What changed in this filing

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Item 1. Business

2023-03-03 compared with 2022-03-03 · 66 added, 35 removed, 257 unchanged (28% of the section changed)

13 unchanged sentences

The Bank was originally chartered as a national bank in 1934 and is now a Pennsylvania-chartered bank.

The CNB Bank franchise operates 18 full-service branch locations in Pennsylvania.

The CNB Bank franchise operates eighteen full-service branch locations in Pennsylvania.

ERIEBANK, a division of the Bank, began operations in 2005.

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In conjunction with the closing of the LPO, the Corporation opened a full-service branch in Cleveland, Ohio.

The Bank currently operates eleven full-service branch locations, a division of the Bank, with its headquarters in Erie, Pennsylvania.

The Bank currently operates twelve full-service branch locations, a division of the Bank, with its headquarters in Erie, Pennsylvania.

In October 2013, the Corporation acquired FC Banc Corp.

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In July 2020, the Corporation acquired Bank of Akron, with its branch locations operating with BankOnBuffalo.

The Bank currently operates ten branch locations and one drive-up office as BankOnBuffalo, a division of the Bank, with its headquarters in Buffalo, New York.

The Bank currently operates eleven branch locations, one mobile branch, one drive-up office, and one loan production 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 state of Virginia as Ridge View Bank, a division of the Bank.

The Bank currently operates two LPOs in Roanoke, Virginia.

The Bank had 44 full-service branch offices located in various communities in its market area at December 31, 2021, and as noted previously has subsequently opened one additional full service branch.

The Bank’s primary market area includes the Pennsylvania counties of Blair, Cambria, Cameron, Centre, Clearfield, Crawford, Elk, Indiana, Jefferson, and McKean.

ERIEBANK, a division of the Bank, operates in the Pennsylvania counties of Crawford, Erie, and Warren and the Ohio counties of Ashtabula, Cuyahoga, and Lake.

FCBank, a division of the Bank, operates in the Ohio counties of Crawford, Richland, Ashland, Wayne, Marion, Morrow, Knox, Delaware, and Franklin.

The Bank currently operates two LPOs in Southwest Virginia.

In early 2023, the Bank intends to launch 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 will operate within the existing geographic footprint of each of CNB Bank’s other divisions and also will have an online presence.

The Bank had 47 full-service branch offices located in various communities in its market area at December 31, 2022.

The Bank’s primary market area of the Pennsylvania counties of Blair, Cambria, Cameron, Centre, Clearfield, Crawford, 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 Roanoke, Virginia.

Ridge View Bank, a division of the Bank, operates in Southwest, Virginia.

Impressia Bank, a division of the Bank, will operate 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.

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(a) enable recovery of data and business operations, (b) address rebuilding network capabilities, and (c) restore data if the financial institution or any of its critical service providers fall victim to this type of cyber-attack.

If the Company does not comply with this regulatory guidance, it could be subject to various regulatory sanctions, as well as financial penalties.

If the Corporation does not comply with this regulatory guidance, it could be subject to various regulatory sanctions, as well as financial penalties.

In November 2021, the federal bank regulatory agencies issued a final rule requiring banking organizations that experience a computer-security incident to notify certain entities.

A computer-security incident occurs when actual or potential harm to the confidentiality, integrity or availability of information or the information system occurs, or there is a violation or imminent threat of a violation to banking security policies and procedures.

The affected bank must notify its respective federal regulator of the computer-security incident that has occurred.

These notifications are intended to promote early awareness of threats to banking organizations and will help banks react to those threats before they manifest into bigger incidents.

This rule also requires bank service providers to notify their customers of a computer-security incident.

State regulators have also been increasingly active in implementing privacy and cybersecurity standards and regulations.

Recently, several states have adopted regulations requiring certain financial institutions to implement cybersecurity programs and providing detailed requirements with respect to these programs, including data encryption requirements.

Many states have also recently implemented or modified their data breach notification and data privacy requirements.

The Corporation expects this trend of state-level activity in those areas to continue, and continues to monitor developments in the states in which the Corporation’s customers are located.

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.

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A change in applicable statutes, regulations or regulatory policy may have a material effect on our business.

In addition to the summary below, as a result of the COVID-19 pandemic, the U.S.

bank regulators issued several letters and other guidance during the course of 2020 and 2021 to bank holding companies and banks regarding expectations for supporting the community and certain related temporary regulatory changes or accommodations, including, for example, temporary relief for banks that may exceed certain regulatory asset thresholds due in large part to their participation in government programs established in response to the COVID-19 pandemic.

The Corporation continues to monitor guidance and developments related to the COVID-19 pandemic.

Bank Holding Company Regulation

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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 does not pose a substantial risk to the safety and soundness of the depository institution or the financial system.

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 does not pose a substantial risk to the safety and soundness of the depository institution 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.

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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) of a certain size (greater than 9% beginning January 1, 2022), 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 PCA purposes.

To date, we have not opted in to this community bank leverage ratio framework.

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In establishing these principles as the foundation upon which all other strategic objectives are anchored, the Corporation seeks to further develop and sustain a diverse, equitable, and inclusive culture, with sensitivity to the entirety of the Corporation’s footprint and environment in which it operates.

The differences among the Corporation’s Board 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 diverse group of stakeholders.

To ensure that the principles are understood, implemented, and demonstrated by the Corporation’s employee team on a sustained basis, the Corporation is developing comprehensive diversity, equity, and inclusion communication processes and a training curriculum – a comprehensive program to be delivered beginning in 2022 to all employees, including internal sessions delivered by a certified diversity and inclusion trainer, supplemented by relevant external training sources.

This effort will include establishing measurable goals of inclusion and diversity accountability, qualitative processes and actions for achievement of these goals, and regular quantitative assessments to measure the impact on the Corporation, its experiences, and its culture.

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 diverse group of stakeholders.

To ensure that the Environmental, Social, and Governance principles are understood, implemented, and demonstrated by the Corporation’s employee team on a sustained basis, the Corporation developed a comprehensive diversity, equity, and inclusion ("DE&I") communication processes and a training curriculum which was rolled out to all employees, including internal sessions delivered by a certified diversity and inclusion trainer, supplemented by relevant external training sources.

Employee experience committees were also formed in 2022 to explore and evaluate how various DE&I topics impact our employees and how we can better address them.

To monitor progress and solicit feedback, the Corporation conducted a company wide survey on DE&I.

The results of this survey will be utilized for developing areas of focus for 2023.

In 2023, the Corporation also plans to continue offering training to employees, including a module within the Corporation's training program for new managers, monthly lunch and learn events, and develop employee resource groups, which are employee-led groups whose aim is to foster a diverse, inclusive workplace aligned within the organization.

Inclusion and Diversity Committee

In support of its strategic diversity and inclusion efforts, and to ensure that the diverse perspectives of the entire Corporation’s employee team is considered when developing and implementing its service and operating profile, the Corporation established an Inclusion and Diversity Committee (the “Diversity Committee”) in 2018.

This Diversity Committee, which meets monthly, is comprised of over 10 employee members including underrepresented minorities, females, and those who identify as LGTBQ+, with the following committee responsibilities and goals:

In support of its strategic diversity and inclusion efforts, and to ensure that the diverse perspectives of the entire Corporation’s employee team is considered when developing and implementing its service and operating profile, the Corporation established a Diversity, Equity and Inclusion Committee (the “Diversity Committee”) in 2018.

The Diversity Committee, which meets monthly, is comprised of over 10 employee members including underrepresented minorities, females, and those who identify as LGTBQAI+, as well as two senior executive level members, with the following committee responsibilities and goals:

• Encourage an inclusive and engaged workforce culture through communications and training;

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A critical measure is realizing increasing diversity in our senior leadership positions, as those members of the Corporation’s management have greater ability to effectuate sustained change in the composition of our team and the expanded, relevant involvement of all groups within the spectrum of our workforce and communities.

The Corporation’s senior leadership team, which is comprised of individuals with the titles of Senior Vice President, Executive Vice President, Senior Executive Vice President, Regional President, President, and CEO, opened the Year 2021 with 33 individuals, including 11 members, or 33%, who were female or members of underrepresented minority groups.

As we began the Year 2022, our senior leadership team has expanded to 36 individuals, with females and members of underrepresented minority groups comprising 12, or 33%, of the team.

As a result of broadening our recruitment efforts to increase the diversity of our team, for the year ended December 31, 2021, the Corporation hired 48 individuals from groups designated as underrepresented minorities, out of 245 total hires for the entire Corporation in 2021.

While 2021 saw the most minority hires made in one year by the Corporation, allowing us to realize improvement in our overall ethnic diversity workforce profile, we recognize that our efforts must continue to remain diligent and be increasingly productive, as some of our regional bank’s workforce profiles do not yet more closely parallel the overall underrepresented minority demographics of their respective communities, particularly our predominantly urban markets including Cleveland, Columbus, Buffalo, and Erie.

As part of expanding our efforts and outlets to reach more qualified underrepresented minority candidates for new or open positions in 2022 and beyond, we are broadening our outreach to new sources for identifying and recruiting talented and qualified minority candidates.

This includes partnering with a local Buffalo, New York college to offer apprenticeship programs designed to provide meaningful on-the-job training, work experience and college credits towards certificates and banking degrees to minority students.

Additionally, our involvement in the Ohio Bankers League Summer Banking Institute allows us to offer internships to minority college students to increase awareness of career opportunities available in the banking industry in both the Cleveland and Columbus, Ohio markets.

We believe our participation in these programs will help us identify or develop similar programs and minority recruitment opportunities in other markets and communities within the Corporation’s footprint.

We are proud of the diversity we have achieved within the Corporation’s senior leadership team, which is comprised of 16 individuals, of which 50% are female or members of underrepresented minority groups.

Overall, the Corporation's workforce is 67% female and 33% male, as reported by those who self-identified.

In addition, 11% of the Corporation's workforce self-identified as a member of an underrepresented minority group.

The underrepresented minority groups include individuals who self-identify as an ethnicity other than white, LGBTQAI+ or military veteran.

As a result of broadening our recruitment efforts to increase the diversity of our teams, for the year ended December 31, 2022, 45 people out of 196 total hires for the Corporation identified as an underrepresented group.

The Corporation increased the percentage of underrepresented hires from 19.5% of total new hires in 2021 to 22.7% in 2022, allowing us to continue to improve our overall diversity workforce profile, as our regional banks' workforce profiles are moving towards better alignment with the overall demographics of their respective communities.

Community Involvement and Social Impacts

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We are committed to strengthening these communities through the active volunteering of our employees.

The Corporation's employees actively participate in their communities through volunteer activities in education, economic development, human and health services, and community reinvestment.

Despite the continuing COVID-19 pandemic, the Corporation’s employees found innovative ways to give back to their communities.

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 2022, employees donated 15,316 hours in support of more than 658 organizations, with 60% of employees actively participating.

Additionally, there were approximately $987,000 in donations to community organizations and events within the communities we serve.

Notably, even during the COVID-19 pandemic, the Corporation’s Martin Luther King, Jr.

“Take the Day On” efforts resulted in the support of 32 community organizations and 206 volunteer hours.

Notably, the Corporation’s Martin Luther King, Jr.

"Take the Day On" efforts resulted in the support of 30 community organizations and 249 volunteer hours recorded.

Employees collected donations and delivered them to local organizations in need during this national day of service, which typically serves as a bank holiday.

Another example of the Corporation’s involvement in the community is a Financial Reality Fair for high school students, many of which are in low-to-moderate income households, held at the local career center.

The event benefited 400 high school students from six high schools, resulted in over 200 hours of volunteer time and partnerships with six community organizations.

Bank experts not only shared their real-life knowledge of budgeting, but also provided additional follow up financial education after the fair.

The Corporation expanded its efforts surrounding its financial literacy outreach in 2022, conducting five Financial Reality Fairs in various regions throughout the footprint we serve.

The fairs teach real-life budgeting skills to high school students, many of whom are in low-to-moderate income households.

The fairs included seven high schools and almost 1,000 students.

Eighty employees donated over 875 hours of volunteer time and leveraged partnerships with thirty community organizations.

Our employees and community volunteers not only shared their real-life knowledge of budgeting, but also provided additional financial education after the events.

In addition to the fairs, employees participated in 120 other financial literacy events ranging from basic community banking sessions to school presentations.

A total of 1,219 volunteer hours can be attributed to the Corporation’s financial literacy program.

Further, the Corporation sponsored elementary and secondary banking curriculum materials donating $30,155 to provide 8,666 workbooks for students, along with teacher guides and complimentary digital programs.

Additionally, the Corporation provided $300,000 in Educational Improvement Tax Credit Program scholarships, and $24,500 in academic scholarships in service to the communities in which we operate.

In 2022, the Corporation focused on increasing its outreach to those who are "unbanked" or "underbanked".

Two examples of how the Corporation worked to address this social issue include the launch of the Stress Less account, the Bank's first Bank On Certified account and opening a new fully mobile "BankOnWheels" to operate in the Buffalo metro area.

The national Bank On movement seeks to provide consumers safe and affordable access to the mainstream financial system and help connect unbanked and underbanked people to these products.

The Bank is committed to expanding banking access to its communities with this Bank On Certified account.

Features of this account include a low minimum to open, checkless checking, a low monthly service charge, free access to eBanking, debit card access, and no fees for overdraft or dormancy.

BankOnWheels, which opened in the fourth quarter of 2022, is an innovative new banking experience, making full-service banking accessible to more consumers and small businesses, particularly those in underserved communities.

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 will rotate between three locations in the cities of Buffalo and Niagara Falls, which are located in communities underserved by banks, with plans to serve additional areas in the future.

Throughout its history, the Corporation has focused on strengthening the communities it serves.

We accomplish this by promoting economic development through investments in community-strengthening initiatives, such as affordable housing and revitalization efforts.

As of December 31, 2022, the Corporation’s investment in affordable housing totaled approximately $8.0 million, with an additional investment commitment of $1.0 million and $2.5 million invested in the Erie Downtown Development Corporation, which is focused on revitalization efforts in downtown Erie, Pennsylvania.

The Corporation is also committed to supporting women owned businesses.

The Bank intends to launch Impressia Bank, a division of the Bank, in the first quarter of 2023.

Designed for women by women, Impressia Bank will be a full-service banking division of the Bank dedicated to the professional and financial development and advancement of women business owners and women leaders.

Impressia Bank clients will have access to resources related to accelerating their business, developing appropriate business strategies, and establishing a community of women who support one another.

Available Information

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business