City National Bank
Annual Report 2015

Plain-text annual report

2015 ANNUAL REPORT Table of conTenTs Consolidated Financial Highlights Message to the Shareholders Executive Management and Board of Directors Officers Shareholder Information 4 5 8 9 12 3 2015 ANNUAL REPORT HIGHLIGHTSHIGHlIGHTs ConsolidaTed FinanCial highlighTs (dollars in thousands, except per share data) For The Year Interest and Dividend Income Interest Expense Net Interest Income Non-interest Income Non-interest Expense Net Income Net Income Return on: Average Assets Average Equity aT Year end Assets Loans, net of unearned Deposits Shareholders’ Equity 2015 $87,178 12,471 74,707 14,799 56,457 22,197 2014 $86,882 12,287 74,595 14,321 52,688 23,074 % Change 0.3% 0.1% 0.2% 3.3% 7.2% (3.8%) 0.99% 11.23% 1.07% 12.76% (7.5%) (12.0%) $2,285,136 1,577,798 1,815,053 201,913 $2,189,213 1,355,289 1,847,079 188,548 4.4% 16.4% (1.7%) 4 CNB FINANCIAL CORPORATION MessaGe To THe sHareHolders To our shareholders, Customers, employees & Friends: The past year has provided the Corporation with many opportunities. We com- pleted a major building project, announced the acquisition of a new bank with two new offices and an excellent staff, grew loans 16%, saw continued if not increasing margin pressure and too many other items to note. Even with these challenges, the return on average equity of 11.23% exceeding the median of our peer group by 21% and the solid earnings allowed us to improve our capital po- sition to support the future growth of CNB. The Corporation’s assets have grown from $1.16B to $2.29B since December 2009, almost doubling our size. The rapid increase in assets through the growth in number of customers caused us to analyze our infrastructure and determine how much we can grow with the number of people and systems that we have. It was obvious in 2013 that we were not going to be able to continue our growth without making some changes. The first need we identified was space to house our staff to handle all of the operational issues involved with managing a financial institution. A building project was undertaken to add approximately 15,000 square feet of space and to renovate our existing headquarters to better leverage our facilities, technology, and personnel. We are pleased to report that the entire $9.8 million project was completed in December 2015. This new modern facility will allow us to operate well into the foreseeable future. CNB is very committed to the Clearfield area as shown by maintaining and enhancing our downtown presence. Being able to attract and retain talented people to the region and continue to support the area is an important part of our culture. In 2015, we celebrated CNB Bank’s 150th anniversary. CNB Bank is proud to have been the financial pillar for the community and our customers over the 150 years. The celebration included a concert with all proceeds benefiting the local firefighters, special loan and deposit promotions, giving away gifts, and $150 prizes to community members. It certainly was a year to remember. As the building project ended and we were able to add personnel to certain areas, the focus turned to our key technology offerings, including a major initiative to determine if we were with a technology partner that shared the same culture and customer experience expec- tations as we have. Throughout a more than six month process, it was determined that Connecticut On-Line Computer Center, Inc., or COCC, shares our customer experience model. CNB is currently in the process of upgrading our core system along with most of our other electronic offerings, including our mobile and eBanking solutions. Going forward, COCC is committed to being a nimble provider of quality financial software solutions so that we may offer up to date services to our customers. 5 2015 ANNUAL REPORT HIGHLIGHTSfInancIals asseT groWTh (in thousands) 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2,400 2011 2012 2013 2014 2015 $1,602,207 $1,773,079 $2,131,289 $2,189,213 $2,285,136 loans, neT oF Unearned (in thousands) 0 125 250 375 500 625 750 875 1,000 1,125 1,250 1,375 1,500 1,625 1,750 1,875 $849,883 $927,824 $1,295,363 $1,355,289 $1,577,798 neT inTeresT inCoMe (in thousands) $ 0 $8 $16 $ 24 $ 32 $ 40 $ 48 $ 56 $ 64 $ 72 $ 74 2011 2012 2013 2014 2015 $48,133 $53,209 $59,204 $74,595 $74,707 earnings Per share (diluted) $.00 .15 .30 .45 .60 .75 .90 1.05 1.20 1.35 1.50 1.65 $1.23 $1.38 $1.29 $1.60 $1.54 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 6 CNB FINANCIAL CORPORATIONMessage to the shareholders continued… ERIEBANK, a division of CNB Bank, has grown its assets to $637 million over the ten years since it began. In 2014, we opened our first ERIEBANK operation in Ohio with a loan production office. The customer response has been so good that a new full service facility is under construction and expected to open in the fourth quarter of 2016. More expansion will occur as we partner with Lake National Bank later this year. This acquisition, announced in December 2015, opens up a large new market and gives ERIEBANK an experienced group of bankers with a culture very much like ours. The two new markets in Northeast Ohio provide us with even more organic growth opportunities in a vibrant ERIEBANK footprint. The FCBank division in central Ohio also continues to prosper. A new main office is being constructed in Worthington, which will house our management group, commercial team, and the staff from our current Worthington location. The commercial lending team is growing with the addition of two C&I lenders who will focus in the Columbus and Lancaster areas. FCBank continues to experience double digit growth in both loans and deposits. The Central Ohio market continues to provide the Corporation with growth opportu- nities although the competitive pressures continue to increase. This market has many large banks and a large number of non-banks vying for commercial real estate which has changed the dynamics of the pricing and underwriting for the larger relationships. The US economy, along with the rest of the world, seems to be cooling off again. Deflated oil and gas prices have made consumers temporarily happy but it has had a dampening effect on many businesses as the oil and gas companies slow significantly or stop all together. Large layoffs, shift reductions and a general uneasiness are setting in. This slow down will cause certain sectors of the econ- omy to reduce spending and expansion while others will continue to move ahead. We are currently operating in three very distinct economies. This diversity will provide us the opportunity to increase customers in a strategic manner. Earlier, culture was discussed as a key piece of our success. Our commitment to be an integral part of all the communities we serve is a significant part of our strategic plan. Our team provides the leadership for many non-profit and community boards. Through this involvement and the dedication to making our communities stronger we gain the trust of our mar- kets to be a part of improving the quality of life for all. This involvement provides more success than any other strategy. Your continued confidence in the Corporation is the backbone to our growth in customers, assets and earnings. Joseph B. Bower, Jr. President and Chief Executive Officer 7 2015 ANNUAL REPORT HIGHLIGHTSeXecUTIVe ManaGeMenT & board of dIrecTors Corporate officers, CnB Financial Corporation Joseph B. Bower, Jr. President & Chief Executive Officer Brian W. Wingard Treasurer & Principal Financial Officer Richard L. Greslick, Jr. Secretary executive officers, CnB Bank Joseph B. Bower, Jr. President & Chief Executive Officer Mark D. Breakey Senior Executive Vice President & Chief Credit Officer Richard L. Greslick, Jr. Senior Executive Vice President, Chief Operating Officer Board of directors CNB Financial Corporation and CNB Bank Dennis L. Merrey Chairman of the Board Retired, Formerly President, Clearfield Powdered Metals, Inc. (Manufacturer) Joseph B. Bower, Jr. President and Chief Executive Officer, CNB Financial Corporation; President & Chief Executive Officer, CNB Bank William F. Falger Retired, Formerly President & Chief Executive Officer, CNB Financial Corporation, CNB Bank Richard L. Greslick, Jr. Senior Executive Vice President & Chief Operating Officer, CNB Bank; Secretary, CNB Financial Corporation Robert W. Montler President & Chief Executive Officer, Lee Industries and Keystone Process Equipment (Manufacturer) 8 Mary Ann Conaway Executive Vice President, Human Resources Leanne D. Kassab Executive Vice President, Customer Experience Joseph E. Dell, Jr. Executive Vice President & Chief Lending Officer Brian W. Wingard Executive Vice President & Chief Financial Officer Peter F. Smith Attorney at Law Peter C. Varischetti President, Varischetti Holdings, LLC CNB Bank Francis X. Straub, III Managing Officer and Director, St. Marys Pharmacy, Inc. and Bennetts Valley Pharmacy, Inc. Joel E. Peterson President, Clearfield Wholesale Paper (Wholesaler) Deborah Dick Pontzer Economic Development & Workforce Specialist, Office of Congressman Glenn Thompson Jeffrey S. Powell President, J.J. Powell, Inc. (Petroleum Distributor) James B. Ryan Retired, Formerly Vice President of Sales, Marketing, Windfall Products, Inc. (Manufacturer) Nick Scott, Jr. Vice President & Owner, Scott Enterprises (Hospitality Industry) Richard B. Seager President and Chief Executive Officer, Beacon Light Behavioral Health Systems (Health Services) CNB FINANCIAL CORPORATIONoffIcers administrative services Timothy A. Bracken Vice President, Controller Donna J. Collins Vice President, Regulation & Examination David W. Ogden Vice President, Credit Administration Edward H. Proud Vice President, Information Systems CnB Bank Gregory M. Dixon CNB Market Executive Jeffrey W. Alabran Senior Vice President, Commercial Banking, Indiana Michael E. Haines Vice President, Commercial Banking, St. Marys Robin L. Hay Vice President, Commercial Banking, Clearfield Karen R. Pfingstler Vice President, Commercial Banking, DuBois Matthew Q. Raptosh Vice President, Commercial Banking, Blair County Joseph H. Yaros Vice President, Commercial Banking, Bradford Eileen F. Ryan Vice President, Mortgage Lending Ruth Anne Ryan-Catalano Vice President, Retail Banking Carolyn B. Smeal Vice President, Operations Susan M. Warrick Vice President, Operations Thomas J. Ammerman, Jr. Assistant Vice President, Security Rebecca A. Coleman Assistant Vice President, Operations Shannon L. Irwin Assistant Vice President, Human Resources Cory K. Johnston Assistant Vice President, Credit Administration Paul A. McDermott Assistant Vice President, Facilities John H. Sette Assistant Vice President, Information Systems Carol J. Cossick Assistant Controller Thomas W. Grice Network Administration Officer Amy B. Potter Marketing Officer Dennis J. Sloppy Information Systems Officer B.J. Sterndale Training Officer Brenda L. Terry Banking Officer C. Brett Stewart Vice President, Commercial Banking, Indiana Christopher L. Stott Vice President, Retail Lending Mary A. Baker Assistant Vice President, Regional Branch Administration, Northern Cambria Office Vickie L. Baker Assistant Vice President, Regional Branch Administration, Bradford Main Office James C. Davidson Assistant Vice President, Private Banking Michael C. Mignogna Assistant Vice President, Commercial Banking, Blair County Susan J. Shimmel Assistant Vice President, Community Office Manager, Clearfield Old Town Road Office Judy L. Barry Portfolio Manager/Support Lender, Blair County Loan Production Office Lori L. Curtis Community Office Manager, Philipsburg Plaza Office Autumn F. Farley Commercial Loan Officer Beverly A. Greene Portfolio Manager/Support Lender, Indiana Office Denise J. Greene Community Office Manager, DuBois Office Lynette M. Hebel Community Office Manager, Karthaus and Kylertown Offices Caroline Henry Community Office Manager, Philipsburg Presqueisle Street Office Tyler A. Kirkwood Regional Branch Administration, Clearfield Industrial Park Road Office Kyle G. Kunes Commercial Loan Officer Dustin A. Minarchick Commercial/Retail Lending Officer Alesia N. McElwee Community Office Manager, Clearfield Main Office Andrew V. Nedzinski Assistant Commercial Lending Officer, St. Marys Offices Katie A. Penoyer Commercial Banking Officer Nadine J. Rodgers Banking Officer, Indiana Douglas M. Shaffer Community Office Manager, Punxsutawney Office Lori D. Shimel Community Office Manager, Houtzdale and Madera Offices Pamela J. Snyder Community Office Manager, Kane Office Gregory R. Williams Banking Officer, Clearfield Wealth & asset Management services Steven R. Shilling Senior Vice President, Wealth & Asset Management Craig C. Ball Vice President, Wealth & Asset Management Eric A. Johnson Vice President, Wealth & Asset Management Glenn R. Pentz Vice President, Wealth & Asset Management Andrew Roman Vice President, Wealth & Asset Management Calvin R. Thomas, Jr. Vice President, Wealth & Asset Management Shawn Amblod Assistant Vice President, Wealth & Asset Management R. Michael Love Assistant Vice President, Wealth & Asset Management Andrew D. Franson Wealth & Asset Operations Officer 9 2015 ANNUAL REPORT HIGHLIGHTSoffIcers & affIlIaTes erieBanK, a division of CnB Bank David J. Zimmer President John M. Schulze Vice President, Commercial Banking Kelly S. Buck Private Banking Officer Steven M. Cappellino Senior Vice President, Commercial Banking, Meadville Office Donald W. Damon Senior Vice President, Business Development William L. DeLuca, Jr. Senior Vice President, Commercial Banking David P. Bogardus Vice President, Commercial Banking, Ashtabula Betsy C. Bort Vice President, Commercial Banking Scott O. Calhoun Vice President, Commercial Banking Joshua P. Miller Vice President, ERIEBANK Investment Advisors Larry G. Morton, Jr. Vice President, ERIEBANK Investment Advisors Gregory A. Noon Vice President, Commercial Banking, Warren Office William J. Vitron, Jr. Vice President, ERIEBANK Investment Advisors Thomas J. Walker Vice President, Commercial Banking, Warren Office Chrystal M. Fairbanks Assistant Vice President, Commercial Banking, Ashtabula Carla M. Higgins Assistant Vice President, Commercial Banking, West 12th Street Office Katie J. Jones Assistant Vice President, Regional Retail Administrator, Harborcreek Office Julie L. Martin Assistant Vice President, Commercial Services James R. Miale Assistant Vice President, Commercial Banking, Meadville Office Timothy J. Roberts Assistant Vice President, Commercial Banking Paul D. Sallie Assistant Vice President, Private Banking Russell G. Daniels Commercial Lending Officer Allison M. Hodas Cash Management Officer Jaclyn R. Italiani Community Office Manager, Downtown Office Debra A. Masone Community Office Manager, Vernon Office Erin L. Mehler Community Office Manager, Interchange Office Helicia E. Sonney Community Office Manager, Asbury Office Theresa L. Swanson Community Office Manager, Warren Office Mary J. Taormina Community Office Manager, Meadville Office Abigail L. Williams Community Office Manager, West 12th Street Office erieBanK regional Board of directors Joseph B. Bower, Jr. President and Chief Executive Officer, CNB Financial Corporation, CNB Bank Mark D. Breakey Senior Executive Vice President & Chief Credit Officer, CNB Bank Gary L. Clark Managing Partner, Stonebank Management, LLC (Consulting) Joseph E. Dell, Jr. Executive Vice President & Chief Lending Officer, CNB Bank Jane M. Earll Esquire, (Senator, Retired) David K. Galey Treasurer and Chief Financial Officer, Greenleaf Corporation, Retired (Manufacturer) James E. Gehrlein Chairman, Enterprise Development Fund of Develop Erie (Community Development) Richard L. Greslick, Jr. Senior Executive Vice President & Chief Operating Officer, CNB Bank; Secretary, CNB Financial Corporation Charles Hagerty Vice President, Northern Tier Markets, UPMC Health Plan (Health Services) Thomas Kennedy President, Professional Development Associates, Inc. (Real Estate Developer) Charles H. Reams President, C. H. Reams & Associates, Inc. (Insurance) Nick Scott, Jr. Vice President & Owner, Scott Enterprises (Hospitality Industry) James E. Spoden Esquire, MacDonald Illig Jones & Britton, LLP (Law Office) David J. Zimmer Chairman of the Board, President, ERIEBANK 10 CNB FINANCIAL CORPORATIONFCBank, a division of CnB Bank J. Andrew Dale President Neal S. Clark Vice President, Senior Commercial Loan Officer Terrance E. Hamm Vice President, Commercial Banking John G. Hock Vice President, Commercial Banking Steven W. Howard Vice President, Team Lead, FC Financial Services Dean J. Vande Water Vice President, Commercial Relationship Manager Anita E. Reeb Vice President, Treasury Management Frank P. Sudal Vice President, Senior Investment Officer, FC Financial Services Brian C. Bach Assistant Vice President, Agriculture Lending Donna M. Conley Assistant Vice President, Lending William R. Diehl Assistant Vice President, Portfolio Manager Jillian V. Price Assistant Vice President, Regional Retail Sales Manager J. Ralph Parker Senior Credit Officer Jared R. Butler Network Adminstrator, Facilities Officer Annette D. Lester Community Office Manager, Cardington Office Clara J. McClung Community Office Manager, Worthington Office Michelle P. Muchow Banking Officer, Executive Assistant Jeffrey P. Scholl Regional Retail Sales Manager Teri A. Slate Community Office Manager, Shiloh Office Travis M. Smith Banking Officer Thomas J. Szabo Junior Commercial Real Estate Lender Elaine M. Wilson Community Office Manager, Fredericktown Office Christopher A. Winegardner Community Office Manager, Upper Arlington Office FCBank, regional Board of directors Joseph B. Bower, Jr. President and Chief Executive Officer, CNB Financial Corporation, CNB Bank Mark D. Breakey Senior Executive Vice President & Chief Credit Officer, CNB Bank Jennifer Carney Partner and Co-Founder, Carney Ranker Architects, Ltd. J. Andrew Dale President, Chairman Joseph E. Dell, Jr. Executive Vice President & Chief Lending Officer, CNB Bank Patrick J. Drouhard Retired, Former Cardington-Lincoln School District Superintendent Richard L. Greslick, Jr. Senior Executive Vice President & Chief Operating Officer, CNB Bank; Secretary, CNB Financial Corporation R. Duane Hord President, Hord Livestock, Inc. (Agriculture) Lawrence A. Morrison CPA and Partner, Kleshinski, Morrison & Morris, LLP (Accounting) David Royer Vice President of Finance & Development, Continental Real Estate Companies (Real Estate Developer) J. Randall Schoedinger CEO, Schoedinger Funeral and Cremation Services holiday Financial services Corporation, a subsidiary of CnB Financial Corporation BOARD OF DIRECTORS CORPORATE OFFICERS Christopher L. Stott Chairman Richard L. Greslick, Jr. Secretary Joseph B. Bower, Jr. Director Brian W. Wingard Director Christopher L. Stott Chairman Joseph P. Strouse President Jonathan L. Holler Vice President Brian W. Wingard Secretary and Treasurer CnB securities Corporation, a subsidiary of CnB Financial Corporation, Wilmington, de BOARD OF DIRECTORS CORPORATE OFFICERS Timothy A. Bracken Director Glenn R. Pentz Director Donald R. McLamb, Jr. Wilmington Trust SP Services, Inc. Brian W. Wingard President Donald R. McLamb, Jr. Treasurer, Wilmington Trust SP Services, Inc. Elizabeth F. Bothner Secretary, Wilmington Trust SP Services, Inc. 11 2015 ANNUAL REPORT HIGHLIGHTS sHareHolder InforMaTIon annual Meeting Quarterly share data For information regarding the Corporation’s quarterly share data, please refer to Item 5 in the 2015 Form 10-K. Market Makers The following firm has chosen to make a market in the stock of the Corporation. Inquiries concerning their services should be directed to: Boenning & Scattergood, Inc. 1700 Market Street, Ste 1420 Philadelphia, PA 19103 (800) 842-8928 The Annual Meeting of the Shareholders of CNB Financial Corporation will be held Tuesday, April 19, 2016 at 2:00 p.m. at the Corporation’s headquarters in Clearfield, PA. Corporate address CNB Financial Corporation 1 S. Second Street P.O. Box 42 Clearfield, PA 16830 (814) 765-9621 stock Transfer agent & registrar American Stock Transfer & Trust Company, LLC 6201 15th Avenue Brooklyn, NY 11219 (800) 937-5449 Form 10-K Shareholders may obtain a copy of the Annual Report to the Securities and Exchange Commission on Form 10-K by writing to: CNB Financial Corporation 1 S. Second Street P.O. Box 42 Clearfield, PA 16830 ATTN: Shareholder Relations 12 CNB FINANCIAL CORPORATIONCorporate Profile erieBanK CNB Financial Corporation is a leader in providing integrat- ed financial solutions which create value for both consum- ers and businesses. These solutions encompass checking, savings, time and deposit accounts, Private Banking, loans and lines of credit (real estate, commercial, industrial, residential and consumer), credit cards, cash manage- ment, online banking, mobile banking, merchant credit card processing, on-site banker and accounts receivable handling. In addition, the Corporation provides wealth and asset management services, retirement plans and other employee benefit plans. CnB Bank A subsidiary of CNB Financial Corporation, CNB is a regional independent community bank in North Central Pennsylva- nia with over 400 employees who make customer service more responsive and reliable. For 150 years, the Bank has strived to be more customer-driven than its competitors and to build long-term customer relationships by being reliable and competitively priced. CNB continually seeks innovative ways to execute a person- al, quality-driven customer service strategy and prides itself on being first-to-market for many of these innovations. To satisfy customers’ financial needs and expectations, it offers a variety of delivery channels, which include twenty-one full-service offices, one loan production office, telephone banking (1-866-224-7314), Internet banking (www.CNBBank.bank), mobile banking, and a centralized customer service center (1-800-492-3221). Headquartered in Erie, Pennsylvania, ERIEBANK is a division of CNB Bank. Presently, there are eight full service offices in Pennsylvania, which house its commercial, retail and Pri- vate Banking divisions. Five of those offices are in Erie, two in Meadville, and one in Warren, Pennsylvania. ERIEBANK also has one loan production office in Ashtabula, Ohio. In addition, ERIEBANK Investment Advisors provides wealth and asset management services, retirement plans and other employee benefit plans. FCBanK FCBank, a division of CNB Bank, is headquartered in Dublin, Ohio with nine full service offices in the communties of Bucyrus, Shiloh, Mt. Hope, Cardington, Fredericktown, Worthington, Dublin, and Upper Arlington. FCBank is driven by a strong focus on meeting the financial needs of businesses and individuals in a way only a community bank can deliver. FCBank offers commercial, retail, and Private Banking services, along with wealth and asset manage- ment services through FC Financial Services. holiday Financial services Holiday Financial Services, a subsidiary of CNB Financial Corporation, is a consumer loan company, and currently has twelve convenient office locations in State College, Brad- ford, Clearfield, Hollidaysburg, Erie, Ridgway, Johnstown, Ebensburg, DuBois, Indiana, Clarion, and Huntingdon, Pennsylvania. 13 2015 ANNUAL REPORT HIGHLIGHTSBacked by the full faith and credit of the United States government Each depositor insured to at least $250,000 FDIC Federal Deposit Insurance Corporation •www.fdic.gov The common stock of the Corporation trades on the nasdaQ global select Market under the symbol CCne. 14 CNB FINANCIAL CORPORATION CnB Financial Corporation 1 South Second Street – P.O. Box 42 Clearfield, PA 16830 800-492-3221 www.CNBBank.bank 

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