Welcome and Call to Order Agenda for the Annual Meeting Call to - - PowerPoint PPT Presentation

Welcome and Call to Order

Agenda for the Annual Meeting

• Call to Order
• Introductions
• Close Nominations and Shareholders’

Vote

• Remarks – 2016 Highlights and Outlook
• Report of the Judges
• Special Presentation
• Adjournment and Refreshments

Introductions

• Directors
• Senior management

Mission

We will sustain an unwavering focus on fulfilling clients’ financial needs.

2016 in Review

2016 Highlights

• Client acquisition
• Loan growth
• Building & aligning the team
• Market share expansion
• Affiliate performance
• Record earnings
• Shareholder performance

2016 Financial Highlights

Total Assets ($ in millions)

$558 $630 $660 $697 $725 $350 $400 $450 $500 $550 $600 $650 $700 $750 $800 2012 2013 2014 2015 2016

Gross Loans ($ in millions)

$358 $387 $420 $451 $495 $250 $300 $350 $400 $450 $500 $550 2012 2013 2014 2015 2016

Total Deposits ($ in millions)

$460 $494 $509 $543 $562 $400 $420 $440 $460 $480 $500 $520 $540 $560 $580 $600 2012 2013 2014 2015 2016

Mifflin County

2016 2015 Kish Bank 42.11% 41.69% Juniata Valley Bank 22.85% 22.58% First National Bank

• f PA

13.41% 13.76% Mifflin County SB 12.91% 12.60% Northwest Bank 4.41% 4.77% Citizens Bank 4.31% 4.60%

Market Share of Bank Deposits

5-Year Deposit Compound Annual Growth Rate (CAGR) 2016 Kish Bank 3.55% Mifflin County Market 1.29%

Source: SNL Financial

Huntingdon County

2016 2015 Community State Bank of Orbisonia 32.60% 33.05% First National Bank

• f PA

23.23% 20.65% Kish Bank 17.56% 17.34% Riverview 12.00% 11.50% Northwest Bank 3.90% 3.95% Juniata Valley Bank 3.28% 3.21% Farmers & Merchants Trust 2.68% 2.43% Mifflin County SB 2.50% 2.20%

Market Share of Bank Deposits

Source: SNL Financial

5-Year Deposit Compound Annual Growth Rate (CAGR) 2016 Kish Bank 3.44% Huntingdon County Market 1.30%

Centre County

2016 2015 PNC Bank 22.56% 20.78% First National Bank

• f PA

17.58% 17.57% BB&T 13.33% 14.55% Citizens Bank of PA 9.21% 9.00% M&T Trust Co. 7.83% 8.21% Northwest SB 5.66% 5.57% Penns Woods 4.81% 5.21% Kish Bank 4.65% 4.88%

Market Share of Bank Deposits

Source: SNL Financial

5-Year Deposit Compound Annual Growth Rate (CAGR) 2016 Kish Bank 10.41% Centre County Market 6.39%

Loan Mix

2016 Gross Loans: $494,599,165 2016 vs. 2015 Loan Growth: 9.62%

Comm RE Comm & Ind Agricultural State & Political Consumer and Others Residentail RE

• 20,000

40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000 Thousands

Loans/Deposits

76.24% 77.12% 81.41% 82.09% 86.95% 70.00% 75.00% 80.00% 85.00% 90.00% 95.00% 100.00% 2012 2013 2014 2015 2016

KISB PA Peers¹ ¹ Includes all public banks with assets between $300mm to $1B Source: FFIEC Uniform Bank Performance Report

Income Highlights

• Strong growth in net

interest income; increased by 6.1% or $1.2 million

• Noninterest income

remains above peers

• Harvested timely security

gains, reducing risk, credit, and duration

• Increased staffing and data

processing costs led to higher noninterest expense.

• Net income reached a new

high and grew by 2.74%

• ver 2015
• Consistent performance

ratios

2016 2015 Net Interest Income 20,867,911 $ 19,660,867 $ Provision for loan losses 530,000 235,000 Noninterest Income 7,095,827 6,748,331 Securities Gains 773,237 535,080 Noninterest Expense 22,179,461 21,049,047 Income before income taxes 5,254,277 5,125,151 Income Taxes 637,383 630,910 Net Income 4,616,894 $ 4,494,241 $ Earnings Per Share (Diluted) 3.77 $ 3.69 $ ROA 0.65% 0.66% ROE 8.54% 8.89% Efficiency Ratio 77.18% 76.88%

Net Income ($ in thousands)

$3,630 $4,217 $4,359 $4,494 $4,617 $3,000 $3,500 $4,000 $4,500 $5,000 2012 2013 2014 2015 2016

Net Interest Income and Margin

($ in thousands)

$16,816 $17,537 $18,630 $19,661 $20,868 3.00% 3.20% 3.40% 3.60% 3.80% 4.00% $16,000 $17,000 $18,000 $19,000 $20,000 $21,000 2012 2013 2014 2015 2016

Net Interest Income ($000s) Net Interest Margin

Noninterest Income ($ in thousands)

$6,913 $6,459 $6,492 $6,748 $7,096 $5,000 $5,500 $6,000 $6,500 $7,000 $7,500 2012 2013 2014 2015 2016

Noninterest Expense ($ in thousands)

$19,290 $19,915 $19,692 $21,049 $22,179 $5,000 $10,000 $15,000 $20,000 $25,000 2012 2013 2014 2015 2016

Salaries Occupancy Data Processing All Other

Return on Average Equity

8.61% 9.70% 9.54% 8.89% 8.54% 4.00% 6.00% 8.00% 10.00% 12.00% 2012 2013 2014 2015 2016

Return on Average Assets

0.65% 0.69% 0.67% 0.66% 0.65% 0.40% 0.60% 0.80% 1.00% 2012 2013 2014 2015 2016

Net Charge-Offs/Avg. Loans

0.12% 0.01% 0.05% 0.11% 0.05% 0.00% 0.05% 0.10% 0.15% 0.20% 0.25% 0.30% 0.35% 2012 2013 2014 2015 2016

KISB PA Peers¹ ¹ Includes Bank Operating Companies in PA with $500mm to $1B in Assets Source: SNL Financial

Nonaccrual Loans/Loans

1.98% 1.53% 1.60% 1.27% 1.14% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 2012 2013 2014 2015 2016

KISB PA Peers¹ ¹ Includes Bank Operating Companies in PA with $500mm to $1B in Assets Source: SNL Financial

Loans 30-89 Days Past Due

0.19% 0.07% 0.52% 0.05% 0.12% 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% 0.70% 0.80% 0.90% 1.00% 2012 2013 2014 2015 2016

KISB Peers¹ ¹ Includes all public banks with assets between $300mm to $1B Source: FFIEC Uniform Bank Performance Report

¹ Stock price as of 4/26/2017

Stock Performance (EOY)

$29 $33 $35 $39 $43 $46 $55 $25 $30 $35 $40 $45 $50 $55 $60 2011 2012 2013 2014 2015 2016 Current¹

Dividend Yield on Common Stock

4.95% 4.70% 4.24% 4.00% 3.74% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 2012 2013 2014 2015 2016

KISB PA Peers¹ National Peers¹ ¹ Includes Bank Operating Companies in PA and Nationally with $500mm to $1B in Assets Source: SNL Financial

Market Disruption

• Continued mergers and acquisitions

– BB&T – Community banks

Community Alignment

Building the Team

Additions to the Management Team

• Mark Cvrkel – EVP, Chief Financial Officer
• Richard Sarfert – EVP, Senior Lending Officer
• Cindy Chase – VP, Loan Review Manager
• Alta Corman-Wolf – VP, Residential Lender
• Ginny McAdoo – VP, Lending Services Manager
• Kevin Rimmey – AVP, Commercial Relationship Manager
• Holly Johnson – Branch Manager, State College North

Atherton

• Mary Ann Crowell – Consumer Lender and Commercial

Documentation Specialist

Senior Management Promotions & Alignment

• Gregory Hayes – Sr. EVP, Chief Operating Officer
• James Shilling – EVP, Chief Business Banking Officer
• Jeff Hayes – VP, Financial Advisor
• Kristie McKnight – VP, Commercial Relationship

Manager

• Peter Ort – VP, Branch Manager, Lewistown Electric

Ave.

• Glenn Snyder – VP, Facilities Manager/Security Officer

2016 MVP

Megan Diemert

National Recognition

• Ranked in American Banker magazine’s list
• f Top 200 Community Banks in the

United States for 11 consecutive years

• Bauer 5 Star Rating
• FHLB Pillars of the Community Award

Building for the Future

Mission

We will sustain an unwavering focus on fulfilling clients’ financial needs. But how?

Digital Natives

• A term used in 2001 to describe the
• utdated education methods not meeting

the needs of the “modern student”

• Apply this concept to banking and the

financial needs of the modern client

• How long can we use outdated methods?
• What do modern clients want?

Enter the FinTech Disruption

• Financial Technology

Companies

• Now over 1300

FinTech companies

• Why? Financial

Service is the largest industry in the world.

FinTech Hurdles

• Regulatory issues
• Competition and noise
• Banks have the customers

So they evolved and partnered with banks!

• Regulatory expertise
• Brand value
• Access to customers

Bank Investment in Technology

4-phase approach recommended by the ABA

• Establish a baseline
• Close major gaps
• Focus on the digital-centric customer
• Drive transformational changes

Why Banks Must Act

Community Bank’s Revenues at Risk ($B, %)

How is Kish moving forward into the future of fulfilling the modern client’s financial needs?

Strategic Focus for 2017

Drive towards the future on the “Twin Rails” of relationship banking and digital delivery.

Seize opportunities presented by market disruption.

Elevate our unwavering focus by understanding and communicating

• ur value and delivering on the

Kish brand promise.

Elevate our focus on the utilization

• f client information while

managing the escalating threat

• f cyber security.

Build long term shareholder returns with a focus on profitable growth.

Summary

Congratulations Directors!

Thank you Phyllis Palm for your service!