CNB FINANCIAL CORP/PACCNE
CNB FINANCIAL CORP/PA Income Taxes Disclosure
Income Taxes
Upon adoption of ASU 2023-09, as described in Note 1, "Summary of Significant Accounting Policies," cash paid for income taxes, net of refunds, during the year ended December 31, 2025 was as follows:
| December 31, 2025 | |||||
| Federal | $ | 9,850 | |||
| States | |||||
| New York | 723 | ||||
| Other | 76 | ||||
| Foreign | — | ||||
| Total cash paid for income taxes, net of refunds | $ | 10,649 | |||
Income Tax Matters
Pre-tax income is entirely related to domestic activities, the Corporation did not have any foreign operations.
The following is a summary of income tax expense from continuing operations for the years ended December 31, 2025, 2024, and 2023:
| December 31, 2025 | December 31, 2024 | December 31, 2023 | |||||||||||||||
| Current tax expense: | |||||||||||||||||
| Federal | $ | 10,526 | $ | 12,863 | $ | 11,446 | |||||||||||
| State | 740 | 1,104 | 1,252 | ||||||||||||||
| Total | 11,266 | 13,967 | 12,698 | ||||||||||||||
| Deferred tax expense (benefit): | |||||||||||||||||
| Federal | 4,828 | (1,124) | 1,110 | ||||||||||||||
| State | 240 | (59) | 1 | ||||||||||||||
| Total | 5,068 | (1,183) | 1,111 | ||||||||||||||
| Income tax expense from continuing operations | $ | 16,334 | $ | 12,784 | $ | 13,809 | |||||||||||
The Corporation did not have any income tax expense (benefit) in foreign jurisdictions.
The reconciliation of income tax attributable to pre-tax income at the federal statutory tax rates to income tax expense in accordance with ASU 2023-09 is as follows:
| December 31, 2025 | |||||||||||
| Amount | % | ||||||||||
| Tax computed at the statutory federal rate | $ | 17,318 | 21.0 | % | |||||||
State income taxes, net of federal benefit (1) | 774 | 0.9 | |||||||||
| Tax credits | |||||||||||
Low income housing tax credits (2) | 61 | 0.1 | |||||||||
| Nontaxable or nondeductible items | |||||||||||
| Tax exempt interest, net | (1,232) | (1.5) | |||||||||
| Bank owned life insurance | (1,002) | (1.2) | |||||||||
| Other | 463 | 0.6 | |||||||||
| Other adjustments | (48) | (0.1) | |||||||||
| Income tax expense | $ | 16,334 | 19.8 | % | |||||||
(1) State taxes in New York make up the majority (greater than 50%) of the tax effect in this category.
(2) Low income housing tax credits includes the tax credit benefit net of proportional amortization.
The reconciliation of income tax attributable to pre-tax income at the federal statutory tax rates to income tax expense before the adoption of ASU 2023-09 is as follows:
| December 31, 2024 | % | December 31, 2023 | % | ||||||||||||||||||||
| Tax at statutory rate | $ | 14,146 | 21.0 | % | $ | 15,084 | 21.0 | % | |||||||||||||||
| Tax exempt income, net | (1,139) | (1.7) | (1,090) | (1.5) | |||||||||||||||||||
| Bank owned life insurance | (653) | (1.0) | (619) | (0.9) | |||||||||||||||||||
| Tax credits, net of amortization | (160) | (0.2) | (173) | (0.3) | |||||||||||||||||||
| Effect of state tax | 826 | 1.2 | 990 | 1.4 | |||||||||||||||||||
| Other | (236) | (0.4) | (383) | (0.5) | |||||||||||||||||||
| Income tax expense | $ | 12,784 | 18.9 | % | $ | 13,809 | 19.2 | % | |||||||||||||||
The following table sets forth deferred taxes as of December 31, 2025 and 2024:
| December 31, 2025 | December 31, 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Allowance for credit losses | $ | 14,760 | $ | 10,895 | |||||||
| Fair value adjustments – business combination | 10,184 | 685 | |||||||||
| Deferred compensation | 5,441 | 4,026 | |||||||||
| Net operating loss carryover | 2,406 | 493 | |||||||||
| Post-retirement benefits | — | 509 | |||||||||
| Unrealized loss on equity securities | 203 | 197 | |||||||||
| Nonaccrual loan interest | 722 | 563 | |||||||||
| Accrued expenses | 2,976 | 609 | |||||||||
| Deferred fees and costs | — | 25 | |||||||||
| Unrealized loss on securities available-for-sale | 7,262 | 10,852 | |||||||||
| Unrealized loss on securities held-to-maturity | 837 | 963 | |||||||||
| Lease liability | 13,570 | 12,360 | |||||||||
| Other | 598 | 547 | |||||||||
| Total | 58,959 | 42,724 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Premises and equipment | 3,134 | 3,054 | |||||||||
| Intangibles – section 197 | 2,354 | 2,475 | |||||||||
| Mortgage servicing rights | 571 | 278 | |||||||||
| Right of use lease asset | 12,858 | 11,839 | |||||||||
| Deferred fees and costs | 195 | — | |||||||||
| Partnership investments | 914 | — | |||||||||
| Post-retirement benefits | 1,519 | — | |||||||||
| Other | 691 | 633 | |||||||||
| Total | 22,236 | 18,279 | |||||||||
| Net deferred tax asset | $ | 36,723 | $ | 24,445 | |||||||
At December 31, 2025 and 2024, the Corporation had no unrecognized tax benefits.
At December 31, 2025, the Corporation had federal net operating loss carryforwards of $10.7 million related to the acquisition of ESSA Bancorp. The net operating loss is limited under section 382 annually but the Corporation will realize the entire benefit as there is no expiration date of this carryforward attribute.
At December 31, 2025, the Corporation had state net operating loss carryforwards with the state of New York of $4.9 million related to the acquisition of Bank of Akron, which will expire at various dates between 2023-2039. The Corporation's ability to utilize the carryforward is limited to $363 thousand per year. Due to this limitation, management determined it is more likely than not a portion of the originally acquired net operating loss will expire before utilized and wrote off $9.5 million in prior periods.
The Corporation recognizes interest and/or penalties related to income tax matters as part of income tax expense. At December 31, 2025, 2024, and 2023, there were no amounts accrued for interest and/or penalties and no amounts recorded as tax expense for the years ending December 31, 2025, 2024, and 2023.
The Corporation and its subsidiaries are subject to U.S. federal income tax, as well as filing various state returns. The Corporation is no longer subject to examinations by the taxing authorities for years prior to 2022. Tax years 2022 through 2025 are open to examination.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 11, 2026 | Showing above |
| 2024 | Mar 6, 2025 | |
| 2023 | Mar 7, 2024 | |
| 2022 | Mar 3, 2023 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.