Cnb Financial Corporation · NASDAQ:CCNE
Cnb Financial — IPO Roadshow (August 2020)
58 slides from Cnb Financial's IPO roadshow presentation, Aug 17, 2020
Slide 1: Discussion Materials: Preferred Equity Offering Investor Presentation
Issuer Free Writing Prospectus Filed Pursuant to Rule 433 Registration Statement No. 333-236018 August 17, 2020 DISCUSSION MATERIALS PREFERRED EQUITY OFFERING INVESTOR PRESENTATION AUGUST 2020Issuer Free Writing Prospectus Filed Pursuant to Rule 433 Registration Statement No. 333-236018 August 17, 2
Slide 2: Certain Important Information
CERTAIN IMPORTANT INFORMATION CERTAIN IMPORTANT INFORMATION This presentation has been prepared by CNB Financial Corporation (the “Company” or “CNB”) solely for information purposes based on its own information, as well as information from public sources. This presentation is a summary only and has
Slide 3: Caution Regarding Forward Looking Statements
CERTAIN IMPORTANT INFORMATION CAUTION REGARDING FORWARD LOOKING STATEMENTS This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that relate to future events or the future performance of CNB Financial Corporation (the “Compan
Slide 4: Terms of Proposed Preferred Stock Offering
TERMS OF PROPOSED PREFERRED STOCK OFFERING CNB Financial Corporation (NASDAQ: CCNE) ISSUER (Depository Shares 1/40) Non-Cumulative Perpetual Preferred Stock, Series A SECURITY $25.00 per depository share LIQUIDATION PREFERENCE TERM Perpetual ISSUANCE TYPE SEC Registered Dividends will be paid quarte
Slide 5: Corporate Overview
CORPORATE OVERVIEWCORPORATE OVERVIEW
Slide 6: Investment Highlights
INVESTMENT HIGHLIGHTS A PREMIER FRANCHISE SUPERIOR MARKET POSITION ATTRACTIVE BUSINESS MIX § Strong market presence with 4 § Diversified loan portfolio with § #1 market share and community bank of diversified local brands that are well exceptionally high growth in Erie and choice in Clearfield Count
Slide 7: CNB Financial Corporation
CNB FINANCIAL CORPORATION § Holding Company for CNB Bank (Clearfield, PA), serving the community since 1865 § 45 full service branches and 1 loan production office throughout Pennsylvania, GREATER New York and Ohio BUFFALO, NY § CNB Bank’s regional divisions include CNB Bank (Western PA); FC Bank (C
Slide 8: Unique Multi-State, Multi-Brand Model
UNIQUE MULTI-STATE, MULTI-BRAND MODEL 18 full-service offices Opened in 2013 with the Opened August 2005 Opened in 2016 as a acquisition of FC Banc single loan production Western and Central PA Corp. in Bucyrus, OH Led by Division President office which was focus David J. Zimmer, III, an converted t
Slide 9: Experienced Leadership
EXPERIENCED LEADERSHIP TOP EXECUTIVES & CHAIRMAN OF THE BOARD JOSEPH B. BOWER JR. President, CEO & Director RICHARD GRESLICK JR. Sr. EVP; Chief Support Officer TITO L. LIMA EVP, CFO & Treasurer PETER F. SMITH Independent Chairman of the Board of Directors CEO of CNB Financial Corporation since Janua
Slide 10: Growth Milestones
GROWTH MILESTONES $50M Sub Debt Raise Acquisition of Lake National Acquisition of Bank CNB Financial County Corporation Conversion to FC Banc Corp. National Bank holding a state in Bucyrus, OH Bank on w/ $360M in of Clearfield company banking Buffalo is established organized charter assets formed 18
Slide 11: A Bank of Choice in Legacy CNB Bank Markets
A BANK OF CHOICE IN LEGACY CNB BANK MARKETS LEADING DEPOSIT MARKET SHARE (1) Combined CNB Bank Franchise County Footprint 2019 2019 Number of Total Deposits In Total Market Rank Institution (ST) Branches Market ($000) Share (%) § 18 full-service offices operate as CNB Bank 1 S&T Bancorp Inc. (PA) 21
Slide 12: Key Growth Markets
KEY GROWTH MARKETS BUFFALO, NY COLUMBUS, OH CLEVELAND, OH / ERIE, PA nd nd § 2 largest city in the state of New § One of the nation’s fastest growing § Cleveland is the 2 largest city in the York cities state of Ohio § High growth market due to several § Growth fueled by a diversified § Major manufa
Slide 13: Recent Acquisitive Success
RECENT ACQUISITIVE SUCCESS (1) (2) (3) FC BANC CORP. LAKE NATIONAL BANK BANK OF AKRON ACQUISITION DATE 10/11/2013 7/15/2016 7/17/2020 ASSETS ($000) $364,163 $156,575 $471,221 LOANS ($000) $250,885 $122,367 $329,001 DEPOSITS ($000) $326,963 $139,712 $425,696 LTM ROAA (%) 0.98% 0.53% 0.81% LTM ROAE (%
Slide 14: Recent Acquisition of Bank of Akron
RECENT ACQUISITION OF BANK OF AKRON STRATEGICALLY COMPELLING TRANSACTION § In market expansion for high growth BankOnBuffalo division of CNB STRATEGIC § Nearly doubles division assets to > $1.0B IMPACT ON § Consolidation of larger competitors in BUFFALO MARKET Western New York has left a void in ser
Slide 15: Growth: Focus on Buffalo
GROWTH: FOCUS ON BUFFALO LEADING DEPOSIT MARKET SHARE Buffalo-Cheektowaga, NY MSA 2019 2019 Number of Total Deposits In Total Market Rank Institution (ST) Branches Market ($000) Share (%) § BankOnBuffalo established as a division of CNB 1 M&T Bank Corp. (NY) 52 29,298,925 63.6 since 2016 2 KeyCorp (
Slide 16: Business Highlights
BUSINESS HIGHLIGHTSBUSINESS HIGHLIGHTS
Slide 17: 2nd Quarter 2020 Highlights
2ND QUARTER 2020 HIGHLIGHTS FINANCIAL HIGHLIGHTS OBSERVATIONS § Net income of $8.2 million§ Participated aggressively in the SBA PPP leading to processing fees of approximately $8.8 million § Diluted earnings per share of $0.54 § Maintains a strong and stable liquidity level with § MRQ Return on ave
Slide 18: Financial Trends
FINANCIAL TRENDS TOTAL ASSETS ($M) TOTAL GROSS LOANS ($M) $5,000 $5,000 $4,470 $4,000 $4,000 $3,764 $3,000 $3,222 $3,000 $3,030 $2,769 $2,804 $2,574 $2,475 $2,000 $2,000 $2,146 $1,874 $1,000 $1,000 $0 $0 2016Y 2017Y 2018Y 2019Y 2020YTD 2016Y 2017Y 2018Y 2019Y 2020YTD TOTAL DEPOSITS ($M) NET INCOME (
Slide 19: Earnings Power
EARNINGS POWER RETURN ON AVERAGE ASSETS RECENT EFFICIENCY INITIATIVES § Re-established loan pricing floors from 4% to 5% 1.40% based on risk rating 1.17% 1.12% 1.20% 1.00% 0.89% 0.87%§ Implemented temporary hiring freeze; once hiring 0.85% 0.80% freeze ends, staff additions will be prioritized based
Slide 20: Loan Portfolio Composition
LOAN PORTFOLIO COMPOSITION 6/30/2020 LOAN PORTFOLIO COMPOSITION OBSERVATIONS § MRQ loan yield of 4.67% § Loan growth driven primarily by increases in C&I COMMERCIAL loans and CRE loans MORTGAGE 28.5% C&I 41.6%§ Excluding $217 million of net PPP loans, loans grew $191 million, or 7.3% in compared to
Slide 21: Additional Loan Detail – Commercial Real Estate
ADDITIONAL LOAN DETAIL – COMMERCIAL REAL ESTATE § Total commercial real estate loans of $696 million (22.9% of total loans) § Diversified by property type – highest concentrations are Apartments and Mixed Use, 8.2% and 4.5% of total loans, respectively § 26.4% in deferral – 35% interest only; 65% pr
Slide 22: Conservative Credit Culture
CONSERVATIVE CREDIT CULTURE JUNE 30, 2020 NONACCRUAL LOANS BY TYPE HISTORICAL NPAs/ASSETS & NCOs/LOANS CONSUMER 2.00% 1.7% 1.50% COMMERCIAL 33.4% 1.00% 0.69% 0.65% 0.60% 0.58% 0.44% 0.50% REAL ESTATE 0.27% 0.26% 0.26% 65.0% 0.24% 0.16% 0.00% 2016 2017 2018 2019 2020YTD NPAs/ASSETS (EX. TDRs) NCOs /
Slide 23: Additional Credit Quality Detail
ADDITIONAL CREDIT QUALITY DETAIL COMMERCIAL LOANS BY RISK RATING (6/30/2020) Special Mention Pass Substandard Doubtful Total Pass % Commercial, Industrial and Agricultural $1,226,388 $10,889 $26,244 $0 $1,263,521 97.1% Commercial Mortgages 818,811 13,465 33,125 0 865,401 94.6% Total $2,045,199 $24,3
Slide 24: Allowance for Loan Losses
ALLOWANCE FOR LOAN LOSSES ALLOWANCE FOR LOAN LOSSES TRENDS OBSERVATIONS $24,529 § The company has elected to delay adoption of $25,000 1.00% the current expected credit loss accounting $20,000 0.80% standard pursuant to the Coronavirus Aid, Relief 0.81% and Economic Security (“CARES”) Act $15,000 0.
Slide 25: COVID-19 Response: Lending & Credit
COVID-19 RESPONSE LENDING & CREDIT § As of June 30, 2020, the Company had approved and secured funds with the Small Business Administration (“SBA”) for 1,898 Paycheck Protection Program(“PPP”) loans, representing approximately $226 million in loan outstanding and $8.8 million in service fees § As of
Slide 26: COVID-19 Loan Modifications by Industry
COVID-19 LOAN MODIFICATIONS LOAN MODIFICATIONS BY INDUSTRY ($ in thousands) Loans with Deferred Payments Portfolio Portfolio # of Interest % of Q2 2020 Q2 2020 Loans Only P&I Total Portfolio Loan Modifications by Industry Commercial Real Estate $696,401 22.9% 158 $65,191 $118,612 $183,803 26% Hospit
Slide 27: COVID-19 Loan Modifications
COVID-19 LOAN MODIFICATIONS § Total modified loans comprised 21% of the total loan portfolio outstanding as of June 30, 2020 § Modifications are 64% Principal & Interest, 36% Principal only § Modifications are 68% for 5-6 months and 32% for 1-4 months LOAN MODIFICATIONS BY REGION BANKONBUFFALO CNB B
Slide 28: SBA PPP Loans
SBA PPP LOANS SBA PAYCHECK PROTECTION PROGRAM (PPP) BY REGION (AS OF JUNE 30, 2020) ($ in thousands) CNB Bank ERIEBANK FCBank BankOnBuffalo Total SBA approved loans $63,498 $80,141 $36,696 $45,458 $225,793 # of SBA approved loans 579 780 193 346 1,898 Average size per loan $110 $103 $190 $130 $119 P
Slide 29: Additional Loan Detail – Hospitality / Hotels
ADDITIONAL LOAN DETAIL – HOSPITALITY / HOTELS HOSPITALITY LOANS BY CATEGORY (6/30/20) HOSPITALITY/HOTELS LOAN PORTFOLIO INDEPENDENT 2% § Franchise hotels comprise 98% of total hotel portfolio as of 6/30/20 OTHER § Resort or destination related hospitality sites comprise BRANDED 13% approximately 1%
Slide 30: Additional Loan Detail
ADDITIONAL LOAN DETAIL § At June 30, 2020, the Company had $159 million in funded ADC loans (excluding the previously mentioned Hotels/Motels and Restaurants/Fast Foods), or 5.6% of total loans outstanding, excluding PPP, and unfunded commitments for ADC loans of $160 million § The ADC portfolio by
Slide 31: Deposit Mix
DEPOSIT MIX 6/30/2020 DEPOSIT MIX AVERAGE DEPOSITS PER BRANCH $100,000 $80,158 $80,000 $73,872 SAVINGS $62,172 52.3% $60,000 $52,884 $48,087 $40,000 TIME DEPOSITS 11.2% $20,000 $0 DEMAND - DEMAND - NONINTEREST 2016 2017 2018 2019 2020YTD INTEREST 14.1% 22.4% OBSERVATIONS § Total deposits of $3.6 bil
Slide 32: Offering Impact
OFFERING IMPACTOFFERING IMPACT
Slide 33: Illustrative Impact of the Proposed Offering: Pro Forma Capital Ratios
ILLUSTRATIVE IMPACT OF THE PROPOSED OFFERING CNB FINANCIAL CORPORATION – PRO FORMA CAPITAL RATIOS 13.8% 13.1% 12.3% 11.4% 10.5% 9.9% 8.6% 8.3% 7.9% 7.6% 7.5% 7.2% (1) Tier 1 Leverage Ratio Tier 1 Leverage Ratio - Adjusted for PPP Tier 1 Risk Based Total Risk Based June 30, 2020 (Actual) As Adjusted
Slide 34: Illustrative Impact: Preferred Dividend Coverage
ILLUSTRATIVE IMPACT OF THE PROPOSED OFFERING PREFERRED DIVIDEND COVERAGE PRO FORMA 2Q2020 LTM 2Q2020 LTM INTEREST COVERAGE Earnings Net Income $37,900 $37,900 Preferred Dividend $0 $3,563 Net Income to Common $37,900 $34,338 Net Income / Preferred Dividend 10.6x 34 Note: Assumes $50 million gross of
Slide 35: Dividend History
DIVIDEND HISTORY HISTORICAL DIVIDEND PER COMMON SHARE $0.800 $0.700 $0.600 $0.500 $0.400 $0.300 $0.200 $0.100 $0.000 Common Dividend Special Dividend 35DIVIDEND HISTORY HISTORICAL DIVIDEND PER COMMON SHARE $0.800 $0.700 $0.600 $0.500 $0.400 $0.300 $0.200 $0.100 $0.000 Common Dividend Special Dividen
Slide 36: Appendix: Additional Financial Detail
APPENDIX ADDITIONAL FINANCIAL DETAILAPPENDIX ADDITIONAL FINANCIAL DETAIL
Slide 37: CNB Financial Corp. Financial Highlights
CNB FINANCIAL CORP. FINANCIAL HIGHLIGHTS For the Twelve Months Ended Quarters Ended In $000s except for per share data 12/31/2017 12/31/2018 12/31/2019 09/30/19 12/31/19 03/31/20 06/30/20 Balance Sheet Total Assets $2,768,773 $3,221,521 $3,763,659 $3,541,170 $3,763,659 $3,779,138 $4,469,551 Total Gr
Slide 38: CNB Bank Financial Highlights
CNB BANK FINANCIAL HIGHLIGHTS For the Twelve Months Ended Quarters Ended In $000s except for per share data 12/31/2017 12/31/2018 12/31/2019 9/30/2019 12/31/2019 3/31/2020 6/30/2020 Balance Sheet Total Assets $2,748,891 $3,203,027 $3,740,508 $3,519,206 $3,740,508 $3,753,504 $4,451,130 Total Loans $2
Slide 39: Bank of Akron Financial Highlights
BANK OF AKRON FINANCIAL HIGHLIGHTS For the Twelve Months Ended Quarters Ended In $000s except for per share data 12/31/2017 12/31/2018 12/31/2019 9/30/2019 12/31/2019 3/31/2020 6/30/2020 Balance Sheet Total Assets $321,286 $349,552 $388,365 $388,877 $388,365 $406,490 $471,221 Total Loans $261,306 $2
Slide 40: Non-Interest Income Detail
NON-INTEREST INCOME ND NONINTEREST INCOME DETAIL – FISCAL YEAR 2019 & 2 QUARTER 2020 YTD § Diversified sources of noninterest income contribute meaningfully to total revenue 45% § Largest noninterest income driver is service charges and fees of 2020YTD pre- § Additionally, wealth management and core
Slide 41: Investment Portfolio
INVESTMENT PORTFOLIO JUNE 30, 2020 AVAILABLE FOR SALE SECURITIES PORTFOLIO FAIR VALUE Amortized Unrealized Fair $ in thousands Cost Gains Losses Value POOLED SBA CORPORATE 4% NOTES & BONDS 2% U.S. Government Sponsored Entities $139,125 $7,521 ($27) $146,619 State and Political Subdivisions 61,339 3,
Slide 42: Liquidity
LIQUIDITY § The Company manages liquidity to meet short-term financial obligations including the payment of deposits on demand or at maturity, the repayment of borrowings at maturity and the ability to fund commitments and other new business opportunities § Funding is obtained through a variety of s
Slide 43: Interest Rate Sensitivity
INTEREST RATE SENSITIVITY § Base case assumes composition of interest sensitive assets and liabilities remain static as of 6/30/2020 § Assumes rate shocks are instantaneous and sustained parallel rate shifts, or reflected uniformly across the yield curve regardless of duration to maturity or reprici
Slide 44: Appendix: Mergers & Acquisitions
APPENDIX MERGERS & ACQUISITIONSAPPENDIX MERGERS & ACQUISITIONS
Slide 45: Overview: Acquisition of Bank of Akron
OVERVIEW: ACQUISITION OF BANK OF AKRON KEY TRANSACTION METRICS TRANSACTION RATIONALE At Completion June 30, 2020 MRQ at Completion Target Financials Completion Date: July 17, 2020 Assets ($000): $471,221 Purchase Price ($M): $40.8 Loans ($000): 329,001 Deposits ($000): 425,696 Price / Tangible Book
Slide 46: Overview: Acquisition of Lake National Bank
OVERVIEW: ACQUISITION OF LAKE NATIONAL BANK KEY TRANSACTION METRICS TRANSACTION RATIONALE At Completion June 30, 2016 MRQ at Completion Target Financials Completion Date: July 15, 2016 Assets ($000): $156,575 Purchase Price ($M): $24.8 Loans ($000): 122,367 Deposits ($000): 139,712 Price / Tangible
Slide 47: Overview: Acquisition of FC Banc Corp.
OVERVIEW: ACQUISITION OF FC BANC CORP. KEY TRANSACTION METRICS TRANSACTION RATIONALE 9/30/2013 At Completion MRQ at Completion Target Financials Completion Date: October 11, 2013 Assets ($000): $364,163 Loans ($000): 250,885 Purchase Price ($M): $41.6 Deposits ($000): 326,963 Price / Tangible Book V
Slide 48: Appendix: COVID-19 Response
APPENDIX COVID-19 RESPONSEAPPENDIX COVID-19 RESPONSE
Slide 49: COVID-19 Response: Operational Response
COVID-19 RESPONSE OPERATIONAL RESPONSE § Invoked Board-approved Pandemic Preparedness Plan including expanding remote-access availability for the workforce § Implemented communications plan to ensure employees, customers and critical vendors are kept abreast of developments affecting operations § Re
Slide 50: Additional Detail – COVID Response Customer Experience
ADDITIONAL DETAIL – COVID 19 RESPONSE CUSTOMER EXPERIENCE § Established COVID-19 Preparedness Committee comprised of Senior Management, focused on safety of our customers and employees § Re-established loan pricing floors at adjustable levels as part of standard pricing decisions § Implemented proac
Slide 51: Additional Detail – COVID Response Employee Experience
ADDITIONAL DETAIL – COVID 19 RESPONSE EMPLOYEE EXPERIENCE § Employed a split team approach § Leveraged IT network capabilities to support work from home § All commercial and private banking sales teams worked remotely § Diversified customer service center agents into 3 locations, in 3 states § Imple
Slide 52: SBA PPP Loans by Industry
SBA PPP LOANS SBA PAYCHECK PROTECTION PROGRAM (PPP) BY INDUSTRY (AS OF JUNE 30, 2020) ($ in thousands) Total Loans Average Loan # of Loans Manufacturing $49,737 $208 239 Healthcare 32,265 173 187 Construction 2 8,974 143 202 Professional and Business Services 23,606 110 215 Retail 15,487 88 175 Othe
Slide 53: Economically Sensitive Industries
ECONOMICALLY SENSITIVE INDUSTRIES TOTAL GROSS LOANS AS OF 6/30/2020 COMMENTARY HOSPITALITY § The Company identifies its most economically sensitive 6% loan exposure categories as hospitality, energy, ENERGY 1% restaurants, and healthcare RESTAURANTS § The Company is not significantly dependent on th
Slide 54: Healthcare Loan Portfolio
HEALTHCARE LOAN PORTFOLIO HEALTHCARE LOANS BY CATEGORY (6/30/20) HEALTHCARE LOAN PORTFOLIO § Total healthcare portfolio comprises approximately 6% of total loan portfolio as of 6/30/20 OFFICES OF HOSPITALS HEALTHCARE 24% § Well diversified portfolio PROFESSIONALS 25% § Full recourse from owners/part
Slide 55: Appendix: Other Relevant Information
APPENDIX OTHER RELEVANT INFORMATIONAPPENDIX OTHER RELEVANT INFORMATION
Slide 56: Kroll Ratings Summary
KROLL RATINGS SUMMARY KROLL BOND RATING AGENCY - RATINGS SUMMARY Ratings last affirmed July 2020 CNB FINANCIAL CORP Senior Unsecured Debt BBB Subordinated Debt BBB- Short-Term Debt K3 CNB BANK Senior Unsecured Debt BBB+ Subordinated Debt BBB Short-Term Deposit K2 Short-Term Debt K2 OUTLOOK Stable 56
Slide 57: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION 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 the core deposit intangible from the calculation of sharehol
Slide 58: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION As of or for the year ending December 31, Year-to-Date Dollars in thousands, except per share data 2016 2017 2018 2019 6/30/2020 Average Common Equity $212,058 $239,223 $250,496 $285,324 $317,587 LESS: Average Intangibles 34,072 4 0,941 39,877 39,145 38,820 Average Tangible c