CNB Financial(CCNE) - 2019 Q2 - Quarterly Report

Forward-Looking Statements This section outlines forward-looking statements, emphasizing their inherent risks and uncertainties under the Private Securities Litigation Reform Act of 1995 - Forward-looking statements are covered by the safe harbor for 'forward-looking statements' provided by the Private Securities Litigation Reform Act of 1995[8] - Significant risks and uncertainties that could cause actual results to differ materially include changes in general business, industry or economic conditions, changes in applicable law or regulations, adverse changes in capital and financial markets, changes in interest rates, higher than expected integration costs, increased competition, and rapidly changing technology[8] - The Corporation undertakes no obligation to publicly update any forward-looking statement, except as may be required by law[9] PART I. FINANCIAL INFORMATION ITEM 1 – Financial Statements This section presents CNB Financial Corporation's unaudited consolidated financial statements and notes, detailing interim financial performance Consolidated Balance Sheets The Consolidated Balance Sheets detail the Corporation's financial position, showing total assets increased by $179.5 million | Metric | June 30, 2019 (Unaudited) | December 31, 2018 (Audited) | | :--------------------------- | :------------------------ | :-------------------------- | | Total Assets | $3,400,974 | $3,221,521 | | Net Loans | $2,600,921 | $2,454,853 | | Total Deposits | $2,734,762 | $2,610,786 | | Total Liabilities | $3,114,359 | $2,958,691 | | Total Shareholders' Equity | $286,615 | $262,830 | Consolidated Statements of Income Net income and EPS increased for the three and six months ended June 30, 2019, driven by higher net interest and non-interest income | Metric (Dollars in thousands, except per share) | 3 Months Ended June 30, 2019 | 3 Months Ended June 30, 2018 | 6 Months Ended June 30, 2019 | 6 Months Ended June 30, 2018 | | :---------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Interest and Dividend Income | $38,282 | $32,099 | $75,035 | $61,486 | | Total Interest Expense | $9,488 | $6,273 | $18,483 | $11,560 | | Net Interest Income | $28,794 | $25,826 | $56,552 | $49,926 | | Provision for Loan Losses | $1,788 | $1,905 | $3,094 | $3,536 | | Total Non-Interest Income | $6,792 | $5,606 | $12,945 | $10,357 | | Total Non-Interest Expenses | $21,984 | $19,543 | $43,159 | $38,542 | | Net Income | $9,767 | $8,441 | $19,240 | $15,538 | | Basic EPS | $0.64 | $0.55 | $1.26 | $1.02 | | Diluted EPS | $0.64 | $0.55 | $1.26 | $1.02 | | Cash Dividends per Share | $0.170 | $0.165 | $0.340 | $0.330 | Consolidated Statements of Comprehensive Income Total comprehensive income significantly increased for both periods ended June 30, 2019, driven by unrealized gains on securities | Metric (Dollars in thousands) | 3 Months Ended June 30, 2019 | 3 Months Ended June 30, 2018 | 6 Months Ended June 30, 2019 | 6 Months Ended June 30, 2018 | | :--------------------------------------------------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Income | $9,767 | $8,441 | $19,240 | $15,538 | | Other comprehensive income (loss), net of tax | $5,238 | ($1,103) | $10,094 | ($5,005) | | Net change in fair value of interest rate swap agreements (net of tax) | ($162) | $37 | ($257) | $99 | | Net change in unrealized gains on securities available for sale (net of tax) | $5,400 | ($1,140) | $10,351 | ($5,104) | | Comprehensive Income | $15,005 | $7,338 | $29,334 | $10,533 | Consolidated Statements of Cash Flows Net cash provided by operating activities remained stable, while investing and financing activities saw decreased cash usage and provision, respectively | Metric (Dollars in thousands) | 6 Months Ended June 30, 2019 | 6 Months Ended June 30, 2018 | | :-------------------------------------------------- | :--------------------------- | :--------------------------- | | Net Cash Provided by Operating Activities | $18,615 | $17,936 | | Net Cash Used by Investing Activities | ($156,475) | ($239,657) | | Net Cash Provided by Financing Activities | $130,227 | $228,703 | | Net Increase (Decrease) in Cash and Cash Equivalents| ($7,633) | $6,982 | | Cash and Cash Equivalents, Ending | $37,930 | $42,327 | - Cash paid for interest increased from $11,406 thousand for the six months ended June 30, 2018, to $18,356 thousand for the same period in 2019[19] Consolidated Statements of Changes in Shareholders' Equity Total shareholders' equity increased to $286.6 million at June 30, 2019, driven by net income and other comprehensive income | Metric (Dollars in thousands) | 3 Months Ended June 30, 2019 | 3 Months Ended June 30, 2018 | 6 Months Ended June 30, 2019 | 6 Months Ended June 30, 2018 | | :---------------------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Balance, April 1 / January 1 | $274,959 | $244,811 | $262,830 | $243,910 | | Net income | $9,767 | $8,441 | $19,240 | $15,538 | | Other comprehensive income (loss) | $5,238 | ($1,103) | $10,094 | ($5,005) | | Stock-based compensation expense | $275 | $272 | $867 | $949 | | Purchase of treasury stock | ($994) | ($2) | ($994) | ($286) | | Cash dividends declared | ($2,591) | ($2,523) | ($5,182) | ($5,046) | | Balance, June 30 | $286,615 | $249,893 | $286,615 | $249,893 | Notes to Consolidated Financial Statements This section provides detailed disclosures for the consolidated financial statements, covering accounting policies, fair value, securities, loans, and other key financial areas 1. BASIS OF PRESENTATION The consolidated financial statements are unaudited, prepared under GAAP and SEC rules, and include all necessary adjustments for fair presentation - The consolidated financial statements are unaudited and include only normal recurring adjustments necessary for fair presentation[26] - Financial performance for the interim period ended June 30, 2019, is not necessarily indicative of results to be expected for the full year[26] - All dollar amounts are stated in thousands, except share and per share data[26] 2. STOCK COMPENSATION The Corporation's stock incentive plans provide time-based and performance-based restricted stock awards, with $867 thousand in compensation expense for H1 2019 - The Corporation maintains the CNB Financial Corporation 2019 Omnibus Incentive Plan for stock-based compensation to key employees, directors, and consultants[27] - Time-based restricted stock for key employees vests over three to five years, while stock compensation for non-employee directors vests immediately since 2018[28] | Metric (Dollars in thousands) | 3 Months Ended June 30, 2019 | 3 Months Ended June 30