Company: CCNE
Filing Date: 2025-11-05
Form Type: 10-Q
Source: 0000736772-25-000202
Chunk: 18

Company: CNB FINANCIAL CORP/PA
Filing Date: 2025-11-05
Form: 10-Q
Item: Item 1
Chunk 18
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 cash flow method on an individual loan basis. To estimate the value of the loans, each loans’ contractual cash flows were projected, adjusted for expected prepayments and credit losses. Assumptions for credit losses were based off the risk characteristics of each loan. For loans specifically evaluated by the Corporation, credit losses were based on the estimated loss identified by the Corporation. The projected cash flows were then discounted to present value using a discount rate based on the relative risk of the cash flows. In connection with the acquisition, the Corporation has purchased Purchase Credit Deteriorated ("PCD") loans, some of which have experienced more than insignificant credit deterioration since origination. PCD loans are recorded at the amount paid. An allowance for credit loss is determined using the same methodology as other loans held for investment. The initial allowance for credit losses determined on a collective basis is allocated to individual loans. The sum of the loan’s purchase price and allowance for credit losses becomes its initial amortized cost basis. The difference between the initial amortized cost basis and the par value of the loan is a noncredit discount or premium, which is amortized into interest income over the life of the loan. Subsequent changes to the allowance for credit losses are recorded through the provision for credit loss expense.The Corporation evaluated acquired loans for deterioration in credit quality based on any of, but not limited to, the following: (1) non-accrual status; (2) modifications for borrowers experiencing financial difficulty; (3) risk ratings of watch, special mention, substandard or doubtful; and (4) loans greater than 60 days past due. Of the $1.7 billion net loans held for investment acquired, $132.2 million were identified as PCD loans on the acquisition date. The following table provides a summary of these PCD loans at acquisition:July 23, 2025Par value of acquired loans at acquisition$138,153 Allowance for credit losses at acquisition(1,857)Non-credit discount at acquisition(4,121)Total merger consideration$132,175 Premises and equipment: The fair value of bank premises and equipment held for use was valued by obtaining recent market data for similar property types with adjustments for characteristics of individual properties. The Corporation acquired 20 branches from ESSA, 10 of which were owned premises.Operating lease right of use (“ROU”) assets and lease liabilities: The fair value of the lease ROU assets was measured at an amount equal to the lease liability and evaluated