in Information Security and Assurance. He also holds 20 industry recognized Technology and Security certifications.
The assessment identifies cybersecurity-related risks and makes recommendations to enhance the security of all new computing services. The Corporation reassesses all suppliers on a regular interval. 22 Table of Contents The Corporation works closely with its internal auditors to assess, identify, and manage cybersecurity risks.
The assessment identifies cybersecurity-related risks and makes recommendations to enhance the security of all new computing services. Management reassesses all suppliers on a regular interval.
Each quarter, the risk owners review and update the cybersecurity threat risk action plan to provide the status on specific risk mitigation actions and to identify new threats.
Risk owners regularly monitor cybersecurity risks and the evolving threat landscape and review and update the cybersecurity threat risk action plan in response to newly identified threats or risk mitigation actions.
The CSIRP outlines roles and responsibilities, criteria for measuring the severity of a cybersecurity incident, and an escalation framework, including processes for informing the General Counsel and the Board of Directors of material cybersecurity incidents. As described above, management is actively involved in assessing and managing the Bank’s material cybersecurity risks.
Several members of the Board of Directors, including the Chairperson of the Audit Committee, also have cybersecurity experience. As described above, management is actively involved in assessing and managing the Bank’s material cybersecurity risks.
Added
Pursuant to the CSIRP and its escalation protocols, designated personnel are responsible for assessing the severity of the incident and associated threat, containing the threat, remediating the threat, including recovery of data and access to systems, analyzing the reporting and disclosure obligations associated with the incident, and performing post-incident analysis and program improvements.
Added
While the particular personnel assigned to an incident response team will depend on the particular facts and circumstances, the CITSO and the VP of Information Security primarily lead these efforts. 23 Table of Contents The Corporation works closely with its internal auditors to assess, identify, and manage cybersecurity risks.
Added
However, there can be no assurance that the Corporation’s security efforts and measures will be effective or that attempted security incidents or disruptions would not be successful or damaging.
Added
In addition, although the Corporation maintains cybersecurity insurance to provide some coverage for certain risks arising out of data and network breaches, there can be no assurance that the Corporation’ cybersecurity insurance coverage will be sufficient in the event of a cyber attack. See “Item 1A. Risk Factors” above for more information.
Added
The boards of directors of the Corporation and the Bank have also established an IT Committee, consisting of at least three independent directors, along with non-voting members from management, including the President and CEO, the Chief Financial Officer, the CITSO, the SVP of Operations, the VP of Information Technology, and the VP of Information Security.
Added
The IT Committee assists the boards of directors of the Corporation and CNB Bank in fulfilling their respective governance responsibilities for CNB’s information technology and related data security infrastructure under relevant regulatory safety and soundness requirements.
Added
The Corporation's incident response plan provides clear communication protocols, including with respect to members of senior management, which may include the CEO, the CFO, the Board of Directors, the Audit Committee and external legal counsel. In addition, the incident response plan considers communications and reporting to customers, regulators and law enforcement.
Added
He holds a bachelor’s degree in information technology and has worked in the technology field for 29 years with 17 of those years in a financial institution in various technology management, security, and audit roles.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES The headquarters of the Corporation and the Bank are located at 1 South Second Street, Clearfield, Pennsylvania, in a building owned by the Corporation. The Bank operates 51 full-service offices at December 31, 2023. Of these 51 offices, 24 are owned and 26 are leased from independent owners and one is leased from the Corporation.
Biggest changeITEM 2. PROPERTIES The headquarters of the Corporation and the Bank are located at 1 South Second Street, Clearfield, Pennsylvania, in a building owned by the Corporation. The Bank operates 55 full-service offices at December 31, 2024. Of these 55 offices, 29 are owned and 25 are leased from independent owners and one is leased from the Corporation.
BankOnBuffalo, a division of the Bank, operates in the New York counties of Erie and Niagara. Ridge View Bank, a division of the Bank, operates in the Virginia counties of Botetourt, Craig, Franklin, and Roanoke. Impressia Bank, a division of the Bank, operates in the Bank’s primary market areas.
BankOnBuffalo, a division of the Bank, operates in the New York counties of Erie, Niagara, and Ontario. Ridge View Bank, a division of the Bank, operates in the Virginia counties of Botetourt, Craig, Franklin, Montgomery, and Roanoke. Impressia Bank, a division of the Bank, operates in the Bank’s primary market areas.
Holiday has nine full-service offices, of which eight are leased from independent owners and one is leased from the Corporation. The CNB Bank franchise's primary market areas are the Pennsylvania counties of Blair, Cambria, Centre, Clearfield, Elk, Indiana, Jefferson, and McKean.
Holiday has six full-service offices, of which five are leased from independent owners and one is leased from the Corporation. The CNB Bank franchise's primary market areas are the Pennsylvania counties of Blair, Cambria, Centre, Clearfield, Elk, Indiana, Jefferson, and McKean.
There are no encumbrances on the offices owned and the rental expense on the leased property is immaterial in relation to operating expenses. The initial lease terms range from two to twenty years.
There are no encumbrances on the offices owned and the rental expense on the leased property is immaterial in relation to operating expenses. The initial lease terms range from one to twenty years. 24 Table of Contents

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS There are no material pending legal proceedings to which the Corporation or any of its subsidiaries is a party, or of which any of their properties is the subject, except ordinary routine proceedings which are incidental to the business. ITEM 4. MINE SAFETY DISCLOSURES None. 23 Table of Contents PART II.
Biggest changeITEM 3. LEGAL PROCEEDINGS There are no material pending legal proceedings to which the Corporation or any of its subsidiaries is a party, or of which any of their properties is the subject, except ordinary routine proceedings which are incidental to the business. ITEM 4. MINE SAFETY DISCLOSURES None. 25 Table of Contents PART II.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe repurchases of common stock, if any, were originally authorized to be made during the period beginning on June 2, 2022 (the date on which the Corporation received acknowledgement of the repurchase program from the Federal Reserve Bank) through and including May 17, 2023.
Biggest changePursuant to the 2024 Plan, repurchase of common stock, if any, are authorized to be made during the period beginning on June 12, 2024 (the date on which the Corporation received acknowledgement from the Federal Reserve Bank) through and including May 14, 2025, through open market purchases, privately negotiated transactions or in such other manner as will comply with the provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, subject to compliance with any material agreement to which the Corporation is a party.
Issuer Purchases of Equity Securities The following table provides information with respect to any purchase of shares of the Corporation’s common stock made by or on behalf of the Corporation for the quarter ended December 31, 2023.
Issuer Purchases of Equity Securities The following table provides information with respect to any purchase of shares of the Corporation’s common stock made by or on behalf of the Corporation for the quarter ended December 31, 2024.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded on the Global Select Market of NASDAQ under the symbol "CCNE." As of December 31, 2023, the number of shareholders of record of the Corporation’s common stock was 7,184.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded on the Global Select Market of NASDAQ under the symbol "CCNE." As of December 31, 2024, the number of shareholders of record of the Corporation’s common stock was 8,461.
Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or approximate dollar value) of Shares that May Yet Be Purchased Under the Plans or Programs (1) October 1 – 31, 2023 — $ — — 173,541 November 1 – 30, 2023 — — — 173,541 December 1 – 31, 2023 — — — 173,541 (1) On May 17, 2022, the Corporation's Board of Directors authorized a common stock repurchase plan (the "Repurchase Plan") pursuant to which the Corporation is authorized to repurchase up to 500,000 shares of common stock, provided that the aggregate purchase price of shares of common stock repurchased does not exceed $15 million.
Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or approximate dollar value) of Shares that May Yet Be Purchased Under the Plans or Programs (1) October 1 – 31, 2024 — $ — — 500,000 November 1 – 30, 2024 — — — 500,000 December 1 – 31, 2024 — — — 500,000 Total — $ — — 500,000 (1) On June 12, 2024, the Corporation received acknowledgement from the Federal Reserve of the Corporation’s 2024 Common Share Repurchase Program (the "2024 Plan").
Additionally, during the quarter ended December 31, 2023, certain employees surrendered shares of common stock owned by them to satisfy their statutory minimum U.S. federal and state tax obligations associated with the vesting of shares of restricted common stock issued under the CNB Financial Corporation 2019 Omnibus Incentive Plan. 24 Table of Contents Share Return Performance Set forth below is a chart comparing the Corporation’s cumulative return to stockholders against the cumulative return of the NASDAQ Composite Index and a peer group index of banking organizations for the five-year period commencing December 31, 2018 and ending December 31, 2023.
Additionally, during the quarter ended December 31, 2024, certain employees surrendered shares of common stock owned by them to satisfy their statutory minimum U.S. federal and state tax obligations associated with the vesting of shares of restricted common stock issued under the CNB Financial Corporation 2019 Omnibus Incentive Plan.
On May 9, 2023, the Corporation's Board of Directors amended the Repurchase Plan to extend its duration to May 17, 2024. Common stock repurchases under the Repurchase Plan may be conducted through open market purchases or, privately negotiated transactions. Depending on market conditions and other factors, these repurchases may be commenced or suspended without prior notice.
Depending on market conditions and other factors, these repurchases may be commenced or suspended without prior notice. As of December 31, 2024, there were 500,000 shares remaining for repurchase under the 2024 Plan.
The amount of any future dividends will depend on economic and market conditions, the Corporation's financial condition and operating results and other factors, including applicable government regulations and policies.
The amount of any future dividends will depend on economic and market conditions, the Corporation's financial condition and operating results and other factors, including applicable government regulations and policies. 26 Table of Contents Share Return Performance Set forth below is a chart comparing the Corporation’s cumulative return to stockholders against the cumulative return of the NASDAQ Composite Index and a peer group index of banking organizations for the five-year period commencing December 31, 2019 and ending December 31, 2024.
CNB Financial Corporation Period Ending Index 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 CNB Financial Corporation 100.00 145.93 98.38 125.89 116.13 114.26 NASDAQ Composite Index 100.00 136.69 198.10 242.03 163.28 236.17 KBW NASDAQ Bank Index 100.00 136.13 122.09 168.88 132.75 131.57 Source: S&P Global Market Intelligence © 2024 ITEM 6. RESERVED
CNB Financial Corporation Period Ending Index 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 CNB Financial Corporation 100.00 67.42 86.27 79.58 78.30 88.96 NASDAQ Composite Index 100.00 144.92 177.06 119.45 172.77 223.87 KBW NASDAQ Bank Index 100.00 89.69 124.06 97.52 96.65 132.60 Source: S&P Global Market Intelligence © 2025 ITEM 6. RESERVED 27 Table of Contents
Removed
Dividends As discussed under "The Corporation’s ability to pay dividends is limited by law and regulations" included in Item 1A. Risk Factors in Part I, the amount and timing of dividends is subject to the discretion of the Board of Directors and depends upon business conditions and regulatory requirements.
Added
The Corporation’s Board of Directors previously approved the 2024 Plan, subject to the Federal Reserve Bank's response, authorizing the repurchase from time to time by the Corporation of up to 500,000 shares of the Corporation’s common stock, provided that the aggregate purchase price of shares of common stock repurchased does not exceed $15,000,000.
Removed
As of December 31, 2023, there were 173,541 shares remaining for repurchase under the program.
Added
Dividends Restrictions The Corporation is a legal entity separate and distinct from the Bank. Declaration and payment of cash dividends by the Corporation depends upon cash dividend payments to the Corporation by the Bank, which is our primary source of revenue and cash flow.
Added
As a Pennsylvania state-chartered bank, the Bank is subject to regulatory restrictions on the payment and amounts of dividends under the Pennsylvania Banking Code. Further, the ability of banking subsidiaries to pay dividends is also subject to their profitability, financial condition, capital expenditures and other cash flow requirements.
Added
The payment of dividends by the Bank and the Corporation may also be affected by other factors, such as the requirement to maintain adequate capital above regulatory requirements. The federal banking agencies have indicated that paying dividends that deplete a depository institution’s capital base to an inadequate level would be an unsafe and unsound banking practice.
Added
A depository institution may not pay any dividend if payment would cause it to become undercapitalized or if it already is undercapitalized. Moreover, the federal banking agencies have issued policy statements that provide that bank holding companies and insured banks should generally only pay dividends out of current operating earnings.
Added
Federal banking regulators have the authority to prohibit banks and bank holding companies from paying a dividend if the regulators deem such payment to be an unsafe or unsound practice. The amount and timing of dividends is subject to the discretion of the Board of Directors and depends upon business conditions and regulatory requirements.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeDecember 31, 2023 Amount of Allowance Allocated Percent of Loans in Each Category to Total Loans Total Loans Ratio of Allowance Allocated to Loans in Each Category Farmland $ 126 0.7 % $ 31,869 0.40 % Owner-occupied, nonfarm nonresidential properties 3,949 11.0 493,064 0.80 Agricultural production and other loans to farmers 7 — 1,652 0.42 Commercial and Industrial 9,433 16.3 726,442 1.30 Obligations (other than securities and leases) of states and political subdivisions 2,613 3.4 152,201 1.72 Other loans 387 0.6 25,507 1.52 Other construction loans and all land development and other land loans 4,033 11.0 491,539 0.82 Multifamily (5 or more) residential properties 1,030 5.7 254,342 0.40 Non-owner occupied, nonfarm nonresidential properties 9,170 20.1 896,043 1.02 1-4 Family Construction 356 1.1 51,207 0.70 Home equity lines of credit 831 2.9 130,700 0.64 Residential Mortgages secured by first liens 8,050 22.2 990,986 0.81 Residential Mortgages secured by junior liens 1,476 2.0 91,063 1.62 Other revolving credit plans 973 1.0 42,877 2.27 Automobile 358 0.6 25,315 1.41 Other consumer 2,653 1.1 51,592 5.14 Credit cards 95 0.3 11,785 0.81 Overdrafts 292 — 292 100.00 Total loans $ 45,832 100.0 % $ 4,468,476 1.03 % 33 Table of Contents December 31, 2022 Amount of Allowance Allocated Percent of Loans in Each Category to Total Loans Total Loans Ratio of Allowance Allocated to Loans in Each Category Farmland $ 159 0.8 % $ 32,168 0.49 % Owner-occupied, nonfarm nonresidential properties 2,905 11.0 468,493 0.62 Agricultural production and other loans to farmers 6 — 1,198 0.50 Commercial and Industrial 9,766 18.5 791,911 1.23 Obligations (other than securities and leases) of states and political subdivisions 1,863 3.4 145,345 1.28 Other loans 456 0.6 24,710 1.85 Other construction loans and all land development and other land loans 3,253 10.5 446,685 0.73 Multifamily (5 or more) residential properties 2,353 6.0 257,696 0.91 Non-owner occupied, nonfarm nonresidential properties 7,653 18.6 795,315 0.96 1-4 Family Construction 327 1.2 51,171 0.64 Home equity lines of credit 1,173 2.9 124,892 0.94 Residential Mortgages secured by first liens 8,484 22.0 942,531 0.90 Residential Mortgages secured by junior liens 1,035 1.7 74,638 1.39 Other revolving credit plans 722 0.9 36,372 1.99 Automobile 271 0.5 21,806 1.24 Other consumer 2,665 1.1 49,144 5.42 Credit cards 67 0.3 10,825 0.62 Overdrafts 278 — 278 100.00 Total loans $ 43,436 100.0 % $ 4,275,178 1.02 % The allowance for credit losses measured as a percentage of total loans was 1.03% as of December 31, 2023, compared to 1.02% as of December 31, 2022.
Biggest changeDecember 31, 2024 Amount of Allowance Allocated Percent of Loans in Each Category to Total Loans Total Loans Ratio of Allowance Allocated to Loans in Each Category Farmland $ 167 0.67 % $ 31,099 0.54 % Owner-occupied, nonfarm nonresidential properties 5,696 11.18 515,208 1.11 Agricultural production and other loans to farmers 37 0.14 6,492 0.57 Commercial and Industrial 7,759 15.60 718,775 1.08 Obligations (other than securities and leases) of states and political subdivisions 1,369 3.05 140,430 0.97 Other loans 329 0.61 28,110 1.17 Other construction loans and all land development and other land loans 2,571 6.14 282,912 0.91 Multifamily (5 or more) residential properties 2,969 8.92 411,146 0.72 Non-owner occupied, nonfarm nonresidential properties 10,110 22.42 1,033,541 0.98 1-4 Family Construction 198 0.57 26,431 0.75 Home equity lines of credit 1,340 3.61 166,327 0.81 Residential Mortgages secured by first liens 8,958 21.97 1,012,746 0.88 Residential Mortgages secured by junior liens 1,343 2.31 106,462 1.26 Other revolving credit plans 960 0.89 41,095 2.34 Automobile 275 0.45 20,961 1.31 Other consumer 2,892 1.17 53,821 5.37 Credit cards 127 0.29 13,143 0.97 Overdrafts 257 0.01 257 100.00 Total loans $ 47,357 100.00 % $ 4,608,956 1.03 % 37 Table of Contents December 31, 2023 (1) Amount of Allowance Allocated Percent of Loans in Each Category to Total Loans Total Loans Ratio of Allowance Allocated to Loans in Each Category Farmland $ 138 0.76 % $ 33,485 0.41 % Owner-occupied, nonfarm nonresidential properties 4,131 11.46 511,910 0.81 Agricultural production and other loans to farmers 7 0.04 1,652 0.42 Commercial and Industrial 9,500 16.26 726,442 1.31 Obligations (other than securities and leases) of states and political subdivisions 2,627 3.41 152,201 1.73 Other loans 389 0.57 25,507 1.53 Other construction loans and all land development and other land loans 2,830 7.62 340,358 0.83 Multifamily (5 or more) residential properties 1,251 6.84 305,697 0.41 Non-owner occupied, nonfarm nonresidential properties 9,783 22.02 984,033 0.99 1-4 Family Construction 191 0.63 28,055 0.68 Home equity lines of credit 844 2.92 130,700 0.65 Residential Mortgages secured by first liens 8,274 22.50 1,005,335 0.82 Residential Mortgages secured by junior liens 1,487 2.04 91,240 1.63 Other revolving credit plans 977 0.96 42,877 2.28 Automobile 360 0.57 25,315 1.42 Other consumer 2,656 1.14 51,592 5.15 Credit cards 95 0.26 11,785 0.81 Overdrafts 292 0.01 292 100.00 Total loans $ 45,832 100.00 % $ 4,468,476 1.03 % (1) As previously disclosed in the Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, and Note 1, "Summary of Significant Accounting Policies," immaterial revisions were made to the amount of allowance allocated and total loans receivable columns disclosure as of December 31, 2023, to reflect the revisions for the applicable portfolio segments.
Liability liquidity is provided by access to funding sources which include core deposits, correspondent banks and other wholesale funding sources. The Corporation's liquidity position is continuously monitored and adjustments are made to the balance between sources and uses of funds as deemed appropriate. Liquidity risk management is an important element in the Corporation's asset/liability management process.
Liability liquidity is provided by access to funding sources which include core deposits, correspondent banks and other wholesale funding sources. The Corporation's liquidity position is continuously monitored and adjustments are made to balance sources and uses of funds as deemed appropriate. Liquidity risk management is an important element in the Corporation's asset/liability management process.
The efficiency ratio on a fully tax-equivalent basis, a non-GAAP ratio, was 64.45% for the year ended December 31, 2023, compared to 60.87% the year ended December 31, 2022. The increase was primarily the result of rising deposit costs coupled with higher occupancy costs and technology expenses.
The efficiency ratio on a fully tax-equivalent basis, a non-GAAP ratio, was 64.45% for the year ended December 31, 2023, compared to 60.87% for the year ended December 31, 2022, respectively. The increase for the year ended December 31, 2023 was primarily the result of rising deposit costs coupled with higher occupancy costs and technology expenses.
The Corporation currently expects that these sources of funds will enable it to meet cash obligations and off-balance sheet commitments as they come due. In addition to the above noted liquidity sources, the Corporation maintains access to the Federal Reserve discount window.
The Corporation expects that these sources of funds will enable it to meet cash obligations and off-balance sheet commitments as they come due. In addition to the above noted liquidity sources, the Corporation maintains access to the Federal Reserve discount window.
These excess funds, when combined with (i) available borrowing capacity of $3.6 billion from the Federal Home Loan Bank of Pittsburgh ("FHLB") and the Federal Reserve, and (ii) available unused commitments from brokered deposit sources and other third-party funding channels, including previously established lines of credit from correspondent banks, resulted in the total on-hand and contingent liquidity sources for the Corporation being approximately 4.0 times the estimated amount of adjusted uninsured deposit balances discussed above.
These excess funds, when combined with (i) available borrowing capacity of $4.6 billion from the Federal Home Loan Bank of Pittsburgh ("FHLB") and the Federal Reserve, and (ii) available unused commitments from brokered deposit sources and other third-party funding channels, including previously established lines of credit from correspondent banks, resulted in the total on-hand and contingent liquidity sources for the Corporation being approximately 5.0 times the estimated amount of adjusted uninsured deposit balances discussed above.
The Corporation expects to satisfy these short-term and long-term cash requirements through deposit growth, principal and interest payments from loans and investment securities, maturing loans and investment securities, as well as by maintaining access to wholesale funding sources. 38 Table of Contents The objective of the Corporation's liquidity management is to manage cash flow and liquidity reserves so that they are adequate to fund the Corporation's operations and to meet cash obligations and other commitments on a timely basis and at a reasonable cost.
The Corporation expects to satisfy these short-term and long-term cash requirements through deposit growth, principal and interest payments from loans and investment securities, maturing loans and investment securities, as well as by maintaining access to wholesale funding sources. 42 Table of Contents The objective of the Corporation's liquidity management is to manage cash flow and liquidity reserves so that they are adequate to fund the Corporation's operations and to meet cash obligations and other commitments on a timely basis and at a reasonable cost.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Management’s Discussion and Analysis of Financial Condition and Results of Operations is presented to provide insight into management’s assessment of financial results and should be read in conjunction with the following parts of this Annual Report on Form 10-K: Part I, Item 1 "Business," Part II, Item 7A, "Quantitative and Qualitative Disclosures About Market Risk," and Part II, Item 8 "Financial Statements and Supplementary Data." This section of this Annual Report on Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Management’s Discussion and Analysis of Financial Condition and Results of Operations is presented to provide insight into management’s assessment of financial results and should be read in conjunction with the following parts of this Annual Report on Form 10-K: Part I, Item 1 "Business," Part II, Item 7A, "Quantitative and Qualitative Disclosures About Market Risk," and Part II, Item 8 "Financial Statements and Supplementary Data." This section of this Annual Report on Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
The "watchlist" is comprised of all credits risk rated special mention, substandard and doubtful. 32 Table of Contents Allowance for Credit Losses The amount of each allowance for credit losses account represents management's best estimate of current expected credit losses on these financial instruments considering available information, from internal and external sources, relevant to assessing exposure to credit loss over the contractual term of the instrument.
The "watchlist" is comprised of all credits risk rated special mention, substandard and doubtful. 36 Table of Contents Allowance for Credit Losses The amount of each allowance for credit losses account represents management's best estimate of current expected credit losses on these financial instruments considering available information, from internal and external sources, relevant to assessing exposure to credit loss over the contractual term of the instrument.
If actual results differ significantly from management's assumptions, the Corporation's allowance for credit loss may not be sufficient to cover inherent losses in the Corporation's loan portfolio, resulting in additions to the Corporation's allowance for credit loss and an increase in the provision for credit losses. 47 Table of Contents Fair Value Measurements The Corporation uses fair value measurements to record certain financial instruments and to determine fair value disclosures.
If actual results differ significantly from management's assumptions, the Corporation's allowance for credit loss may not be sufficient to cover inherent losses in the Corporation's loan portfolio, resulting in additions to the Corporation's allowance for credit loss and an increase in the provision for credit losses. 51 Table of Contents Fair Value Measurements The Corporation uses fair value measurements to record certain financial instruments and to determine fair value disclosures.
The qualitative factors applied at December 31, 2023, and the importance and levels of the qualitative factors applied, may change in future periods depending on the level of changes to items such as the uncertainty of economic conditions and management's assessment of the level of credit risk within the loan portfolio as a result of such changes, compared to the amount of allowance for credit loss calculated by the model.
The qualitative factors applied at December 31, 2024, and the importance and levels of the qualitative factors applied, may change in future periods depending on the level of changes to items such as the uncertainty of economic conditions and management's assessment of the level of credit risk within the loan portfolio as a result of such changes, compared to the amount of allowance for credit loss calculated by the model.
In determining the appropriate estimate for the allowance for credit losses, management considers a number of factors relative to both individually evaluated credits in the loan portfolio and macro-economic factors relative to the economy of the U.S. as a whole and the economies of the areas in which the Corporation does business. 46 Table of Contents Management performs a quarterly evaluation of the adequacy of the allowance for credit losses.
In determining the appropriate estimate for the allowance for credit losses, management considers a number of factors relative to both individually evaluated credits in the loan portfolio and macro-economic factors relative to the economy of the U.S. as a whole and the economies of the areas in which the Corporation does business. 50 Table of Contents Management performs a quarterly evaluation of the adequacy of the allowance for credit losses.
Weighted-average yields have been computed on a fully taxable-equivalent basis using a tax rate of 21%. Mortgage-backed securities are included in maturity categories based on their stated maturity date. December 31, 2023 Within One Year After One But Within Five Years After Five But Within Ten Years After Ten Years Total $ Amt. Yield $ Amt. Yield $ Amt.
Weighted-average yields have been computed on a fully taxable-equivalent basis using a tax rate of 21%. Mortgage-backed securities are included in maturity categories based on their stated maturity date. December 31, 2024 Within One Year After One But Within Five Years After Five But Within Ten Years After Ten Years Total $ Amt. Yield $ Amt. Yield $ Amt.
The forecast and reversion to mean time period used for each economic index at December 31, 2023 were four quarters and eight quarters, respectively. Prepayment and curtailment assumptions are based on the Corporation's historical experience over the trailing 12 months and are adjusted by management as deemed necessary. The prepayment and curtailment assumptions vary based on segment.
The forecast and reversion to mean time period used for each economic index at December 31, 2024 were four quarters and eight quarters, respectively. Prepayment and curtailment assumptions are based on the Corporation's historical experience over the trailing 12 months and are adjusted by management as deemed necessary. The prepayment and curtailment assumptions vary based on segment.
Tangible common equity is calculated by excluding the balance of goodwill and other intangible assets and preferred equity from the calculation of shareholders’ equity. Tangible assets is calculated by excluding the balance of goodwill and other intangible assets from the calculation of total assets.
Tangible common equity is calculated by excluding the balance of goodwill and other intangible assets and preferred equity from the calculation of shareholders’ equity. Tangible assets are calculated by excluding the balance of goodwill and other intangible assets from the calculation of total assets.
The table below provides an allocation of the allowance for credit losses on loans by loan portfolio segment at December 31, 2023 and 2022; however, allocation of a portion of the allowance to one segment does not preclude its availability to absorb losses in other segments.
The table below provides an allocation of the allowance for credit losses on loans by loan portfolio segment at December 31, 2024 and 2023; however, allocation of a portion of the allowance to one segment does not preclude its availability to absorb losses in other segments.
The Corporation’s expected material cash requirements for the year ended December 31, 2024 and thereafter consist of withdrawals by depositors, credit commitments to borrowers, shareholder dividends, share repurchases, operating expenses and capital expenditures that are pursuant to the Corporation's strategic initiatives.
The Corporation’s expected material cash requirements for the year ended December 31, 2025 and thereafter consist of withdrawals by depositors, credit commitments to borrowers, shareholder dividends, share repurchases, operating expenses, and capital expenditures that are pursuant to the Corporation's strategic initiatives.
Management's Discussion and Analysis of Financial Condition and Results of Operations. 40 Table of Contents Average Balances, Interest Rates and Yields The loan categories used to monitor and analyze interest income and yields are different than the portfolio segments used to determine the allowance for credit losses for loans.
Management's Discussion and Analysis of Financial Condition and Results of Operations. 44 Table of Contents Average Balances, Interest Rates and Yields The loan categories used to monitor and analyze interest income and yields are different than the portfolio segments used to determine the allowance for credit losses for loans.
A weight category (0% for the lowest risk assets and increasing for each tier of higher risk assets) is assigned to each asset on the balance sheet. As of December 31, 2023, all of the Corporation's capital ratios exceeded regulatory "well-capitalized" levels.
A weight category (0% for the lowest risk assets and increasing for each tier of higher risk assets) is assigned to each asset on the balance sheet. As of December 31, 2024, all of the Corporation's capital ratios exceeded regulatory "well-capitalized" levels.
The quantitative estimated losses are supplemented by more qualitative factors that impact potential losses. Qualitative factors include changes in underwriting standards, changes in environmental conditions, delinquency level, segment growth rates and changes in duration within new markets, or other relevant factors.
The quantitative estimated losses are supplemented by more qualitative factors that impact potential losses. Qualitative factors include changes in underwriting standards, changes in lending staff, changes in environmental conditions, delinquency level, segment growth rates and changes in duration within new markets, or other relevant factors.
The following table presents average balances of certain measures of our financial condition and net interest margin for the specified years. December 31, 2023 December 31, 2022 December 31, 2021 Average Balance Annual Rate Interest Inc./ Exp. Average Balance Annual Rate Interest Inc./ Exp. Average Balance Annual Rate Interest Inc./ Exp.
The following table presents average balances of certain measures of our financial condition and net interest margin for the specified years. December 31, 2024 December 31, 2023 December 31, 2022 Average Balance Annual Rate Interest Inc./ Exp. Average Balance Annual Rate Interest Inc./ Exp. Average Balance Annual Rate Interest Inc./ Exp.
During the year ended December 31, 2023, notable changes compared to the year ended December 31, 2022 included lower net realized gains on the sale of AFS debt securities, lower mortgage banking income from reduced mortgage loan production volume in the higher-rate environment, lower level of full-year bank owned life insurance income and pass-through income from SBICs, partially offset by an increase in card processing and interchange income and a favorable variance in unrealized losses on equity securities.
Other notable changes during the year ended December 31, 2023 included lower net realized gains on the sale of AFS debt securities, lower mortgage banking income from the reduced mortgage loan production volume in the higher-rate environment, lower level of full-year bank owned life insurance income and pass-through income from SBICs, partially offset by an increase in card processing and interchange income and a favorable variance in unrealized losses on equity securities.
The decrease in PPNR for the year ended December 31, 2023 compared to the year ended December 31, 2022 was primarily driven by the increase in deposit costs combined with the growth in technology expenses due to investments in applications aimed at enhancing both customer relationship management and customer online experience, as well as expanding service delivery channels.
The increase in PPNR for the year ended December 31, 2023 was primarily driven by the increase in deposit costs combined with the growth in technology expenses due to investments in applications aimed at enhancing both customer relationship management and customer online experience, as well as expanding service delivery channels.
The yield on earning assets for the year ended December 31, 2023 included the previously mentioned $1.4 million, or three basis points, in one-time syndicated loan interest income. 43 Table of Contents Provision for Credit Losses The Corporation recorded a provision for credit losses of $6.0 million in 2023 compared to $8.6 million in 2022.
The yield on earning assets for the year ended December 31, 2023 included the previously mentioned $1.4 million, or three basis points, in one-time syndicated loan interest income. Provision for Credit Losses The Corporation recorded a provision for credit losses of $6.0 million in 2023 compared to $8.6 million in 2022.
The Corporation’s material contractual obligations as of December 31, 2023 consist of (i) long-term borrowings - Note 10, "Borrowings," (ii) operating leases - Note 7, "Leases," (iii) time deposits with stated maturity dates - Note 9, "Deposits," and (iv) commitments to extend credit and standby letters of credit - Note 18, "Off-Balance Sheet Activities." 39 Table of Contents Shareholders’ Equity, Capital Ratios and Metrics Shareholders' Equity On September 21, 2022, the Corporation successfully completed a common stock offering resulting in the issuance of 4,257,446 shares of common stock at $23.50 per share and net proceeds of $94.1 million after deducting the underwriting discount and customary offering expenses.
The Corporation’s material contractual obligations as of December 31, 2024 consist of (i) long-term borrowings - Note 10, "Borrowings," (ii) operating leases - Note 7, "Leases," (iii) time deposits with stated maturity dates - Note 9, "Deposits," and (iv) commitments to extend credit and standby letters of credit - Note 18, "Off-Balance Sheet Commitments and Contingencies." 43 Table of Contents Shareholders’ Equity, Capital Ratios and Metrics Shareholders' Equity On September 21, 2022, the Corporation successfully completed a common stock offering resulting in the issuance of 4,257,446 shares of common stock at $23.50 per share and net proceeds of $94.1 million after deducting the underwriting discount and customary offering expenses.
In light of these risks, uncertainties and assumptions, the forward-looking events discussed might not occur and you should not put undue reliance on any forward-looking statements. Overview The Corporation is a financial holding company registered under the BHC Act.
In light of these risks, uncertainties and assumptions, the forward-looking events discussed might not occur and you should not put undue reliance on any forward-looking statements. 28 Table of Contents Overview The Corporation is a financial holding company registered under the BHC Act.
Refer to the accompanying notes to consolidated financial statements elsewhere in this report for the expected timing of such payments as of December 31, 2023.
Refer to the accompanying notes to consolidated financial statements elsewhere in this report for the expected timing of such payments as of December 31, 2024.
For the Corporation, these estimates and assumptions include accounting for the allowance for credit losses and goodwill. Allowance for Credit Losses The Corporation's allowance for credit losses is a critical accounting policy that requires the most significant judgments and estimates used in preparation of its consolidated financial statements.
For the Corporation, these estimates and assumptions include accounting for the allowance for credit losses, fair value measurements, and goodwill. Allowance for Credit Losses The Corporation's allowance for credit losses is a critical accounting policy that requires the most significant judgments and estimates used in preparation of its consolidated financial statements.
Upon completion of the construction period the loans are reclassified to their permanent financing loan segment. 31 Table of Contents Loan Concentration At December 31, 2023, no industry concentration existed which exceeded 10% of the total loan portfolio.
Upon completion of the construction period the loans are reclassified to their permanent financing loan segment. 35 Table of Contents Loan Concentration At December 31, 2024, no industry concentration existed which exceeded 10% of the total loan portfolio.
The taxable equivalent adjustment to net interest income for the years ended December 31, 2023, 2022, and 2021 were $997 thousand, $1.2 million and $953 thousand, respectively. (3) Average loans receivable outstanding includes the average balance outstanding of all nonaccrual loans. Loans receivable consist of the average of total loans receivable less average unearned income.
The taxable equivalent adjustment to net interest income for the years ended December 31, 2024, 2023, and 2022 were $955 thousand, $997 thousand, and $1.2 million, respectively. (3) Average loans receivable outstanding includes the average balance outstanding of all nonaccrual loans. Loans receivable consist of the average of total loans receivable less average unearned income.
(2) Changes in interest income on tax-exempt securities and loans are presented on a fully taxable-equivalent basis, using the Corporation’s marginal federal income tax rate of 21% for the year ended December 31, 2023 and 2022. 42 Table of Contents Results of Operations Year Ended December 31, 2023 vs.
(2) Changes in interest income on tax-exempt securities and loans are presented on a fully taxable-equivalent basis, using the Corporation’s marginal federal income tax rate of 21% for the year ended December 31, 2024 and 2023. 46 Table of Contents Results of Operations Year Ended December 31, 2024 vs.
BankOnBuffalo, a division of the Bank, operates in the New York counties of Erie and Niagara. Ridge View Bank, a division of the Bank, operates in the Virginia counties of Botetourt, Craig, Franklin, and Roanoke. Impressia Bank, a division of the Bank, operates in the Bank’s primary market areas.
BankOnBuffalo, a division of the Bank, operates in the New York counties of Erie, Niagara, and Ontario. Ridge View Bank, a division of the Bank, operates in the Virginia counties of Botetourt, Craig, Franklin, New River Valley, and Roanoke. Impressia Bank, a division of the Bank, operates in the Bank’s primary market areas.
Premises and Equipment During the years ended December 31, 2023 and 2022, the Corporation invested $10.8 million and $12.3 million, respectively, in its physical infrastructure through the purchase of land, buildings, and equipment. Bank Owned Life Insurance The Corporation has periodically purchased Bank Owned Life Insurance ("BOLI").
Premises and Equipment During the years ended December 31, 2024 and 2023, the Corporation invested $16.3 million and $10.8 million, respectively, in its physical infrastructure through the purchase of land, buildings, and equipment. Bank Owned Life Insurance The Corporation has periodically purchased Bank Owned Life Insurance ("BOLI").
December 31, 2023 Within One Year After One But Within Five Years After Five But Within Ten Years After Ten Years Total $ Amt. Yield $ Amt. Yield $ Amt. Yield $ Amt. Yield $ Amt. Yield U.S.
December 31, 2024 Within One Year After One But Within Five Years After Five But Within Ten Years After Ten Years Total $ Amt. Yield $ Amt. Yield $ Amt. Yield $ Amt. Yield $ Amt. Yield U.S.
The adjustment to the average balance for securities in the calculation of average yield for the years ended December 31, 2023, 2022, and 2021 were $(61.1) million, $(40.3) million and $9.9 million, respectively. (5) Includes loans held for sale.
The adjustment to the average balance for securities in the calculation of average yield for the years ended December 31, 2024, 2023, and 2022 were $(53.1) million, $(61.1) million, and $(40.3) million, respectively. (5) Includes loans held for sale.
The yield on earning assets for the year ended December 31, 2023 was 5.57%, an increase of 127 basis points from December 31, 2022. The increase was primarily a result of loan growth and the net benefit of higher interest rates on both variable-rate loans and new loan production.
The yield on earning assets for the year ended December 31, 2024 was 5.88%, an increase of 31 basis points from December 31, 2023. The increase was primarily a result of loan growth and the net benefit of higher interest rates on both variable-rate loans and new loan production.
Although the Corporation’s strategies, through its Bank subsidiary, are executed based on the divisions discussed above, the Bank is a single Pennsylvania-chartered bank whereby all divisions of the Bank conduct their business on a doing business as basis. 26 Table of Contents In addition to the Bank, the Corporation has four other subsidiaries.
Although the Corporation’s strategies, through the Bank, are executed based on the divisions discussed above, the Bank is a single Pennsylvania-chartered bank whereby all divisions of the Bank conduct their business on a doing business as basis. In addition to the Bank, the Corporation has four other subsidiaries.
Return on average tangible common equity, a non-GAAP measure, was 11.98% for the year ended December 31, 2023, compared to 16.64% for the year ended December 31, 2022. The Corporation's efficiency ratio was 65.13% for the year ended December 31, 2023, compared to 61.32% for the year ended December 31, 2022.
Return on average tangible common equity, a non-GAAP measure, was 11.98% and 16.64% for the same periods in 2023 and 2022, respectively. The Corporation's efficiency ratio was 65.13% for the year ended December 31, 2023, compared to 61.32% for the year ended December 31, 2022, respectively.
Management believes the liquidity needs of the Corporation are satisfied primarily by the current balance of cash and cash equivalents, customer deposits, FHLB financing, other funding sources and the portions of the securities and loan portfolios that mature within one year.
Management believes the liquidity needs of the Corporation are satisfied primarily by the current balance of cash and cash equivalents, customer and brokered deposits, FHLB financing, the portions of the securities and loan portfolios that mature within one year, and other third-party funding channels.
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, (i) adverse changes or conditions in capital and financial markets, including actual or potential stresses in the banking industry; (ii) changes in the interest rate environment; (iii) the credit risks of lending activities, including our ability to estimate credit losses and the allowance for credit losses, as well as the effects of changes in the level of, and trends in, loan delinquencies and write-offs; (iv) effectiveness of our data security controls in the face of cyber attacks and any reputational risks following a cybersecurity incident; (v) the duration and scope of a pandemic, and the local, national and global impact of a pandemic; (vi) changes in general business, industry or economic conditions or competition; (vii) 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; (viii) higher than expected costs or other difficulties related to integration of combined or merged businesses; (ix) the effects of business combinations and other acquisition transactions, including the inability to realize our loan and investment portfolios; (x) changes in the quality or composition of our loan and investment portfolios; (xi) adequacy of loan loss reserves; (xii) increased competition; (xiii) loss of certain key officers; (xiv) deposit attrition; (xv) rapidly changing technology; (xvi) unanticipated regulatory or judicial proceedings and liabilities and other costs; (xvii) changes in the cost of funds, demand for loan products or demand for financial services; and (xviii) other economic, competitive, governmental or technological factors affecting our operations, markets, products, services and prices.
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, (i) adverse changes or conditions in capital and financial markets, including actual or potential stresses in the banking industry; (ii) changes in interest rates; (iii) the credit risks of lending activities, including our ability to estimate credit losses and the allowance for credit losses, as well as the effects of changes in the level of, and trends in, loan delinquencies and write-offs; (iv) effectiveness of our data security controls in the face of cyber attacks and any reputational risks following a cybersecurity incident; (v) changes in general business, industry or economic conditions or competition; (vi) 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; (vii) governmental approvals of the Corporation's pending merger with ESSA may not be obtained, or adverse regulatory conditions may be imposed in connection with governmental approvals of the merger; (viii) the Corporation's shareholders and/or the shareholders of ESSA may fail to approve the merger or the issuance of the Corporation’s common stock in the merger, as applicable; (ix) higher than expected costs or other difficulties related to integration of combined or merged businesses; (x) the effects of business combinations and other acquisition transactions, including the inability to realize our loan and investment portfolios; (xi) changes in the quality or composition of our loan and investment portfolios; (xii) adequacy of loan loss reserves; (xiii) increased competition; (xiv) loss of certain key officers; (xv) deposit attrition; (xvi) rapidly changing technology; (xvii) unanticipated regulatory or judicial proceedings and liabilities and other costs; (xviii) changes in the cost of funds, demand for loan products or demand for financial services; and (xix) other economic, competitive, governmental or technological factors affecting our operations, markets, products, services and prices.
Included in the provision for credit losses for the year ended December 31, 2023, was a $156 thousand expense related to the allowance for unfunded commitments compared to a $603 thousand expense for the year ended December 31, 2022.
Included in the provision for credit losses for the year ended December 31, 2024, was a $185 thousand expense related to the allowance for unfunded commitments compared to a $156 thousand expense for the year ended December 31, 2023.
Included in the provision for credit losses for the year ended December 31, 2023, was a $156 thousand expense related to the allowance for unfunded commitments compared to $603 thousand for the year ended December 31, 2022.
Included in the provision for credit losses for the year ended December 31, 2024, was a $185 thousand expense related to the allowance for unfunded commitments compared to $156 thousand for the year ended December 31, 2023.
Note 18, "Off-Balance Sheet Commitments and Contingencies," in the consolidated financial statements provides more detail concerning the provision for credit losses related to unfunded commitments of the Corporation.
(2) Excludes provision for credit losses totaling $759 thousand related to unfunded commitments. Note 18, "Off-Balance Sheet Commitments and Contingencies," in the consolidated financial statements provides more detail concerning the provision for credit losses related to unfunded commitments of the Corporation.
Note 2, "Securities," in the consolidated financial statements provides more detail concerning the composition of the Corporation’s investment securities portfolio and the process for evaluating securities for impairment. The following table summarizes the maturity distribution schedule with corresponding weighted-average yields of AFS debt securities as of December 31, 2023.
Note 2, "Securities," to the consolidated financial statements provides more detail concerning the composition of the Corporation’s securities portfolio and the process for evaluating securities for impairment. 30 Table of Contents The following table summarizes the maturity distribution schedule with corresponding weighted-average yields of AFS debt securities as of December 31, 2024.
A reporting system supplements the review process by providing management with frequent reports related to loan production, loan quality, concentrations of credit, loan delinquencies and nonperforming and potential problem loans. Diversification in the loan portfolio is a means of managing risk associated with fluctuations in economic conditions.
Management reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by providing management with frequent reports related to loan production, loan quality, concentrations of credit, loan delinquencies and nonperforming, and potential problem loans. Diversification in the loan portfolio is a means of managing risk associated with fluctuations in economic conditions.
The policies cover executive officers and a select group of other employees with the Bank being named as beneficiary. Earnings from BOLI assist the Corporation in offsetting its benefit costs. The Corporation made no purchases of BOLI during the year ended December 31, 2023, while the Corporation made $11.6 million purchases of BOLI during the year ended December 31, 2022.
The policies cover executive officers and a select group of other employees with the Bank being named as beneficiary. Earnings from BOLI assist the Corporation in offsetting its benefit costs. The Corporation made no purchases of BOLI during the years ended December 31, 2024 and December 31, 2023.
The net proceeds from the capital raise will be used for general corporate purposes, including working capital and funding the Corporation's organic growth across its multiple geographic markets, or evaluating potential acquisition opportunities. As of December 31, 2023, the Corporation’s total shareholders’ equity was $571.2 million, representing an increase of $40.5 million, or 7.6%, from December 31, 2022.
The net proceeds from the capital raise will be used for general corporate purposes, including working capital and funding the Corporation's organic growth across its multiple geographic markets, or evaluating potential acquisition opportunities. As of December 31, 2024, the Corporation’s total shareholders’ equity was $610.7 million, representing an increase of $39.4 million, or 6.91%, from December 31, 2023.
Year Ended December 31, 2022 Overview of the Statements of Income and Comprehensive Income Net income available to common shareholders ("earnings") was $53.7 million, or $2.55 per diluted share, for the year ended December 31, 2023, compared to earnings of $58.9 million, or $3.26 per diluted share, for the year ended December 31, 2022.
Year Ended December 31, 2023 Overview of the Statements of Income and Comprehensive Income Net income available to common shareholders ("earnings") was $50.3 million, or $2.39 per diluted share, for the year ended December 31, 2024, compared to earnings of $53.7 million, or $2.55 per diluted share, for the year ended December 31, 2023.
In accordance with GAAP, these assets are not included on the Corporation's balance sheet. The Corporation is also party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of the Corporation's clients. These financial instruments include commitments to extend credit and standby letters of credit.
The Corporation is also party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of the Corporation's clients. These financial instruments include commitments to extend credit and standby letters of credit.
Note 18, "Off-Balance Sheet Commitments and Contingencies," in the consolidated financial statements provides more detail concerning the provision for credit losses related to unfunded commitments of the Corporation. 35 Table of Contents Year Ended December 31, 2022 Provision (Benefit) for Credit Losses on Loans Receivable (1) Net (Charge-Offs) Recoveries Average Loans Receivable Ratio of Annualized Net (Charge-Offs) Recoveries to Average Loans Receivable Farmland $ 8 $ — $ 32,075 — % Owner-occupied, nonfarm nonresidential properties (428) (6) 467,606 — Agricultural production and other loans to farmers (3) — 1,254 — Commercial and Industrial 965 (36) 762,585 — Obligations (other than securities and leases) of states and political subdivisions 214 — 149,253 — Other loans 307 — 16,861 — Other construction loans and all land development and other land loans 1,055 — 334,450 — Multifamily (5 or more) residential properties 64 — 227,715 — Non-owner occupied, nonfarm nonresidential properties 1,171 1 697,930 — 1-4 Family Construction 169 — 41,849 — Home equity lines of credit (8) 12 115,682 0.01 Residential Mortgages secured by first liens 1,564 (23) 874,675 — Residential Mortgages secured by junior liens 489 — 63,362 — Other revolving credit plans 236 (42) 29,398 (0.14) Automobile 34 (26) 20,677 (0.13) Other consumer 1,653 (1,534) 50,196 (3.06) Credit cards 36 (61) 11,872 (0.51) Overdrafts 460 (423) 282 (150.00) Total $ 7,986 $ (2,138) $ 3,897,722 (0.05) % (1) Excludes provision for credit losses totaling $603 thousand related to unfunded commitments.
Year Ended December 31, 2022 Provision (Benefit) for Credit Loss Expense Net (Charge-Offs) Recoveries Average Loans Ratio of Annualized Net (Charge-Offs) Recoveries to Average Loans Farmland $ 8 $ — $ 32,075 — % Owner-occupied, nonfarm nonresidential properties (428) (6) 467,606 — Agricultural production and other loans to farmers (3) — 1,254 — Commercial and Industrial 965 (36) 762,585 — Obligations (other than securities and leases) of states and political subdivisions 214 — 149,253 — Other loans 307 — 16,861 — Other construction loans and all land development and other land loans 1,055 — 334,450 — Multifamily (5 or more) residential properties 64 — 227,715 — Non-owner occupied, nonfarm nonresidential properties 1,171 1 697,930 — 1-4 Family Construction 169 — 41,849 — Home equity lines of credit (8) 12 115,682 0.01 Residential Mortgages secured by first liens 1,564 (23) 874,675 — Residential Mortgages secured by junior liens 489 — 63,362 — Other revolving credit plans 236 (42) 29,398 (0.14) Automobile 34 (26) 20,677 (0.13) Other consumer 1,653 (1,534) 50,196 (3.06) Credit cards 36 (61) 11,872 (0.51) Overdrafts 460 (423) 282 (150.00) Total loans $ 7,986 $ (2,138) $ 3,897,722 (0.05) % 40 Table of Contents During the year ended December 31, 2024, the Corporation recorded a provision for credit losses of $9.2 million compared to $6.0 million for the year ended December 31, 2023.
Management believes that these non-GAAP measures provide a greater understanding of ongoing operations, enhance comparability of results of operations with prior periods and show the effects of significant gains and charges in the periods presented.
Management uses non-GAAP financial information in its analysis of the Corporation’s performance. Management believes that these non-GAAP measures provide a greater understanding of ongoing operations, enhance comparability of results of operations with prior periods and show the effects of significant gains and charges in the periods presented.
Non-GAAP measures reflected within the discussion below include: • Tangible book value per common share; • Tangible common equity/tangible assets; • Net interest margin (fully tax equivalent basis); • Efficiency ratio; • Pre-provision net revenue ("PPNR"); • Return on average tangible common equity; and • Non-interest income excluding realized gains on available-for-sale ("AFS") securities.
Non-GAAP measures reflected within the discussion below include: • Tangible book value per common share; • Tangible common equity/tangible assets; • Net interest margin (fully tax equivalent basis); • Efficiency ratio; • Pre-provision net revenue ("PPNR"); and • Return on average tangible common equity.
The increase of $170 thousand, or 0.09%, was primarily due to loan growth and the benefits of the impact of rising interest rates resulting in greater income on variable-rate loans and new loan production, which was substantially offset by an increase in the Corporation's interest expense as a result of both (i) targeted interest-bearing deposit rate increases to ensure both deposit growth and retention, and (ii) a year-over-year increase in the average balance of short-term borrowings through the FHLB.
Interest Income and Expense Net interest income of $189.8 million for the year ended December 31, 2023 increased $170 thousand, or 0.09%, from the year ended December 31, 2022, primarily as a result of loan growth throughout 2023 and the benefits of the impact of rising interest rates in 2023 resulting in greater income on variable-rate loans and new loan production, which was substantially offset by an increase in the Corporation's interest expense as a result of both (i) targeted interest-bearing deposit rate increases in ensure both deposit growth and retention, and (ii) a year-over-year increase in the average balance of short-term borrowings through the FHLB.
PPNR, a non-GAAP measure, was $77.8 million for the year ended December 31, 2023, compared to $86.8 million for the year ended December 31, 2022.
PPNR, a non-GAAP measure, was $76.6 million for the year ended December 31, 2024, compared to $77.8 million for the year ended December 31, 2023.
Net charge-offs during the year ended December 31, 2023 were $3.4 million, or 0.08% of average total loans and loans held for sale, compared to $2.1 million, or 0.05% of average total loans and loans held for sale, during the year ended December 31, 2022.
Net charge-offs during the year ended December 31, 2024 were $7.5 million, or 0.17% of average total loans and loans held for sale, compared to $3.4 million, or 0.08% of average total loans and loans held for sale, during the year ended December 31, 2023.
The following table summarizes the Corporation's net available liquidity and borrowing capacities as of December 31, 2023: Net Available FHLB borrowing capacity (1) $ 993,798 Federal Reserve borrowing capacity (2) 463,547 Brokered deposits (3) 1,871,289 Other third-party funding channels (3) (4) 243,790 Total net available liquidity and borrowing capacity $ 3,572,424 (1) Availability contingent on the FHLB activity-based stock ownership requirement (2) Includes access to discount window, BIC program and Bank Term Funding Program (3) Availability contingent on internal borrowing guidelines (4) Availability contingent on correspondent bank approvals at time of borrowing As of December 31, 2023, management is not aware of any events that are reasonably likely to have a material adverse effect on the Corporation's liquidity, capital resources or operations.
The following table summarizes the Corporation's net available liquidity and borrowing capacities as of December 31, 2024: Net Available FHLB borrowing capacity (1) $ 1,211,618 Federal Reserve borrowing capacity (2) 497,782 Brokered deposits (3) 2,035,038 Other third-party funding channels (3) (4) 859,723 Total net available liquidity and borrowing capacity $ 4,604,161 (1) Availability contingent on the FHLB activity-based stock ownership requirement (2) Includes access to discount window, BIC program and Bank Term Funding Program (3) Availability contingent on internal borrowing guidelines (4) Availability contingent on correspondent bank approvals at time of borrowing As of December 31, 2024, management is not aware of any events that are reasonably likely to have a material adverse effect on the Corporation's liquidity, capital resources or operations.
The Corporation’s capital ratios and book value per common share at December 31, 2023 and 2022 were as follows: December 31, 2023 December 31, 2022 Total risk-based capital ratio 15.99 % 16.08 % Tier 1 capital ratio 13.20 % 13.24 % Common equity tier 1 ratio 11.49 % 11.42 % Leverage ratio 10.54 % 10.74 % Common shareholders' equity/total assets 8.93 % 8.64 % Tangible common equity/tangible assets (1) 8.22 % 7.90 % Book value per common share $ 24.57 $ 22.39 Tangible book value per common share (1) $ 22.46 $ 20.30 (1) Tangible common equity, tangible assets and tangible book value per common share are non-GAAP financial measures calculated using GAAP amounts.
The Corporation’s capital ratios and book value per common share at December 31, 2024 and 2023 were as follows: December 31, 2024 December 31, 2023 Total risk-based capital ratio 16.16 % 15.99 % Tier 1 capital ratio 13.41 % 13.20 % Common equity tier 1 ratio 11.76 % 11.49 % Leverage ratio 10.43 % 10.54 % Common shareholders' equity/total assets 8.93 % 8.93 % Tangible common equity/tangible assets (1) 8.28 % 8.22 % Book value per common share $ 26.34 $ 24.57 Tangible book value per common share (1) $ 24.24 $ 22.46 (1) Tangible common equity, tangible assets and tangible book value per common share are non-GAAP financial measures calculated using GAAP amounts.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2022. 25 Table of Contents Dollar amounts in tables are stated in thousands, except for per share amounts.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found in "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2023.
During the year ended December 31, 2022, Wealth and Asset Management fees increased $432 thousand, or 6.4%, compared to the year ended December 31, 2021, as the Corporation benefited from an increased number of wealth management relationships.
During the year ended December 31, 2023, Wealth and Asset Management fees increased $79 thousand, or 1.10%, compared to the year ended December 31, 2022, as the Corporation benefited from an increased number of wealth management relationships.
Management believes the charges to the provision for credit losses in 2022 were appropriate and the allowance for credit losses was adequate to absorb losses in the loan portfolio at December 31, 2022. 45 Table of Contents Non-Interest Income Total non-interest income was $34.8 million for the year ended December 31, 2022, representing an increase of $1.3 million, or 4.0%, from the same period in 2021.
Management believes the charges to the provision for credit losses in 2023 were appropriate and the allowance for credit losses was adequate to absorb losses in the loan portfolio at December 31, 2023. 49 Table of Contents Non-Interest Income Total non-interest income was $33.3 million for the year ended December 31, 2023, representing a decrease of $1.5 million, or 4.12%, from the same period in 2022.
The $2.6 million reduction in the provision expense for the year ended December 31, 2023 compared to the year ended December 31, 2022 was primarily a result of the lower loan portfolio growth. Net loan charge-offs were $3.4 million during the year ended December 31, 2023, compared to $2.1 million during the year ended December 31, 2022.
The $3.2 million increase in the provision expense for the year ended December 31, 2024 compared to the year ended December 31, 2023, was primarily a result of the higher loan portfolio growth. Net loan charge-offs were $7.5 million during the year ended December 31, 2024, compared to $3.4 million during the year ended December 31, 2023.
Securities AFS debt securities and equity securities totaled $351.3 million and $381.0 million at December 31, 2023 and 2022, respectively. Investments classified as held-to-maturity ("HTM") securities totaled $389.0 million and $404.8 million at December 31, 2023 and 2022, respectively.
Securities AFS debt securities and equity securities totaled $479.0 million and $351.3 million at December 31, 2024 and 2023, respectively. Investments classified as held-to-maturity ("HTM") securities totaled $306.1 million and $389.0 million at December 31, 2024 and 2023, respectively.
At December 31, 2023, the Corporation’s cash and cash equivalents position was approximately $222.0 million, including liquidity of $164.4 million held at the Federal Reserve.
At December 31, 2024, the Corporation’s cash and cash equivalents position was approximately $443.0 million, including liquidity of $375.0 million held at the Federal Reserve.
Primary Factors Used To Evaluate Performance Management considers return on average assets, return on average equity, return on average tangible common equity, earnings per common share, tangible book value per common share, asset quality, net interest margin, and other metrics as key measures of the financial performance of the Corporation.
A reconciliation of these non-GAAP financial measures is provided below in the "Non-GAAP Financial Measures" section. 29 Table of Contents Primary Factors Used To Evaluate Performance Management considers return on average assets, return on average equity, return on average tangible common equity, earnings per common share, tangible book value per common share, asset quality, net interest margin, and other metrics as key measures of the financial performance of the Corporation.
Additional details about our subordinated debentures and notes are included in Note 10, "Borrowings" in the accompanying notes to consolidated financial statements. Liquidity and Capital Resources Liquidity Liquidity measures an organization’s ability to meet its cash obligations as they come due.
The net proceeds from the sale were approximately $83.5 million, after deducting offering expenses. Additional details about our subordinated debentures and notes are included in Note 10, "Borrowings" in the accompanying notes to consolidated financial statements. Liquidity and Capital Resources Liquidity measures an organization’s ability to meet its cash obligations as they come due.
The Corporation's allowance for credit losses is influenced by loan volumes, risk rating migration, delinquency status and other internal and external conditions influencing loss expectations, such as reasonable and supportable forecasts of economic conditions and other external factors.
The allowance for credit losses measured as a percentage of total loans was 1.03% as of December 31, 2024 and 2023. The Corporation's allowance for credit losses is influenced by loan volumes, risk rating migration, delinquency status and other internal and external conditions influencing loss expectations, such as reasonable and supportable forecasts of economic conditions and other external factors.
The Corporation monitors numerous relevant sensitivity elements at both underwriting and through and beyond the funding period, including projects occupancy, loan-to-value, absorption and cap rates, debt service coverage and covenant compliance, and developer/lessor financial strength both in the project and globally.
Even given the Corporation’s historically sound underwriting protocols and high credit quality ratings for borrowers in these industries, the Corporation monitors numerous relevant sensitivity elements at both underwriting and through and beyond the funding period, including projects occupancy, loan-to-value, absorption and cap rates, debt service coverage and covenant compliance, and developer/lessor financial strength both in the project and globally.
In addition, during the year ended December 31, 2023, the Corporation repurchased 326,459 common shares at a weighted average price per share of $20.08, compared to repurchases of 50,166 common shares at a weighted average price per share of $26.75 during the year ended December 31, 2022.
In addition, during the year ended December 31, 2024, the Corporation repurchased 23,988 shares of common stock at a weighted average price per share of $18.33, compared to repurchases of 326,459 shares of common stock at a weighted average price per share of $20.08 during the year ended December 31, 2023.
Furthermore, full-year base-salary and related benefit increases, intended to account for inflationary merit increases and the addition of personnel to staff new offices in 2023, were substantially offset by an approximately $8.1 million reduction in incentive-related expenses. 44 Table of Contents Year Ended December 31, 2022 vs.
Furthermore, full-year base-salary and related benefit increases, intended to account for inflationary merit increases and the addition of personnel to staff new offices in 2023, were substantially offset by an approximately $8.1 million reduction in incentive-related expenses. Income Tax Expense Income tax expense was $13.8 million in 2023 compared to $15.0 million in 2022.
Financial Condition The following table presents ending balances, growth, and the percentage change of certain measures of our financial condition for specified years (dollars in millions): 2023 Balance 2022 Balance $ Change vs. prior year % Change vs. prior year Total assets $ 5,753.0 $ 5,475.2 $ 277.8 5.1 % Total loans, net of allowance for credit losses 4,422.6 4,231.7 190.9 4.5 Total securities 740.2 785.8 (45.6) (5.8) Total deposits 4,998.8 4,622.4 376.3 8.1 Total shareholders’ equity 571.2 530.8 40.5 7.6 27 Table of Contents Cash and Cash Equivalents Cash and cash equivalents totaled $222.0 million at December 31, 2023, including $164.4 million held at the Federal Reserve.
Financial Condition The following table presents ending balances, growth, and the percentage change of certain measures of our financial condition for specified years (dollars in millions): 2024 Balance 2023 Balance $ Change vs. prior year % Change vs. prior year Total assets $ 6,192.0 $ 5,753.0 $ 439.1 7.6 % Total loans, net of allowance for credit losses 4,561.6 4,422.6 139.0 3.1 Total securities 785.1 740.2 44.9 6.1 Total deposits 5,371.4 4,998.8 372.6 7.5 Total shareholders’ equity 610.7 571.2 39.4 6.9 Cash and Cash Equivalents Cash and cash equivalents totaled $443.0 million at December 31, 2024, including $375.0 million held at the Federal Reserve, compared to $222.0 million at December 31, 2023.
At December 31, 2022, the total estimated uninsured deposits for CNB Bank were approximately $1.9 billion, or approximately 39.1% of total CNB Bank deposits.
At December 31, 2023, the total estimated uninsured deposits for CNB Bank were approximately $1.4 billion, or approximately 28.21% of total CNB Bank deposits.
Year Ended December 31, 2021 Overview of the Statements of Income and Comprehensive Income Earnings were $58.9 million, or $3.26 per diluted share, for the year ended December 31, 2022, compared to $53.4 million, or $3.16 per diluted share, for the year ended December 31, 2021, reflecting increases of $5.5 million, or 10.3%, and $0.10 per diluted share, or 3.2%.
Year Ended December 31, 2022 Overview of the Statements of Income and Comprehensive Income Earnings were $53.7 million, or $2.55 per diluted share, for the year ended December 31, 2023, compared to $58.9 million, or $3.26 per diluted share, for the year ended December 31, 2022, reflecting decreases of $5.2 million, or 8.78%, and $0.71 per diluted share, or 21.78%.
The terms of these borrowings are detailed in Note 10, "Borrowings," to the consolidated financial statements. There were zero in short-term FHLB borrowings as of December 31, 2023, compared to $132.4 million at December 31, 2022.
The terms of these borrowings are detailed in Note 10, "Borrowings," to the consolidated financial statements. There were no short-term FHLB borrowings as of December 31, 2024 and December 31, 2023.
Weighted Average Modified Duration (in Years) U.S. Government Sponsored Entities 0.37 State and Political Subdivisions 5.70 Residential and multi-family mortgage 6.00 Corporate notes and bonds 4.38 Pooled SBA 2.57 Total 5.53 The following table summarizes the weighted average modified duration of HTM debt securities as of December 31, 2023. Weighted Average Modified Duration (in Years) U.S.
Weighted Average Modified Duration (in Years) U.S. Government Sponsored Entities 0.34 State and Political Subdivisions 4.89 Residential and multi-family mortgage 3.85 Corporate notes and bonds 4.13 Pooled SBA 2.27 Total 3.93 The following table summarizes the weighted average modified duration of HTM debt securities as of December 31, 2024. Weighted Average Modified Duration (in Years) U.S.
The following table presents additional information about our December 31, 2023 and 2022 deposits: December 31, 2023 December 31, 2022 Time deposits not covered by deposit insurance $ 44,665 $ 69,874 Total deposits not covered by deposit insurance 1,438,944 1,864,886 At December 31, 2023, the total estimated uninsured deposits for CNB Bank were approximately $1.4 billion, or approximately 28.2% of total CNB Bank deposits.
The following table presents additional information about our December 31, 2024 and 2023 deposits: December 31, 2024 December 31, 2023 Time deposits not covered by deposit insurance $ 58,330 $ 44,665 Total deposits not covered by deposit insurance 1,516,839 1,438,944 At December 31, 2024, the total estimated uninsured deposits for CNB Bank were approximately $1.5 billion, or approximately 27.71% of total CNB Bank deposits.
The increase in deposits was due to continued growth in the Corporation's treasury management customer base and resulting increases in municipal and institutional/corporate deposits, including new wealth and asset management deposit relationships resulting from CNB's participation in deposit insurance sharing programs.
The increase in deposits was due to continued growth in the Corporation's treasury management customer base and resulting increases in municipal and institutional/corporate deposits, including wealth and asset management deposit relationships resulting from CNB's participation in deposit insurance sharing programs. The following table sets forth the average balances of and the average rates paid on deposits for the period indicated.
ASSETS: Securities: Taxable (1) (4) $ 720,818 1.89 % $ 14,766 $ 768,959 1.80 % $ 14,560 $ 624,330 1.70 % $ 10,500 Tax-exempt (1) (2) (4) 30,153 2.59 844 35,965 2.87 1,080 42,658 3.43 1,403 Equity securities (1) (2) 10,005 5.09 509 8,248 2.13 176 8,136 3.58 291 Total securities (4) 760,976 1.96 16,119 813,172 1.85 15,816 675,124 1.83 12,194 Loans receivable: Commercial (2) (3) 1,501,202 6.63 99,587 1,429,634 5.08 72,684 1,284,750 4.95 63,642 Mortgage (2) (3) (5) 2,765,484 5.77 159,606 2,355,662 4.78 112,583 2,080,000 4.51 93,738 Consumer (3) 129,655 11.47 14,868 112,426 10.48 11,778 101,169 9.98 10,098 Total loans receivable (3) 4,396,341 6.23 274,061 3,897,722 5.06 197,045 3,465,919 4.83 167,478 Other earning assets 74,800 6.03 4,513 243,653 1.16 2,112 626,997 0.14 881 Total earning assets 5,232,117 5.57 $ 294,693 4,954,547 4.30 $ 214,973 4,768,040 3.79 $ 180,553 Noninterest-bearing assets: Cash and due from banks 54,824 51,670 48,673 Premises and equipment 107,635 89,940 79,807 Other assets 251,725 227,991 199,107 Allowance for credit losses (44,930) (39,935) (36,727) Total noninterest-bearing assets 369,254 329,666 290,860 TOTAL ASSETS $ 5,601,371 $ 5,284,213 $ 5,058,900 LIABILITIES AND SHAREHOLDERS’ EQUITY: Demand—interest-bearing $ 853,632 0.54 % $ 4,626 $ 1,061,452 0.20 % $ 2,131 $ 978,279 0.18 % $ 1,783 Savings 2,666,905 2.92 77,782 2,383,918 0.54 12,772 2,309,560 0.22 5,164 Time 517,017 2.97 15,362 351,272 1.40 4,930 445,488 1.82 8,115 Total interest-bearing deposits 4,037,554 2.42 97,770 3,796,642 0.52 19,833 3,733,327 0.40 15,062 Short-term borrowings 35,224 5.07 1,787 8,793 4.20 369 — — — Finance lease liabilities 339 4.42 15 426 4.69 20 507 4.54 23 Subordinated notes and debentures 104,735 4.10 4,295 104,432 3.69 3,857 108,963 4.35 4,735 Total interest-bearing liabilities 4,177,852 2.49 $ 103,867 3,910,293 0.62 $ 24,079 3,842,797 0.52 $ 19,820 Demand—noninterest-bearing 793,713 847,793 724,839 Other liabilities 79,473 70,379 60,202 Total liabilities 5,051,038 4,828,465 4,627,838 Shareholders’ equity 550,333 455,748 431,062 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 5,601,371 $ 5,284,213 $ 5,058,900 Interest income/Earning assets 5.57 % $ 294,693 4.30 % $ 214,973 3.79 % $ 180,553 Interest expense/Interest-bearing liabilities 2.49 103,867 0.62 24,079 0.52 19,820 Net interest spread 3.08 % $ 190,826 3.68 % $ 190,894 3.27 % $ 160,733 Interest income/Earning assets 5.57 % $ 294,693 4.30 % $ 214,973 3.79 % $ 180,553 Interest expense/Earning assets 1.96 103,867 0.48 24,079 0.41 19,820 Net interest margin (fully tax-equivalent) 3.61 % $ 190,826 3.82 % $ 190,894 3.38 % $ 160,733 (1) Includes unamortized discounts and premiums. 41 Table of Contents (2) Average yields are stated on a fully taxable equivalent basis (calculated using statutory rates of 21%) resulting from tax-free municipal securities in the investment portfolio and tax-free municipal loans in the commercial loan portfolio.
ASSETS: Securities: Taxable (1) (4) $ 700,078 2.14 % $ 16,059 $ 720,818 1.89 % $ 14,766 $ 768,959 1.80 % $ 14,560 Tax-exempt (1) (2) (4) 25,919 2.60 731 30,153 2.59 844 35,965 2.87 1,080 Equity securities (1) (2) 7,058 5.71 403 10,005 5.09 509 8,248 2.13 176 Total securities (4) 733,055 2.19 17,193 760,976 1.96 16,119 813,172 1.85 15,816 Loans receivable: Commercial (2) (3) 1,440,667 6.88 99,184 1,501,202 6.63 99,587 1,429,634 5.08 72,684 Mortgage (2) (3) (5) 2,920,537 6.15 179,645 2,765,484 5.77 159,606 2,355,662 4.78 112,583 Consumer (3) 130,100 11.95 15,547 129,655 11.47 14,868 112,426 10.48 11,778 Total loans receivable (3) 4,491,304 6.55 294,376 4,396,341 6.23 274,061 3,897,722 5.06 197,045 Other earning assets 274,828 5.41 14,856 74,800 6.03 4,513 243,653 1.16 2,112 Total earning assets 5,499,187 5.88 $ 326,425 5,232,117 5.57 $ 294,693 4,954,547 4.30 $ 214,973 Noninterest-bearing assets: Cash and due from banks 56,295 54,824 51,670 Premises and equipment 116,341 107,635 89,940 Other assets 269,167 251,725 227,991 Allowance for credit losses (46,032) (44,930) (39,935) Total noninterest-bearing assets 395,771 369,254 329,666 TOTAL ASSETS $ 5,894,958 $ 5,601,371 $ 5,284,213 LIABILITIES AND SHAREHOLDERS’ EQUITY: Demand—interest-bearing $ 705,488 0.77 % $ 5,451 $ 853,632 0.54 % $ 4,626 $ 1,061,452 0.20 % $ 2,131 Savings 3,052,031 3.46 105,675 2,666,905 2.92 77,782 2,383,918 0.54 12,772 Time 570,911 3.92 22,367 517,017 2.97 15,362 351,272 1.40 4,930 Total interest-bearing deposits 4,328,430 3.08 133,493 4,037,554 2.42 97,770 3,796,642 0.52 19,833 Short-term borrowings — — — 35,224 5.07 1,787 8,793 4.20 369 Finance lease liabilities 247 4.45 11 339 4.42 15 426 4.69 20 Subordinated notes and debentures 105,039 4.28 4,497 104,735 4.10 4,295 104,432 3.69 3,857 Total interest-bearing liabilities 4,433,716 3.11 $ 138,001 4,177,852 2.49 $ 103,867 3,910,293 0.62 $ 24,079 Demand—noninterest-bearing 781,780 793,713 847,793 Other liabilities 86,912 79,473 70,379 Total liabilities 5,302,408 5,051,038 4,828,465 Shareholders’ equity 592,550 550,333 455,748 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 5,894,958 $ 5,601,371 $ 5,284,213 Interest income/Earning assets 5.88 % $ 326,425 5.57 % $ 294,693 4.30 % $ 214,973 Interest expense/Interest-bearing liabilities 3.11 138,001 2.49 103,867 0.62 24,079 Net interest spread 2.77 % $ 188,424 3.08 % $ 190,826 3.68 % $ 190,894 Interest income/Earning assets 5.88 % $ 326,425 5.57 % $ 294,693 4.30 % $ 214,973 Interest expense/Earning assets 2.49 138,001 1.96 103,867 0.48 24,079 Net interest margin (fully tax-equivalent) 3.39 % $ 188,424 3.61 % $ 190,826 3.82 % $ 190,894 (1) Includes unamortized discounts and premiums. 45 Table of Contents (2) Average yields are stated on a fully taxable equivalent basis (calculated using statutory rates of 21%) resulting from tax-free municipal securities in the investment portfolio and tax-free municipal loans in the commercial loan portfolio.
Net interest margin on a fully tax-equivalent basis, a non-GAAP measure, was 3.82% and 3.38% for the years ended December 31, 2022 and 2021, respectively.
Net interest margin was 3.41% and 3.63% for the years ended December 31, 2024 and 2023, respectively. Net interest margin on a fully tax-equivalent basis, a non-GAAP measure, was 3.39% and 3.61% for the years ended December 31, 2024,and 2023, respectively.
Note 3, "Loans Receivable and Allowance for Credit Losses," to the consolidated financial statements provides further disclosure of loan balances by portfolio segment as of December 31, 2023 and 2022, as well as the nature and scope of loan modifications to borrowers experiencing financial difficulty and loans modified in a troubled debt restructuring during 2023 and 2022, respectively, and the related effect on provision for credit expense and allowance for credit losses. 34 Table of Contents Additional information related to credit loss expense and net (charge-offs) recoveries at December 31, 2023, 2022, and 2021 is presented in the tables below.
Note 3, "Loans Receivable and Allowance for Credit Losses," to the consolidated financial statements provides further disclosure of loan balances by portfolio segment as of December 31, 2024 and 2023. 38 Table of Contents Additional information related to credit loss expense and net (charge-offs) recoveries at December 31, 2024, 2023, and 2022 is presented in the tables below.
Scheduled maturities of time deposits not covered by deposit insurance at December 31, 2023 were as follows: December 31, 2023 3 months or less $ 6,903 Over 3 through 6 months 18,501 Over 6 through 12 months 17,061 Over 12 months 2,200 Total $ 44,665 Borrowings Periodically, the Corporation utilizes term borrowings from the FHLB and other lenders to meet funding obligations or match fund certain loan assets.
Scheduled maturities of time deposits not covered by deposit insurance at December 31, 2024 were as follows: December 31, 2024 3 months or less $ 11,067 Over 3 through 6 months 8,059 Over 6 through 12 months 33,582 Over 12 months 5,622 Total $ 58,330 Borrowings Periodically, the Corporation utilizes term borrowings from the FHLB and other lenders to meet funding obligations or match fund certain loan assets.
The $2.6 million reduction in the provision expense for the year ended December 31, 2023 compared to the year ended December 31, 2022 was primarily a result of the decrease in loan portfolio growth.
The $3.2 million increase in the provision expense for the year ended December 31, 2024 compared to the year ended December 31, 2023, was primarily a result of the increase in loan portfolio growth and increase in the net loan charge-offs.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+0 added−1 removed6 unchanged
Biggest changeDecember 31, 2023 December 31, 2022 Change in Basis Points % Change in Net Interest Income Change in Basis Points % Change in Net Interest Income 300 2.6 300 4.9 200 3.8 200 5.5 100 4.6 100 5.8 (100) (3.8) (100) (1.7) (200) (6.5) (200) (6.1) (300) (12.8) (300) (12.5) At December 31, 2023, the Corporation has approximately $2.1 billion in outstanding loan balances that are rate sensitive over the next twelve months. 51 Table of Contents
Biggest changeThe changes to net interest income shown below are in compliance with the Corporation’s policy guidelines. % Change in Net Interest Income Change in Basis Points December 31, 2024 December 31, 2023 300 (0.2)% 2.6% 200 0.5% 3.8% 100 0.5% 4.6% (100) (1.1)% (3.8)% (200) (1.4)% (6.5)% (300) (3.3)% (12.8)% At December 31, 2024, the Corporation has approximately $2.5 billion in outstanding loan balances that are rate sensitive over the next twelve months. 55 Table of Contents
The Corporation’s primary tools in managing Interest Rate Risk (“IRR”) are income simulation models. The income simulation models are utilized to quantify the potential impact of changing interest rates on earnings and to identify expected earnings trends given longer-term rate cycles. Standard gap reports are also utilized to provide supporting detailed information.
The Corporation’s primary tools in managing Interest Rate Risk ("IRR") are income simulation models. The income simulation models are utilized to quantify the potential impact of changing interest rates on earnings and to identify expected earnings trends given longer-term rate cycles. Standard gap reports are also utilized to provide supporting detailed information.
The following table demonstrate the annualized result of an interest rate simulation and the estimated effect that a parallel interest rate shift, or “shock,” in the yield curve and subjective adjustments in deposit pricing might have on the Corporation’s projected net interest income over the next 12 months.
The following table demonstrates the annualized result of an interest rate simulation and the estimated effect that a parallel interest rate shift, or "shock," in the yield curve and subjective adjustments in deposit pricing might have on the Corporation’s projected net interest income over the next 12 months.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The disclosures set forth in this item are qualified by Item 1A. Risk Factors and the section captioned “Forward-Looking Statements and Factors that Could Affect Future Results” included in Item 7.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The disclosures set forth in this item are qualified by Item 1A. Risk Factors and the section captioned "Forward-Looking Statements and Factors that Could Affect Future Results" included in this report, and other cautionary statements set forth elsewhere in this report.
Management’s Discussion and Analysis of Financial Condition and Results of Operations, of this report, and other cautionary statements set forth elsewhere in this report. As a financial institution, the Corporation's primary source of market risk exposure is interest rate risk, which influences fluctuations in the Corporation's future earnings due to changes in interest rates.
As a financial institution, the Corporation's primary source of market risk exposure is interest rate risk, which influences fluctuations in the Corporation's future earnings due to changes in interest rates.
This simulation assumes that there is no growth in interest-earning assets or interest-bearing liabilities over the next 12 months. The changes to net interest income shown below are in compliance with the Corporation’s policy guidelines.
This simulation assumes that there is no growth in interest-earning assets or interest-bearing liabilities over the next 12 months.
These assumptions are subject to uncertainty due to the timing, magnitude, and frequency of rate changes, market conditions, and management strategies.
IRR considerations include inherent assumptions and estimates, including the maturity and repricing characteristics of assets and liabilities, prepayments on amortizing assets, non-maturing deposit sensitivity, and loan and deposit pricing. These assumptions are subject to uncertainty due to the timing, magnitude, and frequency of rate changes, market conditions, and management strategies.
Removed
In order to monitor the long-term structural and economic position of the balance sheet, the ALCO reviews the Economic Value of Equity measure on a quarterly basis. IRR considerations include inherent assumptions and estimates, including the maturity and repricing characteristics of assets and liabilities, prepayments on amortizing assets, non-maturing deposit sensitivity, and loan and deposit pricing.

Other CCNE 10-K year-over-year comparisons