株探米国株
英語
エドガーで原本を確認する
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M 10-K
☒ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2024
or 
☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from                      to                     
Commission File Number 001-39472

CNB FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Pennsylvania   25-1450605
(State or other jurisdiction of
incorporation or organization)		   (I.R.S. Employer
Identification No.)
 
1 South Second Street
P.O. Box 42
Clearfield, Pennsylvania 16830
(Address of principal executive office)
Registrant’s telephone number, including area code (814) 765-9621
Securities registered pursuant to Section 12(b) of the Act:
Title of Class Trading Symbol(s) Name of each exchange on which registered
Common Stock, no par value CCNE The NASDAQ Stock Market LLC
Depositary Shares (each representing a 1/40th interest in a share of 7.125% Series A Non-Cumulative, perpetual preferred stock) CCNEP The NASDAQ Stock Market LLC
Securities registered pursuant to Section 12 (g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐  Yes  ☒  No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐  Yes  ☒  No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒  Yes  ☐  No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒  Yes  ☐  No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer,"; "smaller reporting company,"; and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer  
☐ 
    Accelerated Filer   ☒
Non-accelerated filer  
☐ 
    Smaller reporting company   ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☒
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☒
Relates to an immaterial revision having no impact on our consolidated balance sheets, consolidated statements of income and comprehensive income, consolidated statements of changes in shareholders' equity or consolidated statements of cash flows as of and for the years ended December 31, 2024, 2023, and 2022. Refer to Note 1 of our Consolidated Financial Statements for further information on the revision.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes  ☒  No
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant, based on the last sales price quoted on the Nasdaq Global Select Market on June 30, 2024, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately: $405,810,805
The number of shares outstanding of the registrant’s common stock as of March 5, 2025: 20,980,333 shares

DOCUMENTS INCORPORATED BY REFERENCE
Portions of our Registration Statement on Form S-4, as amended, which is deemed to be a definitive proxy statement under Section 14a-6 of the Securities Exchange Act of 1934, filed with the SEC on March 3, 2025 are incorporated by reference into Part III of this report.

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TABLE OF CONTENTS

    Page Number
PART I.
PART II.
PART III.
PART IV.

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PART I.

The disclosures set forth in this item are qualified by Item 1A. Risk Factors and the section captioned "Forward-Looking Statements and Factors that Could Affect Future Results" in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of this report and other cautionary statements set forth elsewhere in this report.

ITEM 1.  BUSINESS

CNB Financial Corporation (the "Corporation") is a financial holding company registered under the Bank Holding Company Act of 1956, as amended (the "BHC Act"). It was incorporated under the laws of the Commonwealth of Pennsylvania in 1983 for the purpose of engaging in the business of a financial holding company. On April 26, 1984, the Corporation acquired all of the outstanding capital stock of County National Bank, a national banking chartered institution. In December 2006, County National Bank changed its name to CNB Bank (the "Bank") and became a state bank chartered in Pennsylvania and subject to regulation by the Pennsylvania Department of Banking and Securities (the "Pennsylvania Department of Banking") and the Federal Deposit Insurance Corporation. In October 2013, the Corporation acquired FC Banc Corp. and its subsidiary, The Farmers Citizens Bank. In July 2016, the Corporation acquired Lake National Bank, and in July 2020, the Corporation acquired Bank of Akron.

In addition to the Bank, the Corporation has four other subsidiaries. CNB Securities Corporation is incorporated in Delaware and currently maintains investments in debt and equity securities. CNB Insurance Agency, incorporated in Pennsylvania, provides for the sale of nonproprietary annuities and other insurance products. CNB Risk Management, Inc. is a Delaware-based captive insurance company which insures against certain risks unique to the operations of the Corporation and its subsidiaries and for which insurance may not be currently available or economically feasible in today's insurance marketplace. Holiday Financial Services Corporation ("Holiday"), incorporated in Pennsylvania, offers small balance unsecured loans and secured loans, primarily collateralized by automobiles and equipment, to borrowers with higher risk characteristics and currently has nine offices within the Corporation’s market area.

CNB Bank

The Bank was originally chartered as a national bank in 1934 and is now a Pennsylvania-chartered bank. The CNB Bank franchise operates twenty full-service branch locations in Central and North Central Pennsylvania.

ERIEBANK, a division of the Bank, began operations in 2005. In July 2016, the Corporation acquired Lake National Bank, which operated two full-service branches in Mentor, Ohio, approximately 20 miles east of Cleveland, Ohio. The Bank continues to operate one of these branch locations within its ERIEBANK franchise, with the other location ceasing operations in August 2020. In December 2021, the Corporation opened a full-service branch in Cleveland, Ohio. The Bank currently operates thirteen full-service branch locations within its ERIEBANK franchise, a division of the Bank, with its headquarters in Erie, Pennsylvania.

In October 2013, the Corporation acquired FC Banc Corp. and its subsidiary, The Farmers Citizens Bank. The Bank currently operates seven full-service branch locations as FCBank, a division of the Bank, with its headquarters in Worthington, Ohio.

In 2016, the Bank received regulatory approval to conduct business in the State of New York as BankOnBuffalo, a division of the Bank. In July 2020, the Corporation acquired Bank of Akron, with its branch locations operating with BankOnBuffalo. The Bank currently operates twelve branch locations, one mobile branch and one drive-up office as BankOnBuffalo, a division of the Bank, with its headquarters in Buffalo, New York.

In 2021, the Bank received regulatory approval to conduct business in the Commonwealth of Virginia as Ridge View Bank, a division of the Bank. The Bank currently operates three full-serve branch locations and one loan production office in Southwest Virginia.

In 2023, the Bank launched Impressia Bank, a full-service banking division dedicated to the professional and financial development and advancement of women business owners and women leaders. This women-focused commercial bank operates within the existing geographic footprint of each of CNB Bank’s other divisions and also has an online presence.

1
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The Bank had one loan production office, one drive-up office, one mobile office, and 55 full-service branch offices located in various communities in its market area at December 31, 2024. The CNB Bank franchise's primary market areas are the Pennsylvania counties of Blair, Cambria, Centre, Clearfield, Elk, Indiana, Jefferson, and McKean. ERIEBANK, a division of the Bank, operates in the Pennsylvania counties of Crawford, Erie, and Warren and in the Ohio counties of Ashtabula, Cuyahoga, Geauga, Lake, and Lorain. FCBank, a division of the Bank, operates in the Ohio counties of Crawford, Delaware, Franklin, Knox, Marion, Morrow and Richland. BankOnBuffalo, a division of the Bank, operates in the New York counties of Erie and Niagara. Ridge View Bank, a division of the Bank, operates in the Virginia counties of Botetourt, Craig, Franklin, and Roanoke. Impressia Bank, a division of the Bank, operates in the Bank’s primary market areas.

The Bank is a full-service bank engaging in a full range of banking activities and services for individual, business, governmental and institutional customers. These activities and services principally include checking, savings, and time deposit accounts; real estate, commercial, industrial, residential and consumer loans; and a variety of other specialized financial services. The Bank’s Private Client Solutions division offers a full range of client services, including private banking and wealth and asset management.

Merger with ESSA Bancorp, Inc.

On January 9, 2025, the Corporation and CNB Bank entered into a definitive merger agreement (the “Merger Agreement”) with ESSA Bancorp, Inc. (“ESSA”) and its subsidiary bank, ESSA Bank & Trust Company (“ESSA Bank”), pursuant to which the Corporation will acquire ESSA in an all-stock transaction. Subject to the terms and conditions of the Merger Agreement, which has been approved by the boards of directors of each party, ESSA will merge with and into the Corporation, with the Corporation as the surviving entity, and immediately thereafter, ESSA Bank will merge with and into the Bank, with the Bank as the surviving bank (the “Merger”). Under the terms of the Merger Agreement, each outstanding share of ESSA common stock will be converted into the right to receive 0.8547 shares of the Corporation’s common stock. The transaction is currently expected to close in the third quarter of 2025, subject to customary closing conditions, including the receipt of regulatory approvals and approvals by the shareholders of ESSA and the Corporation.

Competition

The financial services industry in the Corporation’s service area continues to be extremely competitive, both among commercial banks and with other financial service providers such as consumer finance companies, thrifts, investment firms, mutual funds, and credit unions. The increased competition has resulted from changes in legal and regulatory guidelines as well as from economic conditions. Mortgage banking firms, leasing companies, financial affiliates of industrial companies, brokerage firms, retirement fund management firms, and even government agencies provide additional competition for loans and other financial services. Some of the financial service providers operating in the Corporation’s market area operate on a large-scale regional or national basis and possess greater resources than those of the Corporation. The Corporation is generally competitive with all competing financial institutions in its service area with respect to interest rates paid on time and savings deposits, service charges on deposit accounts, and interest rates charged on loans.

Supervision and Regulation

The Corporation is a bank holding company that has elected financial holding company status, and the Bank is a Pennsylvania state-chartered bank that is not a member of the Federal Reserve System. Accordingly, the Corporation is subject to the oversight of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board") and the Pennsylvania Department of Banking and is regulated under the BHC Act, and the Bank is subject to the oversight of the Pennsylvania Department of Banking and the Federal Deposit Insurance Corporation ("FDIC"), as its primary federal regulator. The Corporation and the Bank are also subject to various requirements and restrictions under federal and state law, such as requirements to maintain reserves against deposits, restrictions on the types, amounts and terms and conditions of loans that may be granted, and limitations on the types of investments that may be made and the types of services that may be offered. Various consumer financial protection laws and regulations also affect the operation of the Bank and, pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), the Consumer Financial Protection Bureau ("CFPB") is authorized to write additional rules on consumer financial products and services which could affect the operations of the Bank and Holiday. In addition to the impact of regulation, commercial banks are significantly affected by the actions of the Federal Reserve Board, including actions taken with respect to interest rates, as the Federal Reserve Board attempts to control the money supply and credit availability in the U.S. in order to influence the economy.

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The following summary sets forth certain of the material elements of the regulatory framework applicable to bank holding companies and their subsidiaries and provides certain specific information about us and our subsidiaries. It does not describe all of the provisions of the statutes, regulations and policies that are identified. To the extent that the following information describes statutory and regulatory provisions, it is qualified in its entirety by express reference to each of the particular statutory and regulatory provisions. A change in applicable statutes, regulations or regulatory policy may have a material effect on our business.

Bank Holding Company Regulation

As a bank holding company that controls a Pennsylvania state-chartered bank, the Corporation is subject to regulation and examination by the Pennsylvania Department of Banking and the Federal Reserve Board. We are required to file with the Federal Reserve Board an annual report and such additional information and submissions as the Federal Reserve Board may require pursuant to the BHC Act and applicable regulations. For instance, the BHC Act requires each bank holding company to obtain the approval of the Federal Reserve Board before it may acquire substantially all the assets of any bank, or before it may acquire ownership or control of any voting shares of any bank if, after such acquisition, it would own or control, directly or indirectly, more than five percent of any class of voting shares of such bank. Such a transaction may also require approval of the Pennsylvania Department of Banking.

Pursuant to provisions of the BHC Act and regulations promulgated by the Federal Reserve Board thereunder, the Corporation may only engage in, or own companies that engage in, activities deemed by the Federal Reserve Board to be permissible for bank holding companies or financial holding companies. Activities permissible for bank holding companies include those that are so closely related to banking or managing or controlling banks as to be a proper incident thereto. Activities for financial holding companies include those that are "so closely related to banking as to be a proper incident thereto" as well as certain additional activities deemed "financial in nature or incidental to such financial activity" or complementary to a financial activity and that do not pose a substantial risk to the safety and soundness of the banking organization or the financial system.

The Corporation must obtain permission from or provide notice to the Federal Reserve Board prior to engaging in most new business activities.

Regulation of CNB Bank

Federal and state banking laws and regulations govern, among other things, the scope of a bank’s business, the investments a bank may make, the reserves against deposits a bank must maintain, the loans a bank makes and collateral it takes, the activities of a bank with respect to mergers and acquisitions, the establishment of branches, management practices, and numerous other aspects of banking operations.

Source of Strength Doctrine

Under Section 616 of the Dodd-Frank Act, a bank holding company is required to serve as a source of financial strength to its subsidiary banks and may not conduct its operations in an unsafe or unsound manner. In addition, it is the Federal Reserve Board’s policy that a bank holding company must also serve as a source of managerial strength to its subsidiary banks, and a bank holding company should stand ready to use available resources to provide adequate capital funds to its subsidiary banks during periods of financial stress or adversity and should maintain the financial flexibility and capital-raising capacity to obtain additional resources for assisting its subsidiary banks. A bank holding company’s failure to meet its obligations to serve as a source of strength to its subsidiary banks will generally be considered by the Federal Reserve Board to be an unsafe and unsound banking practice, a violation of the Federal Reserve Board regulations, or both. This doctrine is commonly known as the "source of strength" doctrine.

Identity Theft

The Fair Credit Reporting Act’s Red Flags Rule requires financial institutions with covered accounts (e.g., consumer bank accounts and loans) to develop, implement, and administer an identity theft prevention program. This program must include reasonable policies and procedures to detect suspicious patterns or practices that indicate the possibility of identity theft, such as inconsistencies in personal information or changes in account activity.

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Capital Adequacy

The Capital Rules adopted in 2013 by the Federal Reserve Board, the FDIC, and the Office of the Comptroller of the Currency ("OCC") generally implement the Basel Committee on Banking Supervision’s capital framework, referred to as Basel III, for strengthening international capital standards. The Capital Rules revised the definitions and components of regulatory capital, increased risk-based capital requirements, and made selected changes to the calculation of risk-weighted assets. The risk-weighting categories in the Capital Rules are standardized and include a risk-sensitive number of categories, depending on the nature of the assets, generally ranging from 0% for U.S. government and agency securities to 600% for certain equity exposures, and resulting in higher risk weights for a variety of assets.

The Capital Rules: (i) include “Common Equity Tier 1” (“CET1”) and a related regulatory capital ratio of CET1 to risk-weighted assets; (ii) specify that Tier 1 capital consists of CET1 and “Additional Tier 1 capital” instruments meeting certain revised requirements; (iii) mandate that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital; and (iv) expand the scope of the deductions from and adjustments to capital as compared to existing regulations. Under the Capital Rules, for most banking organizations, including the Corporation, the most common form of Additional Tier 1 capital is non-cumulative perpetual preferred stock, and the most common forms of Tier 2 capital are subordinated notes and a portion of the allocation for allowance for credit losses, in each case, subject to the Capital Rules’ specific requirements.

Pursuant to the Capital Rules, the minimum capital ratios are as follows:

•4.5% CET1 to risk-weighted assets;
•6.0% Tier 1 capital (that is, CET1 plus Additional Tier 1 capital) to risk-weighted assets;
•8.0% Total capital (that is, Tier 1 capital plus Tier 2 capital) to risk-weighted assets; and
•4.0% Tier 1 capital to average consolidated assets as reported on consolidated financial statements (called “leverage ratio”).

The Capital Rules also include a “capital conservation buffer,” composed entirely of CET1, in addition to these minimum risk-weighted asset ratios (which are each of the first three ratios described above, but not the leverage ratio). The capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions that do not hold the requisite capital conservation buffer will face constraints on dividends, capital instrument repurchases, interest payments on capital instruments and discretionary bonus payments based on the amount of the shortfall. Thus, the capital standards applicable to the Corporation include an additional capital conservation buffer of 2.5% of CET1, effectively resulting in minimum ratios inclusive of the capital conservation buffer of (i) CET1 to risk-weighted assets of at least 7%, (ii) Tier 1 capital to risk-weighted assets of at least 8.5%, and (iii) total capital to risk-weighted assets of at least 10.5%.

The Capital Rules provide for a number of deductions from and adjustments to CET1. These include, for example, the requirement that mortgage servicing assets, deferred tax assets arising from temporary differences that could not be realized through net operating loss carrybacks, and significant investments in non-consolidated financial entities be deducted from CET1 above certain thresholds. In July 2019, the OCC, the Federal Reserve Board and the FDIC adopted a final rule intended to simplify the Capital Rules described above for non-advanced approaches rule institutions, including provisions related to these deductions and adjustments. Institutions were required to implement the provisions of the simplification rule by April 1, 2020.

The Capital Rules also permit most banking organizations to retain, through a one-time permanent election, the capital treatment that existed before the 2013 Capital Rules were issued for accumulated other comprehensive income. The Corporation made the one-time permanent election to retain the previous capital treatment for accumulated other comprehensive income.

The Capital Rules also preclude certain hybrid securities, such as trust preferred securities, from inclusion in bank holding companies’ Tier 1 capital, although bank holding companies that had total consolidated assets of less than $15 billion at December 31, 2009 may include trust preferred securities issued prior to May 19, 2010 as a component of Tier 1 capital.

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In September 2019, the OCC, the Federal Reserve Board and the FDIC adopted a final rule that is intended to further simplify the Capital Rules for depository institutions and their holding companies that have less than $10 billion in total consolidated assets, such as us, if such institutions meet certain qualifying criteria. This final rule became effective on January 1, 2020. Under this final rule, if we meet the qualifying criteria, including having a leverage ratio (equal to Tier 1 capital divided by average total consolidated assets) greater than 9%, we will be eligible to opt into the community bank leverage ratio framework. If we opt into this framework, we will be considered to have satisfied the generally applicable risk-based and leverage capital requirements in the Capital Rules (as modified pursuant to the simplification rule) and will be considered to have met the well-capitalized ratio requirements for Prompt Corrective Action ("PCA") purposes. To date, we have not opted in to this community bank leverage ratio framework.
Dividend Restrictions

The Corporation is a legal entity separate and distinct from the Bank. Declaration and payment of cash dividends by the Corporation depends upon cash dividend payments to the Corporation by the Bank, which is our primary source of revenue and cash flow.

As a Pennsylvania state-chartered bank, the Bank is subject to regulatory restrictions on the payment and amounts of dividends under the Pennsylvania Banking Code. Further, the ability of banking subsidiaries to pay dividends is also subject to their profitability, financial condition, capital expenditures and other cash flow requirements.

The payment of dividends by the Bank and the Corporation may also be affected by other factors, such as the requirement to maintain adequate capital above regulatory requirements. The federal banking agencies have indicated that paying dividends that deplete a depository institution’s capital base to an inadequate level would be an unsafe and unsound banking practice. A depository institution may not pay any dividend if payment would cause it to become undercapitalized or if it already is undercapitalized. Moreover, the federal banking agencies have issued policy statements that provide that bank holding companies and insured banks should generally only pay dividends out of current operating earnings. Federal banking regulators have the authority to prohibit banks and bank holding companies from paying a dividend if the regulators deem such payment to be an unsafe or unsound practice.

Prompt Corrective Action and Safety and Soundness

Under applicable PCA statutes and regulations, depository institutions are placed into one of five capital categories, ranging from "well capitalized" to "critically undercapitalized." The PCA statute and regulations provide for progressively more stringent supervisory measures as an insured depository institution’s capital category declines. An institution that is not well capitalized is generally prohibited from accepting brokered deposits and offering interest rates on deposits higher than the prevailing rate in its market. An undercapitalized depository institution must submit an acceptable restoration plan to the appropriate federal banking agency. One requisite element of such a plan is that the institution’s parent holding company must guarantee compliance by the institution with the plan, subject to certain limitations.

At December 31, 2024, the Bank qualified as "well capitalized" under applicable regulatory capital standards.

Bank holding companies and insured depository institutions may also be subject to potential enforcement actions of varying levels of severity by the federal banking agencies for unsafe or unsound practices in conducting their business, or for violation of any law, rule, regulation, condition imposed in writing by the agency, or term of a written agreement with the agency. In more serious cases, enforcement actions may include the issuance of directives to increase capital; the issuance of formal and informal agreements; the imposition of civil monetary penalties; the issuance of a cease and desist order that can be judicially enforced; the issuance of removal and prohibition orders against officers, directors, and other institution affiliated parties; the termination of the insured depository institution’s deposit insurance; the appointment of a conservator or receiver for the insured depository institution; and the enforcement of such actions through injunctions or restraining orders based upon a judicial determination that the FDIC, as receiver, would be harmed if such equitable relief was not granted.

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Community Reinvestment Act

Under the Community Reinvestment Act of 1977 ("CRA"), the FDIC is required to assess the record of all financial institutions it supervises to determine if these institutions are meeting the credit needs of the community (including low and moderate income neighborhoods) which they serve. CRA performance evaluations are based on a four-tiered rating system: Outstanding, Satisfactory, Needs to Improve, and Substantial Noncompliance. CRA performance evaluations are considered in evaluating applications for such things as mergers, acquisitions, and applications to open branches. The Bank received a CRA rating of "Satisfactory" at its most recent CRA exam. The FDIC, along with other federal bank regulators, published in October 2023 substantially updated regulations regarding CRA, as well as some amendments to this final rule in March 2024, which became effective on April 1, 2024, with various phase-in periods.

Restrictions on Transactions with Affiliates and Insiders

The Bank is subject to the restrictions of Sections 23A and 23B of the Federal Reserve Act and the implementing Regulation W. The Bank's "affiliates" for purposes of these sections include, among other potential entities, the Corporation and its direct subsidiaries. Section 23A requires that loans or extensions of credit by the Bank to an affiliate, purchases by the Bank of securities issued by an affiliate, purchases by the Bank of assets from an affiliate (except as may be exempted by order or regulation), the Bank’s acceptance of securities or debt obligations issued by an affiliate as collateral for a loan or extension of the credit to a third party, the Bank’s acceptance of a guarantee or letter of credit on behalf of an affiliate, a transaction with an affiliate involving the borrowing or lending of securities to the extent the transaction causes the Bank to have credit exposure to the affiliate, and a derivative transaction with an affiliate, to the extent the Bank will have credit exposure to the affiliate (collectively, "Covered Transactions") be on terms and conditions consistent with safe and sound banking practices. Section 23A also imposes various qualitative and quantitative requirements and restrictions on Covered Transactions and imposes collateralization and other requirements on certain of these transactions. Section 23B requires that all Covered Transactions and certain other transactions, including the sale of securities or other assets by the Bank to an affiliate and the payment of money or the furnishing of services by the Bank to an affiliate, be on terms comparable to those prevailing for similar transactions with nonaffiliates.

The Bank is also subject to Sections 22(g) and 22(h) of the Federal Reserve Act, and the implementation of Regulation O issued by the Federal Reserve Board. These provisions impose limitations on loans and extensions of credit by the Bank to its and its affiliates' executive officers, directors and principal shareholders and their related interests. The limitations restrict the terms and aggregate amount of such transactions. Regulation O also imposes certain recordkeeping and reporting requirements.

Deposit Insurance and Premiums

The deposits of the Bank are insured up to applicable limits per insured depositor by the FDIC. The standard maximum deposit insurance amount is $250,000 per depositor, per insured depository institution, per ownership category, in accordance with applicable FDIC regulations.

The FDIC uses a risk-based assessment system that imposes insurance premiums based on a risk matrix that takes into account the bank’s capital level and supervisory rating. The base for insurance assessments is the average consolidated total assets less tangible equity capital of a financial institution. Assessment rates are calculated using formulas that take into account the risk of the institution being assessed.

In November 2023, the FDIC announced a special assessment on all insured depository institutions with more than $5 billion in total assets, including the Bank, in order to recover the loss to the DIF associated with protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank. The special assessment is being collected over an eight-quarter collection period (and potentially longer), beginning with the first quarterly assessment period of 2024. The assessment base for the special assessment is equal to an insured depository institution’s ("IDI’s") estimated uninsured deposits reported as of December 31, 2022, adjusted to exclude the first $5 billion, applicable either to the IDI, if an IDI is not a subsidiary of a holding company, or at the banking organization level, to the extent that an IDI is part of a holding company with one or more subsidiary IDIs.

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Financial Privacy and Data Security

The Corporation is subject to federal laws, including the Gramm-Leach-Bliley Act, and certain state laws containing consumer privacy protection provisions. These provisions limit the ability of banks and other financial institutions to disclose nonpublic information about consumers to affiliated and non-affiliated third parties and limit the reuse of certain consumer information received from non-affiliated financial institutions. These provisions require notice of privacy policies to consumers and, in some circumstances, allow consumers to prevent disclosure of certain nonpublic personal information to affiliates or non-affiliated third parties by means of opt-out or opt-in authorizations.

The Gramm-Leach-Bliley Act requires that financial institutions implement comprehensive written information security programs that include administrative, technical, and physical safeguards to protect consumer information. Federal banking agencies have also adopted guidelines for establishing information security standards and programs to protect such information. Further, pursuant to interpretive guidance issued under the Gramm-Leach-Bliley Act and certain state laws, financial institutions are required to notify customers of security breaches that result in unauthorized access to their nonpublic personal information.

Incentive Compensation

The Dodd-Frank Act requires the federal banking agencies and the Securities and Exchange Commission (the "SEC") to establish joint regulations or guidelines prohibiting incentive-based payment arrangements at specified regulated entities, including the Corporation and the Bank, with at least $1 billion in total consolidated assets that encourage inappropriate risks by providing an executive officer, employee, director or principal shareholder with excessive compensation, fees, or benefits that could lead to material financial loss to the entity. The federal banking agencies and the SEC proposed such regulations in 2016, and issued re-proposed regulations in substantially the same form in May 2024, which have not been finalized. If the regulations are adopted in the form proposed or a similar form, they will restrict the manner in which executive compensation is structured.

USA PATRIOT Act

Under Title III of the USA PATRIOT Act, all financial institutions are required to take certain measures to identify their customers, prevent money laundering, monitor customer transactions, and report suspicious activity to U.S. law enforcement agencies. Financial institutions also are required to respond to requests for information from federal banking agencies and law enforcement agencies. Information sharing among financial institutions for the above purposes is encouraged by an exemption granted to complying financial institutions from the privacy provisions of the Gramm-Leach-Bliley Act and other privacy laws. Financial institutions that hold correspondent accounts for foreign banks or provide private banking services to foreign individuals are required to take measures to avoid dealing with certain foreign individuals or entities, including foreign banks with profiles that raise money laundering concerns, and are prohibited from dealing with foreign "shell banks" and persons from jurisdictions of particular concern. The primary federal banking agencies and the Secretary of the Treasury have adopted regulations to implement several of these provisions. All financial institutions also are required to establish internal anti-money laundering programs. The effectiveness of a financial institution in combating money laundering activities is a factor to be considered in any application submitted by the financial institution under the Bank Merger Act. The Bank has in place a Bank Secrecy Act and USA PATRIOT Act compliance program and engages in very few transactions of any kind with foreign financial institutions or foreign persons.

Office of Foreign Assets Control Regulation

The United States government has imposed economic sanctions that affect transactions with designated foreign countries, nationals, and others. These are typically known as the "OFAC" rules based on their administration by the U.S. Treasury Department Office of Foreign Assets Control. The Office of Foreign Assets Control-administered sanctions targeting countries take many different forms. Generally, they contain one or more of the following elements: (i) restrictions on trade with or investment in a sanctioned country, including prohibitions against direct or indirect imports from and exports to a sanctioned country and prohibitions on U.S. persons engaging in financial transactions relating to making investments in, or providing investment-related advice or assistance to, a sanctioned country; and (ii) a blocking of assets in which the government or specially designated nationals of the sanctioned country have an interest, by prohibiting transfers of property subject to U.S. jurisdiction (including property in the possession or control of U.S. persons). Blocked assets (property and bank deposits) cannot be paid out, withdrawn, set off, or transferred in any manner without a license from the Office of Foreign Assets Control. Failure to comply with these sanctions could have serious legal and reputational consequences.

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Other Federal Laws and Regulations

State usury and other credit laws limit the amount of interest and various other charges collected or contracted by a bank on loans. The Bank is also subject to lending limits on loans to one borrower and regulatory guidance on concentrations of credit. The Bank’s loans and other products and services are also subject to numerous federal and state consumer financial protection laws, including, but not limited to, the following:

•Truth-In-Lending Act, which governs disclosures of credit terms to consumer borrowers;
•Truth-in-Savings Act, which governs disclosures of the terms of deposit accounts to consumers;
•Home Mortgage Disclosure Act, requiring financial institutions to provide information to regulators to enable determinations as to whether financial institutions are fulfilling their obligations to meet the home lending needs of the communities they serve and not discriminating in their lending practices;
•Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, sex or other prohibited factors in extending credit;
•Real Estate Settlement Procedures Act, which imposes requirements relating to real estate settlements, including requiring lenders to disclose certain information regarding the nature and cost of real estate settlement services;
•Fair Credit Reporting Act, covering numerous areas relating to certain types of consumer information and identity theft;
•Privacy provisions of the Gramm-Leach-Bliley Act and related regulations, which require that financial institutions provide privacy policies to consumers, to allow customers to "opt out" of certain sharing of their nonpublic personal information, and to safeguard sensitive and confidential customer information;
•Electronic Funds Transfer Act, which is a consumer protection law regarding electronic fund transfers; and
•Numerous other federal and state laws and regulations, including those related to consumer protection and bank operations.

Governmental Policies

Our earnings are significantly affected by the monetary and fiscal policies of governmental authorities, including the Federal Reserve Board. Among the instruments of monetary policy used by the Federal Reserve Board to implement these objectives are open-market operations in U.S. Government securities and federal funds, changes in the discount rate on member bank borrowings and changes in reserve requirements against member bank deposits. These instruments of monetary policy are used in varying combinations to influence the overall level of bank loans, investments and deposits, and the interest rates charged on loans and paid for deposits. The Federal Reserve Board frequently uses these instruments of monetary policy, especially its open-market operations and the discount rate, to influence the level of interest rates and to affect the strength of the economy, the level of inflation or the price of the dollar in foreign exchange markets. The monetary policies of the Federal Reserve Board have had a significant effect on the operating results of banking institutions in the past and are expected to continue to do so in the future. It is not possible to predict the nature of future changes in monetary and fiscal policies, or the effect which they may have on our business and earnings.

Other Legislative Initiatives

Proposals may be introduced in the United States Congress, in the Pennsylvania Legislature, and/or by various bank regulatory authorities that could alter the powers of, and restrictions on, different types of banking organizations and which could restructure part or all of the existing regulatory framework for banks, bank and financial holding companies and other providers of financial services. Moreover, other bills may be introduced in Congress which would further regulate, deregulate or restructure the financial services industry, including proposals to substantially reform the regulatory framework. It is not possible to predict whether any such proposals will be enacted into law or, even if enacted, what effect such action may have on our business and earnings.

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Human Capital

As of December 31, 2024, the Corporation had a total of 790 employees, of which 769 were full time and 21 were part time.

The Corporation respects and values the responsibilities of the Corporation to act with integrity in a number of community-focused areas, including being reasonably environmentally considerate, and avoiding discrimination of any investors, customers, or employees by promoting a company culture that reflects of the communities the Corporation serves. The Corporation emphasizes relevant governance principles and compliance considerations in strategic planning, human capital management and leadership development (which includes recruiting and retaining employees), and vendor management, as relationships with third parties represent critical connections to and extensions of the values, operating principles, and the commitment to legal and regulatory compliance of the Corporation and the Board of Directors.

Strategic Planning and Related Training

The Corporation has established a formal Strategic Plan, the framework of which has, as its foundation, the core values and principles that have been fundamental to the Corporation’s long-term success. These attributes include respect, integrity, accountability, leadership, professionalism, collaboration, client-focused, innovation, inclusion, and volunteerism. In establishing these core values and principles as the foundation upon which all other strategic objectives are anchored, the Corporation seeks to further develop and sustain a corporate culture with sensitivity to the entirety of the Corporation’s business and demographic footprint and environment in which it operates. The differences among the Corporation's Board of Directors and employees, and its customers and community members, are respected and embraced to drive innovative products, services, and solutions that effectively meet the variety of needs among the Corporation’s broad group of stakeholders.

Human Capital Management and Leadership Development

The Corporation firmly believes in the importance of succession planning and, as such, has in place a formal succession planning process for all named executive officers, members of the executive management team, and regional presidents. The succession plan was successfully utilized in 2024 after the resignation of a named executive officer, resulting in a seamless transition to a senior executive within the Corporation. A critical factor of the Corporation’s succession plan is the training and development of its management team to create a strong internal pipeline of talent to produce the future leaders of the Corporation. The Corporation’s succession planning process is further strengthened by its presence in diversified markets that lead to opportunities to attract and retain talent with broad-based skills and experiences.

The Corporation is dedicated to recognizing the unique contribution of each employee and is committed to supporting a workplace that understands, accepts and values the similarities and differences between individuals. The Corporation’s key human capital management objectives are to recruit, hire, develop and promote a deeply and broadly experienced employee team that collectively translates into an exceptional workforce committed to fostering, promoting, preserving, and reflecting the entire spectrum of the Corporation’s communities and culture, while successfully executing the Corporation’s business strategies and exemplifying its corporate values. To support these objectives, the Corporation’s Employee Experience processes and programs are designed and operated to:

•Attract and develop talented employees, specifically skilled for their position, from across the spectrum of professional experience, life experience, socio-economic background, and geographic representation;
•Prepare all members of the Corporation's team for critical roles and leadership positions both now and the future, in serving as employees and valuable community members;
•Reward and support employees fairly and without discrimination based on successful performance and through competitive pay and benefit programs;
•Enhance the Corporation’s culture through efforts to better understand, foster, promote, and preserve a culture in alignment with the Corporation's core values; and
•Evolve and invest in technology, tools, and resources to better support employees of varying skills and backgrounds at work.

To monitor changes in the Corporation’s employee and management groups relative to both composition and growth, the Corporation uses, among other tools, recurring management and employee surveys, profile analyses, and summaries of year-over-year changes to the pools of employees and management within its various banking divisions and the Corporation as a whole, and utilizes the results to track progress and improve the effectiveness of the Corporation’s leadership development and workforce profile and personnel management practices.
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The Corporation offers a robust range of training programs tailored to meet the needs of employees across all levels and departments. Through the CNB Academy, the Corporation’s learning management system, the Corporation delivers targeted learning solutions that empower employees to excel in their roles while advancing their professional growth. The Corporation’s training programs are designed to support a culture of continuous learning and career progression. From foundational skills in client interactions to advanced leadership development, employees are equipped with the tools and knowledge to succeed in their current roles and prepare for future opportunities. Career-focused programs like the Mentoring Program, Career Path Planning, and Rising Professionals enable employees to map and achieve their long-term aspirations. By aligning training programs with strategic planning, the Corporation ensures employees are empowered to deliver exceptional service and contribute to organizational success. Through the Corporation’s integrated approach, it builds a resilient, innovative workforce that is prepared to adapt to industry challenges and opportunities while upholding the core values that define its institution.

A critical measure is the opportunity for individuals from all professional and demographic backgrounds to advance into senior leadership positions. These leaders have a greater ability to drive innovation and change and provide the Corporation with financial services expertise to ensure the Corporation benefits from the active engagement and perspectives of all groups within its workforce and communities.

Community Involvement and Social Impacts

The Corporation serves as a cornerstone institution of both financial support and community service in the markets in which it serves. The Corporation is committed to strengthening these communities through the active volunteering of its employees. The Corporation’s employees actively participate in their local communities through volunteer activities in education, economic development, human and health services, and community reinvestment. During 2024, the Corporation’s employees collectively contributed 34,741 hours in voluntary support to 1,397 organizations, with 88% of employees actively participating. Additionally, there were approximately $1.5 million in donations to community organizations and events within the communities the Corporation serves. To encourage employees to give back to their communities, the Corporation introduced the Volunteer Time Off Program, which provides employees with up to 16 hours of paid time off annually to volunteer for nonprofit organizations and local causes who may need volunteer assistance during typical weekday business hours. In 2024, the program was met with tremendous enthusiasm, with employees dedicating a collective total of 3,585 hours to volunteer service across the communities the Corporation serves. Importantly, employees contributed nearly nine times of additional volunteering hours of their own time beyond those hours covered by the Volunteer Time Off Program. From participating in local food drives to mentoring youth and supporting nonprofit initiatives, the program has helped strengthen the Corporation’s ties to its communities while fostering a culture of service among its team members. This initiative reflects the Corporation’s core values of giving back and making a meaningful difference in the lives of others.

The Corporation also promotes economic development through investments in community-strengthening initiatives, such as affordable housing and revitalization efforts. In 2024, the Corporation invested in two new projects that demonstrate its commitment in this area. Located in a distressed section of downtown Rochester, New York, the Corporation supported a project to rehabilitate four historic commercial buildings into a mixed-use community with four commercial spaces and eleven residential apartments through a combination of debt financing of $9.6 million and an equity investment of $4.1 million in historic tax credits generated by the project. The commercial space will be available at affordable rents to generate economic and small business opportunities particularly marketed towards local and minority/women-owned business enterprises. Additionally, in Parma, Ohio, the Corporation provided debt financing of $5.5 million and made an equity investment of $4.2 million in low-income housing tax credits to support a project to rehabilitate low-income senior housing facility, with 63 units. The project includes extensive improvements to make the facility more energy efficient and to increase the number of units that are handicap accessible.

The Corporation remains deeply committed to promoting financial education within its communities. Through a variety of initiatives, the Corporation aims to empower individuals with the knowledge and tools they need to achieve financial wellness. In 2024, the Corporation launched the Financial Wellness Center, offering a series of free, publicly available online trainings that cover a wide range of finance topics, from budgeting basics to retirement planning. In 2024, CNB Bank partnered with twelve local schools to host seven financial reality fairs for high school students, providing hands-on experiences to help them understand budgeting, saving, and preparing for unexpected expenses. To further support financial literacy, lunch-and-learn sessions are offered regularly on topics such as saving for college, building a healthy financial mindset, and retirement planning. Five lunch and learns were hosted by the Corporation in 2024, with more planned for 2025. These initiatives reflect the Corporation’s dedication to fostering a financially informed and resilient community.

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The Corporation continued to focus on increasing its outreach to those who have been traditionally underserved by the financial institution industry. Examples of some the Corporation’s key recent initiatives are outlined below.

In 2025, the Corporation's new financial education center and community banking office is scheduled to open in downtown Erie, PA. Located on Parade Street, this location aims to provide financial education and accessible banking to underserved communities, promoting economic empowerment, and narrowing the wealth gap. This location will be the first bank to open on Parade Street in over a decade.

Launched in May 2023, Impressia Bank is CNB Bank’s sixth division and is dedicated to empowering women business owners and leaders. Headquartered in Buffalo, NY, with additional team members located in Ohio and Pennsylvania, Impressia Bank provides specialized services such as SBA and grant advisory services, wealth management, and private banking. Impressia’s mission is to close the gender funding gap and advance economic empowerment for women by offering innovative financial solutions, mentorship, and leadership development opportunities.

BankOnBuffalo’s BankOnWheels initiative enhances financial inclusion by delivering banking services to underserved communities. By addressing disparities in access to financial resources, BankOnWheels empowers individuals and communities to fully participate in the economy. The first of its kind operated by any financial institution in Western New York, BankOnWheels is a full-service, yet fully mobile bank branch, which will enable the bank to deliver essential banking services to communities with little or no access to such services today. The BankOnWheels rotates between four locations in the cities of Buffalo and Niagara Falls, which are located in communities underserved by banks.

In May 2023, CNB Bank launched the At Ease Program, tailored to meet the unique financial needs of veterans, active-duty service members, and their families. This program offers specialized benefits, including waived fees, free financial tools, and mobile banking services, reflecting the Corporation's commitment to honoring and supporting the military community.

Available Information

The Corporation makes available free of charge on its website (www.cnbbank.bank) its Annual Report on Form 10-K, its quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as practicable after it electronically files such material with, or furnishes it to, the SEC. Information on the Corporation’s website is not incorporated by reference into this report.

Shareholders may obtain a copy of the Corporation’s Annual Report on Form 10-K free of charge by writing to: CNB Financial Corporation, 1 South Second Street, PO Box 42, Clearfield, PA 16830, Attn: Shareholder Relations.

The SEC maintains an internet site that contains reports, proxy statements and other information about electronic filers such as the Corporation. The site is available at http://www.sec.gov.

ITEM 1A. RISK FACTORS

The Corporation’s financial condition and results of operations are subject to various risks inherent in its business. The material risks and uncertainties that management believes affect the Corporation are described below. If any of these risks actually occur, the Corporation’s business, financial condition, liquidity, results of operations and prospects could be materially and adversely affected. The following risks together with all of the other information in this Annual Report on Form 10-K should be considered.

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Economic Risks

Economic conditions could adversely affect our business and financial results.

The Corporation’s financial condition and results of operations are impacted by global markets and economic conditions over which the Corporation has no control. Periods of high inflation since the start of 2021 have led to increased costs for businesses and consumers. In addition, international trade disputes, including threatened or implemented tariffs imposed by the U.S. and threatened or implemented tariffs imposed by foreign countries in retaliation, could result in further inflationary pressures that impact costs. An economic downturn or recession, including deterioration in the economic conditions in the U.S., or a slowing or stalled recovery therefrom, may have a material adverse effect on our business, financial condition or results of operations. Poor economic conditions have in the past adversely affected, and may in the future affect, the demand for the Corporation’s products, the creditworthiness of the Corporation’s borrowers and the value of the Corporation’s investment securities and other interest-earning assets. In particular, the Corporation may face the following risks in connection with the economic or market environment:

•The Corporation’s and the Bank’s ability to borrow from other financial institutions or to access the debt or equity capital markets on favorable terms or at all could be adversely affected by disruptions in the capital markets or other events, including actions by rating agencies and deteriorating investor expectations.
•The Corporation faces increased regulation of the banking and financial services industry. Compliance with such regulation may increase its costs and limit its ability to pursue business opportunities.
•Market developments may affect customer confidence levels and may cause increases in loan delinquencies and default rates, which management expects would adversely impact the Bank’s charge-offs and provision for credit losses.
•Market developments may adversely affect the Bank’s securities portfolio by causing other-than-temporary-impairments, prompting write-downs and securities losses.
•Competition in the banking and financial services industry could intensify as a result of the consolidation of financial services companies in connection with current market conditions.

The Corporation may not be able to meet its cash flow needs on a timely basis at a reasonable cost, and the Corporation’s cost of funds for banking operations may significantly increase as a result of general economic conditions, interest rates and competitive pressures.

Liquidity is the ability to meet cash flow obligations as they come due and cash flow needs on a timely basis and at a reasonable cost. The liquidity of the Bank is used to make loans and to repay deposit and borrowing liabilities as they become due, or are demanded by customers and creditors. Many factors affect the Bank’s ability to meet liquidity needs, including variations in the markets served by its network of offices, its mix of assets and liabilities, reputation and standing in the marketplace, and general economic conditions.

The Bank’s primary source of funding is customer deposits, gathered throughout its network of banking offices. Periodically, the Corporation utilizes term borrowings from the Federal Home Loan Bank (the "FHLB") of Pittsburgh, of which the Bank is a member, and other lenders to meet funding obligations. In addition, the Bank also maintains borrowing capacity with the Federal Reserve Bank of Philadelphia. The Bank’s securities and loan portfolios provide a source of contingent liquidity that could be accessed in a reasonable time period through sales.

Significant changes in general economic conditions, market interest rates, competitive pressures or otherwise, could cause the Bank’s deposits to decrease relative to overall banking operations, and it would have to rely more heavily on brokered funds and borrowings in the future, which are typically more expensive than deposits.

The Corporation's management and Board of Directors, through the Asset/Liability Committee (the "ALCO"), monitor liquidity and the ALCO establishes and monitors acceptable liquidity ranges. The Bank actively manages its liquidity position through target ratios. Continual monitoring of these ratios, both historical and through forecasts under multiple rate scenarios, allows the Bank to employ strategies necessary to maintain adequate liquidity.

Changes in economic conditions, including consumer savings habits and availability of or access to capital, could potentially have a significant impact on the Bank’s liquidity position, which in turn could materially impact the Corporation’s financial condition, results of operations and cash flows.

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Credit and Interest Rate Risks

The Bank’s allowance for credit losses may not be adequate to cover loan losses which could have a material adverse effect on the Corporation’s business, financial condition and results of operations.

A significant source of risk for the Corporation arises from the possibility that losses will be sustained because borrowers, guarantors and related parties may fail to perform in accordance with the terms of their loan agreements. Most loans originated by the Bank are secured, but some loans are unsecured based upon management’s evaluation of the creditworthiness of the borrowers. With respect to secured loans, the collateral securing the repayment of these loans principally includes a wide variety of real estate, and to a lesser extent commercial and personal property, either of which may be insufficient to cover the obligations owed under such loans.

Collateral values and the financial performance of borrowers may be adversely affected by changes in prevailing economic, environmental and other conditions, including declines in the value of real estate, changes in interest rates and debt service levels, changes in oil and gas prices, changes in monetary and fiscal policies of the federal government, widespread disease, terrorist activity, environmental contamination and other external events, which are beyond the control of the Bank. In addition, collateral appraisals that are out of date or that do not meet industry recognized standards might create the impression that a loan is adequately collateralized when in fact it is not. Although the Bank may acquire any real estate or other assets that secure defaulted loans through foreclosures or other similar remedies, the amounts owed under the defaulted loans may exceed the value of the assets acquired.

The allowance for credit losses is subject to a formal analysis by the Credit Administration and Finance Departments of the Corporation. Following the issuance by the Financial Accounting Standards Board ("FASB") of Accounting Standards Update ("ASU") 2016-13, "Measurement of Credit Losses on Financial Instruments," the Corporation adjusted its loan allowance methodology to reflect the new standard, which requires periodic estimates of lifetime expected credit losses on financial assets and categorizes expected credit losses as allowances for credit losses under the current expected credit loss ("CECL") methodology. The Corporation measures expected credit losses of financial assets on a collective (pool) basis, when the financial assets share similar risk characteristics. Depending on the nature of the pool of financial assets with similar risk characteristics, the models utilized by the Corporation to estimate expected credit losses include a discounted cash flow ("DCF") model that discounts instrument-level contractual cash flows, adjusted for prepayments and curtailments, incorporating loss expectations, and a weighted average remaining maturity model which contemplates expected losses at a pool-level, utilizing historic loss information. The Corporation's models for estimating the allowance for credit losses consider available relevant information about the collectability of cash flows, including information about past events, current conditions, and reasonable and supportable forecasts.

The Bank monitors delinquencies and losses on a monthly basis. The Bank has adopted underwriting and credit monitoring policies and procedures, including the review of borrower financial statements and collateral appraisals, which management believes are appropriate to mitigate the risk of loss by assessing the likelihood of borrower nonperformance and the value of available collateral. The Bank also manages credit risk by diversifying its loan portfolio. An ongoing independent review, subsequent to management’s review, of individual credits is performed by an independent loan review function, which reports to the Loan Committee of the Corporation’s Board of Directors.

The determination of the appropriate level of the allowance for credit losses inherently involves a high degree of subjectivity and requires the Corporation to make significant estimates of current credit risks and future trends, all of which may undergo material changes. Although management believes that the processes in place for assessing the appropriate level of the allowance for credit losses are robust, such policies and procedures have limitations, including judgment errors in management’s risk analysis, and may not prevent unexpected losses in the future. Moreover, the CECL methodology may create more volatility in the level of our allowance for credit losses from quarter to quarter as changes in the level of allowance for credit losses will be dependent upon, among other things, macroeconomic forecasts and conditions, loan portfolio volumes and credit quality. These factors could have a material adverse effect on the Corporation’s business, financial condition and results of operations.

Interest rate volatility could significantly reduce the Corporation’s profitability.

The Corporation’s earnings largely depend on the relationship between the yield on its earning assets, primarily loans and investment securities, and the cost of funds, primarily deposits and borrowings. This relationship, commonly known as the net interest margin, is susceptible to significant fluctuation and is affected by economic and competitive factors that influence the yields and rates, and the volume and mix of the Bank’s interest earning assets and interest bearing liabilities.

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Interest rate risk can be defined as the sensitivity of net interest income and of the market value of financial instruments to the direction and frequency of changes in interest rates. Interest rate risk arises from the imbalance in the re-pricing, maturity, and/or cash flow characteristics of assets and liabilities. The Corporation is subject to interest rate risk to the degree that its interest bearing liabilities re-price or mature more slowly or more rapidly or on a different basis than its interest earning assets. Changes in interest rates, including those due to federal monetary policy, will affect the levels of income and expense recorded on a large portion of the Bank’s assets and liabilities, and fluctuations in interest rates will impact the market value of all interest sensitive assets. Significant fluctuations in interest rates could have a material adverse impact on the Corporation’s business, financial condition, results of operations, or liquidity.

Interest rates remain elevated compared to recent years and may increase. As interest rates rise, we experience competitive pressures to increase the rates we pay on deposits, which may decrease our net interest income. Furthermore, elevated interest rates increase our cost of new debt or preferred capital.

The Bank’s interest rate risk measurement and management techniques incorporate the re-pricing and cash flow attributes of its balance sheet and off-balance sheet instruments as they relate to current and potential changes in interest rates. The level of interest rate risk, measured in terms of the potential future effect on earnings, is determined through the use of static gap analysis and earnings simulation modeling under multiple interest rate scenarios. Management’s objectives are to measure, monitor, and develop strategies in response to the interest rate risk profile inherent in the Bank’s balance sheet in order to preserve the sensitivity of net interest income to actual or potential changes in interest rates. For further information on risk relating to interest rates, refer to Part I, Item 7a, "Quantitative and Qualitative Disclosures about Market Risk," herein.

The Corporation’s investment securities portfolio is subject to credit risk, market risk, and liquidity risk, and declines in value in its investment securities portfolio may require it to record impairment charges that could have a material adverse effect on its results of operations and financial condition.

The Corporation’s investment securities portfolio has risks beyond its control that can significantly influence the portfolio’s fair value. These factors include, but are not limited to, changes in interest rates, changes in prepayment speeds, changes in general economic conditions, rating agency downgrades of the securities, defaults of the issuers of the securities and market liquidity. Any change in current accounting principles or interpretations of these principles could impact the Corporation’s assessment of fair value and thus its determination of other-than-temporary impairment of the securities in its investment securities portfolio.

The Bank may be required to record other-than-temporary impairment charges on its investment securities if they suffer declines in value that are considered other-than-temporary. Numerous factors, including collateral deterioration underlying certain private label mortgage-backed securities, lack of liquidity for re-sales of certain investment securities, absence of reliable pricing information for certain investment securities, adverse changes in business climate, adverse actions by regulators, or unanticipated changes in the competitive environment could negatively affect the Bank’s securities portfolio in future periods. An other-than-temporary impairment charge could have a material adverse effect on the Corporation’s results of operations and financial condition.

A substantial decline in the value of the Bank’s FHLB common stock may adversely affect the Corporation’s results of operations, liquidity and financial condition.

As a requirement of membership in the FHLB of Pittsburgh, the Bank must own a minimum required amount of FHLB stock, calculated periodically based primarily on its level of borrowings from the FHLB. Borrowings from the FHLB represent the Bank’s primary source of short-term and long-term wholesale funding.

In an extreme situation, it is possible that the capitalization of an FHLB, including the FHLB of Pittsburgh, could be substantially diminished or reduced to zero. Consequently, given that there is no trading market for the Bank’s FHLB common stock, the Corporation’s management believes that there is a risk that the Corporation’s investment could be deemed impaired at some time in the future. If this occurs, it may adversely affect the Corporation’s results of operations and financial condition.

If the capitalization of the FHLB of Pittsburgh is substantially diminished, the Bank’s liquidity may be adversely impacted if it is not able to obtain alternative sources of funding.

There are 11 FHLB banks, including the FHLB of Pittsburgh, in the FHLB system. The 11 FHLB banks are jointly liable for the consolidated obligations of the FHLB system. To the extent that one FHLB bank cannot meet its obligations to pay its share of the system’s debt, other FHLB banks can be called upon to make the payment. The Corporation cannot assure you, however, that the FHLB system will be able to meet these obligations.
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The Bank could be held responsible for environmental liabilities relating to properties acquired through foreclosure, resulting in significant financial loss.

In the event the Bank forecloses on a defaulted commercial or residential mortgage loan to recover its investment, it may be subject to environmental liabilities in connection with the underlying real property, which could significantly exceed the value of the real property. Although the Bank exercises due diligence to discover potential environmental liabilities prior to acquiring any property through foreclosure, hazardous substances or wastes, contaminants, pollutants, or their sources may be discovered on properties during its ownership or after a sale to a third party. The Corporation cannot assure you that the Bank would not incur full recourse liability for the entire cost of any removal and cleanup on an acquired property, that the cost of removal and cleanup would not exceed the value of the property, or that the Bank could recover any of the costs from any third party. Losses arising from environmental liabilities could have a material adverse impact on the Corporation’s business, financial condition, results of operations, or liquidity.

Risks Related to an Investment in the Corporation’s Securities

Some provisions contained in the Corporation’s articles of incorporation and its bylaws and under Pennsylvania law could deter a takeover attempt or delay changes in control or management of the Corporation.

Certain anti-takeover provisions of the Pennsylvania Business Corporation Law of 1988, as amended, apply to Pennsylvania registered corporations (e.g., publicly traded companies) including, but not limited to, those relating to (1) control share acquisitions, (2) disgorgement of profits by certain controlling persons, (3) business combination transactions with interested shareholders, and (4) the rights of shareholders to demand fair value for their stock following a control transaction. Pennsylvania law permits corporations to opt-out of these anti-takeover provisions, but the Corporation has not done so. Such provisions could have the effect of deterring takeovers or delaying changes in control or management of the Corporation. Additionally, such provisions could limit the price that some investors might be willing to pay in the future for shares of the Corporation’s common stock.

For example, the Corporation’s amended and restated articles of incorporation require the affirmative vote of 66% of the outstanding shares entitled to vote to effect a business combination. In addition, the Corporation’s amended and restated articles of incorporation, subject to the limitations prescribed in such articles and subject to limitations prescribed by Pennsylvania law, authorize the Corporation’s Board of Directors, from time to time by resolution and without further shareholder action, to provide for the issuance of shares of preferred stock, in one or more series, and to fix the designation, powers, preferences and other rights of the shares and to fix the qualifications, limitations and restrictions thereof. As a result of its broad discretion with respect to the creation and issuance of preferred stock without shareholder approval, the Corporation's Board of Directors could adversely affect the voting power and other rights of the holders of common stock and, by issuing shares of preferred stock with certain voting, conversion and/or redemption rights, could discourage any attempt to obtain control of the Corporation.

The Corporation’s bylaws, as amended and restated, provide for the division of the Corporation’s Board of Directors into three classes of directors, with each serving staggered terms. In addition, any amendment to the Corporation’s bylaws must be approved by the affirmative vote of a majority of the votes cast by all shareholders entitled to vote thereon and, if any shareholders are entitled to vote thereon as a class, upon receiving the affirmative vote of a majority of the votes cast by the shareholders entitled to vote as a class.

Any of the foregoing provisions may have the effect of deterring takeovers or delaying changes in control or management of the Corporation.

The price of the Corporation’s common stock may fluctuate significantly, and this may make it difficult for you to resell shares of common stock owned by you at times or at prices you find attractive.

The price of the Corporation’s common stock on the Global Select Market of The NASDAQ Stock Market LLC ("NASDAQ") constantly changes. The Corporation expects that the market price of its common stock will continue to fluctuate, and the Corporation cannot give you any assurances regarding any trends in the market prices for its common stock.

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The Corporation’s stock price may fluctuate as a result of a variety of factors, many of which are beyond its control. These factors include the Corporation’s:

•past and future dividend practice;
•financial condition, performance, creditworthiness, and prospects;
•quarterly variations in the Corporation’s operating results or the quality of the Corporation’s assets;
•operating results that vary from the expectations of management, securities analysts, and investors;
•changes in expectations as to the Corporation’s future financial performance;
•announcements of innovations, new products, strategic developments, significant contracts, acquisitions, and other material events by the Corporation or its competitors;
•the operating and securities price performance of other companies that investors believe are comparable to the Corporation;
•future sales of the Corporation’s equity or equity-related securities;
•the credit, mortgage and housing markets, the markets for securities relating to mortgages or housing, and developments with respect to financial institutions generally; and
•instability in global financial markets and global economies and general market conditions, such as interest or foreign exchange rates, stock, commodity or real estate valuations or volatility, budget deficits or sovereign debt level concerns and other geopolitical, regulatory or judicial events.

The Corporation’s ability to pay dividends is limited by law and regulations.

The future declaration of dividends by the Corporation’s Board of Directors will depend on a number of factors, including capital requirements, regulatory limitations, the Corporation’s operating results and financial condition and general economic conditions. As a bank holding company, the Corporation’s principal assets and sources of income are derived from the Bank and, as a result, the Corporation’s ability to pay dividends depends primarily on the receipt of dividends from the Bank. Dividend payments from the Bank are subject to legal and regulatory limitations, generally based on retained earnings, imposed by bank regulatory agencies. The ability of the Bank to pay dividends is also subject to financial condition, regulatory capital requirements, capital expenditures, and other cash flow requirements. The Corporation cannot assure you that the Bank will be able to pay dividends to the Corporation in the future. If the Corporation were unable to receive dividends from the Bank, it would materially and adversely affect the Corporation’s liquidity and its ability to service its debt, pay its other obligations, or pay cash dividends on its common stock. The Corporation may decide to limit the payment of dividends to its stockholders even when the Corporation has the legal ability to pay them in order to retain earnings for use in the Corporation’s business.

Operational and Strategic Risks

The Bank’s loans are principally concentrated in certain areas of Pennsylvania, Ohio, New York and Virginia, and adverse economic conditions in those markets could adversely affect the Corporation’s business, financial condition and results of operations.

The Corporation’s success is dependent to a significant extent upon general economic conditions in the United States and, in particular, the local economies in Central and Northwest Pennsylvania, Central and Northeast Ohio, Western New York and Southwest Virginia - the primary markets served by the Bank. The Bank is particularly exposed to real estate and economic factors in these geographic areas, as most of its loan portfolio is concentrated among borrowers in these markets. Furthermore, because a substantial portion of the Bank’s loan portfolio is secured by real estate in these areas, the value of the associated collateral is also subject to regional real estate market conditions.

The Bank is not immune to negative consequences arising from overall economic weakness and, in particular, a sharp downturn in the local real estate markets served by the Bank. While the Bank’s loan portfolio has not shown significant signs of credit quality deterioration despite continued challenges in the U.S. economy, we cannot assure you that no deterioration will occur. An economic recession in the markets served by the Bank, and the nation as a whole, could negatively impact household and corporate incomes. This impact could lead to decreased loan demand and increase the number of borrowers who fail to pay the Bank interest or principal on their loans, and accordingly, could have a material adverse effect on the Corporation’s business, financial condition, results of operations, or liquidity.

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Severe weather, flooding and other effects of climate change and other natural disasters, such as earthquakes, could adversely affect our financial condition, results of operations or liquidity.

Our branch locations and our customers’ properties may be adversely impacted by flooding, wildfires, prolonged periods of extreme temperature, high winds and other effects of severe weather conditions that may be caused or exacerbated by climate change. These events can force property closures, result in property damage and/or result in delays in expansion, development or renovation of our properties and those of our customers. Even if these events do not directly impact our properties or our customers’ properties, they may impact us and our customers through increased insurance, energy or other costs. In addition, changes in laws or regulations, including federal, state or city laws, relating to climate change could result in increased capital expenditures to improve the energy efficiency of our branch locations and/or our customers’ properties. We also face investor-related climate risks. Investors are increasingly taking into account environmental, social, and governance factors, including climate risks, in determining whether to invest in companies. Our reputation and investor relationships could be damaged as a result of our involvement with activities perceived to be causing or exacerbating climate change, as well as any decisions we make to continue to conduct or change our activities in response to considerations relating to climate change.

The Corporation depends on the accuracy and completeness of information about customers and counterparties.

In deciding whether to extend credit or enter into other transactions with customers and counterparties, we rely on information furnished to us by or on behalf of customers and counterparties, including financial statements and other financial information. We also rely on representations of customers and counterparties as to the accuracy and completeness of that information and, with respect to financial statements, on reports of independent auditors. For example, in deciding whether to extend credit to clients, we may assume that a customer's audited financial statements conform to U.S. generally accepted accounting principles ("GAAP") and present fairly, in all material respects, the financial condition, results of operations and cash flows of the customer. Our earnings are significantly affected by our ability to properly originate, underwrite and service loans. Our financial condition, results of operations and capital could be negatively impacted to the extent we incorrectly assess the creditworthiness of our borrowers, fail to detect or respond to deterioration in asset quality in a timely manner, or rely on financial statements that do not comply with GAAP or are materially misleading.

The risks presented by acquisitions could adversely affect our financial condition and results of operations.

Any acquisitions will be accompanied by the risks commonly encountered in acquisitions including, among other things: our ability to realize anticipated cost savings and avoid unanticipated costs relating to the merger, the difficulty of integrating operations and personnel, the potential disruption of our or the acquired company’s ongoing business, the inability of our management to maximize our financial and strategic position, the inability to maintain uniform standards, controls, procedures and policies, and the impairment of relationships with the acquired company’s employees and customers as a result of changes in ownership and management. These risks may prevent the Corporation from fully realizing the anticipated benefits of an acquisition or cause the realization of such benefits to take longer than expected.

Strong competition within the Corporation’s markets and technological change may have a material adverse impact on its profitability.

The Corporation competes with an ever-increasing array of financial service providers. As noted above, as a financial holding company and state-chartered financial institution, respectively, the Corporation and the Bank are subject to extensive regulation and supervision, including, in many cases, regulations that limit the type and scope of activities. The non-bank financial service providers that compete with the Corporation and the Bank may not be subject to such extensive regulation, supervision, and tax burden. Competition from nationwide banks, as well as local institutions, is strong in the Corporation’s markets.

The financial services industry is undergoing rapid technological change, and technological advances, including those related to artificial intelligence, are likely to intensify competition. In addition to improving customer services, effective use of technology increases efficiency and enables financial institutions to reduce costs. Accordingly, the Corporation’s future success will depend in part on its ability to address customer needs by using technology. The Corporation cannot assure you that it will be able to successfully take advantage of technological changes or advances or develop and market new technology driven products and services to its customers. Failure to keep pace with technological change affecting the financial services industry could have a material adverse effect on the Corporation's financial condition, results of operations, or liquidity.

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Many regional, national, and international competitors have far greater assets and capitalization than the Corporation has and greater resources to invest in technology and access to capital markets and can consequently offer a broader array of financial services than the Corporation can. We cannot assure you that we will continue to be able to compete effectively with other financial institutions in the future. Developments increasing the nature or level of competition could have a material adverse effect on the Corporation’s business, financial condition, results of operations, or liquidity. For further information on competition, refer to Part I, Item 1, "Competition," herein.

The soundness of other financial institutions with which the Corporation does business could adversely affect the Corporation’s business, financial condition or results of operations.

Our ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions. Financial institutions are interrelated as a result of trading, clearing, counterparty, investment or other relationships. The Corporation routinely executes transactions with counterparties in the financial services industry such as commercial banks, brokers and dealers, investment banks and other institutional clients for a range of transactions including loan participations, derivatives, and hedging transactions. In addition, the Corporation invests in securities or loans originated or issued by financial institutions or supported by the loans they originate. As a result, defaults by, or even rumors or questions about, one or more financial institutions, or the financial industry generally, have led to, or could in the future lead to, market-wide liquidity problems and could lead to losses or defaults by us or other institutions. Many of these transactions expose the Corporation to credit or investment risk in the event of default by the Corporation’s counterparty. In addition, the Corporation’s credit risk may be exacerbated if the collateral it holds cannot be realized or is liquidated at prices not sufficient to recover the full amount of the loan or other exposure to the Corporation. The Corporation could incur losses to its securities portfolio as a result of these issues. These types of losses may have a material adverse effect on the Corporation’s business, financial condition or results of operation.

The Corporation’s operations may be adversely affected if its external vendors do not perform as expected or if its access to third-party services is interrupted.

The Corporation relies on certain external vendors to provide products and services necessary to maintain the day-to-day operations of the Corporation. Some of the products and services provided by vendors include key components of our business infrastructure including data processing and storage and internet connections and network access, among other products and services. Accordingly, the Corporation’s operations are exposed to the risk that these vendors will not perform in accordance with the contracted arrangements or under service level agreements. The failure of an external vendor to perform in accordance with the contracted arrangements or under service level agreements, because of changes in the vendor’s organizational structure, financial condition, support for existing products and services or strategic focus or for any other reason, could disrupt the Corporation’s operations. If we are unable to find alternative sources for our vendors’ services and products quickly and cost-effectively, the failures of our vendors could have a material adverse impact on the Corporation’s business and, in turn, the Corporation’s financial condition and results of operations.

Additionally, our information technology and telecommunications systems interface with and depend on third-party systems, and we could experience service denials if demand for such services exceeds capacity, or such third-party systems fail or experience interruptions. If sustained or repeated, a system failure or service denial could result in a deterioration of our ability to process new and renewal loans, gather deposits and provide customer service, compromise our ability to operate effectively, damage our reputation, result in a loss of customer business and subject us to additional regulatory scrutiny and possible financial liability, any of which could have a material adverse effect on our financial condition and results of operations.

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A failure in or breach of the Corporation’s or any of its subsidiaries’ information technology network and systems, or those of third party vendors and other service providers, including as a result of cyber attacks, could disrupt the Corporation’s or any of its subsidiaries’ businesses, result in the unauthorized disclosure or misuse of confidential or proprietary information, damage its reputation, increase its costs, and/or cause losses.

The Corporation, primarily through the Bank, depends on its information technology networks and systems to continuously process, record and monitor a large number of customer transactions and to process, transmit and store proprietary and confidential information, including personal information of employees and customers. Accordingly, the Corporation’s and its subsidiaries’ information technology networks and systems must continue to be safeguarded and monitored for potential failures, vulnerabilities, disruptions and breakdowns. We face cybersecurity threats, including system, network or internet failures, cyber attacks, ransomware and other malware, social engineering, phishing schemes and workforce member error, negligence, or fraud. Although the Corporation has business continuity plans and other safeguards in place, any such cybersecurity incident, including those impacting personal information, could result in customer attrition, regulatory fines, penalties or intervention, reputational damage, reimbursement or other compensation costs, and/or additional compliance costs, any of which could materially adversely affect the Corporation’s results of operations or financial condition. Further, new technologies such as artificial intelligence may be more capable at evading these safeguard measures.

In addition, significant disruptions of our third party vendors’ and/or service providers’ security systems or infrastructure, or other similar data security incidents, could adversely affect our business operations and/or result in the loss, misappropriation, and/or unauthorized access, use or disclosure of, or the prevention of access to, regulated personal or confidential information, which could harm our business. While we may be entitled to damages if our third-party service providers fail to satisfy their security-related obligations to us, any award may be insufficient to cover our damages, or we may be unable to recover such award.

As of December 31, 2024, the Corporation has not experienced any material risks from cybersecurity threats, including as a result of any previous cybersecurity incidents or threats, that have materially affected the business strategy, results of operations or financial condition of the Corporation. However, there can be no assurance that the Corporation or its subsidiaries will remain unaffected in the future. Given the evolving nature of security threats and evolving safeguards, there can be no assurance that any preventive, protective, or remedial data security measures that we or our third-party service providers implement are or will be adequate to detect or prevent all cybersecurity incidents. The Corporation continues to enhance its data security systems, technology platforms, employee education and risk management processes, in an effort to underpin its business strategy as well as in response to the evolving threat landscape and any incidents we experience. In connection with these efforts, we have incurred costs and expect to incur additional costs as we continue to enhance our data security infrastructure and take further steps to prevent unauthorized access to our systems and the data we maintain. In addition, any actual or perceived failure by the Corporation or our vendors or business partners to comply with our privacy, confidentiality, or data security-related legal or other obligations to third parties may result in claims by third parties that we have breached our privacy- or confidentiality-related obligations, which could materially and adversely affect our business and prospects.

The Corporation’s risk and exposure to these matters, including future "phishing" attempts like the 2020 incident, which was disclosed in the Corporation's Annual Form 10-K for the year ended December 31, 2020, remain heightened because of, among other things, the evolving nature of these threats, our plans to continue to implement our Internet banking and mobile banking channel strategies and develop additional remote connectivity solutions to serve our customers when and how they want to be served. As a result, cybersecurity and the continued development and enhancement of the Corporation’s controls, processes and practices designed to protect its and its subsidiaries systems, computers, software, data and networks from attack, damage or unauthorized access remain a priority for the Corporation. As cyber threats continue to evolve, the Corporation may be required to expend further significant resources to continue to modify or enhance its protective measures or to investigate and remediate future information security vulnerabilities.

Additionally, while we have implemented security measures that we believe are appropriate, a regulator could deem our security measures not to be appropriate given the lack of prescriptive measures in certain data protection laws. Furthermore, increased regulation of data collection, use and retention practices, including self-regulation and industry standards, changes in existing laws and regulations, enactment of new laws and regulations, increased enforcement activity, and changes in interpretation of laws, could increase our cost of compliance and operation, limit our ability to grow our business or otherwise harm the Corporation.

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While we have purchased cybersecurity insurance, there are no assurances that the coverage would be adequate in relation to any incurred losses. Moreover, as cyber attacks increase in frequency and magnitude, we may be unable to obtain cybersecurity insurance in amounts and on terms we view as adequate for our operations. Further information relating to cybersecurity risk management is discussed in Item 1C. “Cybersecurity” of this report.

A pandemic and measures intended to prevent its spread, could have a material adverse effect on our business, results of operations, cash flows, and financial condition.

A pandemic could negatively impact the global economy, disrupt financial markets and international trade, and result in varying unemployment levels, all of which could negatively impact our business, results of operations, cash flows, and financial condition. In response to pandemic outbreaks, governments and other authorities around the world, including federal, state and local authorities in the United States, have imposed, and may in the future impose measures intended to mitigate its spread, including restrictions on freedom of movement and business operations such as issuing guidelines, travel bans, border closings, business closures and quarantine orders.

Our business and financial performance could be adversely affected, directly or indirectly, by terrorist activities, international hostilities or domestic civil unrest.

Neither the occurrence nor the potential impact of geopolitical instabilities, terrorist activities, international hostilities or other extraordinary events beyond the Corporation’s control can be predicted. However, these occurrences could adversely impact us, for example, by preventing us from conducting our business in the ordinary course. Also, their impact on our borrowers, depositors, other customers, suppliers or other counterparties could result in indirect adverse effects on us. Other indirect adverse consequences from these occurrences could result from impacts to the financial markets, the economy in general or in any region, or key parts of the infrastructure (such as the power grid) on which we and our customers rely. These types of indirect effects, whether specific to our counterparties or more generally applicable, could lead, for example, to an increase in delinquencies, bankruptcies or defaults that could result in the Corporation experiencing higher levels of nonperforming assets, net charge-offs and provisions for credit losses. They could also cause a reduction in demand for lending or other services that we provide.

Our use of artificial intelligence could expose us to various risks.

We have begun to utilize artificial intelligence technologies in various aspects of our business, including internal training material creation. Artificial intelligence technologies are susceptible to errors and other malfunctions which could lead to operational challenges and reputational risks. In addition, we may be subject to increasing regulations related to our use of artificial intelligence, including regulations related to privacy, data security, and intellectual property rights, which could expose us to legal risks.

Risks Related to Legal and Compliance Matters

The Corporation is subject to extensive government regulation and supervision, which may affect its ability to conduct its business and may negatively impact its financial results.

The Corporation, primarily through the Bank and its non-bank subsidiary, is subject to extensive federal and state regulation and supervision. Banking regulations are primarily intended to protect depositors’ funds, the Federal Deposit Insurance Fund and the safety and soundness of the banking system as a whole, not stockholders. These regulations affect the Corporation’s lending practices, capital structure, investment practices, dividend policy and growth, among other things. Congress and federal regulatory agencies continually review banking laws, regulations and policies for possible changes. Furthermore, political and policy goals of elected officials may change over time, which could impact the rulemaking, supervision, examination and enforcement priorities of federal banking agencies. Changes to statutes, regulations or regulatory policies, including changes in interpretation or implementation of statutes, regulations or policies, could affect the Corporation in substantial and unpredictable ways. Such changes could subject it to additional costs, limit the types of financial services and products the Corporation may offer, and/or limit the pricing it may charge on certain banking services, among other things.

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Failure to comply with laws, including the Bank Secrecy Act and USA Patriot Act, regulations or policies could result in sanctions by regulatory agencies, restrictions, civil money penalties and/or reputation damage, which could have a material adverse effect on the Corporation’s business, financial condition and results of operations and/or cause the Corporation to lose its financial holding company status. While the Corporation has policies and procedures designed to prevent any such violations, there can be no assurance that such violations will not occur. See the section captioned "Supervision and Regulation" in Part I, Item 1 of this report for further information.

Federal and state governments could pass legislation responsive to current credit conditions which could cause the Corporation to experience higher credit losses.

The Corporation could experience higher credit losses because of federal or state legislation or regulatory action that reduces the amount the Bank’s borrowers are otherwise contractually required to pay under existing loan contracts. Also, the Corporation could experience higher credit losses because of federal or state legislation or regulatory action that limits the Bank’s ability to foreclose on property or other collateral or makes foreclosure less economically feasible. The Corporation cannot assure you that future legislation will not significantly and adversely impact its ability to collect on its current loans or foreclose on collateral.

General Risk Factors

The Corporation relies on its management and other key personnel, and the loss of any of them may adversely affect its operations.

The Corporation is and will continue to be dependent upon the services of its executive management team. In addition, it will continue to depend on its ability to retain and recruit key client relationship managers. The unexpected loss of services of any key management personnel, or the inability to recruit and retain qualified personnel in the future, could have an adverse effect on its business and financial condition.

The Corporation's risk management framework may not be effective in mitigating risk and loss.

The Corporation maintains an enterprise risk management program that is designed to identify, quantify, monitor, report, and control the risks that it faces. These risks include, but are not limited to: strategic, interest-rate, credit, liquidity, operations, pricing, reputation, compliance, litigation, and cybersecurity. While the Corporation assesses and improves this program on an ongoing basis, there can be no assurance that its approach and framework for risk management and related controls will effectively mitigate all risk and limit losses in its business. If conditions or circumstances arise that expose flaws or gaps in the Corporation's risk-management program, or if its controls break down, the Corporation's results of operations and financial condition may be adversely affected.

Risks Related to the Merger with ESSA

The market price of the Corporation’s common stock may decline as a result of the Merger and the market price of the Corporation’s common stock after the consummation of the Merger may be affected by factors different from those affecting the price of the Corporation’s common stock before the Merger.

The market price of the Corporation’s common stock may decline as a result of the Merger if the Corporation does not achieve the perceived benefits of the Merger or the effect of the Merger on the Corporation’s financial results is not consistent with the expectations of financial or industry analysts.

In addition, the consummation of the Merger will result in the combination of two companies that currently operate as independent companies. The business of the Corporation and the business of ESSA differ. As a result, while the Corporation expects to benefit from certain synergies following the Merger, the Corporation may also encounter new risks and liabilities associated with these differences. Following the Merger, shareholders of the Corporation and ESSA will own interests in a combined company operating an expanded business and may not wish to continue to invest in the Corporation, or for other reasons may wish to dispose of some or all of their shares of the Corporation’s common stock. If, following the effective time of the Merger, large amounts of the Corporation’s common stock are sold, the price of the Corporation’s common stock could decline.

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Further, the results of operations of the Corporation and the market price of the Corporation’s common stock after the Merger may be affected by factors different from those currently affecting the independent results of operations of each of the Corporation and ESSA and the market price of the Corporation’s common stock. Accordingly, the Corporation’s historical market prices and financial results may not be indicative of these matters for the Corporation after the Merger.

The Merger Agreement may be terminated in accordance with its terms and the Merger may not be completed.

The Corporation and ESSA can mutually agree to terminate the Merger Agreement at any time before the Merger has been completed, and either company can terminate the Merger Agreement if:

•any regulatory approval required for consummation of the Merger and the other transactions contemplated by the Merger Agreement has been denied by final, nonappealable action of any regulatory authority, or an application for regulatory approval has been permanently withdrawn at the request of a governmental authority;
•the required approval of the issuance of common stock of the Corporation in connection with the Merger by the Corporation’s shareholders or the required approval of the Merger Agreement by the ESSA shareholders are not obtained;
•the other party materially breaches any of its representations, warranties, covenants or other agreements set forth in the Merger Agreement (provided that the terminating party is not then in material breach of any representation, warranty, covenant or other agreement contained in the Merger Agreement), which breach is not cured within 30 days of written notice of the breach, or by its nature cannot be cured prior to the closing of the Merger, and such breach would entitle the non-breaching party not to consummate the Merger; or
•the Merger is not consummated by January 9, 2026, unless the failure to consummate the Merger by such date is due to a material breach of the Merger Agreement by the terminating party.

In addition, the Corporation may terminate the Merger Agreement if:

•ESSA breaches the non-solicitation provisions in the Merger Agreement; or
•the ESSA Board of Directors:
◦fails to recommend approval of the Merger Agreement, or withdraws, modifies or changes such recommendation in a manner adverse to the Corporation’s interests; or
◦recommends, proposes or publicly announces its intention to recommend or propose to engage in an acquisition transaction with any person other than the Corporation or any of its subsidiaries; or
•ESSA fails to call, give notice of, convene and hold its special meeting.

ESSA may terminate the Merger Agreement, subject to its compliance with the Merger Agreement, if ESSA has received an acquisition proposal, and the ESSA Board of Directors has made a determination that such proposal is a superior proposal and has determined to accept such proposal.

Failure to complete the Merger could negatively impact the stock price of the Corporation and its future business and financial results.

Completion of the Merger is subject to the satisfaction or waiver of a number of conditions, including approval by ESSA shareholders of the Merger. The Corporation cannot guarantee when or if these conditions will be satisfied or that the Merger will be successfully completed. The consummation of the Merger may be delayed, the Merger may be consummated on terms different than those contemplated by the Merger Agreement, or the Merger may not be consummated at all. If the Merger is not completed, the ongoing business of the Corporation may be adversely affected, and the Corporation will be subject to several risks, including the following:

•the Corporation could incur substantial costs relating to the proposed Merger, such as legal, accounting, financial advisor, filing, printing and mailing fees; and
•the Corporation’s management and employees’ attention may be diverted from their day-to-day business and operational matters as a result of efforts relating to the attempt to consummate the Merger.

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In addition, if the Merger is not completed, the Corporation may experience negative reactions from the financial markets and from its customers and employees. The Corporation also could be subject to litigation related to any failure to complete the Merger or to enforcement proceedings commenced against the Corporation to perform its obligations under the Merger Agreement. If the Merger is not completed, the Corporation cannot assure its stockholders that the risks described above will not materialize and will not materially affect the Corporation’s business and financial results or the stock price of the Corporation.

The integration of the Corporation and ESSA will present significant challenges and expenses that may result in the combined business not operating as effectively as expected, or in the failure to achieve some or all of the anticipated benefits of the transaction.

The benefits and synergies expected to result from the proposed Merger will depend in part on whether the operations of ESSA can be integrated in a timely and efficient manner with those of the Corporation. The Corporation will face challenges and costs in consolidating its functions with those of ESSA, and integrating the organizations, procedures and operations of the two businesses. The integration of the Corporation and ESSA will be complex and time-consuming, and the management of both companies will have to dedicate substantial time and resources to it. These efforts could divert management’s focus and resources from serving existing customers or other strategic opportunities and from day-to-day operational matters during the integration process. Failure to successfully integrate the operations of the Corporation and ESSA could result in the failure to achieve some of the anticipated benefits from the transaction, including cost savings and other operating efficiencies, and the Corporation may not be able to capitalize on the existing relationships of ESSA to the extent anticipated, or it may take longer, or be more difficult or expensive than expected to achieve these goals. This could have an adverse effect on the business, results of operations, financial condition or prospects of the Corporation and/or the Bank after the transaction.

ITEM 1B.  UNRESOLVED STAFF COMMENTS

None.

ITEM 1C.  CYBERSECURITY

Risk Management and Strategy

The Corporation maintains robust processes for assessing, identifying, and managing material risks from cybersecurity threats. The Corporation’s cybersecurity program is based on the Federal Financial Institutions Examination Council (“FFIEC”) framework which tailors the National Institute of Standards and Technology (“NIST”) Cybersecurity Framework to be more financial services focused. The risk of cybersecurity threats is integrated into the Corporation’s Enterprise Risk Management (“ERM”) program, led by the Corporation’s Chief Risk Officer. The ERM program includes an annual risk prioritization process to identify key enterprise risks. Each key risk is assigned a risk owner to establish action plans and implement risk mitigation strategies. The Corporation’s cybersecurity threat risk action plan is managed at the enterprise level by the Chief Information Technology & Security Officer (the “CITSO”), the VP of Information Technology, and the VP of Information Security. Risk owners regularly monitor cybersecurity risks and the evolving threat landscape and review and update the cybersecurity threat risk action plan in response to newly identified threats or risk mitigation actions. To oversee and identify cybersecurity threat risks on a day-to-day basis, including from third party service providers, the Corporation maintains a third-party security operations center with round-the-clock monitoring, and the CITSO receives regular reports on industry activity. Management also assesses the cybersecurity proficiency of potential third-party suppliers before utilizing their services. The assessment identifies cybersecurity-related risks and makes recommendations to enhance the security of all new computing services. Management reassesses all suppliers on a regular interval.

The Corporation maintains a Cybersecurity Incident Response Plan (the “CSIRP”), which establishes an organizational framework and guidelines intended to facilitate an effective response and handling of cybersecurity incidents that could jeopardize the availability, integrity, or confidentiality of the Corporation’s assets. Pursuant to the CSIRP and its escalation protocols, designated personnel are responsible for assessing the severity of the incident and associated threat, containing the threat, remediating the threat, including recovery of data and access to systems, analyzing the reporting and disclosure obligations associated with the incident, and performing post-incident analysis and program improvements. While the particular personnel assigned to an incident response team will depend on the particular facts and circumstances, the CITSO and the VP of Information Security primarily lead these efforts.

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The Corporation works closely with its internal auditors to assess, identify, and manage cybersecurity risks. In addition, the Corporation engages with third party cybersecurity specialists to provide an independent assessment of the Corporation’s cybersecurity programs and to prepare a 3-year plan to maintain compliance and operational excellence. Management periodically reviews the 3-year plan and modifies it in response to changes in the threat landscape or otherwise as needed. Management has not identified risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect the Corporation, including its business strategy, results of operations or financial condition. However, there can be no assurance that the Corporation’s security efforts and measures will be effective or that attempted security incidents or disruptions would not be successful or damaging. In addition, although the Corporation maintains cybersecurity insurance to provide some coverage for certain risks arising out of data and network breaches, there can be no assurance that the Corporation’ cybersecurity insurance coverage will be sufficient in the event of a cyber attack. See “Item 1A. Risk Factors” above for more information.

Governance

The Board of Directors is responsible for overseeing the assessment and management of enterprise-level risks that may impact the Corporation. The Audit Committee has primary responsibility for overseeing risk management, including oversight of risks from cybersecurity threats. The boards of directors of the Corporation and the Bank have also established an IT Committee, consisting of at least three independent directors, along with non-voting members from management, including the President and CEO, the Chief Financial Officer, the CITSO, the SVP of Operations, the VP of Information Technology, and the VP of Information Security. The IT Committee assists the boards of directors of the Corporation and CNB Bank in fulfilling their respective governance responsibilities for CNB’s information technology and related data security infrastructure under relevant regulatory safety and soundness requirements. Management, including the CITSO, reports on cybersecurity matters regularly to the Board, primarily through the Audit Committee and IT Committee, including an annual report regarding specific risks and mitigation efforts within the Bank and a 3-year cybersecurity threat assessment conducted by third party experts. Management provides benchmarking information and updates on key operational and compliance metrics to the Board of Directors. In addition, cybersecurity training is provided to the full Board of Directors to educate directors on the current cyber threat environment and measures companies can take to mitigate risk and impact of cyber attacks. Several members of the Board of Directors, including the Chairperson of the Audit Committee, also have cybersecurity experience.

As described above, management is actively involved in assessing and managing the Bank’s material cybersecurity risks. The Corporation's incident response plan provides clear communication protocols, including with respect to members of senior management, which may include the CEO, the CFO, the Board of Directors, the Audit Committee and external legal counsel. In addition, the incident response plan considers communications and reporting to customers, regulators and law enforcement.

The CITSO, who reports directly to the CEO, is responsible for the oversight of the Corporation’s IT operation, including the cybersecurity program, and holds a Bachelor of Science degree in Information Technology and Security and a Master of Science in Information Security and Assurance. He also holds 20 industry recognized Technology and Security certifications. The VP of Information Security reports directly to the CITSO and has responsibility for leadership of the Bank’s cybersecurity program. He holds a bachelor’s degree in mathematics and computer science, as well as several industry recognized information security certifications. The VP of Information Technology reports directly to the CITSO and has responsibility for leadership of the Bank’s Information Technology program. He holds a bachelor’s degree in information technology and has worked in the technology field for 29 years with 17 of those years in a financial institution in various technology management, security, and audit roles.

ITEM 2.  PROPERTIES

The headquarters of the Corporation and the Bank are located at 1 South Second Street, Clearfield, Pennsylvania, in a building owned by the Corporation. The Bank operates 55 full-service offices at December 31, 2024. Of these 55 offices, 29 are owned and 25 are leased from independent owners and one is leased from the Corporation. Holiday has six full-service offices, of which five are leased from independent owners and one is leased from the Corporation. The CNB Bank franchise's primary market areas are the Pennsylvania counties of Blair, Cambria, Centre, Clearfield, Elk, Indiana, Jefferson, and McKean. ERIEBANK, a division of the Bank, operates in the Pennsylvania counties of Crawford, Erie, and Warren and in the Ohio counties of Ashtabula, Cuyahoga, Geauga, Lake, and Lorain. FCBank, a division of the Bank, operates in the Ohio counties of Crawford, Delaware, Franklin, Knox, Marion, Morrow and Richland. BankOnBuffalo, a division of the Bank, operates in the New York counties of Erie, Niagara, and Ontario. Ridge View Bank, a division of the Bank, operates in the Virginia counties of Botetourt, Craig, Franklin, Montgomery, and Roanoke. Impressia Bank, a division of the Bank, operates in the Bank’s primary market areas. There are no encumbrances on the offices owned and the rental expense on the leased property is immaterial in relation to operating expenses. The initial lease terms range from one to twenty years.
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ITEM 3.  LEGAL PROCEEDINGS

There are no material pending legal proceedings to which the Corporation or any of its subsidiaries is a party, or of which any of their properties is the subject, except ordinary routine proceedings which are incidental to the business.

ITEM 4.  MINE SAFETY DISCLOSURES

None.

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PART II.

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is traded on the Global Select Market of NASDAQ under the symbol "CCNE." As of December 31, 2024, the number of shareholders of record of the Corporation’s common stock was 8,461.

Issuer Purchases of Equity Securities

The following table provides information with respect to any purchase of shares of the Corporation’s common stock made by or on behalf of the Corporation for the quarter ended December 31, 2024.
Period Total Number
of Shares
Purchased		 Average Price
Paid per Share		 Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
Maximum Number (or approximate dollar value) of Shares that May
Yet Be Purchased
Under the Plans or
Programs (1)
October 1 – 31, 2024 —  $ —  —  500,000 
November 1 – 30, 2024 —  —  —  500,000 
December 1 – 31, 2024 —  —  —  500,000 
Total —  $ —  —  500,000 
(1) On June 12, 2024, the Corporation received acknowledgement from the Federal Reserve of the Corporation’s 2024 Common Share Repurchase Program (the "2024 Plan"). The Corporation’s Board of Directors previously approved the 2024 Plan, subject to the Federal Reserve Bank's response, authorizing the repurchase from time to time by the Corporation of up to 500,000 shares of the Corporation’s common stock, provided that the aggregate purchase price of shares of common stock repurchased does not exceed $15,000,000. Pursuant to the 2024 Plan, repurchase of common stock, if any, are authorized to be made during the period beginning on June 12, 2024 (the date on which the Corporation received acknowledgement from the Federal Reserve Bank) through and including May 14, 2025, through open market purchases, privately negotiated transactions or in such other manner as will comply with the provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, subject to compliance with any material agreement to which the Corporation is a party. Depending on market conditions and other factors, these repurchases may be commenced or suspended without prior notice. As of December 31, 2024, there were 500,000 shares remaining for repurchase under the 2024 Plan.

Additionally, during the quarter ended December 31, 2024, certain employees surrendered shares of common stock owned by them to satisfy their statutory minimum U.S. federal and state tax obligations associated with the vesting of shares of restricted common stock issued under the CNB Financial Corporation 2019 Omnibus Incentive Plan.

Dividends Restrictions

The Corporation is a legal entity separate and distinct from the Bank. Declaration and payment of cash dividends by the Corporation depends upon cash dividend payments to the Corporation by the Bank, which is our primary source of revenue and cash flow.

As a Pennsylvania state-chartered bank, the Bank is subject to regulatory restrictions on the payment and amounts of dividends under the Pennsylvania Banking Code. Further, the ability of banking subsidiaries to pay dividends is also subject to their profitability, financial condition, capital expenditures and other cash flow requirements.

The payment of dividends by the Bank and the Corporation may also be affected by other factors, such as the requirement to maintain adequate capital above regulatory requirements. The federal banking agencies have indicated that paying dividends that deplete a depository institution’s capital base to an inadequate level would be an unsafe and unsound banking practice. A depository institution may not pay any dividend if payment would cause it to become undercapitalized or if it already is undercapitalized. Moreover, the federal banking agencies have issued policy statements that provide that bank holding companies and insured banks should generally only pay dividends out of current operating earnings. Federal banking regulators have the authority to prohibit banks and bank holding companies from paying a dividend if the regulators deem such payment to be an unsafe or unsound practice.

The amount and timing of dividends is subject to the discretion of the Board of Directors and depends upon business conditions and regulatory requirements. The Board of Directors has the discretion to change the dividend at any time for any reason. The Board of Directors presently intends to continue the policy of paying quarterly cash dividends. The amount of any future dividends will depend on economic and market conditions, the Corporation's financial condition and operating results and other factors, including applicable government regulations and policies.
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Share Return Performance

Set forth below is a chart comparing the Corporation’s cumulative return to stockholders against the cumulative return of the NASDAQ Composite Index and a peer group index of banking organizations for the five-year period commencing December 31, 2019 and ending December 31, 2024.
 
 CNB Financial Corporation
2956
  Period Ending
Index 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24
CNB Financial Corporation 100.00  67.42  86.27  79.58  78.30  88.96 
NASDAQ Composite Index 100.00  144.92  177.06  119.45  172.77  223.87 
KBW NASDAQ Bank Index 100.00  89.69  124.06  97.52  96.65  132.60 

Source: S&P Global Market Intelligence
© 2025

ITEM 6. RESERVED
 
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations is presented to provide insight into management’s assessment of financial results and should be read in conjunction with the following parts of this Annual Report on Form 10-K: Part I, Item 1 "Business," Part II, Item 7A, "Quantitative and Qualitative Disclosures About Market Risk," and Part II, Item 8 "Financial Statements and Supplementary Data." This section of this Annual Report on Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023. Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found in "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2023.

Dollar amounts in tables are stated in thousands, except for per share amounts.

Forward-Looking Statements and Factors that Could Affect Future Results

The information below 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 interest rates; (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) changes in general business, industry or economic conditions or competition; (vi) 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; (vii) governmental approvals of the Corporation's pending merger with ESSA may not be obtained, or adverse regulatory conditions may be imposed in connection with governmental approvals of the merger; (viii) the Corporation's shareholders and/or the shareholders of ESSA may fail to approve the merger or the issuance of the Corporation’s common stock in the merger, as applicable; (ix) higher than expected costs or other difficulties related to integration of combined or merged businesses; (x) the effects of business combinations and other acquisition transactions, including the inability to realize our loan and investment portfolios; (xi) changes in the quality or composition of our loan and investment portfolios; (xii) adequacy of loan loss reserves; (xiii) increased competition; (xiv) loss of certain key officers; (xv) deposit attrition; (xvi) rapidly changing technology; (xvii) unanticipated regulatory or judicial proceedings and liabilities and other costs; (xviii) changes in the cost of funds, demand for loan products or demand for financial services; and (xix) other economic, competitive, governmental or technological factors affecting our operations, markets, products, services and prices. Such developments could have an adverse impact on CNB's financial position and results of operations.

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 Annual Report on Form 10-K, 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 might not occur and you should not put undue reliance on any forward-looking statements.

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Overview

The Corporation is a financial holding company registered under the BHC Act. It was incorporated under the laws of the Commonwealth of Pennsylvania in 1983 for the purpose of engaging in the business of a financial holding company. The Corporation’s subsidiary, the Bank, provides financial services to individuals and businesses. The CNB Bank franchise's primary market areas are the Pennsylvania counties of Blair, Cambria, Centre, Clearfield, Elk, Indiana, Jefferson, and McKean. ERIEBANK, a division of the Bank, operates in the Pennsylvania counties of Crawford, Erie, and Warren and in the Ohio counties of Ashtabula, Cuyahoga, Geauga, Lake, and Lorain. FCBank, a division of the Bank, operates in the Ohio counties of Crawford, Delaware, Franklin, Knox, Marion, Morrow, and Richland. BankOnBuffalo, a division of the Bank, operates in the New York counties of Erie, Niagara, and Ontario. Ridge View Bank, a division of the Bank, operates in the Virginia counties of Botetourt, Craig, Franklin, New River Valley, and Roanoke. Impressia Bank, a division of the Bank, operates in the Bank’s primary market areas. Although the Corporation’s strategies, through the Bank, are executed based on the divisions discussed above, the Bank is a single Pennsylvania-chartered bank whereby all divisions of the Bank conduct their business on a doing business as basis.

In addition to the Bank, the Corporation has four other subsidiaries. CNB Securities Corporation is incorporated in Delaware and currently maintains investments in debt and equity securities. CNB Insurance Agency, incorporated in Pennsylvania, provides for the sale of nonproprietary annuities and other insurance products. CNB Risk Management, Inc., incorporated in Delaware, is a captive insurance company that insures against certain risks unique to the operations of the Corporation and its subsidiaries and for which insurance may not be currently available or economically feasible in today's insurance marketplace. Holiday, incorporated in Pennsylvania, offers small balance unsecured loans and secured loans, primarily collateralized by automobiles and equipment, to borrowers with higher risk characteristics.

Merger with ESSA Bancorp, Inc.

On January 9, 2025, the Corporation and CNB Bank entered into the Merger Agreement with ESSA and ESSA Bank, pursuant to which the Corporation will acquire ESSA in an all-stock transaction. Subject to the terms and conditions of the Merger Agreement, which has been approved by the boards of directors of each party, ESSA will merge with and into the Corporation, with the Corporation as the surviving entity, and immediately thereafter, ESSA Bank will merge with and into the Bank, with the Bank as the surviving bank. Under the terms of the Merger Agreement, each outstanding share of ESSA common stock will be converted into the right to receive 0.8547 shares of the Corporation’s common stock. The transaction is currently expected to close in the third quarter of 2025, subject to customary closing conditions, including the receipt of regulatory approvals and approvals by the shareholders of ESSA and the Corporation.

Non-GAAP Financial Information

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 discussion below include:

•Tangible book value per common share;
•Tangible common equity/tangible assets;
•Net interest margin (fully tax equivalent basis);
•Efficiency ratio;
•Pre-provision net revenue ("PPNR"); and
•Return on average tangible common equity.

A reconciliation of these non-GAAP financial measures is provided below in the "Non-GAAP Financial Measures" section.

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Primary Factors Used To Evaluate Performance

Management considers return on average assets, return on average equity, return on average tangible common equity, earnings per common share, tangible book value per common share, asset quality, net interest margin, and other metrics as key measures of the financial performance of the Corporation. The interest rate environment will continue to play an important role in the future earnings of the Corporation. To address the challenging interest rate and competitive environments, the Corporation continues to evaluate, develop and implement strategies necessary to support its ongoing financial performance objectives and future growth goals. Additionally, management frequently evaluates the potential impact of economic and geopolitical events that may have an impact on the credit risk profile of its customers and develops proactive strategies to mitigate such potential impacts on the Corporation’s loan portfolio.

Financial Condition

The following table presents ending balances, growth, and the percentage change of certain measures of our financial condition for specified years (dollars in millions):

2024
Balance		 2023
Balance		 $ Change
vs. prior
year		 % Change
vs. prior
year
Total assets $ 6,192.0  $ 5,753.0  $ 439.1  7.6  %
Total loans, net of allowance for credit losses 4,561.6  4,422.6  139.0  3.1 
Total securities 785.1  740.2  44.9  6.1 
Total deposits 5,371.4  4,998.8  372.6  7.5 
Total shareholders’ equity 610.7  571.2  39.4  6.9 

Cash and Cash Equivalents

Cash and cash equivalents totaled $443.0 million at December 31, 2024, including $375.0 million held at the Federal Reserve, compared to $222.0 million at December 31, 2023. These excess funds, when combined with collective contingent liquidity resources of $4.6 billion including (i) available borrowing capacity from the FHLB and the Federal Reserve, and (ii) available unused commitments from brokered deposit sources and other third-party funding channels, including previously established lines of credit from correspondent banks, result in the total on-hand and contingent liquidity sources for the Corporation to be approximately 5.0 times the estimated amount of adjusted uninsured deposit balances. The increase in cash and cash equivalents from December 31, 2023 to December 31, 2024, was primarily due to an increase in deposits, partially offset by an increase in the loan portfolio and securities portfolio.

Management believes the liquidity needs of the Corporation are satisfied primarily by the current balance of cash and cash equivalents, customer and brokered deposits, FHLB financing, the portions of the securities and loan portfolios that mature within one year, and other third-party funding channels. The Corporation expects that these sources of funds will enable it to meet cash obligations and off-balance sheet commitments as they come due. In addition to the above noted liquidity sources, the Corporation maintains access to the Federal Reserve discount window.

Securities

AFS debt securities and equity securities totaled $479.0 million and $351.3 million at December 31, 2024 and 2023, respectively. Investments classified as held-to-maturity ("HTM") securities totaled $306.1 million and $389.0 million at December 31, 2024 and 2023, respectively.

The Corporation’s objective is to maintain the investment securities portfolio at an appropriate level to balance the earnings and liquidity provided by the portfolio. Note 2, "Securities," to the consolidated financial statements provides more detail concerning the composition of the Corporation’s securities portfolio and the process for evaluating securities for impairment.

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The following table summarizes the maturity distribution schedule with corresponding weighted-average yields of AFS debt securities as of December 31, 2024. Weighted-average yields have been computed on a fully taxable-equivalent basis using a tax rate of 21%. Mortgage-backed securities are included in maturity categories based on their stated maturity date.

December 31, 2024
  Within
One Year		 After One But Within
Five Years		 After Five But
Within Ten
Years		 After Ten
Years		 Total
  $ Amt. Yield $ Amt. Yield $ Amt. Yield $ Amt. Yield $ Amt. Yield
U.S. Government Sponsored Entities $ 14,810  4.73  % $ —  —  % $ —  —  % $ —  —  % $ 14,810  4.73  %
State and Political Subdivisions 6,994  3.07  36,071  2.39  32,945  2.25  14,946  2.21  90,956  2.36 
Residential and multi-family mortgage 4,957  3.08  5,868  2.87  17,199  1.81  290,886  3.48  318,910  3.37 
Corporate notes and bonds 1,984  5.89  8,710  4.88  24,516  4.17  —  —  35,210  4.44 
Pooled SBA —  —  540  4.69  6,825  2.46  1,295  2.14  8,660  2.55 
Total $ 28,745  4.12  % $ 51,189  2.89  % $ 81,485  2.75  % $ 307,127  3.41  % $ 468,546  3.28  %

The following table summarizes the maturity distribution schedule with corresponding weighted-average yields of HTM debt securities as of December 31, 2024.

December 31, 2024
  Within
One Year		 After One But Within
Five Years		 After Five But
Within Ten
Years		 After Ten
Years		 Total
  $ Amt. Yield $ Amt. Yield $ Amt. Yield $ Amt. Yield $ Amt. Yield
U.S. Government Sponsored Entities $ 52,148  1.44  % $ 158,625  1.61  % $ 18,731  1.92  % $ —  —  % $ 229,504  1.60  %
Residential and multi-family mortgage 3,000  1.76  327  2.88  3,368  2.96  69,882  2.56  76,577  2.55 
Total $ 55,148  1.46  % $ 158,952  1.61  % $ 22,099  2.08  % $ 69,882  2.56  % $ 306,081  1.84  %

The following table summarizes the weighted average modified duration of AFS debt securities as of December 31, 2024.

  Weighted Average Modified Duration
(in Years)
U.S. Government Sponsored Entities 0.34 
State and Political Subdivisions 4.89 
Residential and multi-family mortgage 3.85 
Corporate notes and bonds 4.13 
Pooled SBA 2.27 
Total 3.93 

The following table summarizes the weighted average modified duration of HTM debt securities as of December 31, 2024.

  Weighted Average Modified Duration
(in Years)
U.S. Government Sponsored Entities 2.18 
Residential and multi-family mortgage 4.90 
Total 2.86 

The portfolio contains no holdings of a single issuer that exceeds 10% of shareholders’ equity other than U.S. government sponsored entities.

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The Corporation generally purchases debt securities over time and does not attempt to "time" its transactions, which allows for more efficient management of fluctuations in the interest rate environment. The Corporation's strategy given the current environment is to focus on lower risk securities and shorter durations that complement the current portfolio investment ladder, coupled with consistent reinvestment of cash flows to replace lower earning assets.

The Corporation monitors the earnings performance and the effectiveness of the liquidity of the securities portfolio on a regular basis through meetings of the Asset/Liability Committee ("ALCO"). The ALCO also reviews and manages interest rate risk for the Corporation. Through active balance sheet management and analysis of the securities portfolio, a sufficient level of liquidity is maintained to satisfy depositor requirements and various credit needs of our customers.

Loans Receivable

Note 3, "Loans Receivable and Allowance for Credit Losses," to the consolidated financial statements provides more detail concerning the loan portfolio of the Corporation.

At December 31, 2024, loans totaled $4.5 billion, excluding the balances of syndicated loans. This adjusted total of $4.5 billion in loans represented an increase of $169.4 million, or 3.88%, compared to the same adjusted total loans measured as of December 31, 2023. Loan growth for the year ended December 31, 2024, primarily resulted from growth in commercial and residential real estate loans in the Corporation's recent expansion markets of Cleveland, OH and Roanoke, VA. Additional growth occurred in the commercial and residential real estate loans in the Columbus, OH market, commercial industrial loans in the Erie, PA market and residential real estate loans in CNB Bank’s Private Banking division.

At December 31, 2024, the Corporation's balance sheet reflected a decrease in syndicated lending balances of $28.8 million compared to December 31, 2023, reflecting scheduled paydowns or early payoffs of certain syndicated credits during 2024. The syndicated loan portfolio totaled $79.9 million, or 1.73% of total loans at December 31, 2024, compared to $108.7 million, or 2.43% of total loans, at December 31, 2023.

Loan Origination/Risk Management

The Corporation has certain lending policies and procedures in place that are designed to maximize loan income within an acceptable level of risk. Management reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by providing management with frequent reports related to loan production, loan quality, concentrations of credit, loan delinquencies and nonperforming, and potential problem loans. Diversification in the loan portfolio is a means of managing risk associated with fluctuations in economic conditions. The Corporation has not underwritten any hybrid loans, payment option loans, or low documentation/no documentation loans. Variable rate loans are generally underwritten at the fully indexed rate. Loan underwriting policies and procedures have not changed materially between any periods presented. As discussed more fully above, syndicated loan purchases are underwritten utilizing the same process as the Corporation’s originated loans.

The Corporation continues to explore the credit and reputational risks associated with climate change and their potential impact on the foregoing, while closely monitoring regulatory developments on climate risk. This includes, among other things, researching and developing a formalized approach to considering climate change related risks in the Corporation's underwriting processes. This approach will be impacted, in part, by the accessibility and reliability of both customer climate risk data and climate risk data in general. One of the objectives of these efforts is to enable the Corporation to better understand the climate change related risks associated with the Corporation's customers' business activities and to be able to monitor their response to those risks and their ultimate impact on the Corporation's customers.

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Loan Portfolio Profile

As part of its lending policy and risk management activities, the Corporation tracks lending exposure by industry classification and type to determine potential risks associated with industry concentrations, and whether any risk issues could lead to additional credit loss exposure. In the current post-pandemic and inflationary economic environment, the Corporation has evaluated its exposure to the office, hospitality, and multifamily industries within its commercial real estate portfolio. Even given the Corporation’s historically sound underwriting protocols and high credit quality ratings for borrowers in these industries, the Corporation monitors numerous relevant sensitivity elements at both underwriting and through and beyond the funding period, including projects occupancy, loan-to-value, absorption and cap rates, debt service coverage and covenant compliance, and developer/lessor financial strength both in the project and globally. At December 31, 2024, the Corporation had the following key metrics related to its office, hospitality and multifamily portfolios:

•Commercial office loans
◦There were 112 outstanding loans, totaling $113.7 million, or 2.47% of total Corporation loans outstanding;
◦There were no nonaccrual commercial office loans at December 31, 2024;
◦There were no past due commercial office loans at December 31, 2024; and
◦The average outstanding balance per commercial office loan was $1.0 million.

•Commercial hospitality loans
◦There were 170 outstanding loans, totaling $321.6 million, or 6.98% of total Corporation loans outstanding;
◦There were no nonaccrual commercial hospitality loans at December 31, 2024;
◦There were no past due commercial hospitality loans at December 31, 2024; and
◦The average outstanding balance per commercial hospitality loan was $1.9 million.

•Commercial multifamily loans
◦There were 225 outstanding loans, totaling $367.6 million, or 7.98% of total Corporation loans outstanding;
◦There were two nonaccrual commercial multifamily loan that totaled $20.7 million, or 5.62% of total multifamily loans outstanding. As previously discussed, one customer relationship did have a specific reserve of $885 thousand, while the other customer relationship did not have a related specific loss reserve at December 31, 2024;
◦There were three past due commercial multifamily loans that totaled $21.1 million, or 5.75% of total commercial multifamily loans outstanding at December 31, 2024; and
◦The average outstanding balance per commercial multifamily loan was $1.6 million.

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The following table summarize the geographic region (based upon metropolitan statistical areas) in which the commercial office, hospitality and multifamily loans were originated as of December 31, 2024:

  December 31, 2024
Commercial Office
Geographic Region:
Buffalo, NY 32.61  %
Cleveland, OH 30.29 
Cincinnati, OH 9.74 
Columbus, OH 6.40 
All other geographical regions 20.96 
Total Commercial Office 100.00  %
Commercial Hospitality
Geographic Region:
Buffalo, NY 19.19  %
Columbus, OH 18.42 
Pittsburgh, PA 16.74 
Cleveland, OH 7.61 
All other geographical regions 38.04 
Total Commercial Hospitality 100.00  %
Commercial Multifamily
Geographic Region:
Cleveland, OH 44.45  %
Buffalo, NY 22.48 
Columbus, OH 16.05 
All other geographical regions 17.02 
Total Commercial Multifamily 100.00  %

The Corporation had no commercial office, hospitality or multifamily loan relationships considered by the banking regulators to be a high volatility commercial real estate credit ("HVCRE") as of December 31, 2024.

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Maturities and Sensitivities of Loans Receivable to Changes in Interest Rate

The following table presents the maturity distribution of the Corporation's loans receivable at December 31, 2024. The table also presents the portion of loans receivable that have fixed interest rates or variable interest rates that fluctuate over the life of the loans in accordance with changes in an interest rate index.

  December 31, 2024
  Due in
One Year
or Less		 After One,
but Within
Five Years		 After Five but Within Fifteen Years After
Fifteen Years		 Total
Loans Receivable with Fixed Interest Rate
Farmland $ 59  $ 1,872  $ 6,899  $ —  $ 8,830 
Owner-occupied, nonfarm nonresidential properties 23,460  26,489  11,466  2,105  63,520 
Agricultural production and other loans to farmers 3  69  —  9  81 
Commercial and Industrial 10,133  218,859  53,194  22,613  304,799 
Obligations (other than securities and leases) of states and political subdivisions 2,926  15,550  78,092  7,565  104,133 
Other loans 346  864  1,022  12,708  14,940 
Other construction loans and all land development and other land loans (1)
 56,614  17,610  8,473  764  83,461 
Multifamily (5 or more) residential properties 27,916  26,892  2,598  4,212  61,618 
Non-owner occupied, nonfarm nonresidential properties 52,388  111,219  59,225  773  223,605 
1-4 Family Construction (1)
 188  —  —  1,059  1,247 
Home equity lines of credit 7  62  365  285  719 
Residential Mortgages secured by first liens 4,463  30,361  211,817  131,691  378,332 
Residential Mortgages secured by junior liens 268  7,354  67,519  15,193  90,334 
Other revolving credit plans 5  14  17  —  36 
Automobile 413  15,897  4,651  —  20,961 
Other consumer 4,239  33,029  8,726  7,562  53,556 
Credit cards —  —  —  —  — 
Overdrafts —  —  —  —  — 
Total $ 183,428  $ 506,141  $ 514,064  $ 206,539  $ 1,410,172 
Loans Receivable with Variable or Floating Interest Rate
Farmland $ 1,908  $ 4,389  $ 8,192  $ 7,780  $ 22,269 
Owner-occupied, nonfarm nonresidential properties 20,777  91,263  283,218  56,430  451,688 
Agricultural production and other loans to farmers 787  40  5,584  —  6,411 
Commercial and Industrial 279,023  75,788  58,361  804  413,976 
Obligations (other than securities and leases) of states and political subdivisions 1,398  3,284  11,371  20,244  36,297 
Other loans 2,289  2,761  8,120  —  13,170 
Other construction loans and all land development and other land loans (1)
 96,331  64,262  27,913  10,945  199,451 
Multifamily (5 or more) residential properties 54,122  46,284  244,901  4,221  349,528 
Non-owner occupied, nonfarm nonresidential properties 139,635  217,999  401,778  50,524  809,936 
1-4 Family Construction (1)
 4,649  13,836  1,380  5,319  25,184 
Home equity lines of credit 7,928  8,042  38,984  110,654  165,608 
Residential Mortgages secured by first liens 18,145  24,115  134,001  458,153  634,414 
Residential Mortgages secured by junior liens 1,587  638  12,895  1,008  16,128 
Other revolving credit plans 8,322  2,500  28,849  1,388  41,059 
Automobile —  —  —  —  — 
Other consumer 3  57  146  59  265 
Credit cards 13,143  —  —  —  13,143 
Overdrafts 257  —  —  —  257 
Total $ 650,304  $ 555,258  $ 1,265,693  $ 727,529  $ 3,198,784 
11-4 family construction loans and other construction loans and all land development and other land loans segments may include loans that have a permanent financing period as part of the original term of the loan. Upon completion of the construction period the loans are reclassified to their permanent financing loan segment.

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Loan Concentration

At December 31, 2024, no industry concentration existed which exceeded 10% of the total loan portfolio.

Loan Quality

The following table presents information concerning the loan portfolio delinquency and other nonperforming assets at December 31, 2024 and 2023:

December 31, 2024 December 31, 2023
Nonaccrual loans $ 56,323  $ 29,639 
Accrual loans greater than 90 days past due 653  55 
Total nonperforming loans 56,976  29,694 
Other real estate owned 2,509  2,111 
Total nonperforming assets $ 59,485  $ 31,805 
Total loans $ 4,608,956  $ 4,468,476 
Nonaccrual loans as a percentage of loans 1.22  % 0.66  %
Total assets $ 6,192,010  $ 5,752,957 
Nonperforming assets as a percentage of total assets 0.96  % 0.55  %
Allowance for credit losses on loans $ 47,357  $ 45,832 
Allowance for credit losses / Total loans 1.03  % 1.03  %
Ratio of allowance for credit losses on loans to nonaccrual loans     84.08  % 154.63  %

Total nonperforming assets were approximately $59.5 million, or 0.96% of total assets, as of December 31, 2024, compared to $31.8 million, or 0.55% of total assets, as of December 31, 2023. The increase in nonperforming assets for the year ended December 31, 2024, was due to one commercial multifamily relationship totaling $20.4 million with a specific reserve balance of $885 thousand. Management does not believe there is a risk of significant additional loss exposure beyond the specific reserves related to this loan relationship and is actively working with the borrower and their real estate broker to facilitate the sale of the property. In addition, to the loan relationship discussed above, there were two other relationships: (i) a commercial and industrial and owner-occupied commercial real estate relationship as previously disclosed in the second quarter of 2024 and (ii) a commercial relationship (consisting of various loan types) in the third quarter of 2024 that contributed to the increase in nonperforming assets as of December 31, 2024, compared to December 31, 2023.

The Corporation has established written lending policies and procedures that require underwriting standards, loan documentation, and credit analysis standards to be met prior to funding a loan. Subsequent to the funding of a loan, ongoing review of credits is required. Credit reviews are performed quarterly by an outsourced loan review firm and cover approximately 65% of the commercial loan portfolio on an annual basis. In addition, the external independent loan review firm reviews past due loans and all significant classified assets and nonaccrual loans annually.

Potential problem loans consist of loans that are performing in accordance with contractual terms but for which management has concerns about the ability of a borrower to continue to comply with contractual repayment terms because of the borrower’s potential operating or financial difficulties. Management monitors these "watchlist" loans monthly to determine potential losses within the commercial loan portfolio. The "watchlist" is comprised of all credits risk rated special mention, substandard and doubtful.

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Allowance for Credit Losses

The amount of each allowance for credit losses account represents management's best estimate of current expected credit losses on these financial instruments considering available information, from internal and external sources, relevant to assessing exposure to credit loss over the contractual term of the instrument. Relevant available information includes historical credit loss experience, current conditions, and reasonable and supportable forecasts. While historical credit loss experience provides the basis for the estimation of expected credit losses, adjustments to historical loss information may be made for differences in current portfolio-specific risk characteristics, environmental conditions or other relevant internal and external factors. While management utilizes its best judgment and information available, the ultimate adequacy of the Corporation's allowance for credit losses account is dependent upon a variety of factors beyond the Corporation's control, including the performance of the Corporation's loan portfolios, the economy, changes in interest rates, and the view of the regulatory authorities toward classification of assets. The adequacy of the allowance for credit losses is subject to a formal analysis by the Credit Administration and Finance Departments of the Corporation. For additional information regarding the Corporation's accounting policies related to credit losses, refer to Note 1, "Summary of Significant Accounting Policies" and Note 3, "Loans and Allowance for Credit Losses" to these consolidated financial statements.

The table below provides an allocation of the allowance for credit losses on loans by loan portfolio segment at December 31, 2024 and 2023; however, allocation of a portion of the allowance to one segment does not preclude its availability to absorb losses in other segments.

December 31, 2024
Amount of Allowance Allocated Percent of Loans in Each Category to Total Loans Total Loans Ratio of Allowance Allocated to Loans in Each Category
Farmland $ 167  0.67  % $ 31,099  0.54  %
Owner-occupied, nonfarm nonresidential properties 5,696  11.18  515,208  1.11 
Agricultural production and other loans to farmers 37  0.14  6,492  0.57 
Commercial and Industrial 7,759  15.60  718,775  1.08 
Obligations (other than securities and leases) of states and political subdivisions 1,369  3.05  140,430  0.97 
Other loans 329  0.61  28,110  1.17 
Other construction loans and all land development and other land loans 2,571  6.14  282,912  0.91 
Multifamily (5 or more) residential properties 2,969  8.92  411,146  0.72 
Non-owner occupied, nonfarm nonresidential properties 10,110  22.42  1,033,541  0.98 
1-4 Family Construction 198  0.57  26,431  0.75 
Home equity lines of credit 1,340  3.61  166,327  0.81 
Residential Mortgages secured by first liens 8,958  21.97  1,012,746  0.88 
Residential Mortgages secured by junior liens 1,343  2.31  106,462  1.26 
Other revolving credit plans 960  0.89  41,095  2.34 
Automobile 275  0.45  20,961  1.31 
Other consumer 2,892  1.17  53,821  5.37 
Credit cards 127  0.29  13,143  0.97 
Overdrafts 257  0.01  257  100.00 
Total loans $ 47,357  100.00  % $ 4,608,956  1.03  %

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December 31, 2023 (1)
Amount of Allowance Allocated Percent of Loans in Each Category to Total Loans Total Loans Ratio of Allowance Allocated to Loans in Each Category
Farmland $ 138  0.76  % $ 33,485  0.41  %
Owner-occupied, nonfarm nonresidential properties 4,131  11.46  511,910  0.81 
Agricultural production and other loans to farmers 7  0.04  1,652  0.42 
Commercial and Industrial 9,500  16.26  726,442  1.31 
Obligations (other than securities and leases) of states and political subdivisions 2,627  3.41  152,201  1.73 
Other loans 389  0.57  25,507  1.53 
Other construction loans and all land development and other land loans 2,830  7.62  340,358  0.83 
Multifamily (5 or more) residential properties 1,251  6.84  305,697  0.41 
Non-owner occupied, nonfarm nonresidential properties 9,783  22.02  984,033  0.99 
1-4 Family Construction 191  0.63  28,055  0.68 
Home equity lines of credit 844  2.92  130,700  0.65 
Residential Mortgages secured by first liens 8,274  22.50  1,005,335  0.82 
Residential Mortgages secured by junior liens 1,487  2.04  91,240  1.63 
Other revolving credit plans 977  0.96  42,877  2.28 
Automobile 360  0.57  25,315  1.42 
Other consumer 2,656  1.14  51,592  5.15 
Credit cards 95  0.26  11,785  0.81 
Overdrafts 292  0.01  292  100.00 
Total loans $ 45,832  100.00  % $ 4,468,476  1.03  %
(1) As previously disclosed in the Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, and Note 1, "Summary of Significant Accounting Policies," immaterial revisions were made to the amount of allowance allocated and total loans receivable columns disclosure as of December 31, 2023, to reflect the revisions for the applicable portfolio segments.

The allowance for credit losses measured as a percentage of total loans was 1.03% as of December 31, 2024 and 2023.

The Corporation's allowance for credit losses is influenced by loan volumes, risk rating migration, delinquency status and other internal and external conditions influencing loss expectations, such as reasonable and supportable forecasts of economic conditions and other external factors.

For the year ended December 31, 2024, the allowance for credit losses increased $1.5 million. This increase was primarily driven by growth in the Corporation's loan portfolio in new market areas as well as an increased unemployment rate forecast, partially offset by improvements in the Corporation's historical loss rates, annual updates to the Corporation's loss drivers and assumptions, as well as the impact of net charge-offs. Significant uncertainty persists regarding the domestic and global economy due to persistent inflation in certain segments of the U.S. economy, elevated interest rates, fluctuating levels of consumer confidence, and geopolitical conflicts. Management will continue to proactively evaluate its estimate of expected credit losses as new information becomes available.

Note 3, "Loans Receivable and Allowance for Credit Losses," to the consolidated financial statements provides further disclosure of loan balances by portfolio segment as of December 31, 2024 and 2023.

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Additional information related to credit loss expense and net (charge-offs) recoveries at December 31, 2024, 2023, and 2022 is presented in the tables below.

Year Ended December 31, 2024
Provision (Benefit) for Credit Losses on Loans Receivable (1)
 Net
(Charge-Offs)
Recoveries		 Average Loans Receivable Ratio of Annualized Net (Charge-Offs) Recoveries to Average Loans Receivable
Farmland $ 29  $ —  $ 32,278  —  %
Owner-occupied, nonfarm nonresidential properties 2,958  (1,393) 526,379  (0.26)
Agricultural production and other loans to farmers 30  —  2,456  — 
Commercial and Industrial 628  (2,369) 700,935  (0.34)
Obligations (other than securities and leases) of states and political subdivisions (1,258) —  151,788  — 
Other loans (60) —  26,831  — 
Other construction loans and all land development and other land loans (248) (11) 401,083  — 
Multifamily (5 or more) residential properties 1,718  —  310,485  — 
Non-owner occupied, nonfarm nonresidential properties 1,248  (921) 927,788  (0.10)
1-4 Family Construction 7  —  34,451  — 
Home equity lines of credit 491  5  145,978  — 
Residential Mortgages secured by first liens 763  (79) 1,003,331  (0.01)
Residential Mortgages secured by junior liens (144) —  97,421  — 
Other revolving credit plans 109  (126) 40,971  (0.31)
Automobile 55  (140) 22,821  (0.61)
Other consumer 2,138  (1,902) 51,793  (3.67)
Credit cards 158  (126) 14,274  (0.88)
Overdrafts 415  (450) 241  (186.72)
Total $ 9,037  $ (7,512) $ 4,491,304  (0.17) %
(1) Excludes provision for credit losses totaling $944 thousand related to unfunded commitments. Note 18, "Off-Balance Sheet Commitments and Contingencies," in the consolidated financial statements provides more detail concerning the provision for credit losses related to unfunded commitments of the Corporation.

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Year Ended December 31, 2023 (1)
Provision (Benefit) for Credit Losses on Loans Receivable (2)
 Net
(Charge-Offs)
Recoveries		 Average Loans Receivable Ratio of Annualized Net (Charge-Offs) Recoveries to Average Loans Receivable
Farmland $ (21) $ —  $ 34,397  —  %
Owner-occupied, nonfarm nonresidential properties 1,223  3  502,925  — 
Agricultural production and other loans to farmers 1  —  1,255  — 
Commercial and Industrial (312) 46  777,991  0.01 
Obligations (other than securities and leases) of states and political subdivisions 764  —  154,225  — 
Other loans (67) —  30,410  — 
Other construction loans and all land development and other land loans (423) —  435,967  — 
Multifamily (5 or more) residential properties (1,043) (59) 259,557  (0.02)
Non-owner occupied, nonfarm nonresidential properties 2,814  (684) 838,674  (0.08)
1-4 Family Construction (136) —  55,392  — 
Home equity lines of credit (324) (5) 124,865  — 
Residential Mortgages secured by first liens (96) (114) 966,225  (0.01)
Residential Mortgages secured by junior liens 452  —  84,803  — 
Other revolving credit plans 344  (89) 41,417  (0.21)
Automobile 144  (55) 25,044  (0.22)
Other consumer 1,839  (1,848) 49,631  (3.72)
Credit cards 199  (171) 13,261  (1.29)
Overdrafts 479  (465) 302  (153.97)
Total $ 5,837  $ (3,441) $ 4,396,341  (0.08) %
(1) As previously disclosed in the Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, and Note 1, "Summary of Significant Accounting Policies," immaterial revisions were made to the provision (benefit) for credit losses on loans receivable column disclosure as of December 31, 2023, to reflect the revisions for the applicable portfolio segments.
(2) Excludes provision for credit losses totaling $759 thousand related to unfunded commitments. Note 18, "Off-Balance Sheet Commitments and Contingencies," in the consolidated financial statements provides more detail concerning the provision for credit losses related to unfunded commitments of the Corporation.

Year Ended December 31, 2022
Provision (Benefit) for Credit Loss Expense Net
(Charge-Offs)
Recoveries		 Average
Loans		 Ratio of Annualized Net (Charge-Offs)
Recoveries to Average Loans
Farmland $ 8  $ —  $ 32,075  —  %
Owner-occupied, nonfarm nonresidential properties (428) (6) 467,606  — 
Agricultural production and other loans to farmers (3) —  1,254  — 
Commercial and Industrial 965  (36) 762,585  — 
Obligations (other than securities and leases) of states and political subdivisions 214  —  149,253  — 
Other loans 307  —  16,861  — 
Other construction loans and all land development and other land loans 1,055  —  334,450  — 
Multifamily (5 or more) residential properties 64  —  227,715  — 
Non-owner occupied, nonfarm nonresidential properties 1,171  1  697,930  — 
1-4 Family Construction 169  —  41,849  — 
Home equity lines of credit (8) 12  115,682  0.01 
Residential Mortgages secured by first liens 1,564  (23) 874,675  — 
Residential Mortgages secured by junior liens 489  —  63,362  — 
Other revolving credit plans 236  (42) 29,398  (0.14)
Automobile 34  (26) 20,677  (0.13)
Other consumer 1,653  (1,534) 50,196  (3.06)
Credit cards 36  (61) 11,872  (0.51)
Overdrafts 460  (423) 282  (150.00)
Total loans $ 7,986  $ (2,138) $ 3,897,722  (0.05) %

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During the year ended December 31, 2024, the Corporation recorded a provision for credit losses of $9.2 million compared to $6.0 million for the year ended December 31, 2023. Included in the provision for credit losses for the year ended December 31, 2024, was a $185 thousand expense related to the allowance for unfunded commitments compared to a $156 thousand expense for the year ended December 31, 2023. The $3.2 million increase in the provision expense for the year ended December 31, 2024 compared to the year ended December 31, 2023, was primarily a result of the increase in loan portfolio growth and increase in the net loan charge-offs. Net charge-offs during the year ended December 31, 2024 were $7.5 million, or 0.17% of average total loans and loans held for sale, compared to $3.4 million, or 0.08% of average total loans and loans held for sale, during the year ended December 31, 2023.

Premises and Equipment

During the years ended December 31, 2024 and 2023, the Corporation invested $16.3 million and $10.8 million, respectively, in its physical infrastructure through the purchase of land, buildings, and equipment.

Bank Owned Life Insurance

The Corporation has periodically purchased Bank Owned Life Insurance ("BOLI"). The policies cover executive officers and a select group of other employees with the Bank being named as beneficiary. Earnings from BOLI assist the Corporation in offsetting its benefit costs. The Corporation made no purchases of BOLI during the years ended December 31, 2024 and December 31, 2023.

Funding Sources

Deposits

The Corporation’s sources of funds are deposits, borrowings, amortization and repayment of loan principal, interest earned on or maturation of investment securities, and funds provided from operations. The Corporation considers deposits to be its primary source of funding in support of growth in assets.

December 31, 2024 Percent of Deposits in Each Category to Total Deposits December 31, 2023 Percent of Deposits in Each Category to Total Deposits Percentage change
2024 vs. 2023
Noninterest-bearing demand deposits $ 819,680  15.26  % $ 728,881  14.58  % 12.5%
Interest-bearing demand deposits 706,796  13.16  803,093  16.07  (12.0)
Savings 3,122,028  58.12  2,960,282  59.22  5.5
Certificates of deposit 722,860  13.46  506,494  10.13  42.7
Total $ 5,371,364  100.00  % $ 4,998,750  100.00  % 7.5%

At December 31, 2024, total deposits were $5.4 billion, reflecting an increase of $372.6 million, or 7.45%, from December 31, 2023. The increase in deposits was due to continued growth in the Corporation's treasury management customer base and resulting increases in municipal and institutional/corporate deposits, including wealth and asset management deposit relationships resulting from CNB's participation in deposit insurance sharing programs.

The following table sets forth the average balances of and the average rates paid on deposits for the period indicated.

  Year Ended December 31,
  2024 2023 2022
  Average
Amount		 Annual
Rate		 Average
Amount		 Annual
Rate		 Average
Amount		 Annual
Rate
Noninterest-bearing demand deposits $ 781,780  —  % $ 793,713  —  % $ 847,793  —  %
Interest-bearing demand deposits 705,488  0.77  853,632  0.54  1,061,452  0.20 
Savings 3,052,031  3.46  2,666,905  2.92  2,383,918  0.54 
Certificates of deposit 570,911  3.92  517,017  2.97  351,272  1.40 
Total $ 5,110,210  $ 4,831,267  $ 4,644,435 

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At December 31, 2024, the average deposit balance per account for CNB Bank was approximately $34 thousand, which has remained consistently at this level for an extended period.

The following table presents additional information about our December 31, 2024 and 2023 deposits:

December 31, 2024 December 31, 2023
Time deposits not covered by deposit insurance $ 58,330  $ 44,665 
Total deposits not covered by deposit insurance 1,516,839  1,438,944 

At December 31, 2024, the total estimated uninsured deposits for CNB Bank were approximately $1.5 billion, or approximately 27.71% of total CNB Bank deposits. However, when excluding affiliate company deposits of $101.9 million and pledged-investment collateralized deposits of $429.0 million, the adjusted amount and percentage of total estimated uninsured deposits was approximately $986.0 million, or approximately 18.01% of total CNB Bank deposits as of December 31, 2024.

At December 31, 2023, the total estimated uninsured deposits for CNB Bank were approximately $1.4 billion, or approximately 28.21% of total CNB Bank deposits. However, when excluding affiliate company deposits of $101.3 million and pledged-investment collateralized deposits of $400.5 million, the adjusted amount and percentage of total estimated uninsured deposits was approximately $937.1 million, or approximately 18.37% of total CNB Bank deposits as of December 31, 2023.

Scheduled maturities of time deposits not covered by deposit insurance at December 31, 2024 were as follows:

December 31, 2024
3 months or less $ 11,067 
Over 3 through 6 months 8,059 
Over 6 through 12 months 33,582 
Over 12 months 5,622 
Total $ 58,330 

Borrowings

Periodically, the Corporation utilizes term borrowings from the FHLB and other lenders to meet funding obligations or match fund certain loan assets. The terms of these borrowings are detailed in Note 10, "Borrowings," to the consolidated financial statements. There were no short-term FHLB borrowings as of December 31, 2024 and December 31, 2023.

In June 2021, the Corporation sold $85.0 million aggregate principal amount of 3.25% Fixed-to-Floating Rate Subordinated Notes due 2031 (the "2031 Notes") to eligible purchasers in a private offering in reliance on the exemption from the registration requirements of Section 4(a)(2) of the Securities Act and the provisions of Rule 506 of Regulation D thereunder. The 2031 Notes will mature in June 2031, and initially bear interest at a fixed rate of 3.25% per annum, payable semi-annually in arrears, to, but excluding, June 15, 2026, and thereafter to, but excluding, the maturity date or earlier redemption, the interest rate will reset quarterly to an interest rate per annum equal to the then current three-month average SOFR plus 2.58%. The net proceeds from the sale were approximately $83.5 million, after deducting offering expenses. Additional details about our subordinated debentures and notes are included in Note 10, "Borrowings" in the accompanying notes to consolidated financial statements.

Liquidity and Capital Resources

Liquidity measures an organization’s ability to meet its cash obligations as they come due. The liquidity of a financial institution reflects its ability to meet loan requests, to accommodate possible outflows in deposits and to take advantage of interest rate market opportunities. The ability of a financial institution to meet its current financial obligations is a function of its balance sheet structure, its ability to liquidate assets and its access to alternative sources of funds.

The Corporation’s expected material cash requirements for the year ended December 31, 2025 and thereafter consist of withdrawals by depositors, credit commitments to borrowers, shareholder dividends, share repurchases, operating expenses, and capital expenditures that are pursuant to the Corporation's strategic initiatives. The Corporation expects to satisfy these short-term and long-term cash requirements through deposit growth, principal and interest payments from loans and investment securities, maturing loans and investment securities, as well as by maintaining access to wholesale funding sources.

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The objective of the Corporation's liquidity management is to manage cash flow and liquidity reserves so that they are adequate to fund the Corporation's operations and to meet cash obligations and other commitments on a timely basis and at a reasonable cost. The Corporation seeks to achieve this objective and ensure that funding needs are met by maintaining an appropriate level of liquid funds through asset/liability management, which includes managing the mix and time to maturity of financial assets and financial liabilities on its balance sheet. The Corporation's liquidity position is enhanced by its ability to raise additional funds as needed in the wholesale markets.

Asset liquidity is provided by liquid assets which are readily marketable or pledgeable or which will mature in the near future. Liquid assets include cash, interest-bearing deposits in banks, including the Federal Reserve, and AFS debt securities. Liability liquidity is provided by access to funding sources which include core deposits, correspondent banks and other wholesale funding sources.

The Corporation's liquidity position is continuously monitored and adjustments are made to balance sources and uses of funds as deemed appropriate. Liquidity risk management is an important element in the Corporation's asset/liability management process. The Corporation regularly models liquidity stress scenarios to assess potential liquidity outflows or potential funding shortfalls resulting from economic disruptions, volatility in the financial markets, unexpected credit events or other significant occurrences deemed problematic by management. These scenarios are incorporated into the Corporation's contingency funding plan, which provides the basis for the identification of its liquidity needs.

At December 31, 2024, the Corporation’s cash and cash equivalents position was approximately $443.0 million, including liquidity of $375.0 million held at the Federal Reserve. These excess funds, when combined with (i) available borrowing capacity of $4.6 billion from the Federal Home Loan Bank of Pittsburgh ("FHLB") and the Federal Reserve, and (ii) available unused commitments from brokered deposit sources and other third-party funding channels, including previously established lines of credit from correspondent banks, resulted in the total on-hand and contingent liquidity sources for the Corporation being approximately 5.0 times the estimated amount of adjusted uninsured deposit balances discussed above.

The following table summarizes the Corporation's net available liquidity and borrowing capacities as of December 31, 2024:

Net Available
FHLB borrowing capacity (1)
 $ 1,211,618 
Federal Reserve borrowing capacity (2)
 497,782 
Brokered deposits (3)
 2,035,038 
Other third-party funding channels (3) (4)
 859,723 
Total net available liquidity and borrowing capacity $ 4,604,161 
(1) Availability contingent on the FHLB activity-based stock ownership requirement
(2) Includes access to discount window, BIC program and Bank Term Funding Program
(3) Availability contingent on internal borrowing guidelines
(4) Availability contingent on correspondent bank approvals at time of borrowing

As of December 31, 2024, management is not aware of any events that are reasonably likely to have a material adverse effect on the Corporation's liquidity, capital resources or operations. In addition, management is not aware of any regulatory recommendations regarding liquidity that would have a material adverse effect on the Corporation.

In the ordinary course of business the Corporation has entered into contractual obligations and have made other commitments to make future payments. Refer to the accompanying notes to consolidated financial statements elsewhere in this report for the expected timing of such payments as of December 31, 2024. The Corporation’s material contractual obligations as of December 31, 2024 consist of (i) long-term borrowings - Note 10, "Borrowings," (ii) operating leases - Note 7, "Leases," (iii) time deposits with stated maturity dates - Note 9, "Deposits," and (iv) commitments to extend credit and standby letters of credit - Note 18, "Off-Balance Sheet Commitments and Contingencies." Shareholders’ Equity, Capital Ratios and Metrics

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Shareholders' Equity

On September 21, 2022, the Corporation successfully completed a common stock offering resulting in the issuance of 4,257,446 shares of common stock at $23.50 per share and net proceeds of $94.1 million after deducting the underwriting discount and customary offering expenses. The net proceeds from the capital raise will be used for general corporate purposes, including working capital and funding the Corporation's organic growth across its multiple geographic markets, or evaluating potential acquisition opportunities.

As of December 31, 2024, the Corporation’s total shareholders’ equity was $610.7 million, representing an increase of $39.4 million, or 6.91%, from December 31, 2023. The changes resulted from an increase in the Corporation's retained earnings (net income, partially offset by the common and preferred stock dividends paid) and a decrease in accumulated other comprehensive loss primarily from the after-tax impact of temporary unrealized valuation changes in the Corporation’s AFS investment portfolio. The additions to shareholders equity from retained earnings were also partially offset by the Corporation's repurchase of some of its common stock.

Preferred Stock

During the year ended December 31, 2020, the Corporation raised $57.8 million, net of issuance costs, from the issuance of depositary shares, each representing a 1/40th ownership interest in a share of the Corporation's 7.125% Series A fixed rate non-cumulative perpetual preferred stock, no par value, with a liquidation preference of $1,000 per share of preferred stock. The $57.8 million qualifies as Tier 1 capital for regulatory capital purposes.

Capital Ratios and Metrics

The Corporation has complied with the standards of capital adequacy mandated by government regulations. Bank regulators have established "risk-based" capital requirements designed to measure capital adequacy. Risk-based capital ratios reflect the relative risks of various assets banks hold in their portfolios. A weight category (0% for the lowest risk assets and increasing for each tier of higher risk assets) is assigned to each asset on the balance sheet.

As of December 31, 2024, all of the Corporation's capital ratios exceeded regulatory "well-capitalized" levels. The Corporation’s capital ratios and book value per common share at December 31, 2024 and 2023 were as follows:

December 31, 2024 December 31, 2023
Total risk-based capital ratio 16.16  % 15.99  %
Tier 1 capital ratio 13.41  % 13.20  %
Common equity tier 1 ratio 11.76  % 11.49  %
Leverage ratio 10.43  % 10.54  %
Common shareholders' equity/total assets 8.93  % 8.93  %
Tangible common equity/tangible assets (1)
 8.28  % 8.22  %
Book value per common share $ 26.34  $ 24.57 
Tangible book value per common share (1)
 $ 24.24  $ 22.46 
(1) Tangible common equity, tangible assets and tangible book value per common share are non-GAAP financial measures calculated using GAAP amounts. Tangible common equity is calculated by excluding the balance of goodwill and other intangible assets and preferred equity from the calculation of shareholders’ equity. Tangible assets are calculated by excluding the balance of goodwill and other intangible assets from the calculation of total assets. Tangible book value per common share is calculated by dividing tangible common equity by the number of shares outstanding. The Corporation believes that these non-GAAP financial measures provide information to investors that is useful in understanding its financial condition. Because not all companies use the same calculation of tangible common equity and tangible assets, this presentation may not be comparable to other similarly titled measures calculated by other companies. A reconciliation of these non-GAAP financial measures is provided in the "Non-GAAP Financial Measures" section in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
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Average Balances, Interest Rates and Yields

The loan categories used to monitor and analyze interest income and yields are different than the portfolio segments used to determine the allowance for credit losses for loans. The allowance for credit losses was calculated by pooling loans of similar credit risk characteristics and credit monitoring procedures. See Note 1, "Summary of Significant Accounting Policies," and Note 3, "Loans Receivable and Allowance for Credit Losses," to the consolidated financial statements for more information about pooling of loans for the allowance for credit losses.

The following table presents average balances of certain measures of our financial condition and net interest margin for the specified years.

December 31, 2024 December 31, 2023 December 31, 2022
Average
Balance		 Annual
Rate		 Interest
Inc./
Exp.		 Average
Balance		 Annual
Rate		 Interest
Inc./
Exp.		 Average
Balance		 Annual
Rate		 Interest
Inc./
Exp.
ASSETS:
Securities:
Taxable (1) (4)
 $ 700,078  2.14  % $ 16,059  $ 720,818  1.89  % $ 14,766  $ 768,959  1.80  % $ 14,560 
Tax-exempt (1) (2) (4)
 25,919  2.60  731  30,153  2.59  844  35,965  2.87  1,080 
Equity securities (1) (2)
 7,058  5.71  403  10,005  5.09  509  8,248  2.13  176 
Total securities (4)
 733,055  2.19  17,193  760,976  1.96  16,119  813,172  1.85  15,816 
Loans receivable:
Commercial (2) (3)
 1,440,667  6.88  99,184  1,501,202  6.63  99,587  1,429,634  5.08  72,684 
Mortgage (2) (3) (5)
 2,920,537  6.15  179,645  2,765,484  5.77  159,606  2,355,662  4.78  112,583 
Consumer (3)
 130,100  11.95  15,547  129,655  11.47  14,868  112,426  10.48  11,778 
Total loans receivable (3)
 4,491,304  6.55  294,376  4,396,341  6.23  274,061  3,897,722  5.06  197,045 
Other earning assets 274,828  5.41  14,856  74,800  6.03  4,513  243,653  1.16  2,112 
Total earning assets 5,499,187  5.88  $ 326,425  5,232,117  5.57  $ 294,693  4,954,547  4.30  $ 214,973 
Noninterest-bearing assets:
Cash and due from banks 56,295  54,824  51,670 
Premises and equipment 116,341  107,635  89,940 
Other assets 269,167  251,725  227,991 
Allowance for credit losses (46,032) (44,930) (39,935)
Total noninterest-bearing assets 395,771  369,254  329,666 
TOTAL ASSETS $ 5,894,958  $ 5,601,371  $ 5,284,213 
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Demand—interest-bearing $ 705,488  0.77  % $ 5,451  $ 853,632  0.54  % $ 4,626  $ 1,061,452  0.20  % $ 2,131 
Savings 3,052,031  3.46  105,675  2,666,905  2.92  77,782  2,383,918  0.54  12,772 
Time 570,911  3.92  22,367  517,017  2.97  15,362  351,272  1.40  4,930 
Total interest-bearing deposits 4,328,430  3.08  133,493  4,037,554  2.42  97,770  3,796,642  0.52  19,833 
Short-term borrowings —  —  —  35,224  5.07  1,787  8,793  4.20  369 
Finance lease liabilities 247  4.45  11  339  4.42  15  426  4.69  20 
Subordinated notes and debentures 105,039  4.28  4,497  104,735  4.10  4,295  104,432  3.69  3,857 
Total interest-bearing liabilities 4,433,716  3.11  $ 138,001  4,177,852  2.49  $ 103,867  3,910,293  0.62  $ 24,079 
Demand—noninterest-bearing 781,780  793,713  847,793 
Other liabilities 86,912  79,473  70,379 
Total liabilities 5,302,408  5,051,038  4,828,465 
Shareholders’ equity 592,550  550,333  455,748 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 5,894,958  $ 5,601,371  $ 5,284,213 
Interest income/Earning assets 5.88  % $ 326,425  5.57  % $ 294,693  4.30  % $ 214,973 
Interest expense/Interest-bearing liabilities 3.11  138,001  2.49  103,867  0.62  24,079 
Net interest spread 2.77  % $ 188,424  3.08  % $ 190,826  3.68  % $ 190,894 
Interest income/Earning assets 5.88  % $ 326,425  5.57  % $ 294,693  4.30  % $ 214,973 
Interest expense/Earning assets 2.49  138,001  1.96  103,867  0.48  24,079 
Net interest margin (fully tax-equivalent) 3.39  % $ 188,424  3.61  % $ 190,826  3.82  % $ 190,894 
(1) Includes unamortized discounts and premiums.
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(2) Average yields are stated on a fully taxable equivalent basis (calculated using statutory rates of 21%) resulting from tax-free municipal securities in the investment portfolio and tax-free municipal loans in the commercial loan portfolio. The taxable equivalent adjustment to net interest income for the years ended December 31, 2024, 2023, and 2022 were $955 thousand, $997 thousand, and $1.2 million, respectively.
(3) Average loans receivable outstanding includes the average balance outstanding of all nonaccrual loans. Loans receivable consist of the average of total loans receivable less average unearned income. In addition, loans receivable interest income consists of loans receivable fees, including PPP deferred processing fees.
(4) Average balance is computed using the fair value of AFS debt securities and amortized cost of HTM debt securities. Average yield has been computed using amortized cost average balance for AFS and HTM debt securities. The adjustment to the average balance for securities in the calculation of average yield for the years ended December 31, 2024, 2023, and 2022 were $(53.1) million, $(61.1) million, and $(40.3) million, respectively.
(5) Includes loans held for sale.

Volume Analysis of Changes in Net Interest Income

The following table presents the change in net interest income for the years specified.

Analysis of Year-to-Year Changes in Net Interest Income
2024 compared to 2023 2023 compared to 2022
Increase (Decrease)
Due to Change in (1)
Increase (Decrease)
Due to Change in (1)
Volume Rate Net Volume Rate Net
Assets
Securities:
Taxable $ (462) $ 1,755  $ 1,293  $ (443) $ 649  $ 206 
Tax-Exempt (2)
 (116) 3  (113) (152) (84) (236)
Equity Securities (2)
 (150) 44  (106) 37  296  333 
Total Securities (728) 1,802  1,074  (558) 861  303 
Loans:
Commercial (2)
 (4,015) 3,612  (403) 3,634  23,269  26,903 
Mortgage (2)
 8,911  11,128  20,039  19,645  27,378  47,023 
Consumer 53  626  679  1,806  1,284  3,090 
Total Loans 4,949  15,366  20,315  25,085  51,931  77,016 
Other Earning Assets 12,052  (1,709) 10,343  (1,242) 3,643  2,401 
Total Earning Assets $ 16,273  $ 15,459  $ 31,732  $ 23,285  $ 56,435  $ 79,720 
Liabilities and Shareholders’ Equity
Interest Bearing Deposits
Demand – Interest Bearing $ (802) $ 1,627  $ 825  $ (417) $ 2,912  $ 2,495 
Savings 11,367  16,526  27,893  1,516  63,494  65,010 
Time 1,566  5,439  7,005  2,326  8,106  10,432 
Total Interest Bearing Deposits 12,131  23,592  35,723  3,425  74,512  77,937 
Short-Term Borrowings (1,787) —  (1,787) 1,112  306  1,418 
Finance Lease Liabilities (4) —  (4) —  —  — 
Subordinated Debentures 12  190  202  (4) (1) (5)
Total Interest Bearing Liabilities $ 10,352  $ 23,782  $ 34,134  $ 4,533  $ 74,817  $ 79,350 
Change in Net Interest Income $ 5,921  $ (8,323) $ (2,402) $ 18,752  $ (18,382) $ 370 
(1) The change in interest due to both volume and rate have been allocated entirely to volume changes.
(2) Changes in interest income on tax-exempt securities and loans are presented on a fully taxable-equivalent basis, using the Corporation’s marginal federal income tax rate of 21% for the year ended December 31, 2024 and 2023.

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Results of Operations
Year Ended December 31, 2024 vs. Year Ended December 31, 2023

Overview of the Statements of Income and Comprehensive Income

Net income available to common shareholders ("earnings") was $50.3 million, or $2.39 per diluted share, for the year ended December 31, 2024, compared to earnings of $53.7 million, or $2.55 per diluted share, for the year ended December 31, 2023. The decrease in diluted earnings per share in the year ended December 31, 2024 was primarily due to the rise in deposit costs year over year. In addition, during the year ended December 31, 2024, the Corporation repurchased 23,988 shares of common stock at a weighted average price per share of $18.33, compared to repurchases of 326,459 shares of common stock at a weighted average price per share of $20.08 during the year ended December 31, 2023. PPNR, a non-GAAP measure, was $76.6 million for the year ended December 31, 2024, compared to $77.8 million for the year ended December 31, 2023. The decrease in PPNR for the year ended December 31, 2024 compared to the year ended December 31, 2023, was primarily driven by the year-over-year increase in deposit costs combined with increases in certain personnel costs (primarily from new offices and personnel added in the recently added expansion markets of Cleveland, OH and Roanoke, VA) and the growth in technology expenses for recently completed full implementation of certain franchise-wide business development and customer management applications.

Return on average equity was 9.21% for the year ended December 31, 2024, compared to 10.54% for the year ended December 31, 2023. Return on average tangible common equity, a non-GAAP measure, was 10.25% for the year ended December 31, 2024, compared to 11.98% for the year ended December 31, 2023.

The Corporation's efficiency ratio was 66.20% for the year ended December 31, 2024, compared to 65.13% for the year ended December 31, 2023. The efficiency ratio on a fully tax-equivalent basis, a non-GAAP ratio, was 65.47% for the year ended December 31, 2024, compared to 64.45% the year ended December 31, 2023. The increase was primarily the result of rising deposit costs coupled with higher salaries and benefits and technology expenses.

Interest Income and Expense

Net interest income was $187.5 million for the year ended December 31, 2024, compared to $189.8 million for the year ended December 31, 2023. The decrease of $2.4 million, or 1.24%, was primarily due to an increase in the Corporation's interest expense as a result of targeted interest-bearing deposit rate increases to ensure both deposit growth and retention, more than offsetting the interest income growth from both year-over-year loan growth and the impact of higher interest rates for much of the 2024 year resulting in greater income on loans, coupled with a higher average balance of earnings excess liquidity maintained as interest-bearing deposits with the Federal Reserve.

Net interest margin was 3.41% and 3.63% for the years ended December 31, 2024 and 2023, respectively. Net interest margin on a fully tax-equivalent basis, a non-GAAP measure, was 3.39% and 3.61% for the years ended December 31, 2024,and 2023, respectively.

The yield on earning assets for the year ended December 31, 2024 was 5.88%, an increase of 31 basis points from December 31, 2023. The increase was primarily a result of loan growth and the net benefit of higher interest rates on both variable-rate loans and new loan production. The yield on earning assets for the year ended December 31, 2023 included the previously mentioned $1.4 million, or three basis points, in one-time syndicated loan interest income.

Provision for Credit Losses

The Corporation recorded a provision for credit losses of $9.2 million in 2024 compared to $6.0 million in 2023. Included in the provision for credit losses for the year ended December 31, 2024, was a $185 thousand expense related to the allowance for unfunded commitments compared to $156 thousand for the year ended December 31, 2023. The $3.2 million increase in the provision expense for the year ended December 31, 2024 compared to the year ended December 31, 2023, was primarily a result of the higher loan portfolio growth. Net loan charge-offs were $7.5 million during the year ended December 31, 2024, compared to $3.4 million during the year ended December 31, 2023. As disclosed in "Allowance for Credit Losses" discussion above, management estimates the allowance balance using relevant available information, from internal and external sources, relating to past events, current conditions, reasonable and supportable forecasts, and other significant qualitative and quantitative factors.

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Management believes the charges to the provision for credit losses in 2024 were appropriate and the allowance for credit losses was adequate to absorb losses in the loan portfolio at December 31, 2024.

Non-Interest Income

Total non-interest income was $39.1 million for the year ended December 31, 2024, compared to $33.3 million for the year ended December 31, 2023. During the year ended December 31, 2024, notable changes compared to the year ended December 31, 2023 included an increase in higher pass-through income from SBICs coupled with an increase in net realized and unrealized gains on equity securities and an increase in wealth and asset management fees.

Non-Interest Expense

For the year ended December 31, 2024, total non-interest expense was $150.0 million, compared to $145.3 million for the year ended December 31, 2023. The increase of $4.7 million, or 3.21%, from the year ended December 31, 2023 was primarily a result of an increase in salaries and benefits and technology expenses. The increase in salaries and benefits was driven by an increase in personnel costs related to annual merit increases and growth in the Corporation's staff and new offices in its expansion markets (Cleveland, OH and Roanoke, VA), while the increase in technology was primarily due to usage and licensing increases in year-over-year investments in applications aimed at enhancing both customer online banking capabilities, customer call center communications and in-branch technology delivery channels.

Income Tax Expense

Income tax expense was $12.8 million in 2024, compared to $13.8 million in 2023. The effective tax rates were 18.98% and 19.22% for 2024 and 2023, respectively. The effective tax rate for the periods differed from the federal statutory rate of 21.0% principally as a result of tax-exempt income from securities and loans as well as earnings from bank owned life insurance.

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Year Ended December 31, 2023 vs. Year Ended December 31, 2022

Overview of the Statements of Income and Comprehensive Income

Earnings were $53.7 million, or $2.55 per diluted share, for the year ended December 31, 2023, compared to $58.9 million, or $3.26 per diluted share, for the year ended December 31, 2022, reflecting decreases of $5.2 million, or 8.78%, and $0.71 per diluted share, or 21.78%. The 2022 full-year earnings per share was partially impacted by the effect of the Corporation's common stock offering completed in September 2022, resulting in the issuance of 4,257,446 shares of common stock at $23.50 per share and net proceeds of $94.1 million after deducting the underwriting discount and customary offering expenses. PPNR, a non-GAAP measure, was $77.8 million for the year ended December 31, 2023, compared to $86.8 million for the year ended December 31, 2022, reflecting an decrease of $9.0 million, or 10.35%. The increase in PPNR for the year ended December 31, 2023 was primarily driven by the increase in deposit costs combined with the growth in technology expenses due to investments in applications aimed at enhancing both customer relationship management and customer online experience, as well as expanding service delivery channels. In addition, the Corporation had a year-over-year decrease in non-interest income as a result of lower pass-through income from small business investment companies ("SBICs").

Return on average equity was 10.54% for the year ended December 31, 2023, compared to 13.86% for the year ended December 31, 2022. Return on average tangible common equity, a non-GAAP measure, was 11.98% and 16.64% for the same periods in 2023 and 2022, respectively.

The Corporation's efficiency ratio was 65.13% for the year ended December 31, 2023, compared to 61.32% for the year ended December 31, 2022, respectively. The efficiency ratio on a fully tax-equivalent basis, a non-GAAP ratio, was 64.45% for the year ended December 31, 2023, compared to 60.87% for the year ended December 31, 2022, respectively. The increase for the year ended December 31, 2023 was primarily the result of rising deposit costs coupled with higher occupancy costs and technology expenses.

Interest Income and Expense

Net interest income of $189.8 million for the year ended December 31, 2023 increased $170 thousand, or 0.09%, from the year ended December 31, 2022, primarily as a result of loan growth throughout 2023 and the benefits of the impact of rising interest rates in 2023 resulting in greater income on variable-rate loans and new loan production, which was substantially offset by an increase in the Corporation's interest expense as a result of both (i) targeted interest-bearing deposit rate increases in ensure both deposit growth and retention, and (ii) a year-over-year increase in the average balance of short-term borrowings through the FHLB. In addition, as previously mentioned, net interest income for the year ended December 31, 2023 included $1.4 million in nonrecurring interest income related primarily to payoffs in the syndicated loan portfolio.

Net interest margin was 3.63% and 3.83% for the years ended December 31, 2023, and 2022, respectively. Net interest margin on a fully tax-equivalent basis, a non-GAAP measure, was 3.61% and 3.82% for the years ended December 31, 2023, and 2022, respectively.

The yield on earning assets of 5.57% for the year ended December 31, 2023 increased 127 basis points from 4.30% for the year ended December 31, 2022, primarily as a result of loan growth, the net benefit of higher interest rates on both variable-rate loans and new loan production. The yield on earning assets for the year ended December 31, 2023 included the previously mentioned $1.4 million, or three basis points, in one-time syndicated loan interest income.

Provision for Credit Losses

The Corporation recorded a provision for credit losses of $6.0 million in 2023 compared to $8.6 million in 2022. Included in the provision for credit losses for the year ended December 31, 2023 was $156 thousand expense related to the allowance for unfunded commitments compared to $603 thousand for the year ended December 31, 2022. Net loan charge-offs were $3.4 million during the year ended December 31, 2023, compared to $2.1 million during the year ended December 31, 2022. As disclosed in "Allowance for Credit Losses" discussion above, management estimates the allowance balance using relevant available information, from internal and external sources, relating to past events, current conditions, reasonable and supportable forecasts, and other significant qualitative and quantitative factors.

Management believes the charges to the provision for credit losses in 2023 were appropriate and the allowance for credit losses was adequate to absorb losses in the loan portfolio at December 31, 2023.
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Non-Interest Income

Total non-interest income was $33.3 million for the year ended December 31, 2023, representing a decrease of $1.5 million, or 4.12%, from the same period in 2022. During the year ended December 31, 2023, Wealth and Asset Management fees increased $79 thousand, or 1.10%, compared to the year ended December 31, 2022, as the Corporation benefited from an increased number of wealth management relationships. Other notable changes during the year ended December 31, 2023 included lower net realized gains on the sale of AFS debt securities, lower mortgage banking income from the reduced mortgage loan production volume in the higher-rate environment, lower level of full-year bank owned life insurance income and pass-through income from SBICs, partially offset by an increase in card processing and interchange income and a favorable variance in unrealized losses on equity securities.

Non-Interest Expense

For the year ended December 31, 2023, total non-interest expense was $145.3 million, reflecting an increase of $7.7 million, or 5.61%, from the year ended December 31, 2022, primarily as a result of higher occupancy costs combined with higher technology expenses. In addition, other non-interest expenses increased primarily due to business generation related expenses and consulting fees. Furthermore, full-year base-salary and related benefit increases, intended to account for inflationary merit increases and the addition of personnel to staff new offices in 2023, were substantially offset by an approximately $8.1 million reduction in incentive-related expenses.

Income Tax Expense

Income tax expense was $13.8 million in 2023 compared to $15.0 million in 2022. The effective tax rates were 19.22% and 19.21% for 2023 and 2022, respectively. The effective tax rate for the periods differed from the federal statutory rate of 21.0% principally as a result of tax-exempt income from securities and loans as well as earnings from bank owned life insurance.

Off-Balance Sheet Arrangements

Assets under management and assets under custody are held in fiduciary or custodial capacity for the Corporation's clients. In accordance with GAAP, these assets are not included on the Corporation's balance sheet.

The Corporation is also party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of the Corporation's clients. These financial instruments include commitments to extend credit and standby letters of credit. Further discussion of these commitments is included Note 18, "Off-Balance Sheet Commitments and Contingencies."

Critical Accounting Policies and Estimates

The Corporation's consolidated financial statements are prepared in accordance with accounting principles GAAP and follow general practices within the industries in which the Corporation operates. The most significant accounting policies used by the Corporation are presented in Note 1, "Summary of Significant Accounting Policies," to the consolidated financial statements. Application of these principles requires management to make estimates or judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates are based on information available as of the date of the financial statements; accordingly, as this information changes, the financial statements could reflect different estimates or judgments. In management’s opinion, some of these estimates and assumptions have a more significant impact than others on the Corporation's financial reporting. For the Corporation, these estimates and assumptions include accounting for the allowance for credit losses, fair value measurements, and goodwill.

Allowance for Credit Losses

The Corporation's allowance for credit losses is a critical accounting policy that requires the most significant judgments and estimates used in preparation of its consolidated financial statements. In determining the appropriate estimate for the allowance for credit losses, management considers a number of factors relative to both individually evaluated credits in the loan portfolio and macro-economic factors relative to the economy of the U.S. as a whole and the economies of the areas in which the Corporation does business.

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Management performs a quarterly evaluation of the adequacy of the allowance for credit losses. Management considers a variety of factors in establishing this estimate. This evaluation is inherently subjective as it requires material estimates by management that may be susceptible to significant change based on changes in economic and real estate market conditions.

The evaluation is comprised of specific and pooled components. The specific component is the Corporation's evaluation of credit loss on individually evaluated loans based on the fair value of the collateral less estimated selling costs if collateral dependent or based on the present value of expected future cash flows discounted at the loan's initial effective interest rate if not collateral dependent. The majority of the Corporation's loans subject to individual evaluation are considered collateral dependent. All other loans are evaluated collectively for credit loss by pooling loans based on similar risk characteristics.

As a significant percentage of the Corporation's loan portfolio is collateralized by real estate, appraisals of the underlying value of property securing loans are critical in determining the charge-offs for specific loans. Assumptions are instrumental in determining the value of properties. Overly optimistic assumptions or negative changes to assumptions could significantly affect the valuation of a property securing a loan and the related allowance determined. Management carefully reviews the assumptions supporting such appraisals to determine that the resulting values reasonably reflect amounts realizable on the related loans.

The pooled component of the evaluation is determined by applying reasonable and supportable economic forecasts and historical averages to the remaining loans segmented by similar risk characteristics. The key assumptions used in projecting future loss rates include the economic forecast, the forecast and reversion to mean time periods, and prepayment and curtailment assumptions. The assumptions are used to calculate and aggregate estimated cash flows for the time period that remains in each loan's contractual life. The cash flows are discounted back to the balance sheet date using each loan's effective yield, to arrive at a present value of future cash flows, which is compared to the amortized cost basis of the loan pool to determine the amount of allowance for credit loss required by the calculation.

One of the most significant judgments used in projecting loss rates when estimating the allowance for credit loss is the macro-economic forecast provided by a third party. The economic indices sourced from the macro-economic forecast and used in projecting loss rates are national unemployment rate and changes in home values. The economic index used in the calculation to which the calculation is most sensitive is the national unemployment rate. Changes in the macro-economic forecast, especially for the national unemployment rate, could significantly impact the calculated estimated credit losses between reporting periods.

Other key assumptions in the calculation of the allowance for credit loss include the forecast and reversion to mean time periods and prepayment and curtailment assumptions. The macro-economic forecast is applied for a reasonable and supportable time period before reverting to long-term historical averages for each economic index. The forecast and reversion to mean time period used for each economic index at December 31, 2024 were four quarters and eight quarters, respectively. Prepayment and curtailment assumptions are based on the Corporation's historical experience over the trailing 12 months and are adjusted by management as deemed necessary. The prepayment and curtailment assumptions vary based on segment.

The quantitative estimated losses are supplemented by more qualitative factors that impact potential losses. Qualitative factors include changes in underwriting standards, changes in lending staff, changes in environmental conditions, delinquency level, segment growth rates and changes in duration within new markets, or other relevant factors. The allowance for credit loss may be materially affected by these qualitative factors, especially during periods of economic uncertainty, for items not reflected in the lifetime credit loss calculation, but which are deemed appropriate by management's current assessment of the risks related to the loan portfolio and/or external factors. The qualitative factors applied at December 31, 2024, and the importance and levels of the qualitative factors applied, may change in future periods depending on the level of changes to items such as the uncertainty of economic conditions and management's assessment of the level of credit risk within the loan portfolio as a result of such changes, compared to the amount of allowance for credit loss calculated by the model. The evaluation of qualitative factors is inherently imprecise and requires significant management judgment.

While management utilizes its best judgment and information available, the adequacy of the allowance for credit loss is determined by certain factors outside of the Corporation's control, such as the performance of the Corporation's portfolios, changes in the economic environment including economic uncertainty, changes in interest rates, and the view of the regulatory authorities toward classification of assets and the level of allowance for credit loss. Additionally, the level of allowance for credit loss may fluctuate based on the balance and mix of the loan portfolio. If actual results differ significantly from management's assumptions, the Corporation's allowance for credit loss may not be sufficient to cover inherent losses in the Corporation's loan portfolio, resulting in additions to the Corporation's allowance for credit loss and an increase in the provision for credit losses.

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Fair Value Measurements

The Corporation uses fair value measurements to record certain financial instruments and to determine fair value disclosures. Equity securities, AFS debt securities, mortgage loans held for sale, and interest rate swap agreements are financial instruments recorded at fair value on a recurring basis. Additionally, from time to time, the Corporation may be required to record at fair value other financial assets on a nonrecurring basis. These nonrecurring fair value adjustments typically involve write-downs of, or specific reserves against, individual assets. GAAP establishes a three-level hierarchy for disclosure of assets and liabilities recorded at fair value. The classification of assets and liabilities within the hierarchy is based on whether the inputs to the valuation methodology used in the measurement are observable or unobservable. Observable inputs reflect market-driven or market-based information obtained from independent sources, while unobservable inputs reflect our estimates about market data.

The degree of management judgment involved in determining the fair value of a financial instrument is dependent upon the availability of quoted market prices or observable market data. For financial instruments that trade actively and have quoted market prices or observable market data, there is minimal subjectivity involved in measuring fair value. When observable market prices and data are not fully available, management judgment is necessary to estimate fair value. In addition, changes in the market conditions may reduce the availability of quoted prices or observable data. For example, reduced liquidity in the capital markets or changes in secondary market activities could result in observable market inputs becoming unavailable. Therefore, when market data is not available, we use valuation techniques that require more management judgment to estimate the appropriate fair value measurement. Fair value is discussed further in Note 1, "Summary of Significant Accounting Policies" and in Note 4, "Fair Value."

Goodwill

Certain intangible assets generated in connection with acquisitions are periodically assessed for impairment. Goodwill is tested at least annually for impairment, and if certain events occur which indicate goodwill might be impaired between annual tests, goodwill must be tested when such events occur. In making this assessment, the Corporation considers a number of factors including operating results, business plans, economic projections, anticipated future cash flows, current market data, stock price, etc. There are inherent uncertainties related to these factors and the Corporation's judgment in applying them to the analysis of goodwill impairment. Future changes in economic and operating conditions could result in goodwill impairment in subsequent periods.

Non-GAAP Financial Measures

The following tables reconcile the non-GAAP financial measures to their most directly comparable measures under GAAP.

December 31, December 31,
2024 2023
Calculation of tangible book value per common share and tangible common equity / tangible assets (non-GAAP):
Shareholders' equity $ 610,695  $ 571,247 
Less: preferred equity 57,785  57,785 
Common shareholders' equity 552,910  513,462 
Less: goodwill and other intangibles 43,874  43,874 
Less: core deposit intangible 206  280 
Tangible common equity (non-GAAP) $ 508,830  $ 469,308 
Total assets $ 6,192,010  $ 5,752,957 
Less: goodwill and other intangibles 43,874  43,874 
Less: core deposit intangible 206  280 
Tangible assets (non-GAAP) $ 6,147,930  $ 5,708,803 
Ending shares outstanding 20,987,992  20,896,439 
Book value per common share (GAAP) $ 26.34  $ 24.57 
Tangible book value per common share (non-GAAP) $ 24.24  $ 22.46 
Common shareholders' equity / Total assets (GAAP) 8.93  % 8.93  %
Tangible common equity / Tangible assets (non-GAAP) 8.28  % 8.22  %

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Years Ended
December 31,
2024 2023
Calculation of net interest margin:
Interest income $ 325,470  $ 293,696 
Interest expense 138,001  103,867 
Net interest income $ 187,469  $ 189,829 
Average total earning assets $ 5,499,187  $ 5,232,117 
Net interest margin (GAAP) 3.41  % 3.63  %
Calculation of net interest margin (fully tax equivalent basis) (non-GAAP):
Interest income $ 325,470  $ 293,696 
Tax equivalent adjustment (non-GAAP) 955  997 
Adjusted interest income (fully tax equivalent basis) (non-GAAP) 326,425  294,693 
Interest expense 138,001  103,867 
Net interest income (fully tax equivalent basis) (non-GAAP) $ 188,424  $ 190,826 
Average total earning assets $ 5,499,187  $ 5,232,117 
Less: average mark to market adjustment on investments (non-GAAP) (53,087) (61,089)
Adjusted average total earning assets, net of mark to market (non-GAAP) $ 5,552,274  $ 5,293,206 
Net interest margin, fully tax equivalent basis (non-GAAP) 3.39  % 3.61  %

Years Ended
December 31,
2024 2023
Calculation of PPNR (non-GAAP): (1)
Net interest income $ 187,469  $ 189,829 
Add: Non-interest income 39,114  33,335 
Less: Non-interest expense 150,002  145,342 
PPNR (non-GAAP) $ 76,581  $ 77,822 
(1) Management believes that this is an important metric as it illustrates the underlying performance of the Corporation, it enables investors and others to assess the Corporation's ability to generate capital to cover credit losses through the credit cycle and provides consistent reporting with a key metric used by bank regulatory agencies.

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Years Ended
December 31,
2024 2023
Calculation of efficiency ratio:
Non-interest expense $ 150,002  $ 145,342 
Non-interest income $ 39,114  $ 33,335 
Net interest income 187,469  189,829 
Total revenue $ 226,583  $ 223,164 
Efficiency ratio 66.20  % 65.13  %
Calculation of efficiency ratio (fully tax equivalent basis) (non-GAAP):
Non-interest expense $ 150,002  $ 145,342 
Less: core deposit intangible amortization 73  84 
Adjusted non-interest expense (non-GAAP) $ 149,929  $ 145,258 
Non-interest income $ 39,114  $ 33,335 
Net interest income 187,469  189,829 
Less: tax exempt investment and loan income, net of TEFRA (non-GAAP) 5,635  5,425 
Add: tax exempt investment and loan income (fully tax equivalent basis) (non-GAAP) 8,068  7,635 
Adjusted net interest income (fully tax equivalent basis) (non-GAAP) 189,902  192,039 
Adjusted net revenue (fully tax equivalent basis) (non-GAAP) $ 229,016  $ 225,374 
Efficiency ratio (fully tax equivalent basis) (non-GAAP) 65.47  % 64.45  %

Years Ended
December 31,
2024 2023
Calculation of return on average tangible common equity (non-GAAP):
Net income $ 54,575  $ 58,020 
Less: preferred stock dividends 4,302  4,302 
Net income available to common shareholders $ 50,273  $ 53,718 
Average shareholders' equity $ 592,550  $ 550,333 
Less: average goodwill & intangibles 44,118  44,193 
Less: average preferred equity 57,785  57,785 
Tangible common shareholders' equity (non-GAAP) $ 490,647  $ 448,355 
Return on average equity (GAAP) 9.21  % 10.54  %
Return on average common equity (GAAP) 9.40  % 10.91  %
Return on average tangible common equity (non-GAAP) 10.25  % 11.98  %
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ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The disclosures set forth in this item are qualified by Item 1A. Risk Factors and the section captioned "Forward-Looking Statements and Factors that Could Affect Future Results" included in this report, and other cautionary statements set forth elsewhere in this report.

As a financial institution, the Corporation's primary source of market risk exposure is interest rate risk, which influences fluctuations in the Corporation's future earnings due to changes in interest rates. This risk is closely correlated to the repricing characteristics of the Corporation's portfolio of assets and liabilities, with each asset or liability repricing either at maturity or during the instrument's life cycle.

The Corporation’s interest rate risk measurement philosophy focuses on maintaining an appropriate balance between the theoretical and the practical, especially given that the primary objective of the Corporation’s overall asset/liability management process is to assess the level of interest rate risk in the Corporation’s balance sheet. Therefore, the Corporation models a set of interest rate scenarios capturing the financial effects of a range of plausible rate scenarios. The collective impact of these scenarios is designed to enable the Corporation to understand the nature and extent of its sensitivity to interest rate changes. Doing so necessitates an assessment of rate changes over varying time horizons and of varying/sufficient degrees such that the impact of embedded options within the balance sheet are sufficiently examined.

The Corporation has designed its interest rate risk measurement activities to include the following core elements: (i) interest rate ramps and shocks, (ii) parallel and non-parallel yield curve shifts, and (iii) a set of alternative rate scenarios, the nature of which change based upon prevailing market conditions.

The Corporation’s primary tools in managing Interest Rate Risk ("IRR") are income simulation models. The income simulation models are utilized to quantify the potential impact of changing interest rates on earnings and to identify expected earnings trends given longer-term rate cycles. Standard gap reports are also utilized to provide supporting detailed information.

The Corporation also recognizes that a sustained environment of higher/lower interest rates will affect the underlying value of the Corporation’s assets, liabilities and off-balance sheet instruments since the present value of their future cash flows (and the cash flows themselves) change when interest rates change.

IRR considerations include inherent assumptions and estimates, including the maturity and repricing characteristics of assets and liabilities, prepayments on amortizing assets, non-maturing deposit sensitivity, and loan and deposit pricing. These assumptions are subject to uncertainty due to the timing, magnitude, and frequency of rate changes, market conditions, and management strategies.

The following table demonstrates the annualized result of an interest rate simulation and the estimated effect that a parallel interest rate shift, or "shock," in the yield curve and subjective adjustments in deposit pricing might have on the Corporation’s projected net interest income over the next 12 months. This simulation assumes that there is no growth in interest-earning assets or interest-bearing liabilities over the next 12 months. The changes to net interest income shown below are in compliance with the Corporation’s policy guidelines.

% Change in Net Interest Income
Change in Basis Points December 31, 2024 December 31, 2023
300 (0.2)% 2.6%
200 0.5% 3.8%
100 0.5% 4.6%
(100) (1.1)% (3.8)%
(200) (1.4)% (6.5)%
(300) (3.3)% (12.8)%

At December 31, 2024, the Corporation has approximately $2.5 billion in outstanding loan balances that are rate sensitive over the next twelve months.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Registered Public Accounting Firm




To the Shareholders, Board of Directors, and Audit Committee
CNB Financial Corporation
Clearfield, Pennsylvania


Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of CNB Financial Corporation (“Corporation”) as of December 31, 2024 and 2023, the related consolidated statements of income and comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Corporation as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Corporation’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 6, 2025, expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on the Corporation’s financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.



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Allowance for Credit Losses on Loans – Qualitative Factors

Description of the Critical Audit Matter

As described in Notes 1 and 3 to the financial statements, the Corporation’s loan portfolio totaled $4.6 billion as of December 31, 2024, and the allowance for credit losses on loans (“ACL”) was $47.4 million. This represents an estimate of expected losses inherent within the Corporation’s loan portfolio.

The Corporation establishes an allowance representing the estimate of expected credit losses over the estimated life of the existing portfolio of loans. The Corporation measures expected credit losses based on a pooled loan basis when similar risk characteristics exist by primarily applying a discounted cash flow (“DCF”) model. The DCF model discounts instrument-level contractual cash flows, adjusting for prepayments and curtailments, and incorporates loss expectations based on past events, current conditions, and forecasted macroeconomic indicators using reasonable and supportable forecasts. The quantitative estimated losses provided by the DCF model are supplemented by more qualitative factors that impact potential losses. Qualitative factors include changes in underwriting standards, changes in lending staff, changes in environmental conditions and other relevant factors. The allowance for credit loss may be materially affected by these qualitative factors, especially during periods of economic uncertainty, for items not reflected in the lifetime credit loss calculation, but which are deemed appropriate by management's current assessment of the risks related to the loan portfolio and/or external factors. The evaluation of qualitative factors is inherently imprecise and requires significant management judgment.

We identified the qualitative factor adjustments included in the allowance for credit losses on loans as a critical audit matter. The principal considerations for our determination included the high degree of judgment and subjectivity in auditing management’s estimation of qualitative factor adjustments, which requires significant judgment.

How the Critical Audit Matter Was Addressed in the Audit

The primary procedures performed to address the critical audit matter included:

•We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Corporation’s internal controls over the ACL process, including controls over the qualitative elements of the ACL. This included controls over the review of the relevance and reliability of data used to determine the estimates and the review of the appropriateness of the key assumptions and judgments used in the determination of the qualitative factors.

•We evaluated the completeness and accuracy of data used in the development of qualitative factors and the reasonableness of management’s judgments and the relevance of data used in applying the qualitative factors.

•We evaluated the current and expected qualitative adjustments, including assessing the basis for the adjustments and the reasonableness of the significant assumptions.


We have served as the Corporation’s auditor since 2022.



/s/ Forvis Mazars, LLP
Indianapolis, Indiana
March 6, 2025


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Report of Independent Registered Public Accounting Firm




To the Shareholders, Board of Directors, and Audit Committee
CNB Financial Corporation
Clearfield, Pennsylvania


Opinion on the Internal Control over Financial Reporting

We have audited CNB Financial Corporation’s (“Corporation”) internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework: (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework: (2013) issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Corporation as of December 31, 2024 and 2023, and for each of the three years in the period ended December 31, 2024, and our report dated March 6, 2025, expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Corporation’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Corporation’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Corporation in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definitions and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of reliable financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.



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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.



/s/ Forvis Mazars, LLP
Indianapolis, Indiana
March 6, 2025


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CONSOLIDATED BALANCE SHEETS
Dollars in thousands, except share data
  December 31, December 31,
2024 2023
ASSETS
Cash and due from banks $ 63,771  $ 54,789 
Interest-bearing deposits with Federal Reserve 375,009  164,385 
Interest-bearing deposits with other financial institutions 4,255  2,872 
Total cash and cash equivalents 443,035  222,046 
Debt securities available-for-sale, at fair value (amortized cost of $520,223 as of December 31, 2024 and $395,803 as of December 31, 2023)
 468,546  341,955 
Debt securities held-to-maturity, at amortized cost (fair value $282,970 as of December 31, 2024 and $360,570, as of December 31, 2023)
 306,081  388,968 
Equity securities 10,456  9,301 
Loans held for sale 762  675 
Loans receivable
Syndicated loans 79,882  108,710 
Loans 4,529,074  4,359,766 
Total loans receivable 4,608,956  4,468,476 
Less: allowance for credit losses (47,357) (45,832)
Net loans receivable 4,561,599  4,422,644 
FHLB and other restricted stock holdings and investments 40,702  30,011 
Premises and equipment, net 76,011  73,700 
Operating & finance lease right-of-use assets 52,715  35,699 
Bank owned life insurance 117,579  114,468 
Mortgage servicing rights 1,251  1,554 
Goodwill and other intangible assets 43,874  43,874 
Core deposit intangible, net 206  280 
Accrued interest receivable and other assets 69,193  67,782 
Total Assets $ 6,192,010  $ 5,752,957 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Noninterest-bearing demand deposits $ 819,680  $ 728,881 
Interest-bearing demand deposits 706,796  803,093 
Savings 3,122,028  2,960,282 
Certificates of deposit 722,860  506,494 
Total deposits 5,371,364  4,998,750 
Subordinated debentures 20,620  20,620 
Subordinated notes, net of unamortized issuance costs 84,570  84,267 
Operating lease liabilities 40,315  37,650 
Accrued interest payable and other liabilities 64,446  40,423 
Total liabilities 5,581,315  5,181,710 
Commitments and contingent liabilities
Preferred stock, Series A non-cumulative perpetual,
No par value; $1,000 liquidation preference; shares authorized 60,375;
Shares issued 60,375 at December 31, 2024 and 2023
 57,785  57,785 
Common stock, no par value; 50,000,000 shares authorized;
Shares issued 21,235,503 shares at December 31, 2024 and 2023
 —  — 
Additional paid in capital 219,876  220,495 
Retained earnings 381,296  345,935 
Treasury stock, at cost (247,511 shares at December 31, 2024 and 339,064 shares at December 31, 2023)
 (4,689) (6,890)
Accumulated other comprehensive loss (43,573) (46,078)
Total shareholders’ equity 610,695  571,247 
Total Liabilities and Shareholders’ Equity $ 6,192,010  $ 5,752,957 
See Notes to Consolidated Financial Statements
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CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
Dollars in thousands, except per share data
  Year ended December 31,
2024 2023 2022
INTEREST AND DIVIDEND INCOME:
Loans including fees
Interest and fees on loans $ 293,544  $ 273,220  $ 194,149 
Processing fees on PPP loans —  3  1,889 
Securities and cash and cash equivalents:
Taxable 30,915  19,279  16,672 
Tax-exempt 636  724  871 
Dividends 375  470  157 
Total interest and dividend income 325,470  293,696  213,738 
INTEREST EXPENSE:
Deposits 133,493  97,770  19,833 
Borrowed funds and finance lease liabilities 11  1,802  389 
Subordinated debentures (includes $0, $(151), and $127 accumulated other comprehensive
income reclassification for change in fair value of interest rate swap agreements, respectively)
 4,497  4,295  3,857 
Total interest expense 138,001  103,867  24,079 
NET INTEREST INCOME 187,469  189,829  189,659 
PROVISION FOR CREDIT LOSS EXPENSE 9,222  5,993  8,589 
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSS EXPENSE 178,247  183,836  181,070 
NON-INTEREST INCOME:
Service charges on deposit accounts 6,990  7,372  7,206 
Other service charges and fees 2,973  3,010  3,196 
Wealth and asset management fees 7,845  7,251  7,172 
Net realized gains on available-for-sale securities (includes $74, $52, and $651
accumulated other comprehensive income reclassifications for net realized gains
on available-for-sale securities, respectively)
 74  52  651 
Net realized gains on equity securities —  22  — 
Net unrealized gains (losses) on equity securities 754  (409) (1,149)
Mortgage banking 673  676  1,237 
Bank owned life insurance 3,110  2,945  3,433 
Card processing and interchange income 8,666  8,301  7,797 
Other non-interest income 8,029  4,115  5,223 
Total non-interest income 39,114  33,335  34,766 
NON-INTEREST EXPENSES:
Compensation and benefits (includes $(168), $(174), and $(113) accumulated other comprehensive
income reclassifications for net amortization of actuarial (gains) losses, respectively)
 74,536  71,062  71,460 
Net occupancy expense 14,737  14,509  13,298 
Technology expense 21,805  20,202  17,041 
State and local taxes 4,726  4,126  4,078 
Legal, professional and examination fees 4,217  4,414  4,173 
Advertising 2,545  3,133  2,887 
FDIC insurance 3,718  3,879  2,796 
Card processing and interchange expenses 4,575  5,025  4,801 
Other non-interest expenses 19,143  18,992  17,088 
Total non-interest expenses 150,002  145,342  137,622 
INCOME BEFORE INCOME TAXES 67,359  71,829  78,214 
INCOME TAX EXPENSE (includes $51, $79, and $134 income tax expense
reclassification items, respectively)
 12,784  13,809  15,026 
NET INCOME 54,575  58,020  63,188 
PREFERRED STOCK DIVIDENDS 4,302  4,302  4,302 
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 50,273  $ 53,718  $ 58,886 
PER COMMON SHARE DATA:
Basic Earnings Per Common Share $ 2.39  $ 2.56  $ 3.26 
Diluted Earnings Per Common Share $ 2.39  $ 2.55  $ 3.26 
Cash Dividends Declared $ 0.710  $ 0.700  $ 0.700 
NET INCOME $ 54,575  $ 58,020  $ 63,188 
OTHER COMPREHENSIVE INCOME (LOSS):
Net change in unrealized gains (losses) on available-for-sale securities, net of reclassification and tax $ 1,715  $ 6,109  $ (53,576)
Amortization of unrealized gains from held-to-maturity securities, net of tax 545  591  875 
Change in actuarial gains (losses), for post-employment health care plan, net of amortization and tax 245  (139) 150 
Change in fair value of interest rate swap agreements designated as a cash flow hedge, net of interest and tax —  (119) 425 
Total other comprehensive income (loss) 2,505  6,442  (52,126)
COMPREHENSIVE INCOME $ 57,080  $ 64,462  $ 11,062 
See Notes to Consolidated Financial Statements
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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2024, 2023, AND 2022
Dollars in thousands, except share and per share data
Preferred Stock Additional
Paid-In
Capital		 Retained
Earnings		 Treasury
Stock		 Accumulated
Other
Comprehensive
Income (Loss)		 Total
Share-
holders’
Equity
Balance, January 1, 2022 $ 57,785  $ 127,351  $ 260,582  $ (2,477) $ (394) $ 442,847 
Net income —  —  63,188  —  —  63,188 
Other comprehensive loss —  —  —  —  (52,126) (52,126)
Forfeiture of restricted stock award grants (1,440 shares)
 —  36  —  (36) —  — 
Restricted stock award grants (57,823 shares)
 —  (1,000) —  1,000  —  — 
Performance based restricted stock award grants (11,895 shares)
 —  (173) —  173  —  — 
Stock-based compensation expense —  1,248  —  —  —  1,248 
Contribution of treasury stock (3,000 shares)
 —  (44) —  44  —  — 
Stock-based contribution expense —  84  —  —  —  84 
Issuance of common stock, net of issuance costs (4,257,446 shares)
 —  94,051  —  —  —  94,051 
Purchase of treasury stock (50,166 shares)
 —  —  —  (1,342) —  (1,342)
Purchase of treasury stock for the purpose of tax withholding related to restricted stock award vesting (7,568 shares)
 —  —  —  (203) —  (203)
Purchase of treasury stock for the purpose of tax withholding related to performance based restricted stock award vesting (4,706 shares)
 —  —  —  (126) —  (126)
Preferred cash dividend declared —  —  (4,302) —  —  (4,302)
Cash dividends declared ($0.70 per share)
 —  —  (12,557) —  —  (12,557)
Balance, December 31, 2022 57,785  221,553  306,911  (2,967) (52,520) 530,762 
Net income —  —  58,020  —  —  58,020 
Other comprehensive income —  —  —  —  6,442  6,442 
Forfeiture of restricted stock award grants (6,391 shares)
 —  134  —  (134) —  — 
Restricted stock award grants (105,185 shares)
 —  (2,743) —  2,743  —  — 
Performance based restricted stock award grants (4,118 shares)
 —  (111) —  111  —  — 
Stock-based compensation expense —  1,688  —  —  —  1,688 
Contribution of treasury stock (3,000 shares)
 —  (81) —  81  —  — 
Stock-based contribution expense —  55  —  —  —  55 
Purchase of treasury stock (326,459 shares)
 —  —  —  (6,621) —  (6,621)
Purchase of treasury stock for the purpose of tax withholding related to restricted stock award vesting (3,776 shares)
 —  —  —  (89) —  (89)
Purchase of treasury stock for the purpose of tax withholding related to performance based restricted stock award vesting (584 shares)
 —  —  —  (14) —  (14)
Preferred cash dividend declared —  —  (4,302) —  —  (4,302)
Common cash dividends declared ($0.70 per share)
 —  —  (14,694) —  —  (14,694)
Balance, December 31, 2023 57,785  220,495  345,935  (6,890) (46,078) 571,247 
See Notes to Consolidated Financial Statements









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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (continued)
FOR THE YEARS ENDED DECEMBER 31, 2024, 2023, AND 2022
Dollars in thousands, except share and per share data
Preferred Stock Additional
Paid-In
Capital		 Retained
Earnings		 Treasury
Stock		 Accumulated
Other
Comprehensive
Income (Loss)		 Total
Share-
holders’
Equity
Net income —  —  54,575  —  —  54,575 
Other comprehensive income —  —  —  —  2,505  2,505 
Forfeiture of restricted stock award grants (15,044 shares)
 —  360  —  (360) —  — 
Restricted stock award grants (130,857 shares)
 —  (3,025) —  3,025  —  — 
Performance based restricted stock award grants (9,667 shares)
 —  (179) —  179  —  — 
Stock-based compensation expense —  2,225  —  —  —  2,225 
Purchase of treasury stock (23,988 shares)
 —  —  —  (441) —  (441)
Purchase of treasury stock for the purpose of tax withholding related to restricted stock award vesting (7,421 shares)
 —  —  —  (148) —  (148)
Purchase of treasury stock for the purpose of tax withholding related to performance based restricted stock award vesting (2,518 shares)
 —  —  —  (54) —  (54)
Preferred cash dividend declared —  —  (4,302) —  —  (4,302)
Cash dividends declared ($0.71 per common share)
 —  —  (14,912) —  —  (14,912)
Balance, December 31, 2024 $ 57,785  $ 219,876  $ 381,296  $ (4,689) $ (43,573) $ 610,695 
See Notes to Consolidated Financial Statements
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CONSOLIDATED STATEMENTS OF CASH FLOWS
Dollars in thousands
  Year ended December 31,
2024 2023 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 54,575  $ 58,020  $ 63,188 
Adjustments to reconcile net income to net cash provided by operations:
Provision for credit loss expense 9,222  5,993  8,589 
Depreciation and amortization of premises and equipment, operating leases assets,
core deposit intangible, and mortgage servicing rights		 8,269  7,739  6,573 
Accretion of securities, deferred loan fees and costs, net yield and credit mark on
acquired loans, and unearned income		 (4,585) (3,155) (3,316)
Net amortization of deferred costs on borrowings 303  303  303 
Accretion of deferred PPP processing fees —  (3) (1,889)
Deferred tax (benefit) expense (1,183) 1,111  (1,814)
Net realized gains on sales of available-for-sale securities (74) (52) (651)
Net realized and unrealized losses (gains) on equity securities (754) 387  1,149 
Gain on sale of loans held for sale (770) (447) (1,285)
Net losses (gains) on dispositions of premises and equipment and foreclosed assets 53  27  (170)
Proceeds from sale of loans receivable 27,934  16,263  29,151 
Origination of loans held for sale (28,451) (17,874) (34,181)
Income on bank owned life insurance (3,110) (2,945) (2,550)
Gain on bank owned life insurance (death benefit proceeds in excess of cash surrender value) —  —  (883)
Restricted stock compensation expense 2,225  1,688  1,248 
Stock-based contribution expense —  55  84 
Changes in:
Accrued interest receivable and other assets 389  (5,894) (19,065)
Accrued interest payable, lease liabilities, and other liabilities 7,469  (14,193) 19,572 
NET CASH PROVIDED BY OPERATING ACTIVITIES 71,512  47,023  64,053 
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities, prepayments and calls of available-for-sale securities 65,457  42,726  70,033 
Proceeds from sales of available-for-sale securities 806  13,151  22,164 
Proceeds from sale of equity securities —  296  — 
Purchase of available-for-sale securities (190,849) (19,253) (48,433)
Proceeds from maturities, prepayments and calls of held-to-maturity securities 83,883  16,806  23,995 
Purchases of held-to-maturity securities —  —  (213,853)
Purchase of equity securities (401) (369) (398)
Proceeds from loans held for sale previously classified as portfolio loans 11,182  4,994  — 
Net increase in loans receivable (155,115) (197,594) (630,605)
Purchase of bank owned life insurance —  —  (11,644)
Proceeds from death benefit of bank owned life insurance policies —  —  3,273 
Redemption (purchase) of FHLB, other equity, and restricted equity interests (10,691) 704  (7,439)
Purchase of premises and equipment (16,284) (10,847) (12,290)
Proceeds from the sale of premises and equipment and foreclosed assets 8,732  52  496 
Purchase of other intangibles —  (125) — 
NET CASH USED BY INVESTING ACTIVITIES (203,280) (149,459) (804,701)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in checking, money market and savings accounts 156,248  316,280  (153,191)
Net increase in certificates of deposit 216,366  60,033  60,009 
Purchase of treasury stock (643) (6,724) (1,671)
Proceeds from common stock offering, net of issuance costs —  —  94,051 
Cash dividends paid, common stock (14,912) (14,694) (12,557)
Cash dividends paid, preferred stock (4,302) (4,302) (4,302)
Net change in short-term borrowings —  (132,396) 132,396 
NET CASH PROVIDED BY FINANCING ACTIVITIES 352,757  218,197  114,735 
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS 220,989  115,761  (625,913)
CASH AND CASH EQUIVALENTS, Beginning 222,046  106,285  732,198 
CASH AND CASH EQUIVALENTS, Ending $ 443,035  $ 222,046  $ 106,285 
See Notes to Consolidated Financial Statements



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CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
Dollars in thousands
  Year ended December 31,
2024 2023 2022
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 134,399  $ 102,156  $ 26,804 
Income taxes 12,908  12,006  17,423 
SUPPLEMENTAL NONCASH DISCLOSURES:
Transfers to other real estate owned $ 1,453  $ 874  $ 785 
Transfers from loans held for sale to loans held for investment 1,394  1,666  6,448 
Transfers from loans held for investment to loans held for sale 438  166  — 
Transfer of securities from available-for-sale to held-to-maturity —  —  220,757 
Grant of restricted stock awards from treasury stock 3,025  2,743  1,000 
Grant of performance based restricted stock awards from treasury stock 179  111  173 
Restricted stock forfeiture 360  134  36 
Contribution of stock from treasury stock —  81  44 
Lease liabilities arising from obtaining operating right-of-use assets 4,084  5,001  13,371 
Lease liabilities arising from obtaining finance right-of-use assets 14,951  —  — 
See Notes to Consolidated Financial Statements
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Notes to Consolidated Financial Statements

1.  Summary of Significant Accounting Policies

Unless otherwise indicated, dollar amounts in tables are stated in thousands, except for per share amounts.

Business and Organization

CNB Financial Corporation (the "Corporation") is headquartered in Clearfield, Pennsylvania, and provides a full range of banking and related services through its wholly owned subsidiary, CNB Bank (the "Bank"). In addition, the Bank provides wealth and asset management services, including the administration of trusts and estates, retirement plans, and other employee benefit plans as well as a full range of wealth management services. The Bank serves individual and corporate customers and is subject to competition from other financial institutions and intermediaries with respect to these services. In addition to the Bank, the Corporation also operates a consumer discount loan and finance business through its wholly owned subsidiary, Holiday Financial Services Corporation ("Holiday"). The Corporation and its other subsidiaries are subject to examination by federal and state regulators. The Corporation’s market area is primarily concentrated in the Central and Northwest regions of the Commonwealth of Pennsylvania, the Central and Northeast regions of the State of Ohio, Western region of the State of New York and the Southwest region of the Commonwealth of Virginia.

Basis of Financial Presentation

The financial statements are consolidated to include the accounts of the Corporation, the Bank, CNB Securities Corporation, Holiday, CNB Risk Management, Inc. and CNB Insurance Agency. All significant intercompany accounts and transactions have been eliminated in the consolidated financial statements.

Subsequent Events

The Corporation has evaluated subsequent events for recognition and disclosure through the date these consolidated financial statements were issued.

Use of Estimates

To prepare financial statements in conformity with U.S. generally accepted accounting principles ("GAAP"), management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the financial statements and the disclosures provided, and actual results could differ. The allowance for credit losses on loans receivable and off-balance-sheet credit exposures, the fair values of financial instruments, goodwill and the status of contingencies are particularly subject to change.

Cash and Cash Equivalents

For purposes of the consolidated statement of cash flows, the Corporation defines cash and cash equivalents as cash and due from banks and interest bearing deposits with the Federal Reserve and other financial institutions. Net cash flows are reported for customer loan and deposit transactions, interest bearing time deposits with other financial institutions and borrowings with original maturities of 90 days or less.

Interest-Bearing Deposits in Other Financial Institutions

Interest-bearing deposits in other financial institutions are carried at cost.

Restrictions on Cash

Note 17, "Derivative Instruments," to the consolidated financial statements discloses the cash collateral balances required to be maintained in connection with the Corporation’s interest rate swaps.

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Debt Securities

Debt securities are classified as held-to-maturity ("HTM") and carried at amortized cost when management has the positive intent and ability to hold them to maturity. Debt securities are classified as available-for-sale ("AFS") when they might be sold before maturity. AFS debt securities are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income, net of tax.

Interest income includes amortization of purchase premium or discount. Premiums and discounts on securities are amortized on the level-yield method without anticipating prepayments, except for mortgage backed securities where prepayments are anticipated. Premiums on callable debt securities are amortized to their earliest call date. Gains and losses on sales are recorded on the trade date and determined using the specific identification method.

The Corporation has made a policy election to exclude accrued interest from the amortized cost basis of debt securities and report accrued interest separately in accrued interest receivable and other assets in the consolidated balance sheets. A debt security is placed on nonaccrual status at the time any principal or interest payments become more than 90 days delinquent or if full collection of interest or principal becomes uncertain. Accrued interest for a security placed on nonaccrual is reversed against interest income. There was no accrued interest related to debt securities reversed against interest income for the years ended December 31, 2024 and 2023, respectively.

Allowance for Credit Losses (AFS Debt Securities)

For AFS debt securities in an unrealized loss position, the Corporation first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security's amortized cost basis is written down to fair value through income. For AFS debt securities that do not meet the aforementioned criteria, the Corporation evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income.

Changes in the allowance for credit losses are recorded as provision for (or reversal of) credit loss expense. Losses are charged against the allowance when management confirms that an AFS security is uncollectable or when either of the criteria regarding intent or requirement to sell is met. As of December 31, 2024 and December 31, 2023, the Corporation determined that the unrealized loss positions in AFS debt securities were not the result of credit losses, and therefore, an allowance for credit losses was not recorded. See Note 2, "Securities," and Note 4, "Fair Value," for more information about AFS debt securities.

Accrued interest receivable on AFS debt securities totaled $2.1 million and $1.4 million at December 31, 2024 and December 31, 2023, respectively, and was reported in accrued interest receivable and other assets on the consolidated balance sheets.

Allowance for Credit Losses (HTM Debt Securities)

Management measures expected credit losses on HTM debt securities on a collective basis by major security type.

Accrued interest receivable on HTM debt securities totaled $1.1 million and $1.3 million at December 31, 2024 and 2023, respectively, and was reported in accrued interest receivable and other assets on the consolidated balance sheets and is excluded from the estimate of credit losses.

Management classifies the HTM portfolio into the following major security types: U.S. government sponsored entities and residential & multi-family mortgages. All of the residential & multi-family mortgages held by the Corporation are issued by U.S. government entities and agencies. These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses.

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Equity Securities

Equity securities are carried at fair value, with changes in fair value reported in net income. Equity securities without readily determinable fair values are carried at cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment.

Loans Held for Sale

Loans originated and intended for sale in the secondary market are carried at the lower of aggregate cost or fair value, as determined by outstanding commitments from investors. Net unrealized losses, if any, are recorded as a valuation allowance and charged to earnings.

Mortgage loans held for sale are generally sold with servicing rights retained. The carrying value of the mortgage loan sold is reduced by the amount allocated to the servicing right. Gains and losses on sales of mortgage loans are based on the difference between the selling price and the carrying value of the related loan sold.

Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at amortized cost. Amortized cost is the principal balance outstanding, net of purchase premiums and discounts, deferred loan fees and costs. Accrued interest receivable totaled $21.6 million and $21.6 million at December 31, 2024 and December 31, 2023, respectively, and was reported in accrued interest receivable and other assets on the consolidated balance sheets and is excluded from the estimate of credit losses. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the level-yield method without anticipating prepayments.

Interest income on mortgage, consumer and commercial loans is discontinued and placed on nonaccrual status at the time the loan is 90 days delinquent unless the loan is well secured and in process of collection. Past-due status is based on the contractual terms of the loan. Loans, including loans modified in a troubled debt restructuring, are placed on nonaccrual or recorded as charge-offs at an earlier date if collection of principal or interest is considered doubtful.

All interest accrued but not received on loans placed on nonaccrual is reversed against interest income. Interest received on such loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Under the cost-recovery method, interest income is not recognized until the loan balance is reduced to zero. Under the cash-basis method, interest income is recorded when the payment is received in cash. For all portfolio segments, loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Purchased Credit Deteriorated ("PCD") Loans

The Corporation has purchased loans, some of which have experienced more than insignificant credit deterioration since origination.

PCD loans are recorded at the amount paid. An allowance for credit losses is determined using the same methodology as other loans held for investment. The initial allowance for credit losses determined on a collective basis is allocated to individual loans. The sum of the loan's purchase price and allowance for credit losses becomes its initial amortized cost basis. The difference between the initial amortized cost basis and the par value of the loan is a noncredit discount or premium, which is amortized into interest income over the life of the loan. Subsequent changes to the allowance for credit losses are recorded through provision expense.

Concentration of Credit Risk

Most of the Corporation’s business activity is with customers located within the Commonwealth of Pennsylvania and the states of Ohio, New York and Virginia. Therefore, the Corporation’s exposure to credit risk is significantly affected by changes in the economies of Pennsylvania, Ohio, New York and Virginia. At December 31, 2024 no industry concentration existed which exceeded 10% of the total loan portfolio.

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Allowance for Credit Losses - Loans

The allowance for credit losses on loans represents management’s estimate of expected credit losses over the estimated life of our existing portfolio of loans. The allowance for credit losses is a valuation account that is deducted from the loan's amortized cost basis to present the net amount expected to be collected on the loans.

The expense for credit loss recorded through earnings is the amount necessary to maintain the allowance for credit losses on loans at the amount of expected credit losses inherent within the loan portfolio. Loans are recorded as charge-offs against the allowance when management confirms a loan balance is uncollectable. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off.

Management estimates the allowance balance using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts, and other significant qualitative and quantitative factors. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, changes in environmental conditions, delinquency level, segment growth rates and changes in duration within new markets, or other relevant factors. For further information on the allowance for credit losses on loans, see Note 3, "Loans Receivable and Allowance for Credit Losses," for additional detail.

The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist. The Corporation has segregated its portfolio segments based on federal call report codes which classify loans based on the primary collateral supporting the loan. The following are the Corporation's segmented portfolios:

1-4 Family Construction: The Bank originates construction loans to finance 1-4 family residential buildings. Construction loans include not only construction of new structures, but also additions or alterations to existing structures and the demolition of existing structures to make way for new structures. Construction loans are generally secured by real estate. The primary risk characteristics are specific to the uncertainty on whether the construction will be completed according to the specifications and schedules. Factors that may influence the completion of construction may be customer specific, or related to changes in general economic conditions.

Other construction loans and all land development and other land loans: The Bank originates construction loans to finance land development preparatory to erecting new structures or the on-site construction of industrial, commercial, or multi-family buildings. Construction loans include not only construction of new structures, but also additions or alterations to existing structures and the demolition of existing structures to make way for new structures. Construction loans are generally secured by real estate. The primary risk characteristics are specific to the uncertainty on whether the construction will be completed according to the specifications and schedules. Factors that may influence the completion of construction may be customer specific, such as the quality and depth of property management, or related to changes in general economic conditions.

Farmland (including farm residential and other improvements): The Bank originates loans secured by farmland and improvements thereon, secured by mortgages. Farmland includes all land known to be used or usable for agricultural purposes, such as crop and livestock production. Farmland also includes grazing or pasture land, whether tillable or not and whether wooded or not. The primary risk characteristics are specific to the uncertainty on production, market, financial, environmental and human resources.

Home equity lines of credit: The primary risk characteristics associated with home equity lines of credit typically involve changes to the borrower, including unemployment or other loss of income; unexpected significant expenses, such as major medical expenses, catastrophic events, divorce and death. Home equity lines of credit are typically originated with variable or floating interest rates, which could expose the borrower to higher payments in a rising interest rate environment. Real estate values could decrease and cause the value of the underlying property to fall below the loan amount, creating additional potential loss exposure for the Bank.

Residential Mortgages secured by first liens: The Bank originates one-to-four family residential mortgage loans primarily within Central and Northwest Pennsylvania, Central and Northeast Ohio, Western New York, and Southwest Virginia market. These loans are secured by first liens on a primary residence or investment property. The primary risk characteristics associated with residential mortgage loans typically involve major changes to the borrower, including unemployment or other loss of income; unexpected significant expenses, such as major medical expenses, catastrophic events, divorce or death. Residential mortgage loans that have adjustable rates could expose the borrower to higher payments in a rising interest rate environment.
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Real estate values could decrease and cause the value of the underlying property to fall below the loan amount, creating additional potential loss exposure for the Bank.

Residential Mortgages secured by junior liens: The Bank originates loans secured by junior liens against one to four family properties primarily within Central and Northwest Pennsylvania, Central and Northeast Ohio, Western New York, and Southwest Virginia market. Loans secured by junior liens are primarily in the form of an amortizing home equity loan. These loans are subordinate to a first mortgage which may be from another lending institution. The primary risk characteristics associated with loans secured by junior liens typically involve major changes to the borrower, including unemployment or other loss of income, unexpected significant expenses, such as for major medical expenses, catastrophic events, divorce or death. Real estate values could decrease and cause the value of the property to fall below the loan amount, creating additional potential loss exposure for the Bank.

Multifamily (5 or more) residential properties: The Bank originates mortgage loans for multifamily properties primarily within Central and Northwest Pennsylvania, Central and Northeast Ohio, Western New York, and Southwest Virginia market. Multifamily loans are expected to be repaid from the cash flows of the underlying property so the collective amount of rents must be sufficient to cover all operating expenses, property management and maintenance, taxes and debt service. Increases in vacancy rates, interest rates or other changes in general economic conditions can have an impact on the borrower and its ability to repay the loan.

Owner-occupied, nonfarm nonresidential properties: The Bank originates mortgage loans to operating companies primarily within Central and Northwest Pennsylvania, Central and Northeast Ohio, Western New York, and Southwest Virginia market. Owner-occupied real estate properties primarily include retail buildings, medical buildings and industrial/warehouse space. Owner-occupied loans are typically repaid first by the cash flows generated by the borrower’s business operations. The primary risk characteristics are specific to the underlying business and its ability to generate sustainable profitability and positive cash flow. Factors that may influence a borrower's ability to repay their loan include demand for the business’ products or services, the quality and depth of management, the degree of competition, regulatory changes, and general economic conditions.

Non-owner occupied, nonfarm nonresidential properties: The Bank originates mortgage loans for commercial real estate that is managed as an investment property primarily within Central and Northwest Pennsylvania, Central and Northeast Ohio, Western New York, and Southwest Virginia market. Commercial real estate properties primarily include retail buildings/shopping centers, hotels, office/medical buildings and industrial/warehouse space. Increases in vacancy rates, interest rates or other changes in general economic conditions can have an impact on the borrower and its ability to repay the loan. Commercial real estate loans are generally considered to have a higher degree of credit risk as they may be dependent on the ongoing success and operating viability of a fewer number of tenants who are occupying the property and who may have a greater degree of exposure to economic conditions.

Agricultural production and other loans to farmers: The Bank originates loans secured or unsecured to farm owners and operators (including tenants) or to nonfarmers for the purpose of financing agricultural production, including the growing and storing of crops, the marketing or carrying of agricultural products by the growers thereof, and the breeding, raising, fattening, or marketing of livestock, and for purchases of farm machinery, equipment, and implements. The primary risk characteristics are specific to the uncertainty on production, market, financial, environmental and human resources.

Commercial and Industrial: The Bank originates lines of credit and term loans to operating companies for business purposes. The loans are generally secured by business assets such as accounts receivable, inventory, business vehicles and equipment as well as the stock of a company, if privately held. Commercial and Industrial loans are typically repaid first by the cash flows generated by the borrower’s business operations. The primary risk characteristics are specific to the underlying business and its ability to generate sustainable profitability and positive cash flow. Factors that may influence a borrower's ability to repay their loan include demand for the business’ products or services, the quality and depth of management, the degree of competition, regulatory changes, and general economic conditions. The ability of the Bank to foreclose and realize sufficient value from business assets securing these loans is often uncertain. To mitigate the risk characteristics of commercial and industrial loans, commercial real estate may be included as a secondary source of collateral. The Bank will often require more frequent reporting requirements from the borrower in order to better monitor its business performance.

Credit cards: The Bank originates credit cards offered to individuals and businesses for household, family, other personal and business expenditures. Credit cards generally are floating rate loans and include both unsecured and secured lines. Credit card loans generally do not have stated maturities and are unconditionally cancellable. The primary risk characteristics associated with credit cards typically involve major changes to the borrower, including unemployment or other loss of income, unexpected significant expenses, such as for major medical expenses, catastrophic events, divorce or death.
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Other revolving credit plans: The Bank originates lines of credit to individuals for household, family, and other personal expenditures. Consumer loans generally have higher interest rates and shorter terms than residential loans but tend to have higher credit risk due to the type of collateral securing the loan or in some cases the absence of collateral. The primary risk characteristics associated with other revolving loans typically involve major changes to the borrower, including unemployment or other loss of income, unexpected significant expenses, such as for major medical expenses, catastrophic events, divorce or death.

Automobile: The Bank originates consumer loans extended for the purpose of purchasing new and used passenger cars and other vehicles such as minivans, vans, sport-utility vehicles, pickup trucks, and similar light trucks for personal use. The primary risk characteristics associated with automobile loans typically involve major changes to the borrower, including unemployment or other loss of income, unexpected significant expenses, such as for major medical expenses, catastrophic events, divorce or death.

Other consumer: The Bank originates loans to individuals for household, family, and other personal expenditures. This also represents all other loans that cannot be categorized in any of the previous mentioned consumer loan segments. Consumer loans generally have higher interest rates and shorter terms than residential loans but tend to have higher credit risk due to the type of collateral securing the loan or in some cases the absence of collateral. The primary risk characteristics associated with other consumer loans typically involve major changes to the borrower, including unemployment or other loss of income, unexpected significant expenses, such as for major medical expenses, catastrophic events, divorce or death.

Obligations (other than securities and leases) of states and political subdivisions: The Bank originates various types of loans made directly to municipalities. These loans are repaid through general cash flows or through specific revenue streams, such as water and sewer fees. The primary risk characteristics associated with municipal loans are the municipality's ability to manage cash flow, balance the fiscal budget, fixed asset and infrastructure requirements. Additional risks include changes in demographics, as well as social and political conditions.

Other loans: The Bank originates other loans, such as loans to nonprofit organizations, including churches, hospitals, educational and charitable institutions, clubs, and similar associations. The primary risk characteristics associated with these types of loans are repayment, demographic, social, political and reputation risks.

Overdrafts: The Bank reports overdrawn customer deposit balances as loans.

Methods utilized by management to estimate expected credit losses include a discounted cash flow ("DCF") model that discounts instrument-level contractual cash flows, adjusted for prepayments and curtailments, incorporating loss expectations, and a weighted average remaining maturity ("WARM") model which contemplates expected losses at a pool-level, utilizing historic loss information.

Under both models, management estimates the allowance for credit losses on loans using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. After the end of the reasonable and supportable forecast period, the loss rates revert to the mean loss rate over a period of eight quarters.

Historical credit loss experience, including examination of loss experience at representative peer institutions when the Corporation’s loss history does not result in estimations that are meaningful to users of the Corporation’s Consolidated Financial Statements, provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, changes in environmental conditions, delinquency level, segment growth rates and changes in duration within new markets, or other relevant factors.

The DCF model uses inputs of current and forecasted macroeconomic indicators to predict future loss rates. The current macroeconomic indicator utilized by the Corporation is the Federal unemployment rate and the S&P/Case-Shiller U.S. National Home Price Index for select collective residential related pools. In building the current expected credit loss methodology utilized in the DCF model, a correlation between this indicator and historic loss levels was developed, enabling a prediction of future loss rates related to future Federal unemployment rates and S&P/Case-Shiller U.S. National Home Price Index.

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The portfolio segments utilizing the DCF methodology comprised 91.3% and 85.9% of the amortized cost of loans as of December 31, 2024 and December 31, 2023, respectively, and included:

•Farmland
•Home equity lines of credit
•Residential Mortgages secured by first liens
•Residential Mortgages secured by junior liens
•Multifamily (5 or more) residential properties
•Owner-occupied, nonfarm nonresidential properties
•Non-owner occupied, nonfarm nonresidential properties
•Agricultural production and other loans to farmers
•Commercial and Industrial
•Automobile
•Obligations (other than securities and leases) of states and political subdivisions
•Other loans

The WARM model uses combined historic loss rates for the Corporation and peer institutions, if necessary, gathered from call report filings. The selected period for which historic loss rates are used is dependent on management's evaluation of current conditions and expectations of future loss conditions.

The portfolio segments utilizing the WARM methodology comprised 8.7% and 14.1% of the amortized cost of loans as of December 31, 2024 and December 31, 2023, respectively, and included:

•1-4 Family Construction
•Other construction loans and all land development and other land loans
•Credit cards
•Other revolving credit plans
•Other consumer

Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are not also included in the collective evaluation and typically represent collateral dependent loans but may also include other nonperforming loans or borrowers experiencing financial difficulty. The Corporation uses the practical expedient to measure individually evaluated loans as collateral dependent and/or when repayment is expected to be provided substantially through the operation or sale of the collateral. Expected credit losses are based on the fair value at the reporting date, adjusted for selling costs as appropriate. For collateral dependent loans, credit loss is measured as the difference between the amortized cost basis in the loan and the fair value of the underlying collateral. The fair value of the collateral is adjusted for the estimated cost to sell if repayment or satisfaction of a loan is dependent on the sale (rather than only on the operation) of the collateral.

Allowance for Credit Losses on Off-Balance Sheet Credit Exposures

Management estimates expected credit losses over the contractual period in which the Corporation is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Corporation. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life. Management estimates the amount of expected losses by calculating a commitment usage factor over the contractual period for exposures that are not unconditionally cancellable by the Bank and applying the loss factors used in the allowance for credit losses on loans methodology to the results of the usage calculation to estimate the liability for credit losses related to unfunded commitments for each loan segment. The estimate of credit losses on OBS credit exposures is $944 thousand and $759 thousand at December 31, 2024 and 2023, respectively, and was reported in accrued interest payable and other liabilities on the consolidated balance sheets.

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Mortgage Servicing Rights

When mortgage loans are sold with servicing retained, servicing rights are initially recorded at fair value with the income statement effect recorded in mortgage banking income. Fair value is based on market prices for comparable mortgage servicing contracts, when available, or alternatively, is based on a valuation model that calculates the present value of estimated future net servicing income. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income, such as the cost to service, the discount rate, the custodial earnings rate, an inflation rate, ancillary income, prepayment speeds and default rates and losses. The Corporation compares the valuation model inputs and results to published industry data in order to validate the model results and assumptions. All classes of servicing assets are subsequently measured using the amortization method which requires servicing rights to be amortized into non-interest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans.

Servicing rights are evaluated for impairment based upon the fair value of the rights as compared to carrying amount. Impairment is determined by stratifying rights into groupings based on predominant risk characteristics, such as interest rate, loan type and investor type. Impairment is recognized through a valuation allowance, to the extent that fair value is less than the carrying amount. If the Corporation later determines that all or a portion of the impairment no longer exists, a reduction of the allowance may be recorded as an increase to income. Changes in valuation allowances are reported with mortgage banking income on the income statement. The fair values of servicing rights are subject to significant fluctuations as a result of changes in estimated and actual prepayment speeds and default rates and losses.

Servicing fee income, which is reported on the income statement as mortgage banking income, is recorded for fees earned for servicing loans. The fees are based on a contractual percentage of the outstanding principal or a fixed amount per loan and are recorded as income when earned. The amortization of mortgage servicing rights is netted against loan servicing fee income. Late fees and ancillary fees related to loan servicing are not material.

Transfers of Financial Assets

Transfers of financial assets are accounted for as sales when control over the assets has been relinquished. Control over transferred assets is deemed to be surrendered when the assets have been isolated from the Corporation, the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and the Corporation does not maintain effective control over the transferred assets.

Foreclosed Assets

Foreclosed assets are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. Physical possession of residential real estate property collateralizing a consumer mortgage loan occurs when legal title is obtained upon completion of foreclosure or when the borrower conveys all interest in the property to satisfy the loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. If fair value declines subsequent to foreclosure, a valuation allowance is recorded through expense. Operating costs after acquisition are expensed.

Premises and Equipment

Land is carried at cost. Premises and equipment are stated at cost less accumulated depreciation. Depreciation of premises and equipment is computed principally by the straight line method. In general, useful lives range from 3 to 39 years with lives for furniture, fixtures and equipment ranging from 3 to 10 years and lives of buildings and building improvements ranging from 15 to 39 years. Amortization of leasehold improvements is computed using the straight-line method over useful lives of the leasehold improvements or the term of the lease, whichever is shorter. Maintenance, repairs and minor renewals are charged to expense as incurred.

Leases

The Corporation leases real estate property for branches and certain equipment. The Corporation determines if an arrangement is a lease at inception and if the lease is an operating lease or a finance lease.

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Operating lease right-of-use assets represent the Corporation's right to use an underlying asset during the lease term and operating lease liabilities represent the Corporation's obligation to make lease payments arising from the lease. The period over which the right-of-use asset is amortized is generally the lesser of the expected remaining term or the remaining useful life of the leased asset. The lease liability is decreased as periodic lease payments are made. The Corporation performs impairment assessments for right-of-use assets when events or changes in circumstances indicate that their carrying values may not be recoverable.

The calculated amounts of the right-of-use assets and lease liabilities are impacted by the length of the lease term and the discount rate used to calculate the present value of the minimum remaining lease payments. The Corporation's lease agreements often include one or more options to renew at the Corporation's discretion. If, at lease inception, the Corporation considers the exercising of a renewal option to be reasonably certain, the Corporation includes the extended term in the calculation of the right-of-use asset and lease liability. Generally, the Corporation cannot practically determine the interest rate implicit in the lease so the Corporation's incremental borrowing rate is used as the discount rate for the lease. The Corporation uses Federal Home Loan Bank ("FHLB") of Pittsburgh advance interest rates, which have been deemed as the Corporation's incremental borrowing rate, at lease inception based upon the term of the lease. The Corporation's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Lease expense, variable lease expense and short-term lease expense are included in occupancy expense in the Corporation's consolidated statements of income. For facility-related leases, the Corporation elected, by lease class, to not separate lease and non-lease components. Lease expense is recognized on a straight-line basis over the lease term. Variable lease expense primarily represents payments such as common area maintenance, real estate taxes, and utilities and are recognized as expense in the period when those payments are incurred. Short-term lease expense relates to leases with an initial term of 12 months or less. The Corporation has elected to not record a right-of-use asset or lease liability for short-term leases.

Federal Home Loan Bank Stock

As a member of the FHLB of Pittsburgh, the Corporation is required to purchase and hold stock in the FHLB to satisfy membership and borrowing requirements. This stock is restricted in that it can only be sold to the FHLB or to another member institution, and all sales of FHLB stock must be at par. As a result of these restrictions, FHLB stock is unlike other investment securities insofar as there is no trading market for FHLB stock and the transfer price is determined by FHLB membership rules and not by market participants.

FHLB stock is held as a long-term investment, is valued at its cost basis and is analyzed for impairment based on the ultimate recoverability of the par value. The Corporation evaluates impairment quarterly. The decision of whether impairment exists is a matter of judgment that reflects our view of the FHLB’s long-term performance, which includes factors such as the following:

•its operating performance;
•the severity and duration of declines in the fair value of its net assets related to its capital stock amount;
•its commitment to make payments required by law or regulation and the level of such payments in relation to its operating performance;
•the impact of legislative and regulatory changes on the FHLB, and accordingly, on the members of FHLB; and
•its liquidity and funding position.

Both cash and stock dividends are reported as income.

Qualified Affordable Housing Project Investments

The Corporation has investments in various real estate limited partnerships that acquire, develop, own and operate low and moderate-income housing. These investments are made directly in Low Income Housing Tax Credit ("LIHTC") partnerships formed by third parties. As a limited partner in these operating partnerships, the Corporation receives tax credits and tax deductions for losses incurred by the underlying properties. The Corporation accounts for its ownership interest in LIHTC partnerships in accordance with Accounting Standards Update ("ASU") 2023-02, "Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method." The standard allows the Corporation to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits. There were no impairment losses during the year resulting from the forfeiture or ineligibility of tax credits related to qualified affordable housing project investments.
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Bank Owned Life Insurance

The Corporation has purchased life insurance policies on certain key employees. Bank-owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement.

Goodwill and Other Intangible Assets

Goodwill resulting from business combinations prior to January 1, 2009 represents the excess of the purchase price over the fair value of the net assets of businesses acquired. Goodwill resulting from business combinations after January 1, 2009 is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interest in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but tested for impairment at least annually or more frequently if events and circumstances exists that indicate that a goodwill impairment test should be performed. The Corporation has no intangible assets with an indefinite useful life.

During the fourth quarter of 2023, the Corporation elected to change the timing of its annual goodwill impairment test from December 31 to November 30. The selection of November 30 as the annual testing date for the impairment of goodwill is intended to move the testing to a time period outside of the Corporation's annual financial reporting process to allow the Corporation additional time to complete the analysis. The Corporation believes that this change is preferable under the circumstances, and that this change does not accelerate, delay or avoid an impairment charge. The Corporation has also determined that a change in the annual testing date did not result in adjustments to the consolidated financial statements when applied retrospectively. Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. Goodwill is an intangible asset with an indefinite life on the Corporation’s balance sheet.

Other intangible assets consist of core deposit intangible assets arising from the acquisition of Bank of Akron in 2020 and naming rights associated with the formation of Ridge View Bank, a division of the Bank in 2023. The core deposit intangible assets from these acquisitions are amortized using an accelerated method over their estimated useful lives, which range from four years to ten years, respectively. The naming rights have an indefinite useful life.

Loan Commitments and Related Financial Instruments

Financial instruments include off-balance sheet credit instruments, such as commitments to make loans and commercial letters of credit, issued to meet customer financing needs. The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay. Such financial instruments are recorded when they are funded.

Derivatives

Derivative financial instruments are recognized as assets or liabilities at fair value. The Corporation has interest rate swap agreements which are used as part of its asset liability management to help manage interest rate risk. The Corporation does not use derivatives for trading purposes.

At the inception of a derivative contract, the Corporation designates the derivative as one of three types based on the Corporation's intentions and belief as to likely effectiveness as a hedge. These three types are (1) a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment ("fair value hedge"), (2) a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability ("cash flow hedge"), or (3) an instrument with no hedging designation ("stand-alone derivative"). For a fair value hedge, the gain or loss on the derivative, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk, are recognized in current earnings as fair values change. For a cash flow hedge, the gain or loss on the derivative is reported in other comprehensive income (loss) and is reclassified into earnings in the same periods during which the hedged transaction affects earnings. Changes in the fair value of derivatives that do not qualify for hedge accounting are reported currently in earnings, as non-interest income.

Accrued settlements on derivatives that qualify for hedge accounting are recorded in interest income or interest expense, based on the item being hedged. Accrued settlements on derivatives not designated or that do not qualify for hedge accounting are reported in non-interest income. Cash flows on hedges are classified in the cash flow statement the same as the cash flows of the items being hedged.

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The Corporation formally documents the relationship between derivatives and hedged items, as well as the risk-management objective and the strategy for undertaking hedge transactions, at the inception of the hedging relationship. This documentation includes linking fair value or cash flow hedges to specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. The Corporation also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivative instruments that are used are highly effective in offsetting changes in fair values or cash flows of the hedged items. The Corporation discontinues hedge accounting when it determines that the derivative is no longer effective in offsetting changes in the fair value or cash flows of the hedged item, the derivative is settled or terminates, a hedged forecasted transaction is no longer probable, a hedged firm commitment is no longer firm, or treatment of the derivative as a hedge is no longer appropriate or intended.

When hedge accounting is discontinued, subsequent changes in fair value of the derivative are recorded as non-interest income. When a fair value hedge is discontinued, the hedged asset or liability is no longer adjusted for changes in fair value and the existing basis adjustment is amortized or accreted over the remaining life of the asset or liability. When a cash flow hedge is discontinued but the hedged cash flows or forecasted transactions are still expected to occur, gains or losses that were accumulated in other comprehensive income are amortized into earnings over the same periods which the hedged transactions will affect earnings.

The Corporation is exposed to losses if a counterparty fails to make its payments under a contract in which the Corporation is in the net receiving position. The Corporation anticipates that the counterparties will be able to fully satisfy their obligations under the agreements. All the contracts to which the Corporation is a party settle monthly or quarterly. In addition, the Corporation obtains collateral above certain thresholds of the fair value of its hedges for each counterparty based upon their credit standing and the Corporation has netting agreements with the dealers with which it does business.

Stock-Based Compensation

Compensation cost is recognized for restricted stock awards issued to employees, based on the fair value of these awards at the date of grant. The market price of the Corporation’s common stock at the date of grant is used for restricted stock awards.

Compensation cost is recognized over the required service period, generally defined as the vesting period. For awards with graded vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award. Certain of the restricted stock awards are performance based and costs are recognized based upon certain performance conditions. The Corporation's accounting policy is to recognize forfeitures as they occur.

Income Taxes

Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates. A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.

A tax position is recognized as a benefit only if it is "more likely than not" that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the "more likely than not" test, no tax benefit is recorded.

The Corporation recognizes interest and/or penalties, if any, related to income tax matters in income tax expense.

Retirement Plans

Post retirement obligation expense is the net of service and interest cost, return on plan assets and amortization of gains and losses not immediately recognized. The Corporation’s expense associated with its 401(k) plan is determined under the provisions of the plan document and includes both matching and profit sharing components. Deferred compensation and supplemental retirement plan expenses allocate the benefits over years of service.

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Earnings Per Common Share

Basic earnings per common share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the applicable period, excluding outstanding participating securities. Diluted earnings per common share is computed using the weighted average number of common shares determined for the basic computation plus the dilutive effect of potential common shares issuable under certain stock compensation plans. Unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and are included in the computation of earnings per share pursuant to the two-class method. The Corporation has determined that its outstanding non-vested time-based restricted stock awards are participating securities.

Comprehensive Income

The Corporation presents comprehensive income as part of the Consolidated Statements of Income and Comprehensive Income. Other comprehensive income and loss consists of unrealized holding gains and losses on the AFS debt securities portfolio, amortization of AFS debt securities transferred to HTM, changes in the unrecognized actuarial gain and transition obligation related to the Corporation’s post retirement benefits plans, and changes in the fair value of the Corporation’s interest rate swaps, net of tax.

Loss Contingencies

Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there now are such matters that will have a material effect on the consolidated financial statements.

Treasury Stock

The purchase of the Corporation’s common stock is recorded at cost. Purchases of the stock are made in the open market based on market prices. At the date of subsequent reissue, the treasury stock account is reduced by the cost of such stock on a first-in-first-out basis.

Dividend Restriction

Banking regulations require maintaining certain capital levels and may limit the dividends paid by the bank to the holding company or by the holding company to shareholders.

Fair Value of Financial Instruments

Fair values of financial instruments are estimated using relevant market information and other assumptions, as more fully disclosed in a separate note. Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect the estimates.
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Revenue Recognition

The Corporation recognizes revenues when earned based upon (i) contractual terms as transactions occur, or (ii) as related services are provided and collectability is reasonably assured. The largest source of revenue for the Corporation is interest income, which is primarily recognized on an accrual basis according to a written contract, such as loan and lease agreements or investment securities contracts. The Corporation earns non-interest income through a variety of financial and transactional services such as security gains, loan servicing, gains on the sale of loans, commitment fees, fees from financial guarantees, certain credit card fees, gains (losses) on sale of other real estate owned not financed by the Corporation, is not within the scope of ASU 2014-9.

The types of non-interest income within the scope of the standard that are material to the consolidated financial statements are services charges on deposit accounts, wealth and asset management fee income, card processing and interchange income, and other income and are discussed in greater detail below:

Service charges on deposit accounts: The Corporation earns fees from its deposit customers for transaction-based, account maintenance, and overdraft services. Transaction-based fees, which include services such as ATM use fees, stop payment charges, statement rendering, and ACH fees, are recognized at the time the transaction is executed, as that is the point in time the Corporation fulfills the customer’s request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the Corporation satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Services charges on deposits are withdrawn from the customer’s account balance.

Wealth and asset management fees: The Corporation earns wealth and asset management fees from its contracts with trust and brokerage customers to manage assets for investment, and/or to transact on their accounts. These fees are primarily earned over time as the Corporation provides the contracted monthly or quarterly services and are generally assessed based on a tiered scale of the market value of assets under management at month end. Fees for these services are billed to customers on a monthly or quarterly basis and are recorded as revenue at the end of the period for which the wealth and asset management services have been performed. Other performance obligations, such as the delivery of account statements to customers, are generally considered immaterial to the overall transaction price.

Card processing and interchange income: The Corporation earns interchange fees from check card and credit card transactions conducted through the Visa payment network. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to the cardholder.

Other income: The Corporation's other income includes sources such as bank owned life insurance, changes in fair value and realized gains on sales of equity securities, certain service fees, gains (losses) on sales of fixed assets, and gains (losses) on sale of other real estate owned. The service fees are recognized in the same manner as the service charges mentioned above. While gains (losses) on the sale of other real estate owned are within the scope of ASU 2014-9 if financed by the Corporation, the Corporation does not finance the sale of transactions. The revenue on the sale is recorded upon the transfer of control of the property to the buyer and the other real estate owned asset is derecognized.

The Corporation does not exercise significant judgements in the recognition of income, as typically income is not recognized until the performance obligation has been satisfied. The Corporation has not recognized any assets from the costs to obtain or fulfill a contract with customers for revenue streams that fall within the guidance of Topic 606.

Revision of Previously Issued Financial Statements

The Corporation has revised amounts reported in previously issued financial statements for the year ended December 31, 2023 presented in this Annual Report on Form 10–K. The revisions relate to the classification of completed construction loans not being reported in the appropriate permanent loan segment classification. The revisions resulted in changes to Note 3, "Loans Receivable and Allowance for Credit Losses," and specifically the segment classification in the disclosure. These revisions do not impact the Corporation's net income.

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The Corporation evaluated the aggregate effects of these revisions to its previously issued financial statements in accordance with SEC Staff Accounting Bulletins No. 99 and No. 108 and, based upon quantitative and qualitative factors, determined that the revisions were not material to the previously issued financial statements and disclosures included in its Annual Report on Form 10-K for the year ended December 31, 2023.

The following table presents the revisions to total loans disclosure at December 31, 2023 to reflect the adjustment for the applicable portfolio segments:
As Reported As Revised Adjustment
December 31, 2023 Percentage
of Total		 December 31, 2023 Percentage
of Total		 December 31, 2023 Percentage
of Total
Farmland $ 31,869  0.7  % $ 33,485  0.8  % $ 1,616  0.1  %
Owner-occupied, nonfarm nonresidential properties 493,064  11.0  511,910  11.5  18,846  0.5 
Other construction loans and all land development and other land loans 491,539  11.0  340,358  7.6  (151,181) (3.4)
Multifamily (5 or more) residential properties 254,342  5.7  305,697  6.8  51,355  1.1 
Non-owner occupied, nonfarm nonresidential properties 896,043  20.1  984,033  22.0  87,990  1.9 
1-4 Family Construction 51,207  1.1  28,055  0.6  (23,152) (0.5)
Residential Mortgages secured by first liens 990,986  22.2  1,005,335  22.5  14,349  0.3 
Residential Mortgages secured by junior liens 91,063  2.0  91,240  2.0  177  — 
Total $ 3,300,113  73.8  % $ 3,300,113  73.8  % $ —  —  %

Adoption of New Accounting Standards

Accounting Standards Adopted in 2022

In December 2022, FASB issued ASU 2022-06 - Reference Rate Reform (Topic 848). ASU 2022-06 extends the period of time preparers can utilize the reference rate reform relief guidance provided by ASU 2020-04 and ASU 2021-01, which are discussed above. ASU 2022-06, which was effective upon issuance, defers the sunset date of this prior guidance from December 31, 2022, to December 31, 2024 after which entities will no longer be permitted to apply the relief guidance in Topic 848. ASU 2022-06 did not have a material impact on the Corporation's financial statements and related disclosures.

Accounting Standards Adopted in 2023

In October 2021, the FASB issued ASU 2021-08, "Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers." This ASU requires that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, "Revenue from Contracts with Customers." ASU 2021-08 was effective for the Corporation on January 1, 2023 and did not have a material impact on its consolidated financial statements and related disclosures.

In March 2022, the FASB issued ASU 2022-01, "Derivatives and Hedging (Topic 815): Fair Value Hedging - Portfolio Layer Method." Under prior guidance, entities can apply the last-of-layer hedging method to hedge the exposure of a closed portfolio of prepayable financial assets to fair value changes due to changes in interest rates for a portion of the portfolio that is not expected to be affected by prepayments, defaults, and other events affecting the timing and amount of cash flows. ASU 2022-01 expands the last-of-layer method, which permits only one hedge layer, to allow multiple hedged layers of a single closed portfolio. To reflect that expansion, the last-of-layer method is renamed the portfolio layer method. ASU 2022-01 also (i) expands the scope of the portfolio layer method to include non-prepayable financial assets, (ii) specifies eligible hedging instruments in a single-layer hedge, (iii) provides additional guidance on the accounting for and disclosure of hedge basis adjustments under the portfolio layer method and (iv) specifies how hedge basis adjustments should be considered when determining credit losses for the assets included in the closed portfolio. ASU 2022-01 was effective for the Corporation on January 1, 2023 and did not have a material impact on its consolidated financial statements and related disclosures.

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In March 2022, the FASB issued ASU 2022-02, "Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures." This ASU eliminates the separate recognition and measurement guidance for Troubled Debt Restructurings ("TDRs") by creditors. The elimination of the TDRs guidance may be adopted prospectively for loan modifications after adoption or on a modified retrospective basis, which would also apply to loans previously modified, resulting in a cumulative effect adjustment to retained earnings in the period of adoption for changes in the allowance for credit losses. ASU 2022-02 was effective for the Corporation on January 1, 2023 and did not have a material impact on its consolidated financial statements and related disclosures.

In July 2023, FASB issued ASU 2023-03, "Presentation of Financial Statements (Topic 205), Income Statement - Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation - Stock Compensation (Topic 718): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 120, SEC Staff Announcement at the March 24, 2022 Emerging Issues Task Force ("EITF") Meeting, and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280 - General Revision of Regulation S-X: Income or Loss Applicable to Common Stock." This ASU amends the FASB Accounting Standards Codification for SEC updates pursuant to SEC Staff Accounting Bulletin No. 120; SEC Staff Announcement at the March 24, 2022 EITF Meeting; and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280 - General Revision of Regulation S-X: Income or Loss Applicable to Common Stock. The updates were effective immediately. These updates did not have a material impact on the Corporation's consolidated financial statements and related disclosures.

Accounting Standards Adopted in 2024

In June 2022, FASB issued ASU 2022-03, "Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions." In this ASU, a contractual restriction on the sale of an equity security is not considered in measuring the security's fair value. The ASU also requires certain disclosures for equity securities that are subject to contractual restrictions. This guidance was effective for the Corporation on January 1, 2024. The update did not have a material impact on the Corporation's consolidated financial statements and related disclosures.

In March 2023, FASB issued ASU 2023-01, "Leases (Topic 842): Common Control Arrangements." This ASU requires the Corporation to amortize leasehold improvements associated with common control leases over the useful life to the common control group. This guidance is effective for the Corporation on January 1, 2024. The update did not have a material impact on the Corporation's consolidated financial statements and related disclosures.

In March 2023, FASB issued ASU 2023-02, "Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method." In this ASU, these amendments allow the Corporation to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits. This guidance is effective for the Corporation on January 1, 2024. The update did not have a material impact on the Corporation's consolidated financial statements and related disclosures.

In November 2023, FASB issued ASU 2023-07, "Improvements to Reportable Segment Disclosures (Topic 280)." This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker ("CODM") and included within each reported measure of a segment's profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU was effective for the Corporation on December 15, 2024. Adoption of the ASU should be applied retrospectively to all prior periods presented in the financial statements. The update did not have a material impact on the Corporation's consolidated financial statements and related disclosures.

Effects of Newly Issued But Not Yet Effective Accounting Standards

In August 2023, FASB issued ASU 2023-05, "Business Combinations—Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement." ASU 2023-05 requires certain joint ventures to apply a new basis of accounting upon formation by recognizing and initially measuring most of their assets and liabilities at fair value. The objectives of the amendments are to provide decision-useful information to investors and other allocators of capital in a joint venture’s financial statements and also to reduce diversity in practice. ASU 2023-05 should be applied prospectively and is effective for all newly formed joint venture entities with a formation date on or after January 1, 2025. Early adoption is permitted, and joint ventures formed prior to the adoption date may elect to apply the new guidance retrospectively back to their original formation date. The Corporation is evaluating the effect that ASU 2023-05 will have on its consolidated financial statements and related disclosures.

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In October 2023, FASB issued ASU 2023-06, "Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative." The ASU amends the ASC to incorporate certain disclosure requirements from SEC Release No. 33-10532, "Disclosure Update and Simplification" that was issued in 2018. The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. The Corporation is evaluating the effect that ASU 2023-06 will have on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, "Improvements to Income Tax Disclosures (Topic 740)." The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024. Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance. The Corporation is evaluating the effect that ASU 2023-09 will have on its condensed consolidated financial statements and related disclosures.

In March 2024, the FASB issued ASU 2024-01, "Compensation - Stock Compensation (Topic 718)." The ASU adds an illustrative example to demonstrate how an entity should apply the scope guidance in paragraph 718-10-15-3 to determine whether profits interest and similar awards ("profits interest awards") should be accounted for in accordance with Topic 718, Compensation—Stock Compensation. The amendment in this ASU should be applied either (1) retrospectively to all prior periods presented in the financial statements or (2) prospectively to profits interest and similar awards granted or modified on or after the date at which the entity first applies the amendments. If the amendments are applied retrospectively, an entity is required to provide the disclosures in paragraphs 250-10-50-1 through 50-3 in the period of adoption. If the amendment is applied prospectively, an entity is required to disclose the nature of and reason for the change in accounting principle. The ASU is effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods. Early adoption is also permitted for interim and annual financial statements that have not yet been issued or made available for issuance. If an entity adopts the amendments in an interim period, it should adopt the amendment as of the beginning of the annual period that includes that interim period. The Corporation is evaluating the effect that ASU 2024-01 will have on its condensed consolidated financial statements and related disclosures.

In March 2024, the FASB issued ASU 2024-02, "Codification Improvements—Amendments to Remove References to the Concepts Statements." The ASU contains amendments to the FASB Accounting Standards Codification that remove references to various Concepts Statements. In most instances, the references are extraneous and not required to understand or apply the guidance. In other instances, the references were used in prior Concept Statements to provide guidance in certain topical areas. The amendment in this ASU should be applied using one of the following transition methods: (1) prospectively to all new transactions recognized on or after the date that the entity first applies the amendments; or (2) retrospectively to the beginning of the earliest comparative period presented in which the amendments were first applied. An entity should adjust the opening balance of retained earnings (or other appropriate components of equity or net assets in the statement of financial position) as of the beginning of the earliest comparative period presented. The ASU is effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods. Early application of the amendment is permitted for any fiscal year or interim period for which financial statements have not yet been issued, or made available for issuance. If an entity adopts the amendment in an interim period, it must adopt the amendment as of the beginning of the fiscal year that includes that interim period. The Corporation is evaluating the effect that ASU 2024-02 will have on its consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures." The ASU requires disclosure about the types of costs and expenses included in certain expense captions presented on the income statement. The ASU is effective for annual periods beginning after December 15, 2026, and interim report periods beginning after December 15, 2027. Early application of the amendment is permitted. The ASU should be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU or (2) retrospectively to any or all prior periods presented in the financial statements. The Corporation is evaluating the effect that ASU 2024-03 will have on its consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-04, "Debt—Debt with Conversion and Other Options (Subtopic 470-20)." The ASU will improve the relevance and consistency in application of the induced conversion guidance. The ASU is effective for annual periods beginning after December 15, 2025, and interim report periods and interim reporting periods within those annual reporting periods. Early adoption is permitted for all entities that have adopted the amendments in Update 2020-06. The Corporation is evaluating the effect that ASU 2024-04 will have on its consolidated financial statements and related disclosures.

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In January 2025, the FASB issued ASU 2025-01, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40)." The amendment in this ASU amends the effective date of ASU 2024-03 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption of ASU 2024-03 is permitted. The Corporation is evaluating the effect that ASU 2024-04 will have on its consolidated financial statements and related disclosures.

2.  Securities

AFS debt securities at December 31, 2024 and 2023 were as follows: 

  December 31, 2024
  Amortized Gross Unrealized Allowance For Fair
Cost Gains Losses  Credit Losses Value
U.S. Gov’t sponsored entities $ 14,795  $ 17  $ (2) $ —  $ 14,810 
State & political subdivisions 104,025  11  (13,080) —  90,956 
Residential & multi-family mortgage 352,983  60  (34,133) —  318,910 
Corporate notes & bonds 39,022  —  (3,812) —  35,210 
Pooled SBA 9,398  —  (738) —  8,660 
Total $ 520,223  $ 88  $ (51,765) $ —  $ 468,546 

  December 31, 2023
  Amortized Gross Unrealized Allowance For Fair
Cost Gains Losses Credit Losses Value
U.S. Gov’t sponsored entities $ 5,024  $ —  $ (36) $ —  $ 4,988 
State & political subdivisions 105,102  22  (13,315) —  91,809 
Residential & multi-family mortgage 225,871  1  (34,353) —  191,519 
Corporate notes & bonds 48,459  13  (5,333) —  43,139 
Pooled SBA 11,347  —  (847) —  10,500 
Total $ 395,803  $ 36  $ (53,884) $ —  $ 341,955 

HTM debt securities at December 31, 2024 and 2023 are as follows:

  December 31, 2024
  Amortized Gross Unrealized Allowance For Fair
Cost Gains Losses Credit Losses Value
U.S. Gov’t sponsored entities $ 229,504  $ —  $ (13,354) $ —  $ 216,150 
Residential & multi-family mortgage 76,577  —  (9,757) —  66,820 
Total $ 306,081  $ —  $ (23,111) $ —  $ 282,970 

  December 31, 2023
  Amortized Gross Unrealized Allowance For Fair
Cost Gains Losses Credit Losses Value
U.S. Gov’t sponsored entities $ 302,945  $ —  $ (19,038) $ —  $ 283,907 
Residential & multi-family mortgage 86,023  —  (9,360) —  76,663 
Total $ 388,968  $ —  $ (28,398) $ —  $ 360,570 

The Corporation elected to transfer 74 AFS debt securities with an aggregate fair value of $213.7 million to a classification of HTM during the year ended December 31, 2022. In accordance with FASB ASC 320-10-55-24, the transfer from AFS to HTM must be recorded at the fair value of the AFS debt securities at the time of transfer. The net unrealized holding loss of $5.6 million, net of tax, at the date of transfer was retained in accumulated other comprehensive income (loss), with the associated pre-tax amount retained in the carrying value of the HTM debt securities. Such amounts will be amortized to comprehensive income over the remaining life of the securities.

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Information pertaining to AFS security sales is as follows:

Year ended December 31 Proceeds Gross Gains Gross Losses
2024 $ 806  $ 83  $ 9 
2023 13,151  52  — 
2022 22,164  651  — 

The tax provision related to these net realized gains at December 31, 2024, 2023, and 2022 were $16 thousand, $11 thousand, and $137 thousand, respectively.

The following is a schedule of the contractual maturity of AFS and HTM debt securities, excluding equity securities, at December 31, 2024:

  Available-for-sale Held-to-maturity
  Amortized Cost Fair Value Amortized Cost Fair Value
1 year or less $ 23,840  $ 23,789  $ 52,148  $ 51,496 
1 year – 5 years 47,805  44,781  158,625  148,881 
5 years – 10 years 65,830  57,461  18,731  15,773 
After 10 years 20,367  14,945  —  — 
157,842  140,976  229,504  216,150 
Residential and multi-family mortgage 352,983  318,910  76,577  66,820 
Pooled SBA 9,398  8,660  —  — 
Total debt securities $ 520,223  $ 468,546  $ 306,081  $ 282,970 

Mortgage securities and pooled SBA securities are not due at a single date; periodic payments are received based on the payment patterns of the underlying collateral.

On December 31, 2024 and 2023, securities carried at $443.9 million and $489.0 million, respectively, were pledged to secure public deposits and for other purposes as provided by law.

At December 31, 2024 and 2023, there were no holdings of securities by any one issuer, other than U.S. Government sponsored entities, in an amount greater than 10% of shareholders’ equity.

AFS debt securities with unrealized losses at December 31, 2024 and 2023, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows:

December 31, 2024 Less than 12 Months 12 Months or More Total
Description of Securities Fair
Value		 Unrealized
Loss		 Fair
Value		 Unrealized
Loss		 Fair
Value		 Unrealized
Loss
U.S. Gov’t sponsored entities $ 249  $ (1) $ 3,340  $ (1) $ 3,589  $ (2)
State & political subdivisions 6,519  (90) 80,172  (12,990) 86,691  (13,080)
Residential & multi-family mortgage 118,057  (810) 159,576  (33,323) 277,633  (34,133)
Corporate notes & bonds 987  (13) 34,224  (3,799) 35,211  (3,812)
Pooled SBA 410  (2) 8,250  (736) 8,660  (738)
Total $ 126,222  $ (916) $ 285,562  $ (50,849) $ 411,784  $ (51,765)

December 31, 2023 Less than 12 Months 12 Months or More Total
Description of Securities Fair
Value		 Unrealized
Loss		 Fair
Value		 Unrealized
Loss		 Fair
Value		 Unrealized
Loss
U.S. Gov’t sponsored entities $ 2,487  $ (1) $ 1,956  $ (35) $ 4,443  $ (36)
State & political subdivisions 749  —  84,828  (13,315) 85,577  (13,315)
Residential and multi-family mortgage —  —  191,436  (34,353) 191,436  (34,353)
Corporate notes & bonds 978  (22) 41,488  (5,311) 42,466  (5,333)
Pooled SBA —  —  10,409  (847) 10,409  (847)
Total $ 4,214  $ (23) $ 330,117  $ (53,861) $ 334,331  $ (53,884)

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HTM debt securities with unrealized losses at December 31, 2024 and 2023, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows:

December 31, 2024 Less than 12 Months 12 Months or More Total
Description of Securities Fair
Value		 Unrealized
Loss		 Fair
Value		 Unrealized
Loss		 Fair
Value		 Unrealized
Loss
U.S. Gov’t sponsored entities $ —  $ —  $ 216,150  $ (13,354) $ 216,150  $ (13,354)
Residential & multi-family mortgage —  —  66,820  (9,757) 66,820  (9,757)
Total $ —  $ —  $ 282,970  $ (23,111) $ 282,970  $ (23,111)

December 31, 2023 Less than 12 Months 12 Months or More Total
Description of Securities Fair
Value		 Unrealized
Loss		 Fair
Value		 Unrealized
Loss		 Fair
Value		 Unrealized
Loss
U.S. Gov’t sponsored entities $ —  $ —  $ 283,907  $ (19,038) $ 283,907  $ (19,038)
State & political subdivisions —  —  76,663  (9,360) 76,663  (9,360)
Total $ —  $ —  $ 360,570  $ (28,398) $ 360,570  $ (28,398)

The Corporation evaluates securities for possible credit allowance on a quarterly basis, or more frequently when economic or market conditions warrant such an evaluation.

As of December 31, 2024 and 2023, management performed an assessment for allowance for credit losses on the Corporation’s AFS debt securities in an unrealized loss position and as of December 31, 2024 management performed an assessment for allowance for credit losses on the Corporation's HTM debt securities.

First an assessment was performed to determine if the Corporation intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost. Management determined it does not intend to sell and will not be required to sell any of the securities before recovery of its amortized cost. Next, management performed an evaluation relying on information obtained from various sources, including publicly available financial data, ratings by external agencies, brokers and other sources. For the securities that comprise corporate notes and bonds and the securities that are issued by state and political subdivisions, management monitors publicly available financial information, such as filings with the Securities and Exchange Commission, in order to evaluate the securities credit quality and ability to repay its debt obligations. For financial institution issuers, management monitors information from quarterly "call" report filings that are used to generate Uniform Bank Performance Reports. All other securities that were in an unrealized loss position at the balance sheet date were reviewed by management, and issuer-specific documents were reviewed as appropriate given the following considerations; the financial condition and near-term prospects of the issuer and whether downgrades by bond rating agencies have occurred. Based on the results of the assessment, management believes the decline in fair value is not the result of credit losses. As a result no credit allowance is required as of December 31, 2024.

As of December 31, 2024 and 2023 management concluded that the securities described in the previous paragraph did not decline in fair value due to credit factors for the following reasons:
•There is no indication of any significant deterioration of the creditworthiness of the institutions that issued the securities.
•All contractual interest payments on the securities have been received as scheduled, and no information has come to management’s attention through the processes previously described which would lead to a conclusion that future contractual payments will not be timely received.

In addition, the rise in interest rates is the primary driver of the decline in fair value below amortized cost as of December 31, 2024.

Equity securities at December 31, 2024 and 2023 were as follows:
December 31, 2024 December 31, 2023
Corporate equity securities $ 6,542  $ 5,341 
Mutual funds 1,936  2,223 
Money market 287  1,103 
Corporate notes 1,691  634 
Total $ 10,456  $ 9,301 
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During the year ended December 31, 2024, 2023, and 2022, the proceeds from sold equity securities were zero in 2024, $296 thousand in 2023 and zero in 2022, resulting in net realized gains of zero in 2024, $22 thousand in 2023, and zero in 2022.

3.  Loans Receivable and Allowance for Credit Losses

Total net loans receivable at December 31, 2024 and 2023 are summarized as follows:

2024 Percentage
of Total
2023 (1)
 Percentage
of Total
Farmland $ 31,099  0.67  % $ 33,485  0.76  %
Owner-occupied, nonfarm nonresidential properties 515,208  11.18  511,910  11.46 
Agricultural production and other loans to farmers 6,492  0.14  1,652  0.04 
Commercial and Industrial 718,775  15.60  726,442  16.26 
Obligations (other than securities and leases) of states and political subdivisions 140,430  3.05  152,201  3.41 
Other loans 28,110  0.61  25,507  0.57 
Other construction loans and all land development and other land loans 282,912  6.14  340,358  7.62 
Multifamily (5 or more) residential properties
 411,146  8.92  305,697  6.84 
Non-owner occupied, nonfarm nonresidential properties 1,033,541  22.42  984,033  22.02 
1-4 Family Construction 26,431  0.57  28,055  0.63 
Home equity lines of credit 166,327  3.61  130,700  2.92 
Residential Mortgages secured by first liens 1,012,746  21.97  1,005,335  22.50 
Residential Mortgages secured by junior liens 106,462  2.31  91,240  2.04 
Other revolving credit plans 41,095  0.89  42,877  0.96 
Automobile 20,961  0.45  25,315  0.57 
Other consumer 53,821  1.17  51,592  1.14 
Credit cards 13,143  0.29  11,785  0.26 
Overdrafts 257  0.01  292  0.01 
Total loans $ 4,608,956  100.00  % $ 4,468,476  100.00  %
Less: Allowance for credit losses (47,357) (45,832)
Loans, net $ 4,561,599  $ 4,422,644 
Net deferred loan origination fees (costs) included in the above loan table $ 49  $ 2,448 
(1) As previously disclosed in the Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, and Note 1, "Summary of Significant Accounting Policies," immaterial revisions were made to the total loans disclosure at December 31, 2023, to reflect adjustments for the applicable portfolio segments, which revisions are reflected in the above table.

The Corporation’s outstanding loans receivable and related unfunded commitments are primarily concentrated within Central and Northwest Pennsylvania, Central and Northeast Ohio, Western New York and Southwest Virginia. The Bank attempts to limit concentrations within specific industries by utilizing dollar limitations to single industries or customers, and by entering into participation agreements with third parties. Collateral requirements are established based on management’s assessment of the customer. The Corporation maintains lending policies to control the quality of the loan portfolio. These policies delegate the authority to extend loans under specific guidelines and underwriting standards. These policies are prepared by the Corporation’s management and reviewed and approved annually by the Corporation’s Board of Directors.

Syndicated loans, net of deferred fees and costs, are included in the commercial and industrial classification and totaled $79.9 million and $108.7 million as of December 31, 2024 and 2023, respectively.

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Transactions in the allowance for credit losses for the year ended December 31, 2024 were as follows:

Beginning
Allowance (1)
 (Charge-offs) Recoveries
Provision (Benefit) for Credit Losses on Loans Receivable(1)(2)
 Ending
Allowance
Farmland $ 138  $ —  $ —  $ 29  $ 167 
Owner-occupied, nonfarm nonresidential properties 4,131  (1,448) 55  2,958  5,696 
Agricultural production and other loans to farmers 7  —  —  30  37 
Commercial and Industrial 9,500  (2,425) 56  628  7,759 
Obligations (other than securities and leases) of states and political subdivisions 2,627  —  —  (1,258) 1,369 
Other loans 389  —  —  (60) 329 
Other construction loans and all land development and other land loans 2,830  (11) —  (248) 2,571 
Multifamily (5 or more) residential properties
 1,251  —  —  1,718  2,969 
Non-owner occupied, nonfarm nonresidential properties 9,783  (974) 53  1,248  10,110 
1-4 Family Construction 191  —  —  7  198 
Home equity lines of credit 844  —  5  491  1,340 
Residential Mortgages secured by first liens 8,274  (79) —  763  8,958 
Residential Mortgages secured by junior liens 1,487  —  —  (144) 1,343 
Other revolving credit plans 977  (156) 30  109  960 
Automobile 360  (146) 6  55  275 
Other consumer 2,656  (2,094) 192  2,138  2,892 
Credit cards 95  (143) 17  158  127 
Overdrafts 292  (544) 94  415  257 
Total loans $ 45,832  $ (8,020) $ 508  $ 9,037  $ 47,357 
(1) As previously disclosed in the Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, and Note 1, "Summary of Significant Accounting Policies," immaterial revisions were made to the beginning allowance column disclosure as of December 31, 2023, to reflect the revisions for the applicable portfolio segments.
(2) Excludes provision for credit losses related to unfunded commitments. Note 18, "Off-Balance Sheet Commitments and Contingencies," in the consolidated financial statements provides more detail concerning the provision for credit losses related to unfunded commitments of the Corporation.

Transactions in the allowance for credit losses for the year ended December 31, 2023 were as follows:

Beginning
Allowance		 (Charge-offs) Recoveries
Provision (Benefit) for Credit Losses on Loans Receivable (1)(2)
Ending
Allowance (2)
Farmland $ 159  $ —  $ —  $ (21) $ 138 
Owner-occupied, nonfarm nonresidential properties 2,905  (26) 29  1,223  4,131 
Agricultural production and other loans to farmers 6  —  —  1  7 
Commercial and Industrial 9,766  (392) 438  (312) 9,500 
Obligations (other than securities and leases) of states and political subdivisions 1,863  —  —  764  2,627 
Other loans 456  —  —  (67) 389 
Other construction loans and all land development and other land loans 3,253  —  —  (423) 2,830 
Multifamily (5 or more) residential properties
 2,353  (65) 6  (1,043) 1,251 
Non-owner occupied, nonfarm nonresidential properties 7,653  (694) 10  2,814  9,783 
1-4 Family Construction 327  —  —  (136) 191 
Home equity lines of credit 1,173  (10) 5  (324) 844 
Residential Mortgages secured by first liens 8,484  (117) 3  (96) 8,274 
Residential Mortgages secured by junior liens 1,035  —  —  452  1,487 
Other revolving credit plans 722  (119) 30  344  977 
Automobile 271  (56) 1  144  360 
Other consumer 2,665  (1,982) 134  1,839  2,656 
Credit cards 67  (189) 18  199  95 
Overdrafts 278  (604) 139  479  292 
Total loans $ 43,436  $ (4,254) $ 813  $ 5,837  $ 45,832 
(1) Excludes provision for credit losses related to unfunded commitments. Note 18, "Off-Balance Sheet Commitments and Contingencies," in the consolidated financial statements provides more detail concerning the provision for credit losses related to unfunded commitments of the Corporation.
(2) As previously disclosed in the Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, and Note 1, "Summary of Significant Accounting Policies," immaterial revisions were made to the provision (benefit) for credit losses on loans receivable column and ending allowance column disclosures as of December 31, 2023, to reflect the revisions for the applicable portfolio segments.
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Transactions in the allowance for credit losses for the year ended December 31, 2022 were as follows:

Beginning
Allowance		 (Charge-offs) Recoveries
Provision (Benefit) for Credit Losses on Loans Receivable(1)
 Ending Allowance
Farmland $ 151  $ —  $ —  $ 8  $ 159 
Owner-occupied, nonfarm nonresidential properties 3,339  (21) 15  (428) 2,905 
Agricultural production and other loans to farmers 9  —  —  (3) 6 
Commercial and Industrial 8,837  (175) 139  965  9,766 
Obligations (other than securities and leases) of states and political subdivisions 1,649  —  —  214  1,863 
Other loans 149  —  —  307  456 
Other construction loans and all land development and other land loans 2,198  —  —  1,055  3,253 
Multifamily (5 or more) residential properties
 2,289  —  —  64  2,353 
Non-owner occupied, nonfarm nonresidential properties 6,481  (335) 336  1,171  7,653 
1-4 Family Construction 158  —  —  169  327 
Home equity lines of credit 1,169  —  12  (8) 1,173 
Residential Mortgages secured by first liens 6,943  (51) 28  1,564  8,484 
Residential Mortgages secured by junior liens 546  —  —  489  1,035 
Other revolving credit plans 528  (92) 50  236  722 
Automobile 263  (28) 2  34  271 
Other consumer 2,546  (1,623) 89  1,653  2,665 
Credit cards 92  (99) 38  36  67 
Overdrafts 241  (561) 138  460  278 
Total loans $ 37,588  $ (2,985) $ 847  $ 7,986  $ 43,436 
(1) Excludes provision for credit losses related to unfunded commitments. Note 18, "Off-Balance Sheet Commitments and Contingencies," in the consolidated financial statements provides more detail concerning the provision for credit losses related to unfunded commitments of the Corporation.

The Corporation's allowance for credit losses is influenced by loan volumes, risk rating migration, delinquency status and other conditions influencing loss expectations, such as reasonable and supportable forecasts of economic conditions.

For the year ended December 31, 2024, the allowance for credit losses increased primarily due to the growth in the Corporation's loan portfolio in new market areas, partially offset by improvements in the Corporation's historical loss rates, annual updates to the Corporation's loss drivers and assumptions, as well as the impact of net charge-offs. Significant uncertainty persists regarding the domestic and global economy due to persistent inflation in certain segments of the U.S. economy, elevated interest rates, fluctuating levels of consumer confidence, and geopolitical conflicts. Management will continue to proactively evaluate its estimate of expected credit losses as new information becomes available.

Provision for credit losses was $9.2 million for the year ended December 31, 2024, compared to $6.0 million and $8.6 million for the years ended December 31, 2023 and 2022, respectively. Included in the provision for credit losses for the year ended December 31, 2024 was $185 thousand related to the allowance for unfunded commitments compared to $156 thousand and $603 thousand provision towards the allowance for unfunded commitments for the years ended December 31, 2023 and 2022, respectively.
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The following tables present the amortized cost basis of loans on nonaccrual status and loans past due over 89 days still accruing as of December 31, 2024 and 2023, respectively:

December 31, 2024
Nonaccrual Nonaccrual With No Allowance for Credit Loss Loans Past Due over 89 Days Still Accruing
Farmland $ 522  $ 522  $ — 
Owner-occupied, nonfarm nonresidential properties 5,896  1,392  — 
Commercial and Industrial 10,682  10,111  — 
Other construction loans and all land development and other land loans 1,482  36  — 
Multifamily (5 or more) residential properties
 20,658  266  491 
Non-owner occupied, nonfarm nonresidential properties 5,913  5,913  — 
Home equity lines of credit 837  837  — 
Residential Mortgages secured by first liens 9,093  8,311  — 
Residential Mortgages secured by junior liens 271  271  — 
Other revolving credit plans 154  154  — 
Automobile 66  66  — 
Other consumer 749  749  — 
Credit cards —  —  162 
Total loans $ 56,323  $ 28,628  $ 653 

December 31, 2023
Nonaccrual Nonaccrual With No Allowance for Credit Loss Loans Past Due over 89 Days Still Accruing
Farmland $ 1,083  $ 1,083  $ — 
Owner-occupied, nonfarm nonresidential properties 2,673  1,488  — 
Commercial and Industrial 7,512  4,389  — 
Other construction loans and all land development and other land loans 1,653  104  — 
Multifamily (5 or more) residential properties
 305  305  — 
Non-owner occupied, nonfarm nonresidential properties 9,076  6,716  — 
Home equity lines of credit 940  940  — 
Residential Mortgages secured by first liens 5,316  4,902  23 
Residential Mortgages secured by junior liens 123  123  — 
Other revolving credit plans 81  81  — 
Automobile 79  79  — 
Other consumer 798  798  — 
Credit cards —  —  32 
Total loans $ 29,639  $ 21,008  $ 55 

All payments received while on nonaccrual status are applied against the principal balance of the loan. The Corporation does not recognize interest income while loans are on nonaccrual status.

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The following tables present the amortized cost basis of loans receivable that are individually evaluated and collateral-dependent by class of loans as of December 31, 2024 and 2023, respectively:

December 31, 2024
Real Estate Collateral Non-Real Estate Collateral
Farmland $ 352  $ — 
Owner-occupied, nonfarm nonresidential properties 4,503  — 
Commercial and Industrial 258  2,553 
Other construction loans and all land development and other land loans 1,446  — 
Multifamily (5 or more) residential properties
 20,658  — 
Non-owner occupied, nonfarm nonresidential properties 5,224  — 
Home equity lines of credit 290  — 
Residential Mortgages secured by first liens 1,411  — 
Total loans $ 34,142  $ 2,553 

December 31, 2023
Real Estate Collateral Non-Real Estate Collateral
Farmland $ 736  $ — 
Owner-occupied, nonfarm nonresidential properties 6,890  4 
Commercial and Industrial 5,489  4,291 
Other construction loans and all land development and other land loans 1,549  — 
Multifamily (5 or more) residential properties
 305  — 
Non-owner occupied, nonfarm nonresidential properties 8,291  — 
Home equity lines of credit 308  — 
Residential Mortgages secured by first liens 1,070  — 
Total loans $ 24,638  $ 4,295 

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The following table presents the aging of the amortized cost basis in past-due loans as of December 31, 2024 by class of loans:

30 - 59
Days Past Due		 60 - 89
Days Past Due		 Greater Than 89
Days Past Due		 Total Past Due Loans Not Past Due Total
Farmland $ —  $ —  $ —  $ —  $ 31,099  $ 31,099 
Owner-occupied, nonfarm nonresidential properties 77  1,479  5,030  6,586  508,622  515,208 
Agricultural production and other loans to farmers —  —  —  —  6,492  6,492 
Commercial and Industrial 704  185  6,632  7,521  711,254  718,775 
Obligations (other than securities and leases) of states and political subdivisions —  —  —  —  140,430  140,430 
Other loans —  —  —  —  28,110  28,110 
Other construction loans and all land development and other land loans —  —  1,482  1,482  281,430  282,912 
Multifamily (5 or more) residential properties
 —  20,392  757  21,149  389,997  411,146 
Non-owner occupied, nonfarm nonresidential properties —  —  —  —  1,033,541  1,033,541 
1-4 Family Construction 216  —  —  216  26,215  26,431 
Home equity lines of credit 1,006  387  323  1,716  164,611  166,327 
Residential Mortgages secured by first liens 2,908  1,910  5,795  10,613  1,002,133  1,012,746 
Residential Mortgages secured by junior liens 224  35  64  323  106,139  106,462 
Other revolving credit plans 351  4  100  455  40,640  41,095 
Automobile 135  3  —  138  20,823  20,961 
Other consumer 601  271  358  1,230  52,591  53,821 
Credit cards 97  115  162  374  12,769  13,143 
Overdrafts —  —  —  —  257  257 
Total loans $ 6,319  $ 24,781  $ 20,703  $ 51,803  $ 4,557,153  $ 4,608,956 

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The following table presents the aging of the amortized cost basis in past-due loans as of December 31, 2023 by class of loans.

30 - 59
Days Past Due		 60 - 89
Days Past Due		 Greater Than 89
Days Past Due		 Total Past Due
Loans Not Past Due (1)
Total (1)
Farmland $ —  $ 182  $ 129  $ 311  $ 33,174  $ 33,485 
Owner-occupied, nonfarm nonresidential properties 120  —  1,390  1,510  510,400  511,910 
Agricultural production and other loans to farmers —  —  —  —  1,652  1,652 
Commercial and Industrial 64  379  314  757  725,685  726,442 
Obligations (other than securities and leases) of states and political subdivisions —  —  —  —  152,201  152,201 
Other loans —  —  —  —  25,507  25,507 
Other construction loans and all land development and other land loans —  41  1,612  1,653  338,705  340,358 
Multifamily (5 or more) residential properties
 —  —  305  305  305,392  305,697 
Non-owner occupied, nonfarm nonresidential properties 95  299  2,031  2,425  981,608  984,033 
1-4 Family Construction —  —  —  —  28,055  28,055 
Home equity lines of credit 582  682  339  1,603  129,097  130,700 
Residential Mortgages secured by first liens 2,360  1,094  1,651  5,105  1,000,230  1,005,335 
Residential Mortgages secured by junior liens 21  38  60  119  91,121  91,240 
Other revolving credit plans 114  41  14  169  42,708  42,877 
Automobile 62  5  67  134  25,181  25,315 
Other consumer 452  453  354  1,259  50,333  51,592 
Credit cards 110  17  32  159  11,626  11,785 
Overdrafts —  —  —  —  292  292 
Total loans $ 3,980  $ 3,231  $ 8,298  $ 15,509  $ 4,452,967  $ 4,468,476 
(1) As previously disclosed in the Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, and Note 1, "Summary of Significant Accounting Policies," immaterial revisions were made to the loans receivable not past due and total columns disclosure as of December 31, 2023, to reflect the revisions for the applicable portfolio segments.

Loan Modifications

The Corporation adopted ASU 2022-02, Financial Instruments—Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures effective January 1, 2023. The amendments in ASU 2022-02 eliminated the recognition and measure of troubled debt restructurings and enhanced disclosures for loan modifications to borrowers experiencing financial difficulty.

Occasionally, the Corporation modifies loans to borrowers in financial distress by providing principal forgiveness, term extension, an other-than-insignificant payment delay or interest rate reduction. When principal forgiveness is provided, the amount of forgiveness is charged-off against the allowance for credit losses.

In some cases, the Corporation provides multiple types of concessions on one loan. Typically, one type of concession, such as a term extension, is granted initially. If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, may be granted. For the loans included in the "combination" columns below, multiple types of modifications have been made on the same loan within the current reporting period. The combination is at least two of the following: a term extension, principal forgiveness, an other-than-insignificant payment delay and/or an interest rate reduction.

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The following table presents the amortized cost basis of loans at December 31, 2024 that were both experiencing financial difficulty and modified during the year ended December 31, 2024, by class and by type of modification. The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financing receivable is also presented below:

Principal Forgiveness Payment Delay Term Extension Interest Rate Reduction Combination Payment Delay and Term Extension Total Class of Financing Receivable
Farmland $ —  $ 1,040  $ —  $ —  $ —  3.34  %
Owner-occupied, nonfarm nonresidential properties —  696  —  —  —  0.14 
Commercial and Industrial —  —  410  —  —  0.06 
Non-owner occupied, nonfarm nonresidential properties —  5,225  —  —  —  0.51 
Total $ —  $ 6,961  $ 410  $ —  $ —  0.16  %

The following table presents the amortized cost basis of loans at December 31, 2023 that were both experiencing financial difficulty and modified during the year ended December 31, 2023, by class and by type of modification. The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financing receivable is also presented below:

Principal Forgiveness Payment Delay Term Extension Interest Rate Reduction Combination Payment Delay and Term Extension Total Class of Financing Receivable
Owner-occupied, nonfarm nonresidential properties $ —  $ 5,934  $ —  $ —  $ —  1.20  %
Commercial and Industrial —  7,794  524  320  —  1.19 
Non-owner occupied, nonfarm nonresidential properties —  5,911  —  —  785  0.75 
Residential Mortgages secured by first liens —  —  414  —  —  0.04 
Residential Mortgages secured by junior liens —  —  29  —  —  0.03 
Total $ —  $ 19,639  $ 967  $ 320  $ 785  0.49  %

The Corporation has zero in unfunded available credit to customers whose loan receivables are included in the previous tables.

The Corporation closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.

The following table presents the performance of such loans that have been modified during the year ended December 31, 2024:

Current 30 - 59
Days Past Due		 60 - 89
Days Past Due		 Greater Than 89
Days Past Due		 Total Past Due
Farmland $ 1,040  $ —  $ —  $ —  $ — 
Owner-occupied, nonfarm nonresidential properties 696  —  —  —  — 
Commercial and Industrial 410  —  —  —  — 
Non-owner occupied, nonfarm nonresidential properties 5,225  —  —  —  — 
Total $ 7,371  $ —  $ —  $ —  $ — 

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The following table presents the performance of such loans that have been modified during the year ended December 31, 2023:

Current 30 - 59
Days Past Due		 60 - 89
Days Past Due		 Greater Than 89
Days Past Due		 Total Past Due
Owner-occupied, nonfarm nonresidential properties $ 5,934  $ —  $ —  $ —  $ — 
Commercial and Industrial 8,638  —  —  —  — 
Non-owner occupied, nonfarm nonresidential properties 6,696  —  —  —  — 
Residential Mortgages secured by first liens 414  —  —  —  — 
Residential Mortgages secured by junior liens 29  —  —  —  — 
Total $ 21,711  $ —  $ —  $ —  $ — 

The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the year ended December 31, 2024:

Principal Forgiveness Weighted Average
Term Extension
(in years)		 Weighted Average
Interest Rate Reduction
Commercial and Industrial $ —  1.00 —  %
Total $ —  1.00 —  %

The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the year ended December 31, 2023:

Principal Forgiveness Weighted Average
Term Extension
(in years)		 Weighted Average
Interest Rate Reduction
Commercial and Industrial $ —  1.00 0.50  %
Non-owner occupied, nonfarm nonresidential properties —  0.75 — 
Residential Mortgages secured by first liens —  0.50 — 
Residential Mortgages secured by junior liens —  0.50 — 
Total $ —  0.76 0.50  %

There were no loans that had a payment default during the year ended December 31, 2024 and were modified in the twelve months prior to that default to borrowers experiencing financial difficulty.

The following table presents the amortized cost basis of loans that had a payment default during the year ended December 31, 2023 and were modified in the twelve months prior to that default to borrowers experiencing financial difficulty:

Principal Forgiveness Payment Delay Term Extension Interest Rate Reduction Combination Payment Delay and Term Extension
Other construction loans and all land development and other land loans $ —  $ 1,549  $ —  $ —  $ — 
Non-owner occupied, nonfarm nonresidential properties —  —  1,523  —  — 
Total $ —  $ 1,549  $ 1,523  $ —  $ — 

If the Corporation determines that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is written off and the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount.

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Credit Quality Indicators

The Corporation categorizes loans receivable into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Corporation analyzes loans individually to classify the loans as to credit risk.

The Corporation uses the following definitions for risk ratings:

Special Mention: A loan classified as special mention has a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Corporation’s credit position at some future date.
Substandard: A loan classified as substandard is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. The loan has a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. A substandard loan is characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected.
Doubtful: A loan classified as doubtful has all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

The following tables represent the Corporation's commercial credit risk profile by risk rating. Loans receivable not rated as special mention, substandard, or doubtful are considered to be pass rated loans.

December 31, 2024
Non-Pass Rated
Pass Special Mention Substandard Doubtful Total Non-Pass Total
Farmland $ 25,171  $ 5,267  $ 661  $ —  $ 5,928  $ 31,099 
Owner-occupied, nonfarm nonresidential properties 491,798  1,289  22,121  —  23,410  515,208 
Agricultural production and other loans to farmers 6,492  —  —  —  —  6,492 
Commercial and Industrial 654,139  4,321  60,315  —  64,636  718,775 
Obligations (other than securities and leases) of states and political subdivisions 140,430  —  —  —  —  140,430 
Other loans 28,110  —  —  —  —  28,110 
Other construction loans and all land development and other land loans 281,466  —  1,446  —  1,446  282,912 
Multifamily (5 or more) residential properties
 385,946  —  25,200  —  25,200  411,146 
Non-owner occupied, nonfarm nonresidential properties 1,008,507  4,947  20,087  —  25,034  1,033,541 
Total loans $ 3,022,059  $ 15,824  $ 129,830  $ —  $ 145,654  $ 3,167,713 

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December 31, 2023 (1)
Non-Pass Rated
Pass Special Mention Substandard Doubtful Total Non-Pass Total
Farmland $ 32,402  $ —  $ 1,083  $ —  $ 1,083  $ 33,485 
Owner-occupied, nonfarm nonresidential properties 475,093  25,484  11,333  —  36,817  511,910 
Agricultural production and other loans to farmers 1,652  —  —  —  —  1,652 
Commercial and Industrial 653,981  52,030  20,431  —  72,461  726,442 
Obligations (other than securities and leases) of states and political subdivisions 139,014  13,187  —  —  13,187  152,201 
Other loans 25,507  —  —  —  —  25,507 
Other construction loans and all land development and other land loans 338,746  —  1,612  —  1,612  340,358 
Multifamily (5 or more) residential properties
 303,554  1,346  797  —  2,143  305,697 
Non-owner occupied, nonfarm nonresidential properties 957,254  3,008  23,771  —  26,779  984,033 
Total loans $ 2,927,203  $ 95,055  $ 59,027  $ —  $ 154,082  $ 3,081,285 
(1) As previously disclosed in the Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, and Note 1, "Summary of Significant Accounting Policies," immaterial revisions were made to the pass, special mention, total non-pass and total columns disclosure as of December 31, 2023, to reflect the revisions for the applicable portfolio segments.
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The following tables detail the amortized cost of loans receivable, by year of origination (for term loans) and by risk grade within each portfolio segment as of December 31, 2024. Current period originations may include modifications.

Term Loans Amortized Cost Basis by Origination Year
2024 2023 2022 2021 2020 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total
Farmland
Risk rating
Pass $ 265  $ 3,165  $ 6,756  $ 6,477  $ 1,436  $ 6,662  $ 410  $ —  $ 25,171 
Special mention —  —  5,267  —  —  —  —  —  5,267 
Substandard 170  —  —  —  —  491  —  —  661 
Total $ 435  $ 3,165  $ 12,023  $ 6,477  $ 1,436  $ 7,153  $ 410  $ —  $ 31,099 
Current period gross write offs $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ — 
Owner-occupied, nonfarm nonresidential properties
Risk rating
Pass $ 74,692  $ 62,609  $ 114,980  $ 98,469  $ 39,931  $ 90,249  $ 10,868  $ —  $ 491,798 
Special mention —  —  —  254  —  527  508  —  1,289 
Substandard 14,181  1,114  4,370  696  —  1,507  253  —  22,121 
Total $ 88,873  $ 63,723  $ 119,350  $ 99,419  $ 39,931  $ 92,283  $ 11,629  $ —  $ 515,208 
Current period gross write offs $ —  $ —  $ 750  $ —  $ —  $ 698  $ —  $ —  $ 1,448 
Agricultural production and other loans to farmers
Risk rating
Pass $ 5,072  $ 473  $ 18  $ 26  $ 40  $ 148  $ 715  $ —  $ 6,492 
Special mention —  —  —  —  —  —  —  —  — 
Substandard —  —  —  —  —  —  —  —  — 
Total $ 5,072  $ 473  $ 18  $ 26  $ 40  $ 148  $ 715  $ —  $ 6,492 
Current period gross write offs $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ — 
Commercial and Industrial
Risk rating
Pass $ 148,569  $ 44,080  $ 104,613  $ 63,646  $ 24,511  $ 18,771  $ 249,949  $ —  $ 654,139 
Special mention 7  55  139  424  61  32  3,603  —  4,321 
Substandard 845  5,145  10,988  1,461  49  1,935  39,892  —  60,315 
Total $ 149,421  $ 49,280  $ 115,740  $ 65,531  $ 24,621  $ 20,738  $ 293,444  $ —  $ 718,775 
Current period gross write offs $ —  $ 301  $ 116  $ 537  $ 1  $ 43  $ 1,428  $ —  $ 2,426 
Obligations (other than securities and leases) of states and political subdivisions
Risk rating
Pass $ 7,999  $ 24,754  $ 15,756  $ 30,419  $ 11,411  $ 45,882  $ 4,209  $ —  $ 140,430 
Special mention —  —  —  —  —  —  —  —  — 
Substandard —  —  —  —  —  —  —  —  — 
Total $ 7,999  $ 24,754  $ 15,756  $ 30,419  $ 11,411  $ 45,882  $ 4,209  $ —  $ 140,430 
Current period gross write offs $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ — 
Other loans
Risk rating
Pass $ 2,134  $ 3,382  $ 12,291  $ 4,602  $ 1,341  $ 274  $ 4,086  $ —  $ 28,110 
Special mention —  —  —  —  —  —  —  —  — 
Substandard —  —  —  —  —  —  —  —  — 
Total $ 2,134  $ 3,382  $ 12,291  $ 4,602  $ 1,341  $ 274  $ 4,086  $ —  $ 28,110 
Current period gross write offs $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ — 

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Term Loans Amortized Cost Basis by Origination Year
2024 2023 2022 2021 2020 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total
Other construction loans and all land development and other land loans
Risk rating
Pass $ 112,919  $ 58,596  $ 99,268  $ 3,141  $ 749  $ 1,875  $ 4,918  $ —  $ 281,466 
Special mention —  —  —  —  —  —  —  —  — 
Substandard —  —  —  —  —  1,446  —  —  1,446 
Total $ 112,919  $ 58,596  $ 99,268  $ 3,141  $ 749  $ 3,321  $ 4,918  $ —  $ 282,912 
Current period gross write offs $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ 11  $ 11 
Multifamily (5 or more) residential properties
Risk rating
Pass $ 46,905  $ 49,880  $ 173,994  $ 67,500  $ 20,706  $ 25,037  $ 1,924  $ —  $ 385,946 
Special mention —  —  —  —  —  —  —  —  — 
Substandard —  2,107  20,392  —  2,701  —  —  —  25,200 
Total $ 46,905  $ 51,987  $ 194,386  $ 67,500  $ 23,407  $ 25,037  $ 1,924  $ —  $ 411,146 
Current period gross write offs $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ — 
Non-owner occupied, nonfarm nonresidential properties
Risk rating
Pass $ 141,083  $ 190,123  $ 320,047  $ 183,621  $ 38,309  $ 127,515  $ 7,809  $ —  $ 1,008,507 
Special mention 1,962  —  212  2,003  —  349  421  —  4,947 
Substandard 11,469  762  689  —  5,225  1,942  —  —  20,087 
Total $ 154,514  $ 190,885  $ 320,948  $ 185,624  $ 43,534  $ 129,806  $ 8,230  $ —  $ 1,033,541 
Current period gross write offs $ —  $ —  $ 33  $ 296  $ —  $ 625  $ 20  $ —  $ 974 


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The following tables detail the amortized cost of loans receivable, by year of origination (for term loans) and by risk grade within each portfolio segment as of December 31, 2023. Current period originations may include modifications. As previously disclosed in the Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, and Note 1, "Summary of Significant Accounting Policies," immaterial revisions were made to the vintage loan disclosure at December 31, 2023, to reflect the revisions for the applicable portfolio segments.
Term Loans Amortized Cost Basis by Origination Year
2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total
Farmland
Risk rating
Pass $ 3,250  $ 12,897  $ 6,845  $ 1,465  $ 815  $ 6,828  $ 302  $ —  $ 32,402 
Special mention —  —  —  —  —  —  —  —  — 
Substandard —  —  306  —  —  777  —  —  1,083 
Total $ 3,250  $ 12,897  $ 7,151  $ 1,465  $ 815  $ 7,605  $ 302  $ —  $ 33,485 
Current period gross write offs $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ — 
Owner-occupied, nonfarm nonresidential properties
Risk rating
Pass $ 64,237  $ 125,894  $ 107,740  $ 44,286  $ 49,366  $ 73,649  $ 9,921  $ —  $ 475,093 
Special mention 320  6,611  1,180  13,623  407  210  3,133  —  25,484 
Substandard 848  —  696  292  6,738  2,593  166  —  11,333 
Total $ 65,405  $ 132,505  $ 109,616  $ 58,201  $ 56,511  $ 76,452  $ 13,220  $ —  $ 511,910 
Current period gross write offs $ —  $ —  $ —  $ —  $ —  $ 26  $ —  $ —  $ 26 
Agricultural production and other loans to farmers
Risk rating
Pass $ 703  $ 34  $ 89  $ 60  $ 5  $ 159  $ 602  $ —  $ 1,652 
Special mention —  —  —  —  —  —  —  —  — 
Substandard —  —  —  —  —  —  —  —  — 
Total $ 703  $ 34  $ 89  $ 60  $ 5  $ 159  $ 602  $ —  $ 1,652 
Current period gross write offs $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ — 
Commercial and Industrial
Risk rating
Pass $ 78,325  $ 140,178  $ 141,439  $ 33,475  $ 6,662  $ 14,709  $ 239,193  $ —  $ 653,981 
Special mention 7,718  7,803  2,795  65  139  21  33,489  —  52,030 
Substandard —  385  4,281  396  3,476  1,655  10,238  —  20,431 
Total $ 86,043  $ 148,366  $ 148,515  $ 33,936  $ 10,277  $ 16,385  $ 282,920  $ —  $ 726,442 
Current period gross write offs $ 50  $ —  $ —  $ 191  $ —  $ —  $ 151  $ —  $ 392 
Obligations (other than securities and leases) of states and political subdivisions
Risk rating
Pass $ 24,964  $ 16,791  $ 31,768  $ 12,399  $ 4,190  $ 45,331  $ 3,571  $ —  $ 139,014 
Special mention —  —  —  —  —  13,187  —  —  13,187 
Substandard —  —  —  —  —  —  —  —  — 
Total $ 24,964  $ 16,791  $ 31,768  $ 12,399  $ 4,190  $ 58,518  $ 3,571  $ —  $ 152,201 
Current period gross write offs $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ — 
Other loans
Risk rating
Pass $ 3,649  $ 12,211  $ 5,289  $ 1,809  $ 288  $ —  $ 2,261  $ —  $ 25,507 
Special mention —  —  —  —  —  —  —  —  — 
Substandard —  —  —  —  —  —  —  —  — 
Total $ 3,649  $ 12,211  $ 5,289  $ 1,809  $ 288  $ —  $ 2,261  $ —  $ 25,507 
Current period gross write offs $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ — 


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Term Loans Amortized Cost Basis by Origination Year
2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total
Other construction loans and all land development and other land loans
Risk rating
Pass $ 92,321  $ 197,166  $ 23,484  $ 15,540  $ 1,706  $ 1,129  $ 7,400  $ —  $ 338,746 
Special mention —  —  —  —  —  —  —  —  — 
Substandard —  —  —  —  1,549  —  63  —  1,612 
Total $ 92,321  $ 197,166  $ 23,484  $ 15,540  $ 3,255  $ 1,129  $ 7,463  $ —  $ 340,358 
Current period gross write offs $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ — 
Multifamily (5 or more) residential properties
Risk rating
Pass $ 49,566  $ 127,027  $ 70,261  $ 25,232  $ 10,928  $ 19,786  $ 754  $ —  $ 303,554 
Special mention 1,346  —  —  —  —  —  —  —  1,346 
Substandard 797  —  —  —  —  —  —  —  797 
Total $ 51,709  $ 127,027  $ 70,261  $ 25,232  $ 10,928  $ 19,786  $ 754  $ —  $ 305,697 
Current period gross write offs $ —  $ —  $ —  $ —  $ —  $ 65  $ —  $ —  $ 65 
Non-owner occupied, nonfarm nonresidential properties
Risk rating
Pass $ 198,343  $ 332,733  $ 195,106  $ 42,216  $ 55,150  $ 125,532  $ 8,174  $ —  $ 957,254 
Special mention —  —  —  1,887  —  688  433  —  3,008 
Substandard 778  1,134  488  5,911  3,266  10,484  1,710  —  23,771 
Total $ 199,121  $ 333,867  $ 195,594  $ 50,014  $ 58,416  $ 136,704  $ 10,317  $ —  $ 984,033 
Current period gross write offs $ —  $ 358  $ —  $ —  $ 88  $ —  $ 248  $ —  $ 694 

The Corporation considers the performance of the loan portfolio and its impact on the allowance for credit losses. For 1-4 family construction, home equity lines of credit, residential mortgages secured by first liens, residential mortgages secured by junior liens, automobile, credit cards, other revolving credit plans and other consumer segments, the Corporation evaluates credit quality based on the performance status of the loan, which was previously presented, and by payment activity. Nonperforming loans include loans receivable on nonaccrual status and loans receivable past due over 89 days and still accruing interest.

December 31, 2024
December 31, 2023 (1)
Performing Nonperforming Total Performing Nonperforming Total
1-4 Family Construction $ 26,431  $ —  $ 26,431  $ 28,055  $ —  $ 28,055 
Home equity lines of credit 165,490  837  166,327  129,760  940  130,700 
Residential Mortgages secured by first liens 1,003,653  9,093  1,012,746  999,996  5,339  1,005,335 
Residential Mortgages secured by junior liens 106,191  271  106,462  91,117  123  91,240 
Other revolving credit plans 40,941  154  41,095  42,796  81  42,877 
Automobile 20,895  66  20,961  25,236  79  25,315 
Other consumer 53,072  749  53,821  50,794  798  51,592 
Total loans $ 1,416,673  $ 11,170  $ 1,427,843  $ 1,367,754  $ 7,360  $ 1,375,114 
(1) As previously disclosed in the Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, and Note 1, "Summary of Significant Accounting Policies," immaterial revisions were made to the performing and total columns at December 31, 2023, to reflect the revisions for the applicable portfolio segments.
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The following tables detail the amortized cost of loans receivable, by year of origination (for term loans) and by payment activity within each portfolio segment as of December 31, 2024. The current period originations may include modifications, extensions and renewals.

Term Loans Amortized Cost Basis by Origination Year
2024 2023 2022 2021 2020 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total
1-4 Family Construction
Payment performance
Performing $ 21,411  $ 3,717  $ 1,254  $ —  $ —  $ 49  $ —  $ —  $ 26,431 
Nonperforming —  —  —  —  —  —  —  —  — 
Total $ 21,411  $ 3,717  $ 1,254  $ —  $ —  $ 49  $ —  $ —  $ 26,431 
Current period gross write offs $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ — 
Home equity lines of credit
Payment performance
Performing $ 44,573  $ 28,211  $ 30,557  $ 9,440  $ 8,106  $ 30,649  $ 7,993  $ 5,961  $ 165,490 
Nonperforming —  50  —  —  —  —  —  787  837 
Total $ 44,573  $ 28,261  $ 30,557  $ 9,440  $ 8,106  $ 30,649  $ 7,993  $ 6,748  $ 166,327 
Current period gross write offs $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ — 
Residential mortgages secured by first lien
Payment performance
Performing $ 106,278  $ 135,898  $ 224,633  $ 177,756  $ 128,924  $ 226,926  $ 3,238  $ —  $ 1,003,653 
Nonperforming 363  2,494  1,657  1,305  839  2,435  —  —  9,093 
Total $ 106,641  $ 138,392  $ 226,290  $ 179,061  $ 129,763  $ 229,361  $ 3,238  $ —  $ 1,012,746 
Current period gross write offs $ —  $ —  $ —  $ —  $ —  $ 79  $ —  $ —  $ 79 
Residential mortgages secured by junior liens
Payment performance
Performing $ 32,777  $ 22,256  $ 22,931  $ 11,769  $ 5,695  $ 9,465  $ 1,298  $ —  $ 106,191 
Nonperforming 19  40  34  123  —  16  39  —  271 
Total $ 32,796  $ 22,296  $ 22,965  $ 11,892  $ 5,695  $ 9,481  $ 1,337  $ —  $ 106,462 
Current period gross write offs $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ — 
Other revolving credit plans
Payment performance
Performing $ 10,454  $ 5,556  $ 6,898  $ 2,163  $ 5,366  $ 10,504  $ —  $ —  $ 40,941 
Nonperforming —  —  27  6  —  121  —  —  154 
Total $ 10,454  $ 5,556  $ 6,925  $ 2,169  $ 5,366  $ 10,625  $ —  $ —  $ 41,095 
Current period gross write offs $ —  $ 9  $ —  $ 41  $ 25  $ 81  $ —  $ —  $ 156 
Automobile
Payment performance
Performing $ 5,794  $ 8,504  $ 3,975  $ 1,149  $ 664  $ 809  $ —  $ —  $ 20,895 
Nonperforming —  15  47  —  4  —  —  —  66 
Total $ 5,794  $ 8,519  $ 4,022  $ 1,149  $ 668  $ 809  $ —  $ —  $ 20,961 
Current period gross write offs $ 22  $ 93  $ 7  $ 14  $ 6  $ 4  $ —  $ —  $ 146 
Other consumer
Payment performance
Performing $ 27,727  $ 13,090  $ 5,344  $ 2,432  $ 2,162  $ 2,317  $ —  $ —  $ 53,072 
Nonperforming 219  368  82  67  8  5  —  —  749 
Total $ 27,946  $ 13,458  $ 5,426  $ 2,499  $ 2,170  $ 2,322  $ —  $ —  $ 53,821 
Current period gross write offs $ 133  $ 1,141  $ 630  $ 154  $ 24  $ 12  $ —  $ —  $ 2,094 
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The following tables detail the amortized cost of loans receivable, by year of origination (for term loans) and by payment activity within each portfolio segment as of December 31, 2023. Current period originations may include modifications. As previously disclosed in the Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, and Note 1, "Summary of Significant Accounting Policies," immaterial revisions were made to the vintage loan disclosure at December 31, 2023, to reflect the revisions for the applicable portfolio segments.
Term Loans Amortized Cost Basis by Origination Year
2023 2022 2021 2020 2019 Prior Revolving Loans Amortized Cost Basis Revolving Loans Converted to Term Total
1-4 Family Construction
Payment performance
Performing $ 16,968  $ 9,977  $ 251  $ —  $ 59  $ 1  $ 799  $ —  $ 28,055 
Nonperforming —  —  —  —  —  —  —  —  — 
Total $ 16,968  $ 9,977  $ 251  $ —  $ 59  $ 1  $ 799  $ —  $ 28,055 
Current period gross write offs $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ — 
Home equity lines of credit
Payment performance
Performing $ 27,110  $ 32,027  $ 11,437  $ 9,844  $ 6,781  $ 30,467  $ 7,479  $ 4,615  $ 129,760 
Nonperforming —  —  —  —  —  14  —  926  940 
Total $ 27,110  $ 32,027  $ 11,437  $ 9,844  $ 6,781  $ 30,481  $ 7,479  $ 5,541  $ 130,700 
Current period gross write offs $ —  $ —  $ —  $ —  $ 10  $ —  $ —  $ —  $ 10 
Residential mortgages secured by first lien
Payment performance
Performing $ 141,019  $ 238,242  $ 200,794  $ 144,676  $ 77,919  $ 194,185  $ 3,161  $ —  $ 999,996 
Nonperforming 497  174  787  615  492  2,736  38  —  5,339 
Total $ 141,516  $ 238,416  $ 201,581  $ 145,291  $ 78,411  $ 196,921  $ 3,199  $ —  $ 1,005,335 
Current period gross write offs $ —  $ —  $ —  $ —  $ —  $ 22  $ 95  $ —  $ 117 
Residential mortgages secured by junior liens
Payment performance
Performing $ 28,685  $ 27,032  $ 14,204  $ 7,102  $ 3,888  $ 8,833  $ 1,373  $ —  $ 91,117 
Nonperforming —  38  —  —  —  42  43  —  123 
Total $ 28,685  $ 27,070  $ 14,204  $ 7,102  $ 3,888  $ 8,875  $ 1,416  $ —  $ 91,240 
Current period gross write offs $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ —  $ — 
Other revolving credit plans
Payment performance
Performing $ 8,684  $ 8,027  $ 2,732  $ 11,274  $ 1,634  $ 10,445  $ —  $ —  $ 42,796 
Nonperforming —  29  5  —  —  47  —  —  81 
Total $ 8,684  $ 8,056  $ 2,737  $ 11,274  $ 1,634  $ 10,492  $ —  $ —  $ 42,877 
Current period gross write offs $ —  $ —  $ 50  $ 4  $ 16  $ 49  $ —  $ —  $ 119 
Automobile
Payment performance
Performing $ 12,545  $ 6,800  $ 2,597  $ 1,472  $ 1,025  $ 797  $ —  $ —  $ 25,236 
Nonperforming 16  51  —  7  5  —  —  —  79 
Total $ 12,561  $ 6,851  $ 2,597  $ 1,479  $ 1,030  $ 797  $ —  $ —  $ 25,315 
Current period gross write offs $ 18  $ 23  $ —  $ 8  $ 7  $ —  $ —  $ —  $ 56 
Other consumer
Payment performance
Performing $ 27,202  $ 12,261  $ 5,255  $ 3,107  $ 1,471  $ 1,498  $ —  $ —  $ 50,794 
Nonperforming 283  330  116  12  6  51  —  —  798 
Total $ 27,485  $ 12,591  $ 5,371  $ 3,119  $ 1,477  $ 1,549  $ —  $ —  $ 51,592 
Current period gross write offs $ 210  $ 1,164  $ 467  $ 96  $ 33  $ 12  $ —  $ —  $ 1,982 

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  December 31, 2024 December 31, 2023
Credit card
Payment performance
Performing $ 12,981  $ 11,753 
Nonperforming 162  32 
Total $ 13,143  $ 11,785 
Current period gross write offs $ 143  $ 189 

Holiday’s loan portfolio, included in other consumer loans above, is summarized as follows at December 31, 2024 and 2023: 

December 31, 2024 December 31, 2023
Gross consumer loans $ 27,261  $ 31,242 
Less: unearned discounts (4,772) (5,696)
Total consumer loans, net of unearned discounts $ 22,489  $ 25,546 

4.  Fair Value
Fair Value Measurement

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The following three levels of inputs are used to measure fair value:
Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Corporation used the following methods and significant assumptions to estimate fair value:

Investment Securities: The fair values for investment securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2), using matrix pricing. Matrix pricing is a mathematical technique commonly used to price debt securities that are not actively traded, values debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3).

Loans Held for Sale: Loans held for sale are carried at the lower of cost or fair value, which is evaluated on a loan-level basis. The fair value of loans held for sale is determined using quoted prices for similar assets, adjusted for specific attributes of that loan or other observable market data, such as outstanding commitments from third party investors (Level 2).

Derivatives: The fair values of derivatives are based on valuation models using observable market data as of the measurement date (Level 2). The Corporation's derivatives are traded in an over-the-counter market where quoted market prices are not always available. Therefore, the fair values of derivatives are determined using quantitative models that utilize multiple market inputs. The inputs will vary based on the type of derivative, but could include interest rates, prices, and indices to generate continuous yield or pricing curves, prepayment rates, and volatility factors to value the position. The majority of market inputs are actively quoted and can be validated through external sources, including brokers, market transactions, and third-party pricing services.

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Individually Evaluated Loans: The fair value of individually evaluated loans with specific allocations of the allowance for credit losses is generally based on recent real estate appraisals prepared by third-parties. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Management also adjusts appraised values based on the length of time that has passed since the appraisal date and other factors. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower's financial statements, or aging reports, adjusted or discounted based on management's historical knowledge, changes in market conditions from the time of the valuation, and management's expertise and knowledge of the client and client's business, resulting in a Level 3 fair value classification. Individually evaluated loans are evaluated on a quarterly basis for additional impairment and adjusted in accordance with the allowance policy.

Assets and liabilities measured at fair value on a recurring basis were as follows at December 31, 2024 and 2023:

    Fair Value Measurements at December 31, 2024 Using
Description Total Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		 Significant Other
Observable
Inputs
(Level 2)		 Significant
Unobservable
Inputs
(Level 3)
Assets:
Securities Available-For-Sale:
U.S. Government sponsored entities $ 14,810  $ 14,810  $ —  $ — 
States and political subdivisions 90,956  —  90,956  — 
Residential and multi-family mortgage 318,910  —  318,910  — 
Corporate notes and bonds 35,210  —  35,210  — 
Pooled SBA 8,660  —  8,660  — 
Total Securities Available-For-Sale $ 468,546  $ 14,810  $ 453,736  $ — 
Interest rate swaps $ 423  $ —  $ 423  $ — 
Equity Securities:
Corporate equity securities $ 6,542  $ 6,542  $ —  $ — 
Mutual funds 1,936  1,936  —  — 
Money market 287  287  —  — 
Corporate notes 1,691  —  1,691  — 
Total Equity Securities $ 10,456  $ 8,765  $ 1,691  $ — 
Liabilities
Interest rate swaps $ (423) $ —  $ (423) $ — 

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    Fair Value Measurements at December 31, 2023 Using
Description Total Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		 Significant Other
Observable
Inputs
(Level 2)		 Significant
Unobservable
Inputs
(Level 3)
Assets:
Securities Available-For-Sale:
U.S. Government sponsored entities (1)
 $ 4,988  $ 4,988  $ —  $ — 
States and political subdivisions 91,809  —  91,809  — 
Residential and multi-family mortgage 191,519  —  191,519  — 
Corporate notes and bonds 43,139  —  43,139  — 
Pooled SBA 10,500  —  10,500  — 
Total Securities Available-For-Sale $ 341,955  $ 4,988  $ 336,967  $ — 
Interest rate swaps $ 1,013  $ —  $ 1,013  $ — 
Equity Securities:
Corporate equity securities $ 5,341  $ 5,341  $ —  $ — 
Mutual funds 2,223  2,223  —  — 
Money market 1,103  1,103  —  — 
Corporate notes 634  634  — 
Total Equity Securities $ 9,301  $ 8,667  $ 634  $ — 
Liabilities
Interest rate swaps $ (1,013) $ —  $ (1,013) $ — 
(1) In 2023, the Corporation transitioned to a new pricing provider, leading to the reclassification of United States Treasury investments as Level 1 pricing instruments.

Assets and liabilities measured at fair value on a non-recurring basis are as follows at December 31, 2024 and 2023: 

    Fair Value Measurements at December 31, 2024 Using
Description Total Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		 Significant Other
Observable Inputs
(Level 2)		 Significant
Unobservable
Inputs
(Level 3)
Assets:
Collateral-dependent loans:
Farmland $ 352  $ —  $ —  $ 352 
Owner-occupied, nonfarm nonresidential properties 2,531  —  —  2,531 
Commercial and industrial 2,334  —  —  2,334 
Other construction loans and all land development loans and other land loans 1,196  —  —  1,196 
Multifamily (5 or more) residential properties 19,773  —  —  19,773 
Non-owner occupied, nonfarm nonresidential 5,225  —  —  5,225 
Home equity lines of credit 290  —  —  290 
Residential mortgages secured by first liens 1,173  —  —  1,173 

    Fair Value Measurements at December 31, 2023 Using
Description Total Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		 Significant Other
Observable Inputs
(Level 2)		 Significant
Unobservable
Inputs
(Level 3)
Assets:
Collateral-dependent loans:
Farmland $ 736  $ —  $ —  $ 736 
Owner-occupied, nonfarm nonresidential properties 5,589  —  —  5,589 
Commercial and industrial 7,425  —  —  7,425 
Other construction loans and all land development loans and other land loans 1,299  —  —  1,299 
Multifamily (5 or more) residential properties 305  —  —  305 
Non-owner occupied, nonfarm nonresidential 7,216  —  —  7,216 
Home equity lines of credit 308  —  —  308 
Residential mortgages secured by first liens 871  —  —  871 
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A loan is considered to be a collateral dependent loan when, based on current information and events, the Corporation expects repayment of the financial assets to be provided substantially through the operation or sale of the collateral and the Corporation has determined that the borrower is experiencing financial difficulty as of the measurement date. The allowance for credit losses is measured by estimating the fair value of the loan based on the present value of expected cash flows, the market price of the loan, or the underlying fair value of the loan’s collateral. For real estate loans, fair value of the loan’s collateral is determined by third-party appraisals, which are then adjusted for the estimated selling and closing costs related to liquidation of the collateral. For this asset class, the actual valuation methods (income, sales comparable, or cost) vary based on the status of the project or property. For example, land is generally based on the sales comparable method while construction is based on the income and/or sales comparable methods. The unobservable inputs may vary depending on the individual assets with no one of the three methods being the predominant approach. The Corporation reviews the third-party appraisal for appropriateness and may adjust the value downward to consider selling and closing costs. For non-real estate loans, fair value of the loan’s collateral may be determined using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at December 31, 2024:

Fair
value		 Valuation
Technique		 Unobservable Inputs Range
(Weighted
Average)
Collateral-dependent loans receivable:
Farmland $ 352  Valuation of third party appraisal on underlying collateral Loss severity rates
37% (37%)
Owner-occupied, nonfarm nonresidential properties 2,531  Valuation of third party appraisal on underlying collateral Loss severity rates
22%-44% (25%)
Commercial and industrial 2,334  Valuation of third party appraisal on underlying collateral Loss severity rates
9%-100% (31%)
Other construction loans and all land development loans and other land loans 1,196  Valuation of third party appraisal on underlying collateral Loss severity rates
38% (38%)
Multifamily (5 or more) residential properties 19,773  Valuation of third party appraisal on underlying collateral Loss severity rates
10% (10%)
Non-owner occupied, nonfarm nonresidential 5,225  Valuation of third party appraisal on underlying collateral Loss severity rates
51% (51%)
Home equity lines of credit 290  Valuation of third party appraisal on underlying collateral Loss severity rates
25%-29% (28%)
Residential mortgages secured by first liens 1,173  Valuation of third party appraisal on underlying collateral Loss severity rates
22%-51% (34%)

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The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at December 31, 2023:

Fair
value		 Valuation
Technique		 Unobservable Inputs Range
(Weighted
Average)
Collateral-dependent loans receivable:
Farmland $ 736  Valuation of third party appraisal on underlying collateral Loss severity rates
29%-31% (30%)
Owner-occupied, nonfarm nonresidential properties 5,589  Valuation of third party appraisal on underlying collateral Loss severity rates
9%-100% (14%)
Commercial and industrial 7,425  Valuation of third party appraisal on underlying collateral Loss severity rates
8%-75% (31%)
Other construction loans and all land development loans and other land loans 1,299  Valuation of third party appraisal on underlying collateral Loss severity rates
32% (32%)
Multifamily (5 or more) residential properties 305  Valuation of third party appraisal on underlying collateral Loss severity rates
28% (28%)
Non-owner occupied, nonfarm nonresidential 7,216  Valuation of third party appraisal on underlying collateral Loss severity rates
32%-48% (43%)
Home equity lines of credit 308  Valuation of third party appraisal on underlying collateral Loss severity rates
15%-17% (15%)
Residential mortgages secured by first liens 871  Valuation of third party appraisal on underlying collateral Loss severity rates
17%-42% (31%)

Fair Value of Financial Instruments

The following table presents the carrying amount and fair value of financial instruments at December 31, 2024: 

  Carrying
Amount		 Fair Value Measurement Using: Total
Fair Value
  Level 1 Level 2 Level 3
Assets:
Cash and cash equivalents $ 443,035  $ 443,035  $ —  $ —  $ 443,035 
Debt securities available-for-sale 468,546  14,810  453,736  —  468,546 
Debt securities held-to-maturity 306,081  71,323  211,647  —  282,970 
Equity securities 10,456  8,765  1,691  —  10,456 
Loans held for sale 762  —  766  —  766 
Net loans receivable 4,561,599  —  —  4,495,097  4,495,097 
FHLB and other restricted stock holdings and investments 40,702  n/a n/a n/a n/a
Interest rate swaps 423  —  423  —  423 
Accrued interest receivable 24,739  385  2,766  21,588  24,739 
Liabilities:
Deposits $ (5,371,364) $ (4,648,504) $ (718,328) $ —  $ (5,366,832)
Subordinated debentures (105,190) —  (124,515) —  (124,515)
Interest rate swaps (423) —  (423) —  (423)
Accrued interest payable (7,152) —  (7,152) —  (7,152)


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The following table presents the carrying amount and fair value of financial instruments at December 31, 2023:

  Carrying
Amount		 Fair Value Measurement Using: Total
Fair Value
  Level 1 Level 2 Level 3
Assets:
Cash and cash equivalents $ 222,046  $ 222,046  $ —  $ —  $ 222,046 
Debt securities available-for-sale (1)
 341,955  4,988  336,967  —  341,955 
Debt securities held-to-maturity (1)
 388,968  104,141  256,429  —  360,570 
Equity securities 9,301  8,667  634  —  9,301 
Loans held for sale 675  —  677  —  677 
Net loans 4,422,644  —  —  4,323,476  4,323,476 
FHLB and other restricted stock holdings and investments 30,011  n/a n/a n/a n/a
Interest rate swaps 1,013  —  1,013  —  1,013 
Accrued interest receivable 24,318  410  2,319  21,589  24,318 
Liabilities:
Deposits $ (4,998,750) $ (4,492,256) $ (508,181) $ —  $ (5,000,437)
Subordinated debentures (104,887) —  (134,298) —  (134,298)
Interest rate swaps (1,013) —  (1,013) —  (1,013)
Accrued interest payable (3,550) —  (3,550) —  (3,550)
(1) In 2023, the Corporation transitioned to a new pricing provider, leading to the reclassification of United States Treasury investments as Level 1 pricing instruments.

While estimates of fair value are based on management’s judgment of the most appropriate factors as of the balance sheet dates, there is no assurance that the estimated fair values would have been realized if the assets had been disposed of or the liabilities settled at that date, since market values may differ depending on various circumstances. The estimated fair values would also not apply to subsequent dates. The fair value of other equity interests is based on the net asset values provided by the underlying investment partnership. ASU 2015-7 removes the requirement to categorize within the fair value hierarchy all investments measured using the net asset value per share practical expedient and related disclosures. In addition, other assets and liabilities that are not financial instruments, such as premises and equipment, are not included in the disclosures.

Also, non-financial assets such as, among other things, the estimated earnings power of core deposits, the earnings potential of trust accounts, the trained workforce, and customer goodwill, which typically are not recognized on the balance sheet, may have value but are not included in the fair value disclosures.

5.  Secondary Market Mortgage Activities

Total loans serviced for others were $264.1 million and $258.5 million for the years ended December 31, 2024 and 2023, respectively.

The following summarizes secondary market mortgage activities for the years ended December 31, 2024, 2023, and 2022:

December 31, 2024 December 31, 2023 December 31, 2022
Loans originated for resale $ 28,451  $ 17,874  $ 34,181 
Proceeds from sales of loans held for sale 27,934  16,263  29,151 
Net gains on sales of loans held for sale 770  447  1,285 
Loan servicing fees 719  744  781 

The following summarizes activity for capitalized mortgage servicing rights for the years ended December 31, 2024, 2023, and 2022:

December 31, 2024 December 31, 2023 December 31, 2022
Balance, beginning of year $ 1,554  $ 1,804  $ 1,664 
Additions 244  114  232 
Servicing rights acquired —  —  — 
Amortization (547) (364) (92)
Balance, end of year $ 1,251  $ 1,554  $ 1,804 

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The fair value of mortgage servicing rights is based on market prices for comparable mortgage servicing contracts, when available, or alternatively based on a valuation model that calculates the present value of estimated future net servicing income. The fair value of mortgage servicing rights was not materially different than amortized cost at December 31, 2024 and 2023, respectively. No valuation allowance was deemed necessary at December 31, 2024, 2023, and 2022. The fair value of interest rate lock commitments and forward commitments to sell loans were not material at December 31, 2024 or 2023.

6.  Premises and Equipment

The following summarizes premises and equipment at December 31, 2024 and 2023:

December 31, 2024 December 31, 2023
Land $ 9,043  $ 9,043 
Premises and leasehold improvements 92,269  87,591 
Furniture and equipment 48,833  45,703 
Construction in process 1,965  2,047 
152,110  144,384 
Less: accumulated depreciation 76,099  70,684 
Premises and equipment, net $ 76,011  $ 73,700 

Depreciation on premises and equipment amounted to $5.8 million in 2024, $5.7 million in 2023 and $5.3 million in 2022.

7.  Leases

Operating lease assets represent the Corporation's right to use an underlying asset during the lease term and operating lease liabilities represent the Corporation's obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at lease commencement based on the present value of the remaining lease payments using a discount rate that represents the Corporation's incremental borrowing rate at the lease commencement date. Operating lease cost, which is comprised of amortization of the operating lease asset and the implicit interest accreted on the operating lease liability, is recognized on a straight-line basis over the lease term, and is recorded in net occupancy expense in the consolidated statements of income.

The Corporation leases certain full-service branch offices, land and equipment. Leases with an initial term of twelve months or less are not recorded on the balance sheet. Most leases include one or more options to renew and the exercise of the lease renewal options are at the Corporation's sole discretion. The Corporation includes lease extension and termination options in the lease term if, after considering relevant economic factors, it is reasonably certain the Corporation will exercise the option. Certain lease agreements of the Corporation include rental payments adjusted periodically for changes in the consumer price index.

Leases Classification December 31, 2024 December 31, 2023
Assets:
Operating lease assets Operating lease right-of-use assets $ 37,764  $ 35,699 
Finance lease assets Finance lease right-of-use assets 14,951  — 
Finance lease assets
Premises and equipment, net (1)
 143  215 
Total leased assets $ 52,858  $ 35,914 
Liabilities:
Operating lease liabilities Operating lease liabilities $ 40,315  $ 37,650 
Finance lease liabilities Accrued interest payable and other liabilities 15,151  294 
Total leased liabilities $ 55,466  $ 37,944 
(1) Finance lease assets are recorded net of accumulated amortization of $1.1 million and $1.0 million as of December 31, 2024 and 2023, respectively.

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The components of the Corporation's net lease expense for the years ended December 31, 2024, 2023, and 2022 were as follows:

Lease Cost Classification December 31, 2024 December 31, 2023 December 31, 2022
Operating lease cost Net occupancy expense $ 3,066  $ 2,963  $ 2,264 
Variable lease cost Net occupancy expense 103  92  59 
Finance lease cost:
Amortization of leased assets Net occupancy expense 72  72  72 
Interest on lease liabilities Interest expense - borrowed funds 11  15  19 
Sublease income (1)
 Net occupancy expense (96) (93) (79)
Gain on sale-leaseback transactions Noninterest income - other (63) —  — 
Net lease cost $ 3,093  $ 3,049  $ 2,335 
(1) Sublease income excludes rental income from owned properties.

The following table sets forth future minimum rental payments under noncancelable leases with terms in excess of one year as of December 31, 2024:

Maturity of Lease Liabilities as of December 31, 2024
Operating Leases (1)
 Finance Leases Total
2025 $ 2,755  $ 843  $ 3,598 
2026 2,737  843  3,580 
2027 2,759  738  3,497 
2028 2,827  783  3,610 
2029 2,862  783  3,645 
After 2029 51,757  32,228  83,985 
Total lease payments 65,697  36,218  101,915 
Less: Interest 25,382  21,067  46,449 
Present value of lease liabilities $ 40,315  $ 15,151  $ 55,466 
(1) Operating lease payments include payments related to options to extend lease terms that are reasonably certain of being exercised and exclude $5.6 million of legally binding minimum lease payments for leases signed, but not yet commenced.

Other information related to the Corporation's lease liabilities as of December 31, 2024 and 2023 was as follows:

Lease Term and Discount Rate December 31, 2024 December 31, 2023
Weighted-average remaining lease term (years)
Operating leases 22.8 23.0
Finance leases 34.6 3.0
Weighted-average discount rate
Operating leases 4.22  % 4.05  %
Finance leases 5.24  % 4.49  %

Other information related to the Corporation's lease liabilities as of December 31, 2024 and 2023 was as follows:

Other Information December 31, 2024 December 31, 2023
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows used by operating leases $ 1,052  $ 1,134 

8.  Goodwill and Intangible Assets
Goodwill

The change in the carrying amount of goodwill for the years ended December 31, 2024 and 2023 was as follows:

December 31, 2024 December 31, 2023
Balance, beginning of year $ 43,749  $ 43,749 
Acquired during the year —  — 
Balance, end of year $ 43,749  $ 43,749 
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Impairment exists when the carrying value of goodwill exceeds its fair value. The Corporation completed its annual goodwill impairment test as of December 31, 2024 and concluded that no impairment charges were required as of that date. During the fourth quarter of 2023, the Corporation elected to change the timing of its annual goodwill impairment test from December 31 to November 30. The selection of November 30 as the annual testing date for the impairment of goodwill is intended to move the testing to a time period outside of the Corporation's annual financial reporting process to allow the Corporation additional time to complete the analysis. The Corporation believes that this change is preferable under the circumstances, and that this change does not accelerate, delay or avoid an impairment charge. The Corporation has also determined that a change in the annual testing date did not result in adjustments to the consolidated financial statements when applied retrospectively.

At November 30, 2024, the Corporation elected to perform a qualitative assessment to determine if it was more likely than not that the fair value exceeded its carrying value, including goodwill. The qualitative assessment indicated that it was more likely than not that the fair value exceeded its carrying value, resulting in no impairment.

Intangible Assets

In connection with its acquisition of Bank of Akron in 2020, the Corporation recorded a core deposit intangible asset of $613 thousand. During the year ended December 31, 2024, 2023, and 2022, the Corporation recorded amortization expense of $73 thousand, $84 thousand, and $96 thousand, respectively. The net carrying value at December 31, 2024 and 2023 was $206 thousand and $280 thousand, respectively. No other intangible assets were required to be recorded in connection with the acquisition of Bank of Akron.

Estimated amortization expense of core deposit intangible assets for each of the next five years is as follows:

2025 $ 62 
2026 51 
2027 40 
2028 29 
2029 18 
Thereafter 6 
Total $ 206 

In connection with the formation of Ridge View Bank, a division of the Bank, the Corporation recorded an intangible asset related to naming rights in 2023. The naming rights have an indefinite useful life. The Corporation does not amortize intangible assets with indefinite lives but assesses them for impairment annually or more frequently if events or changes in circumstances indicate potential impairment.

As of December 31, 2024, the carrying amount of naming rights intangible assets was $125 thousand and no impairment indicators were identified during the year ended December 31, 2024.

Management evaluates events or changes in circumstances that may impact the indefinite useful life assessment of the naming rights intangible asset. If impairment indicators are identified, the Corporation will perform a qualitative or quantitative impairment test, as applicable.

9.  Deposits

The following table reflects time certificates of deposit accounts included in total deposits and their remaining maturities at December 31, 2024:

Time deposits maturing:
2025 $ 615,026 
2026 93,785 
2027 8,128 
2028 3,308 
2029 1,854 
Thereafter 759 
Total $ 722,860 
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Certificates of deposit of $250 thousand or more totaled $131.1 million and $100.2 million at December 31, 2024 and 2023, respectively.

The Corporation had $185.0 million in brokered deposits as of December 31, 2024 compared to $208.3 million at December 31, 2023. In addition, the Corporation had $924.6 million and $739.3 million in reciprocal deposits at December 31, 2024 and December 31, 2023, respectively.

10.  Borrowings

At December 31, 2024 and 2023, the Corporation had available one $10 million unsecured line of credit with an unaffiliated institution. Borrowings under the line of credit bear interest at a variable rate equal to the Secured Overnight Finance Rate ("SOFR") plus 2.85%. There were no borrowings on the line of credit at December 31, 2024 and 2023.

FHLB Borrowings

The Bank has the ability to borrow funds from the FHLB. The Bank maintains a $250.0 million line-of-credit (Open Repo Plus) with the FHLB which is a revolving term commitment available on an overnight basis. The term of this commitment may not exceed 364 days and it reprices daily at market rates. Under terms of a blanket collateral agreement with the FHLB, the line-of-credit and long term advances are secured by FHLB stock and the Bank pledges its single-family residential mortgage loan portfolio, certain commercial real estate loans, and certain agriculture real estate loans as security for any advances.

Total loans pledged to the FHLB at December 31, 2024, and 2023, were $2.1 billion and $1.8 billion, respectively. The Bank could obtain advances of up to approximately $1.2 billion from the FHLB at December 31, 2024, and $993.8 million at December 31, 2023.

At December 31, 2024, and December 31, 2023, outstanding advances from the FHLB were as follows:

2024 2023
Open Repo borrowing at an interest rate of 4.71% and 5.68% at December 31, 2024 and December 31, 2023. The maximum amount of the Open Repo borrowing available is $250,000.
 $ —  $ — 
Total $ —  $ — 

At December 31, 2024 and 2023, municipal deposit letters of credit issued by the FHLB on behalf of the Bank naming applicable municipalities as beneficiaries were $157.7 million and $155.7 million, respectively. The letters of credit were utilized in place of securities pledged to the municipalities for their deposits maintained at the Bank.

Federal Reserve Borrowings

In June 2023, the Bank was approved by the Federal Reserve Bank of Philadelphia (the "Federal Reserve") for its Borrower-in-Custody ("BIC") program. At December 31, 2024, the Bank had borrowing capacity through the Federal Reserve BIC program of $211.0 million. Borrowings under the BIC program are overnight advances with interest chargeable at the discount window ("primary credit") borrowing rate. At December 31, 2024, the Bank has pledged certain qualifying loans with an unpaid principal balance of $209.0 million and securities with a carrying value of $77.9 million as collateral.

Other Borrowings

At December 31, 2024 and 2023, the Bank had no outstanding borrowings from unaffiliated institutions under overnight borrowing agreements.

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Subordinated Debentures

In 2007, the Corporation issued two $10.0 million floating rate trust preferred securities as part of a pooled offering of such securities. The interest rate on each offering was determined quarterly and floated based on the three-month LIBOR plus 1.55%. Effective September 15, 2023, the interest rate calculation method was revised. The interest rate is now determined quarterly, and floats based on the three-month SOFR plus a credit spread adjustment of 0.26161% plus 1.55%. This change reflects the transition from LIBOR to SOFR as the reference rate. The all-in rate was 6.17% at December 31, 2024 and 7.20% at December 31, 2023. The Corporation issued subordinated debentures to the trusts in exchange for the proceeds of the offerings, which debentures represent the sole assets of the trusts. The subordinated debentures must be redeemed no later than 2037. The Corporation may redeem the debentures, in whole or in part, at face value at any time. The Corporation has the option to defer interest payments from time to time for a period not to exceed five consecutive years. Although the trusts are variable interest entities, the Corporation is not the primary beneficiary. As a result, because the trusts are not consolidated with the Corporation, the Corporation does not report the securities issued by the trusts as liabilities. Instead, the Corporation reports as liabilities the subordinated debentures issued by the Corporation and held by the trusts, since the liabilities are not eliminated in consolidation. The trust preferred securities were designated to qualify as Tier 1 capital under the Federal Reserve’s capital guidelines.

Subordinated Notes

In June 2021, the Corporation sold $85.0 million aggregate principal amount of its fixed-to-floating rate subordinated notes to eligible purchasers in a private offering in reliance on the exemption from the registration requirements of Section 4(a)(2) of the Securities Act of 1933, as amended, and the provisions of Rule 506 of Regulation D thereunder. The notes will mature in June 2031, and initially bear interest at a fixed rate of 3.25% per annum, payable semi-annually in arrears, to, but excluding, June 15, 2026, and thereafter to, but excluding, the maturity date or earlier redemption, the interest rate will reset quarterly to an interest rate per annum equal to the then current three-month average SOFR plus 2.58%. The net proceeds from the sale were approximately $83.5 million, after deducting offering expenses. These subordinated notes were designed to qualify as Tier 2 capital under the Federal Reserve’s capital guidelines and were given an investment grade rating of BBB- by Kroll Bond Rating Agency. The unamortized debt issuance costs were $0.4 million and $0.7 million as of December 31, 2024 and December 31, 2023, respectively.

11.  Employee Benefit Plans

The Corporation sponsors a contributory defined contribution Section 401(k) plan. The plan permits eligible employees to make pre-tax and Roth contributions up to 70% of salary. Employees 21 years of age or over with a minimum of 90 days of service are eligible for matching contributions by the Corporation at 100% of elective contributions not to exceed 5% of plan salary. The Corporation’s matching contribution and related expenses were $2.4 million, $1.8 million, and $1.6 million for the years ended December 31, 2024, 2023, and 2022, respectively. A profit sharing discretionary non-contributory pension plan component is in place for employees 21 years of age or over with a minimum of one-year with 1,000 hours of service and allows employer contributions in an amount equal to a percentage of eligible compensation plus 5.7% of the compensation in excess of $169 thousand, subject to a $345 thousand salary limit. The Corporation recognized profit sharing expense of $1.4 million, $3.6 million, and $2.9 million for the years ended December 31, 2024, 2023, and 2022 respectively.

The Corporation has adopted a non-qualified supplemental executive retirement plan ("SERP") for certain executives to compensate those executive participants in the Corporation’s retirement plan whose benefits are limited by compensation limitations under current tax law. Additionally, on December 31, 2021, the Corporation adopted a Defined Contribution Plan for several employees (the "DCP"), pursuant to which the Corporation will make certain annual contributions to the DCP on the employee's behalf, which will be paid to the employee following their termination of employment from the Corporation or, if earlier, upon the employee becoming disabled. The DCP became effective as of January 2, 2022. The SERP and DCP are considered an unfunded plan for tax and ERISA purposes and all obligations arising under the SERP and DCP are payable from the general assets of the Corporation.

At December 31, 2024 and 2023, obligations of $10.5 million and $10.0 million, respectively, were included in other liabilities for the SERP and DCP. Expenses related to the SERP and DCP were $866 thousand for the year ended December 31, 2024, $565 thousand for the year ended December 31, 2023, and $1.3 million for the year ended December 31, 2022.

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The Corporation has established a Survivor Benefit Plan for the benefit of outside directors. The purpose of the plan is to provide life insurance benefits to beneficiaries of the Corporation’s directors who at the time of their death are participants in the plan. The plan is considered an unfunded plan for tax and ERISA purposes and all obligations arising under the plan are payable from the general assets of the Corporation. At December 31, 2024 and 2023, obligations of $1.3 million and $1.3 million, respectively, were included in other liabilities for this plan. Expenses (benefits) related to this plan were $(17) thousand for the year ended December 31, 2024, $(213) thousand for the year ended December 31, 2023, and $81 thousand for the year ended December 31, 2022.


12.  Deferred Compensation Plans

Deferred compensation plans cover all directors and certain officers. Under the plans, the Corporation pays each participant, or their beneficiary, the value of the participant’s account over a maximum period of 10 years, beginning with the individual’s termination of service. A liability is accrued for the obligation under these plans.

A summary of changes in the deferred compensation plan liability follows:

December 31, 2024 December 31, 2023 December 31, 2022
Balance, beginning of year $ 4,108  $ 3,650  $ 3,675 
Deferrals, dividends, and changes in fair value 845  638  (2)
Deferred compensation payments (241) (180) (23)
Balance, end of year $ 4,712  $ 4,108  $ 3,650 

13.  Income Taxes

The following is a summary of income tax expense for the years ended December 31, 2024, 2023, and 2022:

December 31, 2024 December 31, 2023 December 31, 2022
Current – federal $ 12,863  $ 11,446  $ 15,494 
Current – state 1,104  1,252  1,346 
Deferred – federal (1,124) 1,110  (1,618)
Deferred – state (59) 1  (196)
Income tax expense $ 12,784  $ 13,809  $ 15,026 

The reconciliation of income tax attributable to pre-tax income at the federal statutory tax rates to income tax expense is as follows:

December 31, 2024 % December 31, 2023 % December 31, 2022 %
Tax at statutory rate $ 14,146  21.0  % $ 15,084  21.0  % $ 16,425  21.0  %
Tax exempt income, net (1,139) (1.7) (1,090) (1.5) (1,036) (1.3)
Bank owned life insurance (653) (1.0) (619) (0.9) (721) (0.9)
Tax credits, net of amortization (160) (0.2) (173) (0.3) (193) (0.3)
Effect of state tax 826  1.2  990  1.4  908  1.2 
Other (236) (0.4) (383) (0.5) (357) (0.5)
Income tax expense $ 12,784  18.9  % $ 13,809  19.2  % $ 15,026  19.2  %

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The following table sets forth deferred taxes as of December 31, 2024 and 2023:

December 31, 2024 December 31, 2023
Deferred tax assets:
Allowance for credit losses $ 10,895  $ 10,515 
Fair value adjustments – business combination 685  771 
Deferred compensation 4,026  3,693 
Net operating loss carryover 493  516 
Post-retirement benefits 509  605 
Unrealized loss on equity securities 197  129 
Nonaccrual loan interest 563  476 
Accrued expenses 609  579 
Deferred fees and costs 25  557 
Unrealized loss on securities available-for-sale 10,852  11,308 
Unrealized loss on securities held-to-maturity 963  1,108 
Lease liability 12,360  8,509 
Other 547  453 
42,724  39,219 
Deferred tax liabilities:
Premises and equipment 3,054  3,761 
Intangibles – section 197 2,475  2,487 
Mortgage servicing rights 278  345 
Lease asset 11,839  8,128 
Other 633  571 
18,279  15,292 
Net deferred tax asset $ 24,445  $ 23,927 

At December 31, 2024 and 2023, the Corporation had no unrecognized tax benefits. The Corporation does not expect the total amount of unrecognized tax benefits to significantly increase in the next twelve months.

At December 31, 2024, the Corporation had state net operating loss carryforwards of $14.8 million related to the acquisition of Bank of Akron, which will expire at various dates from 2034 to 2039. The Corporation's ability to utilize carryforwards is limited to $363 thousand per year. Due to this limitation, management has determined it is more likely than not that approximately $9.5 million of net operating loss carryforwards will expire unutilized.

The Corporation recognizes interest and/or penalties related to income tax matters as part of income tax expense. At December 31, 2024, 2023, and 2022, there were no amounts accrued for interest and/or penalties and no amounts recorded as expense for the years ending December 31, 2024, 2023, and 2022.

The Corporation and its subsidiaries are subject to U.S. federal income tax, as well as filing various state returns. The Corporation is no longer subject to U.S. federal income tax examinations by the taxing authorities for years prior to 2021. Tax years 2021 through 2024 are open to examination.

14.  Related Party Transactions

Loans to principal officers, directors, and their affiliates during 2024 were as follows:

Beginning balance $ 40,129 
New loans and advances 5,492 
Effect of changes in composition of related parties 2,859 
Repayments (16,791)
Ending balance $ 31,689 

Deposits from principal officers, directors, and their affiliates were $12.1 million and $11.4 million at December 31, 2024 and 2023, respectively.

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15. Stock-Based Compensation

The Corporation has a stock incentive plan, which is administered by a committee of the Board of Directors and which permits the Corporation to provide various types of stock-based compensation to its key employees, directors, and/or consultants, including time-based and performance-based shares of restricted stock. The Corporation previously maintained the CNB Financial Corporation 2009 Stock Incentive Plan, which terminated in accordance with its terms on February 10, 2019, and currently maintains the CNB Financial Corporation 2019 Omnibus Incentive Plan (the "2019 Stock Incentive Plan"), which was approved by the Corporation’s shareholders and became effective on April 16, 2019. The Corporation does not have a policy or practice on the timing of awards of options in relation to the disclosure of material nonpublic information because the Corporation does not issue nor does it have any outstanding options. The Executive Compensation and Personnel Committee generally grants equity awards annually at a regularly scheduled meeting in connection with its annual compensation review process in the first quarter of the fiscal year. On occasion, the Executive Compensation and Personnel Committee may grant equity awards outside of its annual grant cycle for new hires, promotions, recognition, retention, or other purposes. The Executive Compensation and Personnel Committee does not have a practice or policy of granting equity awards in anticipation of the release of material nonpublic information and, in any event, we do not time the release of material non-public information in coordination with grants of equity awards for the purpose of affecting the value of executive compensation.

The 2019 Stock Incentive Plan provides for up to 507,671 shares of common stock to be awarded in the form of nonqualified options or restricted stock. For key employees, the vesting of time-based restricted stock is one-third, one-fourth, or one-fifth of the granted restricted shares per year, beginning one year after the grant date, with 100% vesting on the third, fourth or fifth anniversary of the grant date, respectively. Prior to 2018, for non-employee directors, the vesting schedule was one-third of the granted restricted shares per year, beginning one year after the grant date, with 100% vested on the third anniversary of the grant date. Beginning in 2018, stock compensation received by non-employee directors vests immediately. All stock-based compensation grants during the years ending December 31, 2024, 2023, and 2022 and outstanding at December 31, 2024, 2023, and 2022 were time-based and performance-based restricted stock.

During the years ended December 31, 2024, 2023, and 2022, the Executive Compensation and Personnel Committee of the Corporation's Board of Directors granted a total of 130,857, 105,185, and 57,823 shares, respectively, of time-based restricted common stock to certain key employees and all independent directors of the Corporation.

Compensation expense for the restricted stock awards is recognized over the requisite service period based on the fair value of the shares at the date of grant on a straight-line basis. Non-vested restricted stock awards are recorded as a reduction of additional paid-in-capital in shareholders’ equity until earned. Compensation expense resulting from time-based, performance-based and director restricted stock awards was $2.2 million, $1.7 million, and $1.2 million for the years ended December 31, 2024, 2023, and 2022, respectively. The total income tax benefit related to the recognized compensation cost of vested restricted stock awards was $467 thousand, $354 thousand, and $262 thousand for the years ended December 31, 2024, 2023, and 2022, respectively.

A summary of changes in time-based unvested restricted stock awards follows:

Shares Weighted-average
Grant Date
Fair Value
Non-vested at January 1, 2024 124,934  $ 24.09 
Granted 112,828  21.26 
Forfeited (15,044) 22.98 
Vested (44,162) 24.17 
Non-vested at December 31, 2024 178,556  $ 22.37 

The above table excludes 18,029 shares in restricted stock awards that were granted to the Corporation’s Board of Directors at a weighted average fair value of $21.35 and immediately vested. As of December 31, 2024 and 2023, there was $2.7 million and $2.1 million, respectively, of total unrecognized compensation cost related to non-vested shares granted under the 2019 Stock Incentive Plan. The fair value of shares vesting during the year end December 31, 2024, 2023, and 2022 was $1.4 million, $1.0 million, and $1.4 million, respectively. As of December 31, 2024, there were zero outstanding unvested restricted stock awards granted to the Corporation's Board of Directors.

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In addition to the time-based restricted stock disclosed above, the Corporation’s Board of Directors grants performance-based restricted stock awards ("PBRSAs") to key employees. The number of PBRSAs will depend on certain performance conditions earned over a three year period and are also subject to service-based vesting. Awards with a maximum of 44,988 shares, 35,129 shares, and 13,761 shares in aggregate were granted to key employees in 2024, 2023, and 2022, respectively. As of December 31, 2024, there were a maximum 85,785 shares outstanding related to PBRSAs.

Total compensation expense related to the PBRSAs and included in the above compensation expense total was $431 thousand, $235 thousand and $91 thousand for 2024, 2023, and 2022, respectively. Estimated remaining unearned compensation related to PBRSAs at December 31, 2024 was $562 thousand.

In 2023, the 2021 PBRSAs were fully earned and in 2024, 9,667 shares were fully distributed. The fair value of the 9,667 shares distributed in 2024 was $206 thousand. In 2022, the 2020 PBRSAs were fully earned and in 2023, 4,118 shares were fully distributed. The fair value of the 4,118 shares distributed in 2023 was $99 thousand.

The number of authorized stock-based awards still available for grant as of December 31, 2024 was 26,728.

16.  Regulatory Capital Matters

Banks and financial holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, for the Bank, prompt corrective action ("PCA") regulations involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can result in regulatory enforcement actions. The net unrealized gain or loss on AFS debt securities is excluded from computing regulatory capital. Management believes as of December 31, 2024 the Corporation and the Bank meet all capital adequacy requirements to which they are subject.

The PCA regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms alone do not represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion; brokered deposits may not be accepted, renewed or rolled over; and capital restoration plans are required. As of December 31, 2024 and 2023, the most recent regulatory notifications categorized the Bank as well capitalized under the PCA. There are no events or conditions since this notification that management believes have changed the Bank’s capital category.

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Actual and required capital amounts and ratios are presented below as of December 31, 2024 and 2023. The capital adequacy ratio includes the capital conservation buffer.

  Actual
For Capital
Adequacy Purposes (1)
 To Be Well Capitalized
Under Prompt Corrective
Action Provisions
  Amount Ratio Amount Ratio Amount Ratio
December 31, 2024
Total Capital to Risk Weighted Assets
Consolidated $ 764,161  16.16  % $ 496,541  10.50  % N/A N/A
Bank 639,971  13.59  494,609  10.50  $ 471,057  10.00  %
Tier 1 (Core) Capital to Risk Weighted Assets
Consolidated 634,131  13.41  401,962  8.50  N/A N/A
Bank 596,615  12.67  400,398  8.50  376,845  8.00 
Common equity Tier 1 to Risk Weighted Assets
Consolidated 556,346  11.76  331,028  7.00  N/A N/A
Bank 589,236  12.51  329,740  7.00  306,187  6.50 
Tier 1 (Core) Capital to Average Assets
Consolidated 634,131  10.43  243,290  4.00  N/A N/A
Bank 596,615  9.84  242,432  4.00  303,040  5.00 
December 31, 2023
Total Capital to Risk Weighted Assets
Consolidated $ 725,091  15.99  % $ 476,235  10.50  % N/A N/A
Bank 603,409  13.36  474,339  10.50  $ 451,751  10.00  %
Tier 1 (Core) Capital to Risk Weighted Assets
Consolidated 598,785  13.20  385,523  8.50  N/A N/A
Bank 563,412  12.47  383,989  8.50  361,401  8.00 
Common equity Tier 1 to Risk Weighted Assets
Consolidated 521,000  11.49  317,490  7.00  N/A N/A
Bank 556,033  12.31  316,226  7.00  293,638  6.50 
Tier 1 (Core) Capital to Average Assets
Consolidated 598,785  10.54  227,231  4.00  N/A N/A
Bank 563,412  9.86  228,573  4.00  285,716  5.00 
(1) The minimum amounts and ratios as of December 31, 2024 and 2023 include the full phase in of the capital conservation buffer of 2.5 percent required by the Basel III framework.

Certain restrictions exist regarding the ability of the Bank to transfer funds to the Corporation in the form of cash dividends, loans or advances. During 2024, $704.5 million of accumulated net earnings of the Bank included in consolidated shareholders’ equity, plus any 2025 net profits retained to the date of the dividend declared, is available for distribution to the Corporation as dividends without prior regulatory approval, subject to regulatory capital requirements described above.

17.  Derivative Instruments

On September 7, 2018, the Corporation executed an interest rate swap agreement with a 5-year term and an effective date of September 15, 2018 in order to hedge cash flows associated with $10.0 million of a subordinated note that was issued by the Corporation during 2007 and elected cash flow hedge accounting for the agreement. The Corporation’s objective in using this derivative is to add stability to interest expense and to manage its exposure to interest rate risk. The interest rate swap involves the receipt of variable-rate amounts in exchange for fixed-rate payments from September 15, 2018 to September 15, 2023 without the exchange of the underlying notional amount. The swap that expired on September 15, 2023 was not renewed.

As of December 31, 2024 and 2023, no derivatives were designated as fair value hedges or hedges of net investments in foreign operations. Additionally, the Corporation does not use derivatives for trading or speculative purposes and currently does not have any derivatives that are not designated as hedges.

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The following tables provide information about the amounts and locations of activity related to the interest rate swaps designated as cash flow hedges within the Corporation’s consolidated balance sheet and statement of income as of December 31, 2024 and 2023 and for the years ended December 31, 2024, 2023, and 2022:

Liability Derivative    
  Balance Sheet Fair value    
Location December 31, 2024 December 31, 2023
Interest rate contract Accrued interest receivable (payable) and other assets (liabilities) $— $—
For the Year Ended December 31, 2024 (a) (b) (c) (d) (e)
Interest rate contract $— Interest expense – subordinated debentures $— Other
income		 $—
For the Year Ended December 31, 2023
Interest rate contract (119) Interest expense – subordinated debentures 151 Other
income		 —
For the Year Ended December 31, 2022
Interest rate contract 425 Interest expense – subordinated debentures (127) Other
income		 —
(a)Amount of Gain or (Loss) Recognized in Other Comprehensive Loss on Derivative (Effective Portion), net of tax
(b)Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)
(c)Amount of Loss Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)
(d)Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
(e)Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)

Derivatives on Behalf of Customers

The Corporation entered into certain interest rate swap contracts that are not designated as hedging instruments. These derivative contracts relate to transactions in which the Corporation enters into an interest rate swap with a customer while at the same time entering into an offsetting interest rate swap with another financial institution. In connection with each swap transaction, the Corporation agrees to pay interest to the customer on a notional amount at a variable interest rate and receive interest from the customer on a similar notional amount at a fixed interest rate. Concurrently, the Corporation agrees to pay another financial institution the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount. The transaction allows the Corporation’s customers to effectively convert a variable rate loan to a fixed rate. Because the Corporation acts as an intermediary for its customer, changes in the fair value of the underlying derivative contracts offset each other and do not impact the Corporation’s results of operations.

The Corporation pledged cash collateral to another financial institution with a balance $173 thousand as of December 31, 2024 and $173 thousand as of December 31, 2023. This balance is included in cash and due from banks on the consolidated balance sheets. The Corporation may require its customers to post cash or securities as collateral on its program of back-to-back swaps depending upon the specific facts and circumstances surrounding each loan and individual swap. In addition, certain language is included in the International Swaps and Derivatives Association agreement and loan documents where, in default situations, the Corporation is permitted to access collateral supporting the loan relationship to recover any losses suffered on the derivative asset or liability. The Corporation may be required to post additional collateral to swap counterparties in the future in proportion to potential increases in unrealized loss positions. Effective on September 30, 2023, the Corporation amended all of the back-to-back swap contracts to reference the 1-month SOFR plus a credit spread adjustment of 11.448 basis points "Fallback SOFR." The following table provides information about the amounts and locations of activity related to the back-to-back interest rate swaps within the Corporation’s consolidated balance sheet as of December 31, 2024 and 2023:

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Fair Value
Notional
Amount		 Asset Liability
December 31, 2024 $ 65,629  $ 423  (a) $ 423  (b)
December 31, 2023 $ 21,302  $ 1,013  (a) $ 1,013  (b)
(a)Reported in accrued interest receivable and other assets within the consolidated balance sheets
(b)Reported in accrued interest payable and other liabilities within the consolidated balance sheets

Risk Participation Agreements

The Corporation’s existing credit derivatives result from participation in or out of interest rate swaps provided by or to external lenders as part of loan participation arrangements, and therefore, are not used to manage interest rate risk in the Corporation’s assets or liabilities. Derivatives not designated as hedges are not speculative and result from a service the Corporation provides to certain lenders which participate in loans.

The Corporation entered into Risk Participation Agreement ("RPA") swaps with other financial institutions related to loans in which the Corporation is a participant in. The RPA provides credit protection to the financial institution should the borrower fail to perform on its interest rate derivative contract with the financial institution. The notional amount of this contingent agreement is $21.3 million as of December 31, 2024 and $21.7 million as of December 31, 2023.

The Corporation entered into RPA swaps with other financial institutions related to loans in which the Corporation is a participant out. The RPA provides credit protection to the Corporation should the borrower fail to perform on its interest rate derivative contract with the financial institution. The notional amount of this contingent agreement is $25.5 million as of December 31, 2024 and zero as of December 31, 2023.

The fair value of the RPA swaps was $11 thousand and $49 thousand as of December 31, 2024 and December 31, 2023, respectively, and is reported in accrued interest payable and other liabilities within the condensed consolidated balance sheets.

18.  Off-Balance Sheet Commitments and Contingencies

Financial Instruments with Off-Balance Sheet Risk

The Corporation is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets. The Corporation's exposure to credit loss in the event of nonperformance by the other party of the financial instrument for commitments to extend credit and standby letters of credit is represented by the contract or notional amount of those instruments. The Corporation uses the same credit policies for underwriting all loans, including these commitments and conditional obligations.

As of December 31, 2024 and 2023, the Corporation did not own or trade other financial instruments with significant off-balance sheet risk including derivatives such as futures, forwards, option contracts and the like, although such instruments may be appropriate to use in the future to manage interest rate risk. See Note 12, "Derivative Instruments," for a description of interest rate derivatives entered into by the Corporation.

Standby letters of credit are conditional commitments issued by the Corporation to guarantee the performance of a customer to a third party. The contract or notional amount of these instruments reflects the maximum amount of future payments that the Corporation could be required to pay under the guarantees if there were a total default by the guaranteed parties, without consideration for possible recoveries under recourse provisions or from collateral held or pledged. In addition, many of these commitments are expected to expire without being drawn upon; therefore, the total commitment amounts do not necessarily represent future cash requirements.
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The Corporation's maximum obligation to extend credit for loan commitments (unfunded loans and unused lines of credit) and standby letters of credit outstanding as of December 31, 2024 and 2023 were as follows:

  December 31, 2024 December 31, 2023
  Fixed Rate Variable Rate Fixed Rate Variable Rate
Commitments to make loans $ 130,087  $ 321,677  $ 111,526  $ 370,437 
Unused lines of credit 24,037  851,846  11,219  789,534 
Standby letters of credit 19,301  2,797  18,649  2,480 

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Corporation evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Corporation upon extension of credit, is based on management’s credit evaluation of the counterparty. Collateral that is held varies but may include securities, accounts receivable, inventory, property, plant and equipment, and residential and income-producing commercial properties.

Allowance for Credit Losses on Unfunded Loan Commitments

The Corporation maintains an allowance for credit losses on unfunded commercial lending commitments and letters of credit to provide for the risk of loss inherent in these arrangements. The allowance is computed using a methodology similar to that used to determine the allowance for credit losses for loans receivable, modified to take into account the probability of a draw-down on the commitment. The provision for credit losses on unfunded loan commitments is included in the provision for credit losses on the Corporation's consolidated statements of income. The allowance for unfunded commitments is included in other liabilities in the consolidated balance sheets. Note 3, "Loans Receivable and Allowance for Credit Losses," in the consolidated financial statements provides more detail concerning the provision for credit losses related to the loan portfolio of the Corporation.

The following table presents activity in the allowance for credit losses on unfunded loan commitments for the years ended December 31, 2024, 2023, and 2022, respectively:

Year ended December 31,
  2024 2023 2022
Beginning balance $ 759  $ 603  $ — 
Provision for credit losses on unfunded loan commitments (1)
 185  156  603 
Ending balance $ 944  $ 759  $ 603 
(1) Excludes provision for credit losses related to the loan portfolio.

Investments in Small Business Investment Corporation and Community Development Entities

The Corporation makes investments in limited partnerships, including certain small business investment corporations ("SBICs") and community development entities ("CDEs"). Capital contributions for investments in SBICs and CDEs, reported in FHLB and other restricted stock holdings and investment on the consolidated balance sheet, as of December 31, 2024 and 2023, were $23.5 million and $21.7 million, respectively. Unfunded capital commitments in investments in SBIC's and other limited partnerships totaled $8.0 million and $6.8 million as of December 31, 2024 and 2023, respectively. These investments are accounted for under the equity method of accounting.

Investments in Qualified Affordable Housing Project Investments

The carrying value of investments in the low-income housing partnerships, reported in FHLB and other restricted stock holdings and investments on the consolidated balance sheet, as of December 31, 2024 and 2023 were $7.3 million and $3.8 million, respectively. The related amortization for the years ended December 31, 2024 2023, and 2022 were $711 thousand, $747 thousand, and $803 thousand, respectively. Unfunded commitments, reported in accrued interest payable and other liabilities on the consolidated balance sheet, as of December 31, 2024 and 2023, were $3.7 million and $796 thousand, respectively.

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Investments in Federal and State Rehabilitation/Historic Tax Credit

From time to time, the Corporation invests in certain limited partnerships that were formed to provide certain federal and state rehabilitation/historic tax credits. The carrying value of these investments, reported in FHLB and other restricted stock holdings and investments on the consolidated balance sheet, as of December 31, 2024 and 2023 were $4.1 million and zero, respectively. The investments do not have any related amortization for the years ended December 31, 2024, 2023, and 2022, respectively. Unfunded commitments, reported in accrued interest payable and other liabilities on the consolidated balance sheets, as of December 31, 2024 and December 31, 2023, were $3.2 million and zero, respectively.

Litigation

The Corporation is subject to claims and lawsuits that arise primarily in the ordinary course of business. It is the opinion of management the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position, results of operations and cash flows of the Corporation.

19. Parent Company Only Financial Information
 
CONDENSED BALANCE SHEETS December 31,
  2024 2023
Assets
Cash $ 100,702  $ 100,427 
Equity securities 1,525  1,795 
Investment in bank subsidiary 585,725  548,493 
Investment in non-bank subsidiaries 25,216  23,262 
Deferred assets and current receivables 2,021  1,894 
Other assets 956  925 
Total assets $ 716,145  $ 676,796 
Liabilities
Subordinated notes and debentures $ 105,190  $ 104,887 
Other liabilities 260  662 
Total liabilities 105,450  105,549 
Stockholders' equity 610,695  571,247 
Total liabilities and stockholders' equity $ 716,145  $ 676,796 

CONDENSED STATEMENTS OF INCOME Year Ended December 31,
Income: 2024 2023 2022
Dividends from:
Bank subsidiary $ 22,185  $ 22,295  $ 21,225 
Non-bank subsidiaries 1,320  1,325  1,431 
Other 201  240  198 
Total income 23,706  23,860  22,854 
Expenses (7,035) (7,084) (6,112)
Income before income taxes and equity in undistributed net income of subsidiaries: 16,671  16,776  16,742 
Change in net unrealized holdings (losses) on equity securities not held for trading (290) (722) (132)
Income tax benefit 1,513  1,606  1,422 
Equity in undistributed net income of bank subsidiary 34,755  38,702  43,846 
Equity in undistributed (distributions in excess) of net income of non-bank subsidiaries 1,926  1,658  1,310 
Net income 54,575  58,020  63,188 
Dividends on preferred stock (4,302) (4,302) (4,302)
Net income available to common stockholders $ 50,273  $ 53,718  $ 58,886 
Comprehensive income attributable to the parent $ 54,575  $ 58,020  $ 63,613 
 
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CONDENSED STATEMENTS OF CASH FLOWS Year Ended December 31,
  2024 2023 2022
Net income
Adjustments to reconcile net income to net cash provided by $ 54,575  $ 58,020  $ 63,188 
Operating activities:
Equity in undistributed net income of bank subsidiary (34,755) (38,702) (43,846)
(Equity in undistributed) distributions in excess of net income of non–bank subsidiaries (1,926) (1,658) (1,310)
Net realized and unrealized (gains) losses on equity securities (290) 700  132 
Increase (decrease) in other assets 174  (230) 609 
Increase in other liabilities 2,734  2,064  1,571 
Net cash provided by operating activities 20,512  20,194  20,344 
Cash flows from investing activities:
Purchase of equity securities (20) (41) (32)
Sales and maturities of equity securities with readily determinable fair value —  296  — 
Investment in bank subsidiaries —  (37,000) — 
Net cash used in investing activities (20) (36,745) (32)
Cash flows from financing activities:
Dividends paid on common stock (14,912) (14,694) (12,557)
Dividends paid on preferred stock (4,302) (4,302) (4,302)
Purchase of treasury stock (1,003) (6,858) (1,707)
Net proceeds from issuance of common stock —  —  94,051 
Net cash provided by financing activities (20,217) (25,854) 75,485 
Net (decrease) increase in cash 275  (42,405) 95,797 
Cash beginning of year 100,427  142,832  47,035 
Cash end of year $ 100,702  $ 100,427  $ 142,832 

20. Earnings Per Share

The computation of basic and diluted earnings per common share is shown below. There were no anti-dilutive stock options for the years ended December 31, 2024, 2023, and 2022.

  Years Ended December 31,
  2024 2023 2022
Basic earnings per common share computation
Net income per consolidated statements of income $ 50,273  $ 53,718  $ 58,886 
Net earnings allocated to participating securities (388) (283) (229)
Net earnings allocated to common stock $ 49,885  $ 53,435  $ 58,657 
Distributed earnings allocated to common stock $ 14,785  $ 14,607  $ 12,508 
Undistributed earnings allocated to common stock 35,100  38,828  46,149 
Net earnings allocated to common stock $ 49,885  $ 53,435  $ 58,657 
Weighted average common shares outstanding, including shares considered participating securities 20,993  21,010  18,057 
Less: Average participating securities (155) (106) (70)
Weighted average shares 20,838  20,904  17,987 
Basic earnings per common share $ 2.39  $ 2.56  $ 3.26 
Diluted earnings per common share computation
Net earnings allocated to common stock $ 49,885  $ 53,435  $ 58,657 
Weighted average common shares outstanding for basic earnings per common share 20,838  20,904  17,987 
Add: Dilutive effects of performance based-shares 62  40  33 
Weighted average shares and dilutive potential common shares 20,900  20,944  18,020 
Diluted earnings per common share $ 2.39  $ 2.55  $ 3.26 

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21. Other Comprehensive Income

Other comprehensive income components and related tax effects were as follows for the years ended December 31, 2024, 2023, and 2022:

December 31, 2024 December 31, 2023 December 31, 2022
Unrealized holding gains (losses) on available-for-sale securities $ 2,245  $ 7,785  $ (67,167)
Less reclassification adjustment for gains recognized in earnings (74) (52) (651)
Net unrealized gains (losses) 2,171  7,733  (67,818)
Tax effect (456) (1,624) 14,242 
Net-of-tax amount 1,715  6,109  (53,576)
Amortization of unrealized gains from held-to-maturity securities 690  748  1,107 
Tax effect (145) (157) (232)
Net-of-tax amount 545  591  875 
Actuarial gains (losses) on postemployment health care plan 478  (2) 303 
Net amortization of transition obligation and actuarial gain (168) (174) (113)
Net unrealized gains (losses) on postemployment health care plan 310  (176) 190 
Tax effect (65) 37  (40)
Net-of-tax amount 245  (139) 150 
Unrealized gains on interest rate swap —  —  411 
Less reclassification adjustment for gains (losses) recognized in earnings —  (151) 127 
Net unrealized gains (losses) —  (151) 538 
Tax effect —  32  (113)
Net-of-tax amount —  (119) 425 
Other comprehensive income (loss) $ 2,505  $ 6,442  $ (52,126)

The following is a summary of the change in the accumulated other comprehensive income (loss) balance, net of tax, for the years ended December 31, 2024, 2023, and 2022.

Balance
December 31, 2023		 Comprehensive
Income (Loss)		 Balance
December 31, 2024
Unrealized gains on securities available-for-sale $ (48,173) $ 1,715  $ (46,458)
Amortization of unrealized gains from held-to-maturity securities 1,466  545  2,011 
Unrealized gains on postretirement benefits plan 629  245  874 
Total $ (46,078) $ 2,505  $ (43,573)

Balance
December 31, 2022		 Comprehensive
Income (Loss)		 Balance
December 31, 2023
Unrealized gains on securities available-for-sale $ (54,282) $ 6,109  $ (48,173)
Amortization of unrealized gains from held-to-maturity securities 875  591  1,466 
Unrealized losses on postretirement benefits plan 768  (139) 629 
Unrealized losses on interest rate swap 119  (119) — 
Total $ (52,520) $ 6,442  $ (46,078)
 
Balance
January 1, 2022		 Comprehensive
Income (Loss)		 Balance
December 31, 2022
Unrealized losses on securities available-for-sale $ (706) $ (53,576) $ (54,282)
Amortization of unrealized gains from held-to-maturity securities —  875  875 
Unrealized gains on postretirement benefits plan 618  150  768 
Unrealized gains on interest rate swap (306) 425  119 
Total $ (394) $ (52,126) $ (52,520)

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22. Segment Reporting

The Corporation generates revenue through the operation of a full-service bank and manages the business activities on a consolidated basis. The nature of the products and services offered, and the types of customers served are similar across the geographic footprint the Bank operates in. The banking segment derives its revenue primarily through the operations as a full-service bank engaging in a full range of banking activities and services, including trust and wealth management services, for individual, business, governmental, and institutional customers. There are branch offices located in Pennsylvania, Ohio, New York and Virginia. The accounting policies of the banking segment are the same as those described in the summary of significant accounting policies. Accordingly, all of the financial service operations are considered by management to be aggregated in one reportable operating segment.

The Corporation’s CODM is the Chief Executive Officer, Michael D. Peduzzi. The CODM assesses performance for the banking segment and decides how to allocate resources based on consolidated net income as reported on the income statement. The measure of segment assets is reported on the balance sheet as total consolidated assets. The CODM uses net income to evaluate overall financial performance and profitability, and it is utilized as a key metric in evaluating the achievement of the corporation’s strategic plan. Net income is used to monitor budget versus actual results. The comparison of budgeted versus actual net income results are used in assessing the banking segment’s performance and in establishing management’s compensation.

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Information reported internally for performance assessment by the CODM follows, including reconciliation to the financial statements.

Year ended December 31,
2024 2023 2022
Interest and Dividend Income:
Loans including fees
Interest and fees on loans $ 293,544  $ 273,220  $ 194,149 
PPP fees —  3  1,889 
Investment Securities 31,926  20,473  17,700 
Total interest and dividend income 325,470  293,696  213,738 
Interest Expense:
Deposits 133,493  97,770  19,833 
Borrowed funds 4,508  6,097  4,246 
Total interest expense 138,001  103,867  24,079 
NET INTEREST INCOME 187,469  189,829  189,659 
PROVISION FOR CREDIT LOSS EXPENSE 9,222  5,993  8,589 
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSS EXPENSE 178,247  183,836  181,070 
NON-INTEREST INCOME:
Service charges on deposit accounts 6,990  7,372  7,206 
Other service charges and fees 2,973  3,010  3,196 
Wealth and asset management fees 7,845  7,251  7,172 
Security gains (losses), net 828  (335) (498)
Mortgage banking 673  676  1,237 
Bank owned life insurance 3,110  2,945  3,433 
Card processing and interchange income 8,666  8,301  7,797 
Other non-interest income 8,029  4,115  5,223 
Total non-interest income 39,114  33,335  34,766 
NON-INTEREST EXPENSES:
Salaries 54,089  50,871  44,495 
Incentive 2,465  2,847  9,875 
Benefits 17,982  17,344  17,090 
Net occupancy expense 14,737  14,509  13,298 
Technology expense 21,805  20,202  17,041 
State and local taxes 4,726  4,126  4,078 
Legal, professional and examination fees 4,217  4,414  4,173 
Advertising 2,545  3,133  2,887 
FDIC insurance 3,718  3,879  2,796 
Card processing and interchange expenses 4,575  5,025  4,801 
Other non-interest expenses 19,143  18,992  17,088 
Total non-interest expenses 150,002  145,342  137,622 
INCOME BEFORE INCOME TAXES 67,359  71,829  78,214 
INCOME TAX EXPENSE 12,784  13,809  15,026 
SEGMENT NET INCOME $ 54,575  $ 58,020  $ 63,188 
Reconciliation of profit or loss
Adjustments and reconciling items —  —  — 
CONSOLIDATED NET INCOME $ 54,575  $ 58,020  $ 63,188 
Reconciliation of assets
Adjustments and reconciling items —  — 
TOTAL CONSOLIDATED ASSETS $ 6,192,010  $ 5,752,957 

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23. Subsequent Events

On January 9, 2025, the Corporation and CNB Bank entered into a definitive merger agreement (the “Merger Agreement”) with ESSA Bancorp, Inc. (“ESSA”) and its subsidiary bank, ESSA Bank & Trust Company (“ESSA Bank”), pursuant to which the Corporation will acquire ESSA in an all-stock transaction. Subject to the terms and conditions of the Merger Agreement, which has been approved by the boards of directors of each party, ESSA will merge with and into the Corporation, with the Corporation as the surviving entity, and immediately thereafter, ESSA Bank will merge with and into the Bank, with the Bank as the surviving bank (the “Merger”). Under the terms of the Merger Agreement, each outstanding share of ESSA common stock will be converted into the right to receive 0.8547 shares of the Corporation’s common stock. The transaction is currently expected to close in the third quarter of 2025, subject to customary closing conditions, including the receipt of regulatory approvals and approvals by the shareholders of ESSA and the Corporation.
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

The Corporation’s management, under the supervision of and with the participation of the Corporation’s Principal Executive Officer and Principal Financial Officer, has carried out an evaluation of the design and effectiveness of the Corporation’s disclosure controls and procedures as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Securities Exchange Act of 1934 as of the end of the period covered by this report. Based upon that evaluation, management, including the Principal Executive Officer and Principal Financial Officer, have concluded that, as of the end of such period, the Corporation’s disclosure controls and procedures are effective to provide reasonable assurance that all material information required to be disclosed in reports the Corporation files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms.

Management’s Report on Internal Control Over Financial Reporting

The management of the Corporation is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. The Corporation’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the U.S.

The Corporation’s internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Corporation; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Corporation are being made only in accordance with authorizations of management and directors of the Corporation; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Corporation’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Corporation’s internal control over financial reporting as of December 31, 2024. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in the 2013 Internal Control-Integrated Framework. Based on our assessment and those criteria, management concluded that the Corporation maintained effective internal control over financial reporting as of December 31, 2024. The effectiveness of our internal control over financial reporting as of December 31, 2024 has been audited by Forvis Mazars, LLP, an independent registered public accounting firm that audited the Corporation’s financial statements, as stated in their report which is located in Item 8 of this Annual Report on Form 10-K.

/s/ Michael D. Peduzzi /s/ Tito L. Lima
President and Chief Executive Officer Treasurer and Principal Financial Officer
Date: March 6, 2025 Date: March 6, 2025

ITEM 9B. OTHER INFORMATION

During the three months ended December 31, 2024, no director or officer of the Corporation, nor the Corporation itself, adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

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ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

None.


PART III.

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this Item 10 is incorporated herein by reference from our Registration Statement on Form S-4, as amended, which is deemed to be a definitive proxy statement under Section 14a-6 of the Securities Exchange Act of 1934, filed with the SEC on March 3, 2025 (the "2025 Proxy Statement"), under the captions "CNB Proposal 2 – Election of Directors," "CNB Executive Officers," "CNB Corporate Governance – Meetings and Committees of the CNB Board of Directors – Audit Committee," "Certain Transactions With CNB Related Persons" and "Delinquent Section 16(a) Reports."

The Corporation’s Board of Directors has approved a Code of Ethics for Officers and Directors. The Code of Ethics can be found at the Bank’s website, www.cnbbank.bank.


ITEM 11. EXECUTIVE COMPENSATION

Information required by this Item 11 is incorporated herein by reference from the 2025 Proxy Statement, including the information in the 2025 Proxy Statement appearing under the captions "CNB Compensation Discussion and Analysis," "Compensation of CNB Executive Officers," "CNB Compensation Committee Report," and "Compensation of CNB Directors."

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information required by this Item 12 is incorporated herein by reference from the 2025 Proxy Statement, including the information in the 2025 Proxy Statement appearing under the captions "Security Ownership of Certain Beneficial Owners of CNB Common Stock and CNB Management" and "CNB Proposal 3 – The Incentive Plan Proposal – Equity Compensation Plan Information."

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information required by this Item 13 is incorporated herein by reference from the 2025 Proxy Statement, including the information in the 2025 Proxy Statement appearing under the captions "CNB Proposal 2 – Election of Directors," "CNB Corporate Governance," and "Certain Transactions With CNB Related Persons."

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information required by this Item 14 is incorporated herein by reference from the 2025 Proxy Statement, including the information in the 2025 Proxy Statement appearing under the captions "CNB Corporate Governance – Meetings and Committees of the CNB Board of Directors – Audit Committee," "CNB Proposal 5 – The Auditor Ratification Proposal." (a)(1) The following consolidated financial statements are set forth in Part II, Item 8:

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PART IV.

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Report of Independent Registered Public Accounting Firm
Forvis Mazars, LLP, Indianapolis, IN, (U.S. PCAOB Auditor Firm I.D.: 686);
Consolidated Balance Sheets as of December 31, 2024 and 2023
Consolidated Statements of Income and Comprehensive Income for the years ended December 31, 2024, 2023, and 2022
Consolidated Statements of Cash Flows for the years ended December 31, 2024, 2023, and 2022
Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2024, 2023, and 2022
Notes to Consolidated Financial Statements

(a)(2) Financial statement schedules are not applicable or are included in the consolidated financial statements or related notes.

(a)(3) The following exhibits are filed as a part of this report:
 
Exhibit No. Description
Agreement and Plan of Merger, dated as of January 9, 2025, by and among CNB Financial Corporation, CNB Bank, ESSA Bancorp, Inc. and ESSA Bank & Trust (incorporated by reference to Exhibit 2.1 to the Registrant's Current Report on Form 8-K filed on January 10, 2025).
Third Amended and Restated Articles of Incorporation of CNB Financial Corporation (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed on April 18, 2024)
Third Amended and Restated Bylaws of CNB Financial Corporation (incorporated by reference to Exhibit 3.2 to the Registrant's Current Report on Form 8-K filed on April 18, 2024)
Statement with Respect to Shares of 7.125% Series A Fixed-Rate Non-Cumulative Perpetual Preferred Stock, effective as of August 25, 2020 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on August 25, 2020)
Description of Registrant's Securities (incorporated by reference to Exhibit 4.1 to the Registrant’s Annual Report on Form 10-K filed on March 3, 2022)
Form of Certificate representing the 7.125% Series A Fixed-Rated Non-Cumulative Perpetual Preferred Stock (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on August 25, 2020)
Deposit Agreement, dated August 25, 2020, among CNB Financial Corporation, American Stock Transfer & Trust Company, LLC, and the holders from time to time of the depositary receipts described therein (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on August 25, 2020)
Form of Depositary Receipt representing the Depositary Shares (included as Exhibit A to Exhibit 4.3 of the Registration Statement on Form 8-A filed on August 25, 2020)
Form of 3.25% Fixed-to-Floating Rate Subordinated Note due 2031 (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on June 3, 2021)
10.1(1)
 CNB Financial Corporation 2019 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on April 18, 2019)
10.2(1)
 Form of CNB Financial Corporation 2019 Omnibus Incentive Plan Restricted Stock Agreement (incorporated by reference to Exhibit 10.2 to the Registrant’s Annual Report on Form 10-K filed on March 3, 2023)
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Exhibit No. Description
10.3(1)
 Form of CNB Financial Corporation 2019 Omnibus Incentive Plan Performance Restricted Stock Agreement (incorporated by reference to Exhibit 10.3 to the Registrant’s Annual Report on Form 10-K filed on March 3, 2023)
10.4(1)
 Letter Agreement, dated April 4, 2022, by and between CNB, CNB Bank and Joseph E. Dell, Jr. (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on April 4, 2022)
10.5(1)
 Executive Employment Agreement, dated March 23, 2020, by and between CNB Financial Corporation, CNB Bank and Tito L. Lima (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on March 24, 2020)
10.6(1)
Executive Employment Agreement, dated August 30, 2021, by and between CNB Financial Corporation, CNB Bank and Martin T. Griffith (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on September 3, 2021)
10.7(1)
 Executive Employment Agreement, dated November 27, 2023, by and between CNB Financial Corporation, CNB Bank and Michael Peduzzi (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on November 30, 2023)
10.8(1)
 Executive Employment Contract, dated October 7, 2015, by and between CNB Bank and Leanne D. Kassab (incorporated by reference to Exhibit 10.10 to the Registrant’s Annual Report on Form 10-K filed on March 3, 2023)
10.9(1)
 Supplemental Executive Retirement Plan for Michael D. Peduzzi, effective as of January 1, 2022 (incorporated by reference to Exhibit 10.13 to the Registrant’s Annual Report on Form 10-K filed on March 3, 2023)
Form of Subordinated Note Purchase Agreement, dated June 3, 2021, by and among CNB Financial Corporation and the Purchasers identified therein (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on June 3, 2021)
10.11(1)
 Defined Contribution Plan for Tito L. Lima, effective as of January 2, 2022 (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on January 4, 2022)
10.12(1)
 Defined Contribution Plan for Leanne Kassab, effective as of January 1, 2022 (incorporated by reference to Exhibit 10.16 to the Registrant’s Annual Report on Form 10-K filed on March 3, 2023)
10.13(1)
 Executive Deferred Compensation Plan, amended and restated, effective as of January 1, 2005 (incorporated by reference to Exhibit 10.17 to the Registrant’s Annual Report on Form 10-K filed on March 3, 2023)
10.14(1)
 Executive Deferred Compensation Plan Amendment No. 1, dated as of January 19, 2015 (incorporated by reference to Exhibit 10.18 to the Registrant’s Annual Report on Form 10-K filed on March 3, 2023)
10.15(1)
 Amendment No. 1 to Defined Contribution Plan for Tito L. Lima (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on October 2, 2023)
10.16(1)
 Amendment No. 1 to Defined Contribution Plan for Leanne Kassab (incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed on October 2, 2023)
10.17(1)
 Amendment No. 1 to Supplemental Executive Retirement Plan (incorporated by reference to Exhibit 10.6 to the Registrant’s Current Report on Form 8-K filed on October 2, 2023)
10.18(1)
 Schedule A to Supplemental Executive Retirement Plan for Michael D. Peduzzi (incorporated by reference to Exhibit 10.7 to the Registrant’s Current Report on Form 8-K filed on October 2, 2023)
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Exhibit No. Description
10.19(1)
 Schedule A to Supplemental Executive Retirement Plan for Tito L. Lima (incorporated by reference to Exhibit 10.8 to the Registrant’s Current Report on Form 8-K filed on October 2, 2023)
10.20(1)
 Schedule A to Supplemental Executive Retirement Plan for Leanne Kassab (incorporated by reference to Exhibit 10.9 to the Registrant’s Current Report on Form 8-K filed on October 2, 2023)
10.21(1)
 Schedule A to Supplemental Executive Retirement Plan for Martin Griffith (incorporated by reference to Exhibit 10.10 to the Registrant’s Current Report on Form 8-K filed on October 2, 2023)
10.22(1)
 Executive Employment Contract, dated September 3, 2020, by and between CNB Bank and Gregory M. Dixon
10.23(1)
 Executive Employment Contract, dated May 18, 2021, by and between CNB Bank and Angela D. Wilcoxson
10.24(1)
 Defined Contribution Plan for Gregory Dixon , effective as of January 2, 2022
Insider Trading and Reporting Compliance Policy
List of subsidiaries of CNB Financial Corporation (incorporated by reference to Exhibit 21 to the Registrant’s Annual Report on Form 10-K filed on March 3, 2023)
Consent of FORVIS, LLP
Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Policy Relating to Recovery of Erroneously Awarded Compensation (incorporated by reference to Exhibit 97.1 to the Registrant's Annual Report on Form 10-K filed on March 7, 2024)
101.INS Inline XBRL Instance Document
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF Inline XBRL Taxonomy Extension Definitions Linkbase Document
101.LAB Inline XBRL Taxonomy Extension Presentation Label Linkbase Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101)
(1) Indicates a management contract or compensatory plan.

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ITEM 16. FORM 10-K SUMMARY

None.
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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

        CNB FINANCIAL CORPORATION
  (Registrant)
Date: March 6, 2025   By: /s/ Michael D. Peduzzi
  MICHAEL D. PEDUZZI
  President & Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March 6, 2025.

/s/ Michael D. Peduzzi /s/ Jeffrey S. Powell
MICHAEL D. PEDUZZI JEFFREY S. POWELL, Chairperson
President and Director
(Principal Executive Officer)
/s/ Tito L. Lima /s/ Richard B. Seager
TITO L. LIMA RICHARD B. SEAGER, Director
Treasurer
(Principal Financial and Accounting Officer)
/s/ N. Michael Obi /s/ Francis X. Straub, III
N. MICHAEL OBI, Director FRANCIS X. STRAUB, III, Director
/s/ Joel E. Peterson /s/ Peter C. Varischetti
JOEL E. PETERSON, Director PETER C. VARISCHETTI, Director
/s/ Deborah Dick Pontzer /s/ Julie M. Young
DEBORAH DICK PONTZER, Director JULIE M. YOUNG, Director
/s/ Nicholas N. Scott
NICHOLAS N. SCOTT, Director

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EX-10.22 2 ccne12312024ex1022dixoneea.htm EX-10.22 Document
Exhibit 10.22

image_01.jpg

Executive Employment Agreement

This Executive Employment Agreement (Agreement) is entered into by Greg M. Dixon, an individual (Mr. Dixon or Executive), and CNB Financial Corporation, a Pennsylvania corporation, and CNB Bank, a state banking institution organized under the laws of the Commonwealth of Pennsylvania, and their respective affiliates, subsidiaries, successors, and assigns (collectively CNB or Bank) on the last date set forth in the signature block below (effective date).

Background

Mr. Dixon became Executive Vice President and Chief Risk Officer of both CNB Financial Corporation and CNB Bank on January 1, 2020. The Bank desires to continue to employ Executive and Executive desires to continue to be employed by the Bank under the terms and conditions of this Agreement. This employment relationship, as well as other covenants described herein, are consideration for this Agreement, the receipt and sufficiency of which are acknowledged by the parties. Parties agree as follows:

1.POSITION AND DUTIES.

a.Mr. Dixon will continue to serve as Executive Vice President and Chief Risk Officer of CNB Financial Corporation and CNB Bank under the direction and control of the Board of Directors of CNB Financial Corporation (the CNB Financial Corporation Board). Executive has and will continue to have all duties, responsibilities and authority consistent with these positions. Executive agrees to act and perform services in a manner consistent with Bank policies, procedures and mores.

b.Executive agrees to devote the time, resources, effort and attention necessary to fulfill his/her duties to the highest ethical principles, industry standards, and to the reasonable satisfaction of the Bank and the CNB Financial Corporation Board. Executive agrees not to engage in any other employment, including self­ employment, during any term of this Agreement. On behalf of the Bank, Mr. Dixon will engage in charitable and social organizations that are consistent with his/her professional responsibilities and position with the Bank.

c.Executive's performance will be evaluated periodically by the Chief Executive Officer of CNB, Executive Compensation Committee, and the CNB Financial Corporation Board as needed but no less frequently than annually.
1

2.COMPENSATION.

a.Base Salary. Executive's initial annual base salary shall be $191,000, minus all applicable deductions, and paid in accordance with the Bank's customary payroll practices. Executive's base salary will be reviewed at least annually by the CNB Financial Corporation Board and adjustments considered but not guaranteed.

b.Incentive Compensation. Executive shall be eligible to receive cash incentive compensation as determined by the Executive Compensation Committee or the CNB Financial Corporation Board. Executive is eligible to receive incentive compensation equal to up to forty percent (40%) of his annual base salary. To earn incentive compensation, Executive must be employed by CNB on December 31 of the year for which such incentive compensation is earned, and such incentive compensation will be paid to the Executive no later than March 15 of the following calendar year.

c.Stock. During employment, at the discretion of the CNB Financial Corporation Board, Executive is eligible to participate in the CNB Financial Corporation 2019 Omnibus Incentive Plan or any successor plan, if any, subject to the terms of that plan or successor plan.

d.Other Compensation. Executive may be entitled to or eligible for bonuses, stock rights, or other compensation as may be decided by the CNB Financial Corporation Board from time-to-time.

e.Benefits. The Bank will offer Executive all benefits, including insurances, paid time off, retirement plans, and similar benefits, made available to other similarly situated executive-level Bank employees upon the same or similar terms and conditions. All benefits hereunder may change from time-to-time at the Bank's discretion, subject to benefit plans and applicable law. Coverage, eligibility, and other terms and conditions of any benefit are governed by the benefit plan documents which control.

f.Director and Officer Insurance. The Bank or its successor will purchase and maintain Director and Officer Liability Insurance for the benefit of Executive in connection with his/her acts and omission as a Bank officer during his/her employment.

3.TERM. This Agreement commences on the effective date and will continue until December 31, 2022 (Initial Term). Thereafter, this Agreement automatically renews for successive 12-month periods (Renewal Term) unless terminated in accordance with the termination provisions set forth below.

4.TERMINATION. This Agreement may terminate prior to the end of the Initial Term or any Renewal Term under the following circumstances:
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a.Executive's death or Disability. For purposes of this Agreement, Disability means Executive is (i) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months; or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of CNB; or (iii) is determined to be totally disabled by the Social Security Administration or the Railroad Retirement Board, if applicable.

b.Termination Due to Change in Control/Good Reason

i.In case of a Change in Control, Executive may terminate his/her employment in the case of one or more of the following events which will be treated as a termination for Good Reason:

1.Material reduction in Executive's authority, duties or responsibilities or assignment of duties inconsistent with the positions of Executive Vice President and Chief Risk Officer without Executive's consent.

2.Material reduction in Executive's base salary or overall compensation without Executive's consent.

3.Relocation of Executive's principal place of employment outside of a 25-mile radius of his/her then current principal place of employment at the time of the Change in Control without Executive's consent.

ii..    Cure Period.

1.If one or more of the foregoing events occur, Executive must give the CNB Financial Corporation Board written notice of intent to terminate his/her employment under this section within 90 days of the event(s) constituting Good Reason. This notice must describe the conditions constituting good reason and give the Bank 30 days from the date of Executive's written notice to cure such conditions ("cure period"). Executive is required to negotiate in good faith to resolve his/her concerns(s).

2.If the Bank fails to respond to Executive's notice or the parties are unable to reach a mutually agreeable resolution, Executive must terminate his/her employment within 21 days after the end of the cure period. Thereafter, Executive will have waived the right to terminate his/her employment for Good Reason for the reason(s)
3

specified in the notice. Termination by Executive thereafter will be a Voluntary Resignation by Executive under 4(c).

iii.For the purposes of this Section, "Change in Control" includes one or more of the following occurrences:

1.Sale of all or substantially all of CNB Bank's stock or CNB Financial Corporation's stock.

2.Sale of all or substantially all of CNB Bank's or CNB Financial Corporation's assets.

3.Acquisition of stock by a third party or group of persons or entities acting in concert sufficient to elect a majority of directors to the Board of Directors of the Bank or to the CNB Financial Corporation Board.

4.Ownership of more than 40% of CNB Financial Corporation stock by a single person or entity or group of persons or entities acting in concert.

iv.Notwithstanding the foregoing, a "Change in Control" does not occur unless the event results in a change in the ownership of the Bank, a change in the effective control of the Bank, or a change in ownership of a substantial portion of the Bank's assets under Section 409A.

c.Non-Renewal by Executive (Voluntary Resignation). Should Executive decide to not renew this Agreement by terminating his employment upon the expiration of this Agreement, he must provide no less than 120 days written notice to the CNB Financial Corporation Board of this intent.

Notwithstanding the foregoing, the Bank reserves the right to end Executive's employment any time after Executive gives notice under this provision. In the event the Bank ends Executive's employment prior to the end of the 120 days' notice, Executive will be entitled to his base salary through the end of the notice period, but for all other purposes such termination will be considered voluntary by Executive.

It will also be deemed a "voluntary termination" by Executive if Executive opts to resign/retire in lieu of termination by the Bank for Cause.

d.Non-Renewal or Termination by the Bank (Without Cause Termination). This Agreement may be terminated or not renewed by the Bank without Cause, provided that the Bank gives Executive no less than 120 days' written notice of the intent to terminate or not renew.
4

e.Termination by the Bank for Cause. The Bank may terminate Executive's employment, without notice, for one or more of the following reasons, which will be treated as termination for Cause:
i.Executive's theft or embezzlement of Bank money, property or other assets; Executive's perpetration of fraud against the Bank; or other acts that impact or compromise the financial security of the Bank.

ii.Executive's participation in any activity which is criminal or knowingly competes with the Bank.
iii.Executive's violation of any material policy or procedure of the Bank or this Agreement.

iv.Executive ceases to qualify for his/her positions and/or the responsibilities of his/her positions due to law, regulation, disqualification or loss of certification or authorization to work in the relevant industry, or for any similar reason.

v.Executive's material and continued failure to perform his/her duties under this Agreement or failure to do so in a competent and/or businesslike manner as reasonably determined by the CNB Financial Corporation Board.

vi.Executive's use of illegal drugs, or abuse of alcohol or prescribed drugs that materially impairs Executive's ability to perform his/her duties hereunder and/or negatively reflects upon the Bank or its reputation.

vii.Any other act or omission by Executive or his/her immediate family that the Bank reasonably believes to adversely and materially compromise the security, stability, operations, or reputation of the Bank.

In case of violations under the foregoing 4(e)(v)-(vii) only, the Bank will give Executive written notice of the violation(s) and actions required to cure such violations. Executive will have 30 days from the date of written notice to cure such violations to the reasonable satisfaction of the CNB Financial Corporation Board. The Bank reserves the right to suspend Executive during an investigation or 30-day cure period. Such suspension is not a termination for the purposes of this Section.

5.EFFECT OF TERMINATION

a.Upon termination for any reason, Executive will receive his/her base salary prorated to his/her last day worked (if death or Disability) or the date of termination of employment.

b.Upon termination for any reason, Executive's stock award will, as applicable, be governed by the CNB Financial Corporation 2019 Omnibus Incentive Plan or successor plan, if any.
5

c.Upon a termination by Executive for Good Reason (in the event of a Change in Control) or by the Bank Without Cause, in addition to the compensation provided in 5(a)-(b), Executive will also be entitled to the following:

i.Severance Compensation. Executive will be entitled to compensation equal to 2.0 times his then current base salary plus 2.0 times the average of Executive's incentive pay bonuses for the three (3) years preceding the year of termination. This compensation will be paid as a one-time lump sum payment, minus all applicable deductions, within 30 days after the conditions in 5(d)(i) are fully satisfied.

ii.Stock Award. The treatment of Executive's stock award will, as applicable, be governed by the CNB Financial Corporation 2019 Omnibus Incentive Plan or successor plan, if any.

d.The Bank's obligation to make payment(s) under foregoing Section (5)(c)(i) is conditioned upon:

i.Severance Agreement

a.Executive executing and delivering to the Bank (and the expiration of any revocation or rescindment period) a severance agreement, including without limitation a waiver and release by Executive of all eligible rights and claims against the Bank, its officers, directors, owners, employees, and others; as well as confidentiality, non­ solicitation, and non-disparagement clauses (the Severance Agreement).

b.Bank will present the Severance Agreement to Executive no later than 15 days after the date of Executive's termination.

c.Executive must execute the severance agreement, if at all, no later than 21 days after receipt (or 45 days in case of a reduction in force).

d.Payment under Section 5(c)(i) will be made no later than 30 days from the date the Severance Agreement becomes fully effective and non-revocable.

ii.Executive's strict compliance with all post-termination obligations including without limitation the Non-Competition, Non-Solicitation, Confidentiality, and Non-Disclosure provisions.
6

6.TAX AND REGULATORY CONSIDERATIONS

a.280G Considerations

i.Anything in this Agreement to the contrary notwithstanding, in the event that the amount of any compensation, payment or distribution by CNB to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, calculated in a manner consistent with Section 2800 of the Internal Revenue Code of 1986, as amended (the Code) and the applicable regulations thereunder (the Aggregate Payments), would be subject to the excise tax imposed by Section 4999 of the Code, then the Aggregate Payments shall be reduced (but not below zero) so that the sum of all of the Aggregate Payments shall be $1.00 less than the amount at which Executive becomes subject to the excise tax imposed by Section 4999 of the Code; provided that such reduction shall only occur if it would result in Executive receiving a higher After Tax Amount (as defined below) than Executive would receive if the Aggregate Payments were not subject to such reduction. In such event, the Aggregate Payments shall be reduced in the following order, in each case, in reverse chronological order beginning with the Aggregate Payments that are to be paid the furthest in time from consummation of the transaction that is subject to Section 2800 of the Code: (1) cash payments not subject to Section 409A of the Code; (2) cash payments subject to Section 409A of the Code; (3) equity-based payments and acceleration; and (4) non-cash forms of benefits; provided that in the case of all the foregoing Aggregate Payments all amounts or payments that are not subject to calculation under Treas. Reg. §1.2800-1, Q&A-24(b) or (c) shall be reduced before any amounts that are subject to calculation under Treas. Reg.§1.2800-1, Q&A-24(b) or (c).

ii.For purposes of this Section 6(a), the After Tax Amount means the amount of the Aggregate Payments less all federal, state, and local income, excise and employment taxes imposed on Executive as a result of Executive's receipt of the Aggregate Payments. For purposes of determining the After Tax Amount, Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation applicable to individuals for the calendar year in which the determination is to be made, and state and local income taxes at the highest marginal rates of individual taxation in each applicable state and locality, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.

iii.The determination as to whether a reduction in the Aggregate Payments shall be made pursuant to 6(a)(i) shall be made by a nationally recognized accounting firm selected by the Company (the Accounting Firm), which shall provide detailed supporting calculations both to CNB and Executive within 15 business days of the date of termination, if applicable, or at such earlier time as is reasonably requested
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by CNB or Executive. Any determination by the Accounting Firm shall be binding upon CNB and Executive.

b.Section 409A

i.General Compliance. This Agreement is intended to comply with Section 409A of the Code (Section 409A) or an exemption thereunder and should be construed and administered in accordance with that intent. Notwithstanding any other provision of this Agreement, payments provided under this Agreement may only be made upon an event and in a manner that complies with Section 409A or an applicable exemption. For purposes of Section 409A, each installment provided under this Agreement, if any, is to be treated as a separate payment.

Parties agree that the payment(s) hereunder is intended to be excepted from Section 409A as separation pay due to an involuntary separation from service or a short-term deferral pursuant to Treasury Regulation Section l.409A-l(b)(4) and are to be excluded from Section 409A to the maximum extent possible.

Notwithstanding the foregoing, the Bank makes no representations that the payments and benefits provided under this Agreement comply with or are exempt from Section 409A, and in no event is the Bank liable for all or any portion of any taxes, penalties, interest, or other expenses that may be incurred by Executive on account of non-compliance with Section 409A.

ii.Specified Employees. Notwithstanding any other provision of this Agreement, if any payment or benefit provided to Executive in connection with his termination of employment is determined to constitute "nonqualified deferred compensation" within the meaning of Section 409A and Executive is determined to be a "specified employee" as defined in Section 409A(a)(2)(b)(i), then such payment or benefit will not be paid until the first payroll date to occur following the six-month anniversary of the termination date or, if earlier, on Executive's death (the Specified Employee Payment Date). The aggregate of any payments that would otherwise have been paid before the Specified Employee Payment Date is to be paid to Executive in a lump sum on the Specified Employee Payment Date. Thereafter, any remaining payments must be paid without delay in accordance with the original schedule.

c.Federal Deposit Insurance Act (FDIA). All payments under this Agreement or otherwise to Executive are subject to and conditioned upon their compliance with Section 18(k) of the FDIA and any related regulations.
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7.COOPERATION. After the termination of this Agreement and/or Executive's employment for any reason, to the extent reasonably requested by the Bank, Executive agrees to cooperate with the Bank in connection with matters arising out of Executive's service to the Bank. The Bank will make reasonable efforts to minimize disruption to Executive and will reimburse him/her for reasonable expenses incurred in connection with such cooperation. To the extent Executive is required to spend substantial time on such matters, the Bank agrees to compensate Executive at a reasonable hourly rate agreed upon by the parties.

8.INDEMNIFICATION. In the event Executive is made a party or threatened to be made a party to any action, charge, suit or other proceeding whether civil, criminal, administrative, investigative, or alternative dispute resolution (Proceeding) by reason of his/her employment by, position with, or acting at the direction of the Bank, the Bank agrees to indemnify and hold harmless Executive to the fullest extent allowed by law from and against all liabilities, costs, claims, and expenses, including attorneys' fees. If it is adjudicated that Executive acted fraudulently, with gross negligence, or with willful or negligent intent to harm the Bank, Executive must reimburse the Bank for all monies paid under this provision. This provision does not apply to any Proceeding initiated by either party in connection with this Agreement.

9.CONFIDENTIAL INFORMATION. Executive understands and acknowledges that during his/her employment, particularly in light of his/her executive and operational control, he/she will create, receive or have access to Bank information and information of customers which is collectively or independently confidential, trade secret, or of proprietary value (Confidential Information) Executive further understands and agrees that this Confidential Information is an asset to the Bank and/or the respective holder of such information, provides a competitive advantage, and in some cases is protected from disclosure by law.

Executive acknowledges that CNB makes great effort to protect the confidentiality of Confidential Information and prevent it from disclosure to persons or entities outside of the Bank's business or to the public in general. Executive further acknowledges that the disclosure or dissemination of such information for non-Bank purposes would cause great harm to all parties, and in some cases, violate the law. Executive, therefore, agrees to use all reasonable measures necessary to avoid any disclosure, including accidental disclosure, of Confidential Information and to protect it from public exposure. This includes, without limitation, securing paper or electronic information, work devices such as laptops and mobile devices, and verbal and electronic communications against unauthorized access or disclosure.

Executive's promise to maintain the confidentiality of Confidential Information is material to this Agreement and vital to employment. Executive understands that any material breach of his/her confidentiality obligations will result in termination of employment for Cause; and if any legal or other action is necessitated by the breach, Executive will be responsible for all costs, including attorneys' fees, of such action.
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The following list includes some, but not all, of the Confidential Information Executive may create, receive or have access to during employment:

•Information about CNB's Directors, Advisory Boards and their members, and CNB employees.

•Customer and prospective customer lists, identities, contact information and contact names, or compilation of the same and the terms and conditions of customer relationships.

•Information that is exchanged with a customer, prospective customer, or business affiliate for the purpose of securing or expanding business.

•Code, user interface or other intellectual property associated with the Bank's software, including individual lines of code as well as code compilations, and any unique, derivative or modified versions of software or code.

•The Bank's intellectual property and any information related to the Bank's intellectual property whether patented, patentable, copyrighted or otherwise protected by intellectual property laws.

•Bank financial information including, without limitation, budgets, profit/loss sheets, asset valuation, financial forecasts, bookkeeping, liabilities, debts, credits, accounts payable/receivable.

•Strategic plans, Bank policies or procedures, expansion plans or projections.

•Business practices, processes, or methods which are unique to the Bank and give it a competitive advantage.

•Sales information, pricing, margin or related information

•Marketing strategies; sales methods; target markets, industries or customers.

•Research, development and technological strategies and advancements.

•Ideas, strategies, recommendation or insights developed as a result of the Bank and Executive's relationship.

•Identity of the Bank's vendors, suppliers, or consultants or the terms and conditions of these relationships.

•Any other information that qualifies as a trade secret under law.

Confidential Information does not include information which is generally known to the public through no wrongful act or omission of any party.
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10.NON-DISCLOSURE.

a.Executive agrees not to, in any way, disclose, transmit, gather or otherwise use Confidential Information except in the course of Bank business. Non-disclosure applies to all Confidential Information whether written, recalled from memory, electronic or in any other form. This Agreement applies both during Executive's employment with CNB and after the relationship with CNB ends.

b.Executive agrees not to give access to software, databases, computers, paper or electronic files, or Bank facilities or supplies to any person unless it is business­ related and consistent with Executive's position or specifically authorized in writing by the CNB Financial Corporation Board.

c.Nothing in this Agreement shall be interpreted or applied to prohibit Executive from making any good faith report to any governmental agency or other governmental entity (a Government Agency) concerning any act or omission that Executive reasonably believes constitutes a possible violation of federal or state law or making other disclosures that are protected under the anti-retaliation or whistleblower provisions of applicable federal or state law or regulation. In addition, nothing contained in this Agreement limits Executive's ability to communicate with any Government Agency or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including Executive's ability to provide documents or other information, without notice to CNB. In addition, for the avoidance of doubt, pursuant to the federal Defend Trade Secrets Act of 2016, Executive shall not be held criminally or civilly liable under any federal or state trade secret law or under this Agreement for the disclosure of a trade secret that (a) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.

11.RETURN AND NON-TRANSMITTAL OF CONFIDENTIAL INFORMATION/BANK. At the end of Executive's employment, or whenever requested, Executive agrees to promptly return all Confidential Information, in whatever form, in his/her possession or control. Executive further agrees not to copy, retain copies of, delete, remove, transmit or otherwise keep any Confidential Information that is embodied in any form or medium.

Executive agrees to return all Bank property upon the termination of employment or when requested, in the same or similar condition as when received.

12.NON-COMPETITION AGREEMENT. Executive agrees not to engage in any employment, business, or other activities which competes in any way with the work or business plans of the Bank while employed by the Bank and for twenty-four (24) months after Executive's employment ends for any reason. Specifically, without limitation, Executive agrees not to, directly or indirectly,
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a.Start, make preparations to start, own, operate, or hold any ownership interest in (other than nominal, arms-length ownership) any business or other entity that provides banking financial services including related support services; or

b.In any capacity work for, provide services to (including gratuitous services) or consult with:

i.any individual, company, business, or other entity which provides the same or similar services as those offered by the Bank at the time of Executive's departure; and/or

ii.any consulting firm or other entity that provides advice, services or other assistance to CNB's competitors.

During employment, Executive's non-competition restrictions are not limited and apply to all competitive activities. During the 24-month post-termination period, these non­ competition restrictions apply in any state of the United States in which the Bank does business, or has definitive plans to start business in, at the time of Executive's departure. (At the time of the execution of this Agreement, those states are New York, Ohio and Pennsylvania.)

13.NON-SOLICITATION AGREEMENT. While employed by the Bank and for 24 months after Executive's employment ends for any reason, Executive agrees not to do, or attempt to do, any of the following:

a.provide to any CNB customer services that are the same or similar to the services Executive provided while employed by the Bank, even if the customer initiates the relationship or communication;

b.solicit or in any way divert any business, customer, or prospective customer away from the Bank;

c.recruit, solicit or encourage the Bank's workforce to leave employment or discontinue a relationship with CNB; or

d.interfere with, divert, or solicit away from the Bank any person, business, supplier, contractor, or other person or entity with whom CNB has a relationship.

14.NON-DISPARAGEMENT AGREEMENT. During Executive's employment and thereafter, Executive agrees not to disparage, defame, libel, slander, malign or otherwise cause harm to the Bank, its reputation or good will, or any of the Bank's employees, management, directors, advisory board members, officers, owners or the family members or businesses of the foregoing, in any forum or form including verbal, written, electronic or online.

15.CONFLICT OF INTEREST. Executive must be free of conflicts of interest that could adversely influence Executive's judgment, objectivity or commitment to CNB in conducting Bank business and providing services. Examples of conflicts of interest include, without limitation:
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a.Having outside employment, affiliations or investments that affects Executive's ability to satisfactorily, neutrally, and efficiently perform his work for the Bank.

b.Leveraging CNB's business or customer relationships for Executive's own personal gain or the gain or benefit of a person or business outside of CNB, even a non-competing business.

c.Providing the same or similar services offered by CNB to customers or others outside of the Bank, or assisting another person or entity in doing so.

d.Diverting work, business or opportunities that should be offered to CNB to another person, business or entity.

e.Using Confidential Information or CNB property for personal use or competitive gain or advantage of self or another.

f.Diverting work time or resources that should be dedicated to CNB and its business to other activities.

g.Engaging in any activity or acting with om1ss1on in a way that violates or reasonably appears to violate CNB's Code of Conduct.

The Bank recognizes that Executive may take part in legitimate financial, business, charitable and other activities, but he/she must promptly disclose any potential conflict of interest to the CNB Financial Corporation Board before engaging in such activities.

16.WORK PRODUCTION.

a.OWNERSHIP. All works, ideas, designs, branding, programs, code of any kind (including translations), ideas and concepts, software (including any derivative or modified versions), discoveries, inventions, products or other information or works, whether copyrightable, patentable, trade secret or not, (collectively, Work Product) developed in whole or in part by Executive during his/her employment by the Bank and related in any way to the business or contemplated business, products, activities, research, or development of the Bank or resulting from any work performed by Executive for the Bank (in each case, regardless of when or where prepared or whose equipment or other resources is used in preparing the same), or under Executive's direction or control, is the sole and exclusive property of CNB.

b.WORK MADE FOR HIRE; ASSIGNMENT. Executive acknowledges that, by reason of being employed by the Bank at the relevant times, to the extent permitted by law, all Work Product consisting of copyrightable subject matter is "work made for hire" as defined in 17 U.S.C. § 101 and such copyrights are, therefore, owned by the Bank.
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c.ASSIGNMENT AND WAIVER. Executive hereby agrees to irrevocably assign to the Bank, and hereby irrevocably assigns to the Bank, for no additional consideration, Executive's full right, title, and interest in and to all Work Product and intellectual property rights (whether registered or not) therein. Upon request, Executive agrees to take any action necessary to protect the Bank's right, interests and use of the Work Product, including, without limitation, all intellectual property rights, assignment, or grant of Power of Attorney or license or sub-licenses. Further, Executive waives all rights and any claims or causes of action of any kind against the Bank concerning Work Product rights.

17.ARBITRATION.

a.Parties agree that any dispute or claim arising out of or relating to this Agreement, breach thereof, or the relationship of the parties or termination thereof, will be settled by binding arbitration held in a private location in Clearfield County, Pennsylvania and in accordance with the applicable state and federal laws of Pennsylvania and the Pennsylvania Uniform Arbitration Act rules and procedures. Notwithstanding the foregoing, Parties may seek immediate injunctive relief in Pennsylvania's state or federal courts should they so choose. All questions or challenges to the arbitrability of this Agreement or any claims hereunder or arising out of the relationship of the parties or termination thereof, will be decided exclusively by the arbitrators.

b.Three arbitrators will oversee the proceedings and will be selected as follows: each party will select one (1) arbitrator and those two (2) arbitrators will mutually select the third arbitrator. Parties are to bear their own costs and attorneys' fees except CNB will bear the costs of the arbitrators, stenographer (if used), and arbitration location.

Notwithstanding the foregoing, in the event a party fails to proceed with arbitration, unsuccessfully challenges any part of this arbitration provision, or fails to comply with the arbitrator's award, the other party is entitled to all costs, including reasonable attorneys' fee, for having to compel arbitration or defend or enforce the award.

c.Arbitrators must limit discovery to those documents, depositions, information requests, subpoenas and other discovery means which are necessary for both parties to fully and fairly vindicate or defend claims brought hereunder. Arbitrators may award any remedy available by the statute(s) at issue. The arbitrators' decision must be a majority decision, but need not be unanimous. The award rendered by the arbitrators may be entered in any court having jurisdiction thereof. The arbitrators will issue a written opinion with, at a minimum, the essential findings and conclusions upon which the decision is based within 5 days of the conclusion of the proceedings.
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18.CLASS ACTION WAIVER. Any action brought by Executive, including without limitation arbitration, will proceed solely on an individual basis without the right for any claim to be adjudicated on a class action basis or on any basis involving claims brought in a purported representative capacity on behalf of others. The adjudicator's authority to resolve and make written awards is limited to claims between Executive and the Bank alone. Claims may not be joined or consolidated unless agreed to in writing by all parties. No arbitration award or decision will have any preclusive effect as to issues or claims in any dispute with anyone who is not a named party to the adjudication. This provision survives the termination of this Agreement.

19.EMPLOYEE'S OBLIGATIONS UNDER THIS AGREEMENT.

a.Indirect Actions. Any provision of this Agreement that prohibits an action or omission on Executive's part applies to Executive directly as an individual, as well as indirectly through any other person or entity including without limitation family members, company, business, enterprise, or any other direct or indirect means.

b.Survivorship. The obligations in the Non-Disclosure, Indemnification, Non­ Disparagement, Work Products, Arbitration, Class Action Waiver, and Miscellaneous provisions survive the termination of this Agreement in perpetuity unless specifically stated otherwise or are rendered unenforceable by law. The obligations in the Non-Competition and Non-Solicitation provisions survive the termination of this Agreement for the time period specified in those provisions and/or the time necessary to enforce such provisions.
c.Tolling/No Defense. Any time period specified in this Agreement, including without limitation, the 24-month Non-Competition and Non-Solicitation provisions, does not include any period of time in which Executive is in violation of this Agreement and/or the time required to enforce this Agreement. Any claim Executive may have against the Bank does not constitute a defense to the Bank's enforcement of the Non-Solicitation, Non-Competition, Confidentiality, Non­ Disclosure, Conflict of Interest, Work Product, Arbitration, Class Action Waiver, and/or Non-Disparagement provisions.

d.Immediate and Irreparable Injury. Executive acknowledges that any violation of the Confidentiality, Non-Disclosure, Non-Solicitation, Non-Competition, Work Product, Conflict of Interest, and/or Non-Disparagement provisions would cause immediate and irreparable injury to CNB such that an adequate remedy at law will not exist. Consequently, in the event of such violation, CNB will be entitled to temporary and/or permanent injunctive relief without proving actual damage or loss, as well as any other relief deemed proper by a Court of law or other adjudicatory forum.
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20.MISCELLANEOUS.

a.Executive acknowledges and agrees that the restrictions and promises outlined herein are material to this Agreement and, in view of the business in which CNB is engaged and the executive functions of Mr. Dixon, are reasonable and necessary to protect the legitimate business interests of the Bank, including, without limitation, the Bank's confidential, trade secret and other proprietary information, good will, assets, business relationships, reputation, and other interests.

b.This Agreement constitutes the entire agreement between Executive and Bank with respect to the matters addressed in this Agreement and supersedes any other agreement, understanding or other communication, oral or written.

c.Modifications of this Agreement are only binding if in writing and signed by both parties. This Agreement cannot be modified in any way by oral statement.

d.This Agreement is entered into in the State of Pennsylvania. Parties agree that Pennsylvania state and/or federal law will govern all provisions of this Agreement, including any disputes hereunder, without regard to Pennsylvania conflicts of laws principles. Parties consent to the jurisdiction of the State or Federal Courts of Pennsylvania, venue in Clearfield County, Pennsylvania (state) or Johnstown, Pennsylvania (federal) for adjudication of any dispute arising hereunder.

e.For the purposes of notification under this Agreement, notice to CNB must be sent to CNB c/o of the President & CEO, 31 South Second St., PO Box 42, Clearfield, PA 16830.

Notice to Executive must be sent to CNB, 31 South Second St., PO Box 42, Clearfield, PA 16830 and his then current home address on file with the Bank.

f.Should either party pursue legal action to enforce any provision of this Agreement, the breaching party will be responsible for all attorney costs, filing fees or any other costs reasonably and actually incurred by the substantially prevailing party in enforcing this Agreement whether in court, by arbitration, mediation or other recourse; and will reimburse the non-breaching party for the same.

Should the parties proceed to arbitration pursuant to the arbitration section, that section's provisions concerning attorneys' fees, costs, etc. supersedes the foregoing paragraph.

g.The Bank reserves the right to assign this Agreement to an affiliated or successor company, or any other company, business or entity. In the event this Agreement is assigned, all terms and conditions hereunder remain in full force and effect. Executive may not assign this Agreement.

h.Except as specifically stated in the Agreement, no failure or delay in exercising any rights hereunder, nor any course of action, will act as a waiver or preclude the
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exercise of such rights, or otherwise affect the enforceability of any part of this Agreement.

i.If any part of this Agreement, including without limitation the Non-Compete, Non­ Solicitation or Arbitration provisions, is deemed to be unenforceable for any reason, the remainder of the Agreement will continue in full force and effect. Unenforceable provisions will be modified to that extent necessary to make them enforceable consistent with the law and the intentions of the parties.
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Parties have read this Agreement, understand their respective rights and obligations, and agree to be bound by it.

EXECUTIVE

By: /s/ Gregory M. Dixon                Date:    September 30, 2020            

Printed name: Gregory M. Dixon    


CNB FINANCIAL CORPORATION

By: /s/ Joseph B. Bower, Jr.                Date:    September 30, 2020            

Printed name: Joseph B. Bower, Jr.            Title:    President & CEO            


CNB BANK

By: /s/ Joseph B. Bower, Jr.                Date:    September 30, 2020            

Printed name: Joseph B. Bower, Jr.            Title:    President & CEO            
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EX-10.23 3 ccne12312024ex1023wilcoxso.htm EX-10.23 Document
Exhibit 10.23

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Executive Employment Agreement

This Executive Employment Agreement (Agreement) is entered into by Angela D. Wilcoxson, an individual (Ms. Wilcoxson or Executive), and CNB Financial Corporation, a Pennsylvania corporation, and CNB Bank, a state banking institution organized under the laws of the Commonwealth of Pennsylvania, and their respective affiliates, subsidiaries, successors, and assigns (collectively CNB or Bank) on the last date set forth in the signature block below (effective date).

Background

Ms. Wilcoxson became Executive Vice President of Commercial Banking of both CNB Financial Corporation and CNB Bank on August 24, 2020. Ms. Wilcoxson will be named Executive Vice President and Chief Commercial Banking Officer effective January 1, 2022. The Bank desires to continue to employ Executive and Executive desires to continue to be employed by the Bank under the terms and conditions of this Agreement. This employment relationship, as well as other covenants described herein, are consideration for this Agreement, the receipt and sufficiency of which are acknowledged by the parties. Parties agree as follows:

1.POSITION AND DUTIES.

a.Ms. Wilcoxson will continue to serve as Executive Vice President of Commercial Banking of CNB Financial Corporation and CNB Bank under the direction and control of the Board of Directors of CNB Financial Corporation (the CNB Financial Corporation Board). Executive has and will continue to have all duties, responsibilities and authority consistent with these positions. Executive agrees to act and perform services in a manner consistent with Bank policies, procedures and mores.

b.Executive agrees to devote the time, resources, effort and attention necessary to fulfill his/her duties to the highest ethical principles, industry standards, and to the reasonable satisfaction of the Bank and the CNB Financial Corporation Board. Executive agrees not to engage in any other employment, including self­ employment, during any term of this Agreement. On behalf of the Bank, Ms. Wilcoxson will engage in charitable and social organizations that are consistent with his/her professional responsibilities and position with the Bank.

c.Executive's performance will be evaluated periodically by the Chief Executive Officer of CNB, Executive Compensation Committee, and the CNB Financial Corporation Board as needed but no less frequently than annually.
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2.COMPENSATION.

a.Base Salary. Executive's initial annual base salary shall be $225,000, minus all applicable deductions, and paid in accordance with the Bank's customary payroll practices. Executive's base salary will be reviewed at least annually by the CNB Financial Corporation Board and adjustments considered but not guaranteed.

b.Incentive Compensation. Executive shall be eligible to receive cash incentive compensation as determined by the Executive Compensation Committee or the CNB Financial Corporation Board. Executive is eligible to receive incentive compensation equal to up to forty percent (40%) of his annual base salary. To earn incentive compensation, Executive must be employed by CNB on December 31 of the year for which such incentive compensation is earned, and such incentive compensation will be paid to the Executive no later than March 15 of the following calendar year.

c.Stock. During employment, at the discretion of the CNB Financial Corporation Board, Executive is eligible to participate in the CNB Financial Corporation 2019 Omnibus Incentive Plan or any successor plan, if any, subject to the terms of that plan or successor plan.

d.Other Compensation. Executive may be entitled to or eligible for bonuses, stock rights, or other compensation as may be decided by the CNB Financial Corporation Board from time-to-time.

e.Benefits. The Bank will offer Executive all benefits, including insurances, paid time off, retirement plans, and similar benefits, made available to other similarly situated executive-level Bank employees upon the same or similar terms and conditions. All benefits hereunder may change from time-to-time at the Bank's discretion, subject to benefit plans and applicable law. Coverage, eligibility, and other terms and conditions of any benefit are governed by the benefit plan documents which control.

f.Director and Officer Insurance. The Bank or its successor will purchase and maintain Director and Officer Liability Insurance for the benefit of Executive in connection with his/her acts and omission as a Bank officer during his/her employment.

3.TERM. This Agreement commences on the effective date and will continue until December 31, 2023 (Initial Term). Thereafter, this Agreement automatically renews for successive 12-month periods (Renewal Term) unless terminated in accordance with the termination provisions set forth below.

4.TERMINATION. This Agreement may terminate prior to the end of the Initial Term or any Renewal Term under the following circumstances:
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a.Executive's death or Disability. For purposes of this Agreement, Disability means Executive is (i) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months; or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of CNB; or (iii) is determined to be totally disabled by the Social Security Administration or the Railroad Retirement Board, if applicable.

b.Termination Due to Change in Control/Good Reason

i.In case of a Change in Control, Executive may terminate his/her employment in the case of one or more of the following events which will be treated as a termination for Good Reason:

1.Material reduction in Executive's authority, duties or responsibilities or assignment of duties inconsistent with the positions of Executive Vice President of Commercial Banking without Executive's consent.

2.Material reduction in Executive's base salary or overall compensation without Executive's consent.

3.Relocation of Executive's principal place of employment outside of a 25-mile radius of his/her then current principal place of employment at the time of the Change in Control without Executive's consent.

ii..    Cure Period.

1.If one or more of the foregoing events occur, Executive must give the CNB Financial Corporation Board written notice of intent to terminate his/her employment under this section within 90 days of the event(s) constituting Good Reason. This notice must describe the conditions constituting good reason and give the Bank 30 days from the date of Executive's written notice to cure such conditions ("cure period"). Executive is required to negotiate in good faith to resolve his/her concerns(s).

2.If the Bank fails to respond to Executive's notice or the parties are unable to reach a mutually agreeable resolution, Executive must terminate his/her employment within 21 days after the end of the cure period. Thereafter, Executive will have waived the right to terminate his/her employment for Good Reason for the reason(s)
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specified in the notice. Termination by Executive thereafter will be a Voluntary Resignation by Executive under 4(c).

iii.For the purposes of this Section, "Change in Control" includes one or more of the following occurrences:

1.Sale of all or substantially all of CNB Bank's stock or CNB Financial Corporation's stock.

2.Sale of all or substantially all of CNB Bank's or CNB Financial Corporation's assets.

3.Acquisition of stock by a third party or group of persons or entities acting in concert sufficient to elect a majority of directors to the Board of Directors of the Bank or to the CNB Financial Corporation Board.

4.Ownership of more than 40% of CNB Financial Corporation stock by a single person or entity or group of persons or entities acting in concert.

iv.Notwithstanding the foregoing, a "Change in Control" does not occur unless the event results in a change in the ownership of the Bank, a change in the effective control of the Bank, or a change in ownership of a substantial portion of the Bank's assets under Section 409A.

c.Non-Renewal by Executive (Voluntary Resignation). Should Executive decide to not renew this Agreement by terminating his employment upon the expiration of this Agreement, he must provide no less than 120 days written notice to the CNB Financial Corporation Board of this intent.

Notwithstanding the foregoing, the Bank reserves the right to end Executive's employment any time after Executive gives notice under this provision. In the event the Bank ends Executive's employment prior to the end of the 120 days' notice, Executive will be entitled to his base salary through the end of the notice period, but for all other purposes such termination will be considered voluntary by Executive.

It will also be deemed a "voluntary termination" by Executive if Executive opts to resign/retire in lieu of termination by the Bank for Cause.

d.Non-Renewal or Termination by the Bank (Without Cause Termination). This Agreement may be terminated or not renewed by the Bank without Cause, provided that the Bank gives Executive no less than 120 days' written notice of the intent to terminate or not renew.
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e.Termination by the Bank for Cause. The Bank may terminate Executive's employment, without notice, for one or more of the following reasons, which will be treated as termination for Cause:
i.Executive's theft or embezzlement of Bank money, property or other assets; Executive's perpetration of fraud against the Bank; or other acts that impact or compromise the financial security of the Bank.

ii.Executive's participation in any activity which is criminal or knowingly competes with the Bank.
iii.Executive's violation of any material policy or procedure of the Bank or this Agreement.

iv.Executive ceases to qualify for his/her positions and/or the responsibilities of his/her positions due to law, regulation, disqualification or loss of certification or authorization to work in the relevant industry, or for any similar reason.

v.Executive's material and continued failure to perform his/her duties under this Agreement or failure to do so in a competent and/or businesslike manner as reasonably determined by the CNB Financial Corporation Board.

vi.Executive's use of illegal drugs, or abuse of alcohol or prescribed drugs that materially impairs Executive's ability to perform his/her duties hereunder and/or negatively reflects upon the Bank or its reputation.

vii.Any other act or omission by Executive or his/her immediate family that the Bank reasonably believes to adversely and materially compromise the security, stability, operations, or reputation of the Bank.

In case of violations under the foregoing 4(e)(v)-(vii) only, the Bank will give Executive written notice of the violation(s) and actions required to cure such violations. Executive will have 30 days from the date of written notice to cure such violations to the reasonable satisfaction of the CNB Financial Corporation Board. The Bank reserves the right to suspend Executive during an investigation or 30-day cure period. Such suspension is not a termination for the purposes of this Section.

5.EFFECT OF TERMINATION

a.Upon termination for any reason, Executive will receive his/her base salary prorated to his/her last day worked (if death or Disability) or the date of termination of employment.

b.Upon termination for any reason, Executive's stock award will, as applicable, be governed by the CNB Financial Corporation 2019 Omnibus Incentive Plan or successor plan, if any.
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c.Upon a termination by Executive for Good Reason (in the event of a Change in Control) or by the Bank Without Cause, in addition to the compensation provided in 5(a)-(b), Executive will also be entitled to the following:

i.Severance Compensation. Executive will be entitled to compensation equal to 2.0 times his then current base salary plus 2.0 times the average of Executive's incentive pay bonuses for the three (3) years preceding the year of termination. This compensation will be paid as a one-time lump sum payment, minus all applicable deductions, within 30 days after the conditions in 5(d)(i) are fully satisfied.

ii.Stock Award. The treatment of Executive's stock award will, as applicable, be governed by the CNB Financial Corporation 2019 Omnibus Incentive Plan or successor plan, if any.

d.The Bank's obligation to make payment(s) under foregoing Section (5)(c)(i) is conditioned upon:

i.Severance Agreement

a.Executive executing and delivering to the Bank (and the expiration of any revocation or rescindment period) a severance agreement, including without limitation a waiver and release by Executive of all eligible rights and claims against the Bank, its officers, directors, owners, employees, and others; as well as confidentiality, non­ solicitation, and non-disparagement clauses (the Severance Agreement).

b.Bank will present the Severance Agreement to Executive no later than 15 days after the date of Executive's termination.

c.Executive must execute the severance agreement, if at all, no later than 21 days after receipt (or 45 days in case of a reduction in force).

d.Payment under Section 5(c)(i) will be made no later than 30 days from the date the Severance Agreement becomes fully effective and non-revocable.

ii.Executive's strict compliance with all post-termination obligations including without limitation the Non-Competition, Non-Solicitation, Confidentiality, and Non-Disclosure provisions.
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6.TAX AND REGULATORY CONSIDERATIONS

a.280G Considerations

i.Anything in this Agreement to the contrary notwithstanding, in the event that the amount of any compensation, payment or distribution by CNB to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, calculated in a manner consistent with Section 2800 of the Internal Revenue Code of 1986, as amended (the Code) and the applicable regulations thereunder (the Aggregate Payments), would be subject to the excise tax imposed by Section 4999 of the Code, then the Aggregate Payments shall be reduced (but not below zero) so that the sum of all of the Aggregate Payments shall be $1.00 less than the amount at which Executive becomes subject to the excise tax imposed by Section 4999 of the Code; provided that such reduction shall only occur if it would result in Executive receiving a higher After Tax Amount (as defined below) than Executive would receive if the Aggregate Payments were not subject to such reduction. In such event, the Aggregate Payments shall be reduced in the following order, in each case, in reverse chronological order beginning with the Aggregate Payments that are to be paid the furthest in time from consummation of the transaction that is subject to Section 2800 of the Code: (1) cash payments not subject to Section 409A of the Code; (2) cash payments subject to Section 409A of the Code; (3) equity-based payments and acceleration; and (4) non-cash forms of benefits; provided that in the case of all the foregoing Aggregate Payments all amounts or payments that are not subject to calculation under Treas. Reg. §1.2800-1, Q&A-24(b) or (c) shall be reduced before any amounts that are subject to calculation under Treas. Reg.§1.2800-1, Q&A-24(b) or (c).

ii.For purposes of this Section 6(a), the After Tax Amount means the amount of the Aggregate Payments less all federal, state, and local income, excise and employment taxes imposed on Executive as a result of Executive's receipt of the Aggregate Payments. For purposes of determining the After Tax Amount, Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation applicable to individuals for the calendar year in which the determination is to be made, and state and local income taxes at the highest marginal rates of individual taxation in each applicable state and locality, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.

iii.The determination as to whether a reduction in the Aggregate Payments shall be made pursuant to 6(a)(i) shall be made by a nationally recognized accounting firm selected by the Company (the Accounting Firm), which shall provide detailed supporting calculations both to CNB and Executive within 15 business days of the date of termination, if applicable, or at such earlier time as is reasonably requested
7

by CNB or Executive. Any determination by the Accounting Firm shall be binding upon CNB and Executive.

b.Section 409A

i.General Compliance. This Agreement is intended to comply with Section 409A of the Code (Section 409A) or an exemption thereunder and should be construed and administered in accordance with that intent. Notwithstanding any other provision of this Agreement, payments provided under this Agreement may only be made upon an event and in a manner that complies with Section 409A or an applicable exemption. For purposes of Section 409A, each installment provided under this Agreement, if any, is to be treated as a separate payment.

Parties agree that the payment(s) hereunder is intended to be excepted from Section 409A as separation pay due to an involuntary separation from service or a short-term deferral pursuant to Treasury Regulation Section l.409A-l(b)(4) and are to be excluded from Section 409A to the maximum extent possible.

Notwithstanding the foregoing, the Bank makes no representations that the payments and benefits provided under this Agreement comply with or are exempt from Section 409A, and in no event is the Bank liable for all or any portion of any taxes, penalties, interest, or other expenses that may be incurred by Executive on account of non-compliance with Section 409A.

ii.Specified Employees. Notwithstanding any other provision of this Agreement, if any payment or benefit provided to Executive in connection with his termination of employment is determined to constitute "nonqualified deferred compensation" within the meaning of Section 409A and Executive is determined to be a "specified employee" as defined in Section 409A(a)(2)(b)(i), then such payment or benefit will not be paid until the first payroll date to occur following the six-month anniversary of the termination date or, if earlier, on Executive's death (the Specified Employee Payment Date). The aggregate of any payments that would otherwise have been paid before the Specified Employee Payment Date is to be paid to Executive in a lump sum on the Specified Employee Payment Date. Thereafter, any remaining payments must be paid without delay in accordance with the original schedule.

c.Federal Deposit Insurance Act (FDIA). All payments under this Agreement or otherwise to Executive are subject to and conditioned upon their compliance with Section 18(k) of the FDIA and any related regulations.
8

7.COOPERATION. After the termination of this Agreement and/or Executive's employment for any reason, to the extent reasonably requested by the Bank, Executive agrees to cooperate with the Bank in connection with matters arising out of Executive's service to the Bank. The Bank will make reasonable efforts to minimize disruption to Executive and will reimburse him/her for reasonable expenses incurred in connection with such cooperation. To the extent Executive is required to spend substantial time on such matters, the Bank agrees to compensate Executive at a reasonable hourly rate agreed upon by the parties.

8.INDEMNIFICATION. In the event Executive is made a party or threatened to be made a party to any action, charge, suit or other proceeding whether civil, criminal, administrative, investigative, or alternative dispute resolution (Proceeding) by reason of his/her employment by, position with, or acting at the direction of the Bank, the Bank agrees to indemnify and hold harmless Executive to the fullest extent allowed by law from and against all liabilities, costs, claims, and expenses, including attorneys' fees. If it is adjudicated that Executive acted fraudulently, with gross negligence, or with willful or negligent intent to harm the Bank, Executive must reimburse the Bank for all monies paid under this provision. This provision does not apply to any Proceeding initiated by either party in connection with this Agreement.

9.CONFIDENTIAL INFORMATION. Executive understands and acknowledges that during his/her employment, particularly in light of his/her executive and operational control, he/she will create, receive or have access to Bank information and information of customers which is collectively or independently confidential, trade secret, or of proprietary value (Confidential Information) Executive further understands and agrees that this Confidential Information is an asset to the Bank and/or the respective holder of such information, provides a competitive advantage, and in some cases is protected from disclosure by law.

Executive acknowledges that CNB makes great effort to protect the confidentiality of Confidential Information and prevent it from disclosure to persons or entities outside of the Bank's business or to the public in general. Executive further acknowledges that the disclosure or dissemination of such information for non-Bank purposes would cause great harm to all parties, and in some cases, violate the law. Executive, therefore, agrees to use all reasonable measures necessary to avoid any disclosure, including accidental disclosure, of Confidential Information and to protect it from public exposure. This includes, without limitation, securing paper or electronic information, work devices such as laptops and mobile devices, and verbal and electronic communications against unauthorized access or disclosure.

Executive's promise to maintain the confidentiality of Confidential Information is material to this Agreement and vital to employment. Executive understands that any material breach of his/her confidentiality obligations will result in termination of employment for Cause; and if any legal or other action is necessitated by the breach, Executive will be responsible for all costs, including attorneys' fees, of such action.
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The following list includes some, but not all, of the Confidential Information Executive may create, receive or have access to during employment:

•Information about CNB's Directors, Advisory Boards and their members, and CNB employees.

•Customer and prospective customer lists, identities, contact information and contact names, or compilation of the same and the terms and conditions of customer relationships.

•Information that is exchanged with a customer, prospective customer, or business affiliate for the purpose of securing or expanding business.

•Code, user interface or other intellectual property associated with the Bank's software, including individual lines of code as well as code compilations, and any unique, derivative or modified versions of software or code.

•The Bank's intellectual property and any information related to the Bank's intellectual property whether patented, patentable, copyrighted or otherwise protected by intellectual property laws.

•Bank financial information including, without limitation, budgets, profit/loss sheets, asset valuation, financial forecasts, bookkeeping, liabilities, debts, credits, accounts payable/receivable.

•Strategic plans, Bank policies or procedures, expansion plans or projections.

•Business practices, processes, or methods which are unique to the Bank and give it a competitive advantage.

•Sales information, pricing, margin or related information

•Marketing strategies; sales methods; target markets, industries or customers.

•Research, development and technological strategies and advancements.

•Ideas, strategies, recommendation or insights developed as a result of the Bank and Executive's relationship.

•Identity of the Bank's vendors, suppliers, or consultants or the terms and conditions of these relationships.

•Any other information that qualifies as a trade secret under law.

Confidential Information does not include information which is generally known to the public through no wrongful act or omission of any party.
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10.NON-DISCLOSURE.

a.Executive agrees not to, in any way, disclose, transmit, gather or otherwise use Confidential Information except in the course of Bank business. Non-disclosure applies to all Confidential Information whether written, recalled from memory, electronic or in any other form. This Agreement applies both during Executive's employment with CNB and after the relationship with CNB ends.

b.Executive agrees not to give access to software, databases, computers, paper or electronic files, or Bank facilities or supplies to any person unless it is business­ related and consistent with Executive's position or specifically authorized in writing by the CNB Financial Corporation Board.

c.Nothing in this Agreement shall be interpreted or applied to prohibit Executive from making any good faith report to any governmental agency or other governmental entity (a Government Agency) concerning any act or omission that Executive reasonably believes constitutes a possible violation of federal or state law or making other disclosures that are protected under the anti-retaliation or whistleblower provisions of applicable federal or state law or regulation. In addition, nothing contained in this Agreement limits Executive's ability to communicate with any Government Agency or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including Executive's ability to provide documents or other information, without notice to CNB. In addition, for the avoidance of doubt, pursuant to the federal Defend Trade Secrets Act of 2016, Executive shall not be held criminally or civilly liable under any federal or state trade secret law or under this Agreement for the disclosure of a trade secret that (a) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.

11.RETURN AND NON-TRANSMITTAL OF CONFIDENTIAL INFORMATION/BANK. At the end of Executive's employment, or whenever requested, Executive agrees to promptly return all Confidential Information, in whatever form, in his/her possession or control. Executive further agrees not to copy, retain copies of, delete, remove, transmit or otherwise keep any Confidential Information that is embodied in any form or medium.

Executive agrees to return all Bank property upon the termination of employment or when requested, in the same or similar condition as when received.

12.NON-COMPETITION AGREEMENT. Executive agrees not to engage in any employment, business, or other activities which competes in any way with the work or business plans of the Bank while employed by the Bank and for twenty-four (24) months after Executive's employment ends for any reason. Specifically, without limitation, Executive agrees not to, directly or indirectly,
11

a.Start, make preparations to start, own, operate, or hold any ownership interest in (other than nominal, arms-length ownership) any business or other entity that provides banking financial services including related support services; or

b.In any capacity work for, provide services to (including gratuitous services) or consult with:

i.any individual, company, business, or other entity which provides the same or similar services as those offered by the Bank at the time of Executive's departure; and/or

ii.any consulting firm or other entity that provides advice, services or other assistance to CNB's competitors.

During employment, Executive's non-competition restrictions are not limited and apply to all competitive activities. During the 24-month post-termination period, these non­ competition restrictions apply in any state of the United States in which the Bank does business, or has definitive plans to start business in, at the time of Executive's departure. (At the time of the execution of this Agreement, those states are New York, Ohio and Pennsylvania.)

13.NON-SOLICITATION AGREEMENT. While employed by the Bank and for 24 months after Executive's employment ends for any reason, Executive agrees not to do, or attempt to do, any of the following:

a.provide to any CNB customer services that are the same or similar to the services Executive provided while employed by the Bank, even if the customer initiates the relationship or communication;

b.solicit or in any way divert any business, customer, or prospective customer away from the Bank;

c.recruit, solicit or encourage the Bank's workforce to leave employment or discontinue a relationship with CNB; or

d.interfere with, divert, or solicit away from the Bank any person, business, supplier, contractor, or other person or entity with whom CNB has a relationship.

14.NON-DISPARAGEMENT AGREEMENT. During Executive's employment and thereafter, Executive agrees not to disparage, defame, libel, slander, malign or otherwise cause harm to the Bank, its reputation or good will, or any of the Bank's employees, management, directors, advisory board members, officers, owners or the family members or businesses of the foregoing, in any forum or form including verbal, written, electronic or online.

15.CONFLICT OF INTEREST. Executive must be free of conflicts of interest that could adversely influence Executive's judgment, objectivity or commitment to CNB in conducting Bank business and providing services. Examples of conflicts of interest include, without limitation:
12

a.Having outside employment, affiliations or investments that affects Executive's ability to satisfactorily, neutrally, and efficiently perform his work for the Bank.

b.Leveraging CNB's business or customer relationships for Executive's own personal gain or the gain or benefit of a person or business outside of CNB, even a non-competing business.

c.Providing the same or similar services offered by CNB to customers or others outside of the Bank, or assisting another person or entity in doing so.

d.Diverting work, business or opportunities that should be offered to CNB to another person, business or entity.

e.Using Confidential Information or CNB property for personal use or competitive gain or advantage of self or another.

f.Diverting work time or resources that should be dedicated to CNB and its business to other activities.

g.Engaging in any activity or acting with om1ss1on in a way that violates or reasonably appears to violate CNB's Code of Conduct.

The Bank recognizes that Executive may take part in legitimate financial, business, charitable and other activities, but he/she must promptly disclose any potential conflict of interest to the CNB Financial Corporation Board before engaging in such activities.

16.WORK PRODUCTION.

a.OWNERSHIP. All works, ideas, designs, branding, programs, code of any kind (including translations), ideas and concepts, software (including any derivative or modified versions), discoveries, inventions, products or other information or works, whether copyrightable, patentable, trade secret or not, (collectively, Work Product) developed in whole or in part by Executive during his/her employment by the Bank and related in any way to the business or contemplated business, products, activities, research, or development of the Bank or resulting from any work performed by Executive for the Bank (in each case, regardless of when or where prepared or whose equipment or other resources is used in preparing the same), or under Executive's direction or control, is the sole and exclusive property of CNB.

b.WORK MADE FOR HIRE; ASSIGNMENT. Executive acknowledges that, by reason of being employed by the Bank at the relevant times, to the extent permitted by law, all Work Product consisting of copyrightable subject matter is "work made for hire" as defined in 17 U.S.C. § 101 and such copyrights are, therefore, owned by the Bank.
13

c.ASSIGNMENT AND WAIVER. Executive hereby agrees to irrevocably assign to the Bank, and hereby irrevocably assigns to the Bank, for no additional consideration, Executive's full right, title, and interest in and to all Work Product and intellectual property rights (whether registered or not) therein. Upon request, Executive agrees to take any action necessary to protect the Bank's right, interests and use of the Work Product, including, without limitation, all intellectual property rights, assignment, or grant of Power of Attorney or license or sub-licenses. Further, Executive waives all rights and any claims or causes of action of any kind against the Bank concerning Work Product rights.

17.ARBITRATION.

a.Parties agree that any dispute or claim arising out of or relating to this Agreement, breach thereof, or the relationship of the parties or termination thereof, will be settled by binding arbitration held in a private location in Clearfield County, Pennsylvania and in accordance with the applicable state and federal laws of Pennsylvania and the Pennsylvania Uniform Arbitration Act rules and procedures. Notwithstanding the foregoing, Parties may seek immediate injunctive relief in Pennsylvania's state or federal courts should they so choose. All questions or challenges to the arbitrability of this Agreement or any claims hereunder or arising out of the relationship of the parties or termination thereof, will be decided exclusively by the arbitrators.

b.Three arbitrators will oversee the proceedings and will be selected as follows: each party will select one (1) arbitrator and those two (2) arbitrators will mutually select the third arbitrator. Parties are to bear their own costs and attorneys' fees except CNB will bear the costs of the arbitrators, stenographer (if used), and arbitration location.

Notwithstanding the foregoing, in the event a party fails to proceed with arbitration, unsuccessfully challenges any part of this arbitration provision, or fails to comply with the arbitrator's award, the other party is entitled to all costs, including reasonable attorneys' fee, for having to compel arbitration or defend or enforce the award.

c.Arbitrators must limit discovery to those documents, depositions, information requests, subpoenas and other discovery means which are necessary for both parties to fully and fairly vindicate or defend claims brought hereunder. Arbitrators may award any remedy available by the statute(s) at issue. The arbitrators' decision must be a majority decision, but need not be unanimous. The award rendered by the arbitrators may be entered in any court having jurisdiction thereof. The arbitrators will issue a written opinion with, at a minimum, the essential findings and conclusions upon which the decision is based within 5 days of the conclusion of the proceedings.
14

18.CLASS ACTION WAIVER. Any action brought by Executive, including without limitation arbitration, will proceed solely on an individual basis without the right for any claim to be adjudicated on a class action basis or on any basis involving claims brought in a purported representative capacity on behalf of others. The adjudicator's authority to resolve and make written awards is limited to claims between Executive and the Bank alone. Claims may not be joined or consolidated unless agreed to in writing by all parties. No arbitration award or decision will have any preclusive effect as to issues or claims in any dispute with anyone who is not a named party to the adjudication. This provision survives the termination of this Agreement.

19.EMPLOYEE'S OBLIGATIONS UNDER THIS AGREEMENT.

a.Indirect Actions. Any provision of this Agreement that prohibits an action or omission on Executive's part applies to Executive directly as an individual, as well as indirectly through any other person or entity including without limitation family members, company, business, enterprise, or any other direct or indirect means.

b.Survivorship. The obligations in the Non-Disclosure, Indemnification, Non­ Disparagement, Work Products, Arbitration, Class Action Waiver, and Miscellaneous provisions survive the termination of this Agreement in perpetuity unless specifically stated otherwise or are rendered unenforceable by law. The obligations in the Non-Competition and Non-Solicitation provisions survive the termination of this Agreement for the time period specified in those provisions and/or the time necessary to enforce such provisions.
c.Tolling/No Defense. Any time period specified in this Agreement, including without limitation, the 24-month Non-Competition and Non-Solicitation provisions, does not include any period of time in which Executive is in violation of this Agreement and/or the time required to enforce this Agreement. Any claim Executive may have against the Bank does not constitute a defense to the Bank's enforcement of the Non-Solicitation, Non-Competition, Confidentiality, Non­ Disclosure, Conflict of Interest, Work Product, Arbitration, Class Action Waiver, and/or Non-Disparagement provisions.

d.Immediate and Irreparable Injury. Executive acknowledges that any violation of the Confidentiality, Non-Disclosure, Non-Solicitation, Non-Competition, Work Product, Conflict of Interest, and/or Non-Disparagement provisions would cause immediate and irreparable injury to CNB such that an adequate remedy at law will not exist. Consequently, in the event of such violation, CNB will be entitled to temporary and/or permanent injunctive relief without proving actual damage or loss, as well as any other relief deemed proper by a Court of law or other adjudicatory forum.
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20.MISCELLANEOUS.

a.Executive acknowledges and agrees that the restrictions and promises outlined herein are material to this Agreement and, in view of the business in which CNB is engaged and the executive functions of Ms. Wilcoxson, are reasonable and necessary to protect the legitimate business interests of the Bank, including, without limitation, the Bank's confidential, trade secret and other proprietary information, good will, assets, business relationships, reputation, and other interests.

b.This Agreement constitutes the entire agreement between Executive and Bank with respect to the matters addressed in this Agreement and supersedes any other agreement, understanding or other communication, oral or written.

c.Modifications of this Agreement are only binding if in writing and signed by both parties. This Agreement cannot be modified in any way by oral statement.

d.This Agreement is entered into in the State of Pennsylvania. Parties agree that Pennsylvania state and/or federal law will govern all provisions of this Agreement, including any disputes hereunder, without regard to Pennsylvania conflicts of laws principles. Parties consent to the jurisdiction of the State or Federal Courts of Pennsylvania, venue in Clearfield County, Pennsylvania (state) or Johnstown, Pennsylvania (federal) for adjudication of any dispute arising hereunder.

e.For the purposes of notification under this Agreement, notice to CNB must be sent to CNB c/o of the President & CEO, 31 South Second St., PO Box 42, Clearfield, PA 16830.

Notice to Executive must be sent to CNB, 31 South Second St., PO Box 42, Clearfield, PA 16830 and his then current home address on file with the Bank.

f.Should either party pursue legal action to enforce any provision of this Agreement, the breaching party will be responsible for all attorney costs, filing fees or any other costs reasonably and actually incurred by the substantially prevailing party in enforcing this Agreement whether in court, by arbitration, mediation or other recourse; and will reimburse the non-breaching party for the same.

Should the parties proceed to arbitration pursuant to the arbitration section, that section's provisions concerning attorneys' fees, costs, etc. supersedes the foregoing paragraph.

g.The Bank reserves the right to assign this Agreement to an affiliated or successor company, or any other company, business or entity. In the event this Agreement is assigned, all terms and conditions hereunder remain in full force and effect. Executive may not assign this Agreement.

h.Except as specifically stated in the Agreement, no failure or delay in exercising any rights hereunder, nor any course of action, will act as a waiver or preclude the
16

exercise of such rights, or otherwise affect the enforceability of any part of this Agreement.

i.If any part of this Agreement, including without limitation the Non-Compete, Non­ Solicitation or Arbitration provisions, is deemed to be unenforceable for any reason, the remainder of the Agreement will continue in full force and effect. Unenforceable provisions will be modified to that extent necessary to make them enforceable consistent with the law and the intentions of the parties.
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Parties have read this Agreement, understand their respective rights and obligations, and agree to be bound by it.

EXECUTIVE

By: /s/ Angela D. Wilcoxson                Date:    May 18, 2021                

Printed name: Angela D. Wilcoxson    


CNB FINANCIAL CORPORATION

By: /s/ Joseph B. Bower, Jr.                Date:    May 18, 2021                

Printed name: Joseph B. Bower, Jr.            Title:    President & CEO            


CNB BANK

By: /s/ Joseph B. Bower, Jr.                Date:    May 18, 2021                

Printed name: Joseph B. Bower, Jr.            Title:    President & CEO            
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EX-10.24 4 ccne12312024ex1024dixondcp.htm EX-10.24 Document


Exhibit 10.24


















CNB FINANCIAL CORPORATION


DEFINED CONTRIBUTION PLAN


FOR GREG DIXON





























Effective January 2, 2022


TABLE OF CONTENTS
PAGE ARTICLE I—PURPOSE    1
ARTICLE II—DEFINITIONS    1
1.1Account    1
1.2Administrative Committee    1
1.3Beneficiary    1
1.4Board or Board of Directors    1
1.5Cause    1
1.6Change in Control    1
1.7Code    2
1.8Disability    2
1.9Distribution Election    2
1.10Effective Date    2
1.11Bank Contribution Account    2
1.12Bank Contribution    2
1.13ERISA    3
1.14Installment Eligible or Installment Eligibility    3
1.15Interest Rate    3
1.16Plan    3
1.17Plan Year    3
1.18Separation from Service    3
1.19Small Benefit    3
1.20Specified Employee    3
ARTICLE III—PARTICIPATION AND ACCOUNTS    4
1.1Participation    4
1.2Bank Contributions    4
ARTICLE IV—VESTING AND FORFEITURE    4
1.1Vesting of Bank Contributions    4
1.2Forfeiture of Bank Contributions    4
ARTICLE V—EARNINGS    4
1.1Earnings on Accounts    4
1.2Statement of Account    5


TABLE OF CONTENTS
PAGE ARTICLE VI—DISTRIBUTIONS FROM THE PLAN    5
1.1Benefit upon Separation from Service after Attainment of Installment Eligibility    5
1.2Benefit upon Separation from Service prior to Attainment of Installment Eligibility    5
1.3Change in Time of Payment    5
1.4Time of Payment    6
1.5Benefit upon Death    6
1.6Benefit upon a Change in Control    6
1.7Benefit upon a Disability    6
1.8Small Benefit    6
1.9Delayed Payments    7
1.10Withholding and Payroll Taxes    7
1.11Payment to Guardian    7
ARTICLE VII—BENEFICIARY DESIGNATION    7
1.1Beneficiary Designation    7
1.2Changing Beneficiary    7
1.3No Beneficiary Designation    8
1.4Effect of Payment    8
ARTICLE VIII—ADMINISTRATION    8
1.1Administration    8
1.2Agents    8
1.3Binding Effect of Decisions    8
ARTICLE IX—CLAIMS PROCEDURE    8
9.1    Claim Procedures    8
ARTICLE X—AMENDMENT AND TERMINATION OF PLAN    10


TABLE OF CONTENTS
PAGE ARTICLE XI—MISCELLANEOUS    10
1.1Unfunded Plan    10
1.2Unsecured General Creditor    10
1.3Trust Fund    11
1.4Nonassignability    11
1.5Not a Contract of Employment    11
1.6Executive Cooperation    11
1.7Governing Law    11
1.8Validity    11
1.9Gender    12
1.10Successors    12
1.11Notices    12
1.12Compliance with Code Section 409A    12
1.13Entire Agreement    12

SCHEDULE A
Payment Form Election

SCHEDULE B
Beneficiary Designation


CNB FINANCIAL CORPORATION DEFINED CONTRIBUTION PLAN FOR GREG DIXON

ARTICLE I—PURPOSE

CNB Financial Corporation, a Pennsylvania banking corporation (the “Bank”) hereby adopts CNB Financial Corporation Defined Contribution Plan for Greg Dixon (the “Plan”) to provide current tax planning opportunities and supplemental funds upon retirement or death for Greg Dixon (“Executive”). The Plan is intended and shall be interpreted to comply with Code Section 409A and those provisions of the Employee Retirement Income Security Act of 1974, as amended, applicable to an unfunded plan maintained primarily to provide deferred compensation benefits for the Executive.

ARTICLE II—DEFINITIONS

1.1Account

“Account” means the interest of the Executive in the Plan as represented by the bookkeeping entries kept by the Bank. An Account may include separate subaccounts, as may be required.

1.2Administrative Committee

“Administrative Committee” shall mean the compensation committee of the Board of Directors pursuant to Article VIII of the Plan.

1.3Beneficiary

“Beneficiary” means the person, persons or entity last designated by the Executive to receive any benefits payable after Executive’s death pursuant to Article VII of the Plan.

1.4Board or Board of Directors

“Board” or “Board of Directors” means the Board of Directors of the Bank.

1.5Cause

“Cause” means deliberate dishonesty of the Executive with respect to the Bank, gross negligence, gross neglect, or the commission of a felony or gross-misdemeanor which results in any material adverse effect on the Bank.

1.6Change in Control

“Change in Control” means a change in control of CNB Financial Corporation, as described in Code Section 409A(a)(2)(A)(v) and the regulations promulgated thereunder except that in determining if there has been a “change in the effective control” of CNB Financial Corporation, as defined in Treasury Regulation Section 1.409A-3(i)(5)(vi), “thirty percent” shall be replaced with “fifty-one percent.”
PAGE 1 - DEFINED CONTRIBUTION PLAN FOR GREG DIXON

1.7Code

“Code” means the Internal Revenue Code of 1986, as amended, and including all guidance and regulations promulgated thereunder.

1.8Disability

“Disability” and “Disabled” mean the Executive is:

(a)Unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months; or

(b)By reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Bank; or

(c)Determined to be totally disabled by the Social Security Administration or the Railroad Retirement Board.

The Administrative Committee will determine whether or not the Executive has incurred a Disability under subsections (a) and (b) above based on such evidence as it deems necessary or appropriate.

1.9Distribution Election

“Distribution Election” is the election the Executive makes as to either form of payment or time of payment, or both, under the provisions of Article VI with respect to his or her Bank Contribution Account. Distribution Elections made pursuant to Article VI shall be irrevocable on January 1, 2022, except as may be provided in Section 6.3.

1.10Effective Date

“Effective Date” means January 2, 2022.

1.11Bank Contribution Account

“Bank Contribution Account” means the Account(s) established to record Bank Contributions and any earnings credited thereto.

1.12Bank Contribution

“Bank Contribution” means the amount the Bank credits to the Executive’s Bank Contribution Account as a nonelective contribution in accordance with Section 3.2 of the Plan. This shall be 10% of Executive’s annual base salary, not including any annual bonuses, group-term life insurance premiums, any noncash benefit provided to the Executive, or any fringe benefit under Code Section 132, whether or not excludible from gross income. This contribution shall be calculated before any payroll reduction for any amounts deferred by the Executive pursuant to the Bank’s tax qualified plans maintained under Code Section 401(a) or a plan maintained under Code Section 125, or under this Plan.
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1.13ERISA

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and including all guidance and regulations promulgated thereunder.

1.14Installment Eligible or Installment Eligibility

“Installment Eligible” or “Installment Eligibility” means the point in time when the Executive has become eligible to receive installment distributions under Section 6.1 because the Executive has attained age sixty-two (62) prior to the Executive’s Separation from Service.

1.15Interest Rate

“Interest Rate” means the earnings rate credited to an Account. The earnings rate credited for a Plan Year shall be a fixed rate of 4%.

1.16Plan

“Plan” means the CNB Financial Corporation Defined Contribution Plan for Greg Dixon as set forth in this document and any Distribution Election, as the same may be amended from time to time.

1.17Plan Year

“Plan Year” means the calendar year.

1.18Separation from Service

“Separation from Service” and “Separated from Service” means the Executive’s termination of employment with the Bank and all affiliated and subsidiary entities that are considered to be part of a controlled group with the Bank pursuant to Code Section 414(b) or (c), except that in applying Code Section 1563 “fifty percent” shall be substituted for “eighty percent.” Whether a termination of employment has occurred is determined based on whether the facts and circumstances indicate that the Bank and the Executive reasonably anticipate that no further services will be performed after a certain date or that the level of bona fide services the Executive will perform after such date (whether as an employee or as an independent contractor) will permanently decrease to no more than twenty percent (20%) of the average level of bona fide services performed (whether as an employee or independent contractor) over the immediately preceding thirty-six (36) months (or the full period of service to the Bank if the Executive has been providing services to the Bank for less than thirty-six (36) months).
Separation from Service shall be determined consistent with and pursuant to Code Section 409A(a)(2)(A)(i).

1.19Small Benefit

“Small Benefit” means a lump-sum payment pursuant to Section 6.8 of the Plan.

1.20Specified Employee

“Specified Employee” means a specified employee as defined in Code Section 409A(a)(2)(B).
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ARTICLE III—PARTICIPATION AND ACCOUNTS

1.1Participation

The Executive shall commence participation in this Plan as of the Effective Date.

1.2Bank Contributions

On the first business day of each year, until Executive has a Separation from Service, a contribution will be allocated to the Executive’s Bank Contribution Account.

ARTICLE IV—VESTING AND FORFEITURE

1.1Vesting of Bank Contributions

(a)Bank Contributions. Executives shall be 0% vested in their Bank Contributions until the later of the date that they attain age fifty-five (55) or five (5) years of service, at which point they shall be 100% vested in all Bank Contributions.

(b)Effect of Separation from Service. The vested percentage in any partially vested Bank Contributions shall not increase after the Executive’s date of Separation from Service.

(c)Full Vesting upon the Occurrence of Certain Events. The Executives shall immediately fully vest in all Bank Contributions upon the occurrence of any of the following events:
(i)The Executive’s death;

(ii)The Executive’s Disability; or

(iii)CNB Financial Corporation undergoes a Change in Control.

1.2Forfeiture of Bank Contributions

Notwithstanding Section 4.1 or anything in this Plan to the contrary, the payment of benefits from the Bank Contributions Account may, at the discretion of the Board, be prohibited or discontinued, and such benefits forfeited if the Executive is involuntarily Separated from Service for Cause or if, within six months following the Executive’s Separation from Service, the Board determines it could have involuntarily Separated from Service the Executive for Cause.

ARTICLE V—EARNINGS

1.1Earnings on Accounts

Each December 31, the Executive’s Bank Contributions Account shall be credited with an amount equal to the Interest Rate for that Plan Year multiplied by the balance in the Bank Contributions Account as of the previous December 31 plus the amount of the Bank Contribution credited to the Executive’s Bank Contribution Account as of January 1 under Section 3.2. If the Bank Contribution was credited on a date other than January 1 for a Plan Year, the Interest Rate credited to this portion of the Executive’s Bank Contribution Account shall be prorated for the number of days it actually was included in the Bank Contribution Account for that Plan Year.
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1.2Statement of Account

From time to time, but not less frequently than annually, the Bank shall provide to the Executive a benefit statement setting forth the balance of the Bank Contribution Account maintained for the Executive.

ARTICLE VI—DISTRIBUTIONS FROM THE PLAN

1.1Benefit upon Separation from Service after Attainment of Installment Eligibility

(a)Form of Payment. Prior to the Effective Date, the Executive shall be required to elect the manner in which the vested amount of the Bank Contribution Account, if any, shall be distributed upon Separation from Service after the Executive becomes Installment Eligible. The Executive may choose either:

(i)Lump sum; or

(ii)Annual installments for a period of ten (10) years. The first installment shall be paid as provided under Section 6.4 or Section 6.7, as appropriate. Each subsequent annual installment shall be redetermined and paid as of the anniversary date of the first installment payment based on the then remaining Account balance and the remaining number of installments.

(b)Default. In the event the Executive does not timely elect the manner in which the Executive’s Bank Contribution Account is to be distributed, such Account shall be distributed in a lump sum.
1.2Benefit upon Separation from Service prior to Attainment of Installment Eligibility Form of Payment. Irrespective of Distribution Election(s) previously made by the
Executive for his Bank Contribution Account, all vested balances in the Executive’s Bank Contribution Account shall be distributed as a result of his Separation from Service, other than retirement, prior to attainment of Installment Eligibility in a lump sum.

1.3Change in Time of Payment

The Executive may subsequently change a Distribution Election provided:

(a)Such election is submitted to the Administrative Committee in writing at least twelve (12) months prior to the date any amount is to be distributed from the Plan;

(b)Such election shall not take effect until twelve (12) months after it is submitted to the Administrative Committee in writing; and

(c)The payment of benefits from the Executive’s Bank Contribution Account to which a subsequent election applies shall not commence until at least five (5) years from the date such payment would otherwise have been made.
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1.4Time of Payment

Upon the Executive’s Separation from Service for any reason other than death or Disability, the Bank shall pay to the Executive a benefit equal to the vested balance in the Executive’s Bank Contribution Account(s) in accordance with this Article VI. A lump sum distribution or the first in a series of installment payments under Section 6.1 shall be made within ninety (90) days of the later of the Executive’s date of Separation from Service or his attainment of age sixty-two (62), subject to Sections
6.8 and 6.9 of the Plan.

1.5Benefit upon Death

(a)Prior to Commencement of Benefits. If the Executive dies prior to the commencement of benefit payments under this Plan, the Bank shall pay to the Beneficiary the Executive’s vested Bank Contribution Account balances in a lump sum within ninety (90) days of the Executive’s date of death.

(b)After the Commencement of Benefits. If the Executive dies following the commencement of benefit payments, the Bank shall pay to the Beneficiary any remaining installment payments that would have been paid to the Executive had the Executive survived. Such payments shall be made at the same time and in the same form as the Executive would have received had he or she survived.

(c)After the Completion of Distributions. If the Executive dies after all Account balances have been completely distributed, no death benefit shall be payable to the Beneficiary.

1.6Benefit upon a Change in Control

(a)Separation from Service After Change in Control. If the Executive has a Separation from Service within one (1) year of an event constituting a Change in Control, their benefit shall be paid as a lump sum within ninety (90) days of the post-Change in Control Separation from Service, regardless of whether they have reached Installment Eligibility.

(b)Post Change in Control Benefit Upon Death. If the Executive dies after an event constituting a Change in Control, the benefit shall be paid as provided in Section 6.5.

1.7Benefit upon a Disability

Form and Timing of Payment. If the Executive is found to be Disabled, the Executive shall be paid as provided under his Distribution Election in either a lump sum or installments. A lump sum distribution or the first in a series of installment payments under Section 6.1 shall be payable immediately or as soon as administratively possible, but in no case shall such payment be delayed longer than ninety
(90) days of the finding that the Executive is Disabled.

1.8Small Benefit

Notwithstanding anything herein to the contrary, but subject to Section 6.9 of the Plan, if, on the date payment is to commence, the Executive’s vested Bank Contributions Account balance (plus the Executive’s vested interest in any other plan or plans required to be aggregated with this Plan under Section 409A) is less than the then current IRS limit on elective deferrals to a 401(k) plan under Code Section 402(g)(1)(B), such Account balance shall be paid to the Executive in a single lump sum within ninety (90) days of the Executive’s date of Separation from Service.
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1.9Delayed Payments

Notwithstanding anything herein to the contrary, if the Executive is a Specified Employee as of his or her date of Separation from Service except due to death, payment of Executive’s Account may not be made or commence before the date that is six (6) months after the date of Separation from Service (or, if earlier, the date of death of the Executive). If the Executive’s Account is scheduled to be paid in annual installments, then the first payment following the six (6) month delay will be valued as of the date the payment will be made, and subsequent payments will be made on the anniversary of the date payment was actually made.

1.10Withholding and Payroll Taxes

The Bank shall withhold from Plan payments any taxes required to be withheld from such payments under federal, state or local law. In addition, any withholding of taxes required with respect to the vesting of Bank Contributions that is required by federal, state, or local law, including but not limited to FICA and Medicare taxes, shall be withheld from the Executive’s compensation. The Executive shall bear the ultimate responsibility for payment of all taxes owed under this Plan.

1.11Payment to Guardian

If a Plan benefit is payable to a minor or a person declared incompetent or to a person incapable of handling the disposition of his property, the Administrative Committee may direct payment to the guardian, conservator, legal representative or person having the care and custody of such minor, incompetent or incapacitated person. The Administrative Committee may require proof of minority, incompetency, incapacity, conservatorship or guardianship as it may deem appropriate prior to distribution. Such distribution shall completely discharge the Bank from all liability with respect to such benefit.

ARTICLE VII—BENEFICIARY DESIGNATION

1.1Beneficiary Designation

The Executive shall have the right, at any time, to designate one (1) or more persons or entities as Beneficiary (both primary as well as secondary) to whom benefits under this Plan shall be paid in the event of Executive’s death prior to complete distribution of the Executive’s vested benefit. Each Beneficiary designation shall be in a written form prescribed by Administrative Committee and shall be effective only when filed with Administrative Committee during the Executive’s lifetime.

1.2Changing Beneficiary

Any Beneficiary designation may be changed by the Executive without the consent of the previously named Beneficiary by the filing of a new Beneficiary designation with the Administrative Committee. The filing of a new designation shall supersede all designations previously filed. If the Executive’s Compensation is community property, any Beneficiary designation shall be valid or effective only as permitted under applicable law.
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1.3No Beneficiary Designation

If the Executive fails to designate a Beneficiary in the manner provided above, if the designation is void, or if the Beneficiary dies before the Executive or before complete distribution of the Executive’s benefits, the Executive’s Beneficiary shall be the person in the first of the following classes in which there is a survivor:

(a)The Executive’s surviving spouse;

(b)The Executive’s children in equal shares, except that if any of the children predecease the Executive with surviving issue, then such issue shall take by right of representation;

(c)The Executive’s estate.

1.4Effect of Payment

Payment to the Beneficiary shall completely discharge Bank’s obligations to the Executive and Beneficiary under this Plan.

ARTICLE VIII—ADMINISTRATION

1.1Administration

The Plan shall be administered by the Administrative Committee, which shall be the person or persons appointed by the Board of Directors or the Chief Executive Officer of the Bank to administer the Plan, and which shall have the authority to make, amend, interpret and enforce all appropriate rules and regulations for the administration of the Plan and decide or resolve, in its sole discretion, any and all questions, including interpretations of the Plan, as may arise in such administration.

1.2Agents

The Administrative Committee may employ agents and delegate to them such administrative duties as it sees fit, and may consult with counsel who may be counsel to the Bank.

1.3Binding Effect of Decisions

The decision or action of the Administrative Committee with respect to any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder shall be final, conclusive and binding upon all persons having any interest in the Plan.

ARTICLE IX—CLAIMS PROCEDURE

1.1Claim Procedures

Any person claiming a benefit (“Claimant”) under the Plan shall present the request in writing to the Administrative Committee.

(a)Initial Claim Review. If the claim is wholly or partially denied, the Administrative Committee will, within ninety (90) days (one hundred eighty (180) days in special
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circumstances) after the receipt of such claim, provide the Claimant with written notice of the denial setting forth in a manner calculated to be understood by the Claimant:

(i)The specific reason or reasons for which the claim was denied;

(ii)Specific reference to pertinent provisions of the Plan, rules, procedures or protocols upon which the Administrative Committee relied to deny the claim;

(iii)A description of any additional material or information that the Claim- ant may file to perfect the claim and an explanation of why this material or information is necessary;

(iv)An explanation of the Plan’s claims review procedure and the time limits applicable to such procedure and a statement of the Claimant’s right to bring a civil action under Section 502(a) of ERISA following an adverse determination upon review.

If special circumstances require an extension of time for processing the claim, the Claimant will be notified within the initial ninety (90) day review period of the special circumstances requiring the extension and the date by which the Administrative Committee expects to render a decision.

In addition, notwithstanding the foregoing, if the claim relates to a disability determination (“Disability Claim”), the decision shall be rendered within forty-five (45) days after receipt of the claim, which may be extended twice by an additional thirty (30) days per extension for matters beyond the control of the Administrative Committee. The claimant will be notified in writing of any such extension(s) before the end of the applicable decision period, as well as the circumstances requiring the extension, the date by which a decision on the claim is expected to be rendered and such other information required by ERISA.

(b)Review of Claim. If a claim for benefits is denied, in whole or in part, the Claimant may request to have the claim reviewed. The Claimant will have sixty (60) days (one hundred and eighty (180) days in the case of a Disability Claim) after receiving notice of the adverse benefit determination in which to request a review. The request must be in writing and delivered to the Administrative Committee. If no such review is requested, the initial decision of the Administrative Committee will be considered final and binding.

The Administrative Committee’s decision on review shall be sent to the Claimant in writing and shall include specific reasons for the decision, written in a manner calculated to be understood by the Claimant, as well as specific references to the pertinent Plan provisions, rules, procedures or protocols upon which the Administrative Committee relied to deny the appeal. The Administrative Committee shall consider all information submitted by the Claimant, regardless of whether the information was part of the original claim. The decision shall also include a statement of the Claimant’s right to bring an action under Section 502(a) of ERISA if the claim is denied on review.

The Administrative Committee’s decision on review shall be made not later than sixty (60) days (forty-five (45) days in the case of a Disability Claim) after its receipt of the request for review, unless special circumstances, such as the need to hold a hearing, require a longer period of time, in which case a decision shall be rendered as soon as possible but not later than one hundred and twenty (120) days after receipt of the Claimant’s request for review ninety (90) days in the case of a Disability Claim). If the Administrative Committee generates any new evidence during the process of reviewing a Disability Claim, the Claimant shall be provided with such new evidence in sufficient time to respond to the new evidence within the review period. If special circumstances
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require an extension of time for processing, the Claimant will be notified within the initial sixty
(60) day period of the special circumstances requiring the extension and the date by which the Administrative Committee expects to render a decision.

The decision on review shall be in writing and shall include specific reasons for the decision written in a manner calculated to be understood by the claimant with specific reference to the provisions of the Plan on which the decision is based and other information required by ERISA, as well as an explanation of the Claimant’s right to submit the claim for binding arbitration in the event of an adverse determination on review (or legal action in the case of a Disability claim).

(c)Exhaustion of Plan’s Claims and Review Procedures Required; Limitations on Legal Actions. The Plan’s claims and appeal procedures described above must be exhausted with respect to any claim of any kind relating to the Plan. If any legal action is permitted to be filed with respect to a Disability Claim under the Plan, such action must be brought by the Claimant no later than one (1) year after the Administrative Committee’s denial of the claim on review, regardless of any state or federal statutes establishing provisions relating to limitations on actions.

ARTICLE X—AMENDMENT AND TERMINATION OF PLAN

The Board may, in its sole discretion and at any time, amend or terminate the Plan by a written instrument subject to the following:

(a)No amendment or termination shall adversely affect the rights or benefits of the Executive under the Plan without the Executive’s prior written consent; and

(b)Any amendment to, or termination of, the Plan, including any change in the timing or form of payment of benefits, including the total liquidation of the Plan, shall comply with Code Section 409A.

ARTICLE XI—MISCELLANEOUS

1.1Unfunded Plan

This Plan is an unfunded plan maintained primarily to provide deferred compensation benefits for a select group of “management or highly compensated employees” within the meaning of Sections 201, 301, and 401 of ERISA, and therefore is exempt from the provisions of Parts 2, 3 and 4 of Title I of ERISA. The Board may terminate the Plan and make no further benefit payments if it is determined by the United States Department of Labor, a court of competent jurisdiction, or an opinion of counsel that the Plan constitutes an employee pension benefit plan within the meaning of Section 3(2) of ERISA which is not so exempt.

1.2Unsecured General Creditor

The Executive and his Beneficiaries, heirs, successors, and assigns shall have no secured legal or equitable rights, interest or claims in any property or assets of the Bank, nor shall they be beneficiaries of, or have any rights, claims or interests in, any life insurance policies, annuity contracts or the proceeds therefrom owned or which may be acquired by the Bank. Such policies, annuity contracts or other assets of the Bank shall not be held in any trust for the benefit of the Executive, his Beneficiaries, heirs, successors or assigns, or held in any way as collateral security for the fulfilling of the obligations of any
PAGE 10 - DEFINED CONTRIBUTION PLAN FOR GREG DIXON

Bank under this Plan. Any and all of the Bank’s assets and policies shall be, and remain, the general, unpledged, unrestricted assets of the Bank. The Bank’s obligation under the Plan shall be an unfunded and unsecured promise to pay money in the future.

1.3Trust Fund

In its discretion, the Bank may establish one (1) or more trusts, with such trustees as the Bank may approve, for the purpose of providing for the payment of benefits owed under this Plan. Although such a trust shall be irrevocable, its assets shall be held for payment to the Bank’s general creditors in the event of insolvency or bankruptcy. To the extent any benefits provided under this Plan with respect to the Executive are paid from any such trust, that Bank shall have no further obligation to pay them. If not paid from the trust, such benefits shall remain the obligation solely of the Bank.

1.4Nonassignability

The Executive shall not have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are, expressly declared to be unassignable and nontransferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by the Executive, nor shall they be transferable by operation of law in the event of the Executive’s bankruptcy or insolvency.

Notwithstanding the above paragraph, the Bank may accelerate the time for paying benefits to someone other than the Executive to the extent necessary to fulfill a domestic relations order (as defined in Code Section 414(p)(1)(B)).

1.5Not a Contract of Employment

This Plan shall not constitute a contract of employment between the Bank and the Executive. Nothing in this Plan shall give the Executive the right to be retained in the service of the Bank or to interfere with the right of the Bank to discipline or discharge the Executive at any time.

1.6Executive Cooperation

The Executive shall cooperate with the Bank by furnishing any and all information requested by the Bank in order to facilitate the payment of benefits hereunder, and by taking such physical examinations as the Bank may deem necessary and taking such other action as may be requested by the Bank.

1.7Governing Law

The provisions of this Plan shall be construed and interpreted according to the laws of Pennsylvania except as preempted by federal law.

1.8Validity

If any provision of this Plan is held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal and invalid provision had never been inserted herein.
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1.9Gender

The masculine gender shall include the feminine and the singular shall include the plural, except where the context expressly dictates otherwise.

1.10Successors

This Agreement shall bind the Executive, the Bank, and their heirs, successors, personal representatives and assigns. The Bank expressly agrees that it shall not merge or consolidate into or with another bank or sell substantially all of its assets to another bank, firm or person until such bank, firm or person expressly agrees, in writing, to assume and discharge the duties and obligations of the Bank under this Agreement.

1.11Notices

All notices shall be in writing, and shall be sufficiently given if delivered to the Bank at its principal place of business, or to the Executive at his last known address as shown in the Bank’s records, in person, by Federal Express or similar receipted delivery, or, if mailed, postage prepaid, by certified mail, return receipt requested. The date of such mailing shall be deemed the date of notice, demand or consent.

1.12Compliance with Code Section 409A

All provisions in this document shall be interpreted, to the extent possible, to be compliant with Code Section 409A. However, in the event any provision of this Plan is determined to not be in compliance with Code Section 409A and any regulations or other guidance promulgated thereunder, such provision shall be null and void to the extent of such noncompliance.

1.13Entire Agreement

This Plan constitutes the entire understanding and agreement with respect to the subject matter contained herein. There are no agreements, understandings, restrictions, representations or warranties between the Executive and the Bank pertaining to the subject matter hereof, other than those as set forth or provided for herein.

CNB Financial Corporation


By:
Dated:
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EX-19 5 ccne12312024ex19.htm EX-19 Document

Exhibit 19
CNB FINANCIAL CORPORATION
Insider Trading and Reporting Compliance Policy

 
COMPLIANCE WITH LAW

It is the policy of CNB Financial Corporation (the “Company”) and all of its subsidiaries to comply fully and to assist its directors, officers and employees, including the directors, officers and employees of its subsidiaries, in complying fully with securities laws applicable to transactions in the Company’s securities. In this regard, the Company depends upon the conduct and diligence of its directors, officers and other employees, in both their professional and personal capacities, to ensure full compliance with this policy. Each such person has a personal obligation and responsibility to act in a manner consistent with the following policy regarding compliance with the insider trading provisions of the federal securities laws.

NO TRADING WHILE IN POSSESSION OF INSIDE INFORMATION

It is the Company’s policy that no director, officer or other employee of the Company or any of its subsidiaries may buy or sell any security issued by the Company, or any option or similar right to buy or sell such a security, while in possession of material nonpublic information regarding the Company or any of its subsidiaries.

CONFIDENTIALITY

In addition, every director, officer and other employee of the Company or any of its subsidiaries shall maintain the confidentiality of material nonpublic information regarding the Company that he or she may possess and shall not give advice or make recommendations regarding investments in the Company. No director, officer or other employee of the Company or any of its subsidiaries shall permit persons under his or her supervision to act inconsistently with this policy.

NO TRADING OR TIPPING

Further, it is the policy of the Company that no director, officer or employee, nor any affiliate of any such person, may, while in possession of material nonpublic information about another company which such person received in the course of performing his or her duties on behalf of the Company or any of its subsidiaries, trade in the securities of such other company or disclose such information to any other person.

Further information regarding the insider trading and related policies of the Company is set forth in the memoranda attached as Appendix A. Every director, executive officer and employee of the Company will be provided with a copy of the memorandum attached at Appendix A.

This Insider Trading Policy continues to apply to directors, officers and employees of the Company following the termination of any such individual’s service to or employment with the Company until any material nonpublic information possessed by such individual has become public or is no longer material, whichever is earlier.

APPENDIX A

MEMORANDUM

May 14, 2024

TO:    All Directors, Executive Officers and Employees of CNB Financial Corporation
FROM:     Senior Executive Vice President/Chief Financial Officer
RE:     Policy on Insider Trading and Reporting Compliance

This memorandum is intended to advise you of the policies adopted by CNB Financial Corporation (the “Company”) to help ensure compliance by the Company’s directors, executive officers and employees of the Company and its subsidiaries with their obligations under the federal securities laws.



INSIDE INFORMATION

Information generally is considered “material” if its disclosure to the public would be reasonably likely to affect investors’ decisions to buy, sell or hold the securities of the Company. Any information that could reasonably be expected to affect the price of the security is material. Both positive and negative information can be material. Some examples of material information include the following: (1) a significant merger or acquisition involving the Company; (2) the Company’s financial results; (3) a change in control or a significant change in management of the Company; (4) the public or private sale of a significant amount of additional securities of the Company; (5) the establishment of a program to repurchase securities of the Company; (6) actual or threatened major litigation or governmental investigations or major developments in such matters; (7) major new products or discoveries or the acquisition or loss of major contracts, orders, suppliers, customers or finance sources; and (8) bankruptcies, receiverships or other severe liquidity problems. Obviously, what is material information cannot be enumerated with precision, because there are many gray areas and varying circumstances. When doubt exists, the information involved should be presumed to be material.

During the period that material information relating to the business or affairs of the Company or its subsidiaries is unavailable to the general public, it must be kept in strict confidence. Accordingly, such information should be discussed only with persons who have a “need to know,” and should be confined to as small a group as possible. The utmost care and circumspection must be exercised at all times. Thus, conversations in public places, such as elevators, restaurants and airplanes, should be limited to matters that do not involve information of a sensitive or confidential nature.

To ensure that the Company’s confidential information is protected to the maximum extent possible, no individuals other than specifically authorized personnel may release material information to the public, or respond to inquiries from the media, analysts or others outside the Company.

TRADING AND TIPPING

General

Rule 10b-5 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is designed to protect against fraud in connection with the purchase or sale of the Company’s securities.1 The rule makes it illegal for any “insider” (a term that ordinarily would include directors and officers)2 to misuse material nonpublic information in connection with the purchase or sale of securities of the Company. Misuse of such information (which is more commonly known as “inside information”) can include using it personally for trading purposes without disclosing it to the party on the other side of the transaction or tipping the information to another person who uses it for trading purposes. In most instances, disclosure of the information to the other party would not be permissible because of the insider's obligation to the issuer to maintain the confidentiality of the information. As a result, an insider generally must abstain from trading when in possession of material nonpublic information.

There are two exceptions to the general “disclose or abstain” rule. First, where the party on the other side of the transaction already is aware of the material nonpublic information (as in the case of an exercise of an employee stock option, where the party on the other side is the Company), no violation of Rule 10b-5 would occur, even though the information is not generally known to the investing public. Second, where the transaction is conducted in accordance with all applicable conditions of Rule 10b5-1 under the Exchange Act, no violation would occur.

1 The rule makes it unlawful for any person, in connection with the purchase or sale of any security, (i) to employ any device, scheme or artifice to defraud, (ii) to make any untrue statement of a material fact or to omit to state a material fact necessary to make any statement made not misleading, or (iii) to engage in any act, practice or course of business that operates or would operate as a fraud or deceit upon any person.
2 Any person who has both access to material nonpublic information about the Company (or any entity with which the Company does business) and a duty not to disclose such information may be considered a corporate “insider” for purposes of Rule 10b-5. Examples of such persons are the Company’s directors, officers, employees, major shareholders, attorneys, accountants, investment bankers, public relations advisors and consultants, and spouses and immediate family members of any of the above. In addition, the Company itself is an insider and generally is prohibited from purchasing or selling its own securities to anyone other than an insider if a material development is pending which has not yet been publicly disclosed.


Rule 10b5-1 provides two affirmative defenses to Rule 10b-5 liability that are equivalent to exemptions from the rule. One exemption is provided for transactions by entities (such as the Company). This exemption can apply to repurchases by the Company of its own securities or purchases or sales of the securities of another entity held in the Company’s portfolio. The exemption will be available if (1) the individual making the investment decision for the Company is not aware of material nonpublic information regarding the entity whose securities are involved in the transaction and (2) the Company implements reasonable policies and procedures to ensure that persons making the investment decisions for it do not violate Rule 10b-5 or any other insider trading provision.

The other exemption under Rule 10b5-1 is available to any person (including entities), although it is likely to be utilized more often by individuals rather than entities. To be eligible for this defense, an insider must enter into a Rule 10b5-1 plan for transactions in the Company’s securities that meet certain conditions specified in the rule (each, a “Rule 10b5-1 Plan”). This exemption can be relied upon if:

•Before becoming aware of the information, the person (1) enters into a binding contract to purchase or sell securities, (2) instructs another person to purchase or sell securities for the instructing person’s account or (3) adopts a written plan for trading securities;

•The contract, instruction or plan either (1) specifies the amount of securities to be purchased or sold and the price at which and the date on which the securities are to be purchased or sold, (2) includes a written formula or algorithm, or computer program, for determining the amount of securities to be purchased or sold and the price at which and the date on which the securities are to be purchased or sold or (3) does not permit the person to exercise any subsequent influence over how, when or whether to effect purchases or sales (provided that any other person who does exercise such influence is not aware of material nonpublic information when doing so); and

•The purchase or sale occurs pursuant to the contract, instruction or plan.

The foregoing exemption is conditioned on the insider entering into the trading arrangement in good faith at a time when the insider is not aware of any material nonpublic information and acting in good faith with respect to the operation of the Rule 10b5-1 Plan. It also is contingent on the insider not entering into or altering a corresponding or hedging transaction or position.

A Rule 10b5-1 Plan must comply with and be operated in accordance with the conditions of Rule 10b5-1, including the following:

•Trades under the Rule 10b5-1 Plan may not commence until expiration of the “cooling-off period” set forth in Rule 10b5-1;33

•The Rule 10b5-1 Plan must include representations that (1) the insider is not aware of material nonpublic information about the Company or its securities; and (b) the insider is adopting the Rule 10b5-1 Plan in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b-5; and

•No insider may have more than one Rule 10b5-1 Plan outstanding at any given time, unless otherwise permitted by the limited exceptions of Rule 10b5-1 (such as plans relating to “sell to cover” arrangements intended to satisfy tax withholding obligations upon the vesting of equity awards).

The foregoing exemptions make it possible for insiders to engage in trading programs under which sales or purchases take place on a pre-planned basis, regardless of whether the insider is in possession of material nonpublic information at the time a trade occurs. Further, the exemptions permit an insider to alter or terminate a trading program at any time when the insider is not aware of material nonpublic information.

Any Rule 10b5-1 Plan, or amendment to any existing Rule 10b5-1 Plan, must be submitted to the Senior Executive Vice President/Chief Operating Officer for approval. Insiders must also promptly report to the Senior Executive Vice President/Chief Operating Officer the termination of any Rule 10b5-1 Plan.4
3 For directors and officers, the cooling-off period currently set forth in Rule 10b5-1 is the later of (i) 90 days after execution of the plan or (ii) two business days following the filing of the Form 10-K or Form 10-Q for the reporting period in which the plan was executed. For all other insiders the cooling-off period is 30 days after execution of the plan.
4 You are cautioned, however, that once a trading program is established, alteration or termination of the program should generally be avoided to avoid the perception that the insider is manipulating the plan to benefit from material nonpublic information, undermining the good faith element of the rule.



Company directors and officers must also promptly report to the Senior Executive Vice President/Chief Operating Officer, or in his absence the President & CEO, the adoption, amendment or termination of any trading plan that is not a Rule 10b5-1 Plan, but that was entered at a time when the director or officer asserted they were not aware of material nonpublic information about the Company or its securities and the plan (i) specifies the amount of securities to be purchased or sold and the price at which and the date on which the securities are to be purchased or sold, (ii) includes a written formula or algorithm, or computer program, for determining the amount of securities to be purchased or sold and the price at which and the date on which the securities are to be purchased or sold, or (iii) does not permit the director or officer to exercise any subsequent influence over how, when, or whether to effect purchases or sales.

There are many sound reasons for insiders to engage in trades pursuant to the exemptions. These include (1) greater certainty as to the absence of antifraud liability for the trades, (2) the defusing of potential adverse media reaction to trades whose timing otherwise would be suspicious, (3) greater flexibility for insiders to engage in transactions, as the trades need not occur during trading “windows” specified by the Company, and (4) The undermining of potential lawsuits against the Company that are premised on trades by insiders having been based on material nonpublic information.

Material Nonpublic Information

As noted previously, information generally is considered “material” if its disclosure to the public would be reasonably likely to affect investors’ decisions to buy, sell or hold the securities of the Company. Such information is “nonpublic” until such time that it is released to the investing public generally.

What constitutes material information depends on the particular facts and circumstances and often is difficult to determine. The U.S. Securities and Exchange Commission (the “SEC”) has indicated, however, that the following kinds of information or events are material, unless specific facts and circumstances suggest otherwise: (1) a significant merger or acquisition involving the Company; (2) the Company’s financial information and/or performance; (3) a change in control or a significant change in management of the Company; (4) the public or private sale of a significant amount of additional securities of the Company; (5) the establishment of a program to repurchase securities of the Company; (6) actual or threatened major litigation or governmental investigations or major developments in such matters; (7) major new products or discoveries or the acquisition or loss of major contracts, orders, suppliers, customers or finance sources; and (8) bankruptcies, receiverships or other severe liquidity problems.

Sanctions

Violations of Rule 10b-5 can subject the guilty party both to civil liability to purchasers or sellers of the Company’s securities who do not possess the undisclosed information and to possible criminal action. The SEC also may initiate civil proceedings seeking penalties of as much as three times the amount of profit gained or loss avoided by the trading party and fines of up to $5 million. Moreover, the SEC can seek injunctions or cease-and-desist orders against illicit traders and can seek to bar such persons from serving as directors or executive officers of public companies.

Insiders also should be aware that Section 21A (b) of the Exchange Act provides the SEC with the authority to bring a civil action against any “controlling person” who knew, or recklessly disregarded, the fact that a person under his or her control was likely to engage in an insider trading violation and failed to take appropriate steps to prevent the violation from occurring.5
Internal Policies on Trading in the Company’s Securities

Release of material information to the media does not immediately free corporate insiders to trade in the Company’s securities. Insiders should refrain from trading until the market has had an opportunity to absorb and evaluate the information. As a general rule, therefore, insiders should wait until the second business day after the public release of the information before trading in the Company’s securities.

5 The Company, its directors and executive officers, and some of its managerial personnel could be deemed controlling persons subject to potential liability under Section 21A(b). Accordingly, it is incumbent on directors and executive officers to maintain an awareness of possible insider trading violations by persons under their control and to take measures where appropriate to prevent such violations.


To help ensure that directors, executive officers and employees who trade in Company securities are in compliance with obligations and restrictions imposed by applicable securities laws, and to help avoid the appearance of impropriety, the Company has adopted a policy (1) prohibiting trading in the Company’s securities (other than pursuant to employee benefit plans) by all directors, executive officers and employees of the Company and its subsidiaries, while in possession of material / nonpublic information (2) in the case of directors, executive officers and certain other employees, permitting trading in the Company’s securities only during quarterly “window periods” beginning on the second business day (e.g., the Monday following a Thursday release) following the public release of the Company’s quarterly or annual financial results and (3) requiring, even during the window periods, all directors, executive officers and certain other employees to notify the Company’s Senior Executive Vice President/Chief Financial Officer, or in his absence the President & CEO, and to obtain approval from him or her at least two (2) business days prior to making any purchase or sale of securities of the Company. Even during these window periods and with approval of the Company’s Senior Executive Vice President/Chief Financial Officer, trading would not be appropriate if the insider is aware that the Company expects to make a public release of material nonpublic information in the near future or otherwise has knowledge of material nonpublic information concerning the Company or any of its subsidiaries. The Company’s Treasurer will oversee the Company’s policies in this area.

In light of its responsibilities under the securities laws, the Company has adopted the following policies regarding your trading in the Company securities.

a.Directors, executive officers and employees of the Company and its subsidiaries may not buy or sell securities of the Company while in possession of material nonpublic information regarding the Company or its subsidiaries. Neither you nor any person affiliated with you (including family members and business entities with respect to which you are a director, officer or large shareholder) may buy or sell securities or engage in any other action to take advantage of, or pass on to others, this type of information. This prohibition extends not only to transactions involving Company securities, but also to transactions involving securities of other entities with which the Company has a relationship.

b.Subject to paragraph 4.a. above, directors, executive officers and certain other employees of the Company and its subsidiaries may trade the Company’s securities only during the window period beginning on the second business day (e.g., the Monday following a Thursday release) following the public release of the Company’s quarterly or annual financial results AND only if prior notification of the trade is given to the Company’s Senior Executive Vice President/Chief Financial Officer, or in his absence the President & CEO, at least two (2) business days prior to the initial trade date and approval from him or her is obtained (see Section C below). Trading outside the window period or without providing such prior notification by you or any person affiliated with you (including family members and business entities with respect to which you are a director, officer or large shareholder) and obtaining the required approval is strictly prohibited.

c.Directors, executive officers and employees of the Company and its subsidiaries may not communicate material nonpublic information to other persons prior to its public disclosure and dissemination (unless under circumstances where trading protections exist). In order to avoid “tipping” inside information to others in violation of the law, you should exercise care both when speaking with other Company personnel who do not have a “need to know,” and when communicating with family, friends and other persons not associated with the Company. To avoid even the appearance of impropriety, you should refrain from making recommendations about buying or selling the securities of the Company or other entities with which it has a relationship.

d.Directors and executive officers may not buy or sell securities of the Company if such transaction is subject to the short-swing profits rules of Section 16(b) of the Exchange Act. As discussed below, any profit resulting from a short-swing transaction (e.g., a purchase and sale, or sale and purchase, occurring within six months) must be disgorged to the Company. This liability is imposed regardless of the intent of the individual, and plaintiffs’ firms routinely monitor Section 16 filings for violations of the short-swing profits rules.

e.Directors and executive officers generally may resell Company shares on the open market only pursuant to an effective SEC registration statement or pursuant to Rule 144. Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”), requires compliance with a number of technical and complicated requirements.



Rule 144

The Securities Act requires every person who offers or sells securities to register such securities with the SEC unless an exemption from registration is available. An exemption frequently relied upon by insiders for public sales of their securities is provided by Rule 144 under the Securities Act. The rule is available for public sales by any person of “restricted securities” (e.g., securities acquired in a private offering or certain other types of exempt offerings) and for sales by “affiliates”6 of any securities, whether restricted or unrestricted (“control securities”). Securities held by directors and executive officers of the Company, whether or not acquired in an unregistered transaction, are presumed to be “control securities” for purposes of Rule 144, absent countervailing facts.

Requirements of the Rule

Rule 144 is a “safe harbor” which provides that, if certain conditions are satisfied, persons who sell control securities or restricted securities will not be deemed “underwriters.”7 Rule 144 contains five conditions applicable to sales of securities by an affiliate of the Company, which are described briefly below. The first four conditions must be satisfied for sales of both control securities and restricted securities by an affiliate, while the fifth condition must be satisfied only for sales of restricted securities by an affiliate.8

i.Current Public Information. Current information about the Company must be publicly available at the time of sale. The Company’s periodic reports filed with the SEC ordinarily will satisfy this requirement.

ii.Volume Limitations. The amount of securities that can be sold during any three- month period cannot exceed the greater of (x) one percent of the outstanding securities of the class being sold or (y) the average weekly reported trading volume for securities of the class during the four calendar weeks preceding the filing of the notice of sale referred to below.

iii.Manner of Sale. The securities must be sold in unsolicited brokers’ transactions or directly to a market maker.

iv.Notice of Sale. The seller must file a notice of the proposed sale with the SEC at the time the order to sell is placed with the broker, unless the amount to be sold in any three-month period neither exceeds 5,000 shares nor has an aggregate sale price greater than $50,000.

v.Holding Period. Restricted securities must be held and fully paid for by the seller for a period of six months prior to sale.9

The foregoing conditions do not have to be complied with by holders of restricted securities who have held (and fully paid for) their restricted securities for at least one year, are not affiliates at the time of sale and were not affiliates during the three months preceding the sale. If the securities are held by affiliates and thus also are control securities, they will continue to be subject to all the restrictions on sales of control securities.

6 As defined in Rule 144, an “affiliate” is a person that directly, or indirectly through the use of one or more intermediaries, controls, is controlled by or is under common control with, the Company. Generally, directors, executive officers and shareholders holding more than 10% of the Company’s voting securities are presumed to be affiliates of the Company.
7 Most secondary market sales (e.g., sales by shareholders, as opposed to sales by the issuer) are effected in reliance on the exemption from registration provided by Section 4(1) of the Securities Act, which exempts sales by any person “other than an issuer, underwriter, or dealer.” Persons who are affiliates of the issuer, however, generally are deemed to be “underwriters” of the issuer’s securities, even when selling securities for their own accounts and, therefore, may not rely on the Section 4(1) exemption. Similarly, any person who sells “restricted securities” (e.g., securities issued in a private placement or other nonpublic offering) is generally deemed to be an “underwriter,” whether or not he or she is an affiliate. Accordingly, when an affiliate sells securities, or when any person sells restricted securities, the selling person generally must structure the transaction so as to avoid being deemed an “underwriter.” By avoiding underwriter status, the selling person is able to sell the securities in reliance on the exemption from registration provided by Section 4(1).
8 The two types of securities are not mutually exclusive. As a result, sales of control securities that also are restricted securities must comply with all five conditions.
9 In some cases, such as those involving gifts or bequests, the holding period of another person can be “tacked” to the seller’s holding period for computation purposes. If the Company were to cease to be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the six-month holding period would increase to a one-year holding period.


Gifts

Bona fide gifts of securities are deemed not to involve sales, so they can be made at any time without regard to the requirements of Rule 144. Individuals who receive restricted securities from an affiliate may be subject to the same restrictions under Rule 144 that would have applied to the donor for a period of up to two years following the gift, depending on the circumstances.

Restrictive Legends

Although there is no legal requirement to place restrictive legends on share certificates indicating that the securities are subject to transfer restrictions, an issuer may be held liable for aiding and abetting violations of the registration requirements by its shareholders if it does not take reasonable steps to prevent such violations. As a consequence, it has been recommended that the Company place appropriate legends on certificates relating to restricted securities.

To prevent inadvertent failures to comply with Rule 144, it has also been recommended that the Company issue stop-transfer orders to its transfer agent with respect to its restricted securities. The Company will work closely with its transfer agent to assure that (i) legended shares are transferred promptly when a lawful sale is effected and (ii) legends are removed where appropriate.10

REPORTING AND TRADING COMPLIANCE PROCEDURES

Ownership Reports

Under Section 16(a) of the Exchange Act, insiders must file with the SEC reports disclosing their holdings of and transactions in the Company’s equity securities. An initial report on Form 3 must be filed by every insider within 10 days of his or her becoming an insider, disclosing all equity securities of the Company beneficially owned by the reporting person on the date such person became an insider. Even if no securities were owned on that date, the insider must file a report. Any subsequent change in beneficial ownership by the insider must, unless exempt, be reported on a Form 4 filed within 2 business days after the change occurred. The fact that an insider’s transactions resulted in no net change, or the fact that no securities were owned after the transactions were completed, does not provide a basis for failing to report. Form 5, a “clean up” report due within 45 days after the close of the issuer’s fiscal year, must be filed to disclose transactions and holdings exempt from prior reporting, as well as transactions and holdings that should have been reported previously but were not. It is suggested that insiders file a Form 4 to report voluntarily, on an early basis, exempt transactions otherwise reportable on Form 5, in order to avoid inadvertent violations that might result from forgetting to report on year-end Form 5 transactions that occurred many months earlier.

Reportable Transactions

Absent an exemption, all changes in beneficial ownership (not just purchases and sales) must be reported. Moreover, a person who has ceased to be a director or executive officer must report any transactions after termination which occurred within six months of a transaction that took place while the person was a director or executive officer.
Beneficial Ownership

The reports under Section 16(a) are intended to cover all securities beneficially owned by the insider. An insider is deemed to beneficially own any security from which the insider can derive a direct or indirect pecuniary benefit. An insider is considered the direct owner of all Company equity securities held in the insider’s own name or held jointly with others. An insider is considered the indirect owner of any securities from which such insider obtains benefits substantially equivalent to those of ownership. Thus, equity securities of the Company beneficially owned through partnerships, corporations, trusts, estates and family members may be subject to reporting. Absent countervailing facts, an insider is presumed to be the beneficial owner of securities held by his or her spouse and family members sharing his or her home. An insider is free, however, to disclaim beneficial ownership of these or any other securities being reported if such insider believes that he or she has a reasonable basis for doing so.

10 For example, it would be appropriate for the Company, upon request, to remove any restrictive legend affixed to certificates representing restricted securities held for more than two years by a person who is not, and during the preceding three months was not, an affiliate of the Company. Legends also may be removed when control securities are transferred to non-affiliates in compliance with Rule 144.


Derivative Securities

Section 16(a) requires reporting on all acquisitions and dispositions of options and other derivative securities by insiders. Derivative securities include options, warrants, convertible securities, stock appreciation rights or similar rights.

Disclosure of Delinquent Reports

It is important that insiders prepare their reports under Section 16(a) properly and file them on a timely basis. There is no provision for an extension of the filing deadlines, and the SEC can take enforcement action against insiders who do not comply fully with the filing requirements. In addition, the Company is required to report the number of late filings of reports under Section 16(a) in the Company’s proxy statement for its annual meeting and to identify the insiders who made the late filings. To avoid embarrassing disclosures of this nature, all directors and executive officers should avail themselves of the assistance of the Company or their own counsel in satisfying the reporting requirements.

Senior Executive Vice President/Chief Operating Officer

The Company’s Senior Executive Vice President/Chief Operating Officer, who may seek the assistance of the Enterprise Support Officer (or other Executive Assistant to the President & CEO), will assist all directors and executive officers in the preparation and filing of their Form 3, Form 4 and Form 5 reports. However, the obligation to timely file such reports requires timely notification by the insider of all transactions involving securities of the company. The Senior Executive Vice President/Chief Operating Officer, in conjunction with the Company’s Secretary and / or Treasurer, also has the authority to close the trading window at any time for all directors, executive officers and certain other employees or any subset thereof. If you violate this Insider Trading Policy or any federal or state laws governing insider trading, or know of any such violation by any director, officer or employee of the Company, you must report the violation immediately to the Senior Executive Vice President/Chief Operating Officer. However, if the conduct in question involves the Senior Executive Vice President/Chief Operating Officer, if you have reported such conduct to the Senior Executive Vice President/Chief Operating Officer and do not believe that he or she has dealt with it properly, or if you do not feel that you can discuss the matter with the Senior Executive Vice President/Chief Operating Officer, Secretary, or Treasurer, you may raise the matter with the Company’s outside corporate counsel.

Prior Notification and Approval of Transactions

Prior to engaging in any transaction involving the securities of the Company, directors, executive officers and certain other employees must provide notification of the transaction to the Senior Executive Vice President/Chief Operating Officer at least two (2) business days prior to the intended trade date and obtain approval from him or her with respect to the transaction. The Senior Executive Vice President/Chief Operating Officer will maintain a log of all transactions conducted by the directors, executive officers and certain other employees of the Company and its subsidiaries. This prior notification and approval process will help prevent inadvertent violations of SEC rules, including Rule 10b-5 and Rule 144. In addition, by receiving notice from directors, executive officers and certain other employees before a transaction in the Company’s securities is undertaken, the Senior Executive Vice President/Chief Operating Officer can review any potential “short-swing profit” liability (see section D below) that may result from matchable transactions directors, executive officers and certain other employees may have engaged in within the preceding six months, as well as possible matching transactions within the coming months. The importance of providing prior notification of and obtaining pre-approval for these transactions cannot be overemphasized due to the sanctions that can result from a failure to comply with applicable securities law provisions.

Form 4 Reminders; Electronic Filing

It can be easy to forget about Form 4 filings, which must be made within 2 business days after a change in beneficial ownership. The Company will periodically remind directors, executive officers and certain other employees of the Form 4 filing requirement. SEC rules require electronic filing of Form 3s, Form 4s and Form 5s. If you do not have them already and are subject to reporting requirements under Section 16 of the Exchange Act, you must obtain EDGAR electronic filing codes. The Company will assist you in this process.

SHORT-SWING PROFIT PROVISIONS

Under Section 16(b) of the Exchange Act, any profit realized by an insider on a “short-swing” transaction (e.g., a purchase and sale, or sale and purchase, of the Company’s equity securities within a period of less than six months) must be disgorged to the Company upon demand by the Company or a shareholder acting on the Company’s behalf. By law, the Company cannot waive or release any claim it may have under Section 16(b) or enter into an enforceable agreement to provide indemnification for amounts recovered under Section 16(b).



Operation of Provision

Liability under Section 16(b) is imposed in a mechanical fashion without regard to the insider’s intent. Good faith, therefore, is not a defense. All that is necessary for a successful claim is to show that the insider realized profits on a short-swing transaction. When computing recoverable profits on multiple purchases and sales within a six-month period, the courts maximize the recovery by matching the lowest purchase price with the highest sale price, the next lowest purchase price with the next highest sale price, and so on. The use of this method makes it possible in some instances for the Company to recover profits under Section 16(b) even though the insider sustained a net loss on the transactions.

The terms “purchase” and “sale” are construed to cover a broad range of transactions. For example, the acquisition of a derivative security and the disposition of the underlying security could be matched as a “purchase” and “sale.” Moreover, purchases and sales by an insider may be matched with transactions by any person (such as certain family members) whose securities are deemed to be beneficially owned by the insider.

Limitations on Liability

The SEC has mitigated the effect of Section 16(b) in some situations by providing exemptions from liability. The most important exemption is provided by Rule 16b-3 for transactions by directors and executive officers with the Company that satisfy prescribed conditions. The SEC also has limited the amount of profits recoverable on transactions involving stock options and other derivative securities. Further, the courts have indicated that it is permissible for insiders to structure their transactions to avoid the application of Section 16(b). We therefore urge that, before engaging in any transaction involving the Company’s common stock, insiders consult with the Company’s Senior Executive Vice President/Chief Operating Officer, President & CEO, Treasurer or Controller, to discuss the potential applicability of Section 16(b).

As explained above, insiders will be held liable for any “short-swing profits” resulting from any combination of purchase and sale, or sale and purchase, of the Company’s publicly traded equity securities within a period of less than six months. For this purpose, transactions in common stock and options to purchase common stock are “matchable” with one another. In addition, short sales by insiders are prohibited.

The acquisition of a derivative security is deemed under Rule 16b-6(a) under the Exchange Act to be a purchase or sale, depending on the circumstances, while the exercise or conversion of a derivative security generally is treated under Rule 16b-6(b) as an exempt transaction. (Option grants under the Company’s plans are exempt purchases and, therefore, are not subject to Section 16(b).) Exercises of out-of-the-money options, however, are deemed to be purchases and are, therefore, not exempt. Sales of securities received upon the exercise of derivative securities are deemed to be sales and also are not exempt.
The requirement that directors, executive officers and certain other employees obtain pre-approval from the Company’s Senior Executive Vice President/Chief Operating Officer or the President & CEO for all transactions in the Company’s securities that they intend to conduct is one means by which inadvertent violations of Section 16 may be avoided.

The Company may not be in a position to prevent short-swing profit violations if it does not learn of a transaction until after the fact (hence the importance of obtaining pre-approval for transactions by directors, executive officers and certain other employees from the Senior Executive Vice President/Chief Operating Officer or President & CEO). One person who often is in a position to help prevent short-swing profit violations before they occur is your broker. A knowledgeable broker can serve as a last line of defense against inadvertent violations. Moreover, such a broker could also provide the Company’s Senior Executive Vice President/Chief Operating Officer with the necessary transaction information (trade date, price, number of shares, etc.) for timely preparation of the Section 16(a) reports. We therefore urge directors, executive officers and certain other employees to engage a broker who is knowledgeable and experienced with respect to Section 16 (as well as Rule 144 and the other provisions of the securities laws to which directors, executive officers and certain other employees are subject). Remember, however, that a broker has no legal responsibility for a client’s Section 16 filings or short-swing profit rule violations; the best protection will come following the procedures set forth in this Policy and your own awareness of the applicable requirements and potential pitfalls.

NECESSARY COMPLIANCE DOCUMENTS

Please complete the following documents (if applicable) and send them to the Senior Executive Vice President/Chief Operating Officer as soon as possible.

1.Certificate stating that you have reviewed this Policy and agree to comply with it (Exhibit 1).


2.Power of Attorney, if you have not already executed and returned this document (directors and executive officers only) (Exhibit 2).


EFFECTIVE DATE

This Policy is effective as of May 14, 2024.




EXHIBIT 1: COMPLIANCE CERTIFICATE

The undersigned hereby certifies that he or she has read and understands, and agrees to comply with, the Policy on Insider Trading and Reporting Compliance of CNB Financial Corporation, a copy of which was distributed with this certificate.



Date:
Signature
Name (Please Print)
Title



EXHIBIT 2: POWER OF ATTORNEY

The undersigned hereby constitutes and appoints Ms. Jessica Zupich the undersigned’s true and lawful attorneys-in-fact to:

1.execute for and on behalf of the undersigned Forms 3, 4 and 5 in accordance with Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules thereunder;

2.do and perform any and all acts for and on behalf of the undersigned which may be necessary or desirable to complete the execution of any such Form 3, 4, or 5 and the timely filing of any such form with the United States Securities and Exchange Commission and any other authority; and

3.Take any other action of any type whatsoever in connection with the foregoing which, in the opinion of such attorney-in-fact, may be of benefit to, in the best interest of, or legally required by, the undersigned.

The undersigned hereby grants to each such attorney-in-fact full power and authority to do and perform all and every act and thing whatsoever requisite, necessary and proper to be done in the exercise of any of the rights and powers herein granted, as fully to all intents and purposes as the undersigned might or could do if personally present, with full power of substitution or revocation, hereby ratifying and confirming all that such attorney-in-fact, or such attorney- in-fact’s substitute or substitutes, shall lawfully do or cause to be done by virtue of this power of attorney and the rights and powers herein granted. The undersigned acknowledges that the foregoing attorneys-in-fact, in serving in such capacity at the request of the undersigned, are not assuming any of the undersigned’s responsibilities to comply with Section 16 of the Exchange Act. This Power of Attorney can only be revoked by delivering a signed, original “Revocation of Power of Attorney” to the attorneys-in-fact.

IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be executed as of this day of _____, 20_____.

Name
Title

EX-23.1 6 ccne12312024ex231.htm EX-23.1 Document

Exhibit 23.1


CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333 272781), Form S-3D (No. 333 163047), Form S-8 (No.333 231505), and Form S-4 (No. 333 285096) of CNB Financial Corporation of our reports dated March 6, 2025, with respect to the consolidated financial statements of CNB Financial Corporation and the effectiveness of internal control over financial reporting, included in this Annual Report on Form 10 K for the year ended December 31, 2024.


/s/ Forvis Mazars, LLP
Indianapolis, Indiana
March 6, 2025
EX-31.1 7 ccne12312024ex311.htm EX-31.1 Document

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Michael D. Peduzzi, certify that:

1. I have reviewed this Annual Report on Form 10-K of CNB Financial Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)     All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 6, 2025
/s/ Michael D. Peduzzi
Michael D. Peduzzi
President and Chief Executive Officer
(Principal Executive Officer)


EX-31.2 8 ccne12312024ex312.htm EX-31.2 Document

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Tito L. Lima, certify that:

1. I have reviewed this Annual Report on Form 10-K of CNB Financial Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)     All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 6, 2025
/s/ Tito L. Lima
Tito L. Lima
Senior Executive Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer)

EX-32.1 9 ccne12312024ex321.htm EX-32.1 Document

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Michael D. Peduzzi, President and Chief Executive Officer of CNB Financial Corporation (the “Corporation”), hereby certify, to my knowledge, that the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

  /s/ Michael D. Peduzzi
  Michael D. Peduzzi
Date: March 6, 2025   President and Chief Executive Officer


EX-32.2 10 ccne12312024ex322.htm EX-32.2 Document

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION OF CHIEF FINANCIAL OFFICER

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Tito L. Lima, Senior Executive Vice President, Chief Financial Officer, and Treasurer of CNB Financial Corporation (the “Corporation”), hereby certify, to my knowledge, that the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.


/s/ Tito L. Lima
Tito L. Lima
Dated: March 6, 2025 Senior Executive Vice President, Chief Financial Officer, and Treasurer