Citizens & Northern Corp · NASDAQ:CZNC
Citizens & Northern — Boenning & Scattergood Community Bank Forum 2019
38 slides from Citizens & Northern's conference presentation, Aug 7, 2019
Slide 1: Boenning & Scattergood Community Bank Forum 2019
Boenning & Scattergood Community Bank Forum 2019 August 8, 2019
Slide 2: Forward-looking statements
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 forward - looking statements may
Slide 3: Table of Contents
Table of Contents 3 • Who We Are ……………………………………… ..... 4 - 13 • Current Strategic Focus ………………………… ... 14 - 15 • Selected Financial Data ………………………… ... 16 - 27 • Investment Considerations ……………………… .. 28 - 29 • Contact Information ……………………………… ........ 30 • Supplemental Schedule ………………………… ... 31 -
Slide 4: Company overview
• Bank holding company with assets of approximately $1.6 billion at June 30, 2019. • Headquarters in Wellsboro, PA. • Banking services are provided by our subsidiary, Citizens & Northern Bank, from 27 full service branches, including 23 branches in the northern tier of PA, 2 branches in Steuben Coun
Slide 5: Summary Statistics June 30, 2019
5 Summary Statistics June 30, 2019 Total Assets $1.610 Billion Net Loans $1.117 Billion Total Deposits $1.284 Billion Tangible Common Equity 1 $209.7 Million Tang. Common Equity / Tang. Assets 1 13.28% Tier 1 Leverage Ratio 13.13% Total Risk Based Capital 20.97% NPAs 2 / Assets 0.95% LTM Return on A
Slide 6: Acquisition of Monument Bancorp, Inc.
• Agreement and Plan of Merger signed and announced in September 2018 • Transaction closed April 1, 2019 • Total purchase transaction valued at approximately $42.7 million, including 80% of consideration in CZNC common stock/20% cash • Former Monument shareholders own 9.4% of CZNC common stock post
Slide 7: Acquisition of Monument Bancorp, Inc. (cont'd)
Upon consummation of the merger, Monument securities portfolio sold with no realized gain or loss. Proceeds used mainly to pay off subordinated debt of $5.4 million and other borrowings. 7 Acquisition of Monument Bancorp, Inc. (cont’d) Preliminary unaudited, estimated fair value of assets acquired a
Slide 8: Monument fair value and purchase accounting
• As of August 8, 2019, fair value calculations of Monument assets acquired and liabilities assumed are in progress. Preliminary values were used for purposes of the 2 nd Q 2019 unaudited financial statements. • Subject to purchase accounting adjustments, tangible book value dilution at closing is a
Slide 9: Current Footprint & Adjacent Counties
9 Current Footprint & Adjacent Counties County of Operation Adjacent County
Slide 10: Current Footprint
10 Current Footprint
Slide 11: Current Footprint
FS Current Footprint 1
Slide 12: Strong Deposit Market Share in Legacy Markets
12 Strong Deposit Market Share in Legacy Markets County % of CZNC Deposits Market Rank Market Share (%) Number of Branches Total County Deposits ($ Millions) Bradford, PA 36.22% 1 33.21% 7 $1,144 Tioga, PA 27.24% 2 37.60% 6 760 Lycoming, PA 15.90% 7 7.00% 6 2,381 Sullivan, PA 7.79% 1 56.59% 2 144 Po
Slide 13: Experienced Management Team
13 Experienced Management Team Name Position Years of Banking Experience Years with Citizens & Northern J. Bradley Scovill President and CEO 28 4 Mark Hughes Chief Financial Officer 19 19 Shelley D'Haene Senior Operations Officer 20 20 Stan Dunsmore Chief Credit Officer 35 12 Harold (Hal) Hoose Chie
Slide 14: Current Strategic Focus
14 Current Strategic Focus • Alignment to Drive Growth • Integration of former Monument staff and systems and evaluation of opportunities to expand service offerings in the Southeast PA market • Lending and other business development opportunities in York County, PA and surrounding areas • Branding
Slide 15: Current Strategic Focus (cont'd)
• Strategic Investments o Development of employees o Sales and Relationship management system o Mobile and online solutions o Facilities renovations in targeted locations to accommodate newer technology solutions that many customers desire • Capital Deployment o Current dividend yield of 4.42% based
Slide 16: Highlights – Six Months Ended June 30, 2019
16 Highlights – As of and for the Six Months Ended June 30, 2019 Earnings Performance (Unaudited) As of or for the six months ended June 30 % Increase/ (Decrease) 2019 2018 Net Income $8,739 $10,746 - 18.68% Diluted Earnings per Share $0.67 $0.87 - 22.99% Return on Average Assets (Annualized) 1.21%
Slide 17: Highlights – Six Months Ended June 30, 2019 (cont'd)
17 Highlights – As of and for the Six Months Ended June 30, 2019 (cont’d) Balance Sheet Highlights (Unaudited) June 30, 2019 June 30, 2018 % Increase (Decrease) Total Assets $1,609,685 $1,284,007 25.36% Available - for - Sale Debt Securities 363,465 348,044 4.43% Loans (Net) 1,108,483 809,816 36.88%
Slide 18: Six Months Ended June 30, 2019 and 2018 Year over Year Comparisons
• EPS decreased $0.22, reflecting the impact of significant expenses related to the Monument merger in 2019 and significant net securities gains in 2018. Adjusted (non - U.S. GAAP) EPS, excluding the impact of merger - related expenses and net securities gains, were $0.11 higher in 2019 as compared
Slide 19: Year over Year Comparisons (cont'd)
19 Six Months Ended June 30, 2019 and 2018 – Year over Year Comparisons (cont’d) • Increase in net interest income (fully taxable equivalent) of $3,673,000, or 16.1% o Growth in average earning assets of $157,901,000, including growth in average loans of $144,047,000. Average total deposits increase
Slide 20: Year over Year Comparisons (cont'd)
20 Six Months Ended June 30, 2019 and 2018 – Year over Year Comparisons (cont’d) • Total noninterest income, excluding gains and losses on securities, was up $160,000, or 1.8% o Increases in brokerage revenue and interchange from debit and credit card transactions o Decrease in fair value of loan se
Slide 21: Loan Portfolio Diversification and Yield
Commercial 46.6% Consumer 1.8% Residential 51.6% 21 Loan Portfolio Diversification and Yield LOAN PORTFOLIO – as of 6/30/19 Dollars in thousands Amount % of Total Residential mortgage loans - first liens $484,479 43.4% Residential mortgage loans - junior liens 28,880 2.6% Home equity lines of credit
Slide 22: Loan Portfolio Diversification and Yield (cont'd)
22 Loan Portfolio Diversification and Yield (cont’d) Average Loans and Yield Info (Dollars in thousands) 2 nd Q 2019 YTD June 2019 YTD June 2018 YTD % Increase (Decrease) Taxable $1,035,672 $894,208 $740,655 20.1% Tax - Exempt 69,571 71,064 76,242 - 7.6% Average Total Loans $1,105,243 $965,272 $816,
Slide 23: Deposit Composition and Cost of Funds
Time deposits of less than $250,000 24.8% Time deposits of $250,000 or more 6.0% Noninterest - bearing demand 23.3% Interest checking 17.0% Savings and money market 28.9% 23 Deposit Composition and Cost of Funds Deposits - as of June 30, 2019 (Amounts in thousands) Amount % of Total Noninterest - be
Slide 24: Wealth Management Division
24 Wealth Management Division • Largest locally - based wealth management department in legacy market with integrated broker/dealer and insurance sales • Team comprised of over 30 professionals • $949m in Trust assets under management at 6/30/19 • Trust, brokerage and insurance revenues totaled $3.7
Slide 25: Diversified Noninterest Income
Six Months Ended June 30, 2019 25 Diversified Noninterest Income Noninterest Income 26% Net Interest Income (Tax Equivalent) 74% Service Charges, Interchange & Other Fees 44% Trust, Brokerage & Insurance Revenue 40% Other Non Interest Income 16% Noninterest Income Source: Company records – Six month
Slide 26: Very Strong Capital Position
Monument acquisition and opening of lending office in York provide immediate opportunities to leverage capital. High capital positions us to continue pursuing opportunities for growth – organically and by entry into new markets via acquisition or other means. 26 Very Strong Capital Position 13.3% 13
Slide 27: Consistently High Earnings Performance
8.72% 8.37% 7.11% 8.16% 11.72% 11.02% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 2015 2016 2017 2017 Excl Securities Gains and Tax Charge¹ 2018 2018 Excl Securities Gains and Merger- Related Expenses¹ 27 Consistently High Earnings Performance $1.35 $1.30 $1.10 $1.26 $1.79 $1.68 $0.00 $0.20 $
Slide 28: Investment Considerations
28 Investment Considerations • Leading deposit market share among community banks in North Central Pennsylvania • Well - established core deposit franchise • Consistently high earnings performance with diverse revenue sources • Disciplined credit culture and risk management profile • Very strong cap
Slide 29: Investment Considerations (cont'd)
29 Investment Considerations (cont’d) • Well - established wealth management team • Quarterly dividends declared of $0.27 per share in each of the first 3 quarters of 2019, resulting in an annualized yield of 4.42% based on market data as of 8/2/2019. 1 (Yield excludes effects of $0.10 special divid
Slide 30: Contact Information
30 Contact Information President and CEO Brad Scovill BradleyS@cnbankpa.com 570 - 723 - 2102 Treasurer and CFO Mark Hughes MarkH@cnbankpa.com 570 - 724 - 8533 Online www.cnbankpa.com www.cntrustpa.com
Slide 31: Reconcilements and Non-U.S. GAAP Information
Reconcilements and Non - U.S. GAAP Information 31 Supplemental Schedule 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 measure
Slide 32: Supplemental Schedule: LTM Return on Average Assets
32 Supplemental Schedule (cont’d) LTM Return on Average Assets (Dollars in thousands) 3rd Q 2018 4th Q 2018 1st Q 2019 2nd Q 2019 LTM Average assets $1,291,348 $1,285,852 $1,279,650 $1,600,068 $1,364,230 (Average) Net income $5,586 $5,681 $5,090 $3,649 $20,006 ROAA - Annualized 1.73% 1.77% 1.59% 0.9
Slide 33: Supplemental Schedule: LTM EPS
33 Supplemental Schedule (cont’d) * Total noninterest income amounts exclude gains and losses on securities. LTM EPS (In thousands, except share and per share amounts) 3rd Q 2018 4th Q 2018 1st Q 2019 2nd Q 2019 LTM EPS – Diluted $0.45 $0.46 $0.41 $0.27 $1.59 LTM EPS - Excluding Net Gains on Securit
Slide 34: Reconciliation of Net Income and Diluted EPS to Non-U.S. GAAP
RECONCILIATION OF NET INCOME AND DILUTED EARNINGS PER SHARE TO NON - U.S. GAAP MEASURE (Dollars in Thousands, Except Per Share Data) (Unaudited) 6 Months Ended June 30, 2019 6 Months Ended June 30, 2018 Income Before Income Tax Provision Income Tax Provision (1) Net Income Diluted Earnings per Commo
Slide 35: Supplemental Schedule: 2018 Return on Average Assets
35 Supplemental Schedule (cont’d) 2018 Return on Average Assets (Amounts in thousands) Average assets $1,276,140 Net income $22,013 ROAA 1.72% 2018 Return on Average Assets - Excluding Net Gains on Securities and Net Merger - Related Expenses Average assets $1,276,140 Net income, as reported $22,013
Slide 36: Supplemental Schedule: 2018 EPS
36 Supplemental Schedule (cont’d) 2018 EPS (In thousands, except share and per share amounts) EPS - Diluted $1.79 2018 EPS - Excluding Net Gains on Securities and Net Merger - Related Expenses Net income, as reported $22,013 Net (gains) losses on securities, net of income tax at 21% (1,606) Add merg
Slide 37: Supplemental Schedule: 2017 Return on Average Assets
37 Supplemental Schedule (cont’d) 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 Net Gains on Securities and Additional Tax Charge Average assets $1,247,759 Net income, as reported $13,434 Less ga
Slide 38: Supplemental Schedule: 2017 EPS
38 Supplemental Schedule (cont’d) 2017 EPS (In thousands, except share and per share amounts) EPS - Diluted $1.10 2017 EPS - Excluding Net Gains on Securities and Additional Tax Charge Net income, as reported $13,434 Less gains on securities, net of income tax at 35% (167) Add income tax provision r
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