Citizens & Northern (CZNC) 8-K C&N Announces FIRST QUARTER 2016 UNAUDITED Financial RESULTS

EXHIBIT 99.3 – Supplemental, Unaudited Financial Information

 

CONDENSED, CONSOLIDATED FINANCIAL HIGHLIGHTS
(In Thousands, Except Per Share Data)       (Unaudited)
	3 MONTHS ENDED						%
	MARCH 31,						INCREASE
	2016			2015			(DECREASE)
EARNINGS PERFORMANCE
Net Income	$	3,573		$	3,815			-6.34	%
Return on Average Assets		1.18	%		1.23	%		-4.07	%
Return on Average Equity		7.60	%		8.08	%		-5.94	%
BALANCE SHEET HIGHLIGHTS
Total Assets	$	1,216,544		$	1,251,958			-2.83	%
Available-for-Sale Securities		413,606			527,814			-21.64	%
Loans (Net)		693,944			621,211			11.71	%
Allowance for Loan Losses		7,661			7,134			7.39	%
Deposits and Repo Sweep Accounts		962,989			982,474			-1.98	%
OFF-BALANCE SHEET
Outstanding Balance of Mortgage Loans Sold
with Servicing Retained		153,778			151,272			1.66	%
Trust Assets Under Management		826,470			832,550			-0.73	%
SHAREHOLDERS' VALUE
(PER COMMON SHARE)
Net Income - Basic	$	0.29		$	0.31			-6.45	%
Net Income - Diluted	$	0.29		$	0.31			-6.45	%
Dividends	$	0.26		$	0.26			0.00	%
Common Book Value	$	15.59		$	15.51			0.52	%
Tangible Common Book Value	$	14.60		$	14.53			0.48	%
Market Value (Last Trade)	$	19.88		$	20.18			-1.49	%
Market Value /  Common Book Value		127.52	%		130.11	%		-1.99	%
Market Value /  Tangible Common Book Value		136.16	%		138.89	%		-1.97	%
Price Earnings Multiple (Annualized)		17.14			16.27			5.35	%
Dividend Yield (Annualized)		5.23	%		5.15	%		1.55	%
Common Shares Outstanding, End of Period		12,081,030			12,193,184			-0.92	%
SAFETY AND SOUNDNESS
Tangible Common Equity / Tangible Assets		14.64	%		14.28	%		2.52	%
Nonperforming Assets / Total Assets		1.36	%		1.33	%		2.26	%
Allowance for Loan Losses / Total Loans		1.09	%		1.14	%		-4.39	%
Total Risk Based Capital Ratio (a)		24.05	%		25.19	%		-3.14	%
Tier 1 Risk Based Capital Ratio (a)		22.99	%		23.98	%		-2.88	%
Common Equity Tier 1 Risk Based Capital Ratio (a)		22.99	%		23.98	%		-2.88	%
Leverage Ratio (a)		14.27	%		13.86	%		3.25	%
AVERAGE BALANCES
Average Assets	$	1,214,392		$	1,242,025			-2.22	%
Average Equity	$	188,007		$	188,841			-0.44	%

(a) Capital ratios for the most recent period are estimated.

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QUARTERLY CONDENSED, CONSOLIDATED INCOME STATEMENT INFORMATION
(In Thousands) (Unaudited)	For the Three Months Ended:
	Mar. 31,		Dec. 31,		Sept. 30,		June 30,		Mar. 31,
	2016		2015		2015		2015		2015
Interest income	$	10,937	$	11,036	$	11,134	$	11,186	$	11,163
Interest expense		904		1,087		1,126		1,176		1,213
Net interest income		10,033		9,949		10,008		10,010		9,950
Provision for loan losses		368		319		302		221		3
Net interest income after provision
for loan losses		9,665		9,630		9,706		9,789		9,947
Other income		3,690		3,999		3,961		3,962		3,556
Net gains on available-for-sale securities		383		1,776		79		932		74
Loss on prepayment of borrowings		0		1,663		0		910		0
Other expenses		9,072		8,416		8,117		7,964		8,533
Income before income tax provision		4,666		5,326		5,629		5,809		5,044
Income tax provision		1,093		1,261		1,395		1,452		1,229
Net income	$	3,573	$	4,065	$	4,234	$	4,357	$	3,815
Net income per share – basic	$	0.29	$	0.33	$	0.35	$	0.36	$	0.31
Net income per share – diluted	$	0.29	$	0.33	$	0.35	$	0.36	$	0.31

QUARTERLY CONDENSED, CONSOLIDATED BALANCE SHEET INFORMATION
(In Thousands) (Unaudited)	As of:
	Mar. 31,		Dec. 31,		Mar. 31,
	2016		2015		2015
ASSETS
Cash & Due from Banks	$	41,173	$	36,061	$	36,430
Available-for-Sale Securities		413,606		420,290		527,814
Loans Held for Sale		526		280		214
Loans, Net		693,944		696,991		621,211
Intangible Assets		11,969		11,972		11,989
Other Assets		55,326		57,823		54,300
TOTAL ASSETS	$	1,216,544	$	1,223,417	$	1,251,958
LIABILITIES
Deposits	$	955,848	$	935,615	$	976,634
Repo Sweep Accounts		7,141		4,915		5,840
Total Deposits and Repo Sweeps		962,989		940,530		982,474
Borrowed Funds		57,503		87,348		72,988
Other Liabilities		7,742		8,052		7,393
TOTAL LIABILITIES		1,028,234		1,035,930		1,062,855
SHAREHOLDERS' EQUITY
Common Shareholders' Equity, Excluding
Accumulated Other Comprehensive Income/ Loss		182,914		184,959		181,437
Accumulated Other Comprehensive Income/ Loss:
Net Unrealized Gains/Losses on
Available-for-sale Securities		5,347		2,493		7,654
Defined Benefit Plans Adjustment, Net		49		35		12
TOTAL SHAREHOLDERS' EQUITY		188,310		187,487		189,103
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY	$	1,216,544	$	1,223,417	$	1,251,958

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AVAILABLE-FOR-SALE SECURITIES	March 31, 2016				December 31, 2015
(In Thousands)	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Obligations of U.S. Government agencies	$	10,661	$	10,707	$	10,663	$	10,483
Obligations of states and political subdivisions:
Tax-exempt		107,269		111,959		103,414		107,757
Taxable		34,249		35,094		34,317		34,597
Mortgage-backed securities		72,210		73,243		73,227		73,343
Collateralized mortgage obligations,
Issued by U.S. Government agencies		179,731		180,860		193,145		191,715
Other collateralized debt obligations		7		7		9		9
Total debt securities		404,127		411,870		414,775		417,904
Marketable equity securities		1,253		1,736		1,680		2,386
Total	$	405,380	$	413,606	$	416,455	$	420,290

Summary of Loans by Type
(Excludes Loans Held for Sale)
(In Thousands)	March 31,			Dec. 31,			March 31,
	2016			2015			2015
Residential mortgage:
Residential mortgage loans - first liens	$	306,753		$	304,783		$	291,612
Residential mortgage loans - junior liens		21,622			21,146			20,896
Home equity lines of credit		38,627			39,040			37,049
1-4 Family residential construction		20,010			21,121			16,217
Total residential mortgage		387,012			386,090			365,774
Commercial:
Commercial loans secured by real estate		154,646			154,779			140,851
Commercial and industrial		71,628			75,196			51,563
Political subdivisions		38,364			40,007			19,479
Commercial construction and land		7,445			5,122			7,249
Loans secured by farmland		7,168			7,019			7,789
Multi-family (5 or more) residential		8,393			9,188			8,673
Agricultural loans		4,492			4,671			3,158
Other commercial loans		11,387			12,152			13,187
Total commercial		303,523			308,134			251,949
Consumer		11,070			10,656			10,622
Total		701,605			704,880			628,345
Less: allowance for loan losses		(7,661	)		(7,889	)		(7,134	)
Loans, net	$	693,944		$	696,991		$	621,211

Loans Held for Sale
(In Thousands)	March 31,			Dec. 31,			March 31,
	2016			2015			2015
Residential mortgage loans originated
and serviced - outstanding balance	$	154,304		$	152,728		$	151,486
Less: outstanding balance of loans sold		(153,778	)		(152,448	)		(151,272	)
Loans held for sale, net	$	526		$	280		$	214

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ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
(In Thousands)
	3 Months			3 Months			Year			3 Months
	Ended			Ended			Ended			Ended
	March 31,			Dec. 31,			Dec. 31,			March 31,
	2016			2015			2015			2015
Balance, beginning of period	$	7,889		$	7,416		$	7,336		$	7,336
Charge-offs		(613	)		(66	)		(562	)		(222	)
Recoveries		17			220			270			17
Net (charge-offs) recoveries		(596	)		154			(292	)		(205	)
Provision for loan losses		368			319			845			3
Balance, end of period	$	7,661		$	7,889		$	7,889		$	7,134

PAST DUE AND IMPAIRED LOANS, NONPERFORMING ASSETS
AND TROUBLED DEBT RESTRUCTURINGS (TDRs)
(In Thousands)
	March 31,			Dec. 31,			March 31,
	2016			2015			2015
Impaired loans with a valuation allowance	$	1,420		$	1,933		$	4,312
Impaired loans without a valuation allowance		8,210			8,041			8,851
Total impaired loans	$	9,630		$	9,974		$	13,163
Total loans past due 30-89 days and still accruing	$	11,373		$	7,057		$	5,722
Nonperforming assets:
Total nonaccrual loans	$	10,944		$	11,517		$	11,944
Total loans past due 90 days or more and still accruing		3,957			3,229			3,086
Total nonperforming loans		14,901			14,746			15,030
Foreclosed assets held for sale (real estate)		1,584			1,260			1,583
Total nonperforming assets	$	16,485		$	16,006		$	16,613
Loans subject to troubled debt restructurings (TDRs):
Performing	$	1,167		$	1,186		$	1,872
Nonperforming		5,146			5,178			5,252
Total TDRs	$	6,313		$	6,364		$	7,124
Total nonperforming loans as a % of loans		2.12	%		2.09	%		2.39	%
Total nonperforming assets as a % of assets		1.36	%		1.31	%		1.33	%
Allowance for loan losses as a % of total loans		1.09	%		1.12	%		1.14	%
Allowance for loan losses as a % of nonperforming loans		51.41	%		53.50	%		47.47	%

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Analysis of Average Daily Balances and Rates
(Dollars in Thousands)
	3 Months						3 Months						3 Months
	Ended			Rate of			Ended			Rate of			Ended			Rate of
	3/31/2016			Return/			12/31/2015			Return/			3/31/2015			Return/
	Average			Cost of			Average			Cost of			Average			Cost of
	Balance			Funds %			Balance			Funds %			Balance			Funds %
EARNING ASSETS
Available-for-sale securities,
at amortized cost:
Taxable	$	305,880			2.09	%	$	327,225			2.05	%	$	388,104			2.15	%
Tax-exempt		105,406			5.23	%		105,118			4.99	%		117,674			5.35	%
Total available-for-sale securities		411,286			2.89	%		432,343			2.76	%		505,778			2.90	%
Interest-bearing due from banks		20,348			0.47	%		20,168			0.39	%		26,994			0.39	%
Loans held for sale		452			5.34	%		406			5.86	%		89			9.11	%
Loans receivable:
Taxable		640,959			5.00	%		629,294			5.04	%		582,498			5.37	%
Tax-exempt		60,677			4.54	%		61,339			4.52	%		41,925			5.15	%
Total loans receivable		701,636			4.96	%		690,633			5.00	%		624,423			5.35	%
Total Earning Assets		1,133,722			4.13	%		1,143,550			4.07	%		1,157,284			4.16	%
Cash		15,588						16,390						16,127
Unrealized gain/loss on securities		7,055						7,637						10,626
Allowance for loan losses		(7,932	)					(7,525	)					(7,391	)
Bank premises and equipment		15,458						15,499						16,252
Intangible Asset - Core Deposit Intangible		29						32						50
Intangible Asset - Goodwill		11,942						11,942						11,942
Other assets		38,530						38,037						37,135
Total Assets	$	1,214,392					$	1,225,562					$	1,242,025
INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Interest checking	$	195,142			0.12	%	$	195,439			0.11	%	$	191,705			0.12	%
Money market		191,514			0.17	%		192,825			0.16	%		194,834			0.15	%
Savings		130,003			0.10	%		127,744			0.10	%		127,853			0.10	%
Certificates of deposit		113,411			0.72	%		116,699			0.68	%		122,007			0.71	%
Individual Retirement Accounts		105,562			0.41	%		107,484			0.41	%		113,806			0.40	%
Other time deposits		804			0.00	%		678			0.00	%		803			0.00	%
Total interest-bearing deposits		736,436			0.26	%		740,869			0.25	%		751,008			0.26	%
Borrowed funds:
Short-term		35,683			0.70	%		17,395			0.39	%		6,017			0.07	%
Long-term		38,725			3.77	%		59,929			3.96	%		73,020			4.03	%
Total borrowed funds		74,408			2.30	%		77,324			3.16	%		79,037			3.73	%
Total Interest-bearing Liabilities		810,844			0.45	%		818,193			0.53	%		830,045			0.59	%
Demand deposits		208,163						207,534						215,019
Other liabilities		7,378						9,149						8,120
Total Liabilities		1,026,385						1,034,876						1,053,184
Stockholders' equity, excluding
accumulated other comprehensive      income/loss		183,376						185,716						181,944
Accumulated other comprehensive income/loss		4,631						4,970						6,897
Total Stockholders' Equity		188,007						190,686						188,841
Total Liabilities and Stockholders' Equity	$	1,214,392					$	1,225,562					$	1,242,025
Interest Rate Spread					3.68	%					3.54	%					3.57	%
Net Interest Income/Earning Assets					3.81	%					3.69	%					3.74	%
Total Deposits (Interest-bearing
and Demand)	$	944,599					$	948,403					$	966,027

(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 35%.

(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 are presented on an annualized basis.

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COMPARISON OF NONINTEREST INCOME
(In Thousands)	Three Months Ended
	March 31,			Dec. 31,			March 31,
	2016			2015			2015
Service charges on deposit accounts	$	1,138		$	1,235		$	1,022
Service charges and fees		94			121			113
Trust and financial management revenue		1,144			1,148			1,114
Brokerage revenue		173			199			219
Insurance commissions, fees and premiums		21			22			40
Interchange revenue from debit card transactions		463			479			474
Net gains from sales of loans		168			162			147
Decrease in fair value of servicing rights		(71	)		(25	)		(117	)
Increase in cash surrender value of life insurance		96			92			97
Other operating income		464			566			447
Total other operating income, before realized
gains on available-for-sale securities, net	$	3,690		$	3,999		$	3,556

COMPARISON OF NONINTEREST EXPENSE
(In Thousands)	Three Months Ended
	March 31,		Dec. 31,		March 31,
	2016		2015		2015
Salaries and wages	$	3,887	$	3,848	$	3,487
Pensions and other employee benefits		1,437		1,084		1,385
Occupancy expense, net		609		589		722
Furniture and equipment expense		427		462		454
FDIC Assessments		142		149		151
Pennsylvania shares tax		322		302		318
Professional fees		289		175		156
Automated teller machine and interchange expense		249		253		246
Software subscriptions		241		259		197
Other operating expense		1,469		1,295		1,417
Total noninterest expense, before loss on
prepayment of borrowings		9,072		8,416		8,533
Loss on prepayment of borrowings		0		1,663		0
Total noninterest expense	$	9,072	$	10,079	$	8,533

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