Lanny’s Recent Stock Purchase – Citizens & Northern (CZNC)

Just when I thought I was coming down with a great system, I realized that I still needed to make contributions into my IRA account for the 2016 year.  I still actually am quite a bit away from maxing out the year, but with this purchase, I definitely reached closer to the goal.  I love banking and truly am passionate about the moves being made in the industry.  I know Bert knows all about this company, and I’m sure the community is starting to also learn a little bit more, hopefully!  A few days ago I was able to make a stock purchase back into a community bank stock that I own!

Citizens & Northern (CZNC) Stock Purchase

So why the heck did I buy Citizens & Northern (CZNC) for what seems like the 10th time?!  The stock wasn’t on my 2017 stocks to look forward to!  Well, this was all about timing for me on this stock purchase.  With stocks soaring still through this year, this stock has risen almost $5/share from back when I purchased a lot of them.  The stock was even getting closer to $27 per share and then it dropped to the low $25’s, and dammit – they even dropped into the $24’s.  However, their ex-dividend date is typically between the 3rd and 4th week of January, and I knew I could capture the drop + buy them to grab the upcoming February dividend of $0.26 per share or $15.60 from this purchase alone.  Here are some details and further reasons on the transaction:

1. ) I still had over $3K left to maximize my traditional IRA.  Based on the income that was received in 2016, I believe I may be in the safe zone to do more into my traditional IRA – see why I think YOU should maximize your traditional IRA if you can!  I already own shares within this type of account and if this bank is acquired, I can defer capital gains taxation.

2.) With earnings per share at $1.35 for the year, 19.42 was the price to earnings ratio.  Much lower than the S&P current 500 index and is not too undervalued, but is a good sign that there is still value left in the bank.

3.) At a dividend clip of $1.04, this equates to a yield of 4.12%, as well as a payout of 80%.  High for a bank, but they always still have a 600,000+ share repurchase program that they can use at their disposal.

4.) Their regulatory capital ratios are alarmingly HIGH.  Which is an amazing thing, but also they are sitting on a liquid investment portfolio, over $30M of cash and they had an amazing asset quality quarter – they were in a net recovery position.  Something I felt they would be in after the blood bath of Q1 2016 as it related to loan charge-offs.  Their ALLL as a % is fairly solid, and I think they are more than equipped to originate new loans and/or acquire a bank.  They also have a strong asset under management, so they could even be a target for an institution that wants that piece for their bank.

I purchased $1,522.55 worth at $25.26 per share for a total of 60 shares.  This alone adds $62.40 to my forward dividend income.  I now, among all investment accounts, own over 291 shares of Citizens & Northern (CZNC).  The shares in total produce over $303 per year or $75.75 per quarter!  Holy crap.  That is essentially 3 shares being reinvested on a quarterly basis, which produces even more income, etc..

Stock purchase summary & Conclusion

With my position, after this stock purchase, now sitting at ~291 shares of CZNC in my portfolio, this is going to really get the big dividend churning from them come February, truly this will start in a few short weeks.  In addition, it fits the industry that I audit in and Bert & I are lucky that we have a keen eye on this area, with an ear closer than just being near the floor.   It feels really good to get two actions on the board here, and really getting the year/wheels churning towards production and pursuit.  I’ve said it once and I’ll say it a thousand times, Every Dollar Counts, in this game!  Bert made it happen with his Procter & Gamble (PG) purchase and I did the same with mine earlier in the month.  Overall, very happy with this purchase and continues my path to accomplish my goals set for 2017.

Anyone looking at the community banking realm?  Are you also going through busy season right now and are ready to jump off the cliff? (hahah)  Seriously though, these long weeks are catching up to me and for all of the CPAs out there – get rest, have somewhat of a balance and please take care of yourself during these busy times!  I digress, but need to watch out for my fellow accountants.  What do you think of this stock purchase, though?  Like it or hate it?  I know there are other great opportunities out there, such as Target (TGT) and VF Corp (VFC) and those are KEEN on my eye, don’t you worry!  Hope everyone is doing well and I truly appreciate you for stopping by!  Talk soon.

-Lanny

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12 thoughts on “Lanny’s Recent Stock Purchase – Citizens & Northern (CZNC)

  1. Lanny,
    I’ve trolled through the CCC list enough to see that CZNC, along with other regional banks, and well primed investments. With good ratios, cash flow, and years of dividend growth. Its interesting how they are flying under the radar, many with yield growth histories that stretch back farther than 2017 – which speaks volumes to me.
    Nice purchase,
    Gremlin

    • Gremlin –

      Thank you very much and that’s too funny. Their return on average assets is pretty amazing, but they need to make a move with their capital this year, they are sitting on too much!! AKA I am expecting sharebuy backs, a potential merger or some form of asset purchase. We shall see, love the community banking space though.

      -Lanny

  2. Bottom line, it’s always nice to see fresh purchases being made. In all, our investing community has not been scared into hiding from the stock market as we continue to invest and grow our passive income stream. Again, “every dollar counts.” You know that all too well. With this new buy you will really created a serious compounding machine as every quarter you’ll be adding several shares just from dividends. I only know this bank stock from your buys as I’m not familiar with it. Nice current yield though. I guess I like this buy though I feel more comfortable with the larger money center banks instead of regional because of a lack of familiarity.

    • DH –

      Yes, we have all been fairly active, it’s quite funny and you have made wallop purchase after wallop purchase, trying to keep up and catch up haha. Yes, have purchased this one quite a few times and they seem to deliver strong net income results on a consistent asset base, but they need to do something with the cash and securities they are sitting on, as most aren’t in the capital position they are in, which is great. And yep – the familiarity for me comes with just the portion of the banking industry that I audit. Very lucky there. Thanks again DH, talk soon.

      -Lanny

  3. I think the community banking sector should do well this year, but it’s important to be selective because some of these names are getting a bit overvalued. I think CZNC is still a good buy – I considered adding more but instead I opted to initiate a new position into ESBK, which is only up about 5% since the election.

    • Brian –

      Nice, only 5% eh? We may have done audit work for Elmira out there in New York. I’ll have to check it out actually haha They have a damn good yield too. Such a fun industry and it’s been moving in only one direction… keep plugged in to it!!

      -Lanny

  4. Looks like another great purchase. You are off to an absolute flyer in the first month of the year. You’re doing so well. I hope you can continue to make this compound and just increase over time. All the best for 2017.

    • BHL –

      Much appreciated!! It has been a heavy investing month, but that it’s been solid/positive. The purchases have felt great, getting back into the swing of things, with a normalized budget now on a monthly basis, now that my retirement accounts are in 12 month automation haha. Thanks for the comment!

      -Lanny

    • D4F –

      Heck yah, NICE. Love the community banking space for the retirement accounts, deferring gains for days if an acquisition occurs : ) Also, yields are usually pretty solid and dividend growth comes in spurts. Hard to find value though right now in that area, as the valuations have spiraled quite high, thanks for sharing, as always.

      -Lanny

  5. You’re probably on target with the analysis. I’m taking a breather on community banks due to valuations (generally overdone, I think) and I got overweight prior to the election. Without significant change to Dodd-Frank and/or a slower than expected increase in rates – a pull back could be on the horizon. Meanwhile I’m looking more at staples and foreign issues.

    • Charlie –

      Couldn’t agree more on the overall valuations on community banks. Also – keep the eyes peeled on those consumer staples, as JNJ has started to come back to the ground for us to scoop them. Keep the eyes very close. Thanks again Charlie, talk soon and keep it up.

      -Lanny

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