CITIZENS & NORTHERN CORP - FORM 8-K - EX-99.3 - EXHIBIT 99.3 - July 13, 2016

Attached files

file filename
EX-99.2 - EXHIBIT 99.2 - CITIZENS & NORTHERN CORPv444205_ex99-2.htm
EX-99.1 - EXHIBIT 99.1 - CITIZENS & NORTHERN CORPv444205_ex99-1.htm
8-K - FORM 8-K - CITIZENS & NORTHERN CORPv444205_8k.htm

 

EXHIBIT 99.3 – Supplemental, Unaudited Financial Information

 

 

CONDENSED, CONSOLIDATED FINANCIAL HIGHLIGHTS

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

   6 MONTHS ENDED   % 
   JUNE 30,   INCREASE 
   2016   2015   (DECREASE) 
EARNINGS PERFORMANCE               
Net Income  $7,444   $8,172    -8.91%
Return on Average Assets   1.22%   1.31%   -6.87%
Return on Average Equity   7.94%   8.66%   -8.31%
                
BALANCE SHEET HIGHLIGHTS               
Total Assets  $1,231,018   $1,255,722    -1.97%
Available-for-Sale Securities   417,205    497,111    -16.07%
                
Loans (Net)   719,913    656,518    9.66%
Allowance for Loan Losses   7,929    7,300    8.62%
Deposits and Repo Sweep Accounts   973,612    983,255    -0.98%
                
OFF-BALANCE SHEET               
Outstanding Balance of Mortgage Loans Sold               
with Servicing Retained   156,417    151,132    3.50%
Trust Assets Under Management   847,280    833,762    1.62%
                
SHAREHOLDERS' VALUE               
(PER COMMON SHARE)               
Net Income - Basic  $0.61   $0.67    -8.96%
Net Income - Diluted  $0.61   $0.67    -8.96%
Dividends  $0.52   $0.52    0.00%
Common Book Value  $15.79   $15.33    3.00%
Tangible Common Book Value  $14.79   $14.35    3.07%
Market Value (Last Trade)  $20.22   $20.55    -1.61%
Market Value / Common Book Value   128.06%   134.05%   -4.47%
Market Value / Tangible Common Book Value   136.71%   143.21%   -4.54%
Price Earnings Multiple (Annualized)   16.57    15.34    8.02%
Dividend Yield (Annualized)   5.14%   5.06%   1.58%
Common Shares Outstanding, End of Period   12,070,195    12,196,830    -1.04%
                
SAFETY AND SOUNDNESS               
Tangible Common Equity / Tangible Assets   14.65%   14.07%   4.12%
Nonperforming Assets / Total Assets   1.40%   1.26%   11.11%
Allowance for Loan Losses / Total Loans   1.09%   1.10%   -0.91%
Total Risk Based Capital Ratio (a)   23.74%   24.39%   -2.67%
Tier 1 Risk Based Capital Ratio (a)   22.67%   23.26%   -2.54%
Common Equity Tier 1 Risk Based Capital Ratio (a)   22.67%   23.26%   -2.54%
Leverage Ratio (a)   14.20%   13.82%   2.75%
                
AVERAGE BALANCES               
Average Assets  $1,220,061   $1,248,904    -2.31%
Average Equity  $187,477   $188,621    -0.61%

 

(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:             
   June 30,   Mar. 31,   Dec. 31,   Sept. 30,   June 30,   Mar. 31, 
   2016   2016   2015   2015   2015   2015 
Interest income  $10,924   $10,937   $11,036   $11,134   $11,186   $11,163 
Interest expense   925    904    1,087    1,126    1,176    1,213 
Net interest income   9,999    10,033    9,949    10,008    10,010    9,950 
Provision for loan losses   318    368    319    302    221    3 
Net interest income after provision                              
for loan losses   9,681    9,665    9,630    9,706    9,789    9,947 
Other income   3,906    3,690    3,999    3,961    3,962    3,556 
Net gains on available-for-sale securities   122    383    1,776    79    932    74 
Loss on prepayment of borrowings   0    0    1,663    0    910    0 
Other expenses   8,535    9,072    8,416    8,117    7,964    8,533 
Income before income tax provision   5,174    4,666    5,326    5,629    5,809    5,044 
Income tax provision   1,303    1,093    1,261    1,395    1,452    1,229 
Net income  $3,871   $3,573   $4,065   $4,234   $4,357   $3,815 
Net income per share – basic  $0.32   $0.29   $0.33   $0.35   $0.36   $0.31 
Net income per share – diluted  $0.32   $0.29   $0.33   $0.35   $0.36   $0.31 

 

QUARTERLY CONDENSED, CONSOLIDATED BALANCE SHEET INFORMATION

(In Thousands) (Unaudited)  As of:             
   June 30,   Mar. 31,   Dec. 31,   June 30, 
   2016   2016   2015   2015 
ASSETS                    
Cash & Due from Banks  $27,436   $41,173   $36,061   $35,405 
Available-for-Sale Securities   417,205    413,606    420,290    497,111 
Loans Held for Sale   381    526    280    192 
Loans, Net   719,913    693,944    696,991    656,518 
Intangible Assets   11,966    11,969    11,972    11,983 
Other Assets   54,117    55,326    57,823    54,513 
TOTAL ASSETS  $1,231,018   $1,216,544   $1,223,417   $1,255,722 
                     
LIABILITIES                    
Deposits  $967,951   $955,848   $935,615   $978,449 
Repo Sweep Accounts   5,661    7,141    4,915    4,806 
Total Deposits and Repo Sweeps   973,612    962,989    940,530    983,255 
Borrowed Funds   58,656    57,503    87,348    77,916 
Other Liabilities   8,220    7,742    8,052    7,578 
TOTAL LIABILITIES   1,040,488    1,028,234    1,035,930    1,068,749 
                     
SHAREHOLDERS' EQUITY                    
Common Shareholders' Equity, Excluding                    
Accumulated Other Comprehensive Income/ Loss   183,636    182,914    184,959    182,887 
Accumulated Other Comprehensive Income/ Loss:                    
Net Unrealized Gains/Losses on                    
Available-for-sale Securities   6,849    5,347    2,493    4,077 
Defined Benefit Plans Adjustment, Net   45    49    35    9 
TOTAL SHAREHOLDERS' EQUITY   190,530    188,310    187,487    186,973 
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY  $1,231,018   $1,216,544   $1,223,417   $1,255,722 

 

2 

 

 

AVAILABLE-FOR-SALE SECURITIES  June 30, 2016   March 31, 2016   December 31, 2015 
(In Thousands)  Amortized   Fair   Amortized   Fair   Amortized   Fair 
   Cost   Value   Cost   Value   Cost   Value 
                         
Obligations of U.S. Government agencies  $9,664   $9,781   $10,661   $10,707   $10,663   $10,483 
Obligations of states and political subdivisions:                              
Tax-exempt   110,702    116,056    107,269    111,959    103,414    107,757 
Taxable   34,015    35,132    34,249    35,094    34,317    34,597 
Mortgage-backed securities issued or guaranteed                              
by U.S. Government agencies or sponsored                              
agencies:                              
Residential pass-through securities   64,108    65,407    72,210    73,243    73,227    73,343 
Residential collateralized mortgage obligations   175,889    177,980    179,731    180,860    193,145    191,715 
Commercial mortgage-backed securities   11,120    11,239    0    0    0    0 
Other collateralized debt obligations   1    1    7    7    9    9 
Total debt securities   405,499    415,596    404,127    411,870    414,775    417,904 
Marketable equity securities   1,171    1,609    1,253    1,736    1,680    2,386 
Total  $406,670   $417,205   $405,380   $413,606   $416,455   $420,290 

 

Summary of Loans by Type                
(Excludes Loans Held for Sale)                
(In Thousands)  June 30,   March 31,   Dec. 31,   June 30, 
   2016   2016   2015   2015 
Residential mortgage:                    
Residential mortgage loans - first liens  $315,191   $306,753   $304,783   $294,978 
Residential mortgage loans - junior liens   22,159    21,622    21,146    21,502 
Home equity lines of credit   39,054    38,627    39,040    39,140 
1-4 Family residential construction   22,241    20,010    21,121    19,651 
Total residential mortgage   398,645    387,012    386,090    375,271 
Commercial:                    
Commercial loans secured by real estate   153,070    154,646    154,779    135,063 
Commercial and industrial   82,390    71,628    75,196    61,427 
Political subdivisions   41,026    38,364    40,007    40,908 
Commercial construction and land   9,193    7,445    5,122    7,826 
Loans secured by farmland   6,615    7,168    7,019    7,565 
Multi-family (5 or more) residential   8,173    8,393    9,188    8,561 
Agricultural loans   4,692    4,492    4,671    4,287 
Other commercial loans   11,904    11,387    12,152    12,809 
Total commercial   317,063    303,523    308,134    278,446 
Consumer   12,134    11,070    10,656    10,101 
Total   727,842    701,605    704,880    663,818 
Less: allowance for loan losses   (7,929)   (7,661)   (7,889)   (7,300)
Loans, net  $719,913   $693,944   $696,991   $656,518 

 

Loans Held for Sale                
(In Thousands)  June 30,   March 31,   Dec. 31,   June 30, 
   2016   2016   2015   2015 
Residential mortgage loans originated                    
and serviced - outstanding balance  $156,798   $154,304   $152,728   $151,324 
Less: outstanding balance of loans sold   (156,417)   (153,778)   (152,448)   (151,132)
Loans held for sale, net  $381   $526   $280   $192 

 

3 

 

 

ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES                
(In Thousands)                
   3 Months   3 Months   6 Months   6 Months 
   Ended   Ended   Ended   Ended 
   June 30,   March 31,   June 30,   June 30, 
   2016   2016   2016   2015 
Balance, beginning of period  $7,661   $7,889   $7,889   $7,336 
Charge-offs   (63)   (613)   (676)   (299)
Recoveries   13    17    30    39 
Net charge-offs   (50)   (596)   (646)   (260)
Provision for loan losses   318    368    686    224 
Balance, end of period  $7,929   $7,661   $7,929   $7,300 

 

PAST DUE AND IMPAIRED LOANS, NONPERFORMING ASSETS            
AND TROUBLED DEBT RESTRUCTURINGS (TDRs)                
(In Thousands)                
   June 30,   March 31,   Dec 31,   June 30, 
   2016   2016   2015   2015 
Impaired loans with a valuation allowance  $1,275   $1,420   $1,933   $3,880 
Impaired loans without a valuation allowance   8,055    8,210    8,041    7,764 
Total impaired loans  $9,330   $9,630   $9,974   $11,644 
                     
Total loans past due 30-89 days and still accruing  $6,945   $11,373   $7,057   $3,803 
                     
Nonperforming assets:                    
Total nonaccrual loans  $10,504   $10,944   $11,517   $12,060 
Total loans past due 90 days or more and still accruing   4,654    3,957    3,229    2,529 
Total nonperforming loans   15,158    14,901    14,746    14,589 
Foreclosed assets held for sale (real estate)   2,052    1,584    1,260    1,223 
Total nonperforming assets  $17,210   $16,485   $16,006   $15,812 
                     
Loans subject to troubled debt restructurings (TDRs):                    
Performing  $1,047   $1,167   $1,186   $1,119 
Nonperforming   5,102    5,146    5,178    5,216 
Total TDRs  $6,149   $6,313   $6,364   $6,335 
                     
Total nonperforming loans as a % of loans   2.08%   2.12%   2.09%   2.20%
Total nonperforming assets as a % of assets   1.40%   1.36%   1.31%   1.26%
Allowance for loan losses as a % of total loans   1.09%   1.09%   1.12%   1.10%
Allowance for loan losses as a % of nonperforming loans   52.31%   51.41%   53.50%   50.04%

 

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 
   6/30/2016   Return/   3/31/2016   Return/   6/30/2015   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  $297,608    2.02%  $305,880    2.09%  $389,705    2.06%
Tax-exempt   108,652    4.79%   105,406    5.23%   116,421    5.33%
Total available-for-sale securities   406,260    2.76%   411,286    2.89%   506,126    2.81%
Interest-bearing due from banks   24,250    0.60%   20,348    0.47%   21,970    0.46%
Loans held for sale   540    5.96%   452    5.34%   145    8.30%
Loans receivable:                              
Taxable   650,213    5.00%   640,959    5.00%   592,188    5.25%
Tax-exempt   61,669    4.50%   60,677    4.54%   49,026    4.88%
Total loans receivable   711,882    4.96%   701,636    4.96%   641,214    5.22%
Total Earning Assets   1,142,932    4.09%   1,133,722    4.13%   1,169,455    4.09%
Cash   16,522         15,588         17,072      
Unrealized gain/loss on securities   7,737         7,055         10,260      
Allowance for loan losses   (7,756)        (7,932)        (7,226)     
Bank premises and equipment   15,390         15,458         16,095      
Intangible Asset - Core Deposit Intangible   25         29         44      
Intangible Asset - Goodwill   11,942         11,942         11,942      
Other assets   38,938         38,530         38,065      
Total Assets  $1,225,730        $1,214,392        $1,255,707      
                               
INTEREST-BEARING LIABILITIES                              
Interest-bearing deposits:                              
Interest checking  $196,918    0.15%  $195,142    0.12%  $199,373    0.11%
Money market   200,896    0.17%   191,514    0.17%   196,537    0.15%
Savings   132,353    0.10%   130,003    0.10%   128,879    0.10%
Certificates of deposit   117,825    0.75%   113,411    0.72%   122,634    0.67%
Individual Retirement Accounts   104,030    0.42%   105,562    0.41%   111,765    0.41%
Other time deposits   1,140    0.00%   804    0.00%   1,125    0.00%
Total interest-bearing deposits   753,162    0.28%   736,436    0.26%   760,313    0.25%
Borrowed funds:                              
Short-term   23,225    0.71%   35,683    0.70%   9,185    0.22%
Long-term   38,649    3.77%   38,725    3.77%   69,211    4.01%
Total borrowed funds   61,874    2.62%   74,408    2.30%   78,396    3.57%
Total Interest-bearing Liabilities   815,036    0.46%   810,844    0.45%   838,709    0.56%
Demand deposits   215,443         208,163         220,839      
Other liabilities   8,304         7,378         7,756      
Total Liabilities   1,038,783         1,026,385         1,067,304      
Stockholders' equity, excluding                              
other comprehensive income/loss   181,882         183,376         181,683      
Other comprehensive income/loss   5,065         4,631         6,720      
Total Stockholders' Equity   186,947         188,007         188,403      
Total Liabilities and Stockholders' Equity  $1,225,730        $1,214,392        $1,255,707      
Interest Rate Spread        3.63%        3.68%        3.53%
Net Interest Income/Earning Assets        3.76%        3.81%        3.69%
                               
Total Deposits (Interest-bearing                              
and Demand)  $968,605        $944,599        $981,152      

 

(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.

 

5 

 

 

Analysis of Average Daily Balances and Rates            
(Dollars in Thousands)                
   6 Months       6 Months     
   Ended   Rate of   Ended   Rate of 
   6/30/2016   Return/   6/30/2015   Return/ 
   Average   Cost of   Average   Cost of 
   Balance   Funds %   Balance   Funds % 
EARNING ASSETS                    
Available-for-sale securities,                    
at amortized cost:                    
Taxable  $301,744    2.06%  $388,909    2.11%
Tax-exempt   107,029    5.01%   117,044    5.34%
Total available-for-sale securities   408,773    2.83%   505,953    2.85%
Interest-bearing due from banks   22,299    0.54%   24,468    0.42%
Loans held for sale   496    5.68%   117    8.62%
Loans receivable:                    
Taxable   645,586    5.00%   587,370    5.31%
Tax-exempt   61,173    4.52%   45,495    5.00%
Total loans receivable   706,759    4.96%   632,865    5.29%
Total Earning Assets   1,138,327    4.11%   1,163,403    4.13%
Cash   16,055         16,602      
Unrealized gain/loss on securities   7,396         10,442      
Allowance for loan losses   (7,844)        (7,308)     
Bank premises and equipment   15,424         16,173      
Intangible Asset - Core Deposit Intangible   27         47      
Intangible Asset - Goodwill   11,942         11,942      
Other assets   38,734         37,603      
Total Assets  $1,220,061        $1,248,904      
                     
INTEREST-BEARING LIABILITIES                    
Interest-bearing deposits:                    
Interest checking  $196,030    0.14%  $195,560    0.11%
Money market   196,205    0.17%   195,690    0.15%
Savings   131,178    0.10%   128,369    0.10%
Certificates of deposit   115,618    0.73%   122,322    0.69%
Individual Retirement Accounts   104,796    0.42%   112,780    0.41%
Other time deposits   972    0.00%   965    0.00%
Total interest-bearing deposits   744,799    0.27%   755,686    0.26%
Borrowed funds:                    
Short-term   29,454    0.70%   7,610    0.16%
Long-term   38,687    3.77%   71,105    4.02%
Total borrowed funds   68,141    2.44%   78,715    3.65%
Total Interest-bearing Liabilities   812,940    0.45%   834,401    0.58%
Demand deposits   211,803         217,945      
Other liabilities   7,841         7,937      
Total Liabilities   1,032,584         1,060,283      
Stockholders' equity, excluding                    
other comprehensive income/loss   182,629         181,813      
Other comprehensive income/loss   4,848         6,808      
Total Stockholders' Equity   187,477         188,621      
Total Liabilities and Stockholders' Equity  $1,220,061        $1,248,904      
Interest Rate Spread        3.66%        3.55%
Net Interest Income/Earning Assets        3.79%        3.71%
                     
Total Deposits (Interest-bearing                    
and Demand)  $956,602        $973,631      

 

(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.

 

6 

 

 

COMPARISON OF NONINTEREST INCOME                    
(In Thousands)  Three Months Ended   Six Months Ended 
   June 30,   March 31,   June 30,   June 30,   June 30, 
   2016   2016   2015   2016   2015 
Service charges on deposit accounts  $1,164   $1,138   $1,305   $2,302   $2,327 
Service charges and fees   123    94    123    217    236 
Trust and financial management revenue   1,251    1,144    1,241    2,395    2,355 
Brokerage revenue   180    173    206    353    425 
Insurance commissions, fees and premiums   27    21    23    48    63 
Interchange revenue from debit card transactions   487    463    500    950    974 
Net gains from sales of loans   295    168    183    463    330 
Decrease in fair value of servicing rights   (108)   (71)   (33)   (179)   (150)
Increase in cash surrender value of life insurance   93    96    102    189    199 
Other operating income   394    464    312    858    759 
Total other operating income, before realized                         
gains on available-for-sale securities, net  $3,906   $3,690   $3,962   $7,596   $7,518 

 

COMPARISON OF NONINTEREST EXPENSE                    
(In Thousands)  Three Months Ended   Six Months Ended 
   June 30,   March 31,   June 30,   June 30,   June 30, 
   2016   2016   2015   2016   2015 
Salaries and wages  $3,913   $3,887   $3,603   $7,800   $7,090 
Pensions and other employee benefits   1,002    1,437    935    2,439    2,320 
Occupancy expense, net   560    609    640    1,169    1,362 
Furniture and equipment expense   439    427    467    866    921 
FDIC Assessments   155    142    148    297    299 
Pennsylvania shares tax   323    322    317    645    635 
Professional fees   282    289    140    571    296 
Automated teller machine and interchange expense   267    249    255    516    501 
Software subscriptions   251    241    211    492    408 
Other operating expense   1,343    1,469    1,248    2,812    2,665 
Total noninterest expense, before loss on                         
prepayment of borrowings   8,535    9,072    7,964    17,607    16,497 
Loss on prepayment of borrowings   0    0    910    0    910 
Total noninterest expense  $8,535   $9,072   $8,874   $17,607   $17,407 

 

7 

Stock widget

Investing forum

CITIZENS & NORTHERN CORP Reports