EX-99.2 3 cznc-20240718xex99d2.htm EX-99.2

EXHIBIT 99.2 – Supplemental, Unaudited Financial Information

Graphic

CONDENSED, CONSOLIDATED EARNINGS INFORMATION

(Dollars In Thousands, Except Per Share Data)

(Unaudited)

    

    

    

    

    

    

 

2nd

2nd

 

QUARTER

QUARTER

 

2024

2023

$ Incr. (Decr.)

% Incr. (Decr.)

 

Interest and Dividend Income

$

31,326

$

28,011

$

3,315

 

11.83

%

Interest Expense

 

11,881

 

7,649

 

4,232

 

55.33

%

Net Interest Income

 

19,445

 

20,362

 

(917)

 

(4.50)

%

Provision for Credit Losses

 

565

 

812

 

(247)

 

(30.42)

%

Net Interest Income After Provision for Credit Losses

 

18,880

 

19,550

 

(670)

 

(3.43)

%

Noninterest Income

 

7,854

 

6,635

 

1,219

 

18.37

%

Net Realized Losses on Available-for-sale Debt Securities

 

0

 

(1)

 

1

 

(100.00)

%

Noninterest Expense

 

19,255

 

18,722

 

533

 

2.85

%

Income Before Income Tax Provision

 

7,479

 

7,462

 

17

 

0.23

%

Income Tax Provision

 

1,366

 

1,419

 

(53)

 

(3.74)

%

Net Income

$

6,113

$

6,043

$

70

 

1.16

%

Net Income Attributable to Common Shares (1)

$

6,066

$

5,996

$

70

 

1.17

%

PER COMMON SHARE DATA:

 

  

 

  

 

  

 

  

Net Income - Basic

$

0.40

$

0.39

$

0.01

 

2.56

%

Net Income - Diluted

$

0.40

$

0.39

$

0.01

 

2.56

%

Dividends Per Share

$

0.28

$

0.28

$

0.00

 

0.00

%

Number of Shares Used in Computation - Basic

 

15,264,533

 

15,231,505

 

  

 

  

Number of Shares Used in Computation - Diluted

 

15,264,533

 

15,231,505

 

  

 

  

SIX MONTHS ENDED

 

JUNE 30,

 

 

    

2024

2023

    

$ Incr. (Decr.)

    

% Incr. (Decr.)

 

Interest and Dividend Income

$

61,662

$

54,150

$

7,512

 

13.87

%

Interest Expense

 

23,176

 

13,007

 

10,169

 

78.18

%

Net Interest Income

 

38,486

 

41,143

 

(2,657)

 

(6.46)

%

Provision for Credit Losses

 

1,519

 

460

 

1,059

 

230.22

%

Net Interest Income After Provision for Credit Losses

 

36,967

 

40,683

 

(3,716)

 

(9.13)

%

Noninterest Income

 

14,529

 

12,244

 

2,285

 

18.66

%

Net Realized Gains on Available-for-sale Debt Securities

 

0

 

6

 

(6)

 

(100.00)

%

Noninterest Expense

 

37,559

 

37,809

 

(250)

 

(0.66)

%

Income Before Income Tax Provision

 

13,937

 

15,124

 

(1,187)

 

(7.85)

%

Income Tax Provision

 

2,518

 

2,828

 

(310)

 

(10.96)

%

Net Income

$

11,419

$

12,296

$

(877)

 

(7.13)

%

Net Income Attributable to Common Shares (1)

$

11,333

$

12,197

$

(864)

 

(7.08)

%

PER COMMON SHARE DATA:

 

  

 

  

 

  

 

  

Net Income - Basic

$

0.74

$

0.80

$

(0.06)

 

(7.50)

%

Net Income - Diluted

$

0.74

$

0.80

$

(0.06)

 

(7.50)

%

Dividends Per Share

$

0.56

$

0.56

$

0.00

 

0.00

%

Number of Shares Used in Computation - Basic

 

15,247,557

 

15,320,101

 

  

 

  

Number of Shares Used in Computation - Diluted

 

15,247,557

 

15,320,366

 

  

 

  

(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.

1


CONDENSED, CONSOLIDATED BALANCE SHEET DATA

(Dollars In Thousands)

(Unaudited)

June 30,

June 30,

 

    

2024

    

2023

    

$ Incr. (Decr.)

    

% Incr. (Decr.)

 

ASSETS

Cash & Due from Banks

$

100,412

$

51,762

$

48,650

 

93.99

%

Available-for-sale Debt Securities

 

401,145

 

445,695

 

(44,550)

 

(10.00)

%

Loans, Net

 

1,872,825

 

1,795,454

 

77,371

 

4.31

%

Bank-Owned Life Insurance

50,301

31,504

18,797

59.67

%

Bank Premises and Equipment, Net

21,966

20,970

996

4.75

%

Deferred Tax Asset, Net

18,375

20,687

(2,312)

(11.18)

%

Intangible Assets

 

54,779

 

55,178

 

(399)

 

(0.72)

%

Other Assets

 

73,319

 

49,530

 

23,789

 

48.03

%

TOTAL ASSETS

$

2,593,122

$

2,470,780

$

122,342

 

4.95

%

LIABILITIES

 

  

 

  

 

  

 

  

Deposits

$

2,059,309

$

2,010,118

$

49,191

 

2.45

%

Borrowed Funds - Federal Home Loan Bank and Repurchase Agreements

 

202,523

 

146,694

 

55,829

 

38.06

%

Senior Notes, Net

14,865

14,798

67

 

0.45

%

Subordinated Debt, Net

 

24,773

 

24,661

 

112

 

0.45

%

Other Liabilities

 

28,431

 

26,392

 

2,039

 

7.73

%

TOTAL LIABILITIES

 

2,329,901

 

2,222,663

 

107,238

 

4.82

%

STOCKHOLDERS' EQUITY

 

  

 

  

 

  

 

  

Common Stockholders' Equity, Excluding Accumulated

 

  

 

  

 

  

 

  

Other Comprehensive Loss

 

304,582

 

296,190

 

8,392

 

2.83

%

Accumulated Other Comprehensive Loss:

 

 

 

  

 

  

Net Unrealized Losses on Available-for-sale Debt Securities

 

(41,710)

 

(48,536)

 

6,826

 

(14.06)

%

Defined Benefit Plans

 

349

 

463

 

(114)

 

(24.62)

%

TOTAL STOCKHOLDERS' EQUITY

 

263,221

 

248,117

 

15,104

 

6.09

%

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY

$

2,593,122

$

2,470,780

$

122,342

 

4.95

%

2


CONDENSED, CONSOLIDATED FINANCIAL HIGHLIGHTS

(Dollars In Thousands, Except Per Share Data)

(Unaudited)

    

FOR THE

    

 

THREE MONTHS ENDED

%

 

June 30, 

INCREASE

 

    

2024

    

2023

    

(DECREASE)

 

EARNINGS PERFORMANCE

 

  

 

  

 

  

Net Income

$

6,113

$

6,043

 

1.16

%

Return on Average Assets (Annualized)

 

0.96

%  

 

0.98

%  

(2.04)

%

Return on Average Equity (Annualized)

 

9.46

%  

 

9.60

%  

(1.46)

%

PRE-TAX, PRE-PROVISION NET REVENUE ("PPNR") - NON-GAAP (a)

PPNR

$

8,246

$

8,514

(3.15)

%

PPNR (Annualized) as a % of Average Assets

1.29

%  

1.38

%  

(6.52)

%

PPNR (Annualized) as a % of Average Equity

12.76

%  

13.53

%  

(5.69)

%

    

AS OF OR FOR THE

    

 

SIX MONTHS ENDED

%

 

June 30, 

INCREASE

 

    

2024

    

2023

    

(DECREASE)

 

EARNINGS PERFORMANCE - U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP")

 

  

 

  

 

  

Net Income

$

11,419

$

12,296

 

(7.13)

%

Return on Average Assets (Annualized)

 

0.90

%  

 

1.01

%  

(10.89)

%

Return on Average Equity (Annualized)

 

8.79

%  

 

9.75

%  

(9.85)

%

PPNR - NON-GAAP (a)

PPNR

$

15,853

$

16,086

(1.45)

%

PPNR (Annualized) as a % of Average Assets

1.25

%  

1.32

%  

(5.30)

%

PPNR (Annualized) as a % of Average Equity

12.20

%  

12.76

%  

(4.39)

%

BALANCE SHEET HIGHLIGHTS

 

 

  

 

  

Total Assets

$

2,593,122

$

2,470,780

 

4.95

%

Available-for-Sale Debt Securities

 

401,145

 

445,695

 

(10.00)

%

Loans, Net

 

1,872,825

 

1,795,454

 

4.31

%

Allowance for Credit Losses:

 

Allowance for Credit Losses on Loans

20,382

19,056

 

6.96

%

Allowance for Credit Losses on Off-Balance Sheet Exposures

682

 

1,154

 

(40.90)

%

Deposits

 

2,059,309

 

2,010,118

 

2.45

%

OFF-BALANCE SHEET

 

 

 

  

Outstanding Balance of Mortgage Loans Sold with Servicing Retained

$

321,136

$

318,267

 

0.90

%

Trust Assets Under Management

 

1,284,674

 

1,154,728

 

11.25

%

STOCKHOLDERS' VALUE (PER COMMON SHARE)

 

  

 

  

 

  

Net Income - Basic

$

0.74

$

0.80

 

(7.50)

%

Net Income - Diluted

$

0.74

$

0.80

 

(7.50)

%

Dividends

$

0.56

$

0.56

 

0.00

%

Common Book Value

$

17.12

$

16.25

 

5.35

%

Tangible Common Book Value (b)

$

13.56

$

12.64

 

7.28

%

Market Value (Last Trade)

$

17.89

$

19.30

 

(7.31)

%

Market Value / Common Book Value

 

104.50

%  

 

118.77

%  

(12.01)

%

Market Value / Tangible Common Book Value NON-GAAP (b)

 

131.93

%  

 

152.69

%  

(13.60)

%

Price Earnings Multiple

 

12.09

 

12.06

 

0.25

%

Dividend Yield (Annualized)

 

6.26

%  

 

5.80

%  

7.93

%

Common Shares Outstanding, End of Period

 

15,375,982

 

15,268,096

 

0.71

%

3


CONDENSED, CONSOLIDATED FINANCIAL HIGHLIGHTS (Continued)

(Dollars In Thousands, Except Per Share Data)

(Unaudited)

AS OF OR FOR THE

 

SIX MONTHS ENDED

%

 

June 30, 

INCREASE

 

    

2024

    

2023

    

(DECREASE)

 

SAFETY AND SOUNDNESS

Tangible Common Equity / Tangible Assets (b)

 

8.21

%  

7.99

%  

2.75

%

Nonperforming Assets / Total Assets

 

0.76

%  

0.58

%  

31.03

%

Allowance for Credit Losses / Total Loans

 

1.08

%  

1.05

%  

2.86

%

Total Risk Based Capital Ratio (c)

 

15.49

%  

15.86

%  

(2.33)

%

Tier 1 Risk Based Capital Ratio (c)

 

13.09

%  

13.37

%  

(2.09)

%

Common Equity Tier 1 Risk Based Capital Ratio (c)

 

13.09

%  

13.37

%  

(2.09)

%

Leverage Ratio (c)

 

9.85

%  

9.81

%  

0.41

%

AVERAGE BALANCES

Average Assets

$

2,533,204

$

2,443,693

 

3.66

%

Average Equity

$

259,783

$

252,215

 

3.00

%

EFFICIENCY RATIO NON-GAAP (d)

Net Interest Income on a Fully Taxable-Equivalent Basis (d)

$

38,883

$

41,651

 

(6.65)

%

Noninterest Income, Excluding Net Realized Gains on Available-for-sale Debt Securities

 

14,529

 

12,244

 

18.66

%

Total (1)

$

53,412

$

53,895

 

(0.90)

%

Noninterest Expense (2)

$

37,559

$

37,809

 

(0.66)

%

Efficiency Ratio = (2)/(1)

 

70.32

%  

 

70.15

%  

0.24

%

(a)PPNR includes net interest income plus noninterest income minus total noninterest expense but excludes provision (credit) for credit losses, realized gains or losses on securities, the income tax provision and nonrecurring items included in earnings. Management believes disclosure of PPNR provides useful information for evaluating C&N’s financial performance without the impact of unusual items or events that may obscure trends in C&N’s underlying performance. This non-GAAP data should be considered in addition to results prepared in accordance with GAAP, and is not a substitute for, or superior to, GAAP results. A reconciliation of this non-GAAP measure to the comparable GAAP measure is provided in Exhibit 99.2 under the table “PPNR- NON- GAAP RECONCILIATION.”

(b)Tangible common book value per share, tangible common equity as a percentage of tangible assets and market value as a percentage of tangible common book value are non-GAAP ratios. Management believes this non-GAAP information is helpful in evaluating the strength of the C&N's capital and in providing an alternative, conservative valuation of C&N's net worth. The ratios shown above are based on the following calculations of tangible assets and tangible common equity:

Total Assets

    

$

2,593,122

    

$

2,470,780

Less: Intangible Assets, Primarily Goodwill

 

(54,779)

 

(55,178)

Tangible Assets

$

2,538,343

$

2,415,602

Total Stockholders' Equity

$

263,221

$

248,117

Less: Intangible Assets, Primarily Goodwill

 

(54,779)

 

(55,178)

Tangible Common Equity (3)

$

208,442

$

192,939

Common Shares Outstanding, End of Period (4)

 

15,375,982

 

15,286,096

Tangible Common Book Value per Share = (3)/(4)

$

13.56

$

12.64

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

(d)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 C&N's marginal federal income tax rate of 21%. A reconciliation of net interest income under U.S. GAAP as compared to net interest income as adjusted to a fully taxable-equivalent basis is provided in Exhibit 99.2 under the table “COMPARISON OF INTEREST INCOME AND EXPENSE.”

4


QUARTERLY CONDENSED, CONSOLIDATED

INCOME STATEMENT INFORMATION

(Dollars In Thousands, Except Per Share Data)

(Unaudited)

    

For the Three Months Ended:

June 30, 

    

March 31, 

    

December 31, 

    

September 30, 

    

June 30, 

2024

2024

2023

2023

2023

Interest income

$

31,326

$

30,336

$

30,236

$

29,118

$

28,011

Interest expense

 

11,881

 

11,295

 

10,642

 

9,455

 

7,649

Net interest income

 

19,445

 

19,041

 

19,594

 

19,663

 

20,362

Provision (credit) for credit losses

 

565

 

954

 

951

 

(1,225)

 

812

Net interest income after provision (credit) for credit losses

 

18,880

 

18,087

 

18,643

 

20,888

 

19,550

Noninterest income

 

7,854

 

6,675

 

8,720

 

6,489

 

6,635

Net realized losses on securities

 

0

 

0

 

(3,042)

 

0

 

(1)

Noninterest expense

 

19,255

 

18,304

 

18,399

 

17,940

 

18,722

Income before income tax provision

 

7,479

 

6,458

 

5,922

 

9,437

 

7,462

Income tax provision

 

1,366

 

1,152

 

1,661

 

1,846

 

1,419

Net income

$

6,113

$

5,306

$

4,261

$

7,591

$

6,043

Net income attributable to common shares

$

6,066

$

5,267

$

4,231

$

7,534

$

5,996

Basic earnings per common share

$

0.40

$

0.35

$

0.28

$

0.50

$

0.39

Diluted earnings per common share

$

0.40

$

0.35

$

0.28

$

0.50

$

0.39

5


QUARTERLY CONDENSED, CONSOLIDATED

BALANCE SHEET INFORMATION

(In Thousands) (Unaudited)

    

As of:

    

    

    

    

June 30,

    

March 31,

    

Dec. 31,

    

Sept. 30,

    

June 30,

2024

2024

2023

2023

2023

ASSETS

 

  

 

  

 

  

 

  

 

  

Cash & Due from Banks

$

100,412

$

46,448

$

56,878

$

52,658

$

51,762

Available-for-Sale Debt Securities

 

401,145

 

405,094

 

415,755

 

429,138

 

445,695

Loans, Net

 

1,872,825

 

1,852,426

 

1,828,931

 

1,812,585

 

1,795,454

Bank-Owned Life Insurance

50,301

49,857

63,674

31,557

31,504

Bank Premises and Equipment, Net

21,966

21,852

21,632

21,267

20,970

Deferred Tax Asset, Net

18,375

17,703

17,441

23,731

20,687

Intangible Assets

 

54,779

 

54,877

 

54,974

 

55,076

 

55,178

Other Assets

 

73,319

 

73,280

 

56,299

 

57,937

 

49,530

TOTAL ASSETS

$

2,593,122

$

2,521,537

$

2,515,584

$

2,483,949

$

2,470,780

LIABILITIES

 

  

 

  

 

  

 

  

 

  

Deposits (1)

$

2,059,309

$

1,995,903

$

2,014,806

$

2,024,997

$

2,010,118

Borrowed Funds - Federal Home Loan Bank and Repurchase Agreements

 

202,523

 

197,655

 

172,211

 

148,529

 

146,694

Senior Notes, Net

14,865

14,848

14,831

14,814

14,798

Subordinated Debt, Net

 

24,773

 

24,745

 

24,717

 

24,689

 

24,661

Other Liabilities

 

28,431

 

26,730

 

26,638

 

30,715

 

26,392

TOTAL LIABILITIES

 

2,329,901

 

2,259,881

 

2,253,203

 

2,243,744

 

2,222,663

STOCKHOLDERS' EQUITY

 

  

 

  

 

  

 

  

 

  

Common Stockholders' Equity, Excluding Accumulated Other Comprehensive Loss

 

304,582

 

302,362

 

300,818

 

300,031

 

296,190

Accumulated Other Comprehensive Loss:

 

 

 

 

 

Net Unrealized Losses on Available-for-sale Debt Securities

 

(41,710)

 

(41,071)

 

(38,878)

 

(60,278)

 

(48,536)

Defined Benefit Plans

 

349

 

365

 

441

 

452

 

463

TOTAL STOCKHOLDERS' EQUITY

 

263,221

 

261,656

 

262,381

 

240,205

 

248,117

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY

$

2,593,122

$

2,521,537

$

2,515,584

$

2,483,949

$

2,470,780

(1) Brokered Deposits (Included in Total Deposits)

$

59,501

$

69,391

$

64,369

$

62,512

$

70,653

6


AVAILABLE-FOR-SALE DEBT SECURITIES

(In Thousands)

    

June 30, 2024

    

March 31, 2024

December 31, 2023

June 30, 2023

Amortized

Fair

Amortized

Fair

Amortized

Fair

Amortized

Fair

    

Cost

    

Value

    

Cost

    

Value

    

Cost

    

Value

    

Cost

    

Value

Obligations of the U.S. Treasury

$

10,323

$

9,257

$

11,324

$

10,231

$

12,325

$

11,290

$

33,931

$

30,743

Obligations of U.S. Government agencies

10,582

9,350

10,637

9,376

11,119

9,946

22,899

20,552

Bank holding company debt securities

28,955

23,657

28,953

23,469

28,952

23,500

28,948

23,325

Obligations of states and political subdivisions:

 

 

 

 

 

  

 

  

Tax-exempt

 

113,659

102,020

 

113,181

102,826

 

113,464

 

104,199

 

125,247

 

113,170

Taxable

 

56,294

47,481

 

57,960

49,255

 

58,720

 

50,111

 

65,715

 

55,702

Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:

 

 

 

 

 

  

 

  

Residential pass-through securities

 

104,708

93,874

 

102,048

91,116

 

105,549

 

95,405

 

105,027

 

92,795

Residential collateralized mortgage obligations

 

46,623

42,565

 

48,477

44,501

 

50,212

 

46,462

 

40,444

 

35,897

Commercial mortgage-backed securities

 

74,510

64,718

 

76,249

66,121

 

76,412

 

66,682

 

76,780

 

65,517

Private label commercial mortgage-backed securities

8,290

8,223

8,252

8,199

8,215

8,160

8,141

7,994

Total Available-for-Sale Debt Securities

$

453,944

$

401,145

$

457,081

$

405,094

$

464,968

$

415,755

$

507,132

$

445,695

SUMMARY OF LOANS BY TYPE

(Excludes Loans Held for Sale)

(In Thousands)

    

June 30, 

    

March 31, 

    

December 31, 

    

June 30, 

2024

2024

2023

2023

Commercial real estate - non-owner occupied

 

  

 

  

 

  

 

  

Non-owner occupied

$

489,514

$

507,223

$

499,104

$

505,519

Multi-family (5 or more) residential

67,154

64,866

64,076

61,004

1-4 Family - commercial purpose

167,296

167,740

174,162

167,260

Total commercial real estate - non-owner occupied

723,964

739,829

737,342

733,783

Commercial real estate - owner occupied

267,169

250,145

237,246

227,801

All other commercial loans:

Commercial and industrial

77,339

80,136

78,832

80,270

Commercial lines of credit

130,924

121,791

117,236

122,607

Political subdivisions

89,460

84,652

79,031

84,456

Commercial construction and land

114,162

106,255

104,123

80,391

Other commercial loans

19,221

19,971

20,471

24,960

Total all other commercial loans

431,106

412,805

399,693

392,684

Residential mortgage loans:

1-4 Family - residential

383,494

387,542

389,262

378,698

1-4 Family residential construction

26,330

22,121

24,452

25,535

Total residential mortgage

409,824

409,663

413,714

404,233

Consumer loans:

Consumer lines of credit (including HELCs)

42,325

41,204

41,503

36,608

All other consumer

18,819

18,803

18,641

19,401

Total consumer

61,144

60,007

60,144

56,009

Total

1,893,207

1,872,449

1,848,139

1,814,510

Less: allowance for credit losses on loans

(20,382)

(20,023)

(19,208)

(19,056)

Loans, net

$

1,872,825

$

1,852,426

$

1,828,931

$

1,795,454

7


NON-OWNER OCCUPIED COMMERCIAL REAL ESTATE

(In Thousands)

Loan Type

June 30, 

% of Non-owner

% of

2024

Occupied CRE

Total Loans

Industrial

$

98,840

20.2

%

5.2

%

Office

96,642

19.7

%

5.1

%

Retail

93,552

19.1

%

4.9

%

Hotels

72,915

14.9

%

3.9

%

Mixed Use

58,891

12.0

%

3.1

%

Other

68,674

14.0

%

3.6

%

Total Non-owner Occupied CRE Loans

$

489,514

Total Gross Loans

$

1,893,207

PAST DUE LOANS AND NONPERFORMING ASSETS

(Dollars In Thousands)

    

June 30, 

    

    

March 31, 

    

December 31, 

    

June 30, 

 

2024

2024

2023

2023

 

Loans individually evaluated with a valuation allowance

$

6,613

$

10,062

$

7,786

$

5,785

Loans individually evaluated without a valuation allowance

8,567

4,743

3,478

3,314

Total individually evaluated loans

$

15,180

$

14,805

$

11,264

$

9,099

Total loans past due 30-89 days and still accruing

$

3,088

$

6,560

$

9,275

$

4,709

Nonperforming assets:

 

  

 

  

 

  

 

  

Total nonaccrual loans

$

19,579

$

19,069

$

15,177

$

12,827

Total loans past due 90 days or more and still accruing

 

20

 

227

 

3,190

 

1,164

Total nonperforming loans

 

19,599

 

19,296

 

18,367

 

13,991

Foreclosed assets held for sale (real estate)

 

181

 

456

 

478

 

459

Total nonperforming assets

$

19,780

$

19,752

$

18,845

$

14,450

Total nonperforming loans as a % of total loans

 

1.04

%  

 

1.03

%  

 

0.99

%  

 

0.77

%

Total nonperforming assets as a % of assets

 

0.76

%  

 

0.78

%  

 

0.75

%  

 

0.58

%

Allowance for credit losses as a % of total loans

 

1.08

%  

 

1.07

%  

 

1.04

%  

 

1.05

%

ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES ON LOANS

(In Thousands)

    

3 Months

    

3 Months

    

3 Months

    

6 Months

    

6 Months

Ended

Ended

Ended

Ended

Ended

June 30, 

March 31, 

June 30, 

June 30, 

June 30, 

2024

2024

2023

2024

2023

Balance, beginning of period

$

20,023

$

19,208

$

18,346

$

19,208

$

16,615

Adoption of ASU 2016-13 (CECL)

0

0

0

0

2,104

Charge-offs

 

(236)

 

(180)

 

(134)

 

(416)

 

(201)

Recoveries

 

29

 

35

 

8

 

64

 

14

Net charge-offs

 

(207)

 

(145)

 

(126)

 

(352)

 

(187)

Provision for credit losses on loans

 

566

 

960

 

836

 

1,526

 

524

Balance, end of period

$

20,382

$

20,023

$

19,056

$

20,382

$

19,056

8


ANALYSIS OF THE PROVISION (CREDIT) FOR CREDIT LOSSES

(In Thousands)

3 Months

3 Months

3 Months

6 Months

6 Months

Ended

Ended

Ended

Ended

Ended

June 30, 

March 31, 

June 30, 

June 30, 

June 30, 

2024

2024

2023

2024

2023

Provision (credit) for credit losses:

Loans receivable

$

566

$

960

$

836

$

1,526

$

524

Off-balance sheet exposures

 

(1)

 

(6)

 

(24)

 

(7)

 

(64)

Total provision for credit losses

$

565

$

954

$

812

$

1,519

$

460

PPNR NON- GAAP RECONCILIATION

(In Thousands)

Three Months Ended

Six Months Ended

June 30, 

March 31, 

June 30, 

June 30, 

June 30, 

Calculation of PPNR:

2024

2024

2023

2024

2023

Net Income (GAAP)

$

6,113

$

5,306

$

6,043

$

11,419

$

12,296

Add: Provision for income taxes

1,366

1,152

1,419

2,518

2,828

Add: Provision for credit losses

565

954

812

1,519

460

Add: Realized losses (gains) on available-for-sale securities debt securities

0

0

1

0

(6)

Add: Adjustments to reflect net interest income on a fully taxable-equivalent basis

202

195

239

397

508

PPNR (non-GAAP)

$

8,246

$

7,607

$

8,514

$

15,853

$

16,086

9


COMPARISON OF INTEREST INCOME AND EXPENSE

(In Thousands)

    

Three Months Ended

Six Months Ended

June 30, 

March 31,

June 30, 

June 30, 

June 30, 

    

2024

    

2024

    

2023

2024

    

2023

INTEREST INCOME

Interest-bearing due from banks

$

516

$

383

$

309

$

899

$

587

Available-for-sale debt securities:

 

 

 

 

 

Taxable

 

2,137

 

2,136

 

2,152

 

4,273

 

4,363

Tax-exempt

 

626

 

623

 

713

 

1,249

 

1,480

Total available-for-sale debt securities

 

2,763

 

2,759

 

2,865

 

5,522

 

5,843

Loans receivable:

 

 

Taxable

 

27,490

 

26,703

 

24,362

 

54,193

 

46,793

Tax-exempt

730

670

700

1,400

1,413

Total loans receivable

28,220

27,373

25,062

55,593

48,206

Other earning assets

29

16

14

45

22

Total Interest Income

31,528

30,531

28,250

62,059

54,658

INTEREST EXPENSE

Interest-bearing deposits:

Interest checking

2,836

2,806

1,512

5,642

2,499

Money market

1,917

2,180

1,112

4,097

1,985

Savings

52

55

63

107

126

Time deposits

4,509

3,850

2,412

8,359

3,719

Total interest-bearing deposits

9,314

8,891

5,099

18,205

8,329

Borrowed funds:

Short-term

360

597

1,144

957

2,241

Long-term - FHLB advances

1,855

1,456

1,056

3,311

1,737

Senior notes, net

120

120

119

240

239

Subordinated debt, net

232

231

231

463

461

Total borrowed funds

2,567

2,404

2,550

4,971

4,678

Total Interest Expense

11,881

11,295

7,649

23,176

13,007

Net Interest Income

$

19,647

$

19,236

$

20,601

$

38,883

$

41,651

Note: Interest income from tax-exempt securities and loans has been adjusted to a fully taxable-equivalent basis, using C&N’s marginal federal income tax rate of 21%. The following table is a reconciliation of net interest income under U.S. GAAP as compared to net interest income as adjusted to a fully taxable-equivalent basis.

(In Thousands)

Three Months Ended

Six Months Ended

June 30, 

March 31,

June 30, 

June 30, 

June 30, 

2024

    

2024

    

2023

2024

    

2023

Net Interest Income Under U.S. GAAP

$

19,445

$

19,041

$

20,362

$

38,486

$

41,143

Add: fully taxable-equivalent interest income adjustment from tax-exempt securities

67

69

103

136

230

Add: fully taxable-equivalent interest income adjustment from tax-exempt loans

135

126

136

261

278

Net Interest Income as adjusted to a fully taxable-equivalent basis

$

19,647

$

19,236

$

20,601

$

38,883

$

41,651

10


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

 

6/30/2024

Return/

3/31/2024

Return/

6/30/2023

Return/

 

Average

Cost of

Average

Cost of

Average

Cost of

 

Balance

Funds %

Balance

Funds %

Balance

Funds %

EARNING ASSETS

 

  

 

  

 

  

 

  

 

  

 

  

Interest-bearing due from banks

$

43,139

4.81

%  

$

32,725

4.71

%

$

29,861

 

4.15

%

Available-for-sale debt securities, at amortized cost:

 

 

 

 

Taxable

 

343,971

2.50

%  

 

347,885

2.47

%

 

395,725

 

2.18

%

Tax-exempt

 

112,921

2.23

%  

 

113,363

2.21

%

 

126,839

 

2.25

%

Total available-for-sale debt securities

 

456,892

2.43

%  

 

461,248

2.41

%

 

522,564

 

2.20

%

Loans receivable:

 

  

 

  

 

  

 

Taxable

 

1,792,556

6.17

%  

 

1,774,064

6.05

%

 

1,697,740

5.76

%

Tax-exempt

 

90,830

3.23

%  

 

85,182

3.16

%

 

90,111

3.12

%

Total loans receivable

 

1,883,386

6.03

%  

 

1,859,246

5.92

%

 

1,787,851

 

5.62

%

Other earning assets

 

2,176

5.36

%  

 

1,384

4.65

%

 

1,325

 

4.24

%

Total Earning Assets

 

2,385,593

5.32

%  

 

2,354,603

5.22

%

 

2,341,601

 

4.84

%

Cash

 

22,396

 

20,448

 

23,084

 

  

Unrealized loss on securities

 

(56,765)

 

(50,849)

 

(56,564)

 

  

Allowance for credit losses

 

(20,290)

 

(19,484)

 

(18,795)

 

  

Bank-owned life insurance

50,018

54,466

31,410

Bank premises and equipment

 

21,994

 

21,788

 

21,140

 

  

Intangible assets

 

54,827

 

54,925

 

55,228

 

  

Other assets

 

89,859

 

82,879

 

69,213

 

  

Total Assets

$

2,547,632

$

2,518,776

$

2,466,317

 

  

INTEREST-BEARING LIABILITIES

 

 

 

  

 

  

Interest-bearing deposits:

 

 

 

  

 

  

Interest checking

$

517,145

2.21

%  

$

514,905

2.19

%

$

463,300

1.31

%

Money market

 

340,038

2.27

%  

 

362,864

2.42

%

 

328,581

1.36

%

Savings

 

207,530

0.10

%  

 

213,278

0.10

%

 

247,434

0.10

%

Time deposits

 

457,885

3.96

%  

 

429,085

3.61

%

 

375,557

2.58

%

Total interest-bearing deposits

 

1,522,598

2.46

%  

 

1,520,132

2.35

%

 

1,414,872

 

1.45

%

Borrowed funds:

 

 

 

  

 

Short-term

 

27,732

5.22

%  

 

44,642

5.38

%

 

87,479

5.25

%

Long-term - FHLB advances

 

175,373

4.25

%  

 

142,753

4.10

%

 

110,982

3.82

%

Senior notes, net

 

14,856

3.25

%  

 

14,840

3.25

%

 

14,789

3.23

%

Subordinated debt, net

 

24,759

3.77

%  

 

24,731

3.76

%

 

24,648

3.76

%

Total borrowed funds

 

242,720

4.25

%  

 

226,966

4.26

%

 

237,898

 

4.30

%

Total Interest-bearing Liabilities

 

1,765,318

2.71

%  

 

1,747,098

2.60

%

 

1,652,770

 

1.86

%

Demand deposits

 

493,922

 

481,146

 

533,533

 

  

Other liabilities

 

29,972

 

29,386

 

28,217

 

  

Total Liabilities

 

2,289,212

 

2,257,630

 

2,214,520

 

  

Stockholders' equity, excluding accumulated other comprehensive loss

 

302,758

 

301,032

 

296,015

 

  

Accumulated other comprehensive loss

 

(44,338)

 

(39,886)

 

(44,218)

 

  

Total Stockholders' Equity

 

258,420

 

261,146

 

251,797

 

  

Total Liabilities and Stockholders' Equity

$

2,547,632

$

2,518,776

$

2,466,317

 

  

Interest Rate Spread

 

2.61

%  

 

2.62

%

 

2.98

%

Net Interest Income/Earning Assets

3.31

%  

3.29

%

3.53

%

Total Deposits (Interest-bearing and Demand)

$

2,016,520

 

  

$

2,001,278

 

  

$

1,948,405

 

  

(1)Annualized rates of return on tax-exempt securities and loans are presented on a fully taxable-equivalent basis, using C&N’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.

11


ANALYSIS OF AVERAGE DAILY BALANCES AND RATES

(Dollars in Thousands)

    

Year

    

    

Year

    

 

Ended

Rate of

Ended

Rate of

 

6/30/2024

Return/

6/30/2023

Return/

 

Average

Cost of

Average

Cost of

 

Balance

Funds %

  

Balance

Funds% 

 

EARNING ASSETS

  

  

  

 

Interest-bearing due from banks

$

37,932

4.77

%  

$

30,744

 

3.85

%

Available-for-sale debt securities, at amortized cost:

 

 

  

 

  

Taxable

 

345,928

2.48

%  

 

402,878

 

2.18

%

Tax-exempt

 

113,142

2.22

%  

 

129,103

 

2.31

%

Total available-for-sale debt securities

 

459,070

 

2.42

%  

 

531,981

 

2.21

%

Loans receivable:

 

  

 

  

 

  

 

  

Taxable

 

1,783,310

 

6.11

%  

 

1,666,052

 

5.66

%

Tax-exempt

 

88,006

 

3.20

%  

 

90,976

 

3.13

%

Total loans receivable

 

1,871,316

 

5.97

%  

 

1,757,028

 

5.53

%

Other earning assets

 

1,780

 

5.08

%  

 

1,263

 

3.51

%

Total Earning Assets

 

2,370,098

 

5.27

%  

 

2,321,016

 

4.75

%

Cash

 

21,422

 

22,682

 

  

Unrealized loss on securities

 

(53,807)

 

(58,300)

 

  

Allowance for credit losses

 

(19,887)

 

(17,929)

 

  

Bank-owned life insurance

52,242

31,339

Bank premises and equipment

 

21,891

 

21,328

 

  

Intangible assets

 

54,876

 

55,279

 

  

Other assets

 

86,369

 

68,278

 

  

Total Assets

$

2,533,204

$

2,443,693

 

  

INTEREST-BEARING LIABILITIES

 

  

 

  

 

  

 

  

Interest-bearing deposits:

 

  

 

  

 

  

 

  

Interest checking

$

516,025

 

2.20

%  

$

460,305

 

1.09

%

Money market

 

351,451

 

2.34

%  

 

346,514

 

1.16

%

Savings

 

210,404

 

0.10

%  

 

252,214

 

0.10

%

Time deposits

 

443,485

 

3.79

%  

 

344,201

 

2.18

%

Total interest-bearing deposits

 

1,521,365

 

2.41

%  

 

1,403,234

 

1.20

%

Borrowed funds:

 

  

 

  

 

  

 

  

Short-term

 

36,187

5.32

%  

 

89,611

 

5.04

%

Long-term - FHLB advances

 

159,063

4.19

%  

 

95,899

 

3.65

%

Senior notes, net

 

14,848

3.25

%  

 

14,781

 

3.26

%

Subordinated debt, net

 

24,745

3.76

%  

 

24,634

 

3.77

%

Total borrowed funds

 

234,843

 

4.26

%  

 

224,925

 

4.19

%

Total Interest-bearing Liabilities

 

1,756,208

 

2.65

%  

 

1,628,159

 

1.61

%

Demand deposits

 

487,534

 

536,579

 

  

Other liabilities

 

29,679

 

26,740

 

  

Total Liabilities

 

2,273,421

 

2,191,478

 

  

Stockholders' equity, excluding accumulated other comprehensive loss

 

301,895

 

297,797

 

  

Accumulated other comprehensive loss

 

(42,112)

 

(45,582)

 

  

Total Stockholders' Equity

 

259,783

 

252,215

 

  

Total Liabilities and Stockholders' Equity

$

2,533,204

$

2,443,693

 

  

Interest Rate Spread

 

2.62

%  

 

  

 

3.14

%

Net Interest Income/Earning Assets

 

3.30

%  

 

  

 

3.62

%

Total Deposits (Interest-bearing and Demand)

$

2,008,899

$

1,939,813

(1)Annualized rates of return on tax-exempt securities and loans are presented on a fully taxable-equivalent basis, using C&N’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.

12


COMPARISON OF NONINTEREST INCOME

(In Thousands)

    

Three Months Ended

Six Months Ended

June 30, 

March 31, 

June 30, 

June 30, 

June 30, 

    

2024

2024

2023

2024

2023

Trust revenue

$

2,014

$

1,897

$

1,804

$

3,911

$

3,581

Brokerage and insurance revenue

 

527

 

539

 

365

 

1,066

795

Service charges on deposit accounts

 

1,472

 

1,318

 

1,388

 

2,790

2,678

Interchange revenue from debit card transactions

 

1,089

 

1,013

 

1,010

 

2,102

2,017

Net gains from sales of loans

 

235

 

191

 

139

 

426

213

Loan servicing fees, net

 

130

 

230

 

190

 

360

312

Increase in cash surrender value of life insurance

 

444

 

470

 

152

 

914

290

Other noninterest income

 

1,943

 

1,017

 

1,587

 

2,960

2,358

Total noninterest income, excluding realized gains
(losses) on securities, net

$

7,854

$

6,675

$

6,635

$

14,529

$

12,244

COMPARISON OF NONINTEREST EXPENSE

(In Thousands)

    

Three Months Ended

Six Months Ended

    

June 30, 

March 31, 

June 30, 

June 30, 

June 30, 

2024

2024

2023

2024

2023

Salaries and employee benefits

$

11,023

$

11,562

$

10,777

$

22,585

$

22,204

Net occupancy and equipment expense

 

1,333

 

1,450

 

1,323

 

2,783

 

2,725

Data processing and telecommunications expenses

 

2,003

 

1,992

 

1,900

 

3,995

 

3,836

Automated teller machine and interchange expense

 

473

 

487

 

395

 

960

 

870

Pennsylvania shares tax

 

434

 

433

 

404

 

867

 

807

Professional fees

 

552

 

518

 

564

 

1,070

 

1,501

Other noninterest expense

 

3,437

 

1,862

 

3,359

 

5,299

 

5,866

Total noninterest expense

$

19,255

$

18,304

$

18,722

$

37,559

$

37,809

13


LIQUIDITY INFORMATION

(In Thousands)

Available Credit Facilities

    

Outstanding

Available

Total Credit

June 30,

March 31,

Dec. 31,

June 30,

March 31,

Dec. 31,

June 30,

March 31,

Dec. 31,

2024

2024

2023

2024

2024

2023

2024

2024

2023

Federal Home Loan Bank of Pittsburgh

$

223,853

$

215,018

$

189,021

$

719,722

$

712,932

$

737,824

$

943,575

$

927,950

$

926,845

Federal Reserve Bank Discount Window

0

0

0

18,884

19,063

19,982

18,884

19,063

19,982

Other correspondent banks

0

0

0

75,000

75,000

75,000

75,000

75,000

75,000

Total credit facilities

$

223,853

$

215,018

$

189,021

$

813,606

$

806,995

$

832,806

$

1,037,459

$

1,022,013

$

1,021,827

Uninsured Deposits Information

June 30, 

March 31, 

December 31, 

2024

2024

2023

Total Deposits - C&N Bank

$

2,074,806

$

2,012,167

$

2,030,909

Estimated Total Uninsured Deposits

$

605,765

$

568,085

$

592,206

Portion of Uninsured Deposits that are

Collateralized

158,268

140,063

151,031

Uninsured and Uncollateralized Deposits

$

447,497

$

428,022

$

441,175

Uninsured and Uncollateralized Deposits as

a % of Total Deposits

21.6

%  

21.3

%  

21.7

%  

Available Funding from Credit Facilities

$

813,606

$

806,995

$

832,806

Fair Value of Available-for-sale Debt

Securities in Excess of Pledging Obligations

238,375

259,489

256,058

Highly Liquid Available Funding

$

1,051,981

$

1,066,484

$

1,088,864

Highly Liquid Available Funding as a % of

Uninsured Deposits

173.7

%  

187.7

%  

183.9

%  

Highly Liquid Available Funding as a % of

Uninsured and Uncollateralized Deposits

235.1

%  

249.2

%  

246.8

%  

14