CITIZENS & NORTHERN CORP - FORM 8-K - EX-99.3 - EXHIBIT 99.3 - October 17, 2016

Attached files

file filename
EX-99.2 - EXHIBIT 99.2 - CITIZENS & NORTHERN CORPv450640_ex99-2.htm
EX-99.1 - EXHIBIT 99.1 - CITIZENS & NORTHERN CORPv450640_ex99-1.htm
8-K - FORM 8-K - CITIZENS & NORTHERN CORPv450640_8k.htm

 

EXHIBIT 99.3 – Supplemental, Unaudited Financial Information

 

 

CONDENSED, CONSOLIDATED FINANCIAL HIGHLIGHTS

(In Thousands, Except Per Share Data) (Unaudited)

   9 MONTHS ENDED   % 
   SEPTEMBER 30,   INCREASE 
   2016   2015   (DECREASE) 
EARNINGS PERFORMANCE               
Net Income  $11,531   $12,406    -7.05%
Return on Average Assets   1.25%   1.32%   -5.30%
Return on Average Equity   8.16%   8.78%   -7.06%
                
BALANCE SHEET HIGHLIGHTS               
Total Assets  $1,245,333   $1,232,531    1.04%
Available-for-Sale Securities   409,800    461,713    -11.24%
Loans (Net)   733,917    672,449    9.14%
Allowance for Loan Losses   8,421    7,416    13.55%
Deposits and Repo Sweep Accounts   998,200    966,856    3.24%
                
OFF-BALANCE SHEET               
Outstanding Balance of Mortgage Loans Sold with Servicing Retained   157,845    152,275    3.66%
Trust Assets Under Management   867,852    790,215    9.82%
                
SHAREHOLDERS' VALUE (PER COMMON SHARE)               
Net Income - Basic  $0.95   $1.02    -6.86%
Net Income - Diluted  $0.95   $1.01    -5.94%
Cash Dividends Declared  $0.78   $0.78    0.00%
Common Book Value  $15.77   $15.60    1.09%
Tangible Common Book Value  $14.78   $14.62    1.09%
Market Value (Last Trade)  $21.97   $19.52    12.55%
Market Value / Common Book Value   139.32%   125.13%   11.34%
Market Value / Tangible Common Book Value   148.65%   133.52%   11.33%
Price Earnings Multiple (Annualized)   17.34    14.35    20.84%
Dividend Yield (Annualized)   4.73%   5.33%   -11.26%
Common Shares Outstanding, End of Period   12,087,223    12,187,033    -0.82%
                
SAFETY AND SOUNDNESS               
Tangible Common Equity / Tangible Assets   14.48%   14.59%   -0.69%
Nonperforming Assets / Total Assets   1.61%   1.28%   25.78%
Allowance for Loan Losses / Total Loans   1.13%   1.09%   3.67%
Total Risk Based Capital Ratio (a)   23.58%   24.54%   -3.91%
Tier 1 Risk Based Capital Ratio (a)   22.47%   23.39%   -3.93%
Common Equity Tier 1 Risk Based Capital Ratio (a)   22.47%   23.39%   -3.93%
Leverage Ratio (a)   14.18%   13.95%   1.65%
                
AVERAGE BALANCES               
Average Assets  $1,226,733   $1,249,156    -1.80%
Average Equity  $188,424   $188,305    0.06%

 

(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:                 
   Sept. 30,   June 30,   Mar. 31,   Dec. 31,   Sept. 30,   June 30,   Mar. 31, 
   2016   2016   2016   2015   2015   2015   2015 
Interest income  $11,131   $10,924   $10,937   $11,036   $11,134   $11,186   $11,163 
Interest expense   944    925    904    1,087    1,126    1,176    1,213 
Net interest income   10,187    9,999    10,033    9,949    10,008    10,010    9,950 
Provision for loan losses   538    318    368    319    302    221    3 
Net interest income after provision for loan losses   9,649    9,681    9,665    9,630    9,706    9,789    9,947 
Other income   3,884    3,906    3,690    3,999    3,961    3,962    3,556 
Net gains on available-for-sale securities   584    122    383    1,776    79    932    74 
Loss on prepayment of borrowings   0    0    0    1,663    0    910    0 
Other expenses   8,579    8,535    9,072    8,416    8,117    7,964    8,533 
Income before income tax provision   5,538    5,174    4,666    5,326    5,629    5,809    5,044 
Income tax provision   1,451    1,303    1,093    1,261    1,395    1,452    1,229 
Net income  $4,087   $3,871   $3,573   $4,065   $4,234   $4,357   $3,815 
Net income per share – basic  $0.34   $0.32   $0.29   $0.33   $0.35   $0.36   $0.31 
Net income per share – diluted  $0.34   $0.32   $0.29   $0.33   $0.35   $0.36   $0.31 
                                    
QUARTERLY CONDENSED, CONSOLIDATED BALANCE SHEET INFORMATION
(In Thousands) (Unaudited)  As of:                         
   Sept. 30,   June 30,   Dec. 31,   Sept. 30,             
   2016   2016   2015   2015             
ASSETS                                   
Cash & Due from Banks  $34,070   $27,436   $36,061   $32,221                
Available-for-Sale Securities   409,800    417,205    420,290    461,713                
Loans Held for Sale   621    381    280    76                
Loans, Net   733,917    719,913    696,991    672,449                
Intangible Assets   11,963    11,966    11,972    11,978                
Other Assets   54,962    54,117    57,823    54,094                
TOTAL ASSETS  $1,245,333   $1,231,018   $1,223,417   $1,232,531                
                                    
LIABILITIES                                   
Deposits  $991,880   $967,951   $935,615   $961,112                
Repo Sweep Accounts   6,320    5,661    4,915    5,744                
Total Deposits and Repo Sweeps   998,200    973,612    940,530    966,856                
Borrowed Funds   46,808    58,656    87,348    67,342                
Other Liabilities   9,722    8,220    8,052    8,233                
TOTAL LIABILITIES   1,054,730    1,040,488    1,035,930    1,042,431                
                                    
SHAREHOLDERS' EQUITY                                   
Common Shareholders' Equity, Excluding                                   
Accumulated Other Comprehensive Income/ Loss   185,173    183,636    184,959    183,978                
Accumulated Other Comprehensive Income/ Loss:                                   
Net Unrealized Gains/Losses on                                   
Available-for-sale Securities   5,388    6,849    2,493    6,116                
Defined Benefit Plans Adjustment, Net   42    45    35    6                
TOTAL SHAREHOLDERS' EQUITY   190,603    190,530    187,487    190,100                
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY  $1,245,333   $1,231,018   $1,223,417   $1,232,531                

 

 2 

 

 

AVAILABLE-FOR-SALE SECURITIES  September 30, 2016   June 30, 2016   December 31, 2015 
(In Thousands)  Amortized   Fair   Amortized   Fair   Amortized   Fair 
   Cost   Value   Cost   Value   Cost   Value 
Obligations of U.S. Government agencies  $9,667   $9,747   $9,664   $9,781   $10,663   $10,483 
Obligations of states and political subdivisions:                              
Tax-exempt   116,797    121,283    110,702    116,056    103,414    107,757 
Taxable   32,764    33,672    34,015    35,132    34,317    34,597 
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:                              
Residential pass-through securities   60,966    62,187    64,108    65,407    73,227    73,343 
Residential collateralized mortgage obligations   164,508    165,719    175,889    177,980    193,145    191,715 
Commercial mortgage-backed securities   16,056    16,112    11,120    11,239    0    0 
Other collateralized debt obligations   0    0    1    1    9    9 
Total debt securities   400,758    408,720    405,499    415,596    414,775    417,904 
Marketable equity securities   752    1,080    1,171    1,609    1,680    2,386 
Total  $401,510   $409,800   $406,670   $417,205   $416,455   $420,290 

 

Summary of Loans by Type                
(Excludes Loans Held for Sale)                
(In Thousands)  Sept. 30,   June 30,   Dec. 31,   Sept. 30, 
   2016   2016   2015   2015 
Residential mortgage:                    
Residential mortgage loans - first liens  $325,533   $315,191   $304,783   $298,096 
Residential mortgage loans - junior liens   22,794    22,159    21,146    20,601 
Home equity lines of credit   38,623    39,054    39,040    38,585 
1-4 Family residential construction   23,310    22,241    21,121    23,633 
Total residential mortgage   410,260    398,645    386,090    380,915 
Commercial:                    
Commercial loans secured by real estate   149,938    153,070    154,779    135,760 
Commercial and industrial   86,969    82,390    75,196    72,011 
Political subdivisions   38,653    41,026    40,007    40,186 
Commercial construction and land   12,809    9,193    5,122    6,852 
Loans secured by farmland   6,900    6,615    7,019    7,521 
Multi-family (5 or more) residential   8,133    8,173    9,188    9,181 
Agricultural loans   4,313    4,692    4,671    4,588 
Other commercial loans   11,557    11,904    12,152    12,691 
Total commercial   319,272    317,063    308,134    288,790 
Consumer   12,806    12,134    10,656    10,160 
Total   742,338    727,842    704,880    679,865 
Less: allowance for loan losses   (8,421)   (7,929)   (7,889)   (7,416)
Loans, net  $733,917   $719,913   $696,991   $672,449 

 

Loans Held for Sale                
(In Thousands)  Sept. 30,   June 30,   Dec. 31,   Sept. 30, 
   2016   2016   2015   2015 
Residential mortgage loans originated and serviced - outstanding balance  $158,466   $156,798   $152,728   $152,351 
Less: outstanding balance of loans sold   (157,845)   (156,417)   (152,448)   (152,275)
Loans held for sale, net  $621   $381   $280   $76 

 

 3 

 

 

ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES                
(In Thousands)                
   3 Months   3 Months   9 Months   9 Months 
   Ended   Ended   Ended   Ended 
   Sept. 30,   June 30,   Sept. 30,   Sept. 30, 
   2016   2016   2016   2015 
Balance, beginning of period  $7,929   $7,661   $7,889   $7,336 
Charge-offs   (61)   (63)   (737)   (496)
Recoveries   15    13    45    50 
Net charge-offs   (46)   (50)   (692)   (446)
Provision for loan losses   538    318    1,224    526 
Balance, end of period  $8,421   $7,929   $8,421   $7,416 

 

PAST DUE AND IMPAIRED LOANS, NONPERFORMING ASSETS

AND TROUBLED DEBT RESTRUCTURINGS (TDRs)

(In Thousands)

   Sept. 30,   June 30,   Dec 31,   Sept. 30, 
   2016   2016   2015   2015 
Impaired loans with a valuation allowance  $3,621   $1,275   $1,933   $1,963 
Impaired loans without a valuation allowance   7,514    8,055    8,041    7,812 
Total impaired loans  $11,135   $9,330   $9,974   $9,775 
                     
Total loans past due 30-89 days and still accruing  $4,040   $6,945   $7,057   $4,780 
                     
Nonperforming assets:                    
Total nonaccrual loans  $10,206   $10,504   $11,517   $11,632 
Total loans past due 90 days or more and still accruing   7,539    4,654    3,229    2,833 
Total nonperforming loans   17,745    15,158    14,746    14,465 
Foreclosed assets held for sale (real estate)   2,321    2,052    1,260    1,363 
Total nonperforming assets  $20,066   $17,210   $16,006   $15,828 
                     
Loans subject to troubled debt restructurings (TDRs):                    
Performing  $946   $1,047   $1,186   $1,043 
Nonperforming   5,032    5,102    5,178    5,182 
Total TDRs  $5,978   $6,149   $6,364   $6,225 
                     
Total nonperforming loans as a % of loans   2.39%   2.08%   2.09%   2.13%
Total nonperforming assets as a % of assets   1.61%   1.40%   1.31%   1.28%
Allowance for loan losses as a % of total loans   1.13%   1.09%   1.12%   1.09%
Allowance for loan losses as a % of nonperforming loans   47.46%   52.31%   53.50%   51.27%

 

 4 

 

 

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 
   9/30/2016   Return/   6/30/2016   Return/   9/30/2015   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  $291,847    1.98%  $297,608    2.02%  $361,481    2.02%
Tax-exempt   112,679    4.51%   108,652    4.79%   111,735    5.14%
Total available-for-sale securities   404,526    2.69%   406,260    2.76%   473,216    2.75%
Interest-bearing due from banks   17,138    0.67%   24,250    0.60%   19,774    0.46%
Loans held for sale   556    5.01%   540    5.96%   245    8.10%
Loans receivable:                              
Taxable   671,408    4.95%   650,213    5.00%   610,516    5.10%
Tax-exempt   61,608    4.50%   61,669    4.50%   63,219    4.50%
Total loans receivable   733,016    4.91%   711,882    4.96%   673,735    5.05%
Total Earning Assets   1,155,236    4.07%   1,142,932    4.09%   1,166,970    4.04%
Cash   17,523         16,522         16,961      
Unrealized gain/loss on securities   9,654         7,737         7,015      
Allowance for loan losses   (8,050)        (7,756)        (7,376)     
Bank premises and equipment   15,379         15,390         15,808      
Intangible Asset - Core Deposit Intangible   24         25         38      
Intangible Asset – Goodwill   11,942         11,942         11,942      
Other assets   38,225         38,938         38,294      
Total Assets  $1,239,933        $1,225,730        $1,249,652      
                               
INTEREST-BEARING LIABILITIES                              
Interest-bearing deposits:                              
Interest checking  $200,789    0.15%  $196,918    0.15%  $197,189    0.11%
Money market   205,158    0.17%   200,896    0.17%   202,106    0.15%
Savings   133,269    0.10%   132,353    0.10%   128,939    0.10%
Certificates of deposit   123,475    0.77%   117,825    0.75%   125,886    0.66%
Individual Retirement Accounts   103,259    0.42%   104,030    0.42%   109,661    0.41%
Other time deposits   1,523    0.26%   1,140    0.00%   1,514    0.26%
Total interest-bearing deposits   767,473    0.28%   753,162    0.28%   765,295    0.25%
Borrowed funds:                              
Short-term   18,655    0.64%   23,225    0.71%   12,972    0.28%
Long-term   38,571    3.76%   38,649    3.77%   62,876    3.98%
Total borrowed funds   57,226    2.75%   61,874    2.62%   75,848    3.34%
Total Interest-bearing Liabilities   824,699    0.46%   815,036    0.46%   841,143    0.53%
Demand deposits   215,880         215,443         212,022      
Other liabilities   9,057         8,304         8,803      
Total Liabilities   1,049,636         1,038,783         1,061,968      
Stockholders' equity, excluding other comprehensive income/loss   183,966         181,882         183,116      
Other comprehensive income/loss   6,331         5,065         4,568      
Total Stockholders' Equity   190,297         186,947         187,684      
Total Liabilities and Stockholders' Equity  $1,239,933        $1,225,730        $1,249,652      
Interest Rate Spread        3.61%        3.63%        3.51%
Net Interest Income/Earning Assets        3.74%        3.76%        3.66%
                               
Total Deposits (Interest-bearing and Demand)  $983,353        $968,605        $977,317      

 

(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.

 

 5 

 

 

Analysis of Average Daily Balances and Rates

(Dollars in Thousands)

   9 Months       9 Months     
   Ended   Rate of   Ended   Rate of 
   9/30/2016   Return/   9/30/2015   Return/ 
   Average   Cost of   Average   Cost of 
   Balance   Funds %   Balance   Funds % 
EARNING ASSETS                    
Available-for-sale securities, at amortized cost:                    
Taxable  $298,421    2.03%  $379,666    2.08%
Tax-exempt   108,926    4.83%   115,255    5.27%
Total available-for-sale securities   407,347    2.78%   494,921    2.82%
Interest-bearing due from banks   20,566    0.58%   22,886    0.43%
Loans held for sale   516    5.44%   160    8.36%
Loans receivable:                    
Taxable   654,256    4.98%   595,170    5.24%
Tax-exempt   61,319    4.51%   51,468    4.80%
Total loans receivable   715,575    4.94%   646,638    5.20%
Total Earning Assets   1,144,004    4.09%   1,164,605    4.10%
Cash   16,548         16,723      
Unrealized gain/loss on securities   8,154         9,287      
Allowance for loan losses   (7,913)        (7,331)     
Bank premises and equipment   15,409         16,050      
Intangible Asset - Core Deposit Intangible   26         44      
Intangible Asset – Goodwill   11,942         11,942      
Other assets   38,563         37,836      
Total Assets  $1,226,733        $1,249,156      
                     
INTEREST-BEARING LIABILITIES                    
Interest-bearing deposits:                    
Interest checking  $197,628    0.14%  $196,109    0.11%
Money market   199,211    0.17%   197,852    0.15%
Savings   131,880    0.10%   128,561    0.10%
Certificates of deposit   118,256    0.75%   123,523    0.68%
Individual Retirement Accounts   104,280    0.42%   111,729    0.41%
Other time deposits   1,157    0.12%   1,150    0.12%
Total interest-bearing deposits   752,412    0.28%   758,924    0.26%
Borrowed funds:                    
Short-term   25,828    0.69%   9,417    0.21%
Long-term   38,648    3.77%   68,332    4.01%
Total borrowed funds   64,476    2.53%   77,749    3.55%
Total Interest-bearing Liabilities   816,888    0.45%   836,673    0.56%
Demand deposits   213,172         215,949      
Other liabilities   8,249         8,229      
Total Liabilities   1,038,309         1,060,851      
Stockholders' equity, excluding other comprehensive income/loss   183,078         182,252      
Other comprehensive income/loss   5,346         6,053      
Total Stockholders' Equity   188,424         188,305      
Total Liabilities and Stockholders' Equity  $1,226,733        $1,249,156      
Interest Rate Spread        3.64%        3.54%
Net Interest Income/Earning Assets        3.77%        3.69%
                     
Total Deposits (Interest-bearing and Demand)  $965,584        $974,873      

 

(1) 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.

 

 6 

 

 

COMPARISON OF NONINTEREST INCOME

(In Thousands)  Three Months Ended   Nine Months Ended 
   Sept. 30,   June 30,   Sept. 30,   Sept. 30,   Sept. 30, 
   2016   2016   2015   2016   2015 
Service charges on deposit accounts  $1,221   $1,164   $1,302   $3,523   $3,629 
Service charges and fees   118    123    137    335    373 
Trust and financial management revenue   1,172    1,251    1,123    3,567    3,478 
Brokerage revenue   216    180    215    569    640 
Insurance commissions, fees and premiums   26    27    24    74    87 
Interchange revenue from debit card transactions   481    487    482    1,431    1,456 
Net gains from sales of loans   236    295    243    699    573 
(Decrease) increase in fair value of servicing rights   (68)   (108)   13    (247)   (137)
Increase in cash surrender value of life insurance   97    93    95    286    294 
Other operating income   385    394    327    1,243    1,086 
Total other operating income, before realized gains on available-for-sale securities, net  $3,884   $3,906   $3,961   $11,480   $11,479 

 

COMPARISON OF NONINTEREST EXPENSE                    
(In Thousands)  Three Months Ended   Nine Months Ended 
   Sept. 30,   June 30,   Sept. 30,   Sept. 30,   Sept. 30, 
   2016   2016   2015   2016   2015 
Salaries and wages  $3,901   $3,913   $3,744   $11,701   $10,834 
Pensions and other employee benefits   1,060    1,002    1,016    3,499    3,336 
Occupancy expense, net   601    560    623    1,770    1,985 
Furniture and equipment expense   435    439    477    1,301    1,398 
FDIC Assessments   151    155    155    448    454 
Pennsylvania shares tax   287    323    311    932    946 
Professional fees   245    282    141    816    437 
Automated teller machine and interchange expense   291    267    234    807    735 
Software subscriptions   237    251    209    729    617 
Other operating expense   1,371    1,343    1,207    4,183    3,872 
Total noninterest expense, before loss on prepayment of borrowings   8,579    8,535    8,117    26,186    24,614 
Loss on prepayment of borrowings   0    0    0    0    910 
Total noninterest expense  $8,579   $8,535   $8,117   $26,186   $25,524 

 

 7 

 

Stock widget

Investing forum

CITIZENS & NORTHERN CORP Reports