Citizens & Northern Corp · NASDAQ:CZNC
Citizens & Northern — Piper Sandler Philly Bank Bonanza 2022
30 slides from Citizens & Northern's conference presentation, Jun 16, 2022
Slide 1: Piper Sandler & Co. Philly Bank Bonanza June 16, 2022
Piper Sandler & Co. Philly Bank Bonanza June 16, 2022
Slide 2: Caution Regarding Forward Looking Statements
CAUTION REGARDING FORWARD LOOKING STATEMENTS This presentation contains forward - looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that relate to future events or the future performance of the Company. Forward - looking statements are not gua rantees of p
Slide 3: C&N Franchise Overview
• Citizens & Northern Corporation (“C&N”) is a bank holding company with assets of approximately $2.3 billion at March 31, 2022. It was founded in 1987 and has been listed on the NASDAQ since 2005. C&N’s principal subsidiary is Citizens & Northern Bank (“C&N Bank”). • Headquartered in Wellsboro, PA,
Slide 4: Current Strategic Focus
4 Current Strategic Focus Source: Company documents • Target business segments we know and understand • Significant progress establishing relationship model in newer markets • Blending digital with personal/physical access Relationship Banking Model • Beginning to harvest results of recent investmen
Slide 5: Digital transformation and technology initiatives
• Cloud Migration • In process of eliminating Bank - operated data centers to de - risk operations and add agility • Consolidation of computing and storage in cloud with Amazon Web Services, Inc. (AWS) is approximately 50% complete • Data & Analytics • Establishing central data warehouse with enhanc
Slide 6: Current Branch Footprint
6 Current Branch Footprint CZNC (31) CZNC LPO (1) County of Operation Adjacent County Elk Tioga York Potter Steuben Berks Bradford Lycoming Clinton Warren Allegany Clearfield McKean Luzerne Cattaraugus Bucks Lancaster Tioga Chester Ontario Adams Yates Burlington Dauphin Livingston Susquehanna Sulliv
Slide 7: Strong Presence in Legacy Markets Support Continued Expansion
Source: FDIC Summary of Deposits; data as of June 30, 2021 7 Strong Presence in Legacy Markets Support Our Continued Expansion into Newer, Higher Growth Markets Total Deposits ($000) As of June 30, 2021 Region C&N Deposits % of Total C&N Deposits Total Market Deposits C&N Market Share Northern Tier
Slide 8: Experienced Management Team
8 Experienced Management Team Name Position Years of Banking Experience Years with Citizens & Northern J. Bradley Scovill President and CEO 31 7 Mark Hughes Chief Financial Officer 22 22 Matthew Bower 1 Chief Wealth Management Officer 32 0 Alexander Balagour Chief Information Officer 9 1 Shelley D’H
Slide 9: Summary Statistics
9 Summary Statistics March 31, 2022 Total Assets $2,330 Million Net Loans $1,524 Million PPP Loans $12.4 Million Total Deposits $1,961 Million Tangible Common Equity 1 $220.5 Million Tang. Common Equity / Tang. Assets 1 9.69% Tier 1 Ratio 15.20% Total Risk Based Capital 18.23% Allowance for Loan Los
Slide 10: First quarter 2022 results highlights
• First quarter 2022 net income totaled $6.9 million, compared to $7.3 million in the preceding quarter and $8.8 million in the same quarter a year ago. Diluted earnings per share for the first quarter 2022 was $0.44, down from $0.46 per share in the preceding quarter and down from $0.55 in the same
Slide 11: Targeted Balance Sheet Growth
11 Targeted Balance Sheet Growth Total Assets ($M) Total Deposits ($M) Total Loans and Leases ($M) Total Equity ($M) CAGR¹: 19.9% CAGR¹: 21.8% Actual (Ex. PPP) PPP Loans 1) CAGR calculated from 2018Y to 2022Q1 2) Reference GAAP to Non GAAP reconciliation pages in appendix Source: S&P Global Market I
Slide 12: Strong Historical Profitability
12 Strong Historical Profitability Net Income ($M) Efficiency Ratio (%) ROAA (%) Net Interest Margin (%) 1) Annualized 2) Reference GAAP to Non GAAP reconciliation pages in appendix Source: S&P Global Market Intelligence; Financial data as of March 31, 2022 GAAP Non - GAAP Adjusted 2 GAAP Non - GAAP
Slide 13: Diversified Revenue: Meaningful Contribution of Fee Income
13 Diversified Revenue: Meaningful Contribution of Fee Income 1) Financial Data shown on an annualized basis Source: Company documents; Financial data as of March 31, 2022 2018Y 2019Y 2020Y 2021Y 2022Q1 Trust Revenue $5,838 $6,106 $6,321 $7,234 $1,786 Brokerage and Insurance Revenue 1,123 1,433 1,48
Slide 14: Diversified Lending Strategy & Portfolio Composition
• Diversified strategy across lending products and geographies • Relationship based lending strategy with strong credit culture • MRQ yield on loans of 5.01%, or 4.47% excluding PPP and purchase accounting related income • Nonowner - occupied CRE / Tier 1 Capital plus the Allowance is 187% as of Mar
Slide 15: Consistent and Well Covered Asset Quality Metrics
15 Consistent and Well Covered Asset Quality Metrics 1) Reference GAAP to Non - GAAP reconciliation pages in appendix 2) Net charge - offs in 2022Q1 have been annualized for purposes of this ratio. Source: S&P Global Market Intelligence and company documents; Financial data as of March 31, 2022 NPAs
Slide 16: Strong Core Deposit Base
16 Strong Core Deposit Base Source: Company documents; Financial data as of March 31, 2022 • Non - time deposits of $1.7B, which represents 86% of total deposits • 0.19% cost of total deposits in first quarter 2022 • Noninterest - bearing deposits were $552M, and represents 28.2% of total deposits 2
Slide 17: Holding Company Capital Ratios
17 Holding Company Capital Ratios TCE / TA (%) Tier 1 Capital Ratio (%) Leverage Ratio (%) Total RBC Ratio (%) Source: Company Documents 14.5 13.2 11.2 10.8 9.7 2018Y 2019Y 2020Y 2021Y 2022Q1 14.8 13.1 10.3 10.5 10.6 2018Y 2019Y 2020Y 2021Y 2022Q1 23.2 19.2 15.6 15.2 15.2 2018Y 2019Y 2020Y 2021Y 202
Slide 18: Bank Level Capital Ratios
18 Bank Level Capital Ratios Tier 1 Capital Ratio (%) Leverage Ratio (%) Total RBC Ratio (%) Source: Company Documents 20.6 17.8 15.2 15.1 15.3 2018Y 2019Y 2020Y 2021Y 2022Q1 13.2 12.2 10.1 10.5 10.7 2018Y 2019Y 2020Y 2021Y 2022Q1 21.8 18.8 16.0 16.0 16.2 2018Y 2019Y 2020Y 2021Y 2022Q1
Slide 19: Conclusion
19 Conclusion 158 - year - old institution with a strong market position Consistently strong profitability with diversified revenue streams Balanced loan portfolio with sound asset quality Stable, low - cost core deposit franchise Strong capital position to support growth strategy 1 2 3 4 5 Experien
Slide 20: Thank You
Thank You 20
Slide 21: Appendix
Appendix 21
Slide 22: Consolidated Historical Balance Sheet
22 Consolidated Historical Balance Sheet Source: Company Documents; Financial data as of March 31, 2022 At Year Ended At Quarter Ended 2019Y 2020Y 2021Y 2021Q2 2021Q3 2021Q4 2022Q1 Assets ($000) Total Cash and Cash Due from Banks 35,202 101,857 104,948 208,860 198,995 104,948 114,346 Available for S
Slide 23: Consolidated Historical Income Statement
23 Consolidated Historical Income Statement Source: Company documents; Financial data as of March 31, 2022 For the Year Ending, 3/31/2022 2019Y 2020Y 2021Y 2022Q1 Net Interest Income 54,488 67,565 77,939 20,332 Provision for Loan Losses 849 3,913 3,661 891 Trust Revenue 6,106 6,321 7,234 1,786 Broke
Slide 24: Investment Portfolio Characteristics
Investment Portfolio Characteristics as of March 31, 2022 24 Securities Portfolio 1) Municipal portfolio credit quality information is summarized based on amortized cost values. Ratings are assigned to each security based on the lowest enhanced or underlying rating from Moody’s, S&P or Fitch. Source
Slide 25: Securities Portfolio, continued
25 Securities Portfolio, continued The composition of the available - for - sale debt securities portfolio at March 31, 2022, December 31, 2021 and December 31, 2020 is as follows: (In Thousands) March 31, 2022 December 31, 2021 December 31, 2020 Amortized Fair Amortized Fair Amortized Fair Cost Val
Slide 26: Asset-sensitive Interest Rate Risk Profile
26 Asset - sensitive Interest Rate Risk Profile Citizens & Northern uses a simulation model to calculate the potential effects of interest rate fluctuations on net interest income and the market value of portfolio equity. The model makes estimates, at each level of interest rate change, regarding ca
Slide 27: Reconciliation of GAAP to Non-GAAP Measure
27 Reconciliation of GAAP to Non - GAAP Measure (1) Income tax has been allocated based on a marginal income tax rate of 21%. The effect on the income tax provision is adjusted fo r the estimated nondeductible portion of merger expenses. (2) Annualized returns on tax - exempt securities and loans ar
Slide 28: Reconciliation of GAAP to Non-GAAP Measure
28 Reconciliation of GAAP to Non - GAAP Measure Source: Company documents; Financial data as of March 31, 2022 At Year Ended December 31, At Quarter Ended ($000s) 2018 2019 2020 2021 3/31/2022 Nonperforming Assets: Purchased Credit Impaired Loans $0 $441 $6,841 $6,558 $3,983 Other Nonaccrual Loans 1
Slide 29: Reconciliation of GAAP to Non-GAAP Measure
29 Reconciliation of GAAP to Non - GAAP Measure Source: Company documents; Financial data as of March 31, 2022 At Year Ended December 31, Three Months Ended ($000s) 2018 2019 2020 2021 6/30/2021 9/30/2021 12/31/2021 3/31/2022 Total Gross Loans $827,563 $1,182,222 $1,644,209 $1,564,849 $1,597,856 $1,
Slide 30: Reconciliation of GAAP to Non-GAAP Measure
30 Reconciliation of GAAP to Non - GAAP Measure Source: Company documents; Financial data as of March 31, 2022 Holding Company Tangible Common Equity At Year Ended At Quarter Ended ($000) 12/31/2018 12/31/2019 12/31/2020 12/31/2021 6/30/2021 9/30/2021 12/31/2021 3/31/2022 Stockholders' Equity (GAAP)
Citizens & Northern — Piper Sandler Philly Bank Bonanza 2022 on 6ix