Published: February 02, 2012
CNB Financial Corporation Reports 2011 Earnings of $15.1 Million, a 33% Increase Over 2010
CLEARFIELD, Pa., Feb. 2, 2012 /PRNewswire/ -- CNB Financial Corporation ("CNB") (NASDAQ: CCNE), the parent company of CNB Bank, today announced its earnings for the fourth quarter and for the year ended December 31, 2011. Highlights include the following:
-- Net income of $15.1 million for the year ended December 31, 2011, or
$1.23 per share, a 33% increase in net income and a 16% increase in
diluted earnings per share over the year ended December 31, 2010.
-- Net income of $3.9 million for the quarter ended December 31, 2011, or
$0.31 per share, a 32% increase in net income and a 35% increase in
diluted earnings per share over the quarter ended December 31, 2010.
-- Returns on average assets and equity of 1.00% and 12.36%, respectively,
for the year ended December 31, 2011. Returns on average assets and
equity of 0.97% and 11.86%, respectively, for the quarter ended December
31, 2011.
-- Total loans of $849.9 million at December 31, 2011, an increase of $55.3
million, or 7.0%, compared to December 31, 2010, and an increase of
$14.2 million, or 1.7%, compared to September 30, 2011.
-- Deposits of $1.35 billion at December 31, 2011, an increase of $191.0
million, or 16.4%, compared to December 31, 2010, and an increase of
$56.3 million, or 4.3%, compared to September 30, 2011.
-- Cost of funds of 1.44% for the year ended December 31, 2011, compared to
1.78% for the year ended December 31, 2010.
Joseph B. Bower, Jr., President and CEO, commented, "CNB Financial Corporation continues to experience strong growth in earnings and assets. The core earnings derived from loans and deposits are, and have been, the backbone of this company. CNB is excited about the opportunities for new business in our existing markets during 2012."
Net Interest Income and Margin
During the year ended December 31, 2011, net interest income increased $6.0 million, or 14.4%, compared to the year ended December 31, 2010. Net interest margin on a fully tax equivalent basis was 3.59% for the year ended December 31, 2011, compared to 3.65% for the year ended December 31, 2010. Increases in earning assets have been offset by decreases in the yield on earning assets. However, the growth in earning assets has outpaced the decline in net interest margin, providing CNB with higher net interest income.
Due to growth in core deposits, interest-bearing liabilities have grown significantly during the year ended December 31, 2011. Interest-bearing deposits as of December 31, 2011 grew $179.1 million, or 17.5%, as compared to December 31, 2010. However, interest expense for the year ended December 31, 2011 decreased by $1.5 million, or 7.8%, compared to the year ended December 31, 2010 as a result of decreases in the cost of core deposits in 2011 as well as CNB's repayment and refinancing of long-term debt in 2010.
Asset Quality
During the year and three month periods ended December 31, 2011, CNB decreased its provision for loan losses as compared to the year and three month periods ended December 31, 2010. For the three month periods ended December 31, 2011 and 2010, the provision for loan losses was $2.3 million and $2.6 million, respectively. For the years ended December 31, 2011 and 2010, the provision for loan losses was $4.9 million and $5.2 million, respectively. The change was primarily attributable to a decrease in net chargeoffs from 2010 to 2011.
One relationship comprising two commercial loans became impaired in the second quarter of 2011, resulting in an increase in non-accrual loans of $4.2 million. The resulting provisions for loan losses were recorded in the periods in which the losses occurred, and a balance of $1.4 million was charged off in the fourth quarter of 2011.
Non-Interest Income
Net realized and unrealized securities gains during the year ended December 31, 2011 were $678 thousand, compared to net realized and unrealized securities gains of $1.8 million for the year ended December 31, 2010. During the years ended December 31, 2011 and 2010, other-than-temporary impairment charges of $398 thousand and $2.2 million, respectively, were recorded in earnings on structured pooled trust preferred securities. CNB's remaining exposure in structured pooled trust preferred securities is $800 thousand at December 31, 2011 and no impairment charges were recorded in the second, third or fourth quarters of 2011. Excluding the effects of these securities transactions, non-interest income was $10.4 million for the year ended December 31, 2011, compared to $10.1 million for the year ended December 31, 2010.
Non-Interest Expenses
Total non-interest expenses increased $1.5 million, or 4.7%, during the year ended December 31, 2011 compared to the year ended December 31, 2010. Salaries and benefits expenses increased $1.6 million, or 10.2%, during the year ended December 31, 2011 compared to the year ended December, 2010, in part due to an increase in average full-time equivalent employees from 288 in 2010 to 297 in 2011. In addition, certain employee benefit expenses, such as health insurance premiums, continue to increase in line with market conditions.
Income taxes were $5.5 million in 2011, compared to $3.5 million in 2010, resulting in effective tax rates of 26.8% and 23.5%, respectively. The increase in the effective tax rate from 2010 to 2011 is attributable to a lower percentage of tax-exempt income in 2011 compared to pre-tax income.
About CNB Financial Corporation
CNB Financial Corporation is a financial holding company with consolidated assets of approximately $1.6 billion that conducts business primarily through CNB Bank, CNB's principal subsidiary. CNB Bank is a full-service bank engaging in a full range of banking activities and services, including trust and wealth management services, for individual, business, governmental, and institutional customers. CNB Bank operations include a loan production office, a private banking division and 27 full-service offices in Pennsylvania, including ERIEBANK, a division of CNB Bank. More information about CNB and CNB Bank may be found on the internet at www.bankcnb.com.
Forward-Looking Statements
This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to CNB's financial condition, liquidity, results of operations, future performance and business. These forward-looking statements are intended to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those that are not historical facts. Forward-looking statements include statements with respect to beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions that are subject to significant risks and uncertainties and are subject to change based on various factors (some of which are beyond CNB's control). Forward-looking statements often include the words "believes," "expects," "anticipates," "estimates," "forecasts," "intends," "plans," "targets," "potentially," "probably," "projects," "outlook" or similar expressions or future conditional verbs such as "may," "will," "should," "would" and "could." Such known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from the statements include, but are not limited to: changes in general business, industry or economic conditions or competition; changes in any applicable law, rule, regulation, policy, guideline or practice governing or affecting financial holding companies and their subsidiaries or with respect to tax or accounting principles or otherwise; adverse changes or conditions in capital and financial markets; changes in interest rates; higher than expected costs or other difficulties related to integration of combined or merged businesses; the inability to realize expected cost savings or achieve other anticipated benefits in connection with business combinations and other acquisitions; changes in the quality or composition of CNB's loan and investment portfolios; adequacy of loan loss reserves; increased competition; loss of certain key officers; continued relationships with major customers; deposit attrition; rapidly changing technology; unanticipated regulatory or judicial proceedings and liabilities and other costs; changes in the cost of funds, demand for loan products or demand for financial services; and other economic, competitive, governmental or technological factors affecting CNB's operations, markets, products, services and prices. Some of these and other factors are discussed in CNB's annual and quarterly reports previously filed with the SEC. Such factors could cause actual results to differ materially from those in the forward-looking statements.
The forward-looking statements are based upon management's beliefs and assumptions and are made as of the date of this press release. CNB undertakes no obligation to publicly update or revise any forward-looking statements included in this press release or to update the reasons why actual results could differ from those contained in such statements, whether as a result of new information, future events or otherwise, except to the extent required by law. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this press release might not occur and you should not put undue reliance on any forward-looking statements.
Financial Tables
The following tables supplement the financial highlights described previously for CNB Financial Corporation.
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
(unaudited)
% %
2011 2010 change 2011 2010 change
---- ---- ------- ---- ---- -------
(Dollars in thousands, except share and per share
data)
Income Statement
----------------
Interest income $16,808 $15,854 6.0% $65,712 $61,147 7.5%
Interest expense 4,264 5,152 -17.2% 17,579 19,056 -7.8%
----- ----- ------ ------
Net interest income 12,544 10,702 17.2% 48,133 42,091 14.4%
Provision for loan
losses 2,264 2,559 -11.5% 4,937 5,158 -4.3%
----- ----- ----- -----
Net interest income
after provision for
loan losses 10,280 8,143 26.2% 43,196 36,933 17.0%
------ ----- ------ ------
Non-interest income
Wealth and asset
management fees 466 574 -18.8% 1,691 1,829 -7.5%
Service charges on
deposit accounts 1,104 1,109 -0.5% 4,233 4,226 0.2%
Other service charges
and fees 425 348 22.1% 1,626 1,396 16.5%
Net realized and
unrealized gains on
securities
for which fair value
was elected 280 204 37.3% 64 162 -60.5%
Mortgage banking 229 449 -49.0% 735 814 -9.7%
Bank owned life
insurance 256 200 28.0% 930 802 16.0%
Other 238 161 47.8% 1,224 1,002 22.2%
Total other-than-
temporary impairment
losses
on available for sale
securities - (318) NA (398) (2,241) -82.2%
Less portion of loss
recognized in other
comprehensive income - - NA - - NA
--- --- --- ---
Net impairment losses
recognized in
earnings - (318) NA (398) (2,241) -82.2%
Net realized gains on
available-for-sale
securities 456 969 -52.9% 614 1,660 -63.0%
--- --- --- -----
Net impairment losses
recognized in
earnings and
realized gains on
available-for-sale
securities 456 651 -30.0% 216 (581) NA
--- --- --- ----
Total non-interest
income 3,454 3,696 -6.5% 10,719 9,650 11.1%
----- ----- ------ -----
Non-interest expenses
Salaries and benefits 4,443 3,997 11.2% 17,285 15,686 10.2%
Net occupancy expense
of premises 1,038 1,122 -7.5% 4,416 4,326 2.1%
FDIC insurance
premiums 290 417 -30.5% 1,259 1,619 -22.2%
Intangible
amortization - 10 NA - 85 NA
Other 2,769 2,648 4.6% 10,322 10,082 2.4%
----- ----- ------ ------
Total non-interest
expenses 8,540 8,194 4.2% 33,282 31,798 4.7%
----- ----- ------ ------
Income before income
taxes 5,194 3,645 42.5% 20,633 14,785 39.6%
Income tax expense 1,325 719 84.3% 5,529 3,469 59.4%
----- --- ----- -----
Net income $3,869 $2,926 32.2% $15,104 $11,316 33.5%
====== ====== ======= =======
Average diluted shares
outstanding 12,332,755 12,209,973 12,279,617 10,609,142
Diluted earnings per
share $0.31 $0.23 34.8% $1.23 $1.06 16.0%
Cash dividends per
share $0.165 $0.165 0.0% $0.660 $0.660 0.0%
Payout ratio 53% 72% 54% 62%
Average Balances
----------------
Loans, net of unearned
income $843,884 $775,723 $819,766 $741,714
Total earning assets 1,486,356 1,287,187 1,407,744 1,204,407
Total deposits 1,341,131 1,151,826 1,266,906 1,081,860
Shareholders' equity 130,480 114,449 122,211 97,384
Performance Ratios
------------------
Return on average
assets 0.97% 0.84% 1.00% 0.87%
Return on average
equity 11.86% 10.23% 12.36% 11.62%
Net interest margin
(FTE) 3.52% 3.48% 3.59% 3.65%
Net interest margin
(FTE), excluding
prepayment penalty of
$707 thousand incurred in the 4th quarter of 2010 3.52% 3.70% 3.59% 3.71%
Loan Charge-Offs
----------------
Net loan charge-offs $1,904 $2,569 $3,145 $4,133
Net loan charge-offs
/average loans 0.90% 1.32% 0.38% 0.56%
(unaudited) (unaudited)
December September % change
31, 30, December 31, versus
2011 2011 2010 9/30/11 12/31/10
---- ---- ---- ------- --------
(Dollars in thousands, except share
and per share data)
Ending Balance
Sheet
--------------
Loans,
net
of
unearned
income $849,883 $835,666 $794,562 1.7% 7.0%
Loans
held
for
sale 1,442 1,049 4,451 37.5% -67.6%
Investment
securities 641,340 595,261 503,028 7.7% 27.5%
FHLB
and
other
equity
interests 6,537 6,594 6,415 -0.9% 1.9%
Other
earning
assets 3,895 3,851 15,665 1.1% -75.1%
----- ----- ------
Total
earning
assets 1,503,097 1,442,421 1,324,121 4.2% 13.5%
Allowance
for
loan
losses (12,615) (12,252) (10,820) 3.0% 16.6%
Goodwill 10,821 10,821 10,821 0.0% 0.0%
Other
assets 100,904 102,682 89,389 -1.7% 12.9%
------- ------- ------
Total
assets $1,602,207 $1,543,672 $1,413,511 3.8% 13.3%
========== ========== ==========
Non
interest-
bearing
deposits $152,732 $152,127 $140,836 0.4% 8.4%
Interest-
bearing
deposits 1,201,119 1,145,435 1,022,032 4.9% 17.5%
--------- --------- ---------
Total
deposits 1,353,851 1,297,562 1,162,868 4.3% 16.4%
Borrowings 74,456 75,424 106,507 -1.3% -30.1%
Subordinated
debt 20,620 20,620 20,620 0.0% 0.0%
Other
liabilities 21,391 19,635 13,871 8.9% 54.2%
Shareholders'
equity 131,889 130,431 109,645 1.1% 20.3%
------- ------- -------
Total
liabilities
and
shareholders'
equity $1,602,207 $1,543,672 $1,413,511 3.8% 13.3%
========== ========== ==========
Ending
shares
outstanding 12,377,318 12,327,743 12,237,261
Book
value
per
share $10.66 $10.58 $8.96
Tangible
book
value
per
share
(*) $9.78 $9.70 $8.08
Capital Ratios
--------------
Tangible
common
equity
/
tangible
assets
(*) 7.61% 7.80% 7.05%
Leverage
ratio 8.22% 8.44% 8.81%
Tier
1
risk
based
ratio 13.89% 14.03% 14.13%
Total
risk
based
ratio 15.14% 15.28% 15.38%
Asset Quality
-------------
Non-
accrual
loans $16,567 $17,270 $11,926
Loans
90+
days
past
due
and
accruing 441 1,834 889
--- ----- ---
Total
non-
performing
loans 17,008 19,104 12,815
Other
real
estate
owned 505 359 396
--- --- ---
Total
non-
performing
assets $17,513 $19,463 $13,211
======= ======= =======
Non-
performing
assets
/
Loans
+
OREO 2.06% 2.33% 1.66%
Allowance
for
loan
losses
/
Loans 1.48% 1.47% 1.36%
* - Tangible common equity, tangible
assets and tangible book value per share
are non-GAAP financial measures
calculated using GAAP amounts. Tangible
common equity is calculated by excluding
the balance of goodwill and other
intangible assets from the calculation of
stockholders' equity. Tangible assets is
calculated by excluding the balance of
goodwill and other intangible assets from
the calculation of total assets.
Tangible book value per share is
calculated by dividing tangible common
equity by the number of shares
outstanding. CNB believes that these non-
GAAP financial measures provide
information to investors that is useful
in understanding its financial condition.
Because not all companies use the same
calculation of tangible common equity and
tangible assets, this presentation may
not be comparable to other similarly
titled measures calculated by other
companies. A reconciliation of these
non-GAAP financial measures is provided
below (dollars in thousands, except per
share data).
(unaudited) (unaudited)
December September
31, 30, December 31,
2011 2011 2010
---- ---- ----
(Dollars in thousands, except share
and per share data)
Shareholders'
equity $131,889 $130,431 $109,645
Less
goodwill 10,821 10,821 10,821
------ ------ ------
Tangible
common
equity $121,068 $119,610 $98,824
======== ======== =======
Total
assets $1,602,207 $1,543,672 $1,413,511
Less
goodwill 10,821 10,821 10,821
------ ------ ------
Tangible
assets $1,591,386 $1,532,851 $1,402,690
========== ========== ==========
Ending
shares
outstanding 12,377,318 12,327,743 12,237,261
Tangible
book
value
per
share $9.78 $9.70 $8.08
Tangible
common
equity/
Tangible
assets 7.61% 7.80% 7.05%
SOURCE CNB Financial Corporation
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