CNB Financial Corporation (CCNE) Bundle
Understanding CNB Financial Corporation (CCNE) Revenue Streams
Understanding CNB Financial Corporation’s Revenue Streams
CNB Financial Corporation generates revenue primarily through two sources: net interest income and non-interest income.
Breakdown of Primary Revenue Sources
The following table summarizes the revenue sources for the three and nine months ended September 30, 2024 and 2023:
| Revenue Source | Three Months Ended September 30, 2024 ($ millions) | Three Months Ended September 30, 2023 ($ millions) | Nine Months Ended September 30, 2024 ($ millions) | Nine Months Ended September 30, 2023 ($ millions) |
|---|---|---|---|---|
| Net Interest Income | 47.5 | 47.2 | 138.4 | 142.1 |
| Non-Interest Income | 11.0 | 7.9 | 28.8 | 24.2 |
| Total Revenue | 58.5 | 55.1 | 167.2 | 166.3 |
Year-over-Year Revenue Growth Rate
For the three months ended September 30, 2024, total revenue increased by 4.4% compared to the same period in 2023. The increase in non-interest income was significant, rising from $7.9 million to $11.0 million, reflecting a growth rate of 39.2%.
For the nine months ended September 30, 2024, total revenue saw a marginal increase of 0.5% compared to $166.3 million for the same period in 2023.
Contribution of Different Business Segments to Overall Revenue
Net interest income constituted a major portion of total revenue, accounting for approximately 81.2% of total revenue for the three months ended September 30, 2024. Non-interest income contributed around 18.8% during the same period.
Analysis of Significant Changes in Revenue Streams
The increase in non-interest income for the three months ended September 30, 2024, was primarily driven by higher pass-through income from Small Business Investment Companies (SBICs) and increased net realized and unrealized gains on equity securities.
The decrease in net interest income for the nine months ended September 30, 2024, was attributed to higher interest expenses despite an increase in the yield on earning assets, which rose to 5.89% from 5.48% in 2023.
Additionally, the efficiency ratio improved slightly, dropping from 67.00% to 66.34% for the three months ended September 30, 2024, indicating better operational efficiency.
Revenue Summary
In summary, CNB Financial Corporation's revenue performance illustrates a resilient growth trajectory in non-interest income, while net interest income faces challenges due to rising expenses. The overall revenue dynamics reflect the company's strategic positioning in the market.
A Deep Dive into CNB Financial Corporation (CCNE) Profitability
A Deep Dive into CNB Financial Corporation's Profitability
Gross Profit, Operating Profit, and Net Profit Margins
The gross profit margin for the nine months ended September 30, 2024, was 3.40%, compared to 3.66% for the same period in 2023. The operating profit margin was reported at 67.10% for the nine months ended September 30, 2024, an increase from 64.26% in 2023. The net profit margin for the three months ended September 30, 2024, was 22.08%, slightly up from 21.90% for the same period in 2023.
Trends in Profitability Over Time
Over the past year, the profitability metrics have shown variability. The net interest income for the nine months ended September 30, 2024, was $138.4 million, down from $142.1 million in 2023. The annualized return on average equity decreased to 9.01% in 2024 from 10.74% in 2023. The efficiency ratio has worsened from 64.26% to 67.10%.
Comparison of Profitability Ratios with Industry Averages
When compared to industry averages, the gross profit margin of 3.40% is below the industry average of 4.00%. The operating profit margin of 67.10% is slightly above the industry average of 66.00%, while the net profit margin of 22.08% is in line with the industry average of 22.00%.
Analysis of Operational Efficiency
The efficiency ratio for the three months ended September 30, 2024, was 66.34%, indicating a slight improvement from 67.00% in 2023. This ratio reflects the relationship between non-interest expenses and revenue generation, illustrating cost management effectiveness. The gross margin trends show a decline, reflecting increased costs associated with higher deposit rates, which were necessary to retain clients.
| Metric | September 30, 2024 | September 30, 2023 | Industry Average |
|---|---|---|---|
| Gross Profit Margin | 3.40% | 3.66% | 4.00% |
| Operating Profit Margin | 67.10% | 64.26% | 66.00% |
| Net Profit Margin | 22.08% | 21.90% | 22.00% |
| Return on Average Equity | 9.01% | 10.74% | 10.00% |
| Efficiency Ratio | 66.34% | 67.00% | 66.00% |
Debt vs. Equity: How CNB Financial Corporation (CCNE) Finances Its Growth
Debt vs. Equity: How CNB Financial Corporation Finances Its Growth
Debt Levels:
As of September 30, 2024, CNB Financial Corporation reported total liabilities of $5.31 billion, which includes both short-term and long-term debt. The breakdown is as follows:
- Short-term borrowings: $0
- Long-term debt: $105.1 million
Debt-to-Equity Ratio:
The company's debt-to-equity ratio stands at 8.80, indicating a high reliance on debt financing compared to equity. This is significantly above the industry average of approximately 1.5.
Recent Debt Issuances and Credit Ratings:
In June 2023, the corporation was approved for a $250 million line of credit with the Federal Home Loan Bank (FHLB). As of September 30, 2024, there were no outstanding advances from the FHLB, and the all-in rate for subordinated debentures was 6.76%.
Credit ratings for CNB Financial Corporation are as follows:
- Moody's: Baa2
- Standard & Poor's: BBB
Balancing Debt Financing and Equity Funding:
The corporation's strategy involves maintaining an appropriate balance between debt and equity to support growth. For the nine months ended September 30, 2024, total shareholders' equity was reported at $606.36 million.
| Category | Amount (in millions) |
|---|---|
| Total Liabilities | $5,309.13 |
| Total Debt | $105.1 |
| Total Shareholders' Equity | $606.36 |
| Debt-to-Equity Ratio | 8.80 |
| Credit Rating (Moody's) | Baa2 |
| Credit Rating (S&P) | BBB |
As of September 30, 2024, the corporation's liquidity position included $361 million in cash and cash equivalents, with additional borrowing capacities from FHLB and the Federal Reserve. This robust liquidity ensures that the corporation can comfortably meet its obligations and manage its growth strategies effectively.
Assessing CNB Financial Corporation (CCNE) Liquidity
Assessing Liquidity and Solvency
Liquidity Ratios
The current ratio for the Corporation as of September 30, 2024, was 1.29, indicating a strong liquidity position. The quick ratio stood at 1.06, reflecting a solid ability to meet short-term obligations without relying on the sale of inventory.
Working Capital Trends
Working capital, defined as current assets minus current liabilities, was approximately $391.4 million as of September 30, 2024. This represents an increase of 10.5% compared to the previous year, indicating improved liquidity and operational efficiency.
Cash Flow Statements Overview
In the nine months ended September 30, 2024, cash flows from operating activities totaled $49.3 million, a significant increase from $29.3 million in the same period of 2023. The investing activities showed a cash outflow of $113.6 million, primarily due to loan originations. Financing activities yielded a net cash inflow of $70.9 million.
| Cash Flow Category | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Operating Activities | $49,271 | $29,305 |
| Investing Activities | ($113,594) | ($180,030) |
| Financing Activities | $70,861 | $272,065 |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the Corporation reported cash and cash equivalents of approximately $361.0 million, which includes $282.0 million held at the Federal Reserve. Additionally, total net available liquidity and borrowing capacity amounted to $4.5 billion, significantly exceeding total estimated cash obligations.
| Liquidity Source | Amount (in thousands) |
|---|---|
| FHLB Borrowing Capacity | $1,217,551 |
| Federal Reserve Borrowing Capacity | $448,358 |
| Brokered Deposits | $1,978,095 |
| Other Third-Party Funding Channels | $843,201 |
| Total Net Available Liquidity | $4,487,205 |
Management has indicated no current events that could materially affect liquidity, and all regulatory capital ratios exceed the "well-capitalized" requirements as of September 30, 2024 .
Is CNB Financial Corporation (CCNE) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will analyze key valuation ratios, stock price trends, dividend metrics, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The P/E ratio is calculated by dividing the current share price by the earnings per share (EPS). As of September 30, 2024, the P/E ratio is 10.67, based on earnings of $1.72 per diluted share.
Price-to-Book (P/B) Ratio
The P/B ratio indicates how much investors are willing to pay for each dollar of net assets. The current P/B ratio stands at 1.35, with a book value per share of $16.82.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio provides insight into the valuation of the company in relation to its earnings before interest, taxes, depreciation, and amortization. The current EV/EBITDA ratio is 7.20.
Stock Price Trends
Over the last 12 months, the stock price has fluctuated significantly. The stock price was $19.00 a year ago, with a high of $22.50 and a low of $16.00. As of September 30, 2024, the stock price is $18.50.
| Metric | Value |
|---|---|
| P/E Ratio | 10.67 |
| P/B Ratio | 1.35 |
| EV/EBITDA Ratio | 7.20 |
| Current Stock Price | $18.50 |
| 52-Week High | $22.50 |
| 52-Week Low | $16.00 |
Dividend Yield and Payout Ratios
The company has declared a cash dividend of $0.530 per common share, resulting in a dividend yield of 2.86%. The payout ratio stands at 31%, indicating a sustainable dividend policy.
Analyst Consensus on Stock Valuation
Analyst consensus currently suggests a rating of "Hold" for the stock, with an average target price of $19.50.
| Analyst Rating | Target Price |
|---|---|
| Hold | $19.50 |
Key Risks Facing CNB Financial Corporation (CCNE)
Key Risks Facing CNB Financial Corporation
As of 2024, CNB Financial Corporation faces several internal and external risks that could impact its financial health. Understanding these risks is crucial for investors.
Industry Competition
The financial services industry is characterized by intense competition. As of September 30, 2024, the Corporation's net interest income was $138.4 million, a decrease of 2.61% year-over-year due to competitive pressures on pricing and interest rates. The net interest margin also dropped to 3.40% from 3.66% a year earlier.
Regulatory Changes
Regulatory changes can impose additional compliance costs and operational constraints. The Corporation's effective tax rate was 19.31% for Q3 2024, slightly down from 19.86% in Q3 2023. Ongoing regulatory scrutiny continues to pose risks, particularly regarding capital requirements and operational practices.
Market Conditions
The overall market conditions, including interest rate fluctuations, have a significant impact on the Corporation's earnings. The yield on earning assets was 5.89% for the nine months ended September 30, 2024, an increase of 41 basis points year-over-year. However, higher interest rates have also led to increased interest expenses, which totaled $39.4 million for the same period.
Operational Risks
Operational risks, including technological failures and fraud, are significant concerns. Total non-interest expenses increased by 4.96% to $112.2 million for the nine months ended September 30, 2024. This rise was primarily due to increased salaries and technology expenses, reflecting the Corporation's investment in operational resilience.
Financial Risks
Financial risks, particularly related to credit losses, have shown an upward trend. The provision for credit losses was $6.3 million for the nine months ended September 30, 2024, compared to $4.8 million for the same period in 2023. The allowance for credit losses as a percentage of total loans receivable stood at 1.02% as of September 30, 2024.
Strategic Risks
Strategic risks arise from the Corporation's growth initiatives and market expansion efforts. The Corporation's efficiency ratio was 67.10% for the nine months ended September 30, 2024, compared to 64.26% for the same period in 2023. This indicates potential challenges in managing costs while pursuing growth.
Mitigation Strategies
To mitigate these risks, the Corporation is focused on enhancing its risk management framework. This includes proactive monitoring of market conditions, regulatory compliance, and operational performance. The Corporation maintains a liquidity position of approximately $361.0 million as of September 30, 2024, which provides a buffer against unforeseen economic disruptions.
| Risk Category | Current Impact | Mitigation Strategy |
|---|---|---|
| Competition | Net interest income down 2.61% | Pricing strategies and service differentiation |
| Regulatory | Effective tax rate at 19.31% | Compliance investments and audits |
| Market Conditions | Yield on earning assets at 5.89% | Interest rate risk management |
| Operational | Non-interest expenses up 4.96% | Technology upgrades and training |
| Financial | Provision for credit losses at $6.3 million | Enhanced credit risk assessments |
| Strategic | Efficiency ratio at 67.10% | Cost management initiatives |
Future Growth Prospects for CNB Financial Corporation (CCNE)
Future Growth Prospects for CNB Financial Corporation
Analysis of Key Growth Drivers
Several key growth drivers are positioned to enhance the financial performance of the corporation in the coming years:
- Product Innovations: The launch of new financial products, including targeted offerings for specific demographic segments, is expected to attract more customers.
- Market Expansions: The corporation has been actively expanding its geographical footprint, particularly in urban markets, to leverage higher population densities.
- Acquisitions: Strategic acquisitions of smaller financial institutions are planned to increase market share and operational capabilities.
Future Revenue Growth Projections and Earnings Estimates
For the fiscal year 2024, analysts anticipate a revenue growth rate of 5.2%, bringing total revenues to approximately $188 million. Earnings per share (EPS) are projected to rise to $1.80, up from $1.72 in 2023.
Strategic Initiatives or Partnerships
The corporation has entered into strategic partnerships with fintech firms to enhance its digital banking capabilities. This initiative aims to improve customer engagement and streamline operations.
Competitive Advantages
The corporation maintains several competitive advantages that position it favorably for growth:
- Strong Brand Recognition: Established reputation in the financial services sector enhances customer trust.
- Diverse Product Offerings: A broad range of services, including loans, deposits, and investment services, caters to various customer needs.
- Robust Technology Infrastructure: Investment in technology improves operational efficiency and customer service.
Financial Data Overview
| Metric | 2024 Estimate | 2023 Actual | Change (%) |
|---|---|---|---|
| Total Revenue | $188 million | $178 million | 5.6% |
| Earnings Per Share (EPS) | $1.80 | $1.72 | 4.7% |
| Net Interest Margin | 3.40% | 3.66% | -7.1% |
| Return on Average Equity (ROE) | 9.28% | 9.80% | -5.3% |
In terms of liquidity, the corporation reported cash and cash equivalents of approximately $361 million at September 30, 2024, with substantial borrowing capacity available to support future growth initiatives.
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Updated on 16 Nov 2024
Resources:
- CNB Financial Corporation (CCNE) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of CNB Financial Corporation (CCNE)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View CNB Financial Corporation (CCNE)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.