8-K
CITIZENS & NORTHERN CORP (CZNC)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of theSecurities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 16, 2020
CITIZENS & NORTHERN CORPORATION
(Exact name of registrant as specified in its charter)
| Pennsylvania | 0-16084 | 23-2451943 |
|---|---|---|
| (State or other jurisdiction of | (Commission | (I.R.S. Employer |
| incorporation) | File Number) | Identification No.) |
| 90-92 Main Street, Wellsboro, PA | 16901 | |
| --- | --- | |
| (Address of Principal Executive Office) | (Zip Code) |
Registrant’s telephone number, including area code (570) 724-3411
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered |
|---|---|---|
| Common Stock Par Value $1.00 | CZNC | NASDAQ Capital Market |
Indicate by checkmark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 240.12b-2)
Emerging growth company ¨
If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ¨
ITEM 2.02. Results of Operations andFinancial Condition
Citizens & Northern Corporation (the “Company”) announced unaudited, consolidated financial results for the year ended December 31, 2019. On January 16, 2020, the Company issued a press release titled “C&N Declares Dividend and Announces Fourth Quarter 2019 Unaudited Financial Results,” a copy of which is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference. The Company’s “banCNotes,” a report that includes unaudited financial information, will be mailed to shareholders on or about January 23, 2020. A copy of the unaudited quarterly financial information included in banCNotes is furnished as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference. Also, supplemental, unaudited financial information is furnished as Exhibit 99.3 to this Current Report on Form 8-K and is incorporated herein by reference.
ITEM 8.01. Other Events
On January 16, 2020, the Company’s Board of Directors declared a cash dividend on its common stock of $0.27 per share. The dividend is payable February 7, 2020 to shareholders of record as of January 27, 2020. The Company announced the dividend in the press release which is attached hereto as Exhibit 99.1 and incorporated herein by reference.
ITEM 9.01. Financial Statements andExhibits
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
(d) Exhibits.
Exhibit 99.3: Supplemental, unaudited financial information.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned, thereunto duly authorized.
| CITIZENS & NORTHERN CORPORATION | |||
|---|---|---|---|
| Date: 1/16/2020 | By: | /s/ Mark A. Hughes | |
| Treasurer and Chief Financial Officer |
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Exhibit 99.1
| Contact: Charity Frantz | |
|---|---|
| January 16, 2020 | 570-724-0225 |
| charityf@cnbankpa.com |
C&N DECLARES DIVIDEND AND Announces FOURTH QUARTER 2019 UNAUDITED
Financial RESULTS
ForImmediate Release:
Wellsboro,PA – Citizens & Northern Corporation (“C&N”) (NASDAQ: CZNC) announced its most recent dividend declaration and its unaudited, consolidated financial results for the three-month and annual periods ended December 31, 2019.
Dividend Declared
C&N’s Board of Directors declared a regular quarterly cash dividend of $0.27 per share. The dividend is payable on February 7, 2020 to shareholders of record as of January 27, 2020. Declaration of the dividend was made at the January 16, 2020 meeting of C&N’s Board of Directors.
Acquisitions of Monument Bancorp, Inc. and Covenant Financial,Inc.
C&N’s acquisition of Monument Bancorp, Inc. (“Monument”) was completed April 1, 2019. Monument was the parent company of Monument Bank, a commercial bank which operated two community bank offices and one lending office in Bucks County, Pennsylvania. Total purchase consideration was $42.7 million, including 1,279,825 shares of C&N common stock issued with a value of $33.1 million and cash paid totaling $9.6 million. Holders of Monument common stock prior to the consummation of the merger held approximately 9.4% of C&N’s common stock outstanding immediately following the merger.
In connection with the transaction, C&N recorded goodwill of $16.4 million and a core deposit intangible asset of $1.5 million. Total loans acquired on April 1, 2019 were valued at $259.3 million, while total deposits assumed were valued at $223.3 million, borrowings were valued at $111.6 million and subordinated debt was valued at $12.4 million. The subordinated debt included an instrument with a fair value of $5.4 million that was redeemed on April 1, 2019 with no realized gain or loss. C&N acquired available-for-sale debt securities valued at $94.6 million and sold the securities in early April for approximately no realized gain or loss. The assets purchased and liabilities assumed in the merger were recorded at their estimated fair values at the time of closing and may be adjusted for up to one year subsequent to the acquisition. In the fourth quarter 2019, C&N recorded adjustments to various assets acquired and liabilities assumed from the merger, resulting in a net reduction in goodwill of $230,000.
Merger-related expenses associated with the Monument transaction totaled $3.8 million for the year ended December 31, 2019, including costs associated with termination of data processing contracts, conversion of Monument’s customer accounting data into C&N’s core system, severance and similar expenses, legal and other professional fees and various other costs.
In December 2019, C&N announced a plan of merger to acquire Covenant Financial, Inc. (“Covenant”) in a transaction valued on December 18, 2019 at approximately $77 million. Under the terms of the definitive agreement, C&N will pay cash for 25% of the Covenant shares and will convert 75% of Covenant shares to C&N common stock. Covenant is the holding company for Covenant Bank, which operates banking offices in Bucks and Chester Counties of PA. Covenant had total assets of $512 million at September 30, 2019. The merger is subject to satisfaction of customary closing conditions, including receipt of regulatory approvals and approval of Covenant’s shareholders. The merger is expected to close in the third quarter 2020. In the fourth quarter 2019, C&N incurred merger-related expenses totaling $287,000 related to the planned acquisition of Covenant. Management estimates pre-tax merger-related expenses associated with the Covenant acquisition will total approximately $8 million ($6.6 million, net of tax), with most of the expenses expected to be incurred in the third quarter 2020.
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Unaudited Financial Information
Net income was $0.40 per diluted share in the fourth quarter 2019 as compared to $0.39 in the third quarter 2019 and $0.46 in the fourth quarter 2018. For the year ended December 31, 2019, net income per diluted share was $1.46 as compared to $1.79 per share in 2018. Earnings for the year ended December 31, 2019 were significantly impacted by the Monument acquisition, including the effects of merger-related expenses described earlier. Further, interest income on loans acquired from Monument, partially offset by interest expense on deposits, borrowings and subordinated debt assumed, contributed to growth in C&N’s net interest income, while costs associated with the expansion contributed to an increase in noninterest expenses.
Earnings for the year ended December 31, 2018 included the benefit of a realized gain on a restricted equity security (Visa Inc. Class B stock) partially offset by the impact of a loss on available-for-sale debt securities. In 2018, pre-tax realized gains on Visa Class B stock totaled $2.3 million while pre-tax realized losses on available-for-sale securities totaled $288,000.
The following table provides a reconciliation of C&N’s fourth quarter and annual 2019 unaudited earnings results under U.S. generally accepted accounting principles (U.S. GAAP) to comparative non-U.S. GAAP results excluding merger-related expenses and realized gains and losses on securities. Management believes disclosure of unaudited fourth quarter and annual 2019 and 2018 earnings results, adjusted to exclude the impact of these items, provides useful information to investors for comparative purposes.
RECONCILIATION OF NET INCOME AND
DILUTED EARNINGS PER SHARE TO NON-U.S.
GAAP MEASURE
(Dollars In Thousands, Except Per Share Data)
(Unaudited)
| 4th<br> Quarter 2019 | 4th<br> Quarter 2018 | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Income | Diluted | Income | Diluted | ||||||||||||||||
| Before | Income | Earnings | Before | Income | Earnings | ||||||||||||||
| Income | Tax | per | Income | Tax | per | ||||||||||||||
| Tax | Provision | Net | Common | Tax | Provision | Net | Common | ||||||||||||
| Provision | (1) | Income | Share | Provision | (1) | Income | Share | ||||||||||||
| Results<br> as Presented Under U.S. GAAP | $ | 6,593 | $ | 1,135 | $ | 5,458 | $ | 0.40 | $ | 6,702 | $ | 1,021 | $ | 5,681 | $ | 0.46 | |||
| Add:<br> Merger-Related Expenses | 281 | 31 | 250 | 128 | 17 | 111 | |||||||||||||
| Net (Gains) Losses on<br> Available-for-Sale Debt Securities | (3 | ) | (1 | ) | (2 | ) | 4 | 1 | 3 | ||||||||||
| Adjusted Earnings, Excluding Effect of Merger-Related Expenses,<br>Gain on Restricted Equity Security and Net Gains and Losses on Available-for-Sale Debt Securities (Non-U.S. GAAP) | $ | 6,871 | $ | 1,165 | $ | 5,706 | $ | 0.42 | $ | 6,834 | $ | 1,039 | $ | 5,795 | $ | 0.47 |
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| --- | | | Year<br> Ended Dec. 31, 2019 | | | | | | | | | | | Year<br> Ended Dec. 31, 2018 | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Income | | | | | | | | | Diluted | | Income | | | | | | | | | Diluted | | | | Before | | | Income | | | | | | Earnings | | Before | | | Income | | | | | | Earnings | | | | Income | | | Tax | | | | | | per | | Income | | | Tax | | | | | | per | | | | Tax | | | Provision | | | Net | | | Common | | Tax | | | Provision | | | Net | | | Common | | | | Provision | | | (1) | | | Income | | | Share | | Provision | | | (1) | | | Income | | | Share | | | Results as Presented Under<br> U.S. GAAP | $ | 23,409 | | $ | 3,905 | | $ | 19,504 | | $ | 1.46 | $ | 26,263 | | $ | 4,250 | | $ | 22,013 | | $ | 1.79 | | Add: Merger-Related Expenses | | 4,099 | | | 829 | | | 3,270 | | | | | 328 | | | 23 | | | 305 | | | | | Less: Gain on Restricted<br> Equity Security | | | | | | | | | | | | | (2,321 | ) | | (487 | ) | | (1,834 | ) | | | | Net (Gains) Losses on<br> Available-for-sale Debt Securities | | (23 | ) | | (5 | ) | | (18 | ) | | | | 288 | | | 60 | | | 228 | | | | | Adjusted Earnings, Excluding Effect of Merger-Related Expenses,<br>Gain on Restricted Equity Security and Net Gains and Losses on Available-for-Sale Debt Securities (Non-U.S. GAAP) | $ | 27,485 | | $ | 4,729 | | $ | 22,756 | | $ | 1.70 | $ | 24,558 | | $ | 3,846 | | $ | 20,712 | | $ | 1.68 | | (1) | Income tax has been allocated based on an income tax rate of 21%. The tax benefit associated with merger-related expenses has<br>been adjusted to reflect the estimated nondeductible portion of the expenses. | | --- | --- |
Additional highlights related to C&N’s fourth quarter and annual 2019 unaudited earnings results as compared to the third quarter 2019 and comparative periods of 2018 are presented below.
Fourth Quarter 2019 as Compared to Third Quarter 2019
Net income was $5,458,000 in the fourth quarter 2019 as compared to $5,307,000 in the third quarter 2019. Excluding the impact of merger-related expenses and net securities gains, adjusted (non-U.S. GAAP) earnings for the fourth quarter 2019 were $5,706,000, up from similarly adjusted (non-U.S. GAAP) third quarter 2019 earnings of $5,444,000. Other significant variances were as follows:
| · | Net interest income increased $14,000 (0.1%) in the fourth quarter 2019 over the total for the third quarter 2019. Average<br>outstanding loans increased $36.0 million (3.2% or 12.8% annualized), mainly as a result of growth in commercial loans from C&N’s<br>new markets in Southeastern PA and York County. Average total deposits decreased $18.6 million, reflecting a seasonal reduction<br>in municipal deposits. In the fourth quarter 2019, additional funding to support loan growth came from an increase in average total<br>borrowed funds of $36.5 million and a $9.0 million decrease in average interest-bearing deposits in other banks. The net interest<br>margin was 3.75% for the fourth quarter 2019, down from 3.81% in the third quarter 2019. The average yield on earning assets decreased<br>0.07% while the average rate paid on interest-bearing liabilities decreased 0.02%. |
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| · | The provision for loan losses was $652,000 in the fourth quarter 2019, down from $1,158,000 in the third quarter 2019. The<br>provision for the third quarter 2019 included recognition of a specific allowance of $678,000 related to a commercial loan with<br>a balance of $1,261,000 at December 31, 2019 and September 30, 2019. |
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| · | Noninterest income totaled $5,066,000 in the fourth quarter 2019, an increase of $103,000 over the third quarter 2019 amount.<br>Total trust and brokerage revenues of $1,949,000 were up $137,000 from the third quarter 2019, reflecting higher estate fees received,<br>appreciation in the value of assets under management and the benefit of new business generated in recent periods. |
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| · | Noninterest expense, excluding merger-related expenses, totaled $11,834,000 in the fourth quarter 2019, an increase of $348,000<br>over the third quarter 2019 amount. Significant variances included the following: |
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| --- | | Ø | Other noninterest expense increased $201,000. Other expenses in the fourth quarter 2019 included a catch-up adjustment of $100,000<br>related to incentive-based payments to a consultant. Also, the comparative total of expenses for the third quarter 2019 included<br>a net reduction of $91,000 from adjustments of various accruals from previous periods. | | --- | --- | | Ø | Pensions and other employee benefits expense increased $96,000 in the fourth quarter 2019. Health insurance expense increased<br>$93,000, reflecting an increase in claims on C&N’s partially self-insured health plan. | | --- | --- |
Fourth Quarter 2019 as Compared to Fourth Quarter 2018
As described above, fourth quarter 2019 net income was $5,458,000, and excluding the impact of merger-related expenses and net securities gains, would be $5,706,000 (non-U.S. GAAP). In comparison, fourth quarter 2018 net income was $5,681,000, and excluding the impact of merger-related expenses and net securities gains, would be $5,795,000 (non-GAAP). Other significant variances were as follows:
| · | Fourth quarter 2019 net interest income of $14,291,000 was $2,299,000 (19.2%) higher than the total for the fourth quarter<br>2018. Total average earning assets increased $317.8 million, including an increase in average loans outstanding of $339.9 million,<br>reflecting the impact of the Monument acquisition and additional loan growth. Total average deposits increased $234.1 million,<br>including deposits assumed from Monument. The net interest margin of 3.75% for the fourth quarter 2019 was 0.26% lower than the<br>fourth quarter 2018 margin of 4.01%. The average yield on earning assets was 0.09% higher in the fourth quarter 2019 as compared<br>to the same period in 2018, while the average rate paid on interest-bearing liabilities increased 0.46% between periods. The increase<br>in average rate on interest-bearing liabilities resulted primarily from comparatively higher rates on time deposits and short-term<br>borrowings assumed from Monument. Accretion and amortization of purchase accounting-related adjustments from marking financial<br>instruments to fair value had a positive effect on net interest income in the fourth quarter 2019 of $153,000, including an increase<br>in income on loans of $311,000 partially offset by increases in interest expense on time deposits of $132,000 and on short-term<br>borrowings of $26,000. The net positive impact to the fourth quarter 2019 net interest margin from accretion and amortization of<br>purchase accounting adjustments was 0.04%. |
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| · | The provision for loan losses was $652,000 for the fourth quarter 2019, an increase of $400,000 over the fourth quarter 2018.<br>The increase in the provision reflected an increase in the allowance due to significant loan growth. The fourth quarter 2019 provision<br>included a charge of $138,000 related to specific loans (increase in specific allowances on loans of $65,000 and net charge-offs<br>of $73,000), a net $425,000 charge attributable to loan growth and a charge of $89,000 related to changes in historical loss and<br>qualitative factors used to estimate the allowance. In comparison, the provision in the fourth quarter 2018 included $304,000 related<br>to the change in total specific allowances on impaired loans, as adjusted for net charge-offs during the period, a charge of $48,000<br>due to loan growth and a net reduction in expense of $100,000 related to decreases in historical loss and qualitative factors. |
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| · | Total noninterest income for the fourth quarter 2019 was up $26,000 from the fourth quarter 2018 total. Total trust and brokerage<br>revenue increased $186,000 and net gains from sales of residential mortgage loans increased $138,000. Other noninterest income<br>decreased $375,000, as C&N recognized income of $438,000 in the fourth quarter 2018 from a life insurance arrangement in which<br>benefits were split between C&N and the heirs of a former employee. |
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| · | Noninterest expense, excluding merger-related expenses, increased $1,888,000 in the fourth quarter 2019 over the fourth quarter<br>2018 amount. Significant variances included the following: |
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| --- | | Ø | Salaries and wages expense increased $784,000. Salaries and wages from C&N’s new ventures in Southeastern PA and<br>York County totaled $854,000 in the fourth quarter 2019. | | --- | --- | | Ø | Pensions and other employee benefits expense increased $333,000, reflecting an increase in number of personnel resulting mainly<br>from new ventures. | | --- | --- | | Ø | Other noninterest expense increased $339,000. Advertising expenses related to rebranding efforts and other activities were<br>$122,000 higher in the fourth quarter 2019 compared to fourth quarter 2018. Other increases included the $100,000 charge referred<br>to above related to incentive-based consulting fees and an increase of $73,000 in amortization of core deposit intangibles related<br>to the Monument acquisition. | | --- | --- | | Ø | Professional fees expenses increased $158,000, including outsourced technical support for the computer network and other computer<br>system-related consulting fees. | | --- | --- |
Year Ended December 31, 2019 as Compared to 2018
Net income for the year ended December 31, 2019 was $19,504,000, or $1.46 per diluted share as compared to 2018 net income of $22,013,000 or $1.79 per share. Excluding the impact of merger-related expenses and net securities gains, adjusted (non-U.S. GAAP) earnings for 2019 would be $22,756,000 or $1.70 per share as compared to similarly adjusted (non-GAAP) earnings of $20,712,000 or $1.68 per share for 2018. Other significant variances were as follows:
| · | Net interest income was up $8,785,000 (19.2%) in 2019 over 2018, reflecting the benefits of growth, particularly from the Monument<br>acquisition as well as loan growth from the York office (opened in March 2019) and organic loan and deposit growth from C&N’s<br>legacy markets. The net interest margin was 3.86% for 2019, down from 3.90% in 2018. In 2019, the net interest margin included<br>a net positive impact from accretion and amortization of purchase accounting adjustments of 0.04%. The average yield on earning<br>assets in 2019 was up 0.30% over 2018, while the average rate paid on interest-bearing liabilities was up 0.46% between periods.<br>The Monument acquisition and other factors contributed to growth in average noninterest-bearing demand deposits of $39.4 million<br>and average stockholders’ equity (excluding accumulated other comprehensive income) of $33.8 million, which helped to offset<br>some of the impact on the margin of compression in the interest rate spread. |
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| · | The provision for loan losses of $849,000 for 2019 was higher than the 2018 provision by $265,000. Similar to the fourth quarter<br>discussion above, the higher provision in 2019 resulted mainly from significant loan growth. The annual 2019 provision included<br>a net reduction in expense of $232,000 related to specific loans (net decrease in specific allowances on loans of $554,000 and<br>net charge-offs of $322,000), a net $1,193,000 charge attributable to loan growth and a net reduction in expense of $112,000 related<br>to changes in historical loss and qualitative factors and the unallocated portion of the allowance. In comparison, the annual 2018<br>provision included $457,000 related to the change in total specific allowances on impaired loans, as adjusted for net charge-offs<br>during the period, a charge of $178,000 due to loan growth and a net reduction in expense of $51,000 related to decreases in historical<br>loss and qualitative factors. |
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| · | Noninterest income increased $687,000, or 3.7%, in 2019 over 2018. Total trust and brokerage revenue increased $516,000 as<br>trust revenue reflected growth in assets under management from market value appreciation as well as new business and brokerage<br>revenue increased as a result of an increase in volume. Increases in volume also led to increases in net gains from sales of mortgage<br>loans of $242,000, interchange revenue from debit card transactions of $208,000 and service charges on deposit accounts of $187,000.<br>Other noninterest income decreased $278,000, as the total for 2018 included the impact of the life insurance transaction described<br>above. Loan servicing fees, net, decreased $247,000, as the fair value of servicing rights decreased $331,000 in 2019 as compared<br>to a decrease of $83,000 in 2018. The reduction in valuation of servicing fees at December 31, 2019 reflected the impact of higher<br>assumed mortgage prepayments from lower interest rates. |
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| · | Noninterest expense, excluding merger-related expenses, increased $6,280,000 in 2019 over 2018. Significant variances included<br>the following: |
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| --- | | Ø | Salaries and wages expense increased $3,453,000, including $2,707,000 related to C&N’s new ventures in Southeastern<br>PA and York County. | | --- | --- | | Ø | Pensions and other employee benefits increased $578,000, mainly due to the increased number of employees resulting from expansion<br>into new markets. | | --- | --- | | Ø | Other noninterest expense increased $1,454,000. Within other noninterest expense, expenses and net losses on other real estate<br>properties increased $385,000, mainly due to significant costs incurred related to one commercial workout situation. Other increases<br>within this category included increases in advertising expense of $327,000, loan collection expenses of $264,000, amortization<br>of core deposit intangibles of $218,000, consulting related to the overdraft privilege program of $145,000 (including the $100,000<br>catch-up adjustment in the fourth quarter 2019 referred to above) and credit card operating costs of $111,000. Also, within other<br>noninterest expense, donations expense decreased $249,000 reflecting a 2018 donation of real estate that resulted in expense of<br>$250,000 with no similar item in 2019. | | --- | --- | | Ø | Data processing expenses increased $653,000, including significant increases in software licensing costs associated with lending,<br>Trust and other functions. Other expense increases within this category included consulting expenses related to renegotiation of<br>an interchange processing contract, costs related to product development efforts in connection with a fintech organization and<br>costs from operating two core processing systems for most of the second quarter 2019. | | --- | --- | | Ø | Automated teller machine and interchange expense decreased $201,000, reflecting cost reductions pursuant to a renegotiated<br>service contract. | | --- | --- |
Other Information:
Changes in other unaudited financial information are as follows:
| · | Total assets amounted to $1,654,145,000 at December 31, 2019, up from $1,642,587,000 at September 30, 2019 and up 28.1% from<br>$1,290,893,000 at December 31, 2018. |
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| · | Net loans outstanding (excluding mortgage loans held for sale) were $1,172,386,000 at December 31, 2019, up from $1,130,143,000<br>at September 30, 2019 and up 43.3% from $818,254,000 at December 31, 2018. In comparing outstanding balances at December 31, 2019<br>and 2018, total commercial loans increased $225.3 million (63.7%), total residential mortgage loans increased $129.8 million (28.4%)<br>and total consumer loans decreased $0.4 million (2.3%). At December 31, 2019, the outstanding balance of commercial loan participations<br>with other financial entities was $64.6 million, up from $58.5 million at September 30, 2019 and down from $67.3 million at December<br>31, 2018. |
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| · | Total nonperforming assets as a percentage of total assets was 0.80% at December 31, 2019, down from 0.86% at September 30,<br>2019 and 1.37% at December 31, 2018. The reduction in this ratio as compared to the level at December 31, 2018 included the impact<br>of acquiring non-impaired loans from Monument in the second quarter 2019 along with reduced balances of loans past due 90 days<br>or more and nonaccrual loans from C&N’s legacy portfolio. Included within nonperforming assets are loans considered impaired<br>upon their purchase from Monument (“PCI Loans”). PCI Loans totaled $441,000 at April 1, 2019 and December 31, 2019. |
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| · | Deposits and repo sweep accounts totaled $1,254,588,000 at December 31, 2019, down from $1,298,649,000 at September 30 2019<br>and up 20.7% from $1,039,625,000 at December 31, 2018. The reduction in deposits in the fourth quarter 2019 was mainly related<br>to seasonal reductions in deposits maintained by PA municipal entities. |
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| · | Total shareholders’ equity was $244,452,000 at December 31, 2019, up from $242,939,000 at September 30, 2019 and $197,368,000<br>at December 31, 2018. Within shareholders’ equity, the portion of accumulated other comprehensive income (loss) related to<br>available-for-sale debt securities was $3,511,000 at December 31, 2019 as compared to up from $4,173,000 at September 30, 2019<br>and ($4,307,000) at December 31, 2018. Fluctuations in accumulated other comprehensive income (loss) related to valuations of available-for-sale<br>debt securities have been caused by changes in interest rates. |
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| --- | | · | Citizens & Northern Bank is subject to various regulatory capital requirements. At December 31, 2019, Citizens & Northern<br>Bank maintains regulatory capital ratios that exceed all capital adequacy requirements. Management expects the Bank to remain well-capitalized<br>for the foreseeable future. | | --- | --- | | · | Assets under management by C&N’s Trust and Financial Management Group amounted to $1,007,000,000 at December 31,<br>2019, up from $959,215,000 at September 30, 2019 and up 16.8% from $862,517,000 at December 31, 2018. | | --- | --- |
Citizens & Northern Corporation is the parent company of Citizens & Northern Bank, an independent community bank providing complete financial, investment and insurance services through 27 full service offices located in Tioga, Bradford, Sullivan, Lycoming, Potter, Cameron, McKean and Bucks counties in Pennsylvania and in Canisteo and South Hornell, New York. C&N also offers commercial, residential and consumer lending services through offices in York and Warminster in Pennsylvania and Elmira, New York. C&N can be found on the worldwide web at www.cnbankpa.com. The Company’s stock is listed on the NASDAQ Capital Market under the symbol CZNC.
Safe Harbor Statement: Except for historical information contained herein, the matters discussed in this release are forward-looking statements. Investors are cautioned that all forward-looking statements involve risks and uncertainty, including without limitation, the following: changes in monetary and fiscal policies of the Federal Reserve Board and the U.S. Government, particularly related to changes in interest rates; changes in general economic conditions; legislative or regulatory changes; downturn in demand for loan, deposit and other financial services in the Corporation’s market area; increased competition from other banks and non-bank providers of financial services; technological changes and increased technology-related costs; changes in management’s assessment of realization of securities and other assets; and changes in accounting principles, or the application of generally accepted accounting principles. Citizens & Northern disclaims any intention or obligation to publicly update or revise any forward-looking statements, whether as a result of events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
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EXHIBIT 99.2
| December 31, 2019 | QUARTERLY<br>REPORT |
|---|
Dear Shareholder:
On December 18, 2019, Citizens & Northern Corporation announced its agreement to acquire Covenant Financial, Inc. and its subsidiary Covenant Bank in a transaction valued at approximately $77 million. Covenant is a $512 million community bank headquartered in Bucks County, PA, with one community office in Doylestown and another in Chester County, PA. This action builds on C&N’s 2019 acquisition of Monument Bank, also located in Bucks County, and expands our presence in attractive southeastern Pennsylvania markets. Covenant’s Team has deep roots in the region and its relationship-based, community focused culture aligns well with C&N’s mission and values. We are excited about the opportunities created by the combined customer base and expanded C&N Team serving the market that enhances our capacity to bring treasury management, mortgage, wealth management, and mobile and online services. This strategic investment provides scale, leverages our recent investments in people and technology, effectively deploys our strong capital base, and is expected to produce substantial earnings accretion beginning in the fourth quarter of 2020. The addition of the Covenant franchise is another significant step in positioning C&N to enhance long-term shareholder value.
The team that creates value in each of our regional markets is critical to the success of our relationship focused business model. Covenant’s President and COO Blair Rush will join C&N as EVP and Region President and Chief Lending Officer Kelley Cwiklinski will continue as SVP and Regional Lending Executive. They will join Chris Nardo, Michelle Pederson, and Ben Crowley to form an expanded southeastern regional leadership team to strengthen and build upon local relationships. In addition, two members of the Covenant board will join the C&N corporate and bank boards of directors. We expect the transaction to close in the third quarter of 2020 and the combined organization is projected to have total assets of approximately $2.3 billion. We wish to extend a warm welcome to the Covenant Team and customers.
Supporting our expansion efforts, C&N’s ongoing focus remains on creating value and deepening relationships with our customers and communities. Our full set of banking, lending and wealth management products and services meet a wide set of needs for the small/family-owned businesses, professionals, and individuals that we have built the Company to serve. The broad set of solutions also provides C&N with a diverse revenue mix that complements net interest income with a variety of noninterest income sources. We continue to improve our products, develop the Team, and invest in systems to connect with customers and deliver value.
Net income for the quarter of 2019, excluding merger related items and securities gains, decreased by approximately 2% compared to the fourth quarter of 2018, while EPS decreased approximately 11%, the difference due to the additional shares issued in the Monument acquisition. Year-to-date, on the same basis, adjusted net income increased nearly 10% and adjusted EPS grew 1%.
Overall loan growth was strong during the fourth quarter mainly due to production in Southeastern PA and York, combined with solid performance in legacy markets. Deposit totals declined during the quarter as a result of seasonal fluctuations in municipal balances and a combination of short- and long-term borrowing provided funding for loan growth. This balance sheet growth produced a modest increase in net interest income during the quarter despite a modest decrease in the net interest margin.
Credit quality remains strong and most key metrics are stable or improving. Our recent growth and expansion is supported by an historically conservative credit culture and consistent policies and underwriting standards. Management maintains a robust process to assess individual credits and trends in the overall portfolio as well as adequacy of the allowance for potential losses. Loan loss provisions during the fourth quarter 2019 and year ended December 31, 2019 were higher than in the comparative periods of 2018 due to substantial growth in the loan portfolio.
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Noninterest income for the quarter was at its highest level of the year. Overall wealth management revenue, which includes both trust and brokerage, was outstanding. Trust assets under management eclipsed the $1 billion mark for the first time due to ongoing relationship management efforts and strong financial markets. Additionally, relationships connected to brokerage activity have assets totaling greater than $300 million. Deposit service charges and interchange revenue produced solid growth, while gains from the sale of mortgage loans were steady for the quarter and increased substantially year-over-year.
Noninterest expense growth was driven by the addition of Monument, technology related costs, marketing expenses related to the re-branding effort and general increases in other operating expenses.
C&N’s capital position remains strong and supports our capacity to continue growth and expansion activities, such as the Covenant acquisition . Earnings also remain positive and support the continuation of a strong cash dividend. On January 16, 2020, the Board of Directors declared a cash dividend on common stock of $.27 per share payable on February 7, 2020, to shareholders of record on January 27, 2020. This results in an annualized dividend rate of $1.08 and annualized yield of 3.82% based on C&N’s December 31, 2019 closing price of $28.25.
Thank you to all our loyal shareholders for your continued support and interest in C&N.
J. Bradley Scovill
President and CEO
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CONDENSED, CONSOLIDATED EARNINGS INFORMATION
(Dollars In Thousands, Except Per Share Data) (Unaudited)
| 4TH | 4TH | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| QUARTER | QUARTER | ||||||||
| 2019 | 2018 | ||||||||
| (Current) | (Prior Year) | Incr. (Decr.) | % Incr. (Decr.) | ||||||
| Interest and Dividend Income | $ | 17,290 | $ | 13,304 | $ | 3,986 | 29.96 | % | |
| Interest Expense | 2,999 | 1,312 | 1,687 | 128.58 | % | ||||
| Net Interest Income | 14,291 | 11,992 | 2,299 | 19.17 | % | ||||
| Provision for Loan Losses | 652 | 252 | 400 | 158.73 | % | ||||
| Net Interest Income After Provision for Loan Losses | 13,639 | 11,740 | 1,899 | 16.18 | % | ||||
| Noninterest Income | 5,066 | 5,040 | 26 | 0.52 | % | ||||
| Gain on Restricted Equity Security | 0 | 0 | 0 | ||||||
| Net Gains (Losses) on Available-for-sale Debt Securities | 3 | (4 | ) | 7 | -175.00 | % | |||
| Merger-Related Expenses | 281 | 128 | 153 | 119.53 | % | ||||
| Other Noninterest Expenses | 11,834 | 9,946 | 1,888 | 18.98 | % | ||||
| Income Before Income Tax Provision | 6,593 | 6,702 | (109 | -1.63 | % | ||||
| Income Tax Provision | 1,135 | 1,021 | 114 | 11.17 | % | ||||
| Net Income | $ | 5,458 | $ | 5,681 | $ | (223 | -3.93 | % | |
| Net Income Attributable to Common Shares (1) | $ | 5,431 | $ | 5,653 | $ | (222 | -3.93 | % | |
| PER COMMON SHARE DATA: | |||||||||
| Net Income - Basic | $ | 0.40 | $ | 0.46 | $ | (0.06 | -13.04 | % | |
| Net Income - Diluted | $ | 0.40 | $ | 0.46 | $ | (0.06 | -13.04 | % | |
| Dividend Per Share - Quarterly | $ | 0.27 | $ | 0.27 | $ | 0.00 | 0.00 | % | |
| Number of Shares Used in Computation - Basic | 13,642,286 | 12,246,900 | |||||||
| Number of Shares Used in Computation - Diluted | 13,663,736 | 12,283,041 |
All values are in US Dollars.
CONDENSED, CONSOLIDATED EARNINGS INFORMATION
(Dollars In Thousands, Except Per Share Data) (Unaudited)
| YEARS ENDED | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| DECEMBER 31, | ||||||||||
| 2019 | 2018 | |||||||||
| (Current) | (Prior Year) | Incr. (Decr.) | % Incr. (Decr.) | |||||||
| Interest and Dividend Income | $ | 64,771 | $ | 50,328 | 28.70 | % | ||||
| Interest Expense | 10,283 | 4,625 | 122.34 | % | ||||||
| Net Interest Income | 54,488 | 45,703 | 19.22 | % | ||||||
| Provision for Loan Losses | 849 | 584 | 45.38 | % | ||||||
| Net Interest Income After Provision for Loan Losses | 53,639 | 45,119 | 18.88 | % | ||||||
| Noninterest Income | 19,284 | 18,597 | 3.69 | % | ||||||
| Gain on Restricted Equity Security | 0 | 2,321 | ) | -100.00 | % | |||||
| Net Gains (Losses) on Available-for-sale Debt Securities | 23 | (288 | ) | -107.99 | % | |||||
| Merger-Related Expenses | 4,099 | 328 | 1149.70 | % | ||||||
| Other Noninterest Expenses | 45,438 | 39,158 | 16.04 | % | ||||||
| Income Before Income Tax Provision | 23,409 | 26,263 | ) | -10.87 | % | |||||
| Income Tax Provision | 3,905 | 4,250 | ) | -8.12 | % | |||||
| Net Income | $ | 19,504 | $ | 22,013 | ) | -11.40 | % | |||
| Net Income Attributable to Common Shares (1) | $ | 19,404 | $ | 21,903 | ) | -11.41 | % | |||
| PER COMMON SHARE DATA: | ||||||||||
| Net Income - Basic | $ | 1.46 | $ | 1.79 | ) | -18.44 | % | |||
| Net Income - Diluted | $ | 1.46 | $ | 1.79 | ) | -18.44 | % | |||
| Dividend Per Share - Quarterly | $ | 1.08 | $ | 1.08 | 0.00 | % | ||||
| Dividend Per Share - Special | $ | 0.10 | $ | 0.00 | ||||||
| Number of Shares Used in Computation - Basic | 13,298,736 | 12,219,209 | ||||||||
| Number of Shares Used in Computation - Diluted | 13,321,559 | 12,257,368 |
All values are in US Dollars.
(1) Basic and diluted net income per common share are determined based on net income less earnings allocated to nonvested restricted shares with nonforfeitable dividends.
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CONDENSED, CONSOLIDATED BALANCE SHEET DATA
(In Thousands) (Unaudited)
| DEC. 31, | DEC. 31, | DEC. 31, 2019 vs 2018 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2019 | 2018 | Incr. (Decr.) | % Incr. (Decr.) | |||||||
| ASSETS | ||||||||||
| Cash & Due from Banks | $ | 35,202 | $ | 37,487 | ) | -6.10 | % | |||
| Available-for-sale Debt Securities | 346,723 | 363,273 | ) | -4.56 | % | |||||
| Loans Held for Sale | 767 | 213 | 260.09 | % | ||||||
| Loans, Net | 1,172,386 | 818,254 | 43.28 | % | ||||||
| Intangible Assets | 29,635 | 11,951 | 147.97 | % | ||||||
| Other Assets | 69,432 | 59,715 | 16.27 | % | ||||||
| TOTAL ASSETS | $ | 1,654,145 | $ | 1,290,893 | 28.14 | % | ||||
| LIABILITIES | ||||||||||
| Deposits | $ | 1,252,660 | $ | 1,033,772 | 21.17 | % | ||||
| Repo Sweep Accounts | 1,928 | 5,853 | ) | -67.06 | % | |||||
| Total Deposits and Repo Sweeps | 1,254,588 | 1,039,625 | 20.68 | % | ||||||
| Borrowed Funds | 136,419 | 42,915 | 217.88 | % | ||||||
| Subordinated Debt | 6,500 | 0 | ||||||||
| Other Liabilities | 12,186 | 10,985 | 10.93 | % | ||||||
| TOTAL LIABILITIES | 1,409,693 | 1,093,525 | 28.91 | % | ||||||
| SHAREHOLDERS' EQUITY | ||||||||||
| Common Shareholders' Equity, Excluding Accumulated<br> Other Comprehensive Income (Loss) | 240,761 | 201,538 | 19.46 | % | ||||||
| Accumulated Other Comprehensive Income (Loss): | ||||||||||
| Net Unrealized Gains/Losses on<br> Available-for-sale Debt Securities | 3,511 | (4,307 | ) | -181.52 | % | |||||
| Defined Benefit Plans | 180 | 137 | 31.39 | % | ||||||
| TOTAL SHAREHOLDERS' EQUITY | 244,452 | 197,368 | 23.86 | % | ||||||
| TOTAL LIABILITIES & SHAREHOLDERS' EQUITY | $ | 1,654,145 | $ | 1,290,893 | 28.14 | % |
All values are in US Dollars.
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EXHIBIT 99.3 – Supplemental, Unaudited Financial Information
CONDENSED, CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollars In Thousands, Except Per Share Data) (Unaudited)
| AS OF OR FOR THE | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| YEARS ENDED | % | ||||||||
| DECEMBER 31, | INCREASE | ||||||||
| 2019 | 2018 | (DECREASE) | |||||||
| EARNINGS PERFORMANCE | |||||||||
| Net Income | $ | 19,504 | $ | 22,013 | -11.40 | % | |||
| Return on Average Assets (Annualized) | 1.27 | % | 1.72 | % | -26.16 | % | |||
| Return on Average Equity (Annualized) | 8.50 | % | 11.72 | % | -27.47 | % | |||
| BALANCE SHEET HIGHLIGHTS | |||||||||
| Total Assets | $ | 1,654,145 | $ | 1,290,893 | 28.14 | % | |||
| Available-for-Sale Debt Securities | 346,723 | 363,273 | -4.56 | % | |||||
| Loans (Net) | 1,172,386 | 818,254 | 43.28 | % | |||||
| Allowance for Loan Losses | 9,836 | 9,309 | 5.66 | % | |||||
| Deposits and Repo Sweep Accounts | 1,254,588 | 1,039,625 | 20.68 | % | |||||
| OFF-BALANCE SHEET | |||||||||
| Outstanding Balance of Mortgage Loans Sold with Servicing Retained | $ | 178,446 | $ | 171,750 | 3.90 | % | |||
| Trust Assets Under Management | 1,007,113 | 862,517 | 16.76 | % | |||||
| SHAREHOLDERS' VALUE (PER COMMON SHARE) | |||||||||
| Net Income - Basic | $ | 1.46 | $ | 1.79 | -18.44 | % | |||
| Net Income - Diluted | $ | 1.46 | $ | 1.79 | -18.44 | % | |||
| Dividends - Quarterly | $ | 1.08 | $ | 1.08 | 0.00 | % | |||
| Dividends - Special | $ | 0.10 | $ | 0.00 | |||||
| Common Book Value | $ | 17.84 | $ | 16.02 | 11.36 | % | |||
| Tangible Common Book Value (a) | $ | 15.68 | $ | 15.05 | 4.19 | % | |||
| Market Value (Last Trade) | $ | 28.25 | $ | 26.43 | 6.89 | % | |||
| Market Value/Common Book Value | 158.35 | % | 164.98 | % | -4.02 | % | |||
| Market Value/Tangible Common Book Value | 180.17 | % | 175.61 | % | 2.60 | % | |||
| Price Earnings Multiple (Annualized) | 19.35 | 14.77 | 31.01 | % | |||||
| Dividend Yield (Annualized, Excluding Special Dividend) | 3.82 | % | 4.09 | % | -6.60 | % | |||
| Common Shares Outstanding, End of Period | 13,703,022 | 12,319,330 | 11.23 | % |
14
CONDENSED, CONSOLIDATED FINANCIAL HIGHLIGHTS (Continued)
(Dollars In Thousands, Except Per Share Data) (Unaudited)
| AS OF OR FOR THE | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| YEARS ENDED | % | ||||||||
| DECEMBER 31, | INCREASE | ||||||||
| 2019 | 2018 | (DECREASE) | |||||||
| SAFETY AND SOUNDNESS | |||||||||
| Tangible Common Equity / Tangible Assets (a) | 13.22 | % | 14.50 | % | -8.83 | % | |||
| Nonperforming Assets / Total Assets | 0.80 | % | 1.37 | % | -41.61 | % | |||
| Allowance for Loan Losses / Total Loans | 0.83 | % | 1.12 | % | -25.89 | % | |||
| Total Risk Based Capital Ratio (b) | 20.58 | % | 24.42 | % | -15.72 | % | |||
| Tier 1 Risk Based Capital Ratio (b) | 19.08 | % | 23.24 | % | -17.90 | % | |||
| Common Equity Tier 1 Risk Based Capital Ratio (b) | 19.08 | % | 23.24 | % | -17.90 | % | |||
| Leverage Ratio (b) | 13.10 | % | 14.78 | % | -11.37 | % | |||
| AVERAGE BALANCES | |||||||||
| Average Assets | $ | 1,540,469 | $ | 1,276,140 | 20.71 | % | |||
| Average Equity | $ | 229,446 | $ | 187,895 | 22.11 | % | |||
| EFFICIENCY RATIO (c) | |||||||||
| Net Interest Income on a Fully Taxable-Equivalent | |||||||||
| Basis (c) | $ | 55,532 | $ | 47,004 | 18.14 | % | |||
| Noninterest Income | 19,284 | 18,597 | 3.69 | % | |||||
| Total (1) | $ | 74,816 | $ | 65,601 | 14.05 | % | |||
| Noninterest Expense Excluding Merger Expenses (2) | $ | 45,438 | $ | 39,158 | 16.04 | % | |||
| Efficiency Ratio = (2)/(1) | 60.73 | % | 59.69 | % | 1.74 | % |
(a) Tangible book value per common share and tangible common equity as a percentage of tangible assets are non-U.S. GAAP ratios. Management believes this non-GAAP information is helpful in evaluating the strength of the Corporation's capital and in providing an alternative, conservative valuation of the Corporation's net worth. The ratios shown above are based on the following calculations of tangible assets and tangible common equity:
| Total Assets | $ | 1,654,145 | $ | 1,290,893 | ||
|---|---|---|---|---|---|---|
| Less: Intangible Assets, Primarily Goodwill | (29,635 | ) | (11,951 | ) | ||
| Tangible Assets | $ | 1,624,510 | $ | 1,278,942 | ||
| Total Shareholders' Equity | $ | 244,452 | $ | 197,368 | ||
| Less: Intangible Assets, Primarily Goodwill | (29,635 | ) | (11,951 | ) | ||
| Tangible Common Equity (3) | $ | 214,817 | $ | 185,417 | ||
| Common Shares Outstanding, End of Period (4) | 13,703,022 | 12,319,330 | ||||
| Tangible Common Book Value per Share = (3)/(4) | $ | 15.68 | $ | 15.05 |
(b) Capital ratios for the most recent period are estimated.
(c) The efficiency ratio is a non-GAAP ratio that is calculated as shown above. For purposes of calculating the efficiency ratio, net interest income on a fully taxable-equivalent basis includes amounts of interest income on tax-exempt securities and loans that have been increased to a fully taxable-equivalent basis, using the Corporation's marginal federal income tax rate of 21%. In the calculation above, management excluded merger-related expenses. These expenses included expenses related to the acquisition of Monument Bancorp, Inc. which closed on April 1, 2019. Also excluded were expenses associated with analysis of the acquisition of Covenant Bancorp, Inc., which is expected to close in the third quarter 2020.
15
QUARTERLY CONDENSED, CONSOLIDATED
INCOMESTATEMENT INFORMATION
(Dollars In Thousands, Except Per Share Data)
(Unaudited)
| For the Three Months Ended: | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | |||||||||||||
| 2019 | 2019 | 2019 | 2019 | 2018 | 2018 | 2018 | 2018 | |||||||||||||
| Interest income | $ | 17,290 | $ | 17,277 | $ | 17,139 | $ | 13,065 | $ | 13,304 | $ | 12,800 | $ | 12,334 | $ | 11,890 | ||||
| Interest expense | 2,999 | 3,000 | 2,934 | 1,350 | 1,312 | 1,241 | 1,079 | 993 | ||||||||||||
| Net interest income | 14,291 | 14,277 | 14,205 | 11,715 | 11,992 | 11,559 | 11,255 | 10,897 | ||||||||||||
| Provision (credit) for loan losses | 652 | 1,158 | (4 | ) | (957 | ) | 252 | 60 | (20 | ) | 292 | |||||||||
| Net interest income after provision (credit) for loan losses | 13,639 | 13,119 | 14,209 | 12,672 | 11,740 | 11,499 | 11,275 | 10,605 | ||||||||||||
| Noninterest income | 5,066 | 4,963 | 4,849 | 4,406 | 5,040 | 4,462 | 4,689 | 4,406 | ||||||||||||
| Net gains (losses) on securities | 3 | 13 | 7 | 0 | (4 | ) | 569 | 1,468 | 0 | |||||||||||
| Merger-related expenses | 281 | 206 | 3,301 | 311 | 127 | 200 | 0 | 0 | ||||||||||||
| Other noninterest expenses | 11,834 | 11,486 | 11,422 | 10,696 | 9,947 | 9,633 | 9,684 | 9,895 | ||||||||||||
| Income before income tax provision | 6,593 | 6,403 | 4,342 | 6,071 | 6,702 | 6,697 | 7,748 | 5,116 | ||||||||||||
| Income tax provision | 1,135 | 1,096 | 693 | 981 | 1,021 | 1,111 | 1,377 | 741 | ||||||||||||
| Net income | $ | 5,458 | $ | 5,307 | $ | 3,649 | $ | 5,090 | $ | 5,681 | $ | 5,586 | $ | 6,371 | $ | 4,375 | ||||
| Net income attributable to common shares | $ | 5,431 | $ | 5,281 | $ | 3,630 | $ | 5,063 | $ | 5,654 | $ | 5,558 | $ | 6,339 | $ | 4,352 | ||||
| Basic earnings per common share | $ | 0.40 | $ | 0.39 | $ | 0.27 | $ | 0.41 | $ | 0.46 | $ | 0.45 | $ | 0.52 | $ | 0.36 | ||||
| Diluted earnings per common share | $ | 0.40 | $ | 0.39 | $ | 0.27 | $ | 0.41 | $ | 0.46 | $ | 0.45 | $ | 0.52 | $ | 0.36 |
QUARTERLY CONDENSED, CONSOLIDATED
BALANCESHEET INFORMATION
(In Thousands) (Unaudited)
| As of: | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Dec. 31, | Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | June 30, | March 31, | ||||||||||||||
| 2019 | 2019 | 2019 | 2019 | 2018 | 2018 | 2018 | 2018 | ||||||||||||||
| ASSETS | |||||||||||||||||||||
| Cash & Due from Banks | $ | 35,202 | $ | 51,443 | $ | 39,505 | $ | 44,002 | $ | 37,487 | $ | 38,341 | $ | 51,475 | $ | 36,860 | |||||
| Available-for-Sale Debt Securities | 346,723 | 363,467 | 363,465 | 357,646 | 363,273 | 358,706 | 348,044 | 341,133 | |||||||||||||
| Loans Held for Sale | 767 | 2,033 | 1,131 | 0 | 213 | 551 | 177 | 225 | |||||||||||||
| Loans, Net | 1,172,386 | 1,130,143 | 1,108,483 | 817,136 | 818,254 | 813,717 | 809,816 | 808,300 | |||||||||||||
| Intangible Assets | 29,635 | 29,939 | 30,013 | 11,949 | 11,951 | 11,951 | 11,952 | 11,953 | |||||||||||||
| Other Assets | 69,432 | 65,562 | 67,088 | 59,267 | 59,715 | 62,173 | 62,543 | 59,645 | |||||||||||||
| TOTAL ASSETS | $ | 1,654,145 | $ | 1,642,587 | $ | 1,609,685 | $ | 1,290,000 | $ | 1,290,893 | $ | 1,285,439 | $ | 1,284,007 | $ | 1,258,116 | |||||
| LIABILITIES | |||||||||||||||||||||
| Deposits | $ | 1,252,660 | $ | 1,294,882 | $ | 1,284,143 | $ | 1,039,911 | $ | 1,033,772 | $ | 1,043,947 | $ | 1,040,899 | $ | 1,018,081 | |||||
| Repo Sweep Accounts | 1,928 | 3,767 | 3,192 | 5,132 | 5,853 | 5,421 | 5,169 | 5,482 | |||||||||||||
| Total Deposits and Repo Sweeps | 1,254,588 | 1,298,649 | 1,287,335 | 1,045,043 | 1,039,625 | 1,049,368 | 1,046,068 | 1,023,563 | |||||||||||||
| Borrowed Funds | 136,419 | 75,714 | 62,574 | 32,844 | 42,915 | 35,985 | 39,054 | 39,122 | |||||||||||||
| Subordinated Debt | 6,500 | 7,000 | 7,000 | 0 | 0 | 0 | 0 | 0 | |||||||||||||
| Other Liabilities | 12,186 | 18,285 | 13,060 | 9,986 | 10,985 | 10,099 | 9,706 | 9,049 | |||||||||||||
| TOTAL LIABILITIES | 1,409,693 | 1,399,648 | 1,369,969 | 1,087,873 | 1,093,525 | 1,095,452 | 1,094,828 | 1,071,734 | |||||||||||||
| SHAREHOLDERS' EQUITY | |||||||||||||||||||||
| Common Shareholders' Equity, Excluding | |||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) | 240,761 | 238,479 | 236,284 | 202,768 | 201,538 | 198,355 | 195,518 | 191,920 | |||||||||||||
| Accumulated Other Comprehensive Income (Loss): | |||||||||||||||||||||
| Net Unrealized Gains (Losses) on | |||||||||||||||||||||
| Available-for-sale Securities | 3,511 | 4,173 | 3,138 | (941 | ) | (4,307 | ) | (8,502 | ) | (6,476 | ) | (5,679 | ) | ||||||||
| Defined Benefit Plans Adjustment, Net | 180 | 287 | 294 | 300 | 137 | 134 | 137 | 141 | |||||||||||||
| TOTAL SHAREHOLDERS' EQUITY | 244,452 | 242,939 | 239,716 | 202,127 | 197,368 | 189,987 | 189,179 | 186,382 | |||||||||||||
| TOTAL LIABILITIES & SHAREHOLDERS' EQUITY | $ | 1,654,145 | $ | 1,642,587 | $ | 1,609,685 | $ | 1,290,000 | $ | 1,290,893 | $ | 1,285,439 | $ | 1,284,007 | $ | 1,258,116 |
16
| AVAILABLE-FOR-SALE DEBT SECURITIES | December 31, 2019 | September 30, 2019 | December 31, 2018 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In Thousands) | Amortized | Fair | Amortized | Fair | Amortized | Fair | ||||||
| Cost | Value | Cost | Value | Cost | Value | |||||||
| Obligations of U.S. Government<br> agencies | $ | 16,380 | $ | 17,000 | $ | 16,379 | $ | 17,096 | $ | 12,331 | $ | 12,500 |
| Obligations of states and political subdivisions: | ||||||||||||
| Tax-exempt | 68,787 | 70,760 | 71,317 | 73,281 | 84,204 | 83,952 | ||||||
| Taxable | 35,446 | 36,303 | 31,907 | 33,086 | 27,618 | 27,699 | ||||||
| Mortgage-backed securities issued or<br> guaranteed by U.S. Government agencies or sponsored agencies: | ||||||||||||
| Residential pass-through<br> securities | 58,875 | 59,210 | 62,051 | 62,245 | 54,827 | 53,445 | ||||||
| Residential collateralized<br> mortgage obligations | 115,025 | 114,723 | 127,950 | 127,815 | 148,964 | 145,912 | ||||||
| Commercial mortgage-backed securities | 47,765 | 48,727 | 48,581 | 49,944 | 40,781 | 39,765 | ||||||
| Total Available-for-Sale Debt Securities | $ | 342,278 | $ | 346,723 | $ | 358,185 | $ | 363,467 | $ | 368,725 | $ | 363,273 |
| Summary of Loans by Type | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||
| (Excludes Loans Held for Sale) | ||||||||||||
| (In Thousands) | Dec. 31, | Sept. 30, | Dec. 31, | |||||||||
| 2019 | 2019 | 2018 | ||||||||||
| Residential mortgage: | ||||||||||||
| Residential mortgage loans - first liens | $ | 510,641 | $ | 487,425 | $ | 372,339 | ||||||
| Residential mortgage loans - junior liens | 27,503 | 29,056 | 25,450 | |||||||||
| Home equity lines of credit | 33,638 | 35,492 | 34,319 | |||||||||
| 1-4 Family residential construction | 14,798 | 32,699 | 24,698 | |||||||||
| Total residential mortgage | 586,580 | 584,672 | 456,806 | |||||||||
| Commercial: | ||||||||||||
| Commercial loans secured by real estate | 301,227 | 297,519 | 162,611 | |||||||||
| Commercial and industrial | 126,374 | 115,213 | 91,856 | |||||||||
| Political subdivisions | 53,570 | 46,466 | 53,263 | |||||||||
| Commercial construction and land | 33,555 | 22,386 | 11,962 | |||||||||
| Loans secured by farmland | 12,251 | 7,103 | 7,146 | |||||||||
| Multi-family (5 or more) residential | 31,070 | 27,633 | 7,180 | |||||||||
| Agricultural loans | 4,319 | 5,145 | 5,659 | |||||||||
| Other commercial loans | 16,535 | 12,828 | 13,950 | |||||||||
| Total commercial | 578,901 | 534,293 | 353,627 | |||||||||
| Consumer | 16,741 | 20,435 | 17,130 | |||||||||
| Total | 1,182,222 | 1,139,400 | 827,563 | |||||||||
| Less: allowance for loan losses | (9,836 | ) | (9,257 | ) | (9,309 | ) | ||||||
| Loans, net | $ | 1,172,386 | $ | 1,130,143 | $ | 818,254 | ||||||
| Loans Held for Sale | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||
| (In Thousands) | Dec. 31, | Sept. 30, | Dec. 31, | |||||||||
| 2019 | 2019 | 2018 | ||||||||||
| Residential mortgage loans originated and serviced - outstanding balance | $ | 179,213 | $ | 179,594 | $ | 171,955 | ||||||
| Less: outstanding balance of loans sold | (178,446 | ) | (177,561 | ) | (171,742 | ) | ||||||
| Loans held for sale, net | $ | 767 | $ | 2,033 | $ | 213 |
17
| ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In Thousands) | ||||||||||||
| 3 Months | 3 Months | Year | Year | |||||||||
| Ended | Ended | Ended | Ended | |||||||||
| Dec. 31, | Sept. 30, | Dec. 31, | Dec. 31, | |||||||||
| 2019 | 2019 | 2019 | 2018 | |||||||||
| Balance, beginning of period | $ | 9,257 | $ | 8,200 | $ | 9,309 | $ | 8,856 | ||||
| Charge-offs | (84 | ) | (116 | ) | (379 | ) | (497 | ) | ||||
| Recoveries | 11 | 15 | 57 | 366 | ||||||||
| Net (charge-offs) | (73 | ) | (101 | ) | (322 | ) | (131 | ) | ||||
| Provision for loan losses | 652 | 1,158 | 849 | 584 | ||||||||
| Balance, end of period | $ | 9,836 | $ | 9,257 | $ | 9,836 | $ | 9,309 | ||||
| PAST DUE AND IMPAIRED LOANS, NONPERFORMING ASSETS AND TROUBLED DEBT RESTRUCTURINGS (TDRs) | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||
| (Dollars In Thousands) | ||||||||||||
| Dec 31, | Sept. 30, | Dec 31, | ||||||||||
| 2019 | 2019 | 2018 | ||||||||||
| Impaired loans with a valuation allowance | $ | 3,375 | $ | 3,027 | $ | 4,851 | ||||||
| Impaired loans without a valuation allowance | 2,111 | 2,916 | 4,923 | |||||||||
| Total impaired loans | $ | 5,486 | $ | 5,943 | $ | 9,774 | ||||||
| Total loans past due 30-89 days and still accruing | $ | 8,889 | $ | 5,230 | $ | 7,142 | ||||||
| Nonperforming assets: | ||||||||||||
| Total nonaccrual loans | $ | 9,218 | $ | 9,020 | $ | 13,113 | ||||||
| Total loans past due 90 days or more and still accruing | 1,207 | 2,395 | 2,906 | |||||||||
| Total nonperforming loans | 10,425 | 11,415 | 16,019 | |||||||||
| Foreclosed assets held for sale (real estate) | 2,886 | 2,762 | 1,703 | |||||||||
| Total nonperforming assets | $ | 13,311 | $ | 14,177 | $ | 17,722 | ||||||
| Loans subject to troubled debt restructurings (TDRs): | ||||||||||||
| Performing | $ | 889 | $ | 924 | $ | 655 | ||||||
| Nonperforming | 1,737 | 1,744 | 2,884 | |||||||||
| Total TDRs | $ | 2,626 | $ | 2,668 | $ | 3,539 | ||||||
| Total nonperforming loans as a % of loans | 0.88 | % | 1.00 | % | 1.94 | % | ||||||
| Total nonperforming assets as a % of assets | 0.80 | % | 0.86 | % | 1.37 | % | ||||||
| Allowance for loan losses as a % of total loans (1) | 0.83 | % | 0.81 | % | 1.12 | % | ||||||
| Allowance for loan losses as a % of nonperforming loans | 94.35 | % | 81.10 | % | 58.11 | % | ||||||
| (1) | Effective April 1, 2019, C&N recorded loans purchased from Monument at fair value. Loans identified as having a deterioration<br>in credit quality were valued at $441,000 at April 1, 2019 and December 31, 2019. The remainder of the portfolio was determined<br>to be the performing component of the portfolio, valued at $258,854,000 at April 1, 2019. The calculation of fair value included<br>a discount for credit losses of $1,914,000, reflecting an estimate of the present value of credit losses based on market expectations.<br>None of the performing loans purchased were found to be impaired in the remainder of 2019; accordingly, there was no allowance<br>for loan losses on loans purchased from Monument as reflected in the table above at December 31, 2019 or September 30, 2019. | |||||||||||
| --- | --- |
18
| Analysis of Average Daily Balances and Rates | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in Thousands) | ||||||||||||||||||
| 3 Months | 3 Months | 3 Months | ||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Ended | Rate<br> of | Ended | Rate<br> of | Ended | Rate<br> of | |||||||||||||
| 12/31/2019 | Return/ | 9/30/2019 | Return/ | 12/31/2018 | Return/ | |||||||||||||
| Average | Cost<br> of | Average | Cost<br> of | Average | Cost<br> of | |||||||||||||
| Balance | Funds<br> % | Balance | Funds<br> % | Balance | Funds<br> % | |||||||||||||
| EARNING ASSETS | ||||||||||||||||||
| Interest-bearing<br> due from banks | $ | 17,577 | 2.03 | % | $ | 26,539 | 2.38 | % | $ | 16,082 | 2.37 | % | ||||||
| Available-for-sale debt<br> securities,at amortized cost: | ||||||||||||||||||
| Taxable | 280,333 | 2.29 | % | 285,114 | 2.41 | % | 282,708 | 2.56 | % | |||||||||
| Tax-exempt | 69,482 | 3.01 | % | 69,472 | 3.34 | % | 91,371 | 3.68 | % | |||||||||
| Total<br> available-for-sale debt securities | 349,815 | 2.43 | % | 354,586 | 2.59 | % | 374,079 | 2.83 | % | |||||||||
| Loans receivable: | ||||||||||||||||||
| Taxable | 1,100,170 | 5.28 | % | 1,062,578 | 5.38 | % | 751,793 | 5.35 | % | |||||||||
| Tax-exempt | 66,195 | 3.81 | % | 67,741 | 3.74 | % | 74,672 | 3.78 | % | |||||||||
| Total<br> loans receivable | 1,166,365 | 5.20 | % | 1,130,319 | 5.28 | % | 826,465 | 5.21 | % | |||||||||
| Other<br> earning assets | 1,721 | 3.23 | % | 1,515 | 2.88 | % | 1,166 | 3.74 | % | |||||||||
| Total Earning Assets | 1,535,478 | 4.53 | % | 1,512,959 | 4.60 | % | 1,217,792 | 4.44 | % | |||||||||
| Cash | 19,983 | 22,341 | 17,101 | |||||||||||||||
| Unrealized gain/loss on<br> securities | 5,056 | 4,915 | (10,898 | ) | ||||||||||||||
| Allowance for loan losses | (9,469 | ) | (8,322 | ) | (8,986 | ) | ||||||||||||
| Bank premises and equipment | 16,801 | 16,103 | 14,735 | |||||||||||||||
| Intangible assets | 29,902 | 29,986 | 11,949 | |||||||||||||||
| Other<br> assets | 53,124 | 48,276 | 44,159 | |||||||||||||||
| Total<br> Assets | $ | 1,650,875 | $ | 1,626,258 | $ | 1,285,852 | ||||||||||||
| INTEREST-BEARING LIABILITIES | ||||||||||||||||||
| Interest-bearing deposits: | ||||||||||||||||||
| Interest checking | $ | 221,052 | 0.44 | % | $ | 232,549 | 0.62 | % | $ | 216,757 | 0.51 | % | ||||||
| Money market | 202,217 | 0.52 | % | 200,873 | 0.52 | % | 177,461 | 0.40 | % | |||||||||
| Savings | 169,342 | 0.16 | % | 170,583 | 0.15 | % | 155,687 | 0.10 | % | |||||||||
| Time<br> deposits | 379,446 | 1.81 | % | 385,538 | 1.82 | % | 225,995 | 0.99 | % | |||||||||
| Total<br> interest-bearing deposits | 972,057 | 0.94 | % | 989,543 | 0.99 | % | 775,900 | 0.54 | % | |||||||||
| Borrowed funds: | ||||||||||||||||||
| Short-term | 54,705 | 2.03 | % | 25,823 | 2.24 | % | 12,499 | 1.46 | % | |||||||||
| Long-term | 56,564 | 2.03 | % | 48,953 | 2.24 | % | 34,936 | 2.33 | % | |||||||||
| Subordinated<br> debt | 7,000 | 6.57 | % | 6,998 | 6.58 | % | 0 | 0.00 | % | |||||||||
| Total<br> borrowed funds | 118,269 | 2.30 | % | 81,774 | 2.62 | % | 47,435 | 2.10 | % | |||||||||
| Total Interest-bearing<br> Liabilities | 1,090,326 | 1.09 | % | 1,071,317 | 1.11 | % | 823,335 | 0.63 | % | |||||||||
| Demand deposits | 299,090 | 300,183 | 261,118 | |||||||||||||||
| Other<br> liabilities | 18,446 | 13,584 | 11,015 | |||||||||||||||
| Total<br> Liabilities | 1,407,862 | 1,385,084 | 1,095,468 | |||||||||||||||
| Stockholders' equity,<br> excluding accumulated other comprehensive income/loss | 238,738 | 237,000 | 198,861 | |||||||||||||||
| Accumulated<br> other comprehensive income/loss | 4,275 | 4,174 | (8,477 | ) | ||||||||||||||
| Total<br> Shareholders' Equity | 243,013 | 241,174 | 190,384 | |||||||||||||||
| Total<br> Liabilities and Shareholders' Equity | $ | 1,650,875 | $ | 1,626,258 | $ | 1,285,852 | ||||||||||||
| Interest Rate Spread | 3.44 | % | 3.49 | % | 3.81 | % | ||||||||||||
| Net Interest Income/Earning<br> Assets | 3.75 | % | 3.81 | % | 4.01 | % | ||||||||||||
| Total Deposits (Interest-bearing<br> and Demand) | $ | 1,271,147 | $ | 1,289,726 | $ | 1,037,018 |
(1) Annualized rates of return on tax-exempt securities and loans are presented on a fully taxable-equivalent basis, using the Corporation’s marginal federal income tax rate of 21%.
(2) Nonaccrual loans have been included with loans for the purpose of analyzing net interest earnings.
(3) Rates of return on earning assets and costs of funds have been presented on an annualized basis.
19
| Analysis of Average Daily Balances and Rates | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in Thousands) | ||||||||||||
| Year | Year | |||||||||||
| Ended | Rate of | Ended | Rate of | |||||||||
| 12/31/2019 | Return/ | 12/31/2018 | Return/ | |||||||||
| Average | Cost of | Average | Cost of | |||||||||
| Balance | Funds % | Balance | Funds % | |||||||||
| EARNING ASSETS | ||||||||||||
| Interest-bearing due from banks | $ | 21,711 | 2.37 | % | $ | 21,800 | 1.90 | % | ||||
| Available-for-sale debt securities, at amortized cost: | ||||||||||||
| Taxable | 284,072 | 2.47 | % | 262,461 | 2.36 | % | ||||||
| Tax-exempt | 73,212 | 3.45 | % | 97,662 | 3.58 | % | ||||||
| Total available-for-sale debt securities | 357,284 | 2.67 | % | 360,123 | 2.69 | % | ||||||
| Loans receivable: | ||||||||||||
| Taxable | 988,560 | 5.37 | % | 746,309 | 5.18 | % | ||||||
| Tax-exempt | 68,999 | 3.82 | % | 76,037 | 3.71 | % | ||||||
| Total loans receivable | 1,057,559 | 5.27 | % | 822,346 | 5.05 | % | ||||||
| Other earning assets | 1,439 | 3.13 | % | 1,160 | 3.10 | % | ||||||
| Total Earning Assets | 1,437,993 | 4.58 | % | 1,205,429 | 4.28 | % | ||||||
| Cash | 19,906 | 17,674 | ||||||||||
| Unrealized gain/loss on securities | 1,347 | (8,343 | ) | |||||||||
| Allowance for loan losses | (8,876 | ) | (9,033 | ) | ||||||||
| Bank premises and equipment | 15,914 | 15,156 | ||||||||||
| Intangible assets | 25,531 | 11,952 | ||||||||||
| Other assets | 48,654 | 43,305 | ||||||||||
| Total Assets | $ | 1,540,469 | $ | 1,276,140 | ||||||||
| INTEREST-BEARING LIABILITIES | ||||||||||||
| Interest-bearing deposits: | ||||||||||||
| Interest checking | $ | 217,910 | 0.53 | % | $ | 217,638 | 0.44 | % | ||||
| Money market | 194,849 | 0.49 | % | 180,835 | 0.30 | % | ||||||
| Savings | 167,677 | 0.15 | % | 152,889 | 0.10 | % | ||||||
| Time deposits | 344,446 | 1.69 | % | 227,060 | 0.90 | % | ||||||
| Total interest-bearing deposits | 924,882 | 0.89 | % | 778,422 | 0.48 | % | ||||||
| Borrowed funds: | ||||||||||||
| Short-term | 33,521 | 2.19 | % | 25,226 | 1.45 | % | ||||||
| Long-term | 43,917 | 2.31 | % | 25,209 | 2.21 | % | ||||||
| Subordinated debt | 5,274 | 6.58 | % | 0 | 0.00 | % | ||||||
| Total borrowed funds | 82,712 | 2.53 | % | 50,435 | 1.83 | % | ||||||
| Total Interest-bearing Liabilities | 1,007,594 | 1.02 | % | 828,857 | 0.56 | % | ||||||
| Demand deposits | 288,805 | 249,409 | ||||||||||
| Other liabilities | 14,624 | 9,979 | ||||||||||
| Total Liabilities | 1,311,023 | 1,088,245 | ||||||||||
| Stockholders' equity, excluding accumulated other comprehensive income/loss | 228,103 | 194,333 | ||||||||||
| Accumulated other comprehensive income/loss | 1,343 | (6,438 | ) | |||||||||
| Total Shareholders' Equity | 229,446 | 187,895 | ||||||||||
| Total Liabilities and Shareholders' Equity | $ | 1,540,469 | $ | 1,276,140 | ||||||||
| Interest Rate Spread | 3.56 | % | 3.72 | % | ||||||||
| Net Interest Income/Earning Assets | 3.86 | % | 3.90 | % | ||||||||
| Total Deposits (Interest-bearing and Demand) | $ | 1,213,687 | $ | 1,027,831 |
(1) Rates of return on tax-exempt securities and loans are presented on a fully taxable-equivalent basis, using the Corporation’s marginal federal income tax rate of 21%.
(2) Nonaccrual loans have been included with loans for the purpose of analyzing net interest earnings.
20
| COMPARISON OF NONINTEREST INCOME | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (In Thousands) | Three Months Ended | Years Ended | |||||||||
| Dec. 31, | Sept. 30, | Dec. 31, | Dec. 31, | Dec. 31, | |||||||
| 2019 | 2019 | 2018 | 2019 | 2018 | |||||||
| Trust and financial management revenue | $ | 1,684 | $ | 1,479 | $ | 1,463 | $ | 6,106 | $ | 5,838 | |
| Brokerage revenue | 265 | 333 | 300 | 1,266 | 1,018 | ||||||
| Insurance commissions, fees and premiums | 18 | 71 | 33 | 167 | 105 | ||||||
| Service charges on deposit accounts | 1,395 | 1,436 | 1,334 | 5,358 | 5,171 | ||||||
| Service charges and fees | 73 | 91 | 80 | 332 | 343 | ||||||
| Interchange revenue from debit card transactions | 690 | 722 | 666 | 2,754 | 2,546 | ||||||
| Net gains from sales of loans | 306 | 310 | 168 | 924 | 682 | ||||||
| Loan servicing fees, net | 91 | (54 | ) | 84 | 100 | 347 | |||||
| Increase in cash surrender value of life insurance | 106 | 105 | 99 | 402 | 394 | ||||||
| Other noninterest income | 438 | 470 | 813 | 1,875 | 2,153 | ||||||
| Total noninterest income, excluding realized gains<br> (losses) on securities, net | $ | 5,066 | $ | 4,963 | $ | 5,040 | $ | 19,284 | $ | 18,597 | |
| COMPARISON OF NONINTEREST EXPENSE | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |
| (In Thousands) | Three Months Ended | Years Ended | |||||||||
| Dec. 31, | Sept. 30, | Dec. 31, | Dec. 31, | Dec. 31, | |||||||
| 2019 | 2019 | 2018 | 2019 | 2018 | |||||||
| Salaries and wages | $ | 5,395 | $ | 5,480 | $ | 4,611 | $ | 20,644 | $ | 17,191 | |
| Pensions and other employee benefits | 1,545 | 1,449 | 1,212 | 5,837 | 5,259 | ||||||
| Occupancy expense, net | 653 | 654 | 599 | 2,629 | 2,497 | ||||||
| Furniture and equipment expense | 322 | 333 | 295 | 1,289 | 1,196 | ||||||
| Data processing expenses | 836 | 802 | 748 | 3,403 | 2,750 | ||||||
| Automated teller machine and interchange expense | 340 | 297 | 316 | 1,103 | 1,304 | ||||||
| Pennsylvania shares tax | 345 | 341 | 320 | 1,380 | 1,318 | ||||||
| Professional fees | 274 | 242 | 116 | 1,069 | 976 | ||||||
| Telecommunications | 207 | 197 | 181 | 744 | 748 | ||||||
| Directors' fees | 187 | 162 | 157 | 673 | 706 | ||||||
| Other noninterest expense | 1,730 | 1,529 | 1,391 | 6,667 | 5,213 | ||||||
| Total noninterest expense, excluding merger-related expenses | 11,834 | 11,486 | 9,946 | 45,438 | 39,158 | ||||||
| Merger-related expenses | 281 | 206 | 128 | 4,099 | 328 | ||||||
| Total noninterest expense | $ | 12,115 | $ | 11,692 | $ | 10,074 | $ | 49,537 | $ | 39,486 |
21