What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-06 compared with 2024-03-07 · 155 added, 152 removed, 711 unchanged (30% of the section changed)

11 unchanged sentences

Such known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from the statements, include, but are not limited to, (i) adverse changes or conditions in capital and financial markets, including actual or potential stresses in the banking industry;

(ii) changes in the interest rate environment;

(ii) changes in interest rates;

(iii) the credit risks of lending activities, including our ability to estimate credit losses and the allowance for credit losses, as well as the effects of changes in the level of, and trends in, loan delinquencies and write-offs;

(iv) effectiveness of our data security controls in the face of cyber attacks and any reputational risks following a cybersecurity incident;

(v) the duration and scope of a pandemic, and the local, national and global impact of a pandemic;

(vi) changes in general business, industry or economic conditions or competition;

(vii) changes in any applicable law, rule, regulation, policy, guideline or practice governing or affecting financial holding companies and their subsidiaries or with respect to tax or accounting principles or otherwise;

(viii) higher than expected costs or other difficulties related to integration of combined or merged businesses;

(ix) the effects of business combinations and other acquisition transactions, including the inability to realize our loan and investment portfolios;

(x) changes in the quality or composition of our loan and investment portfolios;

(xi) adequacy of loan loss reserves;

(xii) increased competition;

(xiii) loss of certain key officers;

(xiv) deposit attrition;

(xv) rapidly changing technology;

(xvi) unanticipated regulatory or judicial proceedings and liabilities and other costs;

(xvii) changes in the cost of funds, demand for loan products or demand for financial services;

and (xviii) other economic, competitive, governmental or technological factors affecting our operations, markets, products, services and prices.

(v) changes in general business, industry or economic conditions or competition;

(vi) changes in any applicable law, rule, regulation, policy, guideline or practice governing or affecting financial holding companies and their subsidiaries or with respect to tax or accounting principles or otherwise;

(vii) governmental approvals of the Corporation's pending merger with ESSA may not be obtained, or adverse regulatory conditions may be imposed in connection with governmental approvals of the merger;

(viii) the Corporation's shareholders and/or the shareholders of ESSA may fail to approve the merger or the issuance of the Corporation’s common stock in the merger, as applicable;

(ix) higher than expected costs or other difficulties related to integration of combined or merged businesses;

(x) the effects of business combinations and other acquisition transactions, including the inability to realize our loan and investment portfolios;

(xi) changes in the quality or composition of our loan and investment portfolios;

(xii) adequacy of loan loss reserves;

(xiii) increased competition;

(xiv) loss of certain key officers;

(xv) deposit attrition;

(xvi) rapidly changing technology;

(xvii) unanticipated regulatory or judicial proceedings and liabilities and other costs;

(xviii) changes in the cost of funds, demand for loan products or demand for financial services;

and (xix) other economic, competitive, governmental or technological factors affecting our operations, markets, products, services and prices.

Such developments could have an adverse impact on CNB's financial position and results of operations.

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

BankOnBuffalo, a division of the Bank, operates in the New York counties of Erie and Niagara.

Ridge View Bank, a division of the Bank, operates in the Virginia counties of Botetourt, Craig, Franklin, and Roanoke.

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 its Bank subsidiary, 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.

Although the Corporation’s strategies, through the Bank, are executed based on the divisions discussed above, the Bank is a single Pennsylvania-chartered bank whereby all divisions of the Bank conduct their business on a doing business as basis.

In addition to the Bank, the Corporation has four other subsidiaries.

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Holiday, incorporated in Pennsylvania, offers small balance unsecured loans and secured loans, primarily collateralized by automobiles and equipment, to borrowers with higher risk characteristics.

Merger with ESSA Bancorp, Inc.

On January 9, 2025, the Corporation and CNB Bank entered into the Merger Agreement with ESSA and ESSA Bank, pursuant to which the Corporation will acquire ESSA in an all-stock transaction.

Subject to the terms and conditions of the Merger Agreement, which has been approved by the boards of directors of each party, ESSA will merge with and into the Corporation, with the Corporation as the surviving entity, and immediately thereafter, ESSA Bank will merge with and into the Bank, with the Bank as the surviving bank.

Under the terms of the Merger Agreement, each outstanding share of ESSA common stock will be converted into the right to receive 0.8547 shares of the Corporation’s common stock.

The transaction is currently expected to close in the third quarter of 2025, subject to customary closing conditions, including the receipt of regulatory approvals and approvals by the shareholders of ESSA and the Corporation.

Non-GAAP Financial Information

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• Return on average tangible common equity.

• Non-interest income excluding realized gains on available-for-sale ("AFS") securities.

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

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Cash and Cash Equivalents

Cash and cash equivalents totaled $222.0 million at December 31, 2023, including $164.4 million held at the Federal Reserve.

Cash and cash equivalents totaled $106.3 million at December 31, 2022.

The increase in cash and cash equivalents from December 31, 2022 to December 31, 2023 was primarily due to an increase in deposits coupled with a decrease in the production of the loan portfolio, offset by a decrease in the paydowns and maturities on the securities portfolio.

The increase in deposits was primarily driven by the impact of competitive pricing pressures due to the rapid increase in interest rates.

Management believes the liquidity needs of the Corporation are satisfied primarily by the current balance of cash and cash equivalents, customer deposits, FHLB financing, other funding sources and the portions of the securities and loan portfolios that mature within one year.

The Corporation currently expects that these sources of funds will enable it to meet cash obligations and off-balance sheet commitments as they come due.

Cash and cash equivalents totaled $443.0 million at December 31, 2024, including $375.0 million held at the Federal Reserve, compared to $222.0 million at December 31, 2023.

These excess funds, when combined with collective contingent liquidity resources of $4.6 billion including (i) available borrowing capacity from the FHLB and the Federal Reserve, and (ii) available unused commitments from brokered deposit sources and other third-party funding channels, including previously established lines of credit from correspondent banks, result in the total on-hand and contingent liquidity sources for the Corporation to be approximately 5.0 times the estimated amount of adjusted uninsured deposit balances.

The increase in cash and cash equivalents from December 31, 2023 to December 31, 2024, was primarily due to an increase in deposits, partially offset by an increase in the loan portfolio and securities portfolio.

Management believes the liquidity needs of the Corporation are satisfied primarily by the current balance of cash and cash equivalents, customer and brokered deposits, FHLB financing, the portions of the securities and loan portfolios that mature within one year, and other third-party funding channels.

The Corporation expects that these sources of funds will enable it to meet cash obligations and off-balance sheet commitments as they come due.

In addition to the above noted liquidity sources, the Corporation maintains access to the Federal Reserve discount window.

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

During 2022, as a result of the Corporation’s asset/liability and capital management strategies, securities with a combined amortized cost of $220.8 million and a fair value of $213.7 million were transferred from AFS to HTM.

These HTM portfolio bonds continue to support liquidity through pledging and can be utilized as collateral against borrowings.

In addition to these internal portfolio transfers, some of the investment purchases made by the Corporation during 2022 were also classified as HTM debt securities.

The Corporation’s objective is to maintain the investment securities portfolio at an appropriate level to balance the earnings and liquidity provided by the portfolio.

Note 2, "Securities," in the consolidated financial statements provides more detail concerning the composition of the Corporation’s investment securities portfolio and the process for evaluating securities for impairment.

Note 2, "Securities," to the consolidated financial statements provides more detail concerning the composition of the Corporation’s securities portfolio and the process for evaluating securities for impairment.

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

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

At December 31, 2023, loans totaled $4.4 billion, excluding the balances of (i) syndicated loans, and (ii) any remaining balances on Paycheck Protection Program ("PPP") loans, net of PPP-related fees (such loans being referred to as the "PPP-related loans").

At December 31, 2024, loans totaled $4.5 billion, excluding the balances of syndicated loans.

This adjusted total of $4.5 billion in loans represented an increase of $169.4 million, or 3.88%, compared to the same adjusted total loans measured as of December 31, 2023.

Loan growth for the year ended December 31, 2023 primarily resulted from growth in the Corporation's recent expansion markets of Cleveland, Ohio, Roanoke, Virginia, and Buffalo, New York combined with growth in the portfolios related to the Columbus, Ohio market and CNB Bank’s Private Banking division.

Loan growth for the year ended December 31, 2024, primarily resulted from growth in commercial and residential real estate loans in the Corporation's recent expansion markets of Cleveland, OH and Roanoke, VA.

Additional growth occurred in the commercial and residential real estate loans in the Columbus, OH market, commercial industrial loans in the Erie, PA market and residential real estate loans in CNB Bank’s Private Banking division.

At December 31, 2024, the Corporation's balance sheet reflected a decrease in syndicated lending balances of $28.8 million compared to December 31, 2023, reflecting scheduled paydowns or early payoffs of certain syndicated credits during 2024.

The syndicated loan portfolio totaled $108.7 million, or 2.43% of total loans, excluding PPP-related loans, at December 31, 2023, compared to $156.6 million, or 3.66% of total loans, excluding PPP-related loans at December 31, 2022.

The syndicated loan portfolio totaled $79.9 million, or 1.73% of total loans at December 31, 2024, compared to $108.7 million, or 2.43% of total loans, at December 31, 2023.

Loan Origination/Risk Management

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Loan Portfolio Profile

As part of our 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 if any risk issues could lead to additional credit loss exposure.

In the current post-pandemic and inflationary economic environment, the Corporation has determined that office commercial real estate ("commercial office") inherently could pose a higher level of credit risk, even given the historical high credit quality ratings and structures applied to the Corporation's outstanding commercial office credit extensions when initially underwritten and when funding or commitments were made.

The Corporation monitors numerous relevant sensitivity elements at both underwriting and through and beyond the funding period, including projects occupancy, loan-to-value, absorption and cap rates, debt service coverage and covenant compliance, and developer/lessor financial strength both in the project and globally.

At December 31, 2023, the Corporation had the following key metrics related to its commercial office portfolio:

• Commercial office loans outstanding consisted of 118 loans, totaling $114.7 million, or 2.57% of total loans outstanding;

• Nonaccrual commercial office loans (one customer relationship) totaled $508 thousand, or 0.44% of total office loans outstanding.

One customer relationship had a related specific loss reserve of $289 thousand, at December 31, 2023;

• The average outstanding balance per commercial office loan was $972 thousand.

The Corporation had no commercial office loan relationships considered by the banking regulators to be a high volatility commercial real estate credit.

As part of its lending policy and risk management activities, the Corporation tracks lending exposure by industry classification and type to determine potential risks associated with industry concentrations, and whether any risk issues could lead to additional credit loss exposure.

In the current post-pandemic and inflationary economic environment, the Corporation has evaluated its exposure to the office, hospitality, and multifamily industries within its commercial real estate portfolio.

Even given the Corporation’s historically sound underwriting protocols and high credit quality ratings for borrowers in these industries, the Corporation monitors numerous relevant sensitivity elements at both underwriting and through and beyond the funding period, including projects occupancy, loan-to-value, absorption and cap rates, debt service coverage and covenant compliance, and developer/lessor financial strength both in the project and globally.

At December 31, 2024, the Corporation had the following key metrics related to its office, hospitality and multifamily portfolios:

• Commercial office loans

◦ There were 112 outstanding loans, totaling $113.7 million, or 2.47% of total Corporation loans outstanding;

◦ There were no nonaccrual commercial office loans at December 31, 2024;

◦ There were no past due commercial office loans at December 31, 2024;

◦ The average outstanding balance per commercial office loan was $1.0 million.

• Commercial hospitality loans

◦ There were 170 outstanding loans, totaling $321.6 million, or 6.98% of total Corporation loans outstanding;

◦ There were no nonaccrual commercial hospitality loans at December 31, 2024;

◦ There were no past due commercial hospitality loans at December 31, 2024;

◦ The average outstanding balance per commercial hospitality loan was $1.9 million.

• Commercial multifamily loans

◦ There were 225 outstanding loans, totaling $367.6 million, or 7.98% of total Corporation loans outstanding;

◦ There were two nonaccrual commercial multifamily loan that totaled $20.7 million, or 5.62% of total multifamily loans outstanding.

As previously discussed, one customer relationship did have a specific reserve of $885 thousand, while the other customer relationship did not have a related specific loss reserve at December 31, 2024;

◦ There were three past due commercial multifamily loans that totaled $21.1 million, or 5.75% of total commercial multifamily loans outstanding at December 31, 2024;

◦ The average outstanding balance per commercial multifamily loan was $1.6 million.

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

December 31, 2024

Commercial Office

Geographic Region:

Buffalo, NY 32.61 %

Cleveland, OH 30.29

Cincinnati, OH 9.74

Columbus, OH 6.40

All other geographical regions 20.96

Total Commercial Office 100.00 %

Commercial Hospitality

Geographic Region:

Buffalo, NY 19.19 %

Columbus, OH 18.42

Pittsburgh, PA 16.74

Cleveland, OH 7.61

All other geographical regions 38.04

Total Commercial Hospitality 100.00 %

Commercial Multifamily

Geographic Region:

Cleveland, OH 44.45 %

Buffalo, NY 22.48

Columbus, OH 16.05

All other geographical regions 17.02

Total Commercial Multifamily 100.00 %

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

Maturities and Sensitivities of Loans Receivable to Changes in Interest Rate

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Loans Receivable with Fixed Interest Rate

$ — $ 1,776 $ 7,787 $ — $ 9,563

Farmland $ 59 $ 1,872 $ 6,899 $ — $ 8,830

Owner-occupied, nonfarm nonresidential properties 23,460 26,489 11,466 2,105 63,520

16,525 31,513 19,875 4,665 72,578

Agricultural production and other loans to farmers 3 69 — 9 81

9 135 — — 144

Commercial and Industrial 10,133 218,859 53,194 22,613 304,799

19,955 257,755 27,165 — 304,875

Obligations (other than securities and leases) of states and political subdivisions 2,926 15,550 78,092 7,565 104,133

3,033 18,298 83,960 8,417 113,708

19 581 544 12,384 13,528

Other loans 346 864 1,022 12,708 14,940

Other construction loans and all land development and other land loans (1)

1 unchanged sentence

Multifamily (5 or more) residential properties 27,916 26,892 2,598 4,212 61,618

2,143 36,796 2,868 4,400 46,207

Non-owner occupied, nonfarm nonresidential properties 52,388 111,219 59,225 773 223,605

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Loans Receivable with Variable or Floating Interest Rate

$ 303 $ 3,962 $ 9,622 $ 8,419 $ 22,306

Farmland $ 1,908 $ 4,389 $ 8,192 $ 7,780 $ 22,269

Owner-occupied, nonfarm nonresidential properties 20,777 91,263 283,218 56,430 451,688

17,382 59,275 283,594 60,235 420,486

Agricultural production and other loans to farmers 787 40 5,584 — 6,411

674 157 677 — 1,508

Commercial and Industrial 279,023 75,788 58,361 804 413,976

260,487 95,025 64,691 1,364 421,567

Obligations (other than securities and leases) of states and political subdivisions 1,398 3,284 11,371 20,244 36,297

— 3,319 10,877 24,297 38,493

430 3,007 8,542 — 11,979

Other loans 2,289 2,761 8,120 — 13,170

Other construction loans and all land development and other land loans (1)

1 unchanged sentence

Multifamily (5 or more) residential properties 54,122 46,284 244,901 4,221 349,528

30,687 17,336 155,247 4,865 208,135

Non-owner occupied, nonfarm nonresidential properties 139,635 217,999 401,778 50,524 809,936

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Total nonperforming assets were approximately $59.5 million, or 0.96% of total assets, as of December 31, 2024, compared to $31.8 million, or 0.55% of total assets, as of December 31, 2023.

The increase in nonperforming assets for the year ended December 31, 2023 was primarily due to one commercial and industrial relationship consisting of 12 loans totaling $3.2 million being placed on nonaccrual status during the fourth quarter of 2023, coupled with one commercial real estate relationship consisting of two loans totaling $6.6 million being placed on nonaccrual status during the third quarter of 2023, as previously disclosed by the Corporation.

The commercial relationship with two loans placed on nonaccrual status in the third quarter has a related combined specific loss reserve of $472 thousand at December 31, 2023.

While this loan relationship was placed on non-accrual status during the third quarter of 2023, based on collateral value support coupled with the specific reserve recorded against this loan relationship, management currently does not believe there is risk of significant additional loss exposure beyond the specific reserve related to this loan relationship.

The increase in nonperforming assets for the year ended December 31, 2024, was due to one commercial multifamily relationship totaling $20.4 million with a specific reserve balance of $885 thousand.

Management does not believe there is a risk of significant additional loss exposure beyond the specific reserves related to this loan relationship and is actively working with the borrower and their real estate broker to facilitate the sale of the property.

In addition, to the loan relationship discussed above, there were two other relationships:

(i) a commercial and industrial and owner-occupied commercial real estate relationship as previously disclosed in the second quarter of 2024 and (ii) a commercial relationship (consisting of various loan types) in the third quarter of 2024 that contributed to the increase in nonperforming assets as of December 31, 2024, compared to December 31, 2023.

The Corporation has established written lending policies and procedures that require underwriting standards, loan documentation, and credit analysis standards to be met prior to funding a loan.

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Amount of Allowance Allocated Percent of Loans in Each Category to Total Loans Total Loans Ratio of Allowance Allocated to Loans in Each Category

$ 126 0.7 % $ 31,869 0.40 %

Farmland $ 167 0.67 % $ 31,099 0.54 %

Owner-occupied, nonfarm nonresidential properties 5,696 11.18 515,208 1.11

3,949 11.0 493,064 0.80

Agricultural production and other loans to farmers 37 0.14 6,492 0.57

7 — 1,652 0.42

Commercial and Industrial 7,759 15.60 718,775 1.08

9,433 16.3 726,442 1.30

Obligations (other than securities and leases) of states and political subdivisions 1,369 3.05 140,430 0.97

2,613 3.4 152,201 1.72

387 0.6 25,507 1.52

Other loans 329 0.61 28,110 1.17

Other construction loans and all land development and other land loans 2,571 6.14 282,912 0.91

Multifamily (5 or more) residential properties 2,969 8.92 411,146 0.72

1,030 5.7 254,342 0.40

Non-owner occupied, nonfarm nonresidential properties 10,110 22.42 1,033,541 0.98

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Amount of Allowance Allocated Percent of Loans in Each Category to Total Loans Total Loans Ratio of Allowance Allocated to Loans in Each Category

$ 159 0.8 % $ 32,168 0.49 %

Farmland $ 138 0.76 % $ 33,485 0.41 %

Owner-occupied, nonfarm nonresidential properties 4,131 11.46 511,910 0.81

2,905 11.0 468,493 0.62

Agricultural production and other loans to farmers 7 0.04 1,652 0.42

6 — 1,198 0.50

Commercial and Industrial 9,500 16.26 726,442 1.31

9,766 18.5 791,911 1.23

Obligations (other than securities and leases) of states and political subdivisions 2,627 3.41 152,201 1.73

1,863 3.4 145,345 1.28

456 0.6 24,710 1.85

Other loans 389 0.57 25,507 1.53

Other construction loans and all land development and other land loans 2,830 7.62 340,358 0.83

Multifamily (5 or more) residential properties 1,251 6.84 305,697 0.41

2,353 6.0 257,696 0.91

Non-owner occupied, nonfarm nonresidential properties 9,783 22.02 984,033 0.99

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Total loans $ 45,832 100.00 % $ 4,468,476 1.03 %

The allowance for credit losses measured as a percentage of total loans was 1.03% as of December 31, 2023, compared to 1.02% as of December 31, 2022.

(1) As previously disclosed in the Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, and Note 1, "Summary of Significant Accounting Policies," immaterial revisions were made to the amount of allowance allocated and total loans receivable columns disclosure as of December 31, 2023, to reflect the revisions for the applicable portfolio segments.

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

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

For the year ended December 31, 2023, the allowance for credit losses increased primarily due to the growth in the Corporation's loan portfolio, including growth in new market areas.

This was partially offset by improvements in the Corporation's historical loss rates, as well as the impact of net charge-offs.

The year-over-year increase in reserves experienced in 2022 was primarily due to loan growth, the impact of net charge-offs, and the provision for credit losses recorded in 2022.

There is still a significant amount of uncertainty related to the domestic and global economy, tightening credit conditions, persistent inflation, and higher interest rates.

For the year ended December 31, 2024, the allowance for credit losses increased $1.5 million.

This increase was primarily driven by growth in the Corporation's loan portfolio in new market areas as well as an increased unemployment rate forecast, partially offset by improvements in the Corporation's historical loss rates, annual updates to the Corporation's loss drivers and assumptions, as well as the impact of net charge-offs.

Significant uncertainty persists regarding the domestic and global economy due to persistent inflation in certain segments of the U.S.

economy, elevated interest rates, fluctuating levels of consumer confidence, and geopolitical conflicts.

Management will continue to proactively evaluate its estimate of expected credit losses as new information becomes available.

Note 3, "Loans Receivable and Allowance for Credit Losses," to the consolidated financial statements provides further disclosure of loan balances by portfolio segment as of December 31, 2023 and 2022, as well as the nature and scope of loan modifications to borrowers experiencing financial difficulty and loans modified in a troubled debt restructuring during 2023 and 2022, respectively, and the related effect on provision for credit expense and allowance for credit losses.

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

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Recoveries Average Loans Receivable Ratio of Annualized Net (Charge-Offs) Recoveries to Average Loans Receivable

$ (33) $ — $ 34,397 — %

Farmland $ 29 $ — $ 32,278 — %

Owner-occupied, nonfarm nonresidential properties 2,958 (1,393) 526,379 (0.26)

1,041 3 502,925 —

Agricultural production and other loans to farmers 30 — 2,456 —

Commercial and Industrial 628 (2,369) 700,935 (0.34)

(379) 46 777,991 0.01

Obligations (other than securities and leases) of states and political subdivisions (1,258) — 151,788 —

750 — 154,225 —

(69) — 30,410 —

Other loans (60) — 26,831 —

Other construction loans and all land development and other land loans (248) (11) 401,083 —

Multifamily (5 or more) residential properties 1,718 — 310,485 —

(1,264) (59) 259,557 (0.02)

Non-owner occupied, nonfarm nonresidential properties 1,248 (921) 927,788 (0.10)

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Recoveries Average Loans Receivable Ratio of Annualized Net (Charge-Offs) Recoveries to Average Loans Receivable

$ 8 $ — $ 32,075 — %

Farmland $ (21) $ — $ 34,397 — %

Owner-occupied, nonfarm nonresidential properties 1,223 3 502,925 —

(428) (6) 467,606 —

Agricultural production and other loans to farmers 1 — 1,255 —

(3) — 1,254 —

Commercial and Industrial (312) 46 777,991 0.01

965 (36) 762,585 —

Obligations (other than securities and leases) of states and political subdivisions 764 — 154,225 —

214 — 149,253 —

307 — 16,861 —

Other loans (67) — 30,410 —

Other construction loans and all land development and other land loans (423) — 435,967 —

Multifamily (5 or more) residential properties (1,043) (59) 259,557 (0.02)

64 — 227,715 —

Non-owner occupied, nonfarm nonresidential properties 2,814 (684) 838,674 (0.08)

9 unchanged sentences

Total $ 5,837 $ (3,441) $ 4,396,341 (0.08) %

(1) As previously disclosed in the Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, and Note 1, "Summary of Significant Accounting Policies," immaterial revisions were made to the provision (benefit) for credit losses on loans receivable column disclosure as of December 31, 2023, to reflect the revisions for the applicable portfolio segments.

(2) Excludes provision for credit losses totaling $759 thousand related to unfunded commitments.

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Recoveries to Average Loans

$ (70) $ — $ 22,970 — %

Farmland $ 8 $ — $ 32,075 — %

Owner-occupied, nonfarm nonresidential properties (428) (6) 467,606 —

213 (574) 428,377 (0.13)

Agricultural production and other loans to farmers (3) — 1,254 —

(15) — 2,245 —

Commercial and Industrial 965 (36) 762,585 —

2,564 40 680,368 0.01

Obligations (other than securities and leases) of states and political subdivisions 214 — 149,253 —

1,028 (377) 138,604 (0.27)

81 — 12,187 —

Other loans 307 — 16,861 —

Other construction loans and all land development and other land loans 1,055 — 334,450 —

Multifamily (5 or more) residential properties 64 — 227,715 —

(435) — 218,285 —

Non-owner occupied, nonfarm nonresidential properties 1,171 1 697,930 —

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Included in the provision for credit losses for the year ended December 31, 2024, was a $185 thousand expense related to the allowance for unfunded commitments compared to a $156 thousand expense for the year ended December 31, 2023.

The $2.6 million reduction in the provision expense for the year ended December 31, 2023 compared to the year ended December 31, 2022 was primarily a result of the decrease in loan portfolio growth.

The $3.2 million increase in the provision expense for the year ended December 31, 2024 compared to the year ended December 31, 2023, was primarily a result of the increase in loan portfolio growth and increase in the net loan charge-offs.

Net charge-offs during the year ended December 31, 2024 were $7.5 million, or 0.17% of average total loans and loans held for sale, compared to $3.4 million, or 0.08% of average total loans and loans held for sale, during the year ended December 31, 2023.

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Earnings from BOLI assist the Corporation in offsetting its benefit costs.

The Corporation made no purchases of BOLI during the year ended December 31, 2023, while the Corporation made $11.6 million purchases of BOLI during the year ended December 31, 2022.

The Corporation made no purchases of BOLI during the years ended December 31, 2024 and December 31, 2023.

Funding Sources

1 unchanged sentence

The Corporation considers deposits to be its primary source of funding in support of growth in assets.

December 31, 2023 December 31, 2022 Percentage change

December 31, 2024 Percent of Deposits in Each Category to Total Deposits December 31, 2023 Percent of Deposits in Each Category to Total Deposits Percentage change

Noninterest-bearing demand deposits $ 819,680 15.26 % $ 728,881 14.58 % 12.5%

4 unchanged sentences

At December 31, 2024, total deposits were $5.4 billion, reflecting an increase of $372.6 million, or 7.45%, from December 31, 2023.

The increase in deposits was due to continued growth in the Corporation's treasury management customer base and resulting increases in municipal and institutional/corporate deposits, including new wealth and asset management deposit relationships resulting from CNB's participation in deposit insurance sharing programs.

The increase in deposits was due to continued growth in the Corporation's treasury management customer base and resulting increases in municipal and institutional/corporate deposits, including wealth and asset management deposit relationships resulting from CNB's participation in deposit insurance sharing programs.

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

9 unchanged sentences

Total $ 5,110,210 $ 4,831,267 $ 4,644,435

At December 31, 2023, the average deposit balance per account for CNB Bank was approximately $33 thousand.

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

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

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At December 31, 2023, the total estimated uninsured deposits for CNB Bank were approximately $1.4 billion, or approximately 28.21% of total CNB Bank deposits.

However, when excluding affiliate company deposits of $143.1 million and pledged-investment collateralized deposits of $396.2 million, the adjusted amount and percentage of total estimated uninsured deposits was approximately $1.3 billion, or approximately 27.8% of total CNB Bank deposits as of December 31, 2022.

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

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

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The terms of these borrowings are detailed in Note 10, "Borrowings," to the consolidated financial statements.

There were zero in short-term FHLB borrowings as of December 31, 2023, compared to $132.4 million at December 31, 2022.

On October 18, 2021, the Corporation announced that it had completed the redemption of $50 million aggregate principal amount of its 5.75% Fixed-to-Floating Rate Subordinated Notes due October 15, 2026 (the "2026 Notes"), representing all outstanding 2026 Notes.

The 2026 Notes were redeemed pursuant to their terms at a price equal to 100% of the principal amount, plus accrued and unpaid interest up to, but excluding, October 15, 2021.

The Corporation financed the redemption of the 2026 Notes with cash on hand, including net proceeds from the issuance and sale of $85.0 million aggregate principal amount of the Corporation’s 3.25% Fixed-to-Floating Rate Subordinated Notes due 2031 completed in June 2021.

There were no short-term FHLB borrowings as of December 31, 2024 and December 31, 2023.

In June 2021, the Corporation sold $85.0 million aggregate principal amount of 3.25% Fixed-to-Floating Rate Subordinated Notes due 2031 (the "2031 Notes") to eligible purchasers in a private offering in reliance on the exemption from the registration requirements of Section 4(a)(2) of the Securities Act and the provisions of Rule 506 of Regulation D thereunder.

The 2031 Notes will mature in June 2031, and initially bear interest at a fixed rate of 3.25% per annum, payable semi-annually in arrears, to, but excluding, June 15, 2026, and thereafter to, but excluding, the maturity date or earlier redemption, the interest rate will reset quarterly to an interest rate per annum equal to the then current three-month average SOFR plus 2.58%.

The net proceeds from the sale were approximately $83.5 million, after deducting offering expenses.

Additional details about our subordinated debentures and notes are included in Note 10, "Borrowings" in the accompanying notes to consolidated financial statements.

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Liability liquidity is provided by access to funding sources which include core deposits, correspondent banks and other wholesale funding sources.

The Corporation's liquidity position is continuously monitored and adjustments are made to the balance between sources and uses of funds as deemed appropriate.

The Corporation's liquidity position is continuously monitored and adjustments are made to balance sources and uses of funds as deemed appropriate.

Liquidity risk management is an important element in the Corporation's asset/liability management process.

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Refer to the accompanying notes to consolidated financial statements elsewhere in this report for the expected timing of such payments as of December 31, 2024.

The Corporation’s material contractual obligations as of December 31, 2023 consist of (i) long-term borrowings - Note 10, "Borrowings," (ii) operating leases - Note 7, "Leases," (iii) time deposits with stated maturity dates - Note 9, "Deposits," and (iv) commitments to extend credit and standby letters of credit - Note 18, "Off-Balance Sheet Activities."

The Corporation’s material contractual obligations as of December 31, 2024 consist of (i) long-term borrowings - Note 10, "Borrowings," (ii) operating leases - Note 7, "Leases," (iii) time deposits with stated maturity dates - Note 9, "Deposits," and (iv) commitments to extend credit and standby letters of credit - Note 18, "Off-Balance Sheet Commitments and Contingencies."

Shareholders’ Equity, Capital Ratios and Metrics

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As of December 31, 2024, the Corporation’s total shareholders’ equity was $610.7 million, representing an increase of $39.4 million, or 6.91%, from December 31, 2023.

The increase was primarily due to (i) improvements in accumulated other comprehensive losses resulting primarily from a reduction in after-tax temporary unrealized losses in the AFS investment portfolio, and (ii) an increase in the Corporation's retained earnings (quarterly net income, partially offset by the common and preferred dividends paid in the quarter).

These were partially offset by an increase in the Corporation's treasury stock as a result of the Corporation's repurchase of 326,459 common shares during the twelve months of 2023.

The changes resulted from an increase in the Corporation's retained earnings (net income, partially offset by the common and preferred stock dividends paid) and a decrease in accumulated other comprehensive loss primarily from the after-tax impact of temporary unrealized valuation changes in the Corporation’s AFS investment portfolio.

The additions to shareholders equity from retained earnings were also partially offset by the Corporation's repurchase of some of its common stock.

Preferred Stock

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Tangible common equity is calculated by excluding the balance of goodwill and other intangible assets and preferred equity from the calculation of shareholders’ equity.

Tangible assets is calculated by excluding the balance of goodwill and other intangible assets from the calculation of total assets.

Tangible assets are calculated by excluding the balance of goodwill and other intangible assets from the calculation of total assets.

Tangible book value per common share is calculated by dividing tangible common equity by the number of shares outstanding.

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(2) Average yields are stated on a fully taxable equivalent basis (calculated using statutory rates of 21%) resulting from tax-free municipal securities in the investment portfolio and tax-free municipal loans in the commercial loan portfolio.

The taxable equivalent adjustment to net interest income for the years ended December 31, 2023, 2022, and 2021 were $997 thousand, $1.2 million and $953 thousand, respectively.

The taxable equivalent adjustment to net interest income for the years ended December 31, 2024, 2023, and 2022 were $955 thousand, $997 thousand, and $1.2 million, respectively.

(3) Average loans receivable outstanding includes the average balance outstanding of all nonaccrual loans.

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Analysis of Year-to-Year Changes in Net Interest Income

2023 compared to.

2022 2022 compared to.

2024 compared to 2023 2023 compared to 2022

Increase (Decrease)

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Net income available to common shareholders ("earnings") was $50.3 million, or $2.39 per diluted share, for the year ended December 31, 2024, compared to earnings of $53.7 million, or $2.55 per diluted share, for the year ended December 31, 2023.

The decrease in diluted earnings per share in the year ended December 31, 2023 was primarily due to the rise in deposit costs year over year, as well as the dilutive effect of the Corporation's common stock offering completed in September 2022, which resulted in the issuance of over 4.2 million shares of common stock, an increase of approximately 25% in total common shares outstanding.

In addition, during the year ended December 31, 2023, the Corporation repurchased 326,459 common shares at a weighted average price per share of $20.08, compared to repurchases of 50,166 common shares at a weighted average price per share of $26.75 during the year ended December 31, 2022.

The decrease in diluted earnings per share in the year ended December 31, 2024 was primarily due to the rise in deposit costs year over year.

In addition, during the year ended December 31, 2024, the Corporation repurchased 23,988 shares of common stock at a weighted average price per share of $18.33, compared to repurchases of 326,459 shares of common stock at a weighted average price per share of $20.08 during the year ended December 31, 2023.

PPNR, a non-GAAP measure, was $76.6 million for the year ended December 31, 2024, compared to $77.8 million for the year ended December 31, 2023.

The decrease in PPNR for the year ended December 31, 2023 compared to the year ended December 31, 2022 was primarily driven by the increase in deposit costs combined with the growth in technology expenses due to investments in applications aimed at enhancing both customer relationship management and customer online experience, as well as expanding service delivery channels.

In addition, the Corporation had a year-over-year decrease in non-interest income as a result of lower pass-through income from small business investment companies ("SBICs").

The decrease in PPNR for the year ended December 31, 2024 compared to the year ended December 31, 2023, was primarily driven by the year-over-year increase in deposit costs combined with increases in certain personnel costs (primarily from new offices and personnel added in the recently added expansion markets of Cleveland, OH and Roanoke, VA) and the growth in technology expenses for recently completed full implementation of certain franchise-wide business development and customer management applications.

Return on average equity was 9.21% for the year ended December 31, 2024, compared to 10.54% for the year ended December 31, 2023.

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The efficiency ratio on a fully tax-equivalent basis, a non-GAAP ratio, was 65.47% for the year ended December 31, 2024, compared to 64.45% the year ended December 31, 2023.

The increase was primarily the result of rising deposit costs coupled with higher occupancy costs and technology expenses.

The increase was primarily the result of rising deposit costs coupled with higher salaries and benefits and technology expenses.

Interest Income and Expense

Net interest income of $189.8 million for the year ended December 31, 2023, compared to $189.7 million for the year ended December 31, 2022.

The increase of $170 thousand, or 0.09%, was primarily due to loan growth and the benefits of the impact of rising interest rates resulting in greater income on variable-rate loans and new loan production, which was substantially offset by an increase in the Corporation's interest expense as a result of both (i) targeted interest-bearing deposit rate increases to ensure both deposit growth and retention, and (ii) a year-over-year increase in the average balance of short-term borrowings through the FHLB.

In addition, as previously mentioned, net interest income for the year ended December 31, 2023 included $1.4 million in nonrecurring interest income related primarily to payoffs in the syndicated loan portfolio.

Net interest income was $187.5 million for the year ended December 31, 2024, compared to $189.8 million for the year ended December 31, 2023.

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

Net interest margin was 3.41% and 3.63% for the years ended December 31, 2024 and 2023, respectively.

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

Included in the net interest margin and the net interest margin on a fully tax-equivalent basis for the year ended December 31, 2023 was approximately $1.4 million, or three basis points, in one-time realized interest income related primarily to payoffs in the syndicated loan portfolio.

The yield on earning assets for the year ended December 31, 2024 was 5.88%, an increase of 31 basis points from December 31, 2023.

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Included in the provision for credit losses for the year ended December 31, 2024, was a $185 thousand expense related to the allowance for unfunded commitments compared to $156 thousand for the year ended December 31, 2023.

The $2.6 million reduction in the provision expense for the year ended December 31, 2023 compared to the year ended December 31, 2022 was primarily a result of the lower loan portfolio growth.

The $3.2 million increase in the provision expense for the year ended December 31, 2024 compared to the year ended December 31, 2023, was primarily a result of the higher loan portfolio growth.

Net loan charge-offs were $7.5 million during the year ended December 31, 2024, compared to $3.4 million during the year ended December 31, 2023.

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Total non-interest income was $39.1 million for the year ended December 31, 2024, compared to $33.3 million for the year ended December 31, 2023.

During the year ended December 31, 2023, notable changes compared to the year ended December 31, 2022 included lower net realized gains on the sale of AFS debt securities, lower mortgage banking income from reduced mortgage loan production volume in the higher-rate environment, lower level of full-year bank owned life insurance income and pass-through income from SBICs, partially offset by an increase in card processing and interchange income and a favorable variance in unrealized losses on equity securities.

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

Non-Interest Expense

For the year ended December 31, 2024, total non-interest expense was $150.0 million, compared to $145.3 million for the year ended December 31, 2023.

The increase of $7.7 million, or 5.61%, from the year ended December 31, 2022 was primarily a result of higher occupancy costs combined with higher technology expenses.

In addition, other non-interest expenses increased primarily due to business generation related expenses and consulting fees.

Furthermore, full-year base-salary and related benefit increases, intended to account for inflationary merit increases and the addition of personnel to staff new offices in 2023, were substantially offset by an approximately $8.1 million reduction in incentive-related expenses.

The increase of $4.7 million, or 3.21%, from the year ended December 31, 2023 was primarily a result of an increase in salaries and benefits and technology expenses.

The increase in salaries and benefits was driven by an increase in personnel costs related to annual merit increases and growth in the Corporation's staff and new offices in its expansion markets (Cleveland, OH and Roanoke, VA), while the increase in technology was primarily due to usage and licensing increases in year-over-year investments in applications aimed at enhancing both customer online banking capabilities, customer call center communications and in-branch technology delivery channels.

Income Tax Expense

Income tax expense was $12.8 million in 2024, compared to $13.8 million in 2023.

The effective tax rates were 18.98% and 19.22% for 2024 and 2023, respectively.

The effective tax rate for the periods differed from the federal statutory rate of 21.0% principally as a result of tax-exempt income from securities and loans as well as earnings from bank owned life insurance.

Year Ended December 31, 2023 vs.

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Overview of the Statements of Income and Comprehensive Income

Earnings were $58.9 million, or $3.26 per diluted share, for the year ended December 31, 2022, compared to $53.4 million, or $3.16 per diluted share, for the year ended December 31, 2021, reflecting increases of $5.5 million, or 10.3%, and $0.10 per diluted share, or 3.2%.

Earnings were $53.7 million, or $2.55 per diluted share, for the year ended December 31, 2023, compared to $58.9 million, or $3.26 per diluted share, for the year ended December 31, 2022, reflecting decreases of $5.2 million, or 8.78%, and $0.71 per diluted share, or 21.78%.

The 2022 full-year earnings per share was partially impacted by the effect of the Corporation's common stock offering completed in September 2022, resulting in the issuance of 4,257,446 shares of common stock at $23.50 per share and net proceeds of $94.1 million after deducting the underwriting discount and customary offering expenses.

PPNR, a non-GAAP measure, was $86.8 million for the year ended December 31, 2022, compared to $76.8 million for the year ended December 31, 2021, reflecting an increase of $10.0 million, or 13.1%.

The increase in PPNR for the year ended December 31, 2022 was primarily driven by growth in loans and expansion of the Corporation's net interest margin.

PPNR, a non-GAAP measure, was $77.8 million for the year ended December 31, 2023, compared to $86.8 million for the year ended December 31, 2022, reflecting an decrease of $9.0 million, or 10.35%.

The increase in PPNR for the year ended December 31, 2023 was primarily driven by the increase in deposit costs combined with the growth in technology expenses due to investments in applications aimed at enhancing both customer relationship management and customer online experience, as well as expanding service delivery channels.

In addition, the Corporation had a year-over-year decrease in non-interest income as a result of lower pass-through income from small business investment companies ("SBICs").

Return on average equity was 10.54% for the year ended December 31, 2023, compared to 13.86% for the year ended December 31, 2022.

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The efficiency ratio on a fully tax-equivalent basis, a non-GAAP ratio, was 64.45% for the year ended December 31, 2023, compared to 60.87% for the year ended December 31, 2022, respectively.

The increase for the year ended December 31, 2022 was primarily a result of expected increasing costs associated with the Corporation’s expanding franchise investments into the Cleveland, Ohio and Southwest Virginia markets, coupled with its continued strategic investments in technologies focused on customer sales management and connectivity capabilities.

The increase for the year ended December 31, 2023 was primarily the result of rising deposit costs coupled with higher occupancy costs and technology expenses.

Interest Income and Expense

Net interest income of $189.7 million for the year ended December 31, 2022 increased $29.9 million, or 18.7%, from the year ended December 31, 2021, primarily as a result of loan growth throughout 2022 and the benefits of the impact of rising interest rates in 2022 resulting in greater income on variable-rate loans, coupled with net growth in the Corporation's investment portfolio.

Included in net interest income were PPP-related fees, which totaled approximately $1.9 million for the year ended December 31, 2022, compared to $8.7 million for the year ended December 31, 2021.

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

Net interest margin was 3.63% and 3.83% for the years ended December 31, 2023, and 2022, respectively.

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

The yield on earning assets of 4.30% for the year ended December 31, 2022 increased 51 basis points from 3.79% for the year ended December 31, 2021, primarily as a result of loan growth, the repricing of variable rate loans, and the Corporation's redeployment of excess cash at the Federal Reserve to investment securities, partially offset by lower PPP-related fees in 2022 compared to 2021.

The cost of interesting-bearing liabilities increased 10 basis points from 0.52% for the year ended December 31, 2021 to 0.62% for the year ended December 31, 2022, primarily as a result of the Corporation's targeted interest-bearing deposit rate increases.

The yield on earning assets of 5.57% for the year ended December 31, 2023 increased 127 basis points from 4.30% for the year ended December 31, 2022, primarily as a result of loan growth, the net benefit of higher interest rates on both variable-rate loans and new loan production.

The yield on earning assets for the year ended December 31, 2023 included the previously mentioned $1.4 million, or three basis points, in one-time syndicated loan interest income.

Provision for Credit Losses

The Corporation recorded a provision for credit losses of $6.0 million in 2023 compared to $8.6 million in 2022.

Included in the provision for credit losses for the year ended December 31, 2022 was $603 thousand expense related to the allowance for unfunded commitments compared to no accrual towards the allowance for unfunded commitments for the year ended December 31, 2021.

Included in the provision for credit losses for the year ended December 31, 2023 was $156 thousand expense related to the allowance for unfunded commitments compared to $603 thousand for the year ended December 31, 2022.

Net loan charge-offs were $3.4 million during the year ended December 31, 2023, compared to $2.1 million during the year ended December 31, 2022.

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Non-Interest Income

Total non-interest income was $34.8 million for the year ended December 31, 2022, representing an increase of $1.3 million, or 4.0%, from the same period in 2021.

Included in non-interest income for the years ended December 31, 2022 and 2021 was $651 thousand and $783 thousand, respectively, in net realized gains on AFS debt securities.

Non-interest income excluding net realized gains on AFS debt securities, a non-GAAP measure, for the year ended December 31, 2022 and the year ended December 31, 2021, increased $1.5 million, or 4.5%, from the same period in 2021.

Total non-interest income was $33.3 million for the year ended December 31, 2023, representing a decrease of $1.5 million, or 4.12%, from the same period in 2022.

During the year ended December 31, 2023, Wealth and Asset Management fees increased $79 thousand, or 1.10%, compared to the year ended December 31, 2022, as the Corporation benefited from an increased number of wealth management relationships.

Other notable increases during the year ended December 31, 2022 included increased income from service charges on deposits, other service charges and fees, pass-through income from SBICs and bank owned life insurance mostly due to an $883 thousand gain resulting from death benefit proceeds.

These were partially offset by unrealized losses on equity securities and decreased mortgage banking activity.

Other notable changes during the year ended December 31, 2023 included lower net realized gains on the sale of AFS debt securities, lower mortgage banking income from the reduced mortgage loan production volume in the higher-rate environment, lower level of full-year bank owned life insurance income and pass-through income from SBICs, partially offset by an increase in card processing and interchange income and a favorable variance in unrealized losses on equity securities.

Non-Interest Expense

For the year ended December 31, 2022, total non-interest expense was $137.6 million, reflecting an increase of $21.2 million, or 18.2%, from the year ended December 31, 2021, primarily as a result of (i) expansion of the Corporation's workforce in its growth regions of Cleveland, Ohio, Southwest Virginia, and Rochester, New York, (ii) increased investments in technology aimed at both enhancing customer experience and expanding service delivery channels, and (iii) the Corporation's sales management and increased legal and professional expenses.

For the year ended December 31, 2023, total non-interest expense was $145.3 million, reflecting an increase of $7.7 million, or 5.61%, from the year ended December 31, 2022, primarily as a result of higher occupancy costs combined with higher technology expenses.

In addition, other non-interest expenses increased primarily due to business generation related expenses and consulting fees.

Income Tax Expense

Income tax expense was $13.8 million in 2023, compared to $15.0 million in 2022 and $13.1 million in 2021.

Income tax expense was $13.8 million in 2023 compared to $15.0 million in 2022.

The effective tax rates were 19.22% and 19.21% for 2023 and 2022, respectively.

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In management’s opinion, some of these estimates and assumptions have a more significant impact than others on the Corporation's financial reporting.

For the Corporation, these estimates and assumptions include accounting for the allowance for credit losses and goodwill.

For the Corporation, these estimates and assumptions include accounting for the allowance for credit losses, fair value measurements, and goodwill.

Allowance for Credit Losses

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The quantitative estimated losses are supplemented by more qualitative factors that impact potential losses.

Qualitative factors include changes in underwriting standards, changes in environmental conditions, delinquency level, segment growth rates and changes in duration within new markets, or other relevant factors.

Qualitative factors include changes in underwriting standards, changes in lending staff, changes in environmental conditions, delinquency level, segment growth rates and changes in duration within new markets, or other relevant factors.

The allowance for credit loss may be materially affected by these qualitative factors, especially during periods of economic uncertainty, for items not reflected in the lifetime credit loss calculation, but which are deemed appropriate by management's current assessment of the risks related to the loan portfolio and/or external factors.

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Return on average tangible common equity (non-GAAP) 10.25 % 11.98 %

Calculation of non-interest income excluding net realized gains on available-for-sale securities (non-GAAP):

Non-interest income $ 33,335 $ 34,766

net realized gains on available-for-sale securities 52 651

Adjusted non-interest income (non-GAAP) $ 33,283 $ 34,115

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 7. Management’s Discussion and Analysis