CNB and ESSA Announce $214 Million Strategic Deal Merger

Two Nasdaq-listed banks – CNB Financial Corporation, parent company of CNB Bank, and ESSA Bancorp, Inc., parent company of ESSA Bank & Trust, have entered into a definitive agreement pursuant to which ESSA will merge with and into CNB, and ESSA Bank will merge with and into CNB Bank.

The combined company is expected to have approximately $8 billion in total assets, $7 billion in total deposits, and $6 billion in total loans.

The transaction consideration is all common stock and is presently valued at approximately $214 million in the aggregate, or approximately $21.10 per ESSA share, based upon the 10-day volume weighted average stock price (VWAP) of $24.69 for CNB common stock as of 8 January 2025.

Under the terms of the merger agreement, the transaction is expected to be a tax-free exchange for shareholders of ESSA for the US federal income tax purposes. ESSA shareholders will receive 0.8547 shares of CNB common stock for each outstanding share of ESSA common stock.

Headquartered in Pennsylvania, ESSA operates 20 community offices throughout the Lehigh Valley, Greater Pocono, Scranton/Wilkes-Barre, and suburban Philadelphia areas.

Following completion of the merger, ESSA Bank & Trust will operate as ESSA Bank, a division of CNB Bank, operating within its existing geographic footprint. CNB anticipates accelerating growth in the greater Lehigh Valley and Scranton/Wilkes-Barre markets utilizing its commercial-oriented playbook and expanding fee-based business lines, bolstering its presence across Pennsylvania.

Michael D. Peduzzi, President and CEO of CNB, said that this combination aligns two high performing banks with an exceptional commitment to client-focused services for its customers and financial support to sustain the economic vitality of the communities in which they operate.

“There are many similarities between the markets of ESSA and the existing CNB locations, as well as with our personal approach to banking. We understand the needs of the commercial, retail, and wealth management customers in these markets and look forward to providing the ESSA division with the support and assistance they need to continue to grow and thrive,” Peduzzi said.

Transaction Details

The merger will expand CNB’s services to eastern Pennsylvania and the greater Lehigh Valley market without any branch overlap. Pro forma deposit franchise will rank the combined company within the Top 10 in Pennsylvania and Top 3 in the greater Lehigh Valley.

CNB is a seasoned acquirer with an executive management team possessing extensive experience in M&A integration and ESSA’s community banking model fits within CNB’s operating philosophy and established multi-state, multi-brand business model.

The merger is expected to be more than 35% accretive to CNB’s diluted earnings per share in 2026, inclusive of fully phased-in cost synergies. Tangible book value per share dilution at transaction close is projected to be 15%, with an earn-back period of approximately 3.3 years.

The combined company is expected to have a very sound estimated pro forma balance sheet at transaction close, with a tangible common equity to tangible asset (TCE/TA) ratio of around 7.7%, Common Equity Tier 1 (CET1) capital ratio of around 10.7%, and loan to deposit ratio of 89%.