CNB Financial Q2 Earnings Call Highlights

Key Points

• CNB Financial reported strong Q2 results: Diluted EPS rose 49% year over year to $0.91, while operating revenue increased 43% to more than $87 million. The net interest margin and efficiency ratio also improved.
• Loan growth remained solid, led by an 18.2% annualized increase in commercial and industrial lending. Deposit balances declined due to a strategy of reducing higher-cost relationships, though underlying deposits grew 4% and non-interest-bearing deposits rose 8.1% annualized.
• Credit quality was largely stable and acquisition benefits are exceeding expectations: CNB expects ESSA’s earnback period to be under 18 months, versus an original three-year estimate, while evaluating additional acquisitions and expansion within its four-state footprint.

CNB Financial NASDAQ: CCNE reported second-quarter 2026 diluted earnings per share of $0.91, up from $0.88 in the first quarter and representing a 49% increase from the second quarter of 2025, as the company cited benefits from its 2025 acquisition of ESSA and continued growth across its legacy banking divisions.

President and CEO Michael Peduzzi said the second quarter marked the company’s fourth consecutive quarter of earnings-per-share growth, excluding one-time merger-related and GAAP adoption costs, since the period immediately preceding the ESSA transaction. CNB acquired ESSA in July 2025.

Operating revenue exceeded $87 million in the second quarter, compared with more than $61 million a year earlier, a 43% increase. The company’s fully tax-equivalent efficiency ratio improved to approximately 56% from just under 65% in the prior-year quarter.

Margin, profitability and capital metrics

Chief Financial Officer Tito Lima said the quarterly earnings increase equated to a 13.7% annualized gain from the first quarter, driven primarily by net interest margin. CNB’s fully tax-equivalent net interest margin was 3.89% in the second quarter, compared with 3.84% in the prior quarter.

Return on tangible common equity rose to 15.2% from 14.9% in the first quarter. Meanwhile, tangible book value per common share increased at a 12.7% annualized rate during the quarter, Lima said. He also cited the company’s dividend yield of approximately 2%.

Peduzzi said the company’s post-merger revenue growth, earnings accretion and expense management have aligned with the assumptions used in its ESSA merger modeling. He said CNB has performed better than originally modeled because the acquired ESSA business and the company’s five other banking divisions have both contributed to growth.

Loan growth and deposit strategy

Originated loans, excluding syndicated loans, grew at an annualized rate of 4.1% from the first quarter. Commercial and industrial lending was the main contributor, with that portfolio growing at an 18.2% annualized rate, according to Lima.

Total deposits, including deposits held for sale, declined at a 3.8% annualized rate from the first quarter. Lima said the decline was entirely related to CNB’s net interest margin strategy of using excess liquidity to exit higher-cost, single-thread deposit relationships.

Excluding that corporate strategy, deposits including deposits held for sale increased at a 4% annualized rate. Non-interest-bearing deposits grew at an 8.1% annualized rate, which Lima attributed primarily to expansion in the company’s treasury management business.

CNB’s available liquidity stood at 4.8 times adjusted uninsured deposits, Lima said.

Credit quality remained largely stable

Peduzzi said the company’s allowance for credit losses amounted to 1.04% of loans in both the first and second quarters. Net charge-offs were 9 basis points in the second quarter, up from 6 basis points in the first quarter, while delinquencies were essentially stable at 81 basis points, compared with 80 basis points.

Non-performing assets as a percentage of total assets increased to 69 basis points from 58 basis points in the first quarter. Peduzzi characterized the increase as related to a one-off credit rather than a broader industry or underwriting-policy issue, adding that the company views its overall credit metrics as consistent with its conservative underwriting profile.

Acquisition outlook and expansion plans

During the question-and-answer session, Peduzzi said CNB expects the ESSA transaction’s earnback period to be less than 18 months, compared with an original projection of three years. The company is focused on ensuring that the integration continues to operate smoothly following the November 2025 systems conversion, he said.

Peduzzi said CNB has the scale to pursue additional acquisition opportunities but intends to consider its approach to growth in light of the $10 billion asset threshold and the potential impact of the Durbin Amendment. He said the company does not want to acquire institutions simply to move close to that threshold without sufficient earnings and revenue growth to support the change.

The company expects any potential acquisitions to focus largely on gaps within its existing four-state footprint. CNB operates under six branded divisions: CNB Bank in west-central Pennsylvania; ERIEBANK in northwestern Pennsylvania and northeast Ohio; BankOnBuffalo in western New York; FCBank in the Greater Columbus, Ohio, market; Ridge View Bank in southern Virginia; and ESSA Bank in northeastern Pennsylvania.

Peduzzi also said the company plans to continue using loan production offices as a means of expanding into adjacent markets, particularly where commercial and industrial lending and treasury management opportunities are available. He identified potential opportunities in markets such as Dayton and Akron, Ohio, while noting that CNB is also evaluating further expansion in State College, Pennsylvania.

Separately, CNB appointed George Leugers as president of its FCBank division during the second quarter. Leugers succeeded Jenny Saunders, who retired in April. Peduzzi said Leugers brings commercial banking experience and market knowledge to the Greater Columbus business.

The company also disclosed that board member Gary Olson resigned from CNB’s board. Olson had joined CNB’s board following the ESSA acquisition and previously served ESSA Bank for more than 40 years, including as its president and CEO.

About CNB Financial (NASDAQ:CCNE)

CNB Financial Corporation NASDAQ: CCNE is a bank holding company headquartered in Clearfield, Pennsylvania. The company operates through its wholly owned subsidiary, CNB Bank & Trust, providing a full suite of community banking services. With a focus on relationship-driven banking, CNB Financial seeks to serve individuals, small businesses and agricultural clients across central Pennsylvania.

The company's core offerings include deposit products such as checking accounts, savings accounts, money market accounts and certificates of deposit.

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