CNB FINANCIAL CORP/PA MANAGEMENT REPORT OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (Form 10-K)

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This Management's Discussion and Analysis of Financial Condition and Results of
Operations is presented to provide insight into management's assessment of
financial results and should be read in conjunction with the following parts of
this Form 10-K: Part I, Item 1 "Business," Part II, Item 7A, "Quantitative and
Qualitative Disclosures About Market Risk," and Part II, Item 8 "Financial
Statements and Supplementary Data."

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Table of Contents Dollar amounts in tables are expressed in thousands, except for per share amounts.

Forward-Looking Statements and Factors That May Affect Future Results

The information below includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, with respect to CNB's financial
condition, liquidity, results of operations, future performance and business.
These forward-looking statements are intended to be covered by the safe harbor
for "forward-looking statements" provided by the Private Securities Litigation
Reform Act of 1995. Forward-looking statements are those that are not historical
facts. Forward-looking statements include statements with respect to beliefs,
plans, objectives, goals, expectations, anticipations, estimates and intentions
that are subject to significant risks and uncertainties and are subject to
change based on various factors (some of which are beyond CNB's control).
Forward-looking statements often include the words "believes," "expects,"
"anticipates," "estimates," "forecasts," "intends," "plans," "targets,"
"potentially," "probably," "projects," "outlook" or similar expressions or
future conditional verbs such as "may," "will," "should," "would" and "could."
CNB's actual results may differ materially from those contemplated by the
forward-looking statements, which are neither statements of historical fact nor
guarantees or assurances of future performance.

Currently, one of the most significant factors that could cause actual outcomes
to differ materially from our forward-looking statements is the potential
adverse effect of the current pandemic of the novel coronavirus, or COVID-19, on
the financial condition, results of operations, cash flows and performance of
the Corporation, our customers and the global economy and financial markets. The
COVID-19 pandemic has impacted us and our customers significantly, and the
extent that it continues to impact us and our customers will depend on future
developments, which are highly uncertain and cannot be predicted with
confidence, including the scope, severity and duration of the pandemic and its
impact on our customers and demand for financial services, the actions
governments, businesses and individuals take in response to the pandemic, the
direct and indirect economic effects of the pandemic and containment measures,
treatment developments, public adoption rates of COVID-19 vaccines, including
booster shots, and their effectiveness against emerging variants of COVID-19,
such as the Delta and Omicron variants, and the pace of recovery when the
COVID-19 pandemic subsides, among others. Moreover, investors are cautioned to
interpret many of the risks identified under Part I, "Item 1A. Risk Factors" in
this Annual Report on Form 10-K as being heightened as a result of the ongoing
and numerous adverse impacts of the COVID-19 pandemic.

Additional factors that could cause the actual results to differ materially from
the statements, include, but are not limited to, (i) changes in general
business, industry or economic conditions or competition; (ii) 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; (iii) adverse changes or conditions
in capital and financial markets; (iv) changes in interest rates; (v) higher
than expected costs or other difficulties related to integration of combined or
merged businesses; (vi) the effects of business combinations and other
acquisition transactions, including the inability to realize our loan and
investment portfolios; (vii) changes in the quality or composition of our loan
and investment portfolios; (viii) adequacy of loan loss reserves; (ix) increased
competition; (x) loss of certain key officers; (xi) deposit attrition; (xii)
rapidly changing technology; (xiii) unanticipated regulatory or judicial
proceedings and liabilities and other costs; (xiv) changes in the cost of funds,
demand for loan products or demand for financial services; and (xv) 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.

The forward-looking statements contained herein are based upon management's
beliefs and assumptions. Any forward-looking statement made herein speaks only
as of the date on which it is made. Factors or events that could cause our
actual results to differ may emerge from time to time, and it is not possible
for us to predict all of them. CNB undertakes no obligation to publicly update
or revise any forward-looking statements included in this Annual Report on Form
10-K, whether as a result of new information, future events or otherwise, except
to the extent required by law. In light of these risks, uncertainties and
assumptions, the forward-looking events discussed might not occur and you should
not put undue reliance on any forward-looking statements.

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Overview

The Corporation is a financial holding company registered under the BHC Act. It
was incorporated under the laws of the Commonwealth of Pennsylvania in 1983 for
the purpose of engaging in the business of a financial holding company. The
Corporation's subsidiary, the Bank, provides financial services to individuals
and businesses primarily within its primary market area of the Pennsylvania
counties of Blair, Cambria, Cameron, Centre, Clearfield, Crawford, Elk, Indiana,
Jefferson, and McKean. ERIEBANK, a division of the Bank, operates in the
Pennsylvania counties of Crawford, Erie, and Warren and in the Ohio counties of
Ashtabula, Cuyahoga, and Lake. FCBank, a division of the Bank, operates in the
Ohio counties of Crawford, Richland, Ashland, Wayne, Marion, Morrow, Knox,
Delaware, and Franklin. BankOnBuffalo, a division of the Bank, operates in New
York counties of Erie and Niagara. Ridge View Bank, a division of the Bank,
operates in Roanoke, Virginia.

In addition to the Bank, the Corporation has four other subsidiaries. CNB
Securities Corporation is incorporated in Delaware and currently maintains
investments in debt and equity securities. CNB Insurance Agency, incorporated in
Pennsylvania, provides for the sale of nonproprietary annuities and other
insurance products. CNB Risk Management, Inc., incorporated in Delaware, is a
captive insurance company that insures against certain risks unique to the
operations of the Corporation and its subsidiaries and for which insurance may
not be currently available or economically feasible in today's insurance
marketplace. Holiday, incorporated in Pennsylvania, offers small balance
unsecured loans and secured loans, primarily collateralized by automobiles and
equipment, to borrowers with higher risk characteristics.

Considerations for COVID-19

The global outbreak of COVID-19 and the public health measures that have been
undertaken in response have had, and continue to have, significant repercussions
across regional and global economies and financial markets. The COVID-19
pandemic, its associated responsive measures and the resulting economic slowdown
have disrupted our business and are expected to continue to have a significant
impact on our business, financial performance and operating results. Since we
cannot estimate when the COVID-19 pandemic and the associated responsive
measures will end, we cannot estimate the ultimate operational and financial
impact of COVID-19 on our business. However, management will continue to
proactively implement strategies to mitigate the impact of the pandemic on the
Corporation's business, risk profile and financial performance.

To address the challenges arising as a result of the COVID-19 pandemic, and in
order to continue to deliver essential services to the communities the
Corporation serves while maintaining a high level of safety for customers and
employees, the Corporation implemented its Pandemic Response Plan. Among other
things, significant actions taken include:

•Implementation of communication plans to ensure employees, customers and critical suppliers are kept informed of developments affecting the Company’s operations.

• Restricting all non-essential travel while continuing to monitor and update the Company’s quarantine protocols based on government guidelines;

•Enforce safe practices in branch lobbies to serve consumers and businesses and continue to provide alternatives to the Company’s customers through its drive-thru capabilities, ATM network, banking via the Internet, its mobile applications and its telephone customer service capabilities;

•Continued remote-access availability for the Corporation's workforce to work
from home or other remote locations. The Corporation has taken appropriate
efforts to ensure that activities are performed in accordance with the
Corporation's compliance and information security policies, which are designed
to ensure customer data and other information is properly safeguarded; and

• Instituted mandatory social distancing policies for employees who do not work remotely.

In order to ensure the safety of its customers and employees, the Company continues to closely monitor the COVID-19 pandemic and is updating its response plan accordingly.

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Non-GAAP Financial Information

This report contains references to financial measures that are not defined in
GAAP. Management uses non-GAAP financial information in its analysis of the
Corporation's performance. Management believes that these non-GAAP measures
provide a greater understanding of ongoing operations, enhance comparability of
results of operations with prior periods and show the effects of significant
gains and charges in the periods presented. The Corporation's management
believes that investors may use these non-GAAP measures to analyze the
Corporation's financial performance without the impact of unusual items or
events that may obscure trends in the Corporation's underlying performance. This
non-GAAP data should be considered in addition to results prepared in accordance
with GAAP, and is not a substitute for, or superior to, GAAP results.
Limitations associated with non-GAAP financial measures include the risks that
persons might disagree as to the appropriateness of items included in these
measures and that different companies might calculate these measures
differently. Non-GAAP measures reflected within the discussion below include:

•Tangible book value per share;
•Tangible equity/tangible assets;
•Tangible common equity/tangible assets;
•Pre-provision net revenue ("PPNR");
•Non-interest income excluding realized gains on available for sale securities;
•Net interest margin (fully tax equivalent basis);
•Efficiency ratio;
•Return on average tangible equity; and
•Return on average tangible common equity

In addition, non-GAAP evaluations on the impact of PPP-related loans (as defined
below), merger costs, branch closure costs and Federal Home Loan Bank of
Pittsburgh ("FHLB") prepayment penalties on various metrics of the Corporation's
financial performance include calculations related to return on average equity,
return on average tangible equity, return on average tangible common equity,
tangible equity/tangible assets, tangible common equity/tangible assets and
allowance for credit losses/loans. A reconciliation of these non-GAAP financial
measures is provided below in the "Non-GAAP Financial Measures" section.

Management considers return on average assets, return on average equity,
earnings per common share, asset quality, and other metrics as key measures of
the financial performance of the Corporation. The interest rate environment will
continue to play an important role in the future earnings of the Corporation. In
order to address the challenging interest rate and competitive environments, the
Corporation continues to evaluate, develop and implement strategies necessary to
support its ongoing financial performance objectives.

Financial condition

The following table presents ending balances, growth, and the percentage change
of certain measures of our financial condition for specified years (dollars in
millions):

                                                                                              $ Change              % Change
                                                          2021               2020             vs. prior            vs. prior
                                                        Balance            Balance              year                  year
Total assets                                          $ 5,328.9          $ 4,729.4          $    599.5                   12.7  %
Total loans, net of allowance for credit losses         3,597.2            3,337.4               259.8                    7.8  %
Total securities                                          707.6              591.6               116.0                   19.6  %
Total deposits                                          4,715.6            4,181.7               533.9                   12.8  %
Total shareholders' equity                                442.8              416.1                26.7                    6.4  %



Cash and Cash Equivalents

Cash and cash equivalents totaled $732.2 million at December 31, 2021, including
additional excess liquidity of $684.3 million held at the Federal Reserve. Cash
and cash equivalents totaled $532.7 million at December 31, 2020. The increase
in liquidity was primarily the result of the impact of government stimulus
initiatives and organic growth in deposits.

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In addition to the Corporation's deposit growth strategies, management believes
the liquidity needs of the Corporation are satisfied primarily by the current
balance of cash and cash equivalents, customer deposits, FHLB borrowing
capacity, and the portions of the securities and loan portfolios that mature
within one year. The Corporation expects that these sources of funds will
support both existing operations, future loan and investment portfolio growth
and off-balance sheet commitments as they come due.

Securities

Securities available for sale and equity securities totaled $707.6 million and
$591.6 million at December 31, 2021 and 2020, respectively. Note 3,
"Securities," in 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 increase of approximately
$116.0 million, or 20%, from December 31, 2020 to December 31, 2021, resulted
primarily from the Corporation's liquidity strategy implemented in 2021. This
strategy focused on deploying excess liquidity earning a relatively modest level
of interest at the Federal Reserve towards investment securities that met the
Corporation's risk profile parameters for investments.

The following tables summarize the maturity distribution schedule with
corresponding weighted-average yields of securities available for sale as of
December 31, 2021. Weighted-average yields have been computed on a fully
taxable-equivalent basis using a tax rate of 21%. Mortgage-backed securities are
included in maturity categories based on their stated maturity date.

                                                                                                                 December 31, 2021
                                                                                                                  After Five But
                                         Within                        After One But Within                         Within Ten                              After Ten
                                        One Year                            Five Years                                 Years                                  Years                                 Total
                                $ Amt.             Yield             $ Amt.              Yield               $ Amt.                Yield             $ Amt.             Yield             $ Amt.             Yield
U.S. Government Sponsored
Entities                      $  7,328              1.97  %       $   60,354              1.57  %       $       44,066              1.83  %       $       0              0.00  %       $ 111,748               1.70  %
State and Political
Subdivisions                  $  3,139              3.00  %       $   26,223              2.85  %       $       51,851              2.22  %       $  22,497              2.33  %         103,710               2.43  %
Residential and multi-family
mortgage                      $      0              0.00  %       $   28,439              2.88  %       $       41,051              2.09  %       $ 365,147              1.38  %         434,637               1.55  %
Corporate notes and bonds     $    661              0.38  %       $    2,946              0.62  %       $       24,457              3.92  %       $       0              0.00  %          28,064               3.49  %
Pooled SBA                    $      0              0.00  %       $      359              5.15  %       $       12,449              2.73  %       $   6,224              1.78  %          19,032               2.46  %
Total                         $ 11,128              2.17  %       $  118,321              2.16  %       $      173,874              2.37  %       $ 393,868              1.44  %       $ 697,191               1.81  %


The portfolio does not contain any holdings of a single issuer greater than 10% of equity other than the we Treasury and government sponsored entities.

The Corporation generally purchases debt securities over time and does not
attempt to "time" its transactions, which allows for more efficient management
of fluctuations in the interest rate environment. The Corporation's strategy
given the current environment is to focus on lower risk securities, shorter
durations that complement the current portfolio investment ladder, and
consistent reinvestment of cash flows to replace lower earning assets.

The Corporation monitors the earnings performance and the effectiveness of the
liquidity of the securities portfolio on a regular basis through meetings of the
ALCO. The ALCO also reviews and manages interest rate risk for the Corporation.
Through active balance sheet management and analysis of the securities
portfolio, a sufficient level of liquidity is maintained to satisfy depositor
requirements and various credit needs of our customers.

Loans

Note 4, "Loans," in the consolidated financial statements provides more detail
concerning the loan portfolio of the Corporation. At December 31, 2021, loans
totaled $3.6 billion, an increase of $263.0 million, or 7.8%, compared to
December 31, 2020. As further discussed below, during the second quarter of
2020, the Corporation began originating loans to qualified small businesses
under the Paycheck Protection Program ("PPP") administered by the Small Business
Administration ("SBA") under the provisions of the CARES Act. Excluding the
impact of PPP loans, net of PPP deferred processing fees (such loans, the
"PPP-related loans"), the Corporation's loan portfolio increased $373.3 million,
or 11.6%, from December 31, 2020. The growth was primarily driven by the
Corporation's ongoing expansion in the Cleveland and Ridge View regions,
combined with continued strong growth in its Private Banking division, coupled
with increased lending opportunities in other regions of the Corporation.

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Included in the loan growth discussed above, and as part of the liquidity
management strategies first implemented by the Corporation in 2020, the year
ended December 31, 2021 reflected an increase in syndicated lending activities
of $103.7 million from December 31, 2020. The syndicated loan portfolio totaled
$125.8 million, or 3.5% of total loans, excluding PPP-related loans, at December
31, 2021. The Corporation internally underwrites each syndicated loan
individually and considers these loans as an alternative to purchasing
investment securities. While the overall strategy is to redeploy lower earning
assets towards a higher profitability loan with a risk profile that meets the
underwriting policies, the Corporation does not expect this type of activity to
become a significant component of its business.

Origin of Loans/Risk Management

The Corporation has certain lending policies and procedures in place that are
designed to maximize loan income within an acceptable level of risk. Management
reviews and approves these policies and procedures on a regular basis. A
reporting system supplements the review process by providing management with
frequent reports related to loan production, loan quality, concentrations of
credit, loan delinquencies and nonperforming and potential problem loans.
Diversification in the loan portfolio is a means of managing risk associated
with fluctuations in economic conditions. The Corporation has not underwritten
any hybrid loans, payment option loans, or low documentation/no documentation
loans. Variable rate loans are generally underwritten at the fully indexed rate.
Loan underwriting policies and procedures have not changed materially between
any periods presented. As discussed more fully above, syndicated loan purchases
are underwritten utilizing the same process as the Corporation's originated
loans.

The Corporation has begun to explore the credit and reputational risks
associated with climate change and their potential impact on the foregoing,
while closely monitoring regulatory developments on climate risk. This includes,
among other things, researching and developing a formalized approach to
considering climate change related risks in the Corporation's underwriting
processes. This approach will be impacted, in part, by the accessibility and
reliability of both customer climate risk data and climate risk data in general.
One of the objectives of these efforts is to enable the Corporation to better
understand the climate change related risks associated with the Corporation's
customers' business activities and to be able to monitor their response to those
risks and their ultimate impact on the Corporation's customers.

Although it is possible that the on-going effects of COVID-19 could continue to
impact demand for our loan products, the Corporation expects to continue to
achieve robust loan growth in 2022 as a result of its diversified markets and
its focus on core customer acquisition strategies.

Client Support Strategies and Loan Portfolio Profile

As of December 31, 2021, the Corporation had outstanding $47.1 million in PPP
loans at a rate of 1.00%, representing 446 PPP loan relationships, and deferred
PPP processing fees of approximately $1.9 million. For the twelve months ended
December 31, 2021, the Corporation recognized $8.7 million in deferred PPP
processing fees ("PPP-related fees"). The outstanding balance of PPP loans at
December 31, 2021 included loans from the two different origination years: (i)
$199 thousand, or seven loans from the Corporation's participation in the PPP in
2020, and (ii) $46.9 million, or 439 loans, from the Corporation's participation
in the PPP in 2021.

In accordance with the CARES Act, the Corporation also deferred loan payments
for its commercial and consumer customers, as determined on a case-by-case basis
by the financial needs of each customer. As of December 31, 2021, there were
five loans with deferred loan payment arrangements totaling $397 thousand,
compared to $151.0 million, or 167 loans, at December 31, 2020.

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Maturities and Sensitivities of Loans to Changes in Interest Rate

The following table presents the maturity distribution of the Corporation's loan
portfolio at December 31, 2021. The table also presents the portion of loans
that have fixed interest rates or variable interest rates that fluctuate over
the life of the loans in accordance with changes in an interest rate index.

                                                                                  December 31, 2021
                                           Due in           After One,          After Five but
                                          One Year          but Within          Within Fifteen               After
                                          or Less           Five Years               Years               Fifteen Years             Total
Loans with Fixed Interest Rate
Farmland                                $      99          $    1,667       

$1,611 $935 $4,312
Owner-occupied non-residential non-farm properties

                                  5,277              19,399                  19,807                   9,056               53,539
Agricultural production and other loans
to farmers                                      0                 284                       0                       0                  284
Commercial and Industrial                  15,621             224,510                  62,089                     185              302,405
Obligations (other than securities and
leases) of states and political
subdivisions                                2,679               4,559                  50,807                  39,902               97,947
Other loans                                    21               1,125                     871                     295                2,312
Other construction loans and all land
development and other land loans (1)       10,243              10,878                   7,319                   1,790               30,230
Multifamily (5 or more) residential
properties                                  1,452              56,949                   3,090                   4,753               66,244
Non-owner occupied, nonfarm
nonresidential properties                  25,595              63,094                  18,319                   6,798              113,806
1-4 Family Construction (1)                 2,482                   0                     652                   4,951                8,085
Home equity lines of credit                     1                 102                     701                     518                1,322
Residential Mortgages secured by first
liens                                       1,815              23,663                 252,640                 109,134              387,252
Residential Mortgages secured by junior
liens                                         234               5,802                  42,533                   4,385               52,954
Other revolving credit plans                   29                  16                      16                       2                   63
Automobile                                    394              15,514                   4,954                       0               20,862
Other consumer                              7,646              31,176                   7,793                   2,852               49,467
Credit cards                                    0                   0                       0                       0                    0
Overdrafts                                      0                   0                       0                       0                    0
Total                                   $  73,588          $  458,738          $      473,202          $      185,556          $ 1,191,084

Loans with Variable or Floating
Interest Rate
Farmland                                $     451          $    2,544       

$9,010 $7,451 $19,456
Owner-occupied non-residential non-farm properties

                                 11,800              30,222                 283,777                  55,334              381,133
Agricultural production and other loans
to farmers                                    829                   0                     266                       0                1,095
Commercial and Industrial                 196,459             120,532                  87,633                   1,960              406,584
Obligations (other than securities and
leases) of states and political
subdivisions                                    0               1,660                  17,244                  24,036               42,940
Other loans                                 2,174               2,911                   1,647                   4,935               11,667
Other construction loans and all land
development and other land loans (1)       60,175             110,199                  88,427                   9,838              268,639
Multifamily (5 or more) residential
properties                                 16,311              48,928                  66,351                  18,309              149,899
Non-owner occupied, nonfarm
nonresidential properties                  68,275             137,110                 288,479                  55,392              549,256
1-4 Family Construction (1)                 7,382               1,287                   3,526                  17,542               29,737
Home equity lines of credit                 4,786               6,761                  73,563                  18,085              103,195
Residential Mortgages secured by first
liens                                       6,976              14,721                 154,116                 263,664              439,477
Residential Mortgages secured by junior
liens                                       1,098                 113                   2,318                     206                3,735
Other revolving credit plans                2,992               1,930                  21,102                     449               26,473
Automobile                                      0                   0                       0                       0                    0
Other consumer                                  1                  46                      78                      84                  209
Credit cards                                9,935                   0                       0                       0                9,935
Overdrafts                                    278                   0                       0                       0                  278
Total                                   $ 389,922          $  478,964          $    1,097,537          $      477,285          $ 2,443,708

11-4 Family building loans and other construction loans and all segments of land development loans and other land loans include loans that are from construction to permanent loans in which the loan segment will change to the end of the construction period.

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The Corporation generally structures commercial loans with shorter-term
maturities in order to match our funding sources and to enable us to effectively
manage the loan portfolio by providing the flexibility to respond to liquidity
needs, changes in interest rates and changes in underwriting standards and loan
structures, among other things. Due to the shorter-term nature of such loans,
from time to time in the ordinary course of business and without any contractual
obligation on our part, we will renew/extend maturing lines of credit or
refinance existing loans at their maturity dates.

Lending concentration

AT December 31, 2021there was no sectoral concentration exceeding 10% of the total loan portfolio.

Loan Quality

The following table presents information regarding defaulted loans and other non-performing assets as of December 31, 2021 and 2020:

                                                                   December 31, 2021          December 31, 2020
Nonaccrual loans                                                  $          19,420          $          30,359
Accrual loans greater than 90 days past due                                     168                        325
Total nonperforming loans                                                    19,588                     30,684
Other real estate owned                                                         707                        862
Total nonperforming assets                                        $         

$20,295 31,546 Modified Loans Under Troubled Debt Restructuring (TDR): Performing TDR Loans

                                              $           9,006          $          10,457
Nonperforming TDR loans (1)                                                   7,600                      4,631
Total TDR loans                                                   $          16,606          $          15,088
Total loans                                                       $       3,634,792          $       3,371,789

Nonaccrual loans as a percentage of loans                                      0.53  %                    0.90  %
Total assets                                                      $       5,328,939          $       4,729,399
Nonperforming assets as a percentage of total assets                           0.38  %                    0.67  %
Allowance for credit losses on loans                              $         

$37,588 34,340 Ratio of allowance for credit losses on loans to outstanding loans

                                                                        193.55  %                  113.11  %


(1) Non-performing TDR loans are also included in the outstanding loans balance.

Total nonperforming assets were $20.3 million, or 0.38%, of total assets, as of
December 31, 2021, reflecting a substantial decrease when compared to
nonperforming assets of $31.5 million, or 0.67%, as of December 31, 2020. The
reduction in nonperforming assets resulted primarily from the resolution of an
$8.7 million commercial real estate loan relationship with no additional loss to
the Corporation. In addition, the fourth quarter of 2021 included the resolution
of a $1.4 million nonperforming commercial real estate loan relationship with no
loss to the Corporation.

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. Subsequent to the funding of a
loan, ongoing review of credits is required. Credit reviews are performed
quarterly by an outsourced loan review firm and cover approximately 65% of the
commercial loan portfolio on an annual basis. In addition, the external
independent loan review firm reviews classified assets, past due loans and
nonaccrual loans quarterly. Note 1, "Summary of Significant Accounting
Policies," in the consolidated financial statements provides a discussion of the
Corporation's policy for placing loans on nonaccrual status.

Potential problem loans consist of loans that are performing in accordance with
contractual terms but for which management has concerns about the ability of a
borrower to continue to comply with repayment terms because of the borrower's
potential operating or financial difficulties. Management monitors these
"watchlist" loans on a monthly basis to determine potential losses within the
commercial loan portfolio. The "watchlist" is comprised of all credits risk
rated special mention, substandard and doubtful.

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Allowance for Credit Losses

As discussed in Note 1, "Summary of Significant Accounting Policies," in the
consolidated financial statements, the Corporation's policies and procedures
related to accounting for credit losses changed on January 1, 2020 in connection
with the adoption of a new accounting standard update as codified in Accounting
Standards Codification ("ASC") Topic 326 ("ASC 326") Financial Instruments -
Credit Losses. The amount of each allowance account represents management's best
estimate of current expected credit losses ("CECL") on these financial
instruments considering available information, from internal and external
sources, relevant to assessing exposure to credit loss over the contractual term
of the instrument. Relevant available information includes historical credit
loss experience, current conditions and reasonable and supportable forecasts.
While historical credit loss experience provides the basis for the estimation of
expected credit losses, adjustments to historical loss information may be made
for differences in current portfolio-specific risk characteristics,
environmental conditions or other relevant factors. While management utilizes
its best judgment and information available, the ultimate adequacy of the
Corporation's allowance accounts is dependent upon a variety of factors beyond
the Corporation's control, including the performance of the Corporation's
portfolios, the economy, changes in interest rates and the view of the
regulatory authorities toward classification of assets. The adequacy of the
allowance for credit losses is subject to a formal analysis by the Credit
Administration and Finance Departments of the Corporation. For additional
information regarding the Corporation's accounting policies related to credit
losses, refer to Note 1, "Summary of Significant Accounting Policies," and Note
4, "Loans" in the consolidated financial statements.

The table below provides an allocation of the allowance for credit losses on
loans by loan portfolio segment at December 31, 2021 and 2020; however,
allocation of a portion of the allowance to one segment does not preclude its
availability to absorb losses in other segments.

                                                                                 December 31, 2021
                                                  Amount of          Percent of Loans                             Ratio of Allowance
                                                  Allowance          in Each Category                             Allocated to Loans
                                                  Allocated           to Total Loans          Total Loans          in Each Category
Farmland                                        $       151                     0.7  %       $    23,768                     0.64  %
Owner-occupied, nonfarm nonresidential
properties                                            3,339                    12.0  %           434,672                     0.77  %
Agricultural production and other loans to
farmers                                                   9                     0.0  %             1,379                     0.65  %
Commercial and Industrial 1                           8,837                    19.5  %           708,989                     1.25  %
Obligations (other than securities and leases)
of states and political subdivisions                  1,649                     3.9  %           140,887                     1.17  %
Other loans                                             149                     0.4  %            13,979                     1.07  %
Other construction loans and all land
development and other land loans                      2,198                     8.2  %           298,869                     0.74  %
Multifamily (5 or more) residential properties        2,289                     5.9  %           216,143                     1.06  %
Non-owner occupied, nonfarm nonresidential
properties                                            6,481                    18.2  %           663,062                     0.98  %
1-4 Family Construction                                 158                     1.0  %            37,822                     0.42  %
Home equity lines of credit                           1,169                     2.9  %           104,517                     1.12  %
Residential Mortgages secured by first liens          6,943                    22.7  %           826,729                     0.84  %
Residential Mortgages secured by junior liens           546                     1.6  %            56,689                     0.96  %
Other revolving credit plans                            528                     0.7  %            26,536                     1.99  %
Automobile                                              263                     0.6  %            20,862                     1.26  %
Other consumer                                        2,546                     1.4  %            49,676                     5.13  %
Credit cards                                             92                     0.3  %             9,935                     0.93  %
Overdrafts                                              241                     0.0  %               278                    86.69  %
Total loans                                     $    37,588                   100.0  %       $ 3,634,792                     1.03  %
Excluding PPP loans, net of deferred processing
fees                                            $    37,588                                  $ 3,589,589                     1.05  %

1 PPP loans, net of deferred PPP processing fees, those disbursed in 2021, are included in the Commercial and Industrial classification.



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                                                                                 December 31, 2020
                                                  Amount of          Percent of Loans                             Ratio of Allowance
                                                  Allowance          in Each Category                             Allocated to Loans
                                                  Allocated           to Total Loans          Total Loans          in Each Category
Farmland                                        $       221                     0.7  %       $    23,316                     0.95  %
Owner-occupied, nonfarm nonresidential
properties                                            3,700                    12.1  %           407,924                     0.91  %
Agricultural production and other loans to
farmers                                                  24                     0.1  %             2,664                     0.90  %
Commercial and Industrial 1                           6,233                    19.7  %           663,550                     0.94  %
Obligations (other than securities and leases)
of states and political subdivisions                    998                     3.9  %           132,818                     0.75  %
Other loans                                              68                     0.4  %            11,961                     0.57  %
Other construction loans and all land
development and other land loans                      1,956                     6.1  %           205,734                     0.95  %
Multifamily (5 or more) residential properties        2,724                     6.3  %           212,815                     1.28  %
Non-owner occupied, nonfarm nonresidential
properties                                            8,658                    19.0  %           640,945                     1.35  %
1-4 Family Construction                                  82                     0.8  %            27,768                     0.30  %
Home equity lines of credit                             985                     3.2  %           109,444                     0.90  %
Residential Mortgages secured by first liens          4,539                    23.0  %           777,030                     0.58  %
Residential Mortgages secured by junior liens           241                     1.6  %            53,726                     0.45  %
Other revolving credit plans                            507                     0.8  %            25,507                     1.99  %
Automobile                                              132                     0.8  %            25,344                     0.52  %
Other consumer                                        2,962                     1.3  %            42,792                     6.92  %
Credit cards                                             66                     0.2  %             8,115                     0.81  %
Overdrafts                                              244                     0.0  %               336                    72.62  %
Total loans                                     $    34,340                   100.0  %       $ 3,371,789                     1.02  %
Excluding PPP loans, net of deferred processing
fees                                            $    34,340                                  $ 3,216,260                     1.07  %

1 PPP loans, net of deferred PPP processing fees, those disbursed in 2020, are included in the Commercial and Industrial classification.



The allowance for credit losses measured as a percentage of loans was 1.03% as
of December 31, 2021, compared to 1.02% as of December 2020. The allowance for
credit losses measured as a percentage of loans, net of PPP-related loans, was
1.05% as of December 31, 2021 compared to 1.07% as of December 31, 2020.

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

For the year ended December 31, 2021, the allowance for credit losses increased
due to the growth in the Corporation's loan portfolio, coupled with qualitative
adjustments in the Corporation's residential and consumer loan portfolios,
growth in new market areas, and qualitative adjustments related to the continued
uncertainty with the pandemic and economic environment. These factors were
partially offset by improvements in the Corporation's historical loss rates and
quantitative inputs including the unemployment forecast and prepayment and
curtailment speeds, as well as the impact of net charge-offs and improvements or
resolutions in the Corporation's individually evaluated loans.

There is still a significant amount of uncertainty related to the economic
impact of COVID-19, including duration, new variants, future government
responses, and the resiliency of the U.S. economy. During 2021, management
reviewed internal and external factors to consider the need for any qualitative
adjustments to the quantitative model. Specifically, management reevaluated the
loss given default assumptions that utilize Frye Jacobs, the time period used
for prepayment and curtailment speeds and the unemployment forecast. Management
will continue to evaluate its estimate of expected credit losses as new
information becomes available.

Note 4 “Loans” to the consolidated financial statements provides additional information on loan balances by portfolio segment at December 31, 2021 and 2020, as well as the nature and extent of loans modified as part of a distressed debt restructuring in 2021 and 2020 and the related effect on the provision for credit charges and the provision for credit losses.

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Table of Contents Additional Information Related to Credit Losses and Net Recoveries (Write-Offs) December 31, 2021 and 2020 is presented in the tables below.

                                                                                                          December 31, 2021
                                                                         Provision                                                          Ratio of Annualized
                                                                       (Benefit) for                 Net                                     Net (Charge-Offs)
                                                                        Credit Loss             (Charge-Offs)            Average          

Average recoveries

                                                                          Expense                Recoveries               Loans                    Loans
Farmland                                                             $           (70)         $            0          $    22,970                        0.00  %
Owner-occupied, nonfarm nonresidential properties                                213                    (574)             428,377                       (0.13) %
Agricultural production and other loans to farmers                               (15)                      0                2,245                        0.00  %
Commercial and Industrial                                                      2,564                      40              680,368                        0.01  %
Obligations (other than securities and leases) of
states and political subdivisions                                              1,028                    (377)             138,604                       (0.27) %
Other loans                                                                       81                       0               12,187                        0.00  %
Other construction loans and all land development
and other land loans                                                             524                    (282)             246,583                       (0.11) %
Multifamily (5 or more) residential properties                                  (435)                      0              218,285                        0.00  %
Non-owner occupied, nonfarm nonresidential
properties                                                                    (2,128)                    (49)             627,595                       (0.01) %
1-4 Family Construction                                                           76                       0               30,513                        0.00  %
Home equity lines of credit                                                      186                      (2)             106,214                        0.00  %
Residential Mortgages secured by first liens                                   2,436                     (32)             795,747                        0.00  %
Residential Mortgages secured by junior liens                                    308                      (3)              55,063                       (0.01) %
Other revolving credit plans                                                      49                     (28)              25,751                       (0.11) %
Automobile                                                                       154                     (23)              23,027                       (0.10) %
Other consumer                                                                   637                  (1,053)              42,634                       (2.47) %
Credit cards                                                                     120                     (94)               9,532                       (0.99) %
Overdrafts                                                                       275                    (278)                 224                     (124.11) %
Total loans                                                          $         6,003          $       (2,755)         $ 3,465,919                       (0.08) %



                                                                                                         December 31, 2020
                                                                        Provision                                                         Ratio of Annualized
                                                                      (Benefit) for                Net                                     Net (Charge-Offs)
                                                                       Credit Loss            (Charge-Offs)            Average          

Average recoveries

                                                                         Expense               Recoveries               Loans                    Loans
Farmland                                                             $         (30)         $            0          $    27,359                        0.00  %
Owner-occupied, nonfarm nonresidential properties                            2,031                     (49)             396,881                       (0.01) %
Agricultural production and other loans to farmers                              (6)                      0                3,185                        0.00  %
Commercial and Industrial                                                    5,283                  (2,740)             644,793                       (0.42) %
Obligations (other than securities and leases) of
states and political subdivisions                                              207                       0              147,851                        0.00  %
Other loans                                                                     19                       0               10,546                        0.00  %
Other construction loans and all land development
and other land loans                                                        (1,504)                    125              191,984                        0.07  %
Multifamily (5 or more) residential properties                               1,301                       0              184,980                        0.00  %
Non-owner occupied, nonfarm nonresidential
properties                                                                   3,266                  (1,470)             532,088                       (0.28) %
1-4 Family Construction                                                         61                       0               24,893                        0.00  %
Home equity lines of credit                                                    367                      (5)             103,723                        0.00  %
Residential Mortgages secured by first liens                                 2,366                    (220)             691,294                       (0.03) %
Residential Mortgages secured by junior liens                                  148                    (156)              55,018                       (0.28) %
Other revolving credit plans                                                   (51)                   (116)              27,102                       (0.43) %
Automobile                                                                      99                     (27)              26,419                       (0.10) %
Other consumer                                                               1,364                  (1,383)              38,679                       (3.58) %
Credit cards                                                                   179                    (139)               8,126                       (1.71) %
Overdrafts                                                                     254                    (250)                 250                     (100.00) %
Total loans                                                          $      15,354          $       (6,430)         $ 3,115,171                       (0.21) %


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Contents

Prior to January 1, 2020, the Company has calculated the allowance for loan losses using the probable exposure method. Our loan loss provision activity was as follows during the year ended December 31, 2019:

                                                                                                        December 31, 2019
                                                                       Provision                                                          Ratio of Annualized
                                                                     (Benefit) for                 Net                                     Net (Charge-Offs)
                                                                      Credit Loss             (Charge-Offs)            Average          

Average recoveries

                                                                        Expense                Recoveries               Loans                    

Loans

Commercial, Industrial, and Agricultural                           $         1,134          $         (188)         $   987,974                       (0.02) %
Commercial Mortgages                                                         2,729                  (3,267)             748,915                       (0.44) %
Residential Real Estate                                                       (344)                   (313)             790,293                       (0.04) %
Consumer                                                                     2,080                  (2,046)              95,018                       (2.15) %
Credit cards                                                                    82                    (101)               7,448                       (1.36) %
Overdrafts                                                                     343                    (340)                 462                      (73.59) %
Total loans                                                        $         6,024          $       (6,255)         $ 2,630,110                       (0.24) %



During the year ended December 31, 2021, the Corporation recorded a provision
for credit losses of $6.0 million, as compared to a provision for credit losses
of $15.4 million for the year ended December 31, 2020. Net chargeoffs during the
year ended December 31, 2021 were $2.8 million, compared to net chargeoffs of
$6.4 million during the year ended December 31, 2020. The year ended December
31, 2020 included (i) a charge-off of approximately $2.6 million related to a
secured commercial and industrial loan relationship with a borrower who is
deceased, and (ii) a separate $1 million charge-off related to the $8.7 million
commercial real estate loan relationship discussed above.

Premises and equipment

During the years ended December 31, 2021 and 2020, the Corporation invested $6.5
million and $5.6 million, respectively, in its physical infrastructure through
the purchase of land, buildings, and equipment. The year ended December 31, 2020
includes premises and equipment related to the Bank of Akron acquisition.

Bank-owned life insurance

The Corporation has periodically purchased Bank Owned Life Insurance ("BOLI").
The policies cover executive officers and a select group of other employees with
the Bank being named as beneficiary. Earnings from BOLI assist the Corporation
in offsetting its benefit costs. The Corporation made $22 million in purchases
of BOLI during the twelve months ended December 31, 2021, while the Corporation
made no purchases of BOLI during the twelve months ended December 31, 2020. The
year ended December 31, 2020 includes $8.2 million of BOLI related to the Bank
of Akron acquisition.

Funding Sources

Deposits

The Company’s sources of funding are deposits, borrowings, amortization and repayment of the principal of borrowing, interest earned on marketable securities or their maturity and funds from operations. The Company views deposits as its primary source of funding to support asset growth.

                                                 December 31,          December 31,             Percentage change
                                                     2021                  2020                   2021 vs. 2020
Demand, Non interest bearing                    $    792,086          $    627,114                    26.3%
Demand, Interest bearing                           1,079,336               951,903                    13.4%
Savings deposits                                   2,457,745             2,126,183                    15.6%
Time deposits                                        386,452               476,544                   (18.9)%
Total                                           $  4,715,619          $  4,181,744                    12.8%



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Deposits totaled $4.7 billion at December 31, 2021, reflecting a $533.9 million,
or 12.8%, increase from December 31, 2020, primarily resulting from the
Corporation's customer acquisition strategies across all of the Corporation's
regions and its Private Banking division, as well as the impact of government
stimulus initiatives. The number of households across all regions increased 3.3%
from December 31, 2020.

The following table shows the average balances and average rates paid on deposits for the period indicated.

                                                                                     Year Ended December 31,
                                                      2021                                     2020                                     2019
                                          Average              Annual              Average              Annual              Average              Annual
                                           Amount               Rate                Amount               Rate                Amount               Rate
Demand - Non-Interest Bearing          $   724,839                              $   516,724                              $   360,208
Demand - Interest Bearing                  978,279                0.18  %           755,200                0.24  %           580,244                0.42  %
Savings Deposits                         2,309,560                0.22  %         1,923,214                0.66  %         1,450,653                1.39  %
Time Deposits                              445,488                1.82  %           445,408                2.15  %           371,464                2.05  %
Total                                  $ 4,458,166                              $ 3,640,546                              $ 2,762,569



The following table presents additional information about our December 31, 2021
and 2020 deposits:

                                                                December 31,          December 31,
                                                                    2021                  2020
Time deposits not covered by deposit insurance                 $     68,562          $     64,202
Total deposits not covered by deposit insurance                   1,711,676             1,401,417



Scheduled maturities of term deposits not covered by deposit insurance at
December 31, 2021 were the following:

                            December 31, 2021
3 months or less           $            7,482
Over 3 through 6 months                 9,618
Over 6 through 12 months               31,619
Over 12 months                         19,843
Total                      $           68,562



Borrowings

Periodically, the Corporation utilizes term borrowings from the FHLB and other
lenders to meet funding obligations or match fund certain loan assets. The terms
of these borrowings are detailed in Note 12, "Borrowings," to the consolidated
financial statements. There were no FHLB or other long-term borrowings as of
December 31, 2021 and 2020. As a result of its strong deposit growth, during the
third and fourth quarters of 2020, the Corporation prepaid the entire balance of
its borrowings from the FHLB. The combined prepayment penalty associated with
these prepayments totaled $7.9 million. The weighted average rate associated
with these borrowings was 2.20%.

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.

Cash and capital resources

Liquidity

Liquidity measures an organization's ability to meet its cash obligations as
they come due. The liquidity of a financial institution reflects its ability to
meet loan requests, to accommodate possible outflows in deposits and to take
advantage of interest rate market opportunities. The ability of a financial
institution to meet its current financial obligations is a function of its
balance sheet structure, its ability to liquidate assets and its access to
alternative sources of funds.

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The Corporation's expected material cash requirements for the twelve months
ended December 31, 2022 and thereafter consist withdrawals by depositors, credit
commitments to borrowers, shareholder dividends, share repurchases, operating
expenses and capital expenditures. The Corporation expects to satisfy these
short-term and long-term cash requirements through deposit growth, principal and
interest payments on loans and investment securities, maturing loans and
investment securities, as well as the Corporation maintains access to wholesale
funding sources.

The objective of the Corporation's liquidity management is to manage cash flow
and liquidity reserves so that they are adequate to fund the Corporation's
operations and to meet cash obligations and other commitments on a timely basis
and at a reasonable cost. The Corporation seeks to achieve this objective and
ensure that funding needs are met by maintaining an appropriate level of liquid
funds through asset/liability management, which includes managing the mix and
time to maturity of financial assets and financial liabilities on its balance
sheet. The Corporation's liquidity position is enhanced by its ability to raise
additional funds as needed in the wholesale markets.

Asset liquidity is provided by liquid assets which are readily marketable or
pledgeable or which will mature in the near future. Liquid assets include cash,
interest-bearing deposits in banks, including the Federal Reserve, and
securities available for sale. Liability liquidity is provided by access to
funding sources which include core deposits, correspondent banks and other
wholesale funding.

The Corporation's liquidity position is continuously monitored and adjustments
are made to the balance between sources and uses of funds as deemed appropriate.
Liquidity risk management is an important element in the Corporation's
asset/liability management process. The Corporation regularly models liquidity
stress scenarios to assess potential liquidity outflows or funding problems
resulting from economic disruptions, volatility in the financial markets,
unexpected credit events or other significant occurrences deemed problematic by
management. These scenarios are incorporated into the Corporation's contingency
funding plan, which provides the basis for the identification of its liquidity
needs.

As of December 31, 2021, the Corporation had approximately $684.3 million held
in an interest-bearing account at the Federal Reserve. The Corporation also has
the ability to borrow funds as a member of the FHLB. As of December 31, 2021,
based upon available, pledgeable collateral, the Corporation's total borrowing
capacity with the FHLB was approximately $932.7 million. Furthermore, at
December 31, 2021, the Corporation had approximately $235.7 million in
securities that were unencumbered by a pledge and could be used to support
additional borrowings through the Federal Reserve discount window, as needed. As
of December 31, 2021, management is not aware of any events that are reasonably
likely to have a material adverse effect on the Corporation's liquidity, capital
resources or operations. In addition, management is not aware of any regulatory
recommendations regarding liquidity that would have a material adverse effect on
the Corporation.

In the ordinary course of business the Corporation has entered into contractual
obligations and have made other commitments to make future payments. Refer to
the accompanying notes to consolidated financial statements elsewhere in this
report for the expected timing of such payments as of December 31, 2021. The
Corporation's material contractual obligations as of December 31, 2021 consist
of (i) long-term borrowings - Note 12, "Borrowings," (ii) operating leases -
Note 9, "Leases," (iii) time deposits with stated maturity dates - Note 11,
"Deposits," and (iv) commitments to extend credit and standby letters of credit
- Note 20, "Off-Balance Sheet Activities."

Equity, capital ratios and measures

The Corporation's capital continues to provide a source of strength for the
Corporation's growth, strategies and profitability. As of December 31, 2021,
CNB's total shareholders' equity was $442.8 million, an increase of $26.7
million, or 6.4%, from December 31, 2020 primarily as a result of growth in
organic earnings, partially offset by a decrease in accumulated other
comprehensive income and payment of common and preferred stock dividends to the
Corporation's common and preferred shareholders during the year ended December
31, 2021.

Under the Basel III Capital Rules, the Corporation elected to opt-out of the
requirement to include most components of accumulated other comprehensive income
in regulatory capital. Accordingly, amounts reported as accumulated other
comprehensive income/loss related to securities available for sale, effective
cash flow hedges and defined benefit post-retirement benefit plans do not impact
regulatory capital and are not included in the calculation of risk-based capital
and leverage ratios. In connection with the adoption of ASC 326 on January 1,
2020, the Corporation also elected to exclude, for a transitional period, the
effects of credit loss accounting under CECL in the calculation of our
regulatory capital and regulatory capital ratios. Regulatory agencies for banks
and bank holding companies utilize capital guidelines designed to measure
capital and take into consideration the risk inherent in both on-balance sheet
and off-balance sheet items. See Note 19, "Regulatory Capital Matters," in the
accompanying notes to consolidated financial statements.
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Favorite stock

During the three months ended September 30, 2020, the Corporation raised $57.8
million, net of issuance costs, from the issuance of depositary shares, each
representing a 1/40th ownership interest in a share of the Corporation's 7.125%
Series A fixed rate non-cumulative perpetual preferred stock, no par value, with
a liquidation preference of $1,000 per share of preferred stock. The $57.8
million qualify as Tier 1 capital for regulatory capital purposes.

Debentures and subordinated notes

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. The $85.0 million qualify as Tier 2
capital for regulatory capital purposes.

Additional details on our debentures and subordinated notes are included in Note 12, “Borrowings”, of the notes to the consolidated financial statements.

From December 31, 2021 all of the Company’s capital ratios exceeded “well capitalized” regulatory levels and continue to support the Company’s growth strategy. The Company’s capital ratios and book value per common share as of December 31, 2021 and 2020 were as follows:

                                                                        December 31, 2021         December 31, 2020
Total risk-based capital ratio                                                    14.92  %                  14.32  %
Tier 1 capital ratio                                                              11.79  %                  11.91  %
Common equity tier 1 ratio                                                         9.65  %                   9.50  %
Leverage ratio                                                                     8.22  %                   8.11  %
Tangible common common equity/tangible assets
(1)                                                                                6.45  %                   6.70  %
Book value per common share                                            $          22.85          $          21.29
Tangible book value per common share (1)                               $    

$20.22 18.66


(1) Tangible common equity, tangible assets and tangible book value per common
share are non-GAAP financial measures calculated using GAAP amounts. Tangible
common equity is calculated by excluding the balance of goodwill and other
intangible assets from the calculation of stockholders' equity. Tangible assets
is 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. The Corporation believes that these non-GAAP financial measures
provide information to investors that is useful in understanding its financial
condition. Because not all companies use the same calculation of tangible common
equity and tangible assets, this presentation may not be comparable to other
similarly titled measures calculated by other companies. A reconciliation of
these non-GAAP financial measures is provided below.
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Average Balances, Interest Rates and Yields

The loan categories used to monitor and analyze interest income and yields are
different than the portfolio segments used to determine the allowance for credit
losses for loans. The allowance for credit losses was calculated by pooling
loans of similar credit risk characteristics and credit monitoring procedures.
See Note 1, "Summary of Significant Accounting Policies," and Note 4, "Loans,"
for more information about pooling of loans for the allowance for credit losses.

The following table shows the average balances of certain measures of our financial condition and our net interest margin for the years indicated.

                                                  December 31, 2021                               December 31, 2020                               December 31, 2019
                                                                     Interest                                        Interest                                         Interest
                                         Average        Annual        Inc./              Average        Annual        Inc./              Average         Annual        Inc./
                                         Balance         Rate          Exp.              Balance         Rate          Exp.              Balance          Rate          Exp.

Assets
Securities:
Taxable (1)                           $   624,330          1.70  % $  

10,500 $505,770 2.35% $11,510 $436,122

           2.77  % $  11,973
Tax-Exempt (1) (2)                         42,658          3.43  %     1,403               55,460          3.32  %     1,772               85,802           3.40  %     2,867
Equity Securities (1) (2)                   8,136          3.58  %       291               12,814          5.89  %       755               18,203           6.17  %     1,123
Total Securities                          675,124          1.83  %    12,194              574,044          2.53  %    14,037              540,127           2.99  %    15,963
Loans:
Commercial (2)                          1,284,750          4.95  %    63,642            1,230,615          4.80  %    59,016              987,974           5.35  %    52,868
Mortgage (2)                            2,080,000          4.51  %    93,738            1,783,980          4.76  %    84,857            1,539,208           5.04  %    77,501
Consumer                                  101,169          9.98  %    10,098              100,576          9.71  %     9,766              102,928          10.08  %    10,373
Total Loans (3)                         3,465,919          4.83  %   167,478            3,115,171          4.93  %   153,639            2,630,110           5.35  %   140,742
Other Earning Assets                      626,997          0.14  %       881              402,861          0.21  %       852               24,674           2.02  %       499
Total earning assets                    4,768,040          3.79  % $ 180,553            4,092,076          4.14  % $ 168,528            3,194,911           4.93  % $ 157,204
Non-Interest Earning Assets
Cash & Due From Banks                      48,673                                          42,001                                          33,218
Premises, Equipment and Right of Use
Assets                                     79,807                                          75,516                                          68,744
Other Assets                              199,107                                         166,511                                         137,519
Allowance for Credit Losses               (36,727)                                        (28,962)                                        (20,655)
Total Non-Interest Earning Assets         290,860                                         255,066                                         218,826
Total Assets                          $ 5,058,900                                     $ 4,347,142                                     $ 3,413,737
Liabilities and Shareholders' Equity
Interest Bearing Deposits
Demand - interest bearing             $   978,279          0.18  % $   1,783          $   755,200          0.24  % $   1,781          $   580,244           0.42  % $   2,455
Savings                                 2,309,560          0.22  %     5,164            1,923,214          0.66  %    12,775            1,450,653           1.39  %    20,138
Time                                      445,488          1.82  %     8,115              445,408          2.15  %     9,586              371,464           2.05  %     7,609
Total interest bearing deposits         3,733,327          0.40  %    15,062            3,123,822          0.77  %    24,142            2,402,361           1.26  %    30,202
Short-term borrowings                           0          0.00  %         0                    0          0.00  %         0               16,022           2.65  %       425
Long-term borrowings                            0          0.00  %         0              220,849          2.04  %     4,507              228,714           2.15  %     4,894
Finance lease liabilities                     507          4.54  %        23                  587          4.60  %        27                  663           4.52  %        30
Subordinated debentures & notes           108,963          4.35  %     4,735               70,620          5.35  %     3,780               70,620           5.63  %     3,979
Total interest bearing liabilities      3,842,797          0.52  % $  19,820            3,415,878          0.95  % $  32,456            2,718,380           1.45  % $  39,530
Demand - non-interest bearing             724,839                                         516,724                                         360,208
Other liabilities                          60,202                                          56,377                                          49,825
Total Liabilities                       4,627,838                                       3,988,979                                       3,128,413
Shareholders' Equity                      431,062                                         358,163                                         285,324
Total Liabilities and Shareholders'
Equity                                $ 5,058,900                                     $ 4,347,142                                     $ 3,413,737
Interest Income/Earning Assets                             3.79  % $ 180,553                               4.14  % $ 168,528                                4.93  % $ 157,204
Interest Expense/Interest Bearing
Liabilities                                                0.52  %    19,820                               0.95  %    32,456                                1.45  %    39,530
Net Interest Spread                                        3.27  % $ 160,733                               3.19  % $ 136,072                                3.48  % $ 117,674
Interest Income/Earning Assets                             3.79  % $ 180,553                               4.14  % $ 168,528                                4.93  % $ 157,204
Interest Expense/Earning Assets                            0.41  %    19,820                               0.80  %    32,456                                1.24  %    39,530
Net Interest Margin                                        3.38  % $ 160,733                               3.34  % $ 136,072                                3.69  % $ 117,674


(1) Includes unamortized discounts and premiums. Average balance is computed
using the fair value of securities. The average yield has been computed using
the amortized cost average balance for available for sale securities.
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(2) Average yields and interest income are stated on a fully taxable equivalent
basis using the Corporation's marginal federal income tax rate of 21% for the
years end December 31, 2021, 2020 and 2019. Interest income has been increased
by $953 thousand, $1.4 million, and $1.5 million for the years ended December
31, 2021, 2020, and 2019, respectively, as a result of the effect of tax-exempt
interest and dividends earned by the Corporation.

(3) Average balance outstanding includes the average balance outstanding of all
nonaccrual loans. Loans consist of the average of total loans less average
unearned income. Included in loan interest income are loan fees of $15.5
million, $10.4 million, and $4.0 million for the years ended December 31, 2021,
2020, and 2019, respectively. Loan fees for the year ended December 31, 2021 and
2020 included $8.7 million and $5.1 million in PPP deferred processing fees.

Volume analysis of changes in net interest income

The following table shows the change in net interest income for the years indicated.

Net Interest Income Rate-Volume    For Twelve Months Ended December 31, 2021 over            For Twelve Months Ended December 31, 2020 over
Variance                                 (under) 2020 Due to Change In (1)                          (under) 2019 Due to Change In (1)
                                    Volume               Rate               Net                Volume               Rate               Net

Assets
Securities:
   Taxable                      $     2,278          $  (3,288)         $  (1,010)         $     1,369          $  (1,832)         $   (463)
   Tax-Exempt (2)                      (430)                61               (369)              (1,026)               (69)           (1,095)
   Equity Securities (2)               (168)              (296)              (464)                (317)               (51)             (368)
Total Securities                      1,680             (3,523)            (1,843)                  26             (1,952)           (1,926)
Loans:
   Commercial (2)                     2,780              1,846              4,626               11,582             (5,434)            6,148
   Mortgage (2)                      13,341             (4,460)             8,881               11,666             (4,310)            7,356
   Consumer                              60                272                332                 (226)              (381)             (607)
   Total Loans                       16,181             (2,342)            13,839               23,022            (10,125)           12,897
Other Earning Assets                    311               (282)                29                  800               (447)              353
Total Earning Assets            $    18,172          $  (6,147)         $  12,025          $    23,848          $ (12,524)         $ 11,324

Liabilities and Shareholders'
Equity
Interest Bearing Deposits
Demand - Interest Bearing       $       407          $    (405)         $       2          $       413          $  (1,087)         $   (674)
Savings                                 864             (8,475)            (7,611)               3,139            (10,502)           (7,363)
Time                                      1             (1,472)            (1,471)               1,591                386             1,977
Total Interest Bearing Deposits       1,272            (10,352)            (9,080)               5,143            (11,203)           (6,060)
Short-Term Borrowings                     0                  0                  0                    0               (425)             (425)
Long-Term Borrowings                      0             (4,507)            (4,507)                (145)              (242)             (387)
Finance Lease Liabilities                (4)                 0                 (4)                  (3)                 0                (3)
Subordinated Debentures               1,666               (711)               955                    0               (199)             (199)
Total Interest Bearing
Liabilities                     $     2,934          $ (15,570)         $ 

(12,636) $4,995 ($12,069) ($7,074)

Change in net interest income $15,238 $9,423 $24,661 $18,853 ($455) $18,398

(1) The change in interest due to both volume and rate has been fully allocated to volume changes.

(2) Changes in interest income on tax-exempt securities and loans are presented
on a fully taxable-equivalent basis, using the Corporation's marginal federal
income tax rate of 21% for the year ended December 31, 2021 and 2020.

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Results of Operations
Year Ended December 31, 2021 vs. Year Ended December 31, 2020

Overview of Statements of Income and Comprehensive Income

Net income was $57.7 million, or $3.16 per diluted common share, for the year
ended December 31, 2021, compared to $32.7 million, or $1.97 per diluted share,
for the year ended December 31, 2020, reflecting increases of $25.0 million, or
76.2%, and $1.19 per diluted share, or 60.4%. The primary drivers of the
increase in net income were the growth in earning assets and PPP related fees.
In addition, included in net income for the year ended December 31, 2020 was the
after-tax impact of $10.2 million, or $0.63 per diluted share, in merger costs,
FHLB prepayment penalties and branch closure costs. Partially offsetting were
the growth in operating expenses to support the Corporation's growth, as well as
a lower net interest margin as a result of the low interest rate environment.
Pre-provision net revenue ("PPNR") was $76.8 million for the year ended December
31, 2021, compared to $55.4 million for the year ended December 31, 2020,
reflecting an increase of $21.3 million, or 38.5%. Included in PPNR for the year
ended December 31, 2020 was $12.6 million in merger costs, prepayment penalties
and branch closure costs.

Return on average equity was 13.39% for the year ended December 31, 2021,
compared to 9.14% for the year ended December 31, 2020. Return on average
tangible common equity was 16.23% and 10.67% for the same periods in 2021 and
2020, respectively. Excluding after-tax merger costs, FHLB prepayment penalties
and branch closure costs, adjusted return on average equity and average tangible
common equity were 11.98% and 14.10% for the year ended December 31, 2020,
respectively.

As a measure of the Corporation's efficiency in management of its expenses, the
efficiency ratio was 59.76% for the year ended December 31, 2021, compared to
65.10% for the year ended December 31, 2020. The efficiency ratio for the year
ended December 31, 2020 included $12.6 million in merger costs, FHLB prepayment
penalties and branch closure costs.

Interest income and expenses

Net interest income for the twelve months ended increased $25.1 million, or
18.6%, to $159.8 million from the twelve months ended December 31, 2020,
primarily as a result of loan growth, various deposit pricing and liquidity
strategies. Included in net interest income were PPP-related fees, which totaled
approximately $8.7 million for the year ended December 31, 2021, compared to
$5.1 million for the year ended December 31, 2020.

Net interest margin on a fully tax equivalent basis was 3.38% and 3.34% for the year ended December 31, 2021 and 2020, respectively.

The yield on earning assets of 3.79% for the twelve months ended December 31,
2021 decreased 35 basis points from 4.14% for the twelve months ended December
31, 2020, primarily as a result of the lower interest rate environment and
higher level of excess cash at the Federal Reserve, partially offset by higher
PPP-related fees. The cost of interest-bearing liabilities decreased 43 basis
points from 0.95% for the year ended December 31, 2020 to 0.52% for the year
ended December 31, 2021, primarily as a result of the Corporation's targeted
deposit rate reductions and the prepayment of the Corporation's remaining FHLB
borrowings, which were approximately $160 million at a weighted average interest
rate of 2.24%, in the fourth quarter of 2020.

Provision for credit losses

The Corporation recorded a provision for credit losses of $6.0 million in 2021
compared to $15.4 million in 2020. Net loan charge-offs were $2.8 million during
the year ended December 31, 2021, compared to $6.4 million during the year ended
December 31, 2020. As disclosed in "Allowance for Credit Losses" discussion
above, management estimates the allowance balance using relevant available
information, from internal and external sources, relating to past events,
current conditions, reasonable and supportable forecasts, and other significant
qualitative and quantitative factors.

Management believes the charges to the provision for credit losses in 2021 were
appropriate and the allowance for credit losses was adequate to absorb losses in
the loan portfolio at December 31, 2021.

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Non-Interest Income

Total non-interest income was $33.4 million for the year ended December 31, 2021
compared to $28.1 million from the same period in 2020, reflecting an increase
of $5.4 million, or 19.2%. Included in non-interest income for the year ended
December 31, 2021 and 2020 were $783 thousand and $2.2 million, respectively, in
net realized gains on available for sale securities. Excluding the impact of the
realized gains on available for sale securities for the year ended December 31,
2021 and 2020, total non-interest income for the year ended December 31, 2021
increased $6.8 million, or 26.2%, from the same period in 2020. The increase was
partially driven by growth in Wealth and Asset Management fees, as assets under
management increased by $135.2 million, or 11.9%, from December 31, 2020, to
$1.3 billion as of December 31, 2021. Other significant factors that contributed
to the increase included income from investments in small business investment
company ("SBIC") funds, card processing and interchange income and service
charges on deposits from increased business activity as well as an increase in
bank owned life insurance income.

Non-interest charges

For the year ended December 31, 2021, total non-interest expense was $116.4
million, reflecting an increase of $9.1 million, or 8.5%, from the year ended
December 31, 2020. Included in non-interest expense for the year ended December
31, 2020 was $12.6 million in merger costs, prepayment penalties and branch
closure costs. In addition, non-interest expense for the year ended December 31,
2021 included expenses related to hiring additional personnel in the
Corporation's growth regions of Cleveland, Buffalo and Ridge View (Roanoke) as
well as investments in technology aimed at enhancing customer experience. Also,
included in the fourth quarter of 2021 is approximately $2.3 million in
additional personnel costs primarily from increased incentive compensation
accruals and certain retirement benefit expenses.


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Year Ended December 31, 2020 vs. Year Ended December 31, 2019

Overview of Statements of Income and Comprehensive Income

Net income was $32.7 million, or $1.97 per diluted common share, for the year
ended December 31, 2020. PPNR was $55.4 million, for the twelve months ended
December 31, 2020. Excluding after-tax merger costs related to CNB's acquisition
of Bank of Akron, FHLB prepayment penalties and branch closure costs totaling a
combined $10.2 million, net income was $42.9 million, or $2.60 per diluted
common share, for the year ended December 31, 2020, compared to $40.2 million,
or $2.64 per diluted share, for the year ended December 31, 2019, reflecting an
increase of $2.7 million, or 6.7%, and a decrease of $0.04 per diluted common
share, or 1.5%. For the year ended December 31, 2020, excluding the impact of
merger, prepayment penalties and branch closure costs PTPP income was $68.1
million, representing an increase of approximately $13.3 million, or 24.2%, from
the same period in 2019.

For the twelve months ended December 31, 2020, return on equity was 9.14%, while
return on average common equity was 9.35% and return on average tangible common
equity was 10.67%. Excluding after-tax merger costs, prepayment penalties and
branch closure costs, adjusted return on average tangible common equity was
14.10% for the year ended December 31, 2020, compared to 16.34% for the year
ended December 31, 2019. For the twelve months ended December 31, 2020, return
on average assets was 0.75%. Excluding after-tax merger costs, prepayment
penalties and branch closure costs, adjusted return on average assets was 0.99%
for the year ended December 31, 2020, compared to 1.18% for the year ended
December 31, 2019.

As a measure of the Corporation's efficiency in management of its expenses, the
efficiency ratio was 65.10% for twelve months ended December 31, 2020. Excluding
after-tax merger costs, prepayment penalties and branch closure costs, the
adjusted efficiency ratio was 57.41% for the twelve months ended December 31,
2020, compared to 60.07% for the comparable period in 2019. The improvement in
efficiency ratio resulted from the impact of PPP-related fees, coupled with an
overall lower level of business activity resulting from the pandemic and the
Corporation's internal cost management initiatives focusing on travel
restrictions, a hiring freeze, lower marketing expenditures and other expense
management initiatives.

Interest Income and Expense

Net interest income for the twelve months ended December 31, 2020 increased
15.9% to $134.7 million from the twelve months ended December 31, 2019, driven
by an organic growth of $560.9 million in earning assets, coupled with $336.3
million in PPP-related loans, estimated PPP-related deposits and Paycheck
Protection Program Lending Facility ("PPPLF") related assets (collectively the
"PPP-related assets"). In addition, the twelve months ended December 31, 2020
included PPP-related fees totaling approximately $5.1 million.

Net interest margin on a fully tax-equivalent basis was 3.34% and 3.69% for the
twelve months ended December 31, 2020 and 2019, respectively, Excluding $336.3
million in PPP-related assets, the net interest margin on a fully-tax equivalent
basis was 3.50% for the twelve months ended December 31, 2020.

The yield on earning assets of 4.15% for the twelve months ended December 31,
2020 included $336.3 million in PPP-related assets. Excluding PPP-related assets
and PPP-related fees, the yield on earning assets was 4.37% for the twelve
months ended December 31, 2020, a decrease of 56 basis points from 4.93% for the
twelve months ended December 31, 2019, primarily as a result of the lower
interest rate environment. The cost of interest-bearing liabilities decreased 50
basis points to 0.95% for the twelve months ended December 31, 2020 from 1.45%
for the twelve months ended December 31, 2019 primarily as a result of the
Corporation's targeted deposit rate reductions.

Provision for credit losses

The Corporation recorded a provision for credit losses of $15.4 million in 2020
compared to $6.0 million in 2019. Net loan charge-offs were $6.4 million during
the year ended December 31, 2020, compared to $6.3 million during the year ended
December 31, 2019. As disclosed in "Allowance for Credit Losses" discussion
above, management estimates the allowance balance using relevant available
information, from internal and external sources, relating to past events,
current conditions, and reasonable and supportable forecasts, and other
significant qualitative and quantitative factors.

Management believes the charges to the provision for credit losses in 2020 were
appropriate and the allowance for credit losses was adequate to absorb losses in
the loan portfolio at December 31, 2020

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Non-Interest Income

Total non-interest income was $28.1 million for the twelve months ended December
31, 2020, an increase of $2.1 million, or 8.0%, from the twelve months ended
December 31, 2019. Total non-interest income includes net realized and
unrealized losses on trading securities, which combined totaled $2.5 million for
the twelve months ended December 31, 2020 compared to $2.0 million for the
twelve months ended December 31, 2019. The remainder of the $2.1 million
increase was primarily due to continued growth in Wealth and Asset Management
fees, increased mortgage banking activity coupled with higher card processing
and interchange income, partially offset by a decrease in service charges on
deposits and other fees resulting from lower business activity and CNB's
response to the pandemic.

Non-interest charges

For the twelve months ended December 31, 2020, total non-interest expense was
$107.3 million. Excluding merger costs, prepayment penalties and branch closure
costs, total non-interest expense was $94.7 million for the twelve months ended
December 31, 2020, an increase of $7.3 million, or 8.4%, from the twelve months
ended December 31, 2019, including a $1.6 million impact from the acquisition of
Bank of Akron. The remaining $5.7 million increase was the result of the
Corporation's ongoing investments in technology and other general expenditures
to support long-term growth. The ratio of non-interest expenses to average
assets was 2.47% at December 31, 2020. Excluding merger costs, prepayment
penalties and branch closure costs and average PPP-related assets, the ratio of
non-interest expenses to average assets was 2.36% at December 31, 2020 compared
to 2.56% at December 31, 2019.

income tax expense

Income tax expense was $13.1 million in 2021, compared to $7.3 million in 2020
and $8.6 million in 2019. The effective tax rates were 18.5%, 18.3%, and 17.6%
for 2021, 2020, and 2019, 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. Included in the 18.3% effective tax rate for the year ended
December 30, 2020 were merger costs, FHLB prepayment penalties and branch
closure costs, all of which reduced the effective tax rate.

Significant Accounting Policies and Estimates

The Corporation's consolidated financial statements are prepared in accordance
with accounting principles generally accepted in the U.S. and follow general
practices within the industries in which the Corporation operates. The most
significant accounting policies used by the Corporation are presented in Note 1,
"Summary of Significant Accounting Policies," to the consolidated financial
statements. Application of these principles requires management to make
estimates or judgments that affect the amounts reported in the financial
statements and accompanying notes. These estimates are based on information
available as of the date of the financial statements; accordingly, as this
information changes, the financial statements could reflect different estimates
or judgments. 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.

Provision for credit losses

The Corporation's allowance for credit losses is a critical accounting policy
that requires the most significant judgments and estimates used in preparation
of its consolidated financial statements. In determining the appropriate
estimate for the allowance for credit losses, management considers a number of
factors relative to both individually evaluated credits in the loan portfolio
and macro-economic factors relative to the economy of the U.S. as a whole and
the economies of the areas in which the Corporation does business.

Management performs a quarterly evaluation of the adequacy of the allowance for
credit losses. Management considers a variety of factors in establishing this
estimate. This evaluation is inherently subjective as it requires material
estimates by management that may be susceptible to significant change based on
changes in economic and real estate market conditions.

The evaluation is comprised of specific and pooled components. The specific
component is the Corporation's evaluation of credit loss on individually
evaluated loans based on the fair value of the collateral less estimated selling
costs if collateral dependent or based on the present value of expected future
cash flows discounted at the loan's initial effective interest rate if not
collateral dependent. The majority of the Corporation's loans subject to
individual evaluation are considered collateral dependent. All other loans are
evaluated collectively for credit loss by pooling loans based on similar risk
characteristics.
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As a significant percentage of the Corporation's loan portfolio is
collateralized by real estate, appraisals of the underlying value of property
securing loans are critical in determining the charge-offs for specific loans.
Assumptions are instrumental in determining the value of properties. Overly
optimistic assumptions or negative changes to assumptions could significantly
affect the valuation of a property securing a loan and the related allowance
determined. Management carefully reviews the assumptions supporting such
appraisals to determine that the resulting values reasonably reflect amounts
realizable on the related loans.

The pooled component of the evaluation is determined by applying reasonable and
supportable economic forecasts and historical averages to the remaining loans
segmented by similar risk characteristics. The key assumptions used in
projecting future loss rates include the economic forecast, the forecast and
reversion to mean time periods, and prepayment and curtailment assumptions. The
assumptions are used to calculate and aggregate estimated cash flows for the
time period that remains in each loan's contractual life. The cash flows are
discounted back to the balance sheet date using each loan's effective yield, to
arrive at a present value of future cash flows, which is compared to the
amortized cost basis of the loan pool to determine the amount of allowance for
credit loss required by the calculation.

One of the most significant judgments used in projecting loss rates when
estimating the allowance for credit loss is the macro-economic forecast provided
by a third party. The economic indices sourced from the macro-economic forecast
and used in projecting loss rates are national unemployment rate and changes in
home values. The economic index used in the calculation to which the calculation
is most sensitive is the national unemployment rate. Changes in the
macro-economic forecast, especially for the national unemployment rate, could
significantly impact the calculated estimated credit losses between reporting
periods.

Other key assumptions in the calculation of the allowance for credit loss
include the forecast and reversion to mean time periods and prepayment and
curtailment assumptions. The macro-economic forecast is applied for a reasonable
and supportable time period before reverting to long-term historical averages
for each economic index. The forecast and reversion to mean time period used for
each economic index at December 31, 2021 were four quarters and eight quarters,
respectively. Prepayment and curtailment assumptions are based on the
Corporation's historical experience over the trailing 12 months and are adjusted
by management as deemed necessary. The prepayment and curtailment assumptions
vary based on segment.

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. 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. The qualitative factors applied at
December 31, 2021, and the importance and levels of the qualitative factors
applied, may change in future periods depending on the level of changes to items
such as the uncertainty of economic conditions and management's assessment of
the level of credit risk within the loan portfolio as a result of such changes,
compared to the amount of allowance for credit loss calculated by the model. The
evaluation of qualitative factors is inherently imprecise and requires
significant management judgment.

While management utilizes its best judgment and information available, the
adequacy of the allowance for credit loss is determined by certain factors
outside of the Corporation's control, such as the performance of the
Corporation's portfolios, changes in the economic environment including economic
uncertainty, changes in interest rates, and the view of the regulatory
authorities toward classification of assets and the level of allowance for
credit loss. Additionally, the level of allowance for credit loss may fluctuate
based on the balance and mix of the loan portfolio. If actual results differ
significantly from management's assumptions, the Corporation's allowance for
credit loss may not be sufficient to cover inherent losses in the Corporation's
loan portfolio, resulting in additions to the Corporation's allowance for credit
loss and an increase in the provision for credit losses.

Good will

Certain intangible assets generated in connection with acquisitions are
periodically assessed for impairment. Goodwill is tested at least annually for
impairment, and if certain events occur which indicate goodwill might be
impaired between annual tests, such as the potential impact of the COVID-19
pandemic, goodwill must be tested when such events occur. In making this
assessment, the Corporation considers a number of factors including operating
results, business plans, economic projections, anticipated future cash flows,
current market data, stock price, etc. There are inherent uncertainties related
to these factors and the Corporation's judgment in applying them to the analysis
of goodwill impairment. Future changes in economic and operating conditions
could result in goodwill impairment in subsequent periods.
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Non-GAAP Financial Measures

The following tables reconcile non-GAAP financial measures to their most directly comparable GAAP measures.

the 31st of December, the 31st of December,

                                                                          2021                 2020

Calculation of tangible book value per share and tangible equity/tangible assets: Equity

                                                 $   442,847          $   416,137
Less: preferred equity                                                    57,785               57,785
Less: goodwill                                                            43,749               43,749
Less: core deposit intangible                                                460                  567
Tangible common equity                                               $   

340,853 $314,036

Total assets                                                         $ 5,328,939          $ 4,729,399
Less: goodwill                                                            43,749               43,749
Less: core deposit intangible                                                460                  567
Tangible assets                                                      $ 

5,284,730 $4,685,083

Ending shares outstanding                                             16,855,062           16,833,008

Tangible book value per common share                                 $     20.22          $     18.66
Tangible common equity/Tangible assets                                      6.45  %              6.70  %



                                                                    December 31,         December 31,
                                                                        2021                 2020

Calculation of allowance/loans, net of PPP-related loans: Total allowance for credit losses

                                  $    

37,588 $34,340

Total loans                                                        $ 3,634,792          $ 3,371,789
Less: PPP-related loans                                                 45,203              155,529

Adjusted total loans, net of PPP-related loans (non-GAAP) $3,589,589 $3,216,260

Provision/adjusted loans, net of PPP-related loans (non-GAAP) 1.05%

              1.07  %



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                                                                             Twelve Months Ended
                                                                                 December 31,

                                                                                     2021                 2020

Calculation of net interest margin (on a full tax equivalent basis): Interest income (on a full tax equivalent basis) (non-GAAP)

                         $   180,553          $   168,528
Interest expense (fully tax equivalent basis) (non-GAAP)                             19,820               32,456
Net interest income (fully tax equivalent basis) (non-GAAP)                 

$160,733 $136,072

Average total earning assets                                                    $ 4,768,040          $ 4,092,076
Less: average mark to market adjustment on investments                                8,141               18,884

Adjusted average total earning assets, net of market value (non-GAAP)

$4,759,899 $4,073,192

Net interest margin, fully tax equivalent basis (non-GAAP)
(annualized)                                                                           3.38  %              3.34  %



                                                                              Twelve Months Ended
                                                                                  December 31,

                                                                                      2021               2020
Calculation of efficiency ratio:
Non-interest expense                                                              $ 116,433          $ 107,326
Less: core deposit intangible amortization                                              107                206
Adjusted non-interest expense (non-GAAP)                                          $ 116,326          $ 107,120

Non-interest income                                                               $  33,434          $  28,059

Net interest income                                                        

$159,780 $134,711
Less: tax-exempt investment and loan income, net of TEFRA (non-GAAP)

                                                                            4,973              5,703

Add: tax-exempt investment and loan income (non-GAAP) (tax equivalent)

                                                                      6,416              7,490
Adjusted net interest income (non-GAAP)                                             161,223            136,498
Adjusted net revenue (non-GAAP) (tax-equivalent)                                  $ 194,657          $ 164,557
Efficiency ratio                                                                      59.76  %           65.10  %



                                          Twelve Months Ended
                                             December 31,

                                                      2021           2020

Calculation of PPNR:
Net interest income                                $ 159,780      $ 134,711
Add: Non-interest income                              33,434         28,059
Less: Non-interest expense                           116,433        107,326
PPNR (non-GAAP)                                    $  76,781      $  55,444



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  Table of Contents
                                                                             Twelve Months Ended
                                                                                 December 31,

                                                                                     2021               2020
Calculation of adjusted return on average equity:
Net income                                                                  

$57,707 $32,743
Add: merger fees, prepayment penalties and branch closure fees (excluding taxes)

                                                                             0             10,168
Adjusted net income                                                              $  57,707          $  42,911
Average shareholders' equity                                                     $ 431,062          $ 358,163
Adjusted return on average equity                                                    13.39  %           11.98  %



                                                                             Twelve Months Ended
                                                                                December 31,

                                                                                    2021              2020

Calculation of return on average tangible common equity: net income available to common shareholders

                                      $ 53,405          $ 31,596
Average tangible common shareholders' equity                                      329,012           296,142
Return on average tangible common equity (non-GAAP) (annualized)            

16.23% 10.67%

Calculation of Adjusted Return on Average Tangible Equity: Net Income Available to Common Shareholders

$53,405 $31,596
Add: merger fees, prepayment penalties and branch closure fees (excluding taxes)

                                                                            0            10,168
Adjusted net income available to common stockholders                             $ 53,405          $ 41,764
Average tangible common shareholders' equity                                      329,012           296,142
Adjusted return on average tangible common equity (non-GAAP)
(annualized)                                                                        16.23  %          14.10  %



                                                                                Twelve Months Ended
                                                                                   December 31,

                                                                                       2021              2020

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

                                                                 $ 33,434          $ 28,059
Less: net realized gains on available-for-sale securities                                783             2,190
Adjusted non-interest income                                                

$32,651 $25,869

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