CNB Financial (“CNB”), parent company of CNB Bank, and ESSA Bancorp (“ESSA”), parent company of ESSA Bank & Trust (“ESSA Bank”), jointly announced that they 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 January 8, 2025. Under the terms of the merger agreement, the transaction is expected to be a tax-free exchange for shareholders of ESSA for U.S. 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 Stroudsburg, PA, 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 (“ESSA Bank” or “ESSA division”), 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.

Under the terms of the merger agreement, CNB and CNB Bank will each add three directors from ESSA to their respective boards of directors. Gary S. Olson, current President, CEO, and Director of ESSA, Robert C. Selig Jr., current Chairman of the Board of ESSA and Daniel J. Henning, ESSA Director, will join both the CNB board and the CNB Bank board following the consummation of the merger. Additionally, Olson will have a role as strategic advisor to CNB’s Chief Executive Officer. Also, CNB will form a Board of Advisors for the ESSA Bank division.

“We are excited to partner with ESSA which shares such a strong banking tradition with CNB. 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,” said Michael D. Peduzzi, President and CEO of CNB. “There are many similarities between the markets of ESSA and our 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.”

Olson added, “CNB is a powerful partner for our bank that closely mirrors our culture and values, making the transaction a natural fit. CNB’s multi-state, multi-brand business model fosters our entrepreneurial spirit, and continues our commitment and presence in eastern Pennsylvania. Leveraging CNB’s infrastructure and robust capital position, suite of banking products, and combined larger lending limit, will further enhance our community banking model, and continue to serve our new and existing customers extremely well.”

Strategic Transaction Highlights:

• Expands 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.

• Low execution risk: CNB is a seasoned acquiror with an executive management team possessing extensive experience in M&A integration.

• Strong cultural alignment: ESSA’s community banking model fits within CNB’s operating philosophy and established multi-state, multi-brand business model.

• Financially attractive economics: The merger is expected to be ~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 earnback period of approximately 3.3 years.

• CNB projects pro forma 2026 to deliver a return on average tangible common equity of ~16% and a return on average assets of ~1.3%.

• 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 ~7.7%, Common Equity Tier 1 (CET1) capital ratio of ~10.7%, and loan to deposit ratio of ~89%.

The transaction has been unanimously approved by the Board of Directors of both companies and is expected to be completed in the third quarter of 2025 subject to approval by shareholders of both ESSA and CNB, as well as regulatory approvals and other customary closing conditions.

Stephens Inc. is serving as CNB’s exclusive financial advisor, and Hogan Lovells US LLP is serving as its legal advisor. Piper Sandler & Co rendered a fairness opinion to CNB’s board. PNC FIG Advisory, part of PNC Capital Markets LLC, is serving as ESSA’s exclusive financial advisor and rendered a fairness opinion to ESSA’s board, and Luse Gorman LLP is serving as its legal advisor.