"Preferred" Favorites In Financial Services

CCNE reported 4Q 2020 adjusted net income of $13.8 million or $0.75 per share, surpassing analysts’ $0.57 estimates. Revenues of $48.1 million were also well ahead of analysts’ expectations.

Last year was marked by a considerable increase in loan loss provisions, reflecting the economic challenges that CNB’s borrowers have faced. Our expectation is that the level of provision in 2021 will ease towards more normalized levels.

We are recommending the CNB Financial Corp.; 7.125% Fixed Rate, Non-Cumulative Perpetual (CCNEP). The preferred issue is callable at par on the initial 06/25/25 call date or any dividend payment date thereafter.

Dividends on this preferred issue are qualified and taxed at the 15%-20% rate. The investment is suitable for medium- to high-risk taxable portfolios. Buy at or below $27.25 for a 6.54% current yield and a 4.91% yield to call.

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