Citizens & Northern Corp · NASDAQ:CZNC
Citizens & Northern — IPO Roadshow (November 2009)
26 slides from Citizens & Northern's IPO roadshow presentation, Nov 12, 2009
Slide 1: Citizens & Northern Corporation Follow-on Offering of Common Shares
Free Writing Prospectus Filed Pursuant to Rule 433 Registration No. 333-162279 November 12, 2009 CITIZENS & NORTHERN CORPORATION Follow-on Offering of Common Shares $20,000,000 November 2009 Ticker: CZNC www.cnbankpa.com Craig G. Litchfield Charles H. Updegraff Jr. Mark A. Hughes Chairman, President
Slide 2: Safe Harbor Regarding Forward Looking Statements
Safe Harbor Regarding Forward Looking Statements This presentation contains forward-looking information about Citizens & Northern Corporation that is intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward-loo
Slide 3: Offering Summary
Offering Summary Issuer: Citizens & Northern Corporation Type of Offering: Follow-on Public Offering Type of Security: Common Stock Ticker Symbol: CZNC Exchange: The NASDAQ Capital Market Offering Size: Gross Proceeds of $20 Million Over-Allotment Option: 15% Use of Proceeds: General corporate purpo
Slide 4: Rationale For Offering
Rationale For Offering Improves strong, “well-capitalized” regulatory capital ratios Along with the planned dividend reduction of at least fifty percent, this capital raise will further strengthen our capital position in a volatile and challenging market environment Help offset negative impact of re
Slide 5: Franchise Overview
Franchise Overview Headquarters: Wellsboro, Pennsylvania Founded in 1864 as "The First National Bank of Wellsborough” September 30, 2009 Total Assets: $1.3 Billion Market Capitalization (Nov. 10, 2009): $108.8 Million Locations Pennsylvania banking services are provided by its subsidiary, Citizens &
Slide 6: Summary Statistics (as of September 30, 2009)
Summary Statistics (as of September 30, 2009) Total Assets: $1.3 Billion Net Loans: $720.3 Million Total Deposits: $896.9 Million Tangible Common Equity: $87.8 Million Tang. Common Equity / Tang. Assets: 6.91% Tier 1 Leverage Ratio: 7.60% Total Risk Based Capital: 12.46% Non-Performing Assets / Tota
Slide 7: Current Footprint
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Slide 8: Strong Market Share in Legacy Counties
Strong Market Share in Legacy Counties Number of Projected HHI Nationwide Proj. % of CZNC Market Market Community County Banking Growth HHI Growth Deposits Rank Share % Offices (2009 – 2014) (2009 – 2014) Bradford, PA 34.9% 1 35.18% 7 4.59% Tioga, PA 28.6% 1 42.46% 6 4.97% Lycoming, PA 14.2% 7 7.29%
Slide 9: Experienced Management Team
Experienced Management Team Years of Financial Years with Citizens & Relevant Experience or Name Position Service Experience Northern Education Chairman, President & Craig Litchfield CEO 37 37 MBA – Syracuse CEO Citizens Trust Charles Updegraff Chief Operating Officer 35 2½ Company Chief Financial O
Slide 10: Investment Considerations
Investment Considerations Leading market share among community banks in Northern Central Pennsylvania Experienced management team Insider commitment: 100% of Board and senior management team will invest in offering Strong core profitability, with diverse revenue sources Disciplined credit culture an
Slide 11: Marcellus Shale Natural Gas Economic Boost
Marcellus Shale Natural Gas Economic Boost Wealth Management Opportunities Improved Economy and Employment Improved Business Opportunities The Marcellus Shale formation can be found beneath about 60 percent of Pennsylvania’s total land mass, where it is buried to depths of up to 9,000 feet. The most
Slide 12: Strong Core Earnings Generation
Strong Core Earnings¹ Generation Core Earnings Per Share Efficiency Ratio Core Return on Average Assets Core Return on Average Equity Note: ¹ See note on Page 6 regarding Non-GAAP financial measures 12
Slide 13: Historical Loan & Deposit Growth
Historical Loan & Deposit Growth Historical loan and deposit growth a combination of: Organic growth De-novo branching Market dislocation Acquisitions of Citizens Bancorp, Inc. (May 2007) and Canisteo Valley Corp. (Sept. 2005) Net Loans Total Deposits 13
Slide 14: Loan Portfolio Diversification
Loan Portfolio Diversification Loans slightly decreased in 2009 due to the challenging economic environment, as Citizens & Northern has experienced contraction in the balance of its mortgage and consumer loan portfolios, with slight growth in average commercial and tax-exempt loan balances (Dollars
Slide 15: Strong Credit Quality
Strong Credit Quality Disciplined credit culture and risk management profile resulting in impressive asset quality, especially given the current operating environment (Dollars in Thousands) 6/30/2008 9/30/2008 12/31/2008 3/31/2009 6/30/2009 9/30/2009 30 - 89 Days Past Due $ 9,465 $ 10,925 $ 9,875 $
Slide 16: Analysis for the Allowance for Loan Losses
Analysis for the Allowance for Loan Losses (Dollars in Thousands) Quarter Ending, Year Ending, 9/30/2009 6/30/2009 3/31/2009 12/31/2008 12/31/2007 Balance, beginning of year 7,681 7,651 7,857 8,859 8,201 Charge-offs: Real estate loans 88 1 5 1,457 196 Installment loans 60 103 73 254 216 Credit cards
Slide 17: Investment Portfolio
Investment Portfolio Significant OTTI charges have dramatically impacted earnings for the first nine months of 2009 Based on the relatively small ($1.6 million) remaining cost basis of mezzanine pooled trust- preferred securities as of September 30, 2009, management currently believes the vast major
Slide 18: Deposit Composition
Deposit Composition The 2009 increase in deposits has come mainly in interest checking, money market, and individual retirement accounts and is partially offset by a reduction in the balance in certificates of deposit Consistent with substantial reductions in short-term global interest rates, the av
Slide 19: Pro Forma Consolidated Capital Ratios
Pro Forma Consolidated Capital Ratios Note: Pro forma ratios based on Company balance sheet as of September 30, 2009 with additional $20 million, less estimated expenses and underwriting discount, of common equity. Risk-based ratio assumes all $20 million immediately invested in 100% risk-weighted a
Slide 20: Main Considerations Going Forward
Main Considerations Going Forward Opportunistic capital raise viewed as a means to take advantage of growth both organically and through market dislocation Will also strengthen our position as an acquirer of attractive, well-priced targets that are either in or contiguous to our current footprint St
Slide 21: Appendix
CITIZENS & NORTHERN CORPORATION APPENDIX 21 always there.
Slide 22: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Notes: Core Earnings is a non-GAAP earnings performance measurement the Corporation's management has defined to exclude net impairment losses on available-for-sale securities and certain other revenues and expenses. Ratios and other financial measures wi
Slide 23: Annual Dividend Reduction
Annual Dividend Reduction Citizens & Northern’s Board of Directors approved a reduction in our quarterly dividend of at least fifty percent (from $0.24 per share to no more than $0.12 per share) commencing in the fourth quarter of 2009, subject to regulatory approval No determination has been made b
Slide 24: Pre-Tax OTTI Charges
Pre-Tax OTTI Charges Pre-tax OTTI charges in the first nine months of 2009 totaled $84,407,000, including $47,947,000 in the third quarter 2009. A summary of pre-tax OTTI charges for the 3- month and 9-month periods ended September 30, 2009 and 2008 is as follows: After the impact of the impairment
Slide 25: 2007 – 2008 Organizational Restructuring
2007 – 2008 Organizational Restructuring 15.9% reduction in workforce Approximately $2.5 Million in after-tax annual improvement from revenue enhancements and cost reductions and efficiencies Improved customer service and cross-sell opportunities with addition of call center 25
Slide 26: Wealth Management Division
Wealth Management Division Largest Locally-Based Wealth Management Department with Integrated Broker/Dealer and Insurance Sales Team is comprised of over 30 professionals $592.8 million in Assets Under Management as of September 30, 2009 $2.4 million in Revenue for nine months ending September 30, 2