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

Gross Loans ($ in millions) $550 $495 $500 $451 $450 $420 $400 $387 $358 $350 $300 $250 2012 2013 2014 2015 2016

Total Deposits ($ in millions) $600 $580 $562 $560 $543 $540 $520 $509 $494 $500 $480 $460 $460 $440 $420 $400 2012 2013 2014 2015 2016

Market Share of Bank Deposits Mifflin County 5-Year Deposit Compound Annual Growth Rate (CAGR) 2016 2015 2016 Kish Bank 42.11% 41.69% Kish Bank 3.55% Juniata Valley Bank 22.85% 22.58% Mifflin County Market 1.29% First National Bank 13.41% 13.76% of PA Mifflin County SB 12.91% 12.60% Northwest Bank 4.41% 4.77% Citizens Bank 4.31% 4.60% Source: SNL Financial

Market Share of Bank Deposits Huntingdon County 5-Year Deposit Compound Annual Growth Rate (CAGR) 2016 2015 2016 Community State 32.60% 33.05% Bank of Orbisonia Kish Bank 3.44% First National Bank Huntingdon County Market 1.30% 23.23% 20.65% of PA 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 & 2.68% 2.43% Merchants Trust Mifflin County SB 2.50% 2.20% Source: SNL Financial

Market Share of Bank Deposits 5-Year Deposit Compound Annual Centre County Growth Rate (CAGR) 2016 2015 2016 PNC Bank 22.56% 20.78% Kish Bank 10.41% First National Bank 17.58% 17.57% Centre County Market 6.39% of PA 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% Source: SNL Financial

Loan Mix Residentail RE Consumer and Others State & Political Agricultural Comm & Ind Comm RE - 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000 Thousands 2016 Gross Loans: $494,599,165 2016 vs. 2015 Loan Growth: 9.62%

Loans/Deposits 100.00% KISB PA Peers¹ 95.00% 90.00% 86.95% 85.00% 82.09% 81.41% 80.00% 77.12% 76.24% 75.00% 70.00% 2012 2013 2014 2015 2016 ¹ Includes all public banks with assets between $300mm to $1B Source: FFIEC Uniform Bank Performance Report

Income Highlights 2016 2015 Strong growth in net • Net Interest Income $ 20,867,911 $ 19,660,867 interest income; increased Provision for loan losses 530,000 235,000 by 6.1% or $1.2 million Noninterest Income 7,095,827 6,748,331 Noninterest income • Securities Gains 773,237 535,080 remains above peers Noninterest Expense 22,179,461 21,049,047 Harvested timely security • Income before income taxes 5,254,277 5,125,151 gains, reducing risk, credit, Income Taxes 637,383 630,910 and duration Net Income $ 4,616,894 $ 4,494,241 Increased staffing and data • processing costs led to Earnings Per Share (Diluted) $ 3.77 $ 3.69 higher noninterest expense. Net income reached a new • high and grew by 2.74% ROA 0.65% 0.66% over 2015 Consistent performance ROE 8.54% 8.89% • ratios Efficiency Ratio 77.18% 76.88%

Net Income ($ in thousands) $5,000 $4,617 $4,494 $4,500 $4,359 $4,217 $4,000 $3,630 $3,500 $3,000 2012 2013 2014 2015 2016

Net Interest Income and Margin ($ in thousands) $20,868 $21,000 4.00% Net Interest Income ($000s) Net Interest Margin $20,000 $19,661 3.80% $19,000 3.60% $18,630 $18,000 3.40% $17,537 $17,000 $16,816 3.20% $16,000 3.00% 2012 2013 2014 2015 2016

Noninterest Income ($ in thousands) $7,500 $7,096 $6,913 $7,000 $6,748 $6,492 $6,459 $6,500 $6,000 $5,500 $5,000 2012 2013 2014 2015 2016

Noninterest Expense ($ in thousands) $25,000 Salaries Occupancy Data Processing All Other $22,179 $21,049 $19,915 $19,692 $19,290 $20,000 $15,000 $10,000 $5,000 2012 2013 2014 2015 2016

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

Return on Average Assets 1.00% 0.80% 0.69% 0.66% 0.67% 0.65% 0.65% 0.60% 0.40% 2012 2013 2014 2015 2016

Net Charge-Offs/Avg. Loans 0.35% KISB PA Peers¹ 0.30% 0.25% 0.20% 0.15% 0.12% 0.11% 0.10% 0.05% 0.05% 0.05% 0.01% 0.00% 2012 2013 2014 2015 2016 ¹ Includes Bank Operating Companies in PA with $500mm to $1B in Assets Source: SNL Financial

Nonaccrual Loans/Loans KISB PA Peers¹ 3.00% 2.50% 1.98% 2.00% 1.60% 1.53% 1.50% 1.27% 1.14% 1.00% 0.50% 0.00% 2012 2013 2014 2015 2016 ¹ Includes Bank Operating Companies in PA with $500mm to $1B in Assets Source: SNL Financial

Loans 30-89 Days Past Due KISB Peers¹ 1.00% 0.90% 0.80% 0.70% 0.60% 0.52% 0.50% 0.40% 0.30% 0.19% 0.20% 0.12% 0.05% 0.07% 0.10% 0.00% 2012 2013 2014 2015 2016 ¹ Includes all public banks with assets between $300mm to $1B Source: FFIEC Uniform Bank Performance Report

Stock Performance (EOY) $60 $55 $55 $50 $46 $45 $43 $39 $40 $35 $35 $33 $29 $30 $25 2011 2012 2013 2014 2015 2016 Current¹ ¹ Stock price as of 4/26/2017

Dividend Yield on Common Stock 7.00% KISB PA Peers¹ National Peers¹ 6.00% 4.95% 5.00% 4.70% 4.24% 4.00% 4.00% 3.74% 3.00% 2.00% 1.00% 2012 2013 2014 2015 2016 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 of 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 outdated 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 our value and delivering on the Kish brand promise.

Elevate our focus on the utilization of client information while managing the escalating threat of cyber security.

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

Summary

Congratulations Directors!

Thank you Phyllis Palm for your service!