Regional bank reveals dividend

Citizens and Northern Corp. recently announced its most recent dividend declaration and its unaudited, consolidated financial results for the three-month period ended March 31.

According to a news release, the bank’s board of directors declared a regular quarterly cash dividend of $0.26 per share. The dividend is payable on May 12 to shareholders of record as of May 1. Declaration of the dividend was made at the April 20 meeting of the bank’s board of directors. First quarter 2017 unaudited financial results earnings per basic and diluted common share were $0.28 in the first quarter 2017, as compared to $0.35 per share in the fourth quarter 2016 and $0.29 per share in the first quarter 2016. The annualized return on average assets for the first quarter 2017 was 1.11 percent, and the annualized return on average equity was 7.38 percent. Earnings for the first quarter 2017 included an estimated $0.01 per common share after-tax benefit from realized gains on available-for-sale securities, as compared to an estimated $0.02 per share after-tax benefit from securities gains in the first quarter 2016.

Net income totaled $3,434,000 in the first quarter 2017, down from $4,231,000 in the fourth quarter 2016.

Significant variances were as follows:

• Total noninterest expenses in the first quarter 2017 increased $740,000 (8.6 percent) over the fourth quarter 2016 amount. Pensions and other employee benefits expense was $312,000 higher in the first quarter 2017 as compared to the fourth quarter 2016, as payroll taxes and similar expenses increased, consistent with the normal pattern of such costs being highest in the beginning of the calendar year. Other operating expenses were $281,000 higher in the first quarter 2017 as compared to the fourth quarter 2016.

Within other operating expense, charitable donations increased $152,000, including donations totaling $150,000 under a state program that resulted in a credit to be applied against Pennsylvania Bank Shares Tax of $135,000. Also within other operating expense, loan collection expenses increased $110,000, net losses and expenses on other real estate properties increased $52,000 and education and training expenses decreased $35,000. Salaries and wages increased $158,000 (4.3 percent) in the first quarter 2017 as compared to the fourth quarter 2016, reflecting merit-based pay increases for a portion of the employee base as well as the effects of fourth quarter 2016 reductions in restricted stock and incentive bonus expense based on updated year-end 2016 estimates.

• The provision for loan losses totaled $452,000 in the first quarter 2017 as compared to a credit (reduction in expense) of $3,000 in the fourth quarter 2016. Net charge-offs totaled $181,000 in the first quarter 2017, and total specific allowances on impaired loans increased $207,000 to $881,000 at March 31, 2017 from $674,000 at Dec. 31, 2016. The net increase in specific allowances in the first quarter 2017 included an increase in the allowance related to one real estate secured commercial loan relationship of $225,000. At March 31, total loans outstanding associated with this relationship amounted to $3,278,000, and the related allowance was $753,000. The small credit for loan losses in the fourth quarter 2016 included the effect of an excess of $55,000 of recoveries on previously charged-off loans over the amount of current charge-offs as well as a net reduction of $11,000 in specific allowances required on impaired loans.

• Noninterest revenue totaled $3,864,000 in the first quarter 2017, down $167,000 (4.1 percent) from the fourth quarter 2016 total. Net gains from sales of residential mortgage loans totaled $166,000 in the first quarter 2017, which was $164,000 lower than the fourth quarter 2016 total, consistent with the bank’s historical experience of a lower volume of mortgage loan sales in the winter months. Service charges on deposit accounts totaled $1,084,000 in the first quarter 2017, down $88,000 from the fourth quarter amount, consistent with the bank’s typical seasonal trends and also reflecting an ongoing pattern of fewer consumer overdrafts throughout the market area. Other operating income totaled $458,000 in the first quarter 2017, up $113,000 from the fourth quarter 2016 amount.

• The income tax provision was $984,000 in the first quarter 2017, down from $1,500,000 in the fourth quarter 2016, primarily as a result of lower pre-tax income.

Net income for the first quarter 2017 was $139,000 (3.9 percent) lower than the first quarter 2016 amount.

• Net interest income increased $126,000 (1.3 percent), in the first quarter 2017 as compared to the first quarter 2016. The net interest margin was 3.78 percent for the first quarter 2017 as compared to 3.81 percent for the first quarter 2016. Average total loans outstanding were higher by $57.7 million (8.2 percent) in the first quarter 2017 as compared to the first quarter 2016, while average total available-for-sale securities were lower by $22.4 million.