CNB FINANCIAL CORPORATION INVESTOR PRESENTATION
April
2024
O U R F A M I L Y O F B A N K S
CERTAIN IMPORTANT INFORMATION
CAUTION REGARDING FORWARD LOOKING STATEMENTS This presentation 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." CNB's actual results may differ materially from those contemplated by the forward-looking statements, which are neither statements of historical fact nor guarantees or assurances of future performance. 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, including significant market-driven impacts to deposit and loan pricing; (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) the adequacy of the allowance for credit losses, including estimations of reserves on both specific credits and portfolio segments; (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. For more information about factors that could cause actual results to differ from those discussed in the forward-looking statements, please refer to the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of and the forward-looking statement disclaimers in CNB's annual and quarterly reports filed with the SEC.
The forward-looking statements contained herein are based upon management's beliefs and assumptions. Any forward-looking statement made herein speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. CNB undertakes no obligation to publicly update or revise any forward-looking statements included in this presentation or to update the reasons why the 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 presentation might not occur and you should not put undue reliance on any forward-looking statements.
NON-GAAPFINANCIAL MEASURES This report contains references to financial measures that are not defined in GAAP. 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. The Corporation's management believes that investors may use these non- GAAP measures to analyze the Corporation's financial performance without the impact of unusual items or events that may obscure trends in the Corporation's underlying performance. This non-GAAP data should be considered in addition to results prepared in accordance with GAAP, and is not a substitute for, or superior to, GAAP results. Limitations associated with non-GAAP financial measures include the risks that persons might disagree as to the appropriateness of items included in these measures and that different companies might calculate these measures differently. Non-GAAP measures reflected within the presentation include: Tangible common equity/tangible assets, Return on average tangible common equity, Net interest margin (fully tax equivalent basis), Efficiency ratio (fully tax equivalent) and Tangible book value per share.
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2023 HIGHLIGHTS AT A GLANCE
- Net income available to common shareholders ("earnings") was $53.7 million, or $2.55 per diluted share, for the twelve months ended December 31, 2023, compared to earnings of $58.9 million, or $3.26 per diluted share, for the twelve months ended December 31, 2022
- As part of its overall capital management strategy, the Corporation has utilized the following:
- During the twelve months 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 twelve months ended December 31, 2022;
- Maintained the dividend per common share of $0.70 for the full-year 2023;
- The Corporation's Return on Average Assets and Return on Average Equity of 1.04% and 10.54%, respectively, were lower for the twelve months ended December 31, 2023, compared to the same measures of 1.20% and 13.86%, respectively, for the twelve months ended December 31, 2022;
- Book value per common share was $24.57 at December 31, 2023, an increase of $2.18, or approximately 10% from $22.39 at December 31, 2022. A key objective for the Corporation is to target an increase of at least 10% in shareholder value annually;
- Jeffrey S. Powell, a member of the CNB Financial Corporation and CNB Bank Boards of Directors, was elected Chairperson of both Boards by his fellow Directors, succeeding Peter F. Smith, who will reach his mandatory retirement date in June 2024.
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FINANCIAL TRENDS
TOTAL GROSS LOANS ($M) | TOTAL DEPOSITS ($M) | ||||||||||||||||
$5,000 | CAGR = 12.4% | $6,000 | CAGR = 12.7% | ||||||||||||||
$4,275 | $4,468 | $4,999 | |||||||||||||||
$5,000 | $4,716 | $4,622 | |||||||||||||||
$4,000 | $3,635 | $4,182 | |||||||||||||||
$3,372 | |||||||||||||||||
$4,000 | |||||||||||||||||
$3,000 | $2,804 | ||||||||||||||||
$3,102 | |||||||||||||||||
$3,000 | |||||||||||||||||
$2,000 | |||||||||||||||||
$2,000 | |||||||||||||||||
$1,000 | |||||||||||||||||
$1,000 | |||||||||||||||||
$0 | $0 | ||||||||||||||||
2019 | 2020 | 2021 | 2022 | 2023 | 2019 | 2020 | 2021 | 2022 | 2023 | ||||||||
TOTAL ASSETS ($M) | |||||||||||||||||
$6,000 | CAGR = 11.2% | $5,475 | $5,753 | ||||||||||||||
$5,329 | |||||||||||||||||
$5,000 | $4,729 | ||||||||||||||||
$3,764 | |||||||||||||||||
$4,000 | |||||||||||||||||
$3,000 | |||||||||||||||||
$2,000 | |||||||||||||||||
$1,000 | |||||||||||||||||
$0 | |||||||||||||||||
2019 | 2020 | 2021 | 2022 | 2023 | |||||||||||||
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(1) CAGR: Compounded Annual Growth Rate from 2019 to 2023
EARNINGS POWER
RETURN ON AVERAGE ASSETS(1) | RETURN ON AVERAGE EQUITY(1) | |||||||||||||||||||
1.40% | 15.00% | 14.1% | 13.4% | 13.9% | ||||||||||||||||
1.17% | 1.14% | 1.20% | ||||||||||||||||||
1.20% | ||||||||||||||||||||
1.04% | 12.00% | |||||||||||||||||||
1.00% | 9.1% | 10.5% | ||||||||||||||||||
0.75% | 9.00% | |||||||||||||||||||
0.80% | ||||||||||||||||||||
0.60% | 6.00% | |||||||||||||||||||
0.40% | ||||||||||||||||||||
3.00% | ||||||||||||||||||||
0.20% | ||||||||||||||||||||
0.00% | 0.00% | |||||||||||||||||||
2019 | 2020 | 2021 | 2022 | 2023 | ||||||||||||||||
2019 | 2020 | 2021 | 2022 | 2023 | ||||||||||||||||
DILUTED EARNINGS PER SHARE(1) | ||||||||||||||||||||
$3.50 | $3.16 | $3.26 | ||||||||||||||||||
$3.00 | ||||||||||||||||||||
$2.63 | $2.55 | |||||||||||||||||||
$2.50 | ||||||||||||||||||||
$1.97 | ||||||||||||||||||||
$2.00 | ||||||||||||||||||||
$1.50 | ||||||||||||||||||||
$1.00 | ||||||||||||||||||||
$0.50 | ||||||||||||||||||||
$0.00 | ||||||||||||||||||||
2019 | 2020 | 2021 | 2022 | 2023 | ||||||||||||||||
(1) Return on average assets, return on average equity, and diluted earnings per share include merger costs in 2019 and merger costs, FHLB prepayment penalties and branch closure costs in 2020.
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EARNINGS POWER
NET INTEREST MARGIN(2) | EFFICIENCY RATIO(1)(2) | |||||||||||||||||
3.90% | ||||||||||||||||||
3.83% 3.82% | ||||||||||||||||||
3.80% | ||||||||||||||||||
80% | ||||||||||||||||||
3.69% | Efficiency Ratio | Efficiency Ratio - Fully Tax Equiv. | ||||||||||||||||
3.70% | ||||||||||||||||||
3.64% | 3.63% 3.61% | |||||||||||||||||
3.60% | 70% | |||||||||||||||||
65.94% | 65.13% | |||||||||||||||||
3.50% | 61.55% | |||||||||||||||||
65.10% | 60.26% | 61.32% | ||||||||||||||||
3.35% 3.38% | 64.45% | |||||||||||||||||
3.40% | 3.29% 3.34% | 60% | ||||||||||||||||
60.19% | 59.76% | 60.87% | ||||||||||||||||
3.30% | ||||||||||||||||||
3.20% | 50% | |||||||||||||||||
3.10% | 40% | |||||||||||||||||
3.00% | ||||||||||||||||||
2019 | 2020 | 2021 | 2022 | 2023 | ||||||||||||||
2019 | 2020 | 2021 | 2022 | 2023 | ||||||||||||||
NIM | NIM Fully Tax Equiv. | |||||||||||||||||
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- Efficiency ratio includes merger costs in 2019 and merger costs, FHLB prepayment penalties and branch closure costs in 2020.
- Net interest margin fully tax equivalent and efficiency ratio fully tax equivalent are non-GAAP financial measures - see Appendix for reconciliations.
CREDIT QUALITY
NONPERFORMING ASSETS TO TOTAL ASSETS | NET CHARGE-OFFS TO LOANS | ||||||||||||
0.75% | 0.50% | ||||||||||||
0.67% | |||||||||||||
0.62% | 0.55% | ||||||||||||
0.50% | 0.38% | 0.43% | 0.25% | 0.24% | 0.21% | ||||||||
0.25% | 0.08% | 0.05% | 0.08% | ||||||||||
0.00% | 0.00% | ||||||||||||
2019 | 2020 | 2021 | 2022 | 2023 | |||||||||
2019 | 2020 | 2021 | 2022 | 2023 |
ALLOWANCE FOR CREDIT LOSSES TO NONACCRUAL LOANS(1)
2.5 | ||
1.94 | 2.07 | |
2.0 | ||
1.55 | ||
1.5
1.0
1.13
0.5
0.0
2020 | 2021 | 2022 | 2023 |
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(1) Prior to January 1, 2020, the Corporation calculated the allowance for loan losses using the probable incurred methodology.
C&I AND COMMERCIAL MORTGAGE PORTFOLIO
- Well diversified and granular C&I portfolio with no single industry greater than 22% of total C&I portfolio
- CNB has proven C&I underwriting practices and strong loan loss history
- Commercial Mortgage portfolio is also well diversified with no single segment greater than 23% of the total Commercial Mortgage portfolio, and with the Commercial Office segment representing less than 10% of the total Commercial Mortgage portfolio
C&I DETAIL (12/31/23)
COMMERCIAL MORTGAGE DETAIL (12/31/23) (1)
Construction
7.6%
Retail Trade
9.7%
Healthcare &
Social Services
11.6%
Manufacturing
21.4%
Finance and
Insurance
6.3%
Other Services | Agriculture, | |
Forestry, Fishing | ||
5.2% | and Hunting | Professional, |
4.7% | ||
Scientific, and |
Technical Services
4.6% Transportation and Warehousing
3.7% Educational
Services 3.5%
All Other
21.7%
Multi-Family
All Other17.6%
22.6%
Storage Units
1.9%
Student Housing
2.1%
Warehouse | Lodging |
2.5% | |
22.1% | |
Manufacturing
2.7%
Retail 8.2%
Office | Mixed Use |
9.4% | 10.8% |
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(1) Does not include construction loans
ADDITIONAL COMMERCIAL MORTGAGE DETAIL
LODGING (12/31/23)(1) | OFFICE (12/31/23)(1) | MULTI-FAMILY (12/31/23)(1) |
- Consists of 171 loans, totaling $268.8 million, or 6.02% of total loans outstanding.
- There were no nonaccrual commercial lodging loans.
- The average outstanding balance per loan was $1.6 million.
- Consists of 118 loans, totaling $114.7 million, or 2.57% of total loans outstanding.
- Nonaccrual commercial office loans totaled $508 thousand, or 0.44% of total office loans outstanding, with a specific loss reserve of $289 thousand.
- The average outstanding balance per loan was $972 thousand.
- Consists of 206 loans, totaling $214.1 million, or 4.79% of total loans outstanding.
- Nonaccrual multi-family loans totaled $305 thousand, or 0.14% of total multi- family loans outstanding.
- The average outstanding balance per loan was $1.0 million.
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(1) Markets are based upon metropolitan statistical areas.
CAPITAL
DIVIDEND PER COMMON SHARE
$0.75 | |||||||
$0.69 | $0.70 | $0.70 | |||||
$0.70 | $0.68 | $0.68 | |||||
$0.65 | |||||||
$0.60 | |||||||
$0.55 | |||||||
$0.50 | |||||||
2019 | 2020 | 2021 | 2022 | 2023 | |||
BOOK VALUE PER COMMON SHARE | |||||||
$25.00 | CAGR = 5.3% | $24.57 | |||||
$21.29 | $22.85 | $22.39 | |||||
$20.00 | $20.00 |
$15.00 | |
$10.00
2019 | 2020 | 2021 | 2022 | 2023 |
PREFERRED STOCK DIVIDEND - FIXED RATE
10.0%
9.0%
8.0%
7.125% | 7.125% | 7.125% | 7.125% |
7.0%
6.0% | |||||||||
5.0% | |||||||||
2020 | 2021 | 2022 | 2023 | ||||||
TANGIBLE COMMON EQUITY/TANGIBLE ASSETS(1) | |||||||||
10% | Common equity / Total assets | ||||||||
9% | Tangible common equity / Tangible assets | ||||||||
8.64% | 8.93% | ||||||||
8% | |||||||||
8.10% | 7.58% | 7.90% | 8.22% | ||||||
7% | |||||||||
7.14% | 6.70% | 7.23% | |||||||
6% | 6.45% | ||||||||
5% | |||||||||
2019 | 2020 | 2021 | 2022 | 2023 | |||||
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(1) Tangible common equity/tangible assets is a non-GAAP financial measure - see Appendix for reconciliation.
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Disclaimer
CNB Financial Corporation published this content on 16 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 April 2024 11:28:01 UTC.
