Citizens & Northern(US:CZNC)2024-05-07 19:05Financial Performance - Net income for Q1 2024 was $5,306,000, or $0.35 per diluted share, down from $6,253,000, or $0.40 per diluted share in Q1 2023, representing a decrease of 15.1%[114] - Noninterest income rose by $1,059,000 to $6,675,000 in Q1 2024, driven by increases in cash surrender value of life insurance and other noninterest income[119] - Noninterest expense decreased by $783,000 to $18,304,000 in Q1 2024, with significant reductions in other noninterest expenses and professional fees[119] - The income tax provision for Q1 2024 was $1,152,000, or 17.8% of pre-tax income, down from $1,409,000, or 18.4% of pre-tax income in Q1 2023[119] Interest Income and Expenses - Net interest income decreased by $1,740,000 to $19,041,000 in Q1 2024, with a net interest margin of 3.29%, down from 3.71% in Q1 2023[116] - Interest income totaled $30,531,000 in 2024, an increase of $4,123,000, or 15.6% from 2023[132] - Interest expense increased by $5,937,000 to $11,295,000 in 2024 from $5,358,000 in 2023[136] - The average rate on interest-bearing liabilities increased by 1.24%, while the average yield on earning assets increased by 0.56% in Q1 2024[116] Credit Losses and Allowances - Provision for credit losses increased to $954,000 in Q1 2024, compared to a credit of $352,000 in Q1 2023, reflecting a rise in qualitative factors and specific allowances on commercial loans[116] - The allowance for credit losses (ACL) as a percentage of gross loans receivable was 1.07% at March 31, 2024, compared to 1.05% at March 31, 2023[117] - The total allowance for credit losses at the end of Q1 2024 was $20,023,000, up from $19,208,000 at the end of 2023[180] - Net charge-offs for the first quarter of 2024 were $145,000, representing 0.01% of average loans, compared to $61,000 and 0.00% in the same period of 2023[179] Loan Portfolio - Average outstanding loans receivable increased by $133,383,000 (7.7%) to $1,859,246,000 in 2024 from $1,725,863,000 in 2023[133] - Commercial loans represented 75% of the loan portfolio as of March 31, 2024, while residential loans accounted for 22%[160] - The Corporation's total loans increased to $1,872,449,000 as of March 31, 2024, compared to $1,848,139,000 at December 31, 2023, reflecting a growth of approximately 1.3%[168] - Total nonperforming loans increased to $19,296,000 as of March 31, 2024, compared to $18,367,000 at December 31, 2023, with nonperforming loans as a percentage of total loans at 1.03%[183] Deposits and Funding - Average total deposits amounted to $2,001,278,000 for the first quarter of 2024, up $70,152,000 (3.6%) from the first quarter of 2023[137] - Total deposits decreased by $18,903,000 (0.9%) to $1,995,903,000 at March 31, 2024, with adjusted total deposits down by $23,925,000 (1.2%) excluding brokered deposits[190] - Estimated uninsured deposits totaled $568,085,000, or 28.2% of total deposits, down from $592,206,000 or 29.2% at December 31, 2023[191] - The Corporation's highly liquid available funding sources totaled $1.1 billion at March 31, 2024, which is 187.7% of uninsured deposits[192] Capital Adequacy - The Corporation's capital ratios as of March 31, 2024, exceeded the Board policy threshold levels, indicating compliance with capital adequacy requirements[196] - As of March 31, 2024, the consolidated total capital to risk-weighted assets ratio is 15.54%, exceeding the minimum requirement of 11%[197] - C&N Bank's Tier 1 capital to risk-weighted assets ratio is 13.67%, above the minimum requirement of 9%[197] - The Corporation's common equity tier 1 capital to risk-weighted assets ratio stands at 13.13%, surpassing the minimum requirement of 7.5%[197] Stock Repurchase and Dividends - The Corporation announced a treasury stock repurchase program allowing the repurchase of up to 750,000 shares, approximately 5% of outstanding shares[197] - Future dividend payments and stock repurchases are contingent upon maintaining a strong financial condition and regulatory capital requirements[198] - C&N Bank's capital conservation buffer is 6.77% as of March 31, 2024, well above the 2.5% threshold that would trigger payout limitations[200] Interest Rate Risk Management - The Corporation's interest rate risk management includes simulations to assess potential impacts on net interest income and economic value of equity[205] - The modeling results indicate that net interest income and economic value of equity are projected to decrease under both rising and falling interest rate scenarios[208] - The Corporation's available-for-sale debt securities are carried at fair value, with significant unrealized losses impacting stockholders' equity[209] - As of March 31, 2024, net interest income (NII) is projected to decrease by 18.0% to $68,158,000 with a +400 basis point change in interest rates[211]