Citizens & Northern Corp · NASDAQ:CZNC
Citizens & Northern — Boenning & Scattergood Community Bank Conference (August 2018)
32 slides from Citizens & Northern's conference presentation, Aug 8, 2018
Slide 1: Boenning & Scattergood Community Bank Conference
August 9, 2018 Boenning & Scattergood Community Bank Conference
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 $1.284 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 June 30, 2018
Summary Statistics June 30, 2018 Total Assets $1.284 Billion Net Loans $809.8 Million Total Deposits $1.041 Billion Tangible Common Equity 1 $177.2 Million Tang. Common Equity / Tang. Assets 1 13.93% Tier 1 Leverage Ratio 14.52% Total Risk Based Capital 23.82% NPAs 2 / Assets 1.35% LTM Return on Ave
Slide 6: Current Footprint
Current Footprint @ACITIZENS & NORA
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 4.18% – 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: Six Months Ended June 30, 2018 Highlights
Six Months Ended June 30, 2018 Highlights 11 Earnings Performance (Unaudited) As of or for the six months ended June 30 % Increase/ (Decrease) 2018 2017 Net Income $10,746 $7,555 42.24% Diluted Earnings per Share $0.87 $0.62 40.32% Return on Average Assets (Annualized) 1.70% 1.22% 39.34% Return on A
Slide 12: Six Months Ended June 30, 2018 and 2017 Year over Year Comparisons
Six Months Ended June 30, 2018 and 2017 Year over Year Comparisons • Increase in EPS of $0.25, or 40.3% • Increase in net income of $3,191,000, or 42.2% • 2018 results included after - tax gain on a restricted equity security (Visa Class B stock) of $1,382,000 and an after - tax loss on available -
Slide 13: Year over Year Comparisons (cont'd)
Six Months Ended June 30, 2018 and 2017 Year over Year Comparisons (cont’d) • Increase in net interest income (tax equivalent) of $909,000, or 4.2% – Net interest margin of 3.86%, up 0.05%, including increase in annualized yield on average earning assets of 0.07% and increase in annualized rate on a
Slide 14: Loan Portfolio Diversification and Yield
Commercial 43.1% Consumer 1.9% Residential 54.9% Loan Portfolio Diversification and Yield LOAN PORTFOLIO – as of 6/30/18 Dollars in thousands Amount % of Total Residential mortgage loans - first liens $361,592 44.2% Residential mortgage loans - junior liens 26,594 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 June 30, 2018 (Amounts in thousands) Amount % of Total Noninterest - bearing demand $248,502 23.9% Interest c hecking 215,808 20.7% Savings and money market 337,022 32.4% Time deposits of less than $250,000 207,195 19.9
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 • $927m in Trust assets under management at 6/30/18 • Trust and brokerage revenues totaled $3.4m YTD June 30, 2018, or 10.8% o
Slide 17: Diversified Noninterest Income
Service Charges, Interchange & Other Fees 43% Trust, Brokerage & Insurance Revenue 38% Other Non Interest Income 19% Noninterest Income Diversified Noninterest Income Noninterest Income 29% Net Interest Income (Tax Equivalent) 71% Six Months Ended June 30, 2018 Source: Company records – Six months e
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 June 30, 2018 Actual Data ¹ See calculation of non - U.S. GAAP ratio on supplemental schedule. ² Source: Company documents 13.9% 14.5% 22.7% 23.8% 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 March 31, 20 18 (2) Source: Bank Holding Company Performance Report March 31, 2018 – FR BHCPR 20 1.38% 1.33% 1.29% 1.08% 1.38% 0.91% 0.92%
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 March 31, 20 18 (2) Source: Bank Holding Company Performance Report March 31, 2018 – FR BHCPR 21
Slide 22: Peer Group Comparison: Interest Expense as % of Interest-bearing Deposits
Peer Group Comparison: Interest Expense as % of Interest - bearing Deposits 22 0.28% 0.26% 0.28% 0.32% 0.38% 0.43% 0.41% 0.44% 0.53% 0.61% 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% 0.70% YE 2014 YE 2015 YE 2016 YE 2017 Q1 2018 CZNC BHC Peer Group (1) BHC Peer Group: Bank Holding Companies in Philade
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 March 31, 20 18 (2) Source: Bank Holding Company Performance Report March 31, 2018 – FR BHCPR 23 - 1.96% 11.88% 6.63% 8.62% 7.
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 March 31, 20 18 (2) Source: Bank Holding Company Performance Report March 31, 2018 – FR BHCPR 24 1.26% 1.25% 1.26% 1.28%
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 3 quarters of 2018, resulting in an annualized yield of 4.18% based on market data as of 6/30/2018 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 LTM Efficiency Ratio (Amounts in thousands) 3rd Q 4th Q 1st Q 2nd Q 2017 2017 2018 2018 LTM Total noninterest expenses (a) $9,192 $9,401 $9,895 $9,684 $38,172 Net interest income, FTE $11,337 $11,468 $11,226 $11,586 $45,617 Total noninterest income * 4,066 4,117 4,4
Slide 32: Supplemental Schedule (cont'd)
Supplemental Schedule (cont’d) 32 2017 Return on Average Assets (Amounts in thousands) Average assets $1,247,759 Net income $13,434 ROAA 1.08% 2017 Return on Average Assets - Excluding Tax Charge Average assets $1,247,759 Net income, as reported $13,434 Additional income tax provision resulting from
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