CITIZENS & NORTHERN CORP - FORM 8-K - EX-99.3 - EXHIBIT 99.3 - January 13, 2014

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8-K - 8-K CURRENT REPORT - CITIZENS & NORTHERN CORPv365257_8k.htm
EX-99.2 - EXHIBIT 99.2 - CITIZENS & NORTHERN CORPv365257_ex99-2.htm
EX-99.1 - EXHIBIT 99.1 - CITIZENS & NORTHERN CORPv365257_ex99-1.htm

EXHIBIT 99.3 – Supplemental, Unaudited Financial Information

 

AVAILABLE-FOR-SALE SECURITIES  December 31, 2013   September 30, 2013   December 31, 2012 
(In Thousands)  Amortized   Fair   Amortized   Fair   Amortized   Fair 
   Cost   Value   Cost   Value   Cost   Value 
                         
Obligations of U.S. Government agencies  $47,382   $45,877   $47,445   $46,384   $30,695   $31,217 
Obligations of states and political subdivisions:                              
     Tax-exempt   127,748    128,426    129,884    131,096    130,168    137,020 
     Taxable   35,153    34,471    31,582    31,211    24,426    24,817 
Mortgage-backed securities   84,849    86,208    80,190    82,354    76,368    80,196 
Collateralized mortgage obligations,                              
     Issued by U.S. Government agencies   182,373    178,092    176,208    175,078    179,770    183,510 
Trust preferred securities issued by individual institutions   0    0    0    0    5,167    5,171 
Collateralized debt obligations:                              
     Pooled trust preferred securities - senior tranches   0    0    0    0    1,615    1,613 
     Other collateralized debt obligations   660    660    660    660    660    660 
Total debt securities   478,165    473,734    465,969    466,783    448,869    464,204 
Marketable equity securities   6,038    8,924    5,802    8,867    5,912    8,373 
Total  $484,203   $482,658   $471,771   $475,650   $454,781   $472,577 

 

Summary of Loans by Type            
(Excludes Loans Held for Sale)            
(In Thousands)  Dec. 31,   Sept. 30,   Dec. 31, 
   2013   2013   2012 
Residential mortgage:            
  Residential mortgage loans - first liens  $299,831   $301,794   $311,627 
  Residential mortgage loans - junior liens   23,040    24,079    26,748 
  Home equity lines of credit   34,530    34,360    33,017 
  1-4 Family residential construction   13,909    15,746    12,842 
Total residential mortgage   371,310    375,979    384,234 
Commercial:               
  Commercial loans secured by real estate   147,215    151,602    158,413 
  Commercial and industrial   42,387    44,312    48,442 
  Political subdivisions   16,291    13,905    31,789 
  Commercial construction and land   17,003    21,630    28,200 
  Loans secured by farmland   10,468    10,711    11,403 
  Multi-family (5 or more) residential   10,985    5,994    6,745 
  Agricultural loans   3,251    3,085    3,053 
  Other commercial loans   14,631    9,858    362 
Total commercial   262,231    261,097    288,407 
Consumer   10,762    11,399    11,269 
Total   644,303    648,475    683,910 
Less: allowance for loan losses   (8,663)   (7,130)   (6,857)
Loans, net  $635,640   $641,345   $677,053 

  

 
 

 

Loans Held for Sale            
(In Thousands)  Dec. 31,   Sept. 30,   Dec 31, 
   2013   2013   2012 
Residential mortgage loans originated            
  and serviced - outstanding balance  $146,008   $138,875   $103,176 
Less: outstanding balance of loans sold   (145,954)   (138,074)   (100,631)
Loans held for sale, net  $54   $801   $2,545 

 

 

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, 
   2013   2013   2013   2012 
Balance, beginning of period  $7,130   $7,198   $6,857   $7,705 
Charge-offs   (52)   (374)   (671)   (1,221)
Recoveries   26    67    430    85 
Net charge-offs   (26)   (307)   (241)   (1,136)
Provision for loan losses   1,559    239    2,047    288 
Balance, end of period  $8,663   $7,130   $8,663   $6,857 

 

PAST DUE AND IMPAIRED LOANS, NONPERFORMING ASSETS        
AND TROUBLED DEBT RESTRUCTURINGS (TDRs)            
(In Thousands)            
   Dec 31,   Sept. 30,   Dec 31, 
   2013   2013   2012 
Impaired loans with a valuation allowance  $9,889   $4,553   $2,710 
Impaired loans without a valuation allowance   6,432    5,703    4,719 
Total impaired loans  $16,321   $10,256   $7,429 
                
Total loans past due 30-89 days and still accruing  $8,305   $7,260   $7,756 
                
Nonperforming assets:               
  Total nonaccrual loans  $14,934   $6,760   $7,353 
  Total loans past due 90 days or more and still accruing   3,131    2,668    2,311 
  Total nonperforming loans   18,065    9,428    9,664 
  Foreclosed assets held for sale (real estate)   892    776    879 
Total nonperforming assets  $18,957   $10,204   $10,543 
                
Loans subject to troubled debt restructurings (TDRs):               
  Performing  $3,267   $1,720   $906 
  Nonperforming   908    1,366    1,155 
Total TDRs  $4,175   $3,086   $2,061 
                
Total nonperforming loans as a % of loans   2.80%   1.45%   1.41%
Total nonperforming assets as a % of assets   1.53%   0.83%   0.82%
Allowance for loan losses as a % of total loans   1.34%   1.10%   1.00%
Allowance for loan losses as a % of nonperforming loans   47.95%   75.63%   70.95%

 

 
 

 

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 
   12/31/2013   Return/   9/30/2013   Return/   12/31/2012   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  $349,203    2.11%  $335,439    2.04%  $327,726    2.32%
     Tax-exempt   129,192    5.36%   130,831    5.48%   132,495    5.86%
          Total available-for-sale securities   478,395    2.99%   466,270    3.00%   460,221    3.34%
Interest-bearing due from banks   27,201    0.42%   24,795    0.40%   23,861    0.40%
Federal funds sold   0    0.00%   0    0.00%   0    0.00%
Loans held for sale   480    5.79%   1,032    5.38%   3,204    4.10%
Loans receivable:                              
     Taxable   605,234    5.56%   615,318    5.64%   656,020    5.97%
     Tax-exempt   37,466    5.78%   34,712    5.87%   39,676    5.99%
          Total loans receivable   642,700    5.58%   650,030    5.65%   695,696    5.97%
          Total Earning Assets   1,148,776    4.38%   1,142,127    4.46%   1,182,982    4.83%
Cash   16,661         17,698         17,482      
Unrealized gain/loss on securities   3,937         1,688         18,983      
Allowance for loan losses   (7,201)        (7,258)        (7,849)     
Bank premises and equipment   17,673         17,950         18,911      
Intangible Asset - Core Deposit Intangible   95         105         149      
Intangible Asset - Goodwill   11,942         11,942         11,942      
Other assets   41,898         43,690         44,146      
Total Assets  $1,233,781        $1,227,942        $1,286,746      
                               
INTEREST-BEARING LIABILITIES                              
Interest-bearing deposits:                              
     Interest checking  $185,502    0.12%  $172,010    0.12%  $169,782    0.12%
     Money market   200,346    0.14%   205,168    0.14%   208,463    0.15%
     Savings   117,975    0.10%   116,474    0.10%   110,645    0.10%
     Certificates of deposit   139,601    0.92%   144,689    0.99%   186,238    1.43%
     Individual Retirement Accounts   125,166    0.39%   127,526    0.40%   137,565    0.58%
     Other time deposits   682    0.00%   1,556    0.25%   738    0.00%
          Total interest-bearing deposits   769,272    0.31%   767,423    0.33%   813,431    0.50%
Borrowed funds:                              
     Short-term   7,784    0.15%   7,944    0.15%   8,877    0.18%
     Long-term   73,369    4.03%   73,436    4.03%   86,362    4.00%
          Total borrowed funds   81,153    3.66%   81,380    3.65%   95,239    3.64%
          Total Interest-bearing Liabilities   850,425    0.63%   848,803    0.65%   908,670    0.83%
Demand deposits   191,509         191,393         187,748      
Other liabilities   10,082         10,030         9,086      
Total Liabilities   1,052,016         1,050,226         1,105,504      
Stockholders' equity, excluding                              
     other comprehensive income/loss   179,356         176,772         169,346      
Other comprehensive income/loss   2,409         944         11,896      
Total Stockholders' Equity   181,765         177,716         181,242      
Total Liabilities and Stockholders' Equity  $1,233,781        $1,227,942        $1,286,746      
Interest Rate Spread        3.75%        3.81%        4.00%
Net Interest Income/Earning Assets        3.91%        3.97%        4.19%
                               
Total Deposits (Interest-bearing                              
     and Demand)  $960,781        $958,816        $1,001,179      
                               

 

(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%.
(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 
   12/31/2013   Return/   12/31/2012   Return/ 
   Average   Cost of   Average   Cost of 
   Balance   Funds %   Balance   Funds % 
EARNING ASSETS                
Available-for-sale securities,                
     at amortized cost:                
     Taxable  $330,980    2.15%  $332,911    2.80%
     Tax-exempt   130,584    5.59%   131,438    5.88%
          Total available-for-sale securities   461,564    3.12%   464,349    3.67%
Interest-bearing due from banks   26,159    0.40%   32,337    0.35%
Federal funds sold   4    0.00%   0    0.00%
Loans held for sale   1,118    4.83%   2,611    4.10%
Loans receivable:                    
     Taxable   620,412    5.72%   662,751    6.10%
     Tax-exempt   36,083    5.83%   37,490    6.24%
          Total loans receivable   656,495    5.73%   700,241    6.11%
          Total Earning Assets   1,145,340    4.55%   1,199,538    5.01%
Cash   16,854         17,408      
Unrealized gain/loss on securities   8,875         18,444      
Allowance for loan losses   (7,204)        (7,688)     
Bank premises and equipment   18,154         18,956      
Intangible Asset - Core Deposit Intangible   113         176      
Intangible Asset - Goodwill   11,942         11,942      
Other assets   43,022         46,387      
Total Assets  $1,237,096        $1,305,163      
                     
INTEREST-BEARING LIABILITIES                    
Interest-bearing deposits:                    
     Interest checking  $174,790    0.12%  $163,840    0.13%
     Money market   203,023    0.14%   208,814    0.17%
     Savings   117,055    0.10%   108,218    0.10%
     Certificates of deposit   148,598    1.02%   194,175    1.55%
     Individual Retirement Accounts   129,255    0.43%   142,315    0.80%
     Other time deposits   1,062    0.09%   1,191    0.08%
          Total interest-bearing deposits   773,783    0.35%   818,553    0.59%
Borrowed funds:                    
     Short-term   6,422    0.14%   6,831    0.15%
     Long-term   75,906    4.02%   105,220    4.00%
          Total borrowed funds   82,328    3.72%   112,051    3.77%
          Total Interest-bearing Liabilities   856,111    0.67%   930,604    0.97%
Demand deposits   190,248         189,916      
Other liabilities   9,325         8,821      
Total Liabilities   1,055,684         1,129,341      
Stockholders' equity, excluding                    
     other comprehensive income/loss   175,893         164,316      
Other comprehensive income/loss   5,519         11,506      
Total Stockholders' Equity   181,412         175,822      
Total Liabilities and Stockholders' Equity  $1,237,096        $1,305,163      
Interest Rate Spread        3.88%        4.04%
Net Interest Income/Earning Assets        4.05%        4.26%
                     
Total Deposits (Interest-bearing                    
     and Demand)  $964,031        $1,008,469      

 

(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%.
(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   Year Ended 
   Dec. 31,   Sept. 30,   Dec. 31,   Dec. 31,   Dec. 31, 
   2013   2013   2012   2013   2012 
Service charges on deposit accounts  $1,355   $1,281   $1,329   $4,966   $5,036 
Service charges and fees   219    241    235    877    929 
Trust and financial management revenue   1,065    1,033    1,085    4,087    3,847 
Brokerage revenue   198    205    148    784    801 
Insurance commissions, fees and premiums   34    32    52    170    221 
Interchange revenue from debit card transactions   488    484    478    1,941    1,938 
Net gains from sales of loans   435    624    662    2,191    1,925 
Increase in cash surrender value of life insurance   98    109    108    399    455 
Net (loss) gain from premises and equipment   (30)   14    (1)   (16)   270 
Other operating income   262    270    231    1,052    961 
Total other operating income, before realized                         
   gains on available-for-sale securities, net  $4,124   $4,293   $4,327   $16,451   $16,383 

 

COMPARISON OF NONINTEREST EXPENSE                    
(In Thousands)  Three Months Ended   Year Ended 
   Dec. 31,   Sept. 30,   Dec. 31,   Dec. 31,   Dec. 31, 
   2013   2013   2012   2013   2012 
 Salaries and wages  $3,435   $3,536   $3,615   $14,206   $14,370 
 Pensions and other employee benefits   985    876    1,059    4,150    4,497 
 Occupancy expense, net   614    626    602    2,473    2,476 
 Furniture and equipment expense   484    487    469    1,948    1,887 
 FDIC Assessments   154    151    165    604    633 
 Pennsylvania shares tax   351    350    301    1,402    1,312 
Other operating expense   1,765    2,584    1,743    8,688    7,739 
 Total noninterest expense, before loss on                         
    prepayment of borrowings   7,788    8,610    7,954    33,471    32,914 
Loss on prepayment of borrowings   0    0    0    1,023    2,333 
 Total Noninterest Expense  $7,788   $8,610   $7,954   $34,494   $35,247 

 

 

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