CITIZENS & NORTHERN CORP - FORM 8-K - EX-99.3 - EXHIBIT 99.3 - January 14, 2013

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8-K - FORM 8-K - CITIZENS & NORTHERN CORPv332036_8k.htm
EX-99.2 - EXHIBIT 99.2 - CITIZENS & NORTHERN CORPv332036_ex99-2.htm
EX-99.1 - EXHIBIT 99.1 - CITIZENS & NORTHERN CORPv332036_ex99-1.htm

 

EXHIBIT 99.3 – Supplemental, Unaudited Financial Information

 

 

AVAILABLE-FOR-SALE SECURITIES December 31, 2012 September 30, 2012 December 31, 2011
(In Thousands) Amortized Fair Amortized Fair Amortized Fair
  Cost Value Cost Value Cost Value
             
Obligations of U.S. Government agencies $30,695 $31,217 $23,181 $23,844 $24,877 $25,587
Obligations of states and political subdivisions:            
     Tax-exempt 130,168 137,020 134,651 141,519 129,401 132,962
     Taxable 24,426 24,817 21,766 22,244 14,004 14,334
Mortgage-backed securities 76,368 80,196 85,750 90,357 116,602 121,769
Collateralized mortgage obligations,            
     Issued by U.S. Government agencies 179,770 183,510 188,169 191,945 161,818 165,131
Trust preferred securities issued by individual institutions 5,167 5,171 6,173 6,221 7,334 8,146
Collateralized debt obligations:            
     Pooled trust preferred securities - senior tranches 1,615 1,613 2,515 2,496 4,996 4,638
     Pooled trust preferred securities - mezzanine tranches 0 0 0 0 0 730
     Other collateralized debt obligations 660 660 660 660 660 660
Total debt securities 448,869 464,204 462,865 479,286 459,692 473,957
Marketable equity securities 5,912 8,373 5,562 8,028 5,643 7,728
Total $454,781 $472,577 $468,427 $487,314 $465,335 $481,685

  

 
 

  

Summary of Loans by Type      
(Excludes Loans Held for Sale)      
(In Thousands) Dec. 31, Sept. 30, Dec. 31,
  2012 2012 2011
Residential mortgage:      
  Residential mortgage loans - first liens $311,627 $317,734 $331,015
  Residential mortgage loans - junior liens 26,748  27,084  28,851 
  Home equity lines of credit 33,017  32,550  30,037 
  1-4 Family residential construction 12,842  13,038  9,959 
Total residential mortgage 384,234  390,406  399,862 
Commercial:      
  Commercial loans secured by real estate 158,413  163,773  156,388 
  Commercial and industrial 48,442  49,405  57,191 
  Political subdivisions 31,789  35,549  37,620 
  Commercial construction and land 28,200  27,307  23,518 
  Loans secured by farmland 11,403  10,328  10,949 
  Multi-family (5 or more) residential 6,745  6,109  6,583 
  Agricultural loans 3,053  3,181  2,987 
  Other commercial loans 362  329  552 
Total commercial 288,407  295,981  295,788 
Consumer 11,269  11,762  12,665 
Total 683,910  698,149  708,315 
Less: allowance for loan losses (6,857) (7,792) (7,705)
Loans, net $677,053 $690,357 $700,610
       
Loans Held for Sale      
(In Thousands) Dec 31, Sept. 30, Dec. 31,
  2012 2012 2011
Residential mortgage loans originated      
  and serviced - outstanding balance $103,176 $87,051 $57,577
Less: outstanding balance of loans sold (100,631) (83,205) (56,638)
Loans held for sale, net $2,545 $3,846 $939

 

 
 

  

ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES    
(In Thousands)        
  3 Months 3 Months Year Year
  Ended Ended Ended Ended
  Dec. 31, Sept. 30, Dec. 31 Dec. 31
  2012 2012 2012 2011
Balance, beginning of period $7,792 $7,657 $7,705 $9,107
Charge-offs (817) (113) (1,221) (1,446)
Recoveries 15  12  85  329 
Net charge-offs (802) (101) (1,136) (1,117)
(Credit) provision for loan losses (133) 236  288  (285)
Balance, end of period $6,857 $7,792 $6,857 $7,705

 

PAST DUE AND IMPAIRED LOANS, NONPERFORMING ASSETS    
AND TROUBLED DEBT RESTRUCTURINGS (TDRs)      
(In Thousands)      
  Dec. 31, Sept. 30, Dec. 31,
  2012 2012 2011
Impaired loans with a valuation allowance $2,710 $4,119 $3,433
Impaired loans without a valuation allowance 4,719 3,718 4,431
Total impaired loans $7,429 $7,837 $7,864
       
Total loans past due 30-89 days and still accruing $7,756 $6,001 $7,898
       
Nonperforming assets:      
  Total nonaccrual loans $7,353 $7,269 $7,197
  Total loans past due 90 days or more and still accruing 2,311 2,260 1,267
  Total nonperforming loans 9,664 9,529 8,464
  Foreclosed assets held for sale (real estate) 879 839 1,235
Total nonperforming assets $10,543 $10,368 $9,699
       
       
Loans subject to troubled debt restructurings (TDRs):      
  Performing $906 $916 $1,064
  Nonperforming 1,155 1,753 2,413
Total TDRs $2,061 $2,669 $3,477
       
Total nonperforming loans as a % of loans 1.41% 1.36% 1.19%
Total nonperforming assets as a % of assets 0.82% 0.79% 0.73%
Allowance for loan losses as a % of total loans 1.00% 1.12% 1.09%
Allowance for loan losses as a % of nonperforming loans 70.95% 81.77% 91.03%

  

 
 

  

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
  12/31/2012 Return/ 9/30/2012 Return/ 12/31/2011 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 $327,726 2.32% $339,639 2.46% $337,405 3.27%
     Tax-exempt 132,495  5.86% 135,362  5.69% 130,819  5.87%
          Total available-for-sale securities 460,221  3.34% 475,001  3.38% 468,224  4.00%
Interest-bearing due from banks 23,861  0.40% 33,929  0.36% 36,404  0.31%
Loans held for sale 3,204  4.10% 4,293  3.89% 953  7.08%
Loans receivable:            
     Taxable 656,020  5.97% 662,374  6.00% 669,755  6.33%
     Tax-exempt 39,676  5.99% 37,696  6.32% 35,744  6.29%
          Total loans receivable 695,696  5.97% 700,070  6.02% 705,499  6.33%
          Total Earning Assets 1,182,982  4.83% 1,213,293  4.82% 1,211,080  5.25%
Cash 17,482    17,466    17,812   
Unrealized gain/loss on securities 18,983    19,310    12,710   
Allowance for loan losses (7,849)   (7,727)   (8,255)  
Bank premises and equipment 18,911    19,106    19,286   
Intangible Asset - Core Deposit Intangible 149    165    230   
Intangible Asset - Goodwill 11,942    11,942    11,942   
Other assets 44,146    46,102    50,743   
Total Assets $1,286,746   $1,319,657   $1,315,548  
             
INTEREST-BEARING LIABILITIES            
Interest-bearing deposits:            
     Interest checking $169,782 0.12% $166,961 0.12% $161,274 0.15%
     Money market 208,463  0.15% 210,269  0.16% 208,855  0.18%
     Savings 110,645  0.10% 110,133  0.10% 101,405  0.10%
     Certificates of deposit 186,238  1.43% 199,250  1.47% 195,774  1.81%
     Individual Retirement Accounts 137,565  0.58% 141,421  0.73% 149,219  1.12%
     Other time deposits 738  0.00% 1,768  0.00% 801  0.50%
          Total interest-bearing deposits 813,431  0.50% 829,802  0.56% 817,328  0.73%
Borrowed funds:            
     Short-term 8,877  0.18% 5,369  0.15% 12,673  0.09%
     Long-term 86,362  4.00% 105,811  4.02% 127,692  4.04%
          Total borrowed funds 95,239  3.64% 111,180  3.83% 140,365  3.68%
          Total Interest-bearing Liabilities 908,670  0.83% 940,982  0.94% 957,693  1.16%
Demand deposits 187,748    191,301    186,562   
Other liabilities 9,086    8,967    8,721   
Total Liabilities 1,105,504    1,141,250    1,152,976   
Stockholders' equity, excluding            
     other comprehensive income/loss 169,346    166,318    154,484   
Other comprehensive income/loss 11,896    12,089    8,088   
Total Stockholders' Equity 181,242    178,407    162,572   
Total Liabilities and Stockholders' Equity $1,286,746   $1,319,657   $1,315,548  
Interest Rate Spread   4.00%   3.88%   4.09%
Net Interest Income/Earning Assets   4.19%   4.09%   4.33%
             
Total Deposits (Interest-bearing            
     and Demand) $1,001,179   $1,021,103   $1,003,890  

 

             
(1) Changes in income on tax-exempt securities and loans are presented on a fully tax-equivalent basis, using the Corporation’s marginal federal income tax rate of 35% in 2012 and 34% in 2011.
(2) Nonaccrual loans have been included with loans for the purpose of analyzing net interest earnings.  

 

 
 

 

Analysis of Average Daily Balances and Rates        
(Dollars in Thousands)          
  Year   Year    
  Ended Rate of Ended Rate of  
  12/31/2012 Return/ 12/31/2011 Return/  
  Average Cost of Average Cost of  
  Balance Funds % Balance Funds %  
EARNING ASSETS          
Available-for-sale securities,          
     at amortized cost:          
     Taxable $332,911 2.80% $333,441 3.39%  
     Tax-exempt 131,438  5.88% 128,463  5.98%  
          Total available-for-sale securities 464,349  3.67% 461,904  4.11%  
Interest-bearing due from banks 32,337  0.35% 31,359  0.23%  
Loans held for sale 2,611  4.10% 900  5.89%  
Loans receivable:          
     Taxable 662,751  6.10% 679,357  6.36%  
     Tax-exempt 37,490  6.24% 35,064  6.37%  
          Total loans receivable 700,241  6.11% 714,421  6.36%  
          Total Earning Assets 1,199,538  5.01% 1,208,584  5.34%  
Cash 17,408    17,762     
Unrealized gain/loss on securities 18,444    7,105     
Allowance for loan losses (7,688)   (8,688)    
Bank premises and equipment 18,956    21,381     
Intangible Asset - Core Deposit Intangible 176    272     
Intangible Asset - Goodwill 11,942    11,942     
Other assets 46,387    55,087     
Total Assets $1,305,163   $1,313,445    
           
INTEREST-BEARING LIABILITIES          
Interest-bearing deposits:          
     Interest checking $163,840 0.13% $162,583 0.25%  
     Money market 208,814  0.17% 206,612  0.24%  
     Savings 108,218  0.10% 97,099  0.17%  
     Certificates of deposit 194,175  1.55% 205,231  1.90%  
     Individual Retirement Accounts 142,315  0.80% 154,688  2.04%  
     Other time deposits 1,191  0.08% 1,231  0.24%  
          Total interest-bearing deposits 818,553  0.59% 827,444  0.98%  
Borrowed funds:          
     Short-term 6,831  0.15% 17,216  0.13%  
     Long-term 105,220  4.00% 134,894  4.02%  
          Total borrowed funds 112,051  3.77% 152,110  3.58%  
          Total Interest-bearing Liabilities 930,604  0.97% 979,554  1.38%  
Demand deposits 189,916    173,681     
Other liabilities 8,821    7,492     
Total Liabilities 1,129,341    1,160,727     
Stockholders' equity, excluding          
     other comprehensive income/loss 164,316    148,324     
Other comprehensive income/loss 11,506    4,394     
Total Stockholders' Equity 175,822    152,718     
Total Liabilities and Stockholders' Equity $1,305,163   $1,313,445    
Interest Rate Spread   4.04%   3.96%  
Net Interest Income/Earning Assets   4.26%   4.22%  
           
Total Deposits (Interest-bearing          
     and Demand) $1,008,469   $1,001,125    

 

           
(1) Changes in income on tax-exempt securities and loans are presented on a fully tax-equivalent basis, using the Corporation’s marginal federal income tax rate of 35% in 2012 and 34% in 2011.
(2) Nonaccrual loans have been included with loans for the purpose of analyzing net interest earnings.

  

 
 

  

COMPARISON OF NONINTEREST INCOME           
(In Thousands) Three Months Ended Years Ended
  Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
  2012 2012 2011 2012 2011
Service charges on deposit accounts $1,329 $1,290 $1,187 $5,036 $4,773
Service charges and fees 235  239  206 929  849 
Trust and financial management revenue 1,085  873  864 3,847  3,472 
Brokerage revenue 148  197  89 801  640 
Insurance commissions, fees and premiums 52  62  65 221  257 
Interchange revenue from debit card transactions 478  477  495 1,938  1,922 
Net gains from sales of loans 662  625  430 1,925  1,107 
Increase in cash surrender value of life insurance 108  111  128 455  509 
Net gain (loss) from other real estate 33  (19) 33 (66) 41 
Net gain from premises and equipment (1) 1  0 270  324 
Impairment loss on limited partnership investment 0  0  0 0  (948)
Other operating income 231  247  214 961  992 
Total other operating income, before realized          
   gains on available-for-sale securities, net $4,360 $4,103 $3,711 $16,317 $13,938
           
COMPARISON OF NONINTEREST EXPENSE          
(In Thousands) Three Months Ended Years Ended
  Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
  2012 2012 2011 2012 2011
 Salaries and wages $3,615 $3,594 $3,545 $14,370 $13,866
 Pensions and other employee benefits 1,059  982  1,063 4,497  4,407 
 Occupancy expense, net 602  610  600 2,476  2,638 
 Furniture and equipment expense 469  475  497 1,887  1,932 
 FDIC Assessments 165  165  144 633  832 
 Pennsylvania shares tax 301  339  322 1,312  1,306 
Other operating expense 1,776  2,042  1,777 7,673  7,076 
 Total noninterest expense, before loss on          
    prepayment of borrowings 7,987  8,207  7,948 32,848  32,057 
Loss on prepayment of borrowings 0  2,190  0 2,333  0 
 Total Noninterest Expense $7,987 $10,397 $7,948 $35,181 $32,057

 

 

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