CITIZENS & NORTHERN CORP - FORM 8-K - EX-99.3 - EXHIBIT 99.3 - April 20, 2017

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EXHIBIT 99.3 – Supplemental, Unaudited Financial Information

 

 

 

CONDENSED, CONSOLIDATED FINANCIAL HIGHLIGHTS

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

 

   3 MONTHS ENDED   % 
   MARCH 31,   INCREASE 
   2017   2016   (DECREASE) 
EARNINGS PERFORMANCE               
Net Income  $3,434   $3,573    -3.89%
Return on Average Assets   1.11%   1.18%   -5.93%
Return on Average Equity   7.38%   7.60%   -2.89%
                
BALANCE SHEET HIGHLIGHTS               
Total Assets  $1,233,924   $1,216,544    1.43%
Available-for-Sale Securities   376,919    413,606    -8.87%
Loans (Net)   753,277    693,944    8.55%
Allowance for Loan Losses   8,744    7,661    14.14%
Deposits and Repo Sweep Accounts   986,495    962,989    2.44%
                
OFF-BALANCE SHEET HIGHLIGHTS               
Outstanding Balance of Mortgage Loans Sold with Servicing Retained        164,291           153,778           6.84  %
Trust Assets Under Management   880,979    826,470    6.60%
                
SHAREHOLDERS' VALUE               
(PER COMMON SHARE)               
Net Income - Basic  $0.28   $0.29    -3.45%
Net Income - Diluted  $0.28   $0.29    -3.45%
Dividends  $0.26   $0.26    0.00%
Common Book Value  $15.41   $15.59    -1.15%
Tangible Common Book Value  $14.42   $14.60    -1.23%
Market Value (Last Trade)  $23.28   $19.88    17.10%
Market Value / Common Book Value   151.07%   127.52%   18.47%
Market Value / Tangible Common Book Value   161.44%   136.16%   18.57%
Price Earnings Multiple (Annualized)   20.79    17.14    21.30%
Dividend Yield (Annualized)   4.47%   5.23%   -14.53%
Common Shares Outstanding, End of Period   12,159,607    12,081,030    0.65%
                
SAFETY AND SOUNDNESS               
Tangible Common Equity / Tangible Assets   14.35%   14.64%   -1.98%
Nonperforming Assets / Total Assets   1.28%   1.36%   -5.88%
Allowance for Loan Losses / Total Loans   1.15%   1.09%   5.50%
Total Risk Based Capital Ratio (a)   23.65%   24.19%   -2.23%
Tier 1 Risk Based Capital Ratio (a)   22.50%   23.12%   -2.68%
Common Equity Tier 1 Risk Based Capital Ratio (a)   22.50%   23.12%   -2.68%
Leverage Ratio (a)   14.30%   14.26%   0.28%
                
AVERAGE BALANCES               
Total Assets  $1,241,392   $1,214,392    2.22%
Total Equity  $186,202   $188,007    -0.96%

 

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

 

 1 

 

 

QUARTERLY CONDENSED, CONSOLIDATED INCOME STATEMENT INFORMATION

(Dollars In Thousands, Except Per Share Data) (Unaudited)  For the Three Months Ended:         
   Mar. 31,   Dec. 31,   Sept. 30,   June 30,   Mar. 31, 
   2017   2016   2016   2016   2016 
Interest income  $11,112   $11,106   $11,131   $10,924   $10,937 
Interest expense   953    920    944    925    904 
Net interest income   10,159    10,186    10,187    9,999    10,033 
Provision (credit) for loan losses   452    (3)   538    318    368 
Net interest income after provision (credit) for loan losses        9,707           10,189           9,649           9,681           9,665   
Noninterest revenue   3,864    4,031    3,884    3,906    3,690 
Net gains on available-for-sale securities   145    69    584    122    383 
Noninterest expenses   9,298    8,558    8,579    8,535    9,072 
Income before income tax provision   4,418    5,731    5,538    5,174    4,666 
Income tax provision   984    1,500    1,451    1,303    1,093 
Net income  $3,434   $4,231   $4,087   $3,871   $3,573 
Net income attributable to common shares  $3,416   $4,209   $4,065   $3,850   $3,553 
Net income per share – basic  $0.28   $0.35   $0.34   $0.32   $0.29 
Net income per share – diluted  $0.28   $0.35   $0.34   $0.32   $0.29 

 

QUARTERLY CONDENSED, CONSOLIDATED BALANCE SHEET INFORMATION

(In Thousands) (Unaudited)  As of:                 
   March 31,   Dec. 31,   March 31,         
   2017   2016   2016         
ASSETS                         
Cash & Due from Banks  $32,543   $32,109   $41,173         
Available-for-Sale Securities   376,919    395,077    413,606           
Loans Held for Sale   163    142    526           
Loans, Net   753,277    743,362    693,944           
Intangible Assets   11,958    11,959    11,969           
Other Assets   59,064    59,643    55,326           
TOTAL ASSETS  $1,233,924   $1,242,292   $1,216,544           
                          
LIABILITIES                         
Deposits  $980,251   $983,843   $955,848           
Repo Sweep Accounts   6,244    5,175    7,141           
Total Deposits and Repo Sweeps   986,495    989,018    962,989           
Borrowed Funds   52,888    59,454    57,503           
Other Liabilities   7,191    7,812    7,742           
TOTAL LIABILITIES   1,046,574    1,056,284    1,028,234           
                          
SHAREHOLDERS' EQUITY                         
Common Shareholders' Equity, Excluding                         
Accumulated Other Comprehensive Income/ Loss   187,825    186,906    182,914           
Accumulated Other Comprehensive Income/ Loss:                         
Net Unrealized Gains/Losses on Available-for-sale Securities   (630)   (949)   5,347           
Defined Benefit Plans Adjustment, Net   155    51    49           
TOTAL SHAREHOLDERS' EQUITY   187,350    186,008    188,310           
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY  $1,233,924   $1,242,292   $1,216,544           

 

 2 

 

 

AVAILABLE-FOR-SALE SECURITIES  March 31, 2017   December 31, 2016 
(In Thousands)  Amortized   Fair   Amortized   Fair 
   Cost   Value   Cost   Value 
                 
Obligations of U.S. Government agencies  $9,674   $9,568   $9,671   $9,541 
Obligations of states and political subdivisions:                    
Tax-exempt   117,272    118,710    118,140    119,037 
Taxable   28,559    28,805    30,073    30,297 
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:                                                
Residential pass-through securities   49,896    49,359    58,922    58,404 
Residential collateralized mortgage obligations   137,077    135,681    147,915    146,608 
Commercial mortgage-backed securities   34,411    33,825    30,817    30,219 
Total debt securities   376,889    375,948    395,538    394,106 
Marketable equity securities   1,000    971    1,000    971 
Total  $377,889   $376,919   $396,538   $395,077 

 

Summary of Loans by Type            
(Excludes Loans Held for Sale)            
(In Thousands)  March 31,   Dec. 31,   March 31, 
   2017   2016   2016 
Residential mortgage:               
Residential mortgage loans - first liens  $340,431   $334,102   $306,753 
Residential mortgage loans - junior liens   23,717    23,706    21,622 
Home equity lines of credit   36,810    38,057    38,627 
1-4 Family residential construction   24,041    24,908    20,010 
Total residential mortgage   424,999    420,773    387,012 
Commercial:               
Commercial loans secured by real estate   153,385    150,468    154,646 
Commercial and industrial   79,493    83,854    71,628 
Political subdivisions   44,625    38,068    38,364 
Commercial construction and land   15,252    14,287    7,445 
Loans secured by farmland   7,497    7,294    7,168 
Multi-family (5 or more) residential   7,622    7,896    8,393 
Agricultural loans   3,992    3,998    4,492 
Other commercial loans   11,131    11,475    11,387 
Total commercial   322,997    317,340    303,523 
Consumer   14,025    13,722    11,070 
Total   762,021    751,835    701,605 
Less: allowance for loan losses   (8,744)   (8,473)   (7,661)
Loans, net  $753,277   $743,362   $693,944 

 

Loans Held for Sale            
(In Thousands)  March 31,   Dec. 31,   March 31, 
   2017   2016   2016 
Residential mortgage loans originated and serviced - outstanding balance     $  164,454        $  163,438        $  154,304   
Less: outstanding balance of loans sold   (164,291)   (163,296)   (153,778)
Loans held for sale, net  $163   $142   $526 

 

 3 

 

 

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, 
   2017   2016   2016   2016 
Balance, beginning of period  $8,473   $8,421   $7,889   $7,889 
Charge-offs   (200)   (20)   (757)   (613)
Recoveries   19    75    120    17 
Net (charge-offs) recoveries   (181)   55    (637)   (596)
Provision (credit) for loan losses   452    (3)   1,221    368 
Balance, end of period  $8,744   $8,473   $8,473   $7,661 

 

PAST DUE AND IMPAIRED LOANS, NONPERFORMING ASSETS

AND TROUBLED DEBT RESTRUCTURINGS (TDRs)

(Dollars In Thousands)

 

   March 31,   Dec 31,   March 31,     
   2017   2016   2016     
Impaired loans with a valuation allowance  $3,319   $3,372   $1,420     
Impaired loans without a valuation allowance   5,380    7,488    8,210      
Total impaired loans  $8,699   $10,860   $9,630      
                     
Total loans past due 30-89 days and still accruing  $6,476   $7,735   $11,373      
                     
Nonperforming assets:                    
Total nonaccrual loans  $11,231   $8,736   $10,944      
Total loans past due 90 days or more and still accruing   2,714    6,838    3,957      
Total nonperforming loans   13,945    15,574    14,901      
Foreclosed assets held for sale (real estate)   1,878    2,180    1,584      
Total nonperforming assets  $15,823   $17,754   $16,485      
                     
Loans subject to troubled debt restructurings (TDRs):                    
Performing  $752   $5,803   $1,167      
Nonperforming   3,083    2,874    5,146      
Total TDRs  $3,835   $8,677   $6,313      
                     
Total nonperforming loans as a % of loans   1.83%   2.07%   2.12%     
Total nonperforming assets as a % of total assets   1.28%   1.43%   1.36%     
Allowance for loan losses as a % of total loans   1.15%   1.13%   1.09%     
Allowance for loan losses as a % of nonperforming loans   62.70%   54.40%   51.41%     

 

 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 
   3/31/2017   Return/   12/31/2016   Return/   3/31/2016   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  $271,251    2.11%  $279,385    1.96%  $305,880    2.09%
Tax-exempt   117,628    4.44%   118,541    4.36%   105,406    5.23%
Total available-for-sale securities   388,879    2.81%   397,926    2.67%   411,286    2.89%
Interest-bearing due from banks   14,923    0.87%   14,424    0.74%   20,348    0.47%
Loans held for sale   201    8.07%   341    7.00%   452    5.34%
Loans receivable:                              
Taxable   698,042    4.87%   688,123    4.87%   640,959    5.00%
Tax-exempt   61,336    4.55%   57,293    4.53%   60,677    4.54%
Total loans receivable   759,378    4.84%   745,416    4.84%   701,636    4.96%
Total Earning Assets   1,163,381    4.11%   1,158,107    4.05%   1,133,722    4.13%
Cash   16,013         16,636         15,588      
Unrealized gain/loss on securities   (958)        4,223         7,055      
Allowance for loan losses   (8,593)        (8,585)        (7,932)     
Bank premises and equipment   15,712         15,425         15,458      
Intangible assets   11,959         11,960         11,971      
Other assets   43,878         41,431         38,530      
Total Assets  $1,241,392        $1,239,197        $1,214,392      
                               
INTEREST-BEARING LIABILITIES                              
Interest-bearing deposits:                              
Interest checking  $201,120    0.16%  $212,463    0.16%  $195,142    0.12%
Money market   191,103    0.17%   199,983    0.18%   191,514    0.17%
Savings   138,805    0.10%   135,059    0.10%   130,003    0.10%
Certificates of deposit   113,636    0.80%   113,776    0.78%   113,411    0.72%
Individual Retirement Accounts   99,028    0.43%   101,046    0.43%   105,562    0.41%
Other time deposits   791    0.00%   676    0.00%   804    0.00%
Total interest-bearing deposits   744,483    0.28%   763,003    0.28%   736,436    0.26%
Borrowed funds:                              
Short-term   41,386    0.75%   18,182    0.48%   35,683    0.70%
Long-term   38,419    3.75%   38,497    3.75%   38,725    3.77%
Total borrowed funds   79,805    2.20%   56,679    2.70%   74,408    2.30%
Total Interest-bearing Liabilities   824,288    0.47%   819,682    0.45%   810,844    0.45%
Demand deposits   222,740         221,928         208,163      
Other liabilities   8,162         9,366         7,378      
Total Liabilities   1,055,190         1,050,976         1,026,385      
Stockholders' equity, excluding accumulated other comprehensive income/loss        186,689                       185,437                       183,376               
Accumulated other comprehensive income/loss   (487)        2,784         4,631      
Total Stockholders' Equity   186,202         188,221         188,007      
Total Liabilities and Stockholders' Equity  $1,241,392        $1,239,197        $1,214,392      
Interest Rate Spread        3.64%        3.60%        3.68%
Net Interest Income/Earning Assets        3.78%        3.73%        3.81%
                               
Total Deposits (Interest-bearing and Demand)  $967,223        $984,931        $944,599      

 

(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 

 

 

COMPARISON OF NONINTEREST INCOME            
(In Thousands)  Three Months Ended 
   March 31,   Dec. 31,   March 31, 
   2017   2016   2016 
Service charges on deposit accounts  $1,084   $1,172   $1,138 
Service charges and fees   97    104    94 
Trust and financial management revenue   1,180    1,193    1,144 
Brokerage revenue   156    187    173 
Insurance commissions, fees and premiums   41    28    21 
Interchange revenue from debit card transactions   520    512    463 
Net gains from sales of loans   166    330    168 
Loan servicing fees, net   72    64    22 
Increase in cash surrender value of life insurance   90    96    96 
Other operating income   458    345    371 
Total noninterest income, before realized gains on available-for-sale securities, net  $3,864   $4,031   $3,690 

 

COMPARISON OF NONINTEREST EXPENSE            
(In Thousands)  Three Months Ended 
   March 31,   Dec. 31,   March 31, 
   2017   2016   2016 
Salaries and wages  $3,868   $3,710   $3,887 
Pensions and other employee benefits   1,530    1,218    1,437 
Occupancy expense, net   578    570    609 
Furniture and equipment expense   453    429    427 
FDIC Assessments   94    40    142 
Pennsylvania shares tax   336    342    322 
Professional fees   227    310    289 
Automated teller machine and interchange expense   294    330    249 
Software subscriptions   280    252    241 
Other operating expense   1,638    1,357    1,469 
Total noninterest expense  $9,298   $8,558   $9,072 

 

 6 

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