Citizens & Northern Corp · NASDAQ:CZNC
Citizens & Northern — Sandler O'Neill + Partners Philly Bank Day 2018
32 slides from Citizens & Northern's conference presentation, Jun 11, 2018
Slide 1: Sandler O'Neill + Partners Philly Bank Day
June 12, 2018 Sandler O’Neill + Partners, L.P. Philly Bank Day
Slide 2: Safe Harbor
Safe Harbor This presentation contains statements which, to the extent that they are not recitations of historical fact may constitute fo rwa rd - looking statements for purposes of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. Such for ward - looking s
Slide 3: Table of Contents
Table of Contents • Who We Are……………………………………………..4 - 8 • Current Strategic Focus……………………………9 - 10 • Selected Financial Data………………………….11 - 26 • Investment Considerations…………….……..27 - 28 • Contact Information……………………………………29 • Supplemental Schedule..…..………………..… 30 - 32 3
Slide 4: Citizens & Northern Franchise Overview
Citizens & Northern Franchise Overview • Bank holding company with assets of approximately $1.258 billion • Headquarters in Wellsboro, PA • Banking services are provided by its subsidiary, Citizens & Northern Bank, from 26 full service offices in Bradford, Cameron, Lycoming, McKean, Potter, Sullivan
Slide 5: Summary Statistics
Summary Statistics March 31, 2018 Total Assets $1.258 Billion Net Loans $808.3 Million Total Deposits $1.018 Billion Tangible Common Equity 1 $174.4 Million Tang. Common Equity / Tang. Assets 1 14.00% Tier 1 Leverage Ratio 14.33% Total Risk Based Capital 23.49% NPAs 2 / Assets 1.39% LTM Return on Av
Slide 6: Current Footprint
Current Footprint A 8 NORTHERN BANK
Slide 7: Strong Deposit Market Share in Legacy Markets
Strong Deposit Market Share in Legacy Markets 1 The Elmira, NY Loan Production Office is located in Chemung County, within 20 miles of 2 full - service branch offices 2 Source : FDIC Summary of Deposits, information as of June 30, 2017 County % of CZNC Deposits Market Rank Market Share (%) Number of
Slide 8: Experienced Management Team
Experienced Management Team All executive officers have 15 or more years of banking experience Name Position Years of Banking Experience Years with Citizens & Northern J. Bradley Scovill President and CEO 27 3 Mark Hughes Chief Financial Officer 18 18 Shelley D'Haene Senior Operations Officer 19 19
Slide 9: Current Strategic Focus
Current Strategic Focus • Alignment to Drive Growth • Strategic Investments – Development of employees – Sales and Relationship management system – Facilities renovations in targeted locations to accommodate newer technology solutions that many customers desire – Online and mobile solutions • Proact
Slide 10: Current Strategic Focus (cont'd)
Current Strategic Focus (cont’d) • Capital Deployment – Current dividend yield of 4.17% – Stock buyback program in place, not used since commencement in April 2016 • Risk Management – Continue to strengthen enterprise risk management programs consistent with size and complexity of the company 10
Slide 11: 1st Quarter 2018 Highlights
1 st Quarter 2018 Highlights 11 Earnings Performance (Unaudited) As of or for the three months ended March 31 % Increase/ (Decrease) 2018 2017 Net Income $4,375 $3,434 27.40% Earnings per Share $0.36 $0.28 28.57% Return on Average Assets (Annualized) 1.39% 1.11% 25.23% Return on Average Equity (Annu
Slide 12: 1st Qtr Comparisons Year over Year
1 st Qtr Comparisons Year over Year • Increase in EPS of $0.08, or 28.6% • Increase in net income of $941,000, or 27.4% • Decrease in income tax provision of $243,000 – Effective tax rate of 14.5% as compared to 22.3% last year – Reduction in effective tax rate reflects the impact of reduction in fe
Slide 13: 1st Qtr Comparisons Year over Year (cont'd)
1 st Qtr Comparisons Year over Year (cont’d) • Increase in net interest income (tax equivalent) of $385,000, or 3.6% – Net interest margin of 3.84%, up 0.06%, including increase in annualized yield on average earning assets of 0.07% and increase in annualized rate on average interest - bearing liabi
Slide 14: Loan Portfolio Diversification and Yield
Commercial 43.7% Consumer 1.9% Residential 54.4% Loan Portfolio Diversification and Yield LOAN PORTFOLIO – as of 3/31/18 Dollars in thousands Amount % of Total Residential mortgage loans - first liens $358,786 43.9% Residential mortgage loans - junior liens 25,870 3.2% Home equity lines of credit 34
Slide 15: Deposit Composition and Cost of Funds
Deposit Composition and Cost of Funds Source: Company documents Deposits - as of March 31, 2018 (Amounts in thousands) Amount % of Total Noninterest - bearing demand $250,839 24.6% Interest c hecking 210,852 20.7% Savings and money market 331,660 32.6% Time deposits of less than $250,000 203,045 19.
Slide 16: Wealth Management Division
Wealth Management Division • Largest locally - based wealth management department with integrated broker/dealer and insurance sales • Team comprised of over 30 professionals • $916m in Trust assets under management at 3/31/18 • Trust and brokerage revenues totaled $1.6m in 1 st quarter 2018, or 10%
Slide 17: Diversified Noninterest Income
Service Charges, Interchange & Other Fees 42% Trust, Brokerage & Insurance Revenue 38% Other Non Interest Income 20% Noninterest Income Diversified Noninterest Income Noninterest Income 28% Net Interest Income (Tax Equivalent) 72% First Quarter 2018 Source: Company records – 1 st Quarter 2018 unaudi
Slide 18: Very Strong Capital Position
Very Strong Capital Position High capital positions us for growth – organically and by entry into new markets via acquisition or other means March 31, 2018 Actual Data ¹ See calculation of non - U.S. GAAP ratio on supplemental schedule. ² Source : Company documents 14.0% 14.3% 22.3% 23.5% 0.00% 5.00
Slide 19: Consistently High Earnings Performance
$1.50 $1.38 $1.35 $1.30 $1.10 $1.28 $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 $1.40 $1.60 2013 2014 2015 2016 2017 2017 Excl Tax Charge¹ Consistently High Earnings Performance Earnings Per Share 1.50% 1.38% 1.32% 1.28% 1.08% 1.25% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% 1.60% 2013 2014 2015
Slide 20: Peer Group Comparison: Return on Assets
Peer Group Comparison: Return on Assets (1) BHC Peer Group: Bank Holding Companies in Philadelphia Federal Reserve District with consolidated assets $1B - $3B at December 31, 2017 (2) Source: Bank Holding Company Performance Report December 31, 2017 – FR BHCPR 20 1.51% 1.38% 1.33% 1.29% 1.08% 0.88%
Slide 21: Peer Group Comparison: Net Interest Income
Peer Group Comparison: Net Interest Income (Tax Equivalent) - % of Average Assets (1) BHC Peer Group: Bank Holding Companies in Philadelphia Federal Reserve District with consolidated assets $1B - $3B at December 31, 2017 (2) Source: Bank Holding Company Performance Report December 31, 2017 – FR BHC
Slide 22: Peer Group Comparison: Interest Expense on Deposits
Peer Group Comparison: Interest Expense as % of Interest - bearing Deposits 22 0.35% 0.28% 0.26% 0.28% 0.32% 0.50% 0.43% 0.41% 0.44% 0.53% 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% 2013 2014 2015 2016 2017 CZNC BHC Peer Group (1) BHC Peer Group: Bank Holding Companies in Philadelphia Federal Reserve
Slide 23: Peer Group Comparison: Loan Growth & Credit Quality
Peer Group Comparison: Loan Growth & Credit Quality (1) BHC Peer Group: Bank Holding Companies in Philadelphia Federal Reserve District with consolidated assets $1B - $3B at December 31, 2017 (2) Source: Bank Holding Company Performance Report December 31, 2017 – FR BHCPR 23 - 6.46% - 1.96% 11.88% 6
Slide 24: Peer Group Comparison: Noninterest Revenue & Expense Data
Peer Group Comparison: Noninterest Revenue & Expense Data (1) BHC Peer Group: Bank Holding Companies in Philadelphia Federal Reserve District with consolidated assets $1B - $3B at December 31, 2017 (2) Source: Bank Holding Company Performance Report December 31, 2017 – FR BHCPR 24 1.33% 1.26% 1.25%
Slide 25: Strategic Investments
Strategic Investments • People – Modest increase in personnel to support growth and advancement – mainly lending, lending support, HR & training, marketing – Increased spending in employee development and training – Health insurance expense has increased due to higher claims on partially self - insu
Slide 26: Strategic Investments (cont'd)
Strategic Investments (cont’d) • Infrastructure & Technology – Capital expenditures increased to support 2 office renovations, acquisition of Elmira property, new phone system, interactive teller machines and upgrades to IT network, data storage and disaster recovery systems – Expenses for software
Slide 27: Investment Considerations
Investment Considerations • Leading deposit market share among community banks in North Central Pennsylvania • Experienced senior leadership team • Consistently high earnings performance, with diverse revenue sources • Very strong capital position • Well - established core deposit franchise with non
Slide 28: Investment Considerations (cont'd)
Investment Considerations (cont’d) • Well - established trust and financial management team • Quarterly dividends declared of $0.27 per share in each of the first 2 quarters of 2018, resulting in an annualized yield of 4.17% based on market data as of 6/1/2018 1 • Attractive currency with valuation
Slide 29: Contact Information
Contact Information President and CEO Brad Scovill BradleyS@cnbankpa.com 570 - 723 - 2102 Treasurer and CFO Mark Hughes MarkH@cnbankpa.com 570 - 724 - 8533 29 Online www.cnbankpa.com www.cntrustpa.com
Slide 30: Supplemental Schedule: Reconcilements and Non-U.S. GAAP Information
Supplemental Schedule Reconcilements and Non - U.S. GAAP Information This presentation contains financial information determined by methods other than accounting principles generally accepted in th e United States (“U.S. GAAP”). The Company’s management believes that these non - U.S. GAAP measures p
Slide 31: Supplemental Schedule (cont'd)
Supplemental Schedule (cont’d) 31
Slide 32: Supplemental Schedule (cont'd)
Supplemental Schedule (cont’d) 32
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