Attached files
| file | filename |
|---|---|
| EX-99.3 - EXHIBIT 99.3 - CITIZENS & NORTHERN CORP | v357231_ex99-3.htm |
| EX-99.1 - EXHIBIT 99.1 - CITIZENS & NORTHERN CORP | v357231_ex99-1.htm |
| 8-K - FORM 8-K - CITIZENS & NORTHERN CORP | v357231_8k.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 |
| September 30, 2013 | QUARTERLY REPORT |
| Dear Shareholder: |
Net income for the third quarter of 2013 continues to be strong at $4,689,000, albeit 14.65% less than the third quarter of 2012. Our Return on Average Assets (ROAA) of 1.55% remains near the top of our peer group. As I have previously reported, the Federal Reserve Bank’s desire to hold interest rates at historic lows has resulted in continued margin compression. Margin compression is the major factor in our lower net income. Third quarter 2013 non-interest income was $171,000 higher than third quarter 2012. While non-interest expenses were $384,000 higher during the third quarter 2013 compared to third quarter 2012, that amount included $694,000 additional professional fees as the result of a consulting engagement in which the consulting firm identified recommendations for potential increases in revenues with an estimated annual total pre-tax benefit of approximately $1.3 million.
The balance sheet remains relatively unchanged as the current interest rate environment provides little opportunity to leverage our capital to increase net interest income without accepting undue credit and interest rate risk.
Dividends year-to-date have been 75 cents per share, an increase of 25.0% over the prior year. The current dividend provides a very attractive yield of 5.02% based on the last trade of the quarter.
As we enter the final quarter of 2013, we see many of the challenges that we have experienced during the first nine months of the year, including continued margin compression, increased regulatory costs as the result of Dodd-Frank and weak loan demand. We remain confident that Citizens & Northern is well positioned to continue to produce solid financial results.
I solicit your continued support and welcome your questions and comments.
Charles H. Updegraff, Jr.
Chairman, President & CEO
CITIZENS & NORTHERN CORPORATION
BOARD OF DIRECTORS
Charles H. Updegraff, Jr. - Chairman
| Dennis F. Beardslee | Raymond R. Mattie | ||
| Jan E. Fisher | Edward H. Owlett, III | ||
| R. Bruce Haner | Leonard Simpson | ||
| Susan E. Hartley | James E. Towner | ||
| Leo F. Lambert | 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 |
| ACCOUNT SERVICES - 90-92 Main St., Wellsboro, PA 16901 | |
| BANKCARD SERVICES - 90-92 Main St., Wellsboro PA 16901 | 800-577-8001 |
| ELECTRONIC BANKING – 10 Nichols St., Wellsboro, PA 16901 | 877-838-2517 |
| www.cnbankpa.com | |
| 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)
| 3RD | 2ND | 3RD | 9 MONTHS ENDED | |||||||||||||||||
| QUARTER | QUARTER | QUARTER | SEPTEMBER 30, | |||||||||||||||||
| 2013 | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||
| (Current) | (Prior Qtr) | (Prior Yr) | (Current) | (Prior Yr) | ||||||||||||||||
| Interest and Dividend Income | $ | 12,027 | $ | 12,355 | $ | 13,836 | $ | 37,029 | $ | 43,141 | ||||||||||
| Interest Expense | 1,396 | 1,415 | 2,228 | 4,411 | 7,131 | |||||||||||||||
| Net Interest Income | 10,631 | 10,940 | 11,608 | 32,618 | 36,010 | |||||||||||||||
| Provision for Loan Losses | 239 | 66 | 236 | 488 | 421 | |||||||||||||||
| Net Interest Income After Provision for Loan Losses | 10,392 | 10,874 | 11,372 | 32,130 | 35,589 | |||||||||||||||
| Other Income | 4,293 | 4,191 | 4,122 | 12,327 | 12,056 | |||||||||||||||
| Net Gains on Available-for-sale Securities | 193 | 100 | 2,430 | 1,452 | 2,631 | |||||||||||||||
| Loss on Prepayment of Borrowings | 0 | 0 | 2,190 | 1,023 | 2,333 | |||||||||||||||
| Other Noninterest Expenses | 8,610 | 8,520 | 8,226 | 25,683 | 24,960 | |||||||||||||||
| Income Before Income Tax Provision | 6,268 | 6,645 | 7,508 | 19,203 | 22,983 | |||||||||||||||
| Income Tax Provision | 1,579 | 1,671 | 2,014 | 4,834 | 6,217 | |||||||||||||||
| Net Income | $ | 4,689 | $ | 4,974 | $ | 5,494 | $ | 14,369 | $ | 16,766 | ||||||||||
| PER COMMON SHARE DATA: | ||||||||||||||||||||
| Net Income – Basic | $ | 0.38 | $ | 0.40 | $ | 0.45 | $ | 1.16 | $ | 1.37 | ||||||||||
| Net Income – Diluted | $ | 0.38 | $ | 0.40 | $ | 0.45 | $ | 1.16 | $ | 1.37 | ||||||||||
| Dividend Per Share | $ | 0.25 | $ | 0.25 | $ | 0.22 | $ | 0.75 | $ | 0.60 | ||||||||||
| Number Shares Used in Computation - Basic | 12,363,887 | 12,342,755 | 12,244,797 | 12,342,706 | 12,225,895 | |||||||||||||||
| Number Shares Used in Computation - Diluted | 12,396,902 | 12,369,311 | 12,270,685 | 12,371,927 | 12,252,357 | |||||||||||||||
CONDENSED, CONSOLIDATED BALANCE SHEET DATA
(In Thousands, Except Per Share Data) (Unaudited)
| SEPT. 30, | JUNE 30, | SEPT. 30, | ||||||||||
| 2013 | 2013 | 2012 | ||||||||||
| ASSETS | ||||||||||||
| Cash & Due from Banks | $ | 43,247 | $ | 35,776 | $ | 42,496 | ||||||
| Available-for-sale Securities | 475,650 | 470,068 | 487,314 | |||||||||
| Loans Held for Sale | 801 | 725 | 3,846 | |||||||||
| Loans, Net | 641,345 | 647,772 | 690,357 | |||||||||
| Intangible Assets | 12,042 | 12,055 | 12,098 | |||||||||
| Other Assets | 59,867 | 61,948 | 73,898 | |||||||||
| TOTAL ASSETS | $ | 1,232,952 | $ | 1,228,344 | $ | 1,310,009 | ||||||
| LIABILITIES | ||||||||||||
| Deposits | $ | 963,465 | $ | 950,769 | $ | 1,013,010 | ||||||
| Repo Sweep Accounts | 4,833 | 4,387 | 4,657 | |||||||||
| Total Deposits and Repo Sweeps | 968,298 | 955,156 | 1,017,667 | |||||||||
| Borrowed Funds | 73,405 | 85,472 | 104,954 | |||||||||
| Other Liabilities | 10,043 | 8,355 | 7,242 | |||||||||
| TOTAL LIABILITIES | 1,051,746 | 1,048,983 | 1,129,863 | |||||||||
| SHAREHOLDERS' EQUITY | ||||||||||||
| Common Shareholders' Equity, Excluding Accumulated | ||||||||||||
| Other Comprehensive Income (Loss) | 178,838 | 176,681 | 168,320 | |||||||||
| Accumulated Other Comprehensive Income (Loss): | ||||||||||||
| Net Unrealized Gains/Losses on | ||||||||||||
| Available-for-sale Securities | 2,520 | 2,832 | 12,278 | |||||||||
| Defined Benefit Plans | (152 | ) | (152 | ) | (452 | ) | ||||||
| TOTAL SHAREHOLDERS' EQUITY | 181,206 | 179,361 | 180,146 | |||||||||
| TOTAL LIABILITIES & SHAREHOLDERS' EQUITY | $ | 1,232,952 | $ | 1,228,344 | $ | 1,310,009 | ||||||
CONDENSED, CONSOLIDATED FINANCIAL HIGHLIGHTS
(In Thousands, Except Per Share Data) (Unaudited)
| 9 MONTHS ENDED | % | |||||||||||
| SEPTEMBER 30, | INCREASE | |||||||||||
| 2013 | 2012 | (DECREASE) | ||||||||||
| EARNINGS PERFORMANCE | ||||||||||||
| Net Income | $ | 14,369 | $ | 16,766 | -14.30 | % | ||||||
| Return on Average Assets | 1.55 | % | 1.70 | % | -8.82 | % | ||||||
| Return on Average Equity | 10.57 | % | 12.85 | % | -17.74 | % | ||||||
| BALANCE SHEET HIGHLIGHTS | ||||||||||||
| Total Assets | $ | 1,232,952 | $ | 1,310,009 | -5.88 | % | ||||||
| Available-for-Sale Securities | 475,650 | 487,314 | -2.39 | % | ||||||||
| Loans (Net) | 641,345 | 690,357 | -7.10 | % | ||||||||
| Allowance for Loan Losses | 7,130 | 7,792 | -8.50 | % | ||||||||
| Deposits and Repo Sweep Accounts | 968,298 | 1,017,667 | -4.85 | % | ||||||||
| OFF-BALANCE SHEET | ||||||||||||
| Outstanding Balance of Mortgage Loans Sold with Servicing Retained | 138,074 | 83,205 | 65.94 | % | ||||||||
| Trust Assets Under Management | 760,964 | 707,571 | 7.55 | % | ||||||||
| SHAREHOLDERS' VALUE | ||||||||||||
| (PER COMMON SHARE) | ||||||||||||
| Net Income - Basic | $ | 1.16 | $ | 1.37 | -15.33 | % | ||||||
| Net Income - Diluted | $ | 1.16 | $ | 1.37 | -15.33 | % | ||||||
| Dividends | $ | 0.75 | $ | 0.60 | 25.00 | % | ||||||
| Common Book Value | $ | 14.65 | $ | 14.70 | -0.34 | % | ||||||
| Tangible Common Book Value | $ | 13.67 | $ | 13.71 | -0.29 | % | ||||||
| Market Value (Last Trade) | $ | 19.94 | $ | 19.61 | 1.68 | % | ||||||
| Market Value / Common Book Value | 136.11 | % | 133.40 | % | 2.03 | % | ||||||
| Market Value / Tangible Common Book Value | 145.87 | % | 143.03 | % | 1.98 | % | ||||||
| Price Earnings Multiple | 12.89 | 10.74 | 20.02 | % | ||||||||
| Dividend Yield | 5.02 | % | 4.08 | % | 23.04 | % | ||||||
| Common Shares Outstanding, End of Period | 12,372,133 | 12,254,759 | 0.96 | % | ||||||||
| SAFETY AND SOUNDNESS | ||||||||||||
| Tangible Common Equity / Tangible Assets | 13.86 | % | 12.95 | % | 7.03 | % | ||||||
| Nonperforming Assets / Total Assets | 0.83 | % | 0.79 | % | 5.06 | % | ||||||
| Allowance for Loan Losses / Total Loans | 1.10 | % | 1.12 | % | -1.79 | % | ||||||
| Total Risk Based Capital Ratio (a) | 26.17 | % | 22.98 | % | 13.88 | % | ||||||
| Tier 1 Risk Based Capital Ratio (a) | 24.90 | % | 21.74 | % | 14.54 | % | ||||||
| Leverage Ratio (a) | 13.71 | % | 12.03 | % | 13.97 | % | ||||||
| AVERAGE BALANCES | ||||||||||||
| Average Assets | $ | 1,238,213 | $ | 1,311,347 | -5.58 | % | ||||||
| Average Equity | $ | 181,293 | $ | 174,002 | 4.19 | % | ||||||
(a) Capital ratios for the most recent period are estimated.