2022 Journal of Case Studies

SECOND PLACE: Mansfield University of Pennsylvania

Earnings Performance C&N’s earning performance had an overall upward trend over the last five years. As shown in Figure 1, its net income was $15 million in 2016 and decreased to $13 million in 2017. That year in December, the federal tax rate decreased from 35% to 21% with the Tax Cuts and Job Act. This resulted in an additional tax provision of $2.159 million that was recorded as an expense, which explains the decline. There was another decline of $2.2 million between 2018 and 2019, which resulted from the one-time expenses incurred from the Monument acquisition. Because of the acquisition of Covenant in 2021, C&N’s net income rose considerably 1.5 2

recognized $11.4 million in interest income alone. Figure 2 shows additional analysis where the net income is shown as a percentage of the bank’s total assets. This allows us to compare the earnings performance regardless of the asset size of the other institutions. C&N’s net income to average asset ratio outperformed its peers every year except for 2019 and 2020 when it went through its acquisitions. Due to the bank’s strong leadership and financially sound decisions, it was able to outperform its peer group again in 2021.

Figure 2: Net Income (as a % of Average Assets) C&N vs PG4

C&N PG4

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to $31.9 million from $20.4 million in 2020. Because C&N absorbed the loans from this, it

0.5

0

2017

2018

2019

2020

2021

Source: UBPR Call Reports, C&N. PGAR, PG4.

Table 1: Comparison of Income and Expenses (as a % of Average Assets) C&N vs PG4

2017 2021 C&N PG4 C&N PG4 C&N PG4 C&N PG4 C&N PG4 2018 2019 2020

3.91% 3.90% 4.04% 4.14% 4.07% 4.35% 3.36% 3.79% 3.72% 3.41%

Interest income

0.32% 0.43% 0.36% 0.63% 0.62% 0.87% 0.38% 0.52% 0.22% 0.25%

Interest expense

3.59% 3.46% 3.68% 3.51% 3.45% 3.49% 2.98% 3.27% 3.50% 3.14%

Net interest income

1.30% 0.86% 1.65% 0.83% 1.18% 0.88% 1.04% 0.91% 1.13% 0.83%

Non-interest income

2.94% 2.73% 3.03% 2.73% 2.99% 2.76% 2.74% 2.57% 2.69% 2.40%

Non-interest expense

1.08% 0.97% 1.77% 1.24% 1.26% 1.26% 0.88% 1.13% 1.39% 1.27%

Net income

Source: UBPR Call Reports, C&N. PGAR, PG4.

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