Attached files
| file | filename |
|---|---|
| 8-K - 8-K - CITIZENS & NORTHERN CORP | v407290_8k.htm |
| EX-99.1 - EXHIBIT 99.1 - CITIZENS & NORTHERN CORP | v407290_ex99-1.htm |
| EX-99.3 - EXHIBIT 99.3 - CITIZENS & NORTHERN CORP | v407290_ex99-3.htm |
EXHIBIT 99.2
90-92 Main Street, P.O. Box 58
Wellsboro, PA 16901
Phone: (570) 724-3411 Fax: (570) 723-8097
E-Mail: cnemail@cnbankpa.com Web Page: http://www.cnbankpa.com
Stock Symbol: CZNC
| Chartered 1864 | ||
| FEDERAL DEPOSIT INSURANCE CORP | ||
| March 31, 2015 | QUARTERLY REPORT |
Dear Shareholder:
It is with great pride that I extend greetings to you as your new CEO with this Quarterly Report. Our first six weeks as part of the C&N Team have been productive and insightful as we have engaged in all aspects of our Company. Your Board and Management Team have been open and welcoming and I am very impressed with our people and the organization. We have a great history and strong foundation to continue building on and, after meeting virtually every member of our team and a number of key customers, I have developed an appreciation for the real commitment to our franchise throughout the communities that we serve. This commitment, combined with our ability to engage the C&N Team in delivering value to our customers and communities, provides the platform for generating profitable growth to our shareholders. While we are operating in a challenging economic and regulatory environment, I am confident in our ability to deliver on this objective in the years ahead.
During the first quarter of 2015, diluted earnings per share were $.31 compared to $.35 for the fourth quarter of 2014, and $.34 for the same period in 2014. Net interest income decreased $261,000 from the fourth quarter, although the net interest margin improved to 3.74% from 3.73% in Q4 2015. A flatter yield curve and lack of loan growth have put pressure on the margin, although it remains well above peer levels. Noninterest income declined $315,000 from the prior quarter primarily due to a reduction in the value of mortgage servicing rights, lower deposit service charges and net overdraft fees, and gains from the sale of mortgage loans. Noninterest expenses increased $214,000 as a result of increased benefits costs, occupancy expenses, and charitable contributions which were partially offset by reductions in expense in a number of other expense categories. It is notable that credit quality remains strong as evidenced by the minimal loan loss provision of $3,000 during the first quarter.
Total assets, loans, and deposits all remained relatively stable as of March 31, 2015 compared to year-end 2014. As we approached the end of the quarter, after very difficult winter weather, we experienced some increase in lending activity and are cautiously optimistic about the local economy and that our business development activities are gaining traction. The Trust and Financial Management business had $833 million in assets under management as of March 31, and growing customer relationships and revenues from this division will be a continued focus moving forward. C&N’s capital position remains very strong. Total shareholders’ equity was $189.1 million at March 31, as compared to $188.4 million at the end of 2014. All capital ratios remain well in excess of regulatory standards. Management is focused on implementing strategies to leverage our capital position through loan growth. We are also committed to maintaining an attractive cash dividend, continuing the stock repurchase program announced in July 2014, and assessing other strategies that will grow the company and support shareholder value.
In closing, it is great to be on board at C&N to pursue our many opportunities. I look forward to engaging with you as we continue to build this outstanding franchise.
J. Bradley Scovill
President and CEO
CITIZENS & NORTHERN CORPORATION
BOARD OF DIRECTORS
| Dennis F. Beardslee | Edward H. Owlett, III | |
| Jan E. Fisher | J. Bradley Scovill | |
| R. Bruce Haner | Leonard Simpson | |
| Susan E. Hartley | James E. Towner | |
| Leo F. Lambert, Chairman | Ann M. Tyler |
CITIZENS & NORTHERN BANK
1-877-838-2517
OFFICES
| 428 S. Main Street, ATHENS, PA 18810 |
| 3 Main Street, CANISTEO, NY 14823 |
| 10 N Main Street, COUDERSPORT, PA 16915 |
| 111 Main Street, DUSHORE, PA 18614 |
| 563 Main Street, EAST SMITHFIELD, PA 18817 |
| 104 Main Street, ELKLAND, PA 16920 |
| 135 East Fourth Street, EMPORIUM, PA 15834 |
| 6250 County Route 64, HORNELL, NY 14843 |
| 230-232 Railroad Street, JERSEY SHORE, PA 17740 |
| 102 E. Main Street, KNOXVILLE, PA 16928 |
| 514 Main Street, LAPORTE, PA 18626 |
| 4534 Williamson Trail LIBERTY, PA 16930 |
| 1085 S. Main Street, MANSFIELD, PA 16933 |
| 612 James Monroe Avenue, MONROETON, PA 18832 |
| 3461 Rte.405 Highway, MUNCY, PA 17756 |
| 100 Maple Street, PORT ALLEGANY, PA 16743 |
| 24 Thompson Street, RALSTON, PA 17763 |
| 1827 Elmira Street, SAYRE, PA 18840 |
| 2 E. Mountain Ave., SO. WILLIAMSPORT, PA 17702 |
| 41 Main Street, TIOGA, PA 16946 |
| 428 Main Street, TOWANDA, PA18848 |
| Court House Square, TROY, PA 16947 |
| 90-92 Main Street, WELLSBORO, PA 16901 |
| 130 Court Street, WILLIAMSPORT, PA 17701 |
| 1510 Dewey Ave., WILLIAMSPORT, PA 17702 |
| Route 6, WYSOX, PA 18854 |
TRUST & FINANCIAL MANAGEMENT GROUP
| 3 Main Street, Canisteo, NY 14823 | 607-698-4295 |
| 10 N Main Street, Coudersport, PA 16915 | 800-921-9150 |
| 1827 Elmira Street, Sayre, PA 18840 | 888-760-8192 |
| 428 Main Street, Towanda, PA 18848 | 888-987-8784 |
| 90-92 Main Street, Wellsboro, PA 16901 | 888-487-8784 |
| 130 Court Street, Williamsport, PA 17701 | 866-732-7213 |
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| DEPOSIT OPERATIONS - 90-92 Main St., Wellsboro, PA 16901 | |
| BANKCARD SERVICES -90-92 Main St., Wellsboro PA 16901 | 800-577-8001 |
| ELECTRONIC BANKING – 90-92 Main St., Wellsboro, PA 16901 | 877-838-2517 |
| www.cnbankpa.com | |
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| C&N FINANCIAL SERVICES CORPORATION – 90-92 Main Street, Wellsboro, PA | 866-ASK-CNFS |
| www.cnfinancialservices.com |
| CONDENSED, CONSOLIDATED EARNINGS INFORMATION | ||||||||||||
| (In Thousands, Except Per Share Data) (Unaudited) | ||||||||||||
| 1ST | 4TH | 1ST | ||||||||||
| QUARTER | QUARTER | QUARTER | ||||||||||
| 2015 | 2014 | 2014 | ||||||||||
| (Current) | (Prior Qtr) | (Prior Yr) | ||||||||||
| Interest and Dividend Income | $ | 11,163 | $ | 11,468 | $ | 11,406 | ||||||
| Interest Expense | 1,213 | 1,257 | 1,288 | |||||||||
| Net Interest Income | 9,950 | 10,211 | 10,118 | |||||||||
| Provision (Credit) for Loan Losses | 3 | 123 | (311 | ) | ||||||||
| Net Interest Income After Provision (Credit) for Loan Losses | 9,947 | 10,088 | 10,429 | |||||||||
| Other Income | 3,487 | 3,802 | 3,751 | |||||||||
| Net Gains on Available-for-sale Securities | 74 | 210 | 31 | |||||||||
| Other Noninterest Expenses | 8,464 | 8,250 | 8,524 | |||||||||
| Income Before Income Tax Provision | 5,044 | 5,850 | 5,687 | |||||||||
| Income Tax Provision | 1,229 | 1,482 | 1,399 | |||||||||
| Net Income | $ | 3,815 | $ | 4,368 | $ | 4,288 | ||||||
| PER COMMON SHARE DATA: | ||||||||||||
| Net Income – Basic | $ | 0.31 | $ | 0.36 | $ | 0.35 | ||||||
| Net Income – Diluted | $ | 0.31 | $ | 0.35 | $ | 0.34 | ||||||
| Dividend Per Share | $ | 0.26 | $ | 0.26 | $ | 0.26 | ||||||
| Number Shares Used in Computation - Basic | 12,268,306 | 12,302,646 | 12,417,627 | |||||||||
| Number Shares Used in Computation - Diluted | 12,289,139 | 12,325,409 | 12,444,797 | |||||||||
| CONDENSED, CONSOLIDATED BALANCE SHEET DATA | ||||||||||||
| (In Thousands, Except Per Share Data) (Unaudited) | ||||||||||||
| MARCH 31, | DEC. 31, | MARCH 31, | ||||||||||
| 2015 | 2014 | 2014 | ||||||||||
| ASSETS | ||||||||||||
| Cash & Due from Banks | $ | 36,430 | $ | 36,047 | $ | 61,087 | ||||||
| Available-for-sale Securities | 527,814 | 516,807 | 484,014 | |||||||||
| Loans Held for Sale | 214 | 0 | 133 | |||||||||
| Loans, Net | 621,211 | 623,209 | 617,475 | |||||||||
| Intangible Assets | 11,989 | 11,994 | 12,020 | |||||||||
| Other Assets | 54,300 | 53,906 | 60,410 | |||||||||
| TOTAL ASSETS | $ | 1,251,958 | $ | 1,241,963 | $ | 1,235,139 | ||||||
| LIABILITIES | ||||||||||||
| Deposits | $ | 976,634 | $ | 967,989 | $ | 961,833 | ||||||
| Repo Sweep Accounts | 5,840 | 5,537 | 4,730 | |||||||||
| Total Deposits and Repo Sweeps | 982,474 | 973,526 | 966,563 | |||||||||
| Borrowed Funds | 72,988 | 73,060 | 73,270 | |||||||||
| Other Liabilities | 7,393 | 7,015 | 10,544 | |||||||||
| TOTAL LIABILITIES | 1,062,855 | 1,053,601 | 1,050,377 | |||||||||
| SHAREHOLDERS' EQUITY | ||||||||||||
| Common Shareholders' Equity, Excluding Accumulated | ||||||||||||
| Other Comprehensive Income | 181,437 | 183,002 | 182,220 | |||||||||
| Accumulated Other Comprehensive Income: | ||||||||||||
| Net Unrealized Gains/Losses on | ||||||||||||
| Available-for-sale Securities | 7,654 | 5,281 | 2,442 | |||||||||
| Defined Benefit Plans | 12 | 79 | 100 | |||||||||
| TOTAL SHAREHOLDERS' EQUITY | 189,103 | 188,362 | 184,762 | |||||||||
| TOTAL LIABILITIES & SHAREHOLDERS' EQUITY | $ | 1,251,958 | $ | 1,241,963 | $ | 1,235,139 | ||||||
| CONDENSED, CONSOLIDATED FINANCIAL HIGHLIGHTS | ||||||||||||
| (In Thousands, Except Per Share Data) (Unaudited) | ||||||||||||
| 3 MONTHS ENDED | % | |||||||||||
| MARCH 31, | INCREASE | |||||||||||
| 2015 | 2014 | (DECREASE) | ||||||||||
| EARNINGS PERFORMANCE | ||||||||||||
| Net Income | $ | 3,815 | $ | 4,288 | -11.03 | % | ||||||
| Return on Average Assets | 1.23 | % | 1.41 | % | -12.77 | % | ||||||
| Return on Average Equity | 8.08 | % | 9.41 | % | -14.13 | % | ||||||
| BALANCE SHEET HIGHLIGHTS | ||||||||||||
| Total Assets | $ | 1,251,958 | $ | 1,235,139 | 1.36 | % | ||||||
| Available-for-Sale Securities | 527,814 | 484,014 | 9.05 | % | ||||||||
| Loans (Net) | 621,211 | 617,475 | 0.61 | % | ||||||||
| Allowance for Loan Losses | 7,134 | 8,343 | -14.49 | % | ||||||||
| Deposits and Repo Sweep Accounts | 982,474 | 966,563 | 1.65 | % | ||||||||
| OFF-BALANCE SHEET | ||||||||||||
| Outstanding Balance of Mortgage Loans Sold | ||||||||||||
| with Servicing Retained | 151,272 | 147,391 | 2.63 | % | ||||||||
| Trust Assets Under Management | 832,550 | 797,833 | 4.35 | % | ||||||||
| SHAREHOLDERS' VALUE | ||||||||||||
| (PER COMMON SHARE) | ||||||||||||
| Net Income - Basic | $ | 0.31 | $ | 0.35 | -11.43 | % | ||||||
| Net Income - Diluted | $ | 0.31 | $ | 0.34 | -8.82 | % | ||||||
| Dividends | $ | 0.26 | $ | 0.26 | 0.00 | % | ||||||
| Common Book Value | $ | 15.51 | $ | 14.87 | 4.30 | % | ||||||
| Tangible Common Book Value | $ | 14.53 | $ | 13.90 | 4.53 | % | ||||||
| Market Value (Last Trade) | $ | 20.18 | $ | 19.71 | 2.38 | % | ||||||
| Market Value / Common Book Value | 130.11 | % | 132.55 | % | -1.84 | % | ||||||
| Market Value / Tangible Common Book Value | 138.89 | % | 141.80 | % | -2.05 | % | ||||||
| Price Earnings Multiple | 16.27 | 14.08 | 15.55 | % | ||||||||
| Dividend Yield | 5.15 | % | 5.28 | % | -2.46 | % | ||||||
| Common Shares Outstanding, End of Period | 12,193,184 | 12,429,000 | -1.90 | % | ||||||||
| SAFETY AND SOUNDNESS | ||||||||||||
| Tangible Common Equity / Tangible Assets | 14.28 | % | 14.12 | % | 1.13 | % | ||||||
| Nonperforming Assets / Total Assets | 1.33 | % | 1.44 | % | -7.64 | % | ||||||
| Allowance for Loan Losses / Total Loans | 1.14 | % | 1.33 | % | -14.29 | % | ||||||
| Total Risk Based Capital Ratio (a) | 25.86 | % | 27.71 | % | -6.68 | % | ||||||
| Tier 1 Risk Based Capital Ratio (a) | 24.63 | % | 26.26 | % | -6.21 | % | ||||||
| Common Equity Tier 1 Risk Based Capital Ratio (a) | 24.63 | % | ||||||||||
| Leverage Ratio (a) | 13.86 | % | 14.11 | % | -1.77 | % | ||||||
| AVERAGE BALANCES | ||||||||||||
| Average Assets | $ | 1,242,025 | $ | 1,218,992 | 1.89 | % | ||||||
| Average Equity | $ | 188,841 | $ | 182,307 | 3.58 | % | ||||||
(a) Capital ratios for the most recent period are estimated. The Common Equity Tier 1 Risk Based Capital Ratio became applicable to the Corporation in the first quarter 2015.