CITIZENS & NORTHERN CORP - FORM 8-K - EX-99.3 - EXHIBIT 99.3 - April 13, 2016

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8-K - FORM 8-K - CITIZENS & NORTHERN CORPv436862_8k.htm
EX-99.1 - EXHIBIT 99.1 - CITIZENS & NORTHERN CORPv436862_ex99-1.htm
EX-99.2 - EXHIBIT 99.2 - CITIZENS & NORTHERN CORPv436862_ex99-2.htm

 

EXHIBIT 99.3 – Supplemental, Unaudited Financial Information

 

 

 

CONDENSED, CONSOLIDATED FINANCIAL HIGHLIGHTS        
(In Thousands, Except Per Share Data)       (Unaudited)        
   3 MONTHS ENDED   % 
   MARCH 31,   INCREASE 
   2016   2015   (DECREASE) 
EARNINGS PERFORMANCE               
Net Income  $3,573   $3,815    -6.34%
Return on Average Assets   1.18%   1.23%   -4.07%
Return on Average Equity   7.60%   8.08%   -5.94%
                
BALANCE SHEET HIGHLIGHTS               
Total Assets  $1,216,544   $1,251,958    -2.83%
Available-for-Sale Securities   413,606    527,814    -21.64%
Loans (Net)   693,944    621,211    11.71%
Allowance for Loan Losses   7,661    7,134    7.39%
Deposits and Repo Sweep Accounts   962,989    982,474    -1.98%
                
OFF-BALANCE SHEET               
Outstanding Balance of Mortgage Loans Sold               
  with Servicing Retained   153,778    151,272    1.66%
Trust Assets Under Management   826,470    832,550    -0.73%
                
SHAREHOLDERS' VALUE               
    (PER COMMON SHARE)               
Net Income - Basic  $0.29   $0.31    -6.45%
Net Income - Diluted  $0.29   $0.31    -6.45%
Dividends  $0.26   $0.26    0.00%
Common Book Value  $15.59   $15.51    0.52%
Tangible Common Book Value  $14.60   $14.53    0.48%
Market Value (Last Trade)  $19.88   $20.18    -1.49%
Market Value /  Common Book Value   127.52%   130.11%   -1.99%
Market Value /  Tangible Common Book Value   136.16%   138.89%   -1.97%
Price Earnings Multiple (Annualized)   17.14    16.27    5.35%
Dividend Yield (Annualized)   5.23%   5.15%   1.55%
Common Shares Outstanding, End of Period   12,081,030    12,193,184    -0.92%
                
SAFETY AND SOUNDNESS               
Tangible Common Equity / Tangible Assets   14.64%   14.28%   2.52%
Nonperforming Assets / Total Assets   1.36%   1.33%   2.26%
Allowance for Loan Losses / Total Loans   1.09%   1.14%   -4.39%
Total Risk Based Capital Ratio (a)   24.05%   25.19%   -3.14%
Tier 1 Risk Based Capital Ratio (a)   22.99%   23.98%   -2.88%
Common Equity Tier 1 Risk Based Capital Ratio (a)   22.99%   23.98%   -2.88%
Leverage Ratio (a)   14.27%   13.86%   3.25%
                
AVERAGE BALANCES               
Average Assets  $1,214,392   $1,242,025    -2.22%
Average Equity  $188,007   $188,841    -0.44%

 

 

(a) Capital ratios for the most recent period are estimated.    

  

1 

 

  

QUARTERLY CONDENSED, CONSOLIDATED INCOME STATEMENT INFORMATION        
(In Thousands) (Unaudited)  For the Three Months Ended: 
   Mar. 31,   Dec. 31,   Sept. 30,   June 30,   Mar. 31, 
   2016   2015   2015   2015   2015 
Interest income  $10,937   $11,036   $11,134   $11,186   $11,163 
Interest expense   904    1,087    1,126    1,176    1,213 
Net interest income   10,033    9,949    10,008    10,010    9,950 
Provision for loan losses   368    319    302    221    3 
Net interest income after provision                         
  for loan losses   9,665    9,630    9,706    9,789    9,947 
Other income   3,690    3,999    3,961    3,962    3,556 
Net gains on available-for-sale securities   383    1,776    79    932    74 
Loss on prepayment of borrowings   0    1,663    0    910    0 
Other expenses   9,072    8,416    8,117    7,964    8,533 
Income before income tax provision   4,666    5,326    5,629    5,809    5,044 
Income tax provision   1,093    1,261    1,395    1,452    1,229 
Net income  $3,573   $4,065   $4,234   $4,357   $3,815 
Net income per share – basic  $0.29   $0.33   $0.35   $0.36   $0.31 
Net income per share – diluted  $0.29   $0.33   $0.35   $0.36   $0.31 

 

QUARTERLY CONDENSED, CONSOLIDATED BALANCE SHEET INFORMATION    
(In Thousands) (Unaudited)  As of: 
   Mar. 31,   Dec. 31,   Mar. 31, 
   2016   2015   2015 
ASSETS               
Cash & Due from Banks  $41,173   $36,061   $36,430 
Available-for-Sale Securities   413,606    420,290    527,814 
Loans Held for Sale   526    280    214 
Loans, Net   693,944    696,991    621,211 
Intangible Assets   11,969    11,972    11,989 
Other Assets   55,326    57,823    54,300 
TOTAL ASSETS  $1,216,544   $1,223,417   $1,251,958 
                
LIABILITIES               
Deposits  $955,848   $935,615   $976,634 
Repo Sweep Accounts   7,141    4,915    5,840 
     Total Deposits and Repo Sweeps   962,989    940,530    982,474 
Borrowed Funds   57,503    87,348    72,988 
Other Liabilities   7,742    8,052    7,393 
TOTAL LIABILITIES   1,028,234    1,035,930    1,062,855 
                
SHAREHOLDERS' EQUITY               
Common Shareholders' Equity, Excluding               
  Accumulated Other Comprehensive Income/ Loss   182,914    184,959    181,437 
Accumulated Other Comprehensive Income/ Loss:               
  Net Unrealized Gains/Losses on               
     Available-for-sale Securities   5,347    2,493    7,654 
  Defined Benefit Plans Adjustment, Net   49    35    12 
TOTAL SHAREHOLDERS' EQUITY   188,310    187,487    189,103 
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY  $1,216,544   $1,223,417   $1,251,958 

 

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AVAILABLE-FOR-SALE SECURITIES  March 31, 2016   December 31, 2015 
(In Thousands)  Amortized   Fair   Amortized   Fair 
   Cost   Value   Cost   Value 
                 
Obligations of U.S. Government agencies  $10,661   $10,707   $10,663   $10,483 
Obligations of states and political subdivisions:                    
     Tax-exempt   107,269    111,959    103,414    107,757 
     Taxable   34,249    35,094    34,317    34,597 
Mortgage-backed securities   72,210    73,243    73,227    73,343 
Collateralized mortgage obligations,                    
     Issued by U.S. Government agencies   179,731    180,860    193,145    191,715 
Other collateralized debt obligations   7    7    9    9 
Total debt securities   404,127    411,870    414,775    417,904 
Marketable equity securities   1,253    1,736    1,680    2,386 
Total  $405,380   $413,606   $416,455   $420,290 

 

Summary of Loans by Type            
(Excludes Loans Held for Sale)            
(In Thousands)  March 31,   Dec. 31,   March 31, 
   2016   2015   2015 
Residential mortgage:               
  Residential mortgage loans - first liens  $306,753   $304,783   $291,612 
  Residential mortgage loans - junior liens   21,622    21,146    20,896 
  Home equity lines of credit   38,627    39,040    37,049 
  1-4 Family residential construction   20,010    21,121    16,217 
Total residential mortgage   387,012    386,090    365,774 
Commercial:               
  Commercial loans secured by real estate   154,646    154,779    140,851 
  Commercial and industrial   71,628    75,196    51,563 
  Political subdivisions   38,364    40,007    19,479 
  Commercial construction and land   7,445    5,122    7,249 
  Loans secured by farmland   7,168    7,019    7,789 
  Multi-family (5 or more) residential   8,393    9,188    8,673 
  Agricultural loans   4,492    4,671    3,158 
  Other commercial loans   11,387    12,152    13,187 
Total commercial   303,523    308,134    251,949 
Consumer   11,070    10,656    10,622 
Total   701,605    704,880    628,345 
Less: allowance for loan losses   (7,661)   (7,889)   (7,134)
Loans, net  $693,944   $696,991   $621,211 
                

 

Loans Held for Sale            
(In Thousands)  March 31,   Dec. 31,   March 31, 
   2016   2015   2015 
Residential mortgage loans originated               
  and serviced - outstanding balance  $154,304   $152,728   $151,486 
Less: outstanding balance of loans sold   (153,778)   (152,448)   (151,272)
Loans held for sale, net  $526   $280   $214 

 

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ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES             
(In Thousands)                
   3 Months   3 Months   Year   3 Months 
   Ended   Ended   Ended   Ended 
   March 31,   Dec. 31,   Dec. 31,   March 31, 
   2016   2015   2015   2015 
Balance, beginning of period  $7,889   $7,416   $7,336   $7,336 
Charge-offs   (613)   (66)   (562)   (222)
Recoveries   17    220    270    17 
Net (charge-offs) recoveries   (596)   154    (292)   (205)
Provision for loan losses   368    319    845    3 
Balance, end of period  $7,661   $7,889   $7,889   $7,134 
                     

 

PAST DUE AND IMPAIRED LOANS, NONPERFORMING ASSETS         
AND TROUBLED DEBT RESTRUCTURINGS (TDRs)            
(In Thousands)            
   March 31,   Dec. 31,   March 31, 
   2016   2015   2015 
Impaired loans with a valuation allowance  $1,420   $1,933   $4,312 
Impaired loans without a valuation allowance   8,210    8,041    8,851 
Total impaired loans  $9,630   $9,974   $13,163 
                
Total loans past due 30-89 days and still accruing  $11,373   $7,057   $5,722 
                
Nonperforming assets:               
  Total nonaccrual loans  $10,944   $11,517   $11,944 
  Total loans past due 90 days or more and still accruing   3,957    3,229    3,086 
  Total nonperforming loans   14,901    14,746    15,030 
  Foreclosed assets held for sale (real estate)   1,584    1,260    1,583 
Total nonperforming assets  $16,485   $16,006   $16,613 
                
Loans subject to troubled debt restructurings (TDRs):               
  Performing  $1,167   $1,186   $1,872 
  Nonperforming   5,146    5,178    5,252 
Total TDRs  $6,313   $6,364   $7,124 
                
Total nonperforming loans as a % of loans   2.12%   2.09%   2.39%
Total nonperforming assets as a % of assets   1.36%   1.31%   1.33%
Allowance for loan losses as a % of total loans   1.09%   1.12%   1.14%
Allowance for loan losses as a % of nonperforming loans   51.41%   53.50%   47.47%

 

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Analysis of Average Daily Balances and Rates                    
(Dollars in Thousands)                     
   3 Months       3 Months       3 Months     
   Ended   Rate of   Ended   Rate of   Ended   Rate of 
   3/31/2016   Return/   12/31/2015   Return/   3/31/2015   Return/ 
   Average   Cost of   Average   Cost of   Average   Cost of 
   Balance   Funds %   Balance   Funds %   Balance   Funds % 
EARNING ASSETS                              
Available-for-sale securities,                              
     at amortized cost:                              
     Taxable  $305,880    2.09%  $327,225    2.05%  $388,104    2.15%
     Tax-exempt   105,406    5.23%   105,118    4.99%   117,674    5.35%
          Total available-for-sale securities   411,286    2.89%   432,343    2.76%   505,778    2.90%
Interest-bearing due from banks   20,348    0.47%   20,168    0.39%   26,994    0.39%
Loans held for sale   452    5.34%   406    5.86%   89    9.11%
Loans receivable:                              
     Taxable   640,959    5.00%   629,294    5.04%   582,498    5.37%
     Tax-exempt   60,677    4.54%   61,339    4.52%   41,925    5.15%
          Total loans receivable   701,636    4.96%   690,633    5.00%   624,423    5.35%
          Total Earning Assets   1,133,722    4.13%   1,143,550    4.07%   1,157,284    4.16%
Cash   15,588         16,390         16,127      
Unrealized gain/loss on securities   7,055         7,637         10,626      
Allowance for loan losses   (7,932)        (7,525)        (7,391)     
Bank premises and equipment   15,458         15,499         16,252      
Intangible Asset - Core Deposit Intangible   29         32         50      
Intangible Asset - Goodwill   11,942         11,942         11,942      
Other assets   38,530         38,037         37,135      
Total Assets  $1,214,392        $1,225,562        $1,242,025      
                               
INTEREST-BEARING LIABILITIES                              
Interest-bearing deposits:                              
     Interest checking  $195,142    0.12%  $195,439    0.11%  $191,705    0.12%
     Money market   191,514    0.17%   192,825    0.16%   194,834    0.15%
     Savings   130,003    0.10%   127,744    0.10%   127,853    0.10%
     Certificates of deposit   113,411    0.72%   116,699    0.68%   122,007    0.71%
     Individual Retirement Accounts   105,562    0.41%   107,484    0.41%   113,806    0.40%
     Other time deposits   804    0.00%   678    0.00%   803    0.00%
          Total interest-bearing deposits   736,436    0.26%   740,869    0.25%   751,008    0.26%
Borrowed funds:                              
     Short-term   35,683    0.70%   17,395    0.39%   6,017    0.07%
     Long-term   38,725    3.77%   59,929    3.96%   73,020    4.03%
          Total borrowed funds   74,408    2.30%   77,324    3.16%   79,037    3.73%
          Total Interest-bearing Liabilities   810,844    0.45%   818,193    0.53%   830,045    0.59%
Demand deposits   208,163         207,534         215,019      
Other liabilities   7,378         9,149         8,120      
Total Liabilities   1,026,385         1,034,876         1,053,184      
Stockholders' equity, excluding                               
     accumulated other comprehensive      income/loss   183,376         185,716         181,944      
Accumulated other comprehensive income/loss   4,631         4,970         6,897      
Total Stockholders' Equity   188,007         190,686         188,841      
Total Liabilities and Stockholders' Equity  $1,214,392        $1,225,562        $1,242,025      
Interest Rate Spread        3.68%        3.54%        3.57%
Net Interest Income/Earning Assets        3.81%        3.69%        3.74%
                               
Total Deposits (Interest-bearing                              
     and Demand)  $944,599        $948,403        $966,027      
                               

 

(1)Annualized rates of return on tax-exempt securities and loans are presented on a fully taxable-equivalent basis, using the Corporation’s marginal federal income tax rate of 35%.
(2)Nonaccrual loans have been included with loans for the purpose of analyzing net interest earnings.
(3)Rates of return on earning assets and costs of funds are presented on an annualized basis.

 

 

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COMPARISON OF NONINTEREST INCOME            
(In Thousands)  Three Months Ended 
   March 31,   Dec. 31,   March 31, 
   2016   2015   2015 
Service charges on deposit accounts  $1,138   $1,235   $1,022 
Service charges and fees   94    121    113 
Trust and financial management revenue   1,144    1,148    1,114 
Brokerage revenue   173    199    219 
Insurance commissions, fees and premiums   21    22    40 
Interchange revenue from debit card transactions   463    479    474 
Net gains from sales of loans   168    162    147 
Decrease in fair value of servicing rights   (71)   (25)   (117)
Increase in cash surrender value of life insurance   96    92    97 
Other operating income   464    566    447 
Total other operating income, before realized               
   gains on available-for-sale securities, net  $3,690   $3,999   $3,556 

 

             
COMPARISON OF NONINTEREST EXPENSE            
(In Thousands)  Three Months Ended 
   March 31,   Dec. 31,   March 31, 
   2016   2015   2015 
 Salaries and wages  $3,887   $3,848   $3,487 
 Pensions and other employee benefits   1,437    1,084    1,385 
 Occupancy expense, net   609    589    722 
 Furniture and equipment expense   427    462    454 
 FDIC Assessments   142    149    151 
 Pennsylvania shares tax   322    302    318 
 Professional fees   289    175    156 
 Automated teller machine and interchange expense   249    253    246 
 Software subscriptions   241    259    197 
 Other operating expense   1,469    1,295    1,417 
  Total noninterest expense, before loss on               
    prepayment of borrowings   9,072    8,416    8,533 
 Loss on prepayment of borrowings   0    1,663    0 
 Total noninterest expense  $9,072   $10,079   $8,533 

 

 

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