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CNB Financial Corp. Announces Third Quarter Earnings.

CANAJOHARIE, N.Y.--(BUSINESS WIRE)--Oct. 25, 1999--

CNB Financial Corp. (Nasdaq:CNBF) announced operating results for the three and nine month periods ended September. 30, 1999.

Net income for the third quarter of 1999 amounted to $1.658 million, an 10.5 percent decrease from the $1.852 million reported for the third quarter of 1998, while net income for the nine months ended September 30, 1999 amounted to $4.804 million, a 11.5 percent decrease from the $5.428 million reported for the nine months ended September 30, 1998. Diluted earnings per share amounted to $0.22 for the quarter ended September 30, 1999, an 8.3 percent decrease compared to diluted earnings per share of $0.24 for the quarter ended September 30, 1998 and diluted earnings per share for the nine months ended September 30, 1999 amounted to $0.63, an 11.3 percent decrease compared to diluted earnings per share of $0.71 for the nine months ended September 30, 1998. Cash dividends paid to shareholders in the first nine months of 1999 totaled $0.25 per share, or 12 percent higher than the $0.22 per share paid in the first nine months of 1998.

The decrease in net income in the third quarter of 1999 when compared to the third quarter of 1998, was due primarily to the Corporation's continued expansion. On August 27, 1999, Central National Bank, Canajoharie, New York ("CNB"), the principal banking subsidiary of CNB Financial Corp., completed its acquisition of five bank branches and related deposits from Astoria Federal Savings and Loan Association ("AFS"). The five branches are located in Central New York State, in the communities of Oneonta (3), Cooperstown and Norwich. In addition, CNB opened two branches (Clifton Park and Whitesboro, New York) in the third quarter of 1999. This expansion activity resulted in an increase in operating expenses in the third quarter of 1999. Included in the increases were salaries and employee benefits, occupancy and equipment, advertising, stationary and supplies. In addition, interest on junior subordinated debentures and amortization of the goodwill incurred with the purchase of the AFS branches, have added on going expenditures. The increase in advertising and stationary and supplies are a result of start-up costs associated with acquiring and opening branches.

As a result of the acquisition of branches, CNB assumed approximately $156.5 million in deposits, including accrued interest payable, and paid a premium of 12.1 percent on the deposits. In consideration for its assumption of the deposits and other liabilities, CNB received the branch-related assets (primarily fixed assets) and a total net cash payment equal to approximately $133.9 million. A substantial portion of this cash was invested in federal funds sold during the third quarter of 1999 which bears a much lower rate of interest than loans and securities. As CNB continues to deploy these funds in higher yielding loans and securities, an improvement in operating results is anticipated.

The decrease in net income for the nine months ended September30, 1999 when compared to the same period in 1998 was due primarily to the expansion activity that occurred in the third quarter of 1999, noted above, and a write-down of a corporate bond in the second quarter 1999 of $879,000 after tax ($1.187 million pre-tax). Excluding the write-down, net income would have been $5.683 million for the nine months ended September 30, 1999, an increase of $255,000 (4.7 percent) over the same period in 1998. Diluted earnings per share would have been $0.75 per share for the nine months ended September 30, 1999, an increase of $0.04 (5.6 percent). The increase in net income excluding the write-down was due primarily to an increase in net interest income of $1.285 million (6.5 percent). The increase in net interest income is due primarily to the Corporation's growth in earning assets. The average balance of earning assets increased from $644.5 million for the nine months ended September 30, 1998 to $716.1 million for the nine months ended September 30, 1999, an increase of $71.6 million (11.1 percent).

Due primarily to the acquisition of branches from AFS, the Corporation's total assets increased $161.1 million (23.1 percent) from $697.0 million at September 30, 1998 to $858.1 million at September 30, 1999. Return on average assets for the nine months ended September 30, 1999 was 11.25 percent vs. 13.07 percent for the same period in 1998. Excluding the write-down, return on average assets would have been 1.02 percent and return on average equity would have been 13.29 percent for the nine months ended September 30, 1999. Asset quality continues to improve, as the ratio of non-performing assets to total assets decreased from 0.95 percent at September 30, 1998 to 0.72 percent at September 30, 1999. The ratio of the allowance for loan losses to non-performing loans increased from 154 percent at September 30, 1998 to 166 percent at September 30, 1999.

Headquartered in Canajoharie, New York, CNB Financial Corp. is the holding company for Central National Bank, Canajoharie, and Central Asset Management, Inc. Central National Bank provides a broad range of deposit and loan products to area consumers, businesses and government entities. The bank operates 27 full service branch offices and two financial service centers throughout eight counties in Central New York. Central Asset Management provides investment advisory services. Visit our web site on the World Wide Web at http:www.canajonb.com.

Except for historical information contained herein, the matters discussed in this news release and other information contained in CNB Financial Corp.'s Securities and Exchange Commission filings may express "forward-looking statements". Those "forward-looking statements" may involve risk and uncertainties, including statements concerning future events or performance and assumptions and other statements that are other than statements of historical facts. CNB Financial Corp. wishes to caution readers not to place undue reliance on any "forward-looking statements", which speak only as of the date made. Readers are advised that various risk factors, including but not limited to: (1) credit risk, (2) interest rate risk, (3) competition, (4) certain vendors' critical systems or services failing to comply with Year 2000 programming issues, (5) changes in the regulatory environment, and (6) changes in general business and economic trends, could cause the actual results or circumstances for future periods to differ materially from those anticipated or projected. CNB Financial Corp. does not undertake, and specifically disclaims any obligation, to publicly release the results of any revisions that may be made to any "forward-looking statements" to reflect the occurrence of unanticipated events or circumstances after the date of such statement. -0-
 CNB FINANCIAL CORP.
 UNAUDITED CONSOLIDATED FINANCIAL HIGHLIGHTS
 (Dollars in Thousands)

QUARTERLY DATA 9/30/99 9/30/98 Change
 (in percents)
Summary of Operations
 Net interest income $7,458 $6,531 14.2
 Provision for loan losses 340 320 6.3
 Net gain on securities trans 32 82 (61.0)
 Other income 998 938 6.4
 Other expenses 5,853 4,736 23.6
 Net Income 1,658 1,852 (10.5)

Performance Ratios (Annualized):
 (in percents)
 Net interest margin
 (tax equivalent) 4.08 percent 4.21 percent
 Return on average assets 0.86 percent 1.09 percent
 Return on average equity 12.05 percent 13.33 percent

YEAR-TO-DATE DATA (Y-T-D)

Summary of Operations:
 Net interest income $20,972 $19,687 6.5 percent
 Provision for loan losses 1,060 610 73.8 percent
 Net (loss) gain on (620) 318 (295.0) percent
 securities transactions(1)
 Other income 2,916 2,682 8.7 percent
 Other expenses 15,648 14,745 6.1 percent
 Net income 4,804 5,428 (11.5) percent
 Net Income(2) 5,683 5,428 4.7 percent

Performance Ratios (Annualized):
 (in percents)
 Net interest margin
 (tax equivalent) 4.07 percent 4.25 percent Return on average assets
 0.87 percent 1.07 percent Return on average assets(2) 1.02 percent

 1.07 percent Return on average equity 11.25 percent 13.07 percent
 Return on average equity(2)13.29 percent 13.07 percent

BALANCE SHEET DATA 9/30/99 9/30/98

 Assets $858,129 $696,958
 Deposits 759,652 618,719
 Gross loans 425,383 371,561
 Allowance for loan losses 8,508 8,403
 Non-performing loans 5,137 5,454
 Allowance to
 non-performing loans
 (in percents) 166 percent 154 percent
 Allowance to total loans
 (in percents) 2.0 percent 2.3 percent
 Stockholders' equity 56,576 56,067

(1) -- Includes write-down of corporate bond of $1.187 million in the
 quarter ended June 30, 1999.

(2) -- Excludes after tax $879,000 write-down of corporate bond in
 the quarter ended June 30, 1999.

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Publication:Business Wire
Date:Oct 26, 1999
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