CNB FINANCIAL CORP/PA
For the period ended Jun 30, 2025. Filed Aug 7, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 7, 2025
CCNE$35.78-0.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-07.
0000736772-25-000087
ITEM 2. – Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-07.
0000736772-25-000169
ITEM 2. – Managements Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 153 previous paragraphs and 185 current paragraphs.
110 unchanged; 36 reworded; 28 added; 7 removed; 0 previous and 11 current paragraphs rearranged.
Tables are not compared: 29 previous and 34 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (28)
Current report
RECENT EVENTS
Current report
The transaction has extended CNB Bank's branch network into the Northeastern Region including the Lehigh Valley of Pennsylvania. With the addition of ESSA's 20 community offices, CNB Bank now has 78 offices comprised of one loan production office, one drive-up office, one mobile office, and 75 full-service offices across its four-state footprint.
Current report
Pursuant to the Merger Agreement, each outstanding share of ESSA common stock was converted into the right to receive 0.8547 shares of the Corporation's common stock. The total consideration paid to ESSA shareholders was approximately $202.5 million, comprised of approximately 8,357,157 shares of the Corporation's common stock, valued at approximately $202.5 million based on the July 23, 2025 closing price of $24.23 per share of the Corporation's common stock, and $20 thousand in cash (cash in lieu of fractional shares).
Current report
The acquisition of ESSA was completed subsequent to the second quarter of 2025, and as a result ESSA's balance sheet and results of operations are not included in the Corporation's condensed consolidated financial statements for the period ended June 30, 2025. The merger with ESSA will be accounted for as a business combination. The Corporation is currently in the process of completing the purchase accounting and has not made all of the remaining required disclosures, such as the fair value of assets acquired and supplemental pro forma information, which will be disclosed in subsequent filings. As of June 30, 2025, ESSA had approximately $2.2 billion in total assets, $1.8 billion in total loans, and $1.5 billion in total deposits.
Current report
◦There were 113 outstanding loans, totaling $111.1 million, or 2.35% of total Corporation loans outstanding;
Current report
◦There were 156 outstanding loans, totaling $321.2 million, or 6.79% of total Corporation loans outstanding;
Current report
◦There were no past due commercial hospitality loans; and
Current report
◦There were 223 outstanding loans, totaling $405.4 million, or 8.57% of total Corporation loans outstanding;
Current report
(3) Includes loans held for sale.
Current report
The provision for credit losses was $4.3 million and $2.6 million for the three months ended June 30, 2025 and June 30, 2024, respectively.
Current report
RESULTS OF OPERATIONS
Current report
Six Months Ended June 30, 2025 and 2024
Current report
OVERVIEW
Current report
Earnings were $23.3 million, or $1.10 per diluted share, for the six months ended June 30, 2025. Excluding after-tax merger costs, earnings were $25.1 million, or $1.19 per diluted share, for the six months ended June 30, 2025, compared to earnings of $23.4 million, or $1.11 per diluted share, for the six months ended June 30, 2024. The year-to-date increase of $1.7 million, or 7.37%, and $0.08 per diluted share, or 7.21% was a result of an increase in net interest income partially offset by a decrease in non-interest income and increases in non-interest expense and the provision for credit losses.
Current report
Annualized return on average equity was 8.18% for the six months ended June 30, 2025. Excluding after-tax merger costs, annualized return on average equity was 8.78% for the six months ended June 30, 2025 compared to 8.86% for the six months ended June 30, 2024. Annualized return on average tangible common equity, a non-GAAP measure, was 8.95% for the six months ended June 30, 2025. Excluding after-tax merger costs, annualized return on average tangible common equity was 9.66% for the six months ended June 30, 2025, compared to 9.85% for the six months ended June 30, 2024.
Current report
The Corporation's efficiency ratio was 68.27% for the six months ended June 30, 2025, and 67.55% on a fully tax-equivalent basis, a non-GAAP measure. Excluding merger costs, the efficiency ratio on a fully tax-equivalent basis, a non-GAAP measure, was 65.97%, compared to 66.74% for the six months ended June 30, 2024. The year-over-year decrease was primarily driven by higher net interest income, partially offset by higher non-interest expense.
Current report
NET INTEREST INCOME
Current report
Net interest income was $100.6 million for the six months ended June 30, 2025, compared to $90.9 million for the six months ended June 30, 2024. The increase of $9.7 million, or 10.65%, was due to investment and loan growth, higher average balance of interest-bearing deposits with the Federal Reserve, and a decrease in rates on deposits.
Current report
Net interest margin was 3.49% and 3.38% for the six months ended June 30, 2025 and 2024, respectively. Net interest margin on a fully tax-equivalent basis, a non-GAAP measure, was 3.48% and 3.36% for the six months ended June 30, 2025 and 2024, respectively.
Current report
The yield on earning assets of 5.81% for the six months ended June 30, 2025 decreased 4 basis points from June 30, 2024, primarily as a result of the lower loan yields on variable and floating-rate loans following the three Federal Reserve rate decreases totaling 100 basis points since mid-September 2024.
Current report
PROVISION FOR CREDIT LOSSES
Current report
The provision for credit losses was $5.9 million for the six months ended June 30, 2025, compared to $3.9 million for the six months ended June 30, 2024. The $2.0 million increase in the provision expense for six months ended June 30, 2025 compared to the six months ended June 30, 2024 was primarily a result of the increased net loan charge-offs and higher loan growth.
Current report
NON-INTEREST INCOME
Current report
Total non-interest income was $17.5 million for the six months ended June 30, 2025, compared to $17.8 million for the six months ended June 30, 2024. This decrease was primarily due to lower other charges and fees, coupled with lower pass-through income from SBICs, partially offset by an increase in unrealized gains on equity securities, bank owned life insurance (death benefit) and card processing and interchange income.
Current report
NON-INTEREST EXPENSE
Current report
For the six months ended June 30, 2025, total non-interest expense was $80.7 million. Excluding merger costs, total non-interest expense was $78.8 million, compared to $73.4 million for the six months ended June 30, 2024. Excluding merger costs, the increase of $5.4 million, or 7.30%, from the six months ended June 30, 2024 was primarily a result of an increase in salaries and benefits, occupancy expense, card processing and interchange expense, state and local taxes and technology expenses, partially offset by a decrease in legal fees, advertising and FDIC insurance premiums. In addition, total non-interest expenses increased primarily due to an increase in personnel costs related to annual merit increases and growth in the Corporation's staff and new offices in its expansion markets, while the increase in occupancy expense was primarily due to higher rent expense related to three additional full-service office locations. Additionally, increases in card processing and interchange expenses and other non-interest expenses were due to timing of business development expenses.
Current report
INCOME TAX EXPENSE
Current report
Income tax expense was $6.2 million, representing an 19.49% effective tax rate, compared to $5.9 million, representing an 18.70% effective tax rate for the six months ended June 30, 2025 and 2024, respectively.
Removed paragraphs (7)
Previous report
Merger with ESSA Bancorp, Inc.
Previous report
◦There were 112 outstanding loans, totaling $109.2 million, or 2.37% of total Corporation loans outstanding;
Previous report
◦There were 162 outstanding loans, totaling $323.1 million, or 7.01% of total Corporation loans outstanding;
Previous report
◦There were 227 outstanding loans, totaling $373.4 million, or 8.10% of total Corporation loans outstanding;
Previous report
◦There were two nonaccrual commercial multifamily loans that totaled $20.5 million, or 5.50% 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;
Previous report
◦There were two past due commercial multifamily loans that totaled $20.5 million, or 5.50% of total commercial multifamily loans outstanding; and
Previous report
The provision for credit losses was $1.6 million and $1.3 million for the three months ended March 31, 2025 and March 31, 2024, respectively.
Reworded paragraphs (36)
Previous wording
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.
Current wording
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. ESSA Bank, a division of the Bank, operates in the Pennsylvania counties of Monroe, Northampton, Lehigh, Delaware, Chester, Montgomery, Lackawanna, and Luzerne. 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.
Previous wording
The following discussion should be read in conjunction with the Corporation’s consolidated financial statements and notes thereto for the year ended December 31, 2024, included the 2024 Form 10-K, and in conjunction with the condensed consolidated financial statements and notes thereto included in Item 1 of this report. Operating results for the three months ended March 31, 2025 are not necessarily indicative of the results for the full year ending December 31, 2025, or any future period.
Current wording
The following discussion should be read in conjunction with the Corporation's consolidated financial statements and notes thereto for the year ended December 31, 2024, included the 2024 Form 10-K, and in conjunction with the condensed consolidated financial statements and notes thereto included in Item 1 of this report. Operating results for the three and six months ended June 30, 2025 are not necessarily indicative of the results for the full year ending December 31, 2025, or any future period.
Previous wording
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. At the Corporation’s 2025 Annual Meeting of Shareholders held on April 15, 2025, the Corporation’s shareholders voted to approve the issuance of shares of the Corporation’s common stock pursuant to the Merger Agreement.
Current wording
On July 23, 2025, the Corporation completed its previously announced acquisition of ESSA and its subsidiary bank, ESSA Bank & Trust Company ("ESSA Bank"), pursuant to the definitive merger agreement (the "Merger Agreement") dated as of January 9, 2025. The Corporation's acquisition of ESSA was an all-stock transaction. Under the terms of the Merger Agreement, ESSA merged with and into the Corporation, with the Corporation as the surviving entity, and immediately thereafter, ESSA Bank merged with and into CNB Bank, with CNB Bank as the surviving bank (the "Merger"). Banking offices of ESSA Bank operate under the trade name ESSA Bank, a division of CNB Bank.
Previous wording
Cash and cash equivalents totaled $520.2 million at March 31, 2025, including additional excess liquidity of $447.1 million held at the Federal Reserve, compared to $375.0 million at December 31, 2024. These excess funds, when combined with collective contingent liquidity resources of $4.7 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 available liquidity sources for the Corporation to be approximately 5.3 times the estimated amount of adjusted uninsured deposit balances.
Current wording
Cash and cash equivalents totaled $425.4 million at June 30, 2025, including additional excess liquidity of $332.2 million held at the Federal Reserve, compared to $375.0 million at December 31, 2024. 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 available liquidity sources for the Corporation to be approximately 5.1 times the estimated amount of adjusted uninsured deposit balances.
Previous wording
AFS debt securities and equity securities combined totaled $526.7 million and $479.0 million at March 31, 2025 and December 31, 2024, respectively. At March 31, 2025, the total balance of investments classified as HTM debt securities was $282.2 million compared to $306.1 million at December 31, 2024.
Current wording
AFS debt securities and equity securities combined totaled $534.1 million and $479.0 million at June 30, 2025 and December 31, 2024, respectively. At June 30, 2025, the total balance of investments classified as HTM debt securities was $270.0 million compared to $306.1 million at December 31, 2024.
Previous wording
At March 31, 2025, loans, excluding the impact of syndicated loans, totaled $4.5 billion, representing an increase of $11.7 million, or 0.26% year to date increase (1.05% annualized), from December 31, 2024. The increase in loans for the quarter ended March 31, 2025 compared to December 31, 2024 was primarily driven by growth in the BankOnBuffalo, Ridge View Bank and the legacy CNB markets.
Current wording
At June 30, 2025, loans, excluding the impact of syndicated loans, totaled $4.7 billion, representing an increase of $125.4 million, or 2.77% year to date increase (5.58% annualized), from December 31, 2024. The increase in loans for the six months ended June 30, 2025 compared to December 31, 2024 was primarily driven by growth in the ERIEBANK, Ridge View Bank, BankOnBuffalo and the legacy CNB markets, as well as CNB Bank's Private Banking Division.
Previous wording
At March 31, 2025, the Corporation's condensed consolidated balance sheet reflected a decrease in syndicated lending balances of $10.7 million compared to December 31, 2024, primarily resulting from scheduled paydowns or early payoffs of certain syndicated loans. The syndicated loan portfolio totaled $69.2 million, or 1.50% of total loans, at March 31, 2025, compared to $79.9 million, or 1.73% of total loans at December 31, 2024. The Corporation closely manages the level and composition of its syndicated loan portfolio to ensure it continues to provide a high credit quality, profitable use of excess liquidity to complement the Corporation’s loan growth from its in-market customer relationships.
Current wording
At June 30, 2025, the Corporation's condensed consolidated balance sheet reflected a decrease in syndicated lending balances of $946 thousand compared to December 31, 2024, primarily resulting from scheduled paydowns of certain syndicated loans. The syndicated loan portfolio totaled $78.9 million, or 1.67% of total loans, at June 30, 2025, compared to $79.9 million, or 1.73% of total loans at December 31, 2024. The Corporation closely manages the level and composition of its syndicated loan portfolio to ensure it continues to provide a high credit quality, profitable use of excess liquidity to complement the Corporation's loan growth from its in-market customer relationships.
Previous wording
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 to identify any concentration risk issues that could lead to additional credit loss exposure. An important and recurring part of this process involves the Corporation’s continued measurement and evaluation of 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 standards for borrowers in the commercial real estate industry segments, the Corporation monitors numerous relevant sensitivity elements, including 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 March 31, 2025, the Corporation had the following key metrics related to its office, hospitality and multifamily portfolios:
Current wording
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 to identify any concentration risk issues that could lead to additional credit loss exposure. An important and recurring part of this process involves the Corporation's continued measurement and evaluation of 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 standards for borrowers in the commercial real estate industry segments, the Corporation monitors numerous relevant sensitivity elements, including 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.
Previous wording
◦There were two past due commercial office loans that totaled $216 thousand, or 0.20% of total commercial office loans outstanding; and
Current wording
◦There were two past due commercial office loans that totaled $209 thousand, or 0.19% of total commercial office loans outstanding; and
Previous wording
◦The average outstanding balance per commercial office loan was $975 thousand.
Current wording
◦The average outstanding balance per commercial office loan was $983 thousand.
Previous wording
◦The average outstanding balance per commercial hospitality loan was $2.0 million.
Current wording
◦The average outstanding balance per commercial hospitality loan was $2.1 million.
Previous wording
◦There was one past due commercial hospitality loan that totaled $157 thousand, or 0.05% of total commercial hospitality loans outstanding; and
Current wording
◦There was one nonaccrual and past due commercial multifamily loan that totaled $199 thousand, or 0.05% of total multifamily loans outstanding; and
Previous wording
◦The average outstanding balance per commercial multifamily loan was $1.6 million.
Current wording
◦The average outstanding balance per commercial multifamily loan was $1.8 million.
Previous wording
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 March 31, 2025:
Current wording
The following table summarizes the geographic region (based upon metropolitan statistical areas) in which the commercial office, hospitality and multifamily loans were originated as of June 30, 2025:
Previous wording
The Corporation had no commercial office, hospitality or multifamily loan relationships considered by the banking regulators to be high volatility commercial real estate ("HVCRE") credits.
Current wording
As of June 30, 2025, the Corporation had no commercial office, hospitality or multifamily loan relationships considered by the banking regulators to be high volatility commercial real estate ("HVCRE") credits.
Previous wording
Total nonperforming assets were $56.1 million, or 0.89% of total assets, as of March 31, 2025, compared to $59.5 million, or 0.96% of total assets, as of December 31, 2024. In addition, the allowance for credit losses as a percentage of nonaccrual loans was 87.57% at March 31, 2025, compared to 84.08% at December 31, 2024. The decrease in nonperforming assets for the three months ended March 31, 2025, compared to December 31, 2024 was primarily due to paydowns to nonaccrual loans, charge-offs, and the sale of an other real estate owned property.
Current wording
Total nonperforming assets were $30.4 million, or 0.48% of total assets, as of June 30, 2025, compared to $59.5 million, or 0.96% of total assets, as of December 31, 2024. In addition, the allowance for credit losses as a percentage of nonaccrual loans was 169.52% at June 30, 2025, compared to 84.08% at December 31, 2024. The decrease in nonperforming assets for the six months ended June 30, 2025, compared to December 31, 2024 was primarily due to paydowns to workout-related efforts on two larger nonaccrual loan relationships, and resulting charge-offs on these workouts and other smaller problem loans. The most significant charge-offs were $1.5 million for an owner-occupied commercial real estate relationship (balance of approximately $3.8 million with a specific reserve balance of $1.4 million) and a $1.1 million charge-off of a multifamily commercial real estate loan (balance of approximately $20.3 million with a specific reserve balance of $885 thousand).
Previous wording
The allowance for credit losses measured as a percentage of total loans receivable was 1.03% as of March 31, 2025 and 1.03% as of December 31, 2024.
Current wording
The allowance for credit losses measured as a percentage of total loans receivable was 1.02% as of June 30, 2025 and 1.03% as of December 31, 2024.
Previous wording
For the three months ended March 31, 2025, the allowance for credit losses remained unchanged, reflecting stable credit quality in the loan portfolio. Significant uncertainty persists regarding the domestic and global economy due to changes to U.S. tariffs and corresponding policy changes by U.S. trading partners, continued 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.
Current wording
For the six months ended June 30, 2025, the allowance for credit losses increased $972 thousand, primarily driven by growth in the Corporation's loan portfolio. Significant uncertainty persists regarding the domestic and global economy due to changes to U.S. tariffs and corresponding policy changes by U.S. trading partners, continued 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.
Previous wording
Provision for credit losses was $1.6 million for the three months ended March 31, 2025, compared to $1.3 million for the three months ended March 31, 2024. Included in the provision for credit losses for the three months ended March 31, 2025 was $117 thousand related to the allowance for unfunded commitments compared to $24 thousand benefit towards the allowance for unfunded commitments for the three months ended March 31, 2024.
Current wording
Provision for credit losses was $4.3 million and $5.9 million for the three and six months ended June 30, 2025, compared to $2.6 million and $3.9 million for the three and six months ended June 30, 2024. Included in the provision for credit losses for the three and six months ended June 30, 2025 was $63 thousand and $180 thousand related to the allowance for unfunded commitments compared to $87 thousand and $63 thousand towards the allowance for unfunded commitments for the three and six months ended June 30, 2024.
Previous wording
At March 31, 2025, total deposits were $5.5 billion, reflecting an increase of $88.7 million, or 1.65%, from December 31, 2024. The increase in deposit balances was driven by higher retail and municipal deposits, coupled with growth in retail time deposits.
Current wording
At June 30, 2025, total deposits were $5.5 billion, reflecting an increase of $95.7 million, or 1.78%, from December 31, 2024. The increase in deposit balances was driven by higher retail and municipal deposits, coupled with growth in retail time deposits.
Previous wording
At March 31, 2025, the total estimated uninsured deposits for the Bank were approximately $1.6 billion, or approximately 27.94% of total Bank deposits. However, when excluding $101.9 million of affiliate company deposits and $481.2 million of pledged-investment collateralized deposits, the adjusted amount and percentage of total estimated uninsured deposits was approximately $971.1 million, or approximately 17.46% of total Bank deposits as of March 31, 2025.
Current wording
At June 30, 2025, the total estimated uninsured deposits for the Bank were approximately $1.6 billion, or approximately 28.62% of total Bank deposits. However, when excluding $103.5 million of affiliate company deposits and $509.0 million of pledged-investment collateralized deposits, the adjusted amount and percentage of total estimated uninsured deposits was approximately $982.0 million, or approximately 17.63% of total Bank deposits as of June 30, 2025.
Previous wording
At March 31, 2025, the Corporation’s cash and cash equivalents position was approximately $520.2 million, including liquidity of $447.1 million held at the Federal Reserve. These excess funds, when combined with $4.7 billion in (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 available liquidity sources for the Corporation to be approximately 5.3 times the estimated amount of adjusted uninsured deposit balances discussed above.
Current wording
At June 30, 2025, the Corporation's cash and cash equivalents position was approximately $425.4 million, including liquidity of $332.2 million held at the Federal Reserve. These excess funds, when combined with $4.6 billion in (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 available liquidity sources for the Corporation to be approximately 5.1 times the estimated amount of adjusted uninsured deposit balances discussed above.
Previous wording
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 condensed consolidated financial statements elsewhere in this report for the expected timing of such payments as of March 31, 2025. The Corporation’s material contractual obligations as of March 31, 2025 consist of (i) long-term borrowings - Note 7, "Borrowings," (ii) operating leases - Note 5, "Leases," (iii) time deposits with stated maturity dates - Note 6, "Deposits," and (iv) commitments to extend credit and standby letters of credit - Note 9, "Off-Balance Sheet Commitments and Contingencies."
Current wording
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 condensed consolidated financial statements elsewhere in this report for the expected timing of such payments as of June 30, 2025. The Corporation's material contractual obligations as of June 30, 2025 consisted of (i) long-term borrowings - Note 7, "Borrowings," (ii) operating leases - Note 5, "Leases," (iii) time deposits with stated maturity dates - Note 6, "Deposits," and (iv) commitments to extend credit and standby letters of credit - Note 9, "Off-Balance Sheet Commitments and Contingencies."
Previous wording
As of March 31, 2025, the Corporation’s total shareholders’ equity was $624.5 million, representing an increase of $13.8 million, or 2.26%, from December 31, 2024, primarily due to 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 available-for-sale portfolio.
Current wording
As of June 30, 2025, the Corporation's total shareholders' equity was $637.3 million, representing an increase of $26.6 million, or 4.35%, from December 31, 2024, primarily due to 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 available-for-sale portfolio.
Previous wording
At March 31, 2025, the Corporation's pre-tax net unrealized losses on available-for-sale and held-to-maturity securities totaled approximately $61.7 million, or 9.88% of total shareholders' equity, compared to $74.8 million, or 12.25% of total shareholders' equity at December 31, 2024. The change in unrealized losses was primarily due to changes in the yield curve during the first quarter of 2025 compared to 2024, coupled with the Corporation's scheduled bond maturities, which were all realized at par. Importantly, all regulatory capital ratios for the Corporation would exceed regulatory "well-capitalized" levels as of both March 31, 2025 and December 31, 2024 if the net unrealized losses at the respective dates were fully recognized. Additionally, the Corporation continued to maintain excess liquidity totaling approximately $100.7 million of liquid funds at March 31, 2025, which more than covers the $61.7 million in combined available-for-sale and held-to-maturity unrealized losses on investments held primarily in its wholly-owned banking subsidiary, as an immediately available source of contingent capital to be down-streamed to the Bank, if necessary.
Current wording
At June 30, 2025, the Corporation's pre-tax net unrealized losses on available-for-sale and held-to-maturity securities totaled approximately $55.6 million, or 8.73% of total shareholders' equity, compared to $74.8 million, or 12.25% of total shareholders' equity at December 31, 2024. The change in unrealized losses was primarily due to changes in the yield curve during the first and second quarter of 2025 compared to 2024, coupled with the Corporation's scheduled bond maturities, which were all realized at par. Importantly, all regulatory capital ratios for the Corporation would exceed regulatory "well-capitalized" levels as of both June 30, 2025 and December 31, 2024 if the net unrealized losses at the respective dates were fully recognized. Additionally, the Corporation continued to maintain excess liquidity totaling approximately $102.2 million of liquid funds at June 30, 2025, which more than covers the $55.6 million in combined available-for-sale and held-to-maturity unrealized losses on investments held primarily in its wholly-owned banking subsidiary, as an immediately available source of contingent capital to be down-streamed to the Bank, if necessary.
Previous wording
(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 three months ended March 31, 2025 and 2024 was $260 thousand and $217 thousand, respectively.
Current wording
(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 three months ended June 30, 2025 and 2024 was $265 thousand and $214 thousand, respectively.
Previous wording
(4) Average balance is computed using the fair value of AFS securities and amortized cost of HTM securities. Average yield has been computed using amortized cost average balance for AFS and HTM securities. The adjustment to the average balance for securities in the calculation of average yield for the three months ended March 31, 2025 and 2024 was $(48.1) million and $(55.1) million, respectively.
Current wording
(4) Average balance is computed using the fair value of AFS securities and amortized cost of HTM securities. Average yield has been computed using amortized cost average balance for AFS and HTM securities. The adjustment to the average balance for securities in the calculation of average yield for the three months ended June 30, 2025 and 2024 was $(42.6) million and $(59.2) million, respectively.
Previous wording
Net income available to common shareholders ("earnings") was $10.4 million, or $0.50 per diluted share, for the three months ended March 31, 2025. Excluding after-tax merger costs, earnings were $11.9 million, or $0.57 per diluted share for the three months ended March 31, 2025. The Corporation’s earnings for the three months ended March 31, 2024 were $11.5 million, or $0.55 per diluted share. Excluding after-tax merger costs, the increase in diluted earnings per share comparing the three months ended March 31, 2025 to the three months ended March 31, 2024 was primarily due to an increase in net interest income, partially offset by increases in non-interest expense and the provision for credit losses, coupled with a decrease in non-interest income.
Current wording
Net income available to common shareholders ("earnings") was $12.9 million, or $0.61 per diluted share, for the three months ended June 30, 2025. Excluding after-tax merger costs, earnings were $13.2 million, or $0.63 per diluted share, for the three months ended June 30, 2025. The Corporation's earnings for the three months ended June 30, 2024 were $11.9 million, or $0.56 per diluted share. Excluding after-tax merger costs, the increase in diluted earnings per share comparing the three months ended June 30, 2025 to the three months ended June 30, 2024 was primarily due to an increase in net interest income and non-interest income, partially offset by increases in non-interest expense and the provision for credit losses.
Previous wording
Annualized return on average equity was 7.52% for the three months ended March 31, 2025, compared to 8.79% for the three months ended March 31, 2024. Annualized return on average tangible common equity, a non-GAAP measure, was 8.15% for the three months ended March 31, 2025, compared to 9.77% for the three months ended March 31, 2024.
Current wording
Annualized return on average equity was 8.83% for the three months ended June 30, 2025. Excluding after-tax merger costs, annualized return on average equity was 9.06% for the three months ended June 30, 2025, compared to 8.94% for the three months ended June 30, 2024. Annualized return on average tangible common equity, a non-GAAP measure, was 9.71% for the three months ended June 30, 2025. Excluding after-tax merger costs, annualized return on average tangible common equity was 9.98% for the three months ended June 30, 2025, compared to 9.93% for the three months ended June 30, 2024.
Previous wording
The Corporation's efficiency ratio was 72.07% for the three months ended March 31, 2025, compared to 69.08% for the three months ended March 31, 2024. The efficiency ratio on a fully tax-equivalent basis, a non-GAAP ratio, was 71.28% for the three months ended March 31, 2025, compared to 68.29% for the three months ended March 31, 2024. Excluding merger costs, the efficiency ratio on a fully tax-equivalent basis, a non-GAAP measure was 68.62% compared to 68.29% for the three months ended March 31, 2024.
Current wording
The Corporation's efficiency ratio was 64.73% for the three months ended June 30, 2025. Excluding merger costs, the efficiency ratio on fully tax-equivalent basis, a non-GAAP measure, was 63.50% for the three months ended June 30, 2025, compared to 65.20% for the three months ended June 30, 2024.
Previous wording
Net interest income was $48.4 million for the three months ended March 31, 2025, compared to $45.2 million for the three months ended March 31, 2024. When comparing the first quarter of 2025 to the first quarter of 2024, the increase in net interest income of $3.2 million, or 7.10%, was primarily due to an increase in the Corporation's interest income as a result of the increase in total loans outstanding quarter over quarter, partially offset by targeted interest-bearing deposit rate increases to ensure both deposit relationship retention and new deposit growth in the Corporation's markets.
Current wording
Net interest income was $52.2 million for the three months ended June 30, 2025, compared to $45.7 million for the three months ended June 30, 2024. When comparing the second quarter of 2025 to the second quarter of 2024, the increase in net interest income of $6.5 million, or 14.17%, was primarily due to an increase in the Corporation's interest income as a result of the increase in investments and total loans outstanding quarter over quarter coupled with a decrease in total interest expense as a result of lower interest rates on deposits.
Previous wording
Net interest margin was 3.38% and 3.40% for the three months ended March 31, 2025 and March 31, 2024, respectively. Net interest margin on a fully tax-equivalent basis, a non-GAAP measure, was 3.37% and 3.38%, for the three months ended March 31, 2025 and March 31, 2024, respectively.
Current wording
Net interest margin was 3.60% and 3.36% for the three months ended June 30, 2025 and June 30, 2024, respectively. Net interest margin on a fully tax-equivalent basis, a non-GAAP measure, was 3.59% and 3.34% for the three months ended June 30, 2025 and June 30, 2024, respectively.
Previous wording
The yield on earning assets of 5.73% for the three months ended March 31, 2025 decreased 8 basis points from March 31, 2024, primarily attributable to the net impact of declining interest rates on variable and floating-rate loans as a result of the Federal Reserve decreases since mid-September 2024, coupled with changes in the yield curve.
Current wording
The yield on earning assets of 5.89% for the three months ended June 30, 2025 was unchanged from June 30, 2024, primarily attributable to the net impact of declining interest rates on variable and floating-rate loans as a result of the Federal Reserve decreases since mid-September 2024, coupled with changes in the yield curve.
Previous wording
Total non-interest income was $8.5 million for the three months ended March 31, 2025 compared to $9.0 million for the three months ended March 31, 2024. The decrease during the three months ended March 31, 2025, compared to the three months ended March 31, 2024, was primarily due to increases in unrealized losses on equity securities and mortgage banking income, partially offset by higher pass-through income SBICs.
Current wording
Total non-interest income was $9.0 million for the three months ended June 30, 2025 compared to $8.9 million for the three months ended June 30, 2024. The increase during the three months ended June 30, 2025, compared to the three months ended June 30, 2024, was primarily due to increases in bank owned life insurance (death benefit) and an improvement in unrealized gains on equity securities, partially offset by lower other charges and fees, coupled with lower pass-through income SBICs.
Previous wording
For the three months ended March 31, 2025, total non-interest expense was $41.0 million, compared to $37.4 million for the three months ended March 31, 2024. Excluding merger costs, the increase from the three months ended March 31, 2024 was primarily a result of higher salaries and benefits reflecting increased incentive compensation accruals and higher health insurance costs. Additionally, technology expense increased, primarily due to higher core processing charges associated with growth. These increases were partially offset by a decline in legal expenses. In addition, card processing and interchange expense for the first quarter of 2025 was $1.2 million, or 55.05% of card processing and interchange income, compared to $1.2 million, or 58.48% of card processing and interchange income for the first quarter of 2024.
Current wording
For the three months ended June 30, 2025, total non-interest expense was $39.6 million, compared to $36.0 million for the three months ended June 30, 2024. Excluding merger costs, the increase from the three months ended June 30, 2024 was primarily a result of higher salaries and benefits reflecting increased incentive compensation accruals and retirement plan contributions. Additionally, occupancy expense increased, primarily due to higher rent expense related to three additional full-service office locations, coupled with an increase in card processing and interchange expenses and other non-interest expenses (timing of business development expenses). These increases were partially offset by a decline in legal expenses. In addition, card processing and interchange expense for the second quarter of 2025 was $1.3 million, or 55.00% of card processing and interchange income, compared to $0.9 million, or 40.15% of card processing and interchange income for the second quarter of 2024.
Previous wording
Income tax expense was $2.9 million, representing a 19.96% effective tax rate, compared to $2.8 million, representing a 18.36% effective tax rate for the three months ended March 31, 2025 and 2024, respectively.
Current wording
Income tax expense was $3.3 million, representing a 19.10% effective tax rate, compared to $3.0 million, representing a 19.03% effective tax rate for the three months ended June 30, 2025 and 2024, respectively.
Rearranged current paragraphs (11)
Current report — wording carried from elsewhere
At June 30, 2025, the Corporation had the following key metrics related to its office, hospitality and multifamily portfolios:
Current report — wording carried from elsewhere
(1)Excludes provision for credit losses related to unfunded commitments. Note 9, "Off-Balance Sheet Commitments and Contingencies," to the condensed consolidated financial statements provides more detail concerning the provision for credit losses related to unfunded commitments of the Corporation.
Current report — wording carried from elsewhere
(1)Excludes provision for credit losses related to unfunded commitments. Note 9, "Off-Balance Sheet Commitments and Contingencies," to the condensed consolidated financial statements provides more detail concerning the provision for credit losses related to unfunded commitments of the Corporation.
Current report — wording carried from elsewhere
(1)Includes unamortized discounts and premiums.
Current report — wording carried from elsewhere
(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 six months ended June 30, 2025 and 2024 was $525 thousand and $431 thousand, respectively.
Current report — wording carried from elsewhere
(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.
Current report — wording carried from elsewhere
(4) Average balance is computed using the fair value of AFS securities and amortized cost of HTM securities. Average yield has been computed using amortized cost average balance for AFS and HTM securities. The adjustment to the average balance for securities in the calculation of average yield for the six months ended June 30, 2025 and 2024 was $(45.3) million and $(57.2) million, respectively.
Current report — wording carried from elsewhere
The following table presents the change in net interest income for the six months ended June 30, 2025 and 2024:
Current report — wording carried from elsewhere
(1) Changes in interest income or expense not arising solely as a result of volume or rate variances are allocated to volume changes.
Current report — wording carried from elsewhere
(2)Changes in interest income on tax-exempt securities and loans receivable are presented on a fully taxable-equivalent basis, using the Corporation's marginal federal income tax rate of 21% for the six months ended June 30, 2025 and June 30, 2024.
Current report — wording carried from elsewhere
Management believes the charges to the provision for credit losses for the six months ended June 30, 2025 were appropriate and the allowance for credit losses was adequate to absorb current expected credit losses in the loan portfolio at June 30, 2025.