CNB Financial(CCNE) - 2025 Q2 - Quarterly Results

Executive Summary and Key Financial Highlights CNB Financial Corporation reported strong Q2 2025 results, driven by increased net income, significant loan growth, improved net interest margin, and reduced nonperforming assets Key Financial Trends Overview CNB Financial Corporation achieved strong Q2 2025 results, marked by increased net income, significant loan growth, improved net interest margin, and reduced nonperforming assets | Metric | Q2 2025 (3 months ended June 30) | Q1 2025 (3 months ended March 31) | Change (QoQ) | Change (%) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :----------- | :--------- | | Net Income (GAAP) | $12.9 million | $10.4 million | +$2.5 million | +24.04% | | Diluted EPS (GAAP) | $0.61 | $0.50 | +$0.11 | +22.00% | | Net Income (Excl. merger costs) | $13.2 million | $11.9 million | +$1.3 million | +10.92% | | Diluted EPS (Excl. merger costs) | $0.63 | $0.57 | +$0.06 | +10.53% | | Metric | June 30, 2025 | March 31, 2025 | Change (QoQ) | Change (%) | | :-------------------------------- | :------------ | :------------- | :----------- | :--------- | | Loans (excl. syndicated) | $4.7 billion | $4.6 billion | +$113.7 million | +2.50% | | Total Deposits | $5.5 billion | $5.5 billion | +$7.0 million | +0.13% | | Net Interest Margin | 3.60% | 3.38% | +0.22% | +6.51% | | Nonperforming Assets | $30.4 million | $56.1 million | -$25.7 million | -45.81% | | Common Shareholders' Equity to Total Assets | 9.17% | 9.00% | +0.17% | +1.89% | - The decrease in nonperforming assets was primarily due to the resolution of approximately $24.1 million in non-performing assets[4] Detailed Executive Summary Q2 2025 performance was driven by increased net interest income and non-interest income, robust loan growth, strategically managed deposits, strong liquidity, and reduced unrealized securities losses | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended March 31, 2025 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :---------------------------- | :--------------------------- | :--------------------------- | | Net Income (GAAP) | $12.9 million | $10.4 million | $23.3 million | $23.4 million | | Diluted EPS (GAAP) | $0.61 | $0.50 | $1.10 | $1.11 | | Net Income (Excl. merger costs) | $13.2 million | $11.9 million | $25.1 million | $23.4 million | | Diluted EPS (Excl. merger costs) | $0.63 | $0.57 | $1.19 | $1.11 | - Loans, excluding syndicated balances, increased by $113.7 million (2.50% QoQ, 10.04% annualized) to $4.7 billion at June 30, 2025, driven by growth in ERIEBANK, Ridge View Bank, BankOnBuffalo, legacy CNB markets, and CNB Bank's Private Banking division[6] - Total deposits increased by $7.0 million (0.13% QoQ, 0.51% annualized) to $5.5 billion, despite exiting/reducing $77.7 million in higher-cost municipal deposits. Excluding these, deposits increased by $84.7 million (1.55% QoQ, 6.22% annualized)[6] - Total available liquidity sources were approximately 5.1 times the estimated adjusted uninsured deposit balances as of June 30, 2025[8] - Pre-tax net unrealized losses on combined available-for-sale and held-to-maturity securities decreased to $55.6 million (8.73% of total shareholders' equity) at June 30, 2025, from $61.7 million (9.88%) at March 31, 2025[8] CEO's Strategic Commentary CEO highlighted strong commercial loan growth, improved net interest margin, and strategic preparation for the ESSA Bancorp acquisition to expand assets and market footprint - Second quarter earnings and growth reflected positive momentum from continued commercial loan growth and demand, including realized deposit and relationship growth from Treasury Management activities[9] - The taxable-equivalent net interest margin increased by 22 basis points compared to the first quarter, driven by increases in average loan yield and continued decreases in the cost of interest-bearing funds[9] - The acquisition of ESSA Bancorp, Inc. is scheduled to close on July 23, 2025, expected to significantly add to CNB's earning-asset base and market footprint, and to realize economies-of-scale cost efficiencies[9] Financial Performance Analysis The Corporation demonstrated improved Q2 2025 profitability through increased net interest income, managed non-interest income and expenses, and strong key performance ratios Earnings and Profitability The Corporation demonstrated improved profitability in Q2 2025, with increased returns on equity and tangible common equity, and an improved efficiency ratio | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--------------------------------------- | :------ | :------ | :------ | | Annualized Return on Average Equity (GAAP) | 8.83% | 7.52% | 8.94% | | Annualized Return on Average Equity (Excl. merger costs) | 9.06% | 8.49% | 8.94% | | Annualized Return on Average Tangible Common Equity (GAAP) | 9.71% | 8.15% | 9.93% | | Annualized Return on Average Tangible Common Equity (Excl. merger costs) | 9.98% | 9.32% | 9.93% | | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--------------------------------------- | :------ | :------ | :------ | | Efficiency Ratio (GAAP) | 64.73% | 72.07% | 65.94% | | Efficiency Ratio (FTE, Non-GAAP) | 64.08% | 71.28% | 65.20% | | Adjusted Efficiency Ratio (FTE, Non-GAAP) | 63.50% | 68.62% | 65.20% | - The quarter-over-quarter decrease in the efficiency ratio was primarily driven by higher net interest income and non-interest income, and decreased non-interest expense[19] Net Interest Income and Margin Net interest income and margin significantly increased in Q2 2025, driven by a favorable earning asset mix, higher yields, and lower interest-bearing liability costs | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :-------------------------------- | :------ | :------ | :------ | | Total Revenue | $61.2 million | $56.9 million | $54.6 million | | Net Interest Income | $52.2 million | $48.4 million | $45.7 million | | Net Interest Margin (GAAP) | 3.60% | 3.38% | 3.36% | | Net Interest Margin (FTE, Non-GAAP) | 3.59% | 3.37% | 3.34% | - The increase in net interest income of $3.8 million (7.78% QoQ, 31.19% annualized) was primarily due to the change in the earning asset mix from interest-bearing deposits to loans, coupled with changes in the yield curve[19] | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :-------------------------------- | :------ | :------ | :------ | | Yield on Earning Assets | 5.89% | 5.73% | 5.89% | | Cost of Interest-Bearing Liabilities | 2.88% | 2.93% | 3.17% | - The decrease in the cost of interest-bearing liabilities was primarily the result of the Corporation's targeted interest-bearing deposit rate decreases in response to Federal Reserve rate decreases since mid-September 2024[19] Non-Interest Income Non-interest income rose quarter-over-quarter from wealth management and insurance, but decreased year-to-date due to lower fees and SBIC income | Metric | Q2 2025 | Q1 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------- | :------ | :------ | :------ | :------- | :------- | | Total Non-Interest Income | $9.0 million | $8.5 million | $8.9 million | $17.5 million | $17.8 million | - Quarter-over-quarter increase was primarily attributable to increases in wealth and asset management fees, bank owned life insurance revenue (death benefit), and an improvement in unrealized gains on equity securities[25] - Year-over-year decrease in non-interest income was primarily due to lower other charges and fees, coupled with lower pass-through income from small business investment companies (SBICs)[25] Non-Interest Expense Non-interest expense decreased QoQ (excl. merger costs) due to lower salaries, but increased YoY from higher staffing, occupancy, and card processing costs | Metric | Q2 2025 | Q1 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------- | :------ | :------ | :------ | :------- | :------- | | Total Non-Interest Expense | $39.6 million | $41.0 million | $36.0 million | $80.7 million | $73.4 million | | Total Non-Interest Expense (Excl. merger costs) | $39.3 million | $39.5 million | $36.0 million | $78.8 million | $73.4 million | - Quarter-over-quarter decrease (excluding merger costs) was primarily driven by a decrease in salaries and benefits due to a decrease in staffing levels and retirement plan contribution accruals, in anticipation of the ESSA acquisition[25] - Year-over-year increase (excluding merger costs) was primarily driven by higher salaries and benefits, increased occupancy expense (three additional full-service office locations), and increased card processing and interchange expenses[25] Income Tax Expense Income tax expense increased slightly QoQ, with the effective tax rate stable around 19-20%, impacted by non-deductible merger costs | Metric | Q2 2025 | Q1 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------- | :------ | :------ | :------ | :------- | :------- | | Income Tax Expense | $3.3 million | $2.9 million | $3.0 million | $6.2 million | $5.9 million | | Effective Tax Rate | 19.10% | 19.96% | 19.03% | 19.49% | 18.70% | - The effective tax rate for the first and second quarters of 2025 was impacted by non-deductible merger costs of $1.3 million and $357 thousand, respectively[22] Key Performance Ratios The Corporation's Q2 2025 performance ratios showed improvements in return on average assets and equity, net interest margin, and efficiency ratio | Metric (Annualized) | Q2 2025 | Q1 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--------------------------------------- | :------ | :------ | :------ | :------- | :------- | | Return on Average Assets (GAAP) | 0.90% | 0.75% | 0.89% | 0.82% | 0.89% | | Adjusted Return on Average Assets (Non-GAAP) | 0.92% | 0.85% | 0.89% | 0.88% | 0.89% | | Return on Average Equity (GAAP) | 8.83% | 7.52% | 8.94% | 8.18% | 8.86% | | Adjusted Return on Average Equity (Non-GAAP) | 9.06% | 8.49% | 8.94% | 8.78% | 8.86% | | Return on Average Tangible Common Equity (Non-GAAP) | 9.71% | 8.15% | 9.93% | 8.95% | 9.85% | | Adjusted Return on Average Tangible Common Equity (Non-GAAP) | 9.98% | 9.32% | 9.93% | 9.66% | 9.85% | | Net Interest Margin, FTE (Non-GAAP) | 3.59% | 3.37% | 3.34% | 3.48% | 3.36% | | Efficiency Ratio, FTE (Non-GAAP) | 64.08% | 71.28% | 65.20% | 67.55% | 66.74% | | Adjusted Efficiency Ratio, FTE (Non-GAAP) | 63.50% | 68.62% | 65.20% | 65.97% | 66.74% | Balance Sheet and Asset Quality The balance sheet reflects strong loan growth, strategically managed deposits, robust liquidity, improved asset quality, and a solid capital position Loans and Deposits Strong loan growth across core markets and private banking, modest deposit growth with strategic municipal deposit reductions, and a high-quality loan portfolio | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :-------------------------------- | :------------ | :------------- | :------------ | | Total Loans Receivable | $4,733,420 | $4,610,009 | $4,479,692 | | Syndicated Loans | $78,936 | $69,189 | $53,938 | | Total Deposits | $5,467,082 | $5,460,078 | $5,110,845 | | Noninterest-bearing demand deposits | $855,788 | $842,398 | $762,918 | - Commercial office loans totaled $111.1 million (2.35% of total loans), with no nonaccrual loans and two past-due loans totaling $209 thousand[15] - Commercial hospitality loans totaled $321.2 million (6.79% of total loans), with no nonaccrual or past-due loans[15] - Commercial multifamily loans totaled $405.4 million (8.57% of total loans), with one nonaccrual and past-due loan totaling $199 thousand[15] Liquidity and Investment Portfolio Strong liquidity maintained with decreased unrealized investment losses, ensuring all regulatory capital ratios remain well-capitalized without short-term borrowings | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--------------------------------------- | :------------ | :------------- | :------------ | | Cash equivalents at Federal Reserve | $332.2 million | $447.1 million | $271.9 million | | Total available liquidity sources | $4.6 billion (contingent) | N/A | N/A | | Pre-tax net unrealized losses on securities | $55.6 million | $61.7 million | $84.1 million | | Unrealized losses as % of shareholders' equity | 8.73% | 9.88% | 14.33% | - The Corporation had no outstanding short-term borrowings from the FHLB or the Federal Reserve's Discount Window at June 30, 2025, March 31, 2025, and June 30, 2024[8] - All regulatory capital ratios would still exceed regulatory 'well-capitalized' levels if net unrealized losses were fully recognized[8] Asset Quality and Credit Losses Asset quality improved significantly with decreased nonperforming assets, though provision for credit losses rose due to higher charge-offs and loan growth | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--------------------------------------- | :------------ | :------------- | :------------ | | Total Nonperforming Assets | $30.4 million | $56.1 million | $36.5 million | | Nonperforming Assets as % of Total Assets | 0.48% | 0.89% | 0.62% | | Allowance for Credit Losses as % of Total Loans | 1.02% | 1.03% | 1.02% | | Allowance for Credit Losses as % of Nonaccrual Loans | 169.52% | 87.57% | 130.88% | | Metric | Q2 2025 | Q1 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--------------------------------------- | :------ | :------ | :------ | :------- | :------- | | Provision for Credit Losses | $4.3 million | $1.6 million | $2.6 million | $5.9 million | $3.9 million | | Net Loan Charge-offs | $3.3 million | $1.4 million | $2.8 million | $4.7 million | $4.1 million | | Annualized Net Loan Charge-offs / Average Total Loans | 0.28% | 0.13% | 0.25% | 0.21% | 0.19% | - The $25.7 million decrease in nonperforming assets was primarily due to paydowns from workout-related efforts on two larger nonaccrual loan relationships and resulting charge-offs[8] Capital Position The Corporation's capital position strengthened in Q2 2025, with increases in total shareholders' equity and key capital ratios, exceeding 'well-capitalized' levels | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--------------------------------------- | :------------ | :------------- | :------------ | | Total Shareholders' Equity | $637.3 million | $624.5 million | $586.7 million | | Common Shareholders' Equity to Total Assets | 9.17% | 9.00% | 8.99% | | Tangible Common Equity to Tangible Assets (Non-GAAP) | 8.53% | 8.36% | 8.30% | | Tier 1 Leverage Ratio | 10.42% | 10.27% | 10.56% | | Common Equity Tier 1 Ratio | 11.78% | 11.85% | 11.71% | | Tier 1 Risk-Based Ratio | 13.38% | 13.50% | 13.41% | | Total Risk-Based Ratio | 16.14% | 16.30% | 16.20% | - The increase in total shareholders' equity was due to an increase in retained earnings (net income, partially offset by dividends) and a decrease in accumulated other comprehensive loss[29] - Regulatory capital ratios for the Corporation continue to exceed regulatory 'well-capitalized' levels as of June 30, 2025[29] Book Value Metrics Book value and tangible book value per share increased QoQ and YoY (adjusted for merger costs), driven by retained earnings and reduced comprehensive loss | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--------------------------------------- | :------------ | :------------- | :------------ | | Book Value Per Common Share (GAAP) | $27.44 | $27.01 | $25.19 | | Adjusted Book Value Per Common Share (Non-GAAP) | $27.53 | $27.08 | $25.19 | | Tangible Book Value Per Common Share (Non-GAAP) | $25.35 | $24.91 | $23.09 | | Adjusted Tangible Book Value Per Common Share (Non-GAAP) | $25.44 | $24.98 | $23.09 | - The increases in book value and tangible book value per common share (excluding merger costs) were primarily due to a $9.1 million increase in retained earnings and a $3.0 million decrease in accumulated other comprehensive loss quarter-over-quarter[11] Corporate Information and Outlook This section details the upcoming ESSA acquisition, provides a company overview, and outlines cautionary forward-looking statements Recent Strategic Events CNB Financial Corporation announced the upcoming ESSA Bancorp acquisition, with regulatory approvals received and legal merger scheduled for July 23, 2025 - CNB Financial Corporation entered into a definitive merger agreement with ESSA Bancorp, Inc. in an all-stock transaction, with each ESSA common stock share converting into 0.8547 shares of CNB's common stock[28] - Requisite bank regulatory approvals and waivers have been received, and the transaction is scheduled to close on July 23, 2025[28] About CNB Financial Corporation CNB Financial Corporation, with $6.3 billion in assets, operates CNB Bank across multiple states and divisions, offering comprehensive financial services - CNB Financial Corporation is a financial holding company with consolidated assets of approximately $6.3 billion[30] - CNB Bank operates 55 full-service offices and other facilities across Pennsylvania, Ohio, New York, and Virginia, serving individual, business, governmental, and institutional customers[30] - The Corporation operates through multi-brand divisions including ERIEBANK, FCBank, BankOnBuffalo, Ridge View Bank, and Impressia Bank[30] Forward-Looking Statements Forward-looking statements carry risks from market changes, interest rates, credit, economic conditions, regulatory shifts, and acquisition integration challenges - Forward-looking statements are subject to significant risks and uncertainties, including adverse changes in capital and financial markets, changes in interest rates, credit risks of lending activities, and effectiveness of data security controls[31] - Risks also include the inability to achieve expected synergies and operating efficiencies from the ESSA merger, higher than expected integration costs, and changes in the quality or composition of loan and investment portfolios[31] - The Corporation undertakes no obligation to publicly update or revise any forward-looking statements, except as required by law[32] Consolidated Financial Data This section provides detailed consolidated financial data, including income statement, average balances, ending balance sheet, and key capital and asset quality ratios Income Statement The consolidated income statement shows a QoQ increase in net interest income and net income available to common shareholders, despite higher provision for credit losses | Metric (in thousands) | Q2 2025 | Q1 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--------------------------------------- | :------ | :------ | :------ | :------- | :------- | | Interest and fees on loans | $75,408 | $72,379 | $72,142 | $147,787 | $143,655 | | Net interest income | $52,197 | $48,431 | $45,717 | $100,628 | $90,939 | | Provision for credit losses | $4,338 | $1,556 | $2,591 | $5,894 | $3,911 | | Total non-interest income | $9,008 | $8,507 | $8,865 | $17,515 | $17,820 | | Total non-interest expenses | $39,617 | $41,038 | $35,989 | $80,655 | $73,413 | | Net income available to common shareholders | $12,881 | $10,406 | $11,882 | $23,287 | $23,407 | | Diluted earnings per common share | $0.61 | $0.50 | $0.56 | $1.10 | $1.11 | Average Balances, Income and Interest Rates (Taxable Equivalent Basis) Average earning assets increased, yield improved, and cost of interest-bearing liabilities decreased, expanding the net interest margin on a fully tax-equivalent basis | Metric (in thousands) | Q2 2025 | Q1 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--------------------------------------- | :------ | :------ | :------ | :------- | :------- | | Average Total Loans and Loans Held for Sale | $4,668,051 | $4,591,395 | $4,441,633 | $4,629,956 | $4,435,246 | | Average Total Earning Assets | $5,817,121 | $5,803,526 | $5,465,645 | $5,810,364 | $5,407,954 | | Average Interest-Bearing Deposits | $4,558,732 | $4,574,700 | $4,321,678 | $4,566,673 | $4,275,406 | | Average Yield on Total Earning Assets | 5.89% | 5.73% | 5.89% | 5.81% | 5.85% | | Average Cost of Interest-Bearing Liabilities | 2.88% | 2.93% | 3.17% | 2.90% | 3.10% | | Net Interest Margin (FTE) | 3.59% | 3.37% | 3.34% | 3.48% | 3.36% | - The yield on earning assets for Q2 2025 increased by 16 basis points from Q1 2025, attributable to quarter-over-quarter increases in the yield on both the loan and securities portfolios[19] - The cost of interest-bearing liabilities decreased by 5 basis points from Q1 2025 and 29 basis points from Q2 2024, primarily due to targeted interest-bearing deposit rate decreases[19] Ending Balance Sheet The ending balance sheet reflects growth in total assets, loans, and deposits, with increased shareholders' equity due to retained earnings and reduced comprehensive loss | Metric (in thousands) | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--------------------------------------- | :------------ | :------------- | :------------ | | Total Assets | $6,318,477 | $6,295,508 | $5,886,571 | | Total Loans Receivable | $4,733,420 | $4,610,009 | $4,479,692 | | Total Deposits | $5,467,082 | $5,460,078 | $5,110,845 | | Total Liabilities | $5,681,196 | $5,671,000 | $5,299,871 | | Total Shareholders' Equity | $637,281 | $624,508 | $586,700 | | Book Value Per Common Share | $27.44 | $27.01 | $25.19 | | Tangible Book Value Per Common Share (Non-GAAP) | $25.35 | $24.91 | $23.09 | Capital and Asset Quality Ratios Capital ratios remained strong and above well-capitalized levels, with significant improvement in asset quality ratios and nonperforming assets coverage | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--------------------------------------- | :------------ | :------------- | :------------ | | Tangible Common Equity / Tangible Assets (Non-GAAP) | 8.53% | 8.36% | 8.30% | | Tier 1 Leverage Ratio | 10.42% | 10.27% | 10.56% | | Common Equity Tier 1 Ratio | 11.78% | 11.85% | 11.71% | | Total Nonperforming Assets | $30,389 | $56,051 | $36,541 | | Nonperforming Assets / Total Assets | 0.48% | 0.89% | 0.62% | | Ratio of Allowance for Credit Losses on Loans to Nonaccrual Loans | 169.52% | 87.57% | 130.88% | | Allowance for Credit Losses / Total Loans | 1.02% | 1.03% | 1.02% | - Capital ratios as of June 30, 2025, are estimated pending final regulatory filings[37] Reconciliation of Non-GAAP Financial Measures This section reconciles GAAP to non-GAAP financial measures, adjusting for merger costs to provide clearer insights into operational performance Merger Costs, Net of Tax This section details the calculation of merger costs, distinguishing between deductible and non-deductible components, presented net of tax for Q2 and YTD 2025 | Metric (in thousands) | Q2 2025 | Q1 2025 | YTD 2025 | | :--------------------------------------- | :------ | :------ | :------- | | Merger costs - non deductible | $357 | $1,327 | $1,684 | | Merger costs - deductible | $0 | $202 | $202 | | Tax benefit of merger costs (non-GAAP) | $0 | $42 | $42 | | Merger costs, net of tax (non-GAAP) | $357 | $1,487 | $1,844 | Adjusted Net Income Available to Common Shareholders This reconciliation adjusts GAAP net income available to common shareholders by adding back merger costs, net of tax, for clearer operational performance | Metric (in thousands) | Q2 2025 | Q1 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--------------------------------------- | :------ | :------ | :------ | :------- | :------- | | Net income available to common shareholders (GAAP) | $12,881 | $10,406 | $11,882 | $23,287 | $23,407 | | Add: Merger costs, net of tax (non-GAAP) | $357 | $1,487 | $0 | $1,844 | $0 | | Adjusted net income available to common shareholders (non-GAAP) | $13,238 | $11,893 | $11,882 | $25,131 | $23,407 | Adjusted Pre-Provision Net Revenue (PPNR) The adjusted PPNR calculation removes merger costs from non-interest expense, offering insight into capital generation before credit losses and unusual items | Metric (in thousands) | Q2 2025 | Q1 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--------------------------------------- | :------ | :------ | :------ | :------- | :------- | | PPNR (non-GAAP) | $21,588 | $15,900 | $18,593 | $37,488 | $35,346 | | Add: Merger costs | $357 | $1,529 | $0 | $1,886 | $0 | | Adjusted PPNR (non-GAAP) | $21,945 | $17,429 | $18,593 | $39,374 | $35,346 | Adjusted Earnings Per Common Share This section reconciles basic and diluted earnings per common share, adjusted for merger costs, net of tax, for a normalized view of profitability | Metric | Q2 2025 | Q1 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--------------------------------------- | :------ | :------ | :------ | :------- | :------- | | Diluted earnings per common share (GAAP) | $0.61 | $0.50 | $0.56 | $1.10 | $1.11 | | Adjusted diluted earnings per common share (non-GAAP) | $0.63 | $0.57 | $0.56 | $1.19 | $1.11 | Adjusted Dividend Payout Ratio The adjusted dividend payout ratio uses adjusted diluted EPS, offering a more representative measure of earnings distributed as dividends, excluding merger costs | Metric | Q2 2025 | Q1 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--------------------------------------- | :------ | :------ | :------ | :------- | :------- | | Dividend payout ratio (GAAP) | 30% | 36% | 31% | 33% | 32% | | Adjusted dividend payout ratio (non-GAAP) | 29% | 32% | 31% | 30% | 32% | Adjusted Net Interest Margin (Fully Tax Equivalent Basis) This reconciliation presents the net interest margin on a fully tax-equivalent basis, adjusting interest income for tax benefits of tax-exempt securities and loans | Metric | Q2 2025 | Q1 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--------------------------------------- | :------ | :------ | :------ | :------- | :------- | | Net interest margin (GAAP) (annualized) | 3.60% | 3.38% | 3.36% | 3.49% | 3.38% | | Net interest margin (fully tax equivalent basis) (non-GAAP) (annualized) | 3.59% | 3.37% | 3.34% | 3.48% | 3.36% | Adjusted Tangible Book Value Per Common Share and Tangible Common Equity / Tangible Assets This section reconciles GAAP book value and equity to tangible measures, adjusted for merger costs, offering a conservative view of equity and asset quality | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--------------------------------------- | :------------ | :------------- | :------------ | | Book value per common share (GAAP) | $27.44 | $27.01 | $25.19 | | Tangible book value per common share (non-GAAP) | $25.35 | $24.91 | $23.09 | | Adjusted book value per common share (non-GAAP) | $27.53 | $27.08 | $25.19 | | Adjusted tangible book value per common share (non-GAAP) | $25.44 | $24.98 | $23.09 | | Common shareholders' equity / Total assets (GAAP) | 9.17% | 9.00% | 8.99% | | Tangible common equity / Tangible assets (non-GAAP) | 8.53% | 8.36% | 8.30% | | Adjusted tangible common equity / Adjusted tangible assets (non-GAAP) | 8.56% | 8.38% | 8.30% | Adjusted Efficiency Ratio (Fully Tax Equivalent Basis) The adjusted efficiency ratio, on a fully tax-equivalent basis and excluding merger costs, provides a refined measure of operational efficiency | Metric | Q2 2025 | Q1 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--------------------------------------- | :------ | :------ | :------ | :------- | :------- | | Efficiency ratio (GAAP) | 64.73% | 72.07% | 65.94% | 68.27% | 67.50% | | Efficiency ratio (fully tax equivalent basis) (non-GAAP) | 64.08% | 71.28% | 65.20% | 67.55% | 66.74% | | Adjusted efficiency ratio (fully tax equivalent basis) (non-GAAP) | 63.50% | 68.62% | 65.20% | 65.97% | 66.74% | Adjusted Return on Average Assets This reconciliation adjusts GAAP return on average assets by adding back merger costs, net of tax, for a more accurate representation of asset profitability | Metric (annualized) | Q2 2025 | Q1 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--------------------------------------- | :------ | :------ | :------ | :------- | :------- | | Return on average assets (GAAP) | 0.90% | 0.75% | 0.89% | 0.82% | 0.89% | | Adjusted return on average assets (non-GAAP) | 0.92% | 0.85% | 0.89% | 0.88% | 0.89% | Adjusted Total Deposits This reconciliation adjusts total deposits by including high-cost municipal deposits that were exited/reduced, providing a view of deposit levels before adjustments | Metric (in thousands) | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--------------------------------------- | :------------ | :------------- | :------------ | | Total deposits (GAAP) | $5,467,082 | $5,460,078 | $5,110,845 | | Add: High cost municipal deposits | $77,690 | $0 | $0 | | Adjusted total deposits (non-GAAP) | $5,544,772 | $5,460,078 | $5,110,845 | Adjusted Return on Average Tangible Common Equity This reconciliation provides the return on average tangible common equity, adjusted for merger costs, offering a refined measure of profitability relative to tangible common equity | Metric (annualized) | Q2 2025 | Q1 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--------------------------------------- | :------ | :------ | :------ | :------- | :------- | | Return on average tangible common equity (non-GAAP) | 9.71% | 8.15% | 9.93% | 8.95% | 9.85% | | Adjusted return on average tangible common equity (non-GAAP) | 9.98% | 9.32% | 9.93% | 9.66% | 9.85% |