| Item 3.03. | Material Modifications to Rights of Security Holders. |
On August 21, 2020, CNB Financial Corporation, a Pennsylvania corporation (the “Company”), filed a statement with respect to shares (the “Statement with Respect to Shares”) with the Secretary of State of the Commonwealth of Pennsylvania (the “Secretary of State of Pennsylvania”), which became effective as of August 25, 2020, establishing the designations, preferences, limitations and relative rights of a new series of preferred stock designated as the “7.125% Series A Fixed-Rate Non-Cumulative Perpetual Preferred Stock,” no par value per share, with a liquidation preference of $1,000 per share (the “Series A Preferred Stock”). The Statement with Respect to Shares was filed in connection with an Underwriting Agreement, dated August 20, 2020 (the “Underwriting Agreement”), by and between the Company and Janney Montgomery Scott LLC, as representative of the several underwriters listed in Schedule A thereto (collectively, the “Underwriters”), pursuant to which the Company agreed to sell to the Underwriters 2,415,000 depositary shares (the “Depositary Shares”), including 315,000 Depositary Shares issued upon the exercise of the Underwriters’ option to purchase additional Depositary Shares, each representing a 1/40th ownership interest in a share of the Series A Preferred Stock. Each holder of a Depositary Share will be entitled to the proportional rights of a share of Series A Preferred Stock represented by the Depositary Share.
The Series A Preferred Stock ranks, with respect to the payment of dividends and distributions upon liquidation, dissolution or winding-up, (1) senior to the Company’s common stock and each other class or series of preferred stock the Company may issue in the future the terms of which do not expressly provide that it ranks on a parity with or senior to the Series A Preferred Stock as to dividend rights and rights on liquidation, winding-up and dissolution of the Company (collectively, “junior securities”), (2) on a parity with each class or series of preferred stock the Company may issue in the future the terms of which expressly provide that such class or series will rank on a parity with the Series A Preferred Stock as to dividend rights and rights on liquidation, winding-up and dissolution of the Company (collectively, “parity securities”), and (3) junior to all existing and future indebtedness and other liabilities and any class or series of preferred stock that expressly provides in the statement with respect to shares creating such preferred stock that such series ranks senior to the Series A Preferred Stock (subject to any requisite consents prior to issuance).
Under the terms of the Series A Preferred Stock, with certain limited exceptions, if the Company’s board of directors has not authorized, and the Company has not declared and paid or set aside for payment, dividends on the Series A Preferred Stock for the most recently completed dividend period, it may not declare or pay dividends on, or redeem, purchase or acquire, its common stock or other junior securities during the next succeeding dividend period.
The foregoing description of the terms of the Series A Preferred Stock is qualified in its entirety by reference to the full text of the Statement with Respect to Shares, which is included as Exhibit 3.1 to this Current Report on Form 8-K and is incorporated by reference herein.
| Item 5.03. | Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. |
On August 21, 2020, the Company filed the Statement with Respect to Shares with the Secretary of State of Pennsylvania, which became effective as of August 25, 2020, amending the Company’s Second Amended and Restated Articles of Incorporation by establishing and designating the newly authorized Series A Preferred Stock of the Company consisting of 60,375 authorized shares.
Dividends on the Series A Preferred Stock will be payable when, as and if authorized and declared by the Company’s board of directors or a duly authorized committee thereof out of legally available funds. From the issue date, dividends on the Series A Preferred Stock will accrue on a non-cumulative basis at a rate of 7.125% per annum on the liquidation preference of $1,000 per share, payable quarterly, in arrears, on the 1st day of each March, June, September and December, commencing on December 1, 2020.
In the event that the Company voluntarily or involuntarily liquidates, dissolves or winds up, the holders of the Series A Preferred Stock at the time outstanding will be entitled to receive liquidating distributions in the amount of $1,000 per share of the Series A Preferred Stock (equivalent to $25 per Depositary Share), plus an amount equal to any authorized and declared but unpaid dividends thereon to and including the date of such liquidation without accumulation of any undeclared dividends, out of assets legally available for distribution to the Company’s
