KBRA Affirms Ratings for CNB Financial Corporation

KBRA affirms the senior unsecured debt rating of BBB, the subordinated debt rating of BBB-, and the short-term debt rating of K3 for Clearfield, Pennsylvania-based CNB Financial Corporation (NASDAQ: CCNE) (“the company”). In addition, KBRA affirms the deposit and senior unsecured debt ratings of BBB+, the subordinated debt rating of BBB, and the short-term deposit and debt ratings of K2 for its subsidiary, CNB Bank. The Outlook for all long-term ratings is Stable.

Key Credit Considerations

The ratings are supported by a solid core funding profile anchored by a sizable deposit base in the company’s heritage markets and minimal reliance on wholesale funding. This is reflected in the company’s better-than-peer loan-to-core deposit ratio and core funding ratio, which has consistently tracked near 90% over a multi-year period. While the proportion of NIB deposits is below peer levels at 16% of total deposits, the deposit base has reflected relative durability despite broader industry funding pressures, which KBRA attributes to the strength of the company’s franchise and market footprint. CCNE’s earnings profile was stable despite periodic volatility associated with merger-related expenses, with ROA ranging from 0.9% to 1.2% over the past five years. The ESSA Bancorp, Inc. acquisition further strengthened the earnings profile through strategic balance sheet repositioning while expanding the company’s footprint across Pennsylvania, creating additional opportunities for loan growth and greater leverage of its existing business lines. Following the acquisition, CCNE sold ~$44 million of lower-yielding loans while allowing selected acquired CRE exposures to run off, resulting in a more balanced commercial loan portfolio. Earnings performance is further supported by the company’s comparatively higher NIM, benefiting from a higher-yielding loan portfolio and a greater concentration of loans within the earning asset mix (83% at 1Q26). Moreover, while noninterest income has historically represented a somewhat lower proportion of total revenue relative to peers (12%-17%), its contribution to earnings has remained stable, supported by recurring fee-based businesses that are less dependent on lending activity, particularly wealth management and card-related revenues. CCNE has demonstrated consistently solid asset quality performance over time, as evidenced by its minimal loss history, reflecting disciplined underwriting, effective credit administration, and a granular loan portfolio that has become increasingly geographically diversified. While the merger initially pressured capital metrics, resulting in a 60-bp decline in the CET1 ratio to 10.6% at 3Q25, capital has since grown meaningfully due to CCNE’s early adoption of ASU-2025 in 3Q25 which resulted in the reversal of $16.4 million in provision expenses. As a result, the CET1 ratio has improved to 11.8% in 1Q26, exceeding its pre-transaction level and providing capital protection commensurate with the company’s risk profile.

Rating Sensitivities

A rating upgrade is unlikely over the intermediate term. However, increased diversification, particularly growth in fee generating business lines, in conjunction with geographic diversification while demonstrating continued outperformance in earnings, may lead to positive rating momentum over the longer term. Degradation in credit quality measures, including credit losses meaningfully above historical levels, persistent earnings pressures that result in weaker than peer trends, or a decline in capital metrics materially below the peer range could result in negative rating migration.

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