<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
FOR THE SIX MONTH PERIOD ENDED: JUNE 30, 1995
COMMISSION FILE NUMBER: 0-6084
CITIZENS AND NORTHERN CORPORATION
STATE OF INCORPORATION: PENNSYLVANIA
I.R.S. EMPLOYER IDENTIFICATION NUMBER: 23-2451943
REGISTRANT'S TELEPHONE NUMBER (INCLUDING AREA CODE) : 717-724-3411
ADDRESS OF PRINCIPAL EXECUTIVE OFFICE: THOMPSON STREET
RALSTON, PA 17763
MAILING ADDRESS OF EXECUTIVE OFFICE: 90-92 MAIN STREET
WELLSBORO, PA. 16901
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 15 (D) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such report), and (2) has been subject to such filing
requirements for the past 90 days.
Yes x No
----- -----
As of August 1, 1995 5,066,516 COMMON SHARES WERE OUTSTANDING
1
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10-Q
Part I - Financial Information
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
June 30, December 31,
(In Thousands) 1995 1994
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
Cash & Due From Banks 13,033 11,572
Interest Bearing Deposits 1,101 835
Total Cash and Cash Equivalents 14,134 12,407
Available-for-Sale Securities 291,601 260,624
Held-to-Maturity Securities 1,330 1,196
Loans, Net 256,107 254,243
Bank Premises and Equipment 6,671 6,920
Foreclosed Assets Held for Sale 584 644
Accrued Interest on Bonds and Loans 3,857 3,861
Other Assets 1,561 6,583
TOTAL ASSETS 575,845 546,478
LIABILITIES
Deposits:
Noninterest Bearing 42,462 42,855
Interest - Bearing 370,504 356,408
Total Deposits 412,966 399,263
Dividends Payable 794 786
Borrowed Funds 99,500 98,500
Accrued Interest and Other Liabilities 3,827 1,133
TOTAL LIABILITIES 517,087 499,682
STOCKHOLDERS' EQUITY
Common Stock, Par Value $ 1.00 per Share 5,067 5,016
Authorized 10,000,000; Issued 5,066,516
and 5,016,352 in 1995 and 1994, respectively
Stock Dividend Distributable 1,016
Paid in Capital 11,575 10,610
Retained Earnings 41,547 39,743
Total 58,189 56,385
Unrealized Holding Loss on Available-for-Sale Securities 1,569 (8,589)
Less: Treasury Stock at Cost
104,060 shares at June 30, 1995 (1,000) -
103,030** shares at December 31, 1994 (1,000)
TOTAL STOCKHOLDERS' EQUITY 58,758 46,796
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY 575,845 546,478
<FN>
The accompanying notes are an integral part of the consolidated financial
statements.
** Common stock adjusted to reflect 100% stock dividend issued October 1994
</TABLE>
2
<PAGE>
CITIZENS & NORTHERN CORPORATION - FORM 10-Q
Part I - Financial Information (continued)
Item 1. Financial Statements (continued)
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
(Dollars in Thousands except Per Share Data)
Fiscal Year to Date 3 Months ending
6 Months Ending June 30, June 30,
1995 1994 1995 1994
(Current) (Prior Year) (Current) (Prior Year)
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and Fees on Loans 12,599 11,206 6,460 5,658
Interest on Balances with Depository Institutions 23 41 15 8
Interest on Loans to Political Subdivisions 208 144 107 75
Interest on Federal Funds Sold 63 8
Income from Available-for-Sale and
Held-to-Maturity Securities:
Taxable 7,320 7,349 3,690 3,799
Tax Exempt 1,299 1,343 672 664
Dividends 354 311 172 149
Total Interest and Dividend Income 21,866 20,402 11,116 10,353
INTEREST EXPENSE
Interest on Deposits 9,414 7,294 4,807 3,770
Interest on Other Borrowings 2,816 2,289 1,328 1,208
Total Interest Expense 12,230 9,583 6,135 4,978
Interest Margin 9,636 10,819 4,981 5,375
Provision for Loan Losses 368 369 184 185
Interest Margin After Provision for Possible Loan Losses 9,268 10,450 4,797 5,190
OTHER INCOME
Service Charges on Depssit Accounts 556 520 282 274
Service Charges and Fees 131 144 68 83
Trust Department Income 384 270 195 164
Insurance Commissions, Fees and Premiums 313 275 156 131
Other Operating Income 29 307 10 7
Realized Gains on Available-for-Sale and
Held-to-Maturity Securities, Net 851 695 77 153
Total Other Income 2,264 2,211 788 812
OTHER EXPENSES
Salaries and Wages 2,728 2,484 1,364 1,227
Pensions and Other Employee Benefits 878 906 418 446
Occupancy Expense, Net 356 352 176 165
Furniture and Equipment Expense 310 259 158 133
Other Operating Expense 3,037 2,810 1,546 1,454
Total Other Expenses 7,309 6,811 3,662 3,425
Income Before Income Tax Provision 4,223 5,850 1,923 2,577
Income Tax Provision 831 1,513 256 693
NET INCOME 3,392 4,337 1,667 1,884
PER SHARE DATA:
NET INCOME 0.68 0.87 0.34 0.38
NUMBER SHARES USED IN COMPUTATION 4,962,456 4,962,456 4,962,456 4,962,456
NUMBER SHARES ISSUED 5,066,516 5,016,352 5,066,516 5,016,352
NUMBER SHARES AUTHORIZED 10,000,000 10,000,000 10,000,000 10,000,000
DIVIDEND PER SHARE 0.32 0.30 0.16 0.15
</TABLE>
3
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10-Q
Part I - Financial Information (continued)
Item 1. Financial Statements (continued)
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
(In Thousands) Periods Ending June 30,
1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income 3,392 4,337
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities
Provision for Possible Loan Losses 368 369
Realized (Gain), on Available-for-Sale and
Held-to-Maturity Securities, Net (851) (695)
Provision for Depreciation 368 287
Accretion and Amortization 161 100
Deferred Income Tax (26) (25)
(Increase) in Accrued Interest
Receivable and Other Assets (181) (2,104)
Increase in Accrued Interest Payable and
Other Liabilities 2,700 4,706
Net Cash Provided by Operating Activities 5,931 6,975
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the Maturity of Held-to-Maturity Securities 64 115
Purchase of Held-to-Maturity Securities (198) (320)
Proceeds from Sales of Available-for-Sale Securities 3,295 36,929
Proceeds from Maturities of Available-for-Sale Securities 16,191 28,001
Purchase of Available-for-Sale Securities (34,381) (58,571)
Net (Increase) Decrease in Loans (2,232) (5,702)
Proceeds from the Sale of Other Assets
Purchase of Premises and Equipment (119) (637)
Sale of Other Real Estate 228 87
Purchase of Other Real Estate (167) (501)
Net Cash Used in Investing Activities (17,319) (599)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Increase in Deposits 13,703 5,248
Increase (Decrease) in Short Term Borrowings 21,000 4,667
Proceeds from (Repayment of) Long Term Borrowings (20,000) (15,000)
Dividends Declared (1,588) (1,474)
Net Cash Provided by Financing Activities 13,115 (6,559)
INCREASE IN CASH AND CASH EQUIVALENTS 1,727 (183)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 12,407 13,122
CASH AND CASH EQUIVALENTS, END OF PERIOD 14,134 12,939
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest Paid 9,629 6,651
Income Taxes Paid 779 1,630
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10-Q
Part I - Financial Information (continued)
Item 1. Financial Statements (continued)
Notes to Consolidated Financial Statements
1. The financial information included herein, with the exception of the
Consolidated Balance Sheet dated December 31, 1994 is unaudited; however, such
information reflects all adjustments (consisting solely of normal recurring
adjustments) that are, in the opinion of management, necessary to a fair
presentation of the financial position, results of operations, and changes in
financial position for the interim periods.
During the first quarter of 1995 the Corporation implemented SFAS No. 114
"Accounting by Creditors for Impairment of a Loan". The pronouncement requires
that impaired loans that are within the scope of this statement be measured
based on the present value of expected future cash flows discounted at the
loan's effective interest rate or at the loan's observable market price or the
fair value of collateral if the loan is collateral dependent. The implementation
of this standard did not have a material impact on the Corporation's balance
sheet.
At the regular annual meeting of the Corporation, the shareholders approved
a Stock Incentive Plan. The shares of stock that may be issued under the Stock
Incentive Plan shall not exceed in the aggregate 60,000 shares (subject to
proportional adjustment to reflect increases or decreases resulting from stock
splits, stock dividends and recapitalizations) of the Corporation's common
stock, par value $1.00 per share. Such stock utilized by the Stock Incentive
Plan may be authorized and unissued capital stock of the Corporation or it may
be such capital stock issued and subsequently reacquired by the Corporation as
treasury stock.
Certain 1994 information has been restated to reflect a 2 for 1 stock split
in the form of a stock dividend on October 14, 1994.
This document has not been reviewed or confirmed for accuracy or relevance
by the Federal Deposit Insurance Corporation.
5
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10-Q
Part I - Financial Information (continued)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
EARNINGS OVERVIEW
The Corporation reported net income for the six month period ending June
30, 1995 of $3,392,000 or $ .68 per common share; this compares to $4,337,000 or
$ .87 per share for the same period ending June 30, 1994.
The decline in net income reflects the increase in interest rates that
occurred during 1994 as the Federal Reserve increased interest rates to control
inflation. The net spread between earning assets and interest-bearing
liabilities for the periods ending June 30, 1995, December 31, 1994, and June
30, 1994 was 2.83, 3.39, and 3.59 percent respectively.
The directors and management of the Corporation expect that 1995 will be a
profitable year, though profits are not expected to reach levels attained during
1994 and 1993.
NET INTEREST MARGIN
1995/1994
The net spread between the rate of return on earning assets and the cost of
interest-bearing liabilities dropped from 3.59 percent for the six month period
ending June 30, 1994 to 2.83 percent for the six month period ending June 30,
1995. The net spread for the year ending December 31, 1994 was 3.39 percent. The
gross rate of return on earning assets for the periods ending June 30, 1995,
December 31, 1994, and June 30, 1994 was 8.18 percent, 7.91 percent, and 7.84
percent, respectively.
The gross rate of return on earning assets has begun to reflect the
increase in interest rates as it has moved from 7.84 percent at June 30, 1994 to
8.18 percent at June 30, 1995. The rate of return on the investment portfolio
has increased 23 basis points since June 30, 1994 as payments received on the
mortgage backed securities are reinvested at somewhat higher rates. The rate of
return on the loan portfolio has increased 42 basis points since June 30, 1994
due in part to adjustable rate mortgages reflecting higher rates. Also, the
average balance of real estate loans outstanding has increased significantly
since June 30, 1994.
The increase in the average cost of interest-bearing liabilities was 110
basis points between the periods ending June 30, 1995 and June 30, 1994. This is
due to the shorter repricing schedule of the liabilities, primarily Money Market
and Interest Checking accounts. The average rate paid on Money Market and
Interest Checking accounts increased 184 basis points and 162 basis points
respectively since June 30, 1994. Also posting a significant increase since June
30, 1994 was the cost of borrowed funds. The average cost of borrowed funds for
the six month period ending June 30, 1995 was 6.06 percent; this compares to an
average cost of 4.75 percent for the comparable period in 1994.
It appears that interest rates have leveled off and management is expecting
a decline in rates that should improve the net interest margin during the
remainder of 1995.
6
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10-Q
Part I - Financial Information (continued)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Tables I and II are provided to reflect average balances and rates paid for the
periods ending June 30, 1995, December 31, 1994, and June 30, 1994,
respectfully.
TABLE I - ANALYSIS OF THE EFFECT OF VOLUME AND RATE CHANGES IN INTEREST INCOME
AND INTEREST EXPENSE
<TABLE>
<CAPTION>
Periods Ending June 30, 1995/1994
(In Thousands)
Change in Change in Total
Volume Rate Change
<S> <C> <C> <C>
EARNING ASSETS
Available-for-Sale Securities:
U. S. Treasury Securities
Securities of Other U.S. Government Agencies and Corporations 139 (2) 137
Mortgage Backed Securities (473) 385 (88)
Obligations of States and Political Subdivisions 7 (50) (43)
Stock 21 22 43
Other Securities (34) (47) (81)
Total Available-for-Sale Securities (338) 306 (32)
Held-to-Maturity Securities
U. S. Treasury Securities 5 4 9
Securities of Other U.S. Government Agencies and Corporations
Mortgage Backed Securities (7) 1 (6)
Obligations of States and Political Subdivisions
Stock
Other Securities
Total Held-to-Maturity Securities (2) 5 3
Interest-bearing Due from Banks (6) (11) (17)
Federal Funds Sold 37 18 55
Loans:
Real Estate Loans 761 414 1,175
Consumer 70 26 96
Agricultural 5 14 19
Commercial/Industrial (14) 119 105
Other (4) 1 (3)
Political Subdivisions 49 15 64
Leases
Total Loans 867 589 1,456
Total Interest Income 558 907 1,465
INTEREST BEARING LIABILITIES
Interest Checking
23 331 354
Money Market 254 757 1,011
Savings (51) (51)
Certificates of Deposit (113) 521 408
Individual Retirement Accounts 299 90 389
Other Time Deposits (3) 11 8
Federal Funds Purchased (231) 130 (101)
Other Borrowed Funds 46 583 629
Total Interest Expense 224 2,423 2,647
NET INTEREST INCOME 334 (1,516) (1,182)
</TABLE>
7
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10-Q
Part 1 - Financial Information (continued)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
TABLE II - ANALYSIS OF AVERAGE DAILY BALANCES AND RATES
<TABLE>
<CAPTION>
(In Thousands) Rate of Rate of Rate of
Return/ Return/ Return/
Cost of Cost of Cost of
Funds Funds Funds
6/30/95 % 12/31/94 % 6/30/94 %
<S> <C> <C> <C> <C> <C> <C>
EARNING ASSETS
Available-for-Sale Securities:
U. S. Treasury Securities 2,510 5.14 2,512 5.10 2,513 5.10
Securities of Other U.S. Government Agencies and Corporations 10,838 6.22 9,761 6.32 6,330 6.26
Mortgage Backed Securities 204,000 6.68 219,627 6.40 218,694 6.31
Obligations of States and Political Subdivisions 41,262 6.35 40,464 6.56 41,036 6.60
Stock 13,381 5.34 13,010 5.12 12,482 5.02
Other Securities 5,161 4.55 4,011 9.35 6,432 6.22
Total Available-for-Sale Securities 277,152 6.49 289,385 6.39 287,487 6.26
Held-to-Maturity Securities
U. S. Treasury Securities 299 6.31 50 6.00
Securities of Other U. S. Government Agencies and Corporations
Mortgage Backed Securities 1,057 7.65 1,185 7.34 1,246 7.46
Obligations of States and Political Subdivisions
Stock
Other Securities
Total Held-to-Maturity Securities 1,356 7.35 1,235 7.29 1,246 7.46
Interest-bearing Due from Banks 1,107 4.31 1,114 5.92 1,318 6.27
Federal Funds Sold 2,071 6.01 346 3.76 490 3.29
Loans:
Real Estate Loans 197,268 8.93 185,535 8.61 179,782 8.48
Consumer 36,575 16.12 35,073 16.53 35,697 16.40
Agricultural 3,082 10.29 3,028 9.78 2,977 9.36
Commercial/Industrial 13,650 9.99 13,843 8.81 13,976 8.24
Other 192 7.63 272 6.99 293 6.65
Political Subdivisions 6,446 6.45 5,244 6.01 4,865 5.91
Leases 154 8.37 152 8.55 147 8.87
Total Loans 257,367 10.03 243,147 9.72 237,737 9.61
Less Unearned Discount (1)
Net Loans & Leases 257,367 10.03 243,147 9.72 237,736 9.62
Total Earning Assets 539,053 8.18 535,227 7.91 528,277 7.84
Cash 11,831 13,775 13,088
Securities Valuation Reserve (8,578) (851) 3,306
Allowance for Possible Loan Losses (4,393) (4,064) (3,971)
Other Assets 8,069 4,372 6,532
Bank Premises & Equipment 6,832 6,199 5,820
Total Assets 552,814 554,658 553,052
INTEREST-BEARING LIABILITIES
Interest Checking 41,806 4.45 41,061 3.31 40,511 2.83
Money Market 89,046 5.11 79,050 3.84 76,809 3.27
Savings 49,877 2.48 53,853 2.50 54,008 2.49
Certificates of Deposit 107,149 5.28 109,174 4.43 111,892 4.32
Individual Retirement Accounts 78,221 7.15 70,537 6.92 69,635 6.91
Other Time Deposits 2,397 2.45 2,555 2.39 2,541 2.63
Federal Funds Purchased 5,220 6.39 11,565 4.31 14,439 3.71
Other Borrowed Funds 86,870 6.06 92,614 5.17 85,166 4.75
Total Interest-bearing Liabilities 460,586 5.35 460,409 4.52 455,001 4.25
Demand Deposits 38,664 39,282 37,888
Other Liabilities 2,494 2,877 6,939
TOTAL LIABILITIES 501,744 502,568 499,828
Stockholders' Equity 50,633 52,629 51,042
Securities Valuation Reserve 437 (539) 2,182
Total Liabilities and Stockholders'
Equity 552,814 554,658 553,052
Interest Rate Spread 2.83 3.39 3.59
</TABLE>
8
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10-Q
Part 1 - Financial Information (continued)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
ALLOWANCE FOR POSSIBLE LOAN LOSSES
The Allowance for Possible Loan Losses is a reserve established by
management which it believes will be adequate to absorb future loan losses based
on management's assessment of the quality of the total loan portfolio. The
assessment is performed on an ongoing basis and reviewed by the Board of
Directors quarterly.
The assessment evaluates portfolio quality and includes a historical review
of charge-offs using a six year average. Portfolio quality is determined by
regulatory and independent loan reviews. The Corporation employs an independent
loan review specialist who reviews loans of a certain size criteria as set by
the Board of Directors. The review includes but is not limited to documentation,
financial statements, tax returns, and a cash flow analysis of each loan.
The Department of Banking completed an examination in late May 1995 and
classified $3,430,000 as substandard or loss. This is a marked reduction since
the FDIC examination completed in August 1994. All loans listed as loss by the
State examiners have been charged off or will be by year end 1995.
Probably the most important tool used by management to determine portfolio
quality is the "Watch List". The "Watch List" is a collection of loans that are
now or have been substandard for a variety of reasons. The list is distributed
to Branch Managers monthly for their review and update before going to the Board
of Directors. The list also contains all nonperforming loans that for purposes
of SFAS No. 114 are segregated for reserve purposes and valued at their
observable collateral value.
Other factors used to evaluate the reserve level are loan growth, economic
conditions of the market area and peer group comparisons.
Tables IV and V present a six year history of the Allowance for Possible
Loan Losses and projection for the current year. Table V projects estimated
losses using the last six years as a base. Years having abnormally large or low
charge-offs are eliminated to present a realistic estimation. Table III provides
reserve activity for the year-to-date, the most probable at year end, and a
worst case scenario which uses a historical average including years which had
larger than normal losses.
TABLE III
RESERVE FOR LOAN LOSSES
RECONCILEMENT
(In Thousands)
<TABLE>
<CAPTION>
Actual Actual Probable Worst Case
June 30, 1995 Dec 31, 1994 Dec. 31, 1995 Dec. 31, 1995
<S> <C> <C> <C> <C>
Beginning Balance January 1, 1994 4,229 3,817 4,229 4,229
Provision Charged to Earnings 368 738 737 737
Recoveries 141 194 166 166
Charge-offs (265) (520) (525) (928)
Ending Balance 4,473 4,229 4,607 4,204
</TABLE>
9
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10-Q
Part I Financial Information (continued)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
TABLE IV
LOAN LOSS HISTORY
(In Thousands)
<TABLE>
<CAPTION>
1995 Est 1994 1993 1992 1991 1990 1989 Average
<S> <C> <C> <C> <C> <C> <C> <C> <C>
*NET LOANS 277,670 258,472 238,755 225,475 199,072 190,544 159,715 221,386
NET CHARGE OFFS 359 326 247 518 3,142 115 222 704
ALLOWANCE BALANCE 4,607 4,229 3,817 3,356 2,548 2,539 2,284 3,340
PROV FOR LN LOSSES 737 737 708 1,326 3,151 326 275 1,037
EARNINGS 7,065 7,494 8,127 7,290 5,643 5,342 4,268 6,461
EARNINGS COVERAGE
OF NET CHG OFFS 19.7 x 23.0 x 32.9 x 14.1 x 1.8 x 46.5 x 19.2 x 12.1 x
ALLOWANCE COVERAGE
OF NET CHG OFFS 12.8 x 13.0 x 15.5 x 6.5 x 0.8 x 22.1 x 10.3 x 6.2 x
ACCRUING LNS CONTR
90 DAYS PAST DUE 2,800 2,743 2,899 2,532 3,810 2,425 1,684 2,699.0
NET CHARGE OFFS AS
A% OF PROVISION 48.7 % 44.2 % 34.9 % 39.1 % 99.7 % 35.3 % 80.7 % 29.4
YEAR END NON-PERF 650 624 843 1,351 417 309 264 636.9
ALLOWANCE AS A%
OF NET LOANS (1) 1.69 % 1.64 % 1.60 % 1.49 % 1.28 % 1.33 % 1.43 %
PEER GROUP (2) 1.60 % 1.65 % 1.82 % 1.42 % 1.44 % 1.34 % 1.32 %
<FN>
* Gross loans less unearned discount
</TABLE>
TABLE V
ALLOCATION OF RESERVE FOR POSSIBLE LOAN LOSSES
At June 30, 1995
(In Thousands)
<TABLE>
<CAPTION>
1995 Est. 1994 1993 1992 1991 1990 Average Loss Ratio Reserve
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial and Agricultural 23,500 22,649 26,376 22,712 23,541 21,120 23,316 1.96061 461
Real Estate --Construction 2,500 2,593 2,224 993 982 1,249 1,757 0
Real Estate -- Mortgage 210,000 193,095 170,532 162,434 136,716 121,987 165,794 0.01603 34
Credit Cards and Related Plans 9,750 9,896 9,212 9,991 6,694 5,738 8,547 0.98951 96
All Other Loans to Individuals 31,750 30,094 30,282 29,182 31,762 35,605 31,446 0.45112 143
Lease Financing 170 145 154 162 129 164 154 0 0
Total 277,670 258,472 238,780 225,474 199,824 85,863 231,014
Letter of Credit Commitments 4,500 4,415 5,046 4,670 N/A N/A 4,658 1.94836 88
Other Commitments:
Consumer 25,000 24,202 23,323 22,174 N/A N/A 23,675 0.45112 113
Mortgage 9,600 9,566 9,466 9,117 N/A N/A 9,437 0.01603 2
Commercial 10,000 9,901 9,790 5,670 N/A N/A 8,840 1.96061 196
FASB No. 114 Nonperforming Loans 167 N/A N/A N/A N/A N/A 167 167
Total Reserve Allocation 1,299
Unallocated Portion 3,174
Total Reserve Balance 4,473
<FN>
The reserve allocation factor is determined by using a six year average of net
charge offs divided by the six year average loan balance by type.
</TABLE>
10
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10-Q
Part I - Financial Information (continued)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
OTHER INCOME
The following table compares the major categories of other income for the
periods ending June 30, 1995 and June 30, 1994 and the amount and percentage of
change by category.
TABLE VI
MAJOR CATEGORIES OF OTHER INCOME
(In Thousands)
<TABLE>
<CAPTION>
Periods Ending
June 30, $ %
1995 1994 Change Change
<S> <C> <C> <C> <C>
Service Charges on Deposit Accounts 556 520 36 6.92
Service Charges and Fees 131 144 (13) (9.03)
Trust Department Income 384 270 114 42.22
Insurance Commissions, Fees and Premiums 313 275 38 13.82
Other Operating Income 29 307 (278) (90.55)
Realized Gains on Available-for-Sale and
Held-to-Maturity Securities, Net 851 695 156 22.45
Total Other Income 2,264 2,211 53 2.40
</TABLE>
Other income increased 2.4 percent during the six month period ending June
30, 1995 when compared to the same period last year.
Service charges on deposit accounts increased $36,000 or about 7 percent
when comparing the two periods. The increase consists of $11,000 in account and
statement fees due to increased usage and an increase of 565 accounts over last
year; there was also an increase of $25,000 in overdraft charges between the two
periods
Other service charges and fees declined $13,000 or 9 percent during the
first six months of 1995 when compared to the same period in 1994. The 1994
total included a large rebate from the bank's check supplier and interest on a
large tax refund for the years 1991 and 1992; the rebate and the tax refund
interest amounted to $15,000.
Trust Department fees increased 42 percent or $114,000 over the same period
in 1994. The increase can be attributed to several factors. Interest rates and
market values were up significantly during the first six months of 1995 when
compared to the same period last year, both of which contributed to larger
account fees. An increase in the fee schedule was implemented January 1, 1995
and has thus increased fee income. Also, an ongoing effort to sell employee
benefit plans is beginning to generate additional fee income. There were also
fees generated from the settlement of several large estates during the first six
months of 1995.
Other operating income decreased $278,000 during the six month period
ending June 30, 1995 when compared to the same period in 1994. This was due to a
realized gain on the sale of an investment which had been classified as an other
asset. The gain amounted to $265,000 and if excluded the change between the two
periods would have been a decline of $13,000 or 5 percent.
Realized gains on the sale of Available-for-Sale investments amounted to
$851,000 for the first six months of 1995 and $695,000 during the same period in
1994. The gains resulted from the sale of several equity securities sold because
of a new FDIC policy. The policy requires banks to either sell or transfer to
their holding company all equity investments not traded on a recognized
securities exchange. The policy gives banks until mid 1996 to accomplish the
sale or transfer. Some of the equity securities sold during both periods were
sold because it was felt they were over priced or the holdings had become
excessive.
11
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10-Q
Part I - Financial Information (continued)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
OTHER EXPENSE
The following table compares the various categories of other expense for the
periods ending June 30, 1995 and June 30, 1994
TABLE VII
MAJOR CATEGORIES OF OTHER EXPENSE
(In Thousands)
<TABLE>
<CAPTION>
Periods Ending
June 30, $ %
1995 1994 Change Change
<S> <C> <C> <C> <C>
Salaries and Wages 2,728 2,484 244 9.82
Pensions and Other Employee Benefits 878 906 (28) (3.09)
Occupancy Expense, Net 356 352 4 1.14
Furniture and Equipment Expense 310 259 51 19.69
Other Operating Expense 3,037 2,810 227 8.08
Total Other Expense 7,309 6,811 498 7.31
</TABLE>
Salaries and wages increased over 9 percent. The increase can be attributed
to an increase in the number of full time equivalent employees and merit raises.
The number of full time equivalent employees was 198 at June 30, 1995 and 191 at
June 30, 1994. Merit raises effective January 1, 1995 were in the 5 to 6 percent
range.
Pensions and Other Employee Benefits declined by $28,000 or 3 percent when
compared to the same period last year. The decrease was due to the retirement of
two executive officers who received severance payments for accumulated benefits.
Also, the required contributions to the Supplemental Retirement Plan were less
without the two executive officers.
Other categories of other expense reflecting large variances over last year
were Furniture and Fixtures and Other Expense. The primary cause for the
increase in Furniture and Fixture Expense was the purchase of a check imaging
system which became operational in August of 1994. The cost of the system was
approximately $900,000 and was instrumental in increasing depreciation expense
$63,000 over the periods being compared.
Other Expense increased $227,000 over the same period in 1994; this
increase includes nearly $50,000 of additional processing costs for the
Corporation's credit card program. There was no other single large contributing
factor to the increase. However, FDIC expense, Pennsylvania Shares Tax, Director
and Committee fees, and Bank examination charges were up over the same period
last year.
12
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10-Q
Part 1 - Financial Information (continued)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
STATEMENT OF CONDITION
Average total assets of the Corporation for the six month period ending
June 30, 1995 declined slightly at $2,000,000 when compared to the quarter
ending December 31, 1994; however, the balance sheet structure did not change
significantly between December 31, 1994 and June 30, 1995. The average balance
in the investment portfolio declined $12,200,000 and was offset with an increase
in the average loan volume of $14,200,000. The change in the asset mix was
prompted by the increase in interest rates and a heavier loan demand. The
reduction in the investment portfolio was made in late December 1994 as
approximately $20,000,000 in mortgage backed securities were sold due to the
increased cost of borrowing used to fund the investments. The increase in loans
was primarily larger real estate secured commercial loans.
On the liability side of the balance sheet average total deposits have
increased just over 4 percent since December 31, 1994. The deposit accounts
posting increases were Money Market and Individual Retirement accounts. Other
account balances changed only slightly with the exception of Passbook and
Statement savings accounts, which posted a decline in average balances of
$3,900,000 during the six month period ending June 30, 1995. The amount of the
decline is insignificant, however Regular savings have always maintained
relatively stable and increasing balances. Average borrowed funds also declined
$12,000,000 since December 31, 1994 as a result of the decline in the average
investment portfolio.
Interest rate swings have caused wide fluctuations in the market value of
the Available-for-Sale securities, thus causing a large adjustment to the
capital account. The net adjustment to capital at June 30, 1995, and December
31, 1994 was $1,569,000 and ($8,589,000), a change of $10,158,000 net of income
tax.
Average total assets have remained nearly unchanged since June 30 1994,
when compared to the period ending June 30, 1995; however, average total
investments have declined $10,335,000. This was due to the previously mentioned
sale of mortgage backed investments and a corresponding reduction of borrowed
funds. Average total loans for the period ending June 30, 1995 exceeded average
total loans for the period ending June 30, 1994 by $19,630,000. The increase in
loan volume was primarily real estate secured commercial loans.
The increase in average loan volume was funded primarily by an increase in
average total deposits of $13,100,000. The deposit growth was centered around
Money Market and Individual Retirement accounts. Average Certificates of Deposit
declined $4,700,000 between June 30, 1994 and June 30, 1995. The decline started
early in 1994 as interest rates began to increase. Presently interest rates have
begun to stabilize and even decline slightly causing Certificates of Deposits
balances to increase to first quarter 1994 levels.
The reader should refer to Table II and Table VIII on pages 8 and 14. Table
II reflects average balances for the periods ending June 30, 1995, December 31,
1994, and June 30, 1994. Table VIII reflects the estimated market values of
assets and liabilities at June 30, 1995.
13
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10-Q
Part I - Financial Information (continued)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
TABLE VIII
ESTIMATED MARKET VALUES
FOR THE PERIOD ENDING June 30, 1995
(In Thousands)
<TABLE>
<CAPTION>
CARRYING FAIR
VALUE VALUE DIFFERENCE
<S> <C> <C> <C>
ASSETS
Loans:
Gross Loans 260,580 255,112 (5,468)
Less: Loan Loss Reserve (4,473) (4,473) 0
Net Loans 256,107 250,639 (5,468)
Held-to-Maturity Securities
U. S. Government Securities 1,330 1,335 5
Total Held-to-Maturity Securities 1,330 1,335 5
LIABILITIES
Deposits:
Money Market 87,830 87,830 0
Interest Checking 41,710 41,710 0
Club Accounts 1,882 1,882 0
Certificates of Deposit 110,049 111,755 1,706
Golden Passbook 1,011 1,011 0
Regular/Key Savings 48,827 48,827 0
Individual Retirement Accounts 79,194 78,597 (597)
Total Interest Bearing Deposits 370,503 371,612 1,109
Borrowings:
Fixed Rate Borrowings 10,000 10,060 60
Variable Rate Borrowings 23,500 23,500 0
Total Borrowings 33,500 33,560 60
Federal Funds Purchased 16,000 15,960 (40)
Repurchase Agreements 50,000 50,000 0
</TABLE>
14
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10-Q
Part I - Financial Information (continued)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
LIQUIDITY AND INTEREST RATE SENSITIVITY
The Corporation's ability to absorb short-term deposit fluctuations or
unusually heavy loan demand, should either occur, is met by using a flexline of
credit available through the Federal Home Loan Bank of Pittsburgh or by
repurchase agreements. The flexline of credit provides the Corporation with a
credit line which approximates 10 percent of total assets or about $50 million
dollars. Repurchase agreements are secured with mortgage-backed instruments. The
maturities of the repurchase agreements generally range from 30 days to 3 years.
At June 30, 1995 the Corporation had $63,500,000 in short-term borrowings
(maturing within one year) and $20,000,000 in borrowings that mature in 2 to 3
years. The majority of the borrowed funds are repurchase agreements secured with
mortgage backed investments. This short-term borrowing creates a large negative
gap which narrows the net interest spread and lowers the net interest margin
during periods of rising interest rates. During the period from March 31, 1994
to March 31, 1995 interest rates increased approximately 200 basis points,
causing 1995 earnings to decline slightly from the record earnings posted during
1994 and 1993.
Rising interest rates also have a marked effect on the market value of the
investment portfolio. At December 31, 1994 the market depreciation on the
portfolio of Available-for-Sale securities amounted to $13,000,000. However, as
rates began to stabilize late in the first quarter of 1995 the portfolio posted
a market appreciation at June 30, 1995 of $2,377,000, which was a market value
improvement of $15,377,000.
The Corporation uses a computer model to measure the theoretical effect of
interest rate swings on the market value and the net interest margin using a
rate shock. The model shocks interest 400 basis points upward and downward. The
reader should refer to pages 16 and 17 for a fuller understanding of the effect
of interest rate movements.
15
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10-Q
Part I - Financial Information (continued)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
TABLE IX
RATE SENSITIVE ASSETS AND RATE SENSITIVE LIABILITIES
AT June 30, 1995
(In Thousands)
<TABLE>
<CAPTION>
Less Than Less Than Less Than Less Than
3 Mos. 3-6 6-12 1-3 3-5
or Less Mos. Mos. Years Years
<S> <C> <C> <C> <C> <C>
ASSETS
Interest-Bearing Deposits 1,001 100
"Available-for-Sale" Securities
U.S. Treasury Securities 2,453
U.S. Agency Securities 6,994
Mortgage Backed Securities 216,956
Municipals 43,033
Other Bonds 4,425
Stocks 17,740
Total "Available-for-Sale" Securities 291,601
"Held-to-Maturity" Securities:
U.S.Treasury Securities 299
Mortgage Backed Securities
Total "Held-to-Maturity" Securities: 299
Loans and Lease Financing:
Real Estate-Construction 1,053
Real Estate-Mortgage 39,656 19,199 28,528 24,604 22,114
Consumer 7,370 2,577 4,733 10,380 2,567
Agricultural 761 218 524 1,087 429
Commercial 9,923 413 687 1,786 795
Other 178 2 42 31 3
Political Subdivisions 821 153 338 1,265 1,230
Leases 12 12 24 96 50
Total Loans 59,774 22,574 34,876 39,249 27,188
Less: Unearned Discount
Allowance for Loan Losses
Net Loans and Leases 59,774 22,574 34,876 39,249 27,188
Cash and Due From Banks
Other Assets 3,857
Total Assets 356,233 22,574 34,976 39,249 27,487
LIABILITIES AND EQUITY
Interest-Bearing Deposits:
Money Market 87,830
NOW and SNOW 41,710
Christmas/Fund Clubs 1,786 96
CD's 23,937 23,272 25,416 27,223 10,158
Reg/Key Savings
GPS
IRA's
Total Interest-Bearing Deposits 153,477 25,058 25,512 27,223 10,158
Demand Deposits
Repurchase Agreements 30,000 20,000
Federal Funds Purchased 16,000
Borrowed Funds:
Variable 23,500
Fixed 10,000
Total Borrowed Funds 23,500 10,000
Other Liabilities 794
Stockholders' Equity
Total Liabilities and Equity 193,771 55,058 25,512 57,223 10,158
Interest Rate Sensitivity Gap 162,462 (32,484) 9,464 (17,974) 17,329
<CAPTION>
Less Than Less Than Less Than
5-10 10-20 20 Non-
Years Years Years Interest Total
<S> <C> <C> <C> <C> <C>
ASSETS
Interest-Bearing Deposits 1,101
"Available-for-Sale" Securities
U.S.Treasury Securities 2,453
U.S.Agency Securities 6,994
Mortgage Backed Securities 216,956
Municipals 43,033
Other Bonds 4,425
Stocks 17,740
Total "Available-for-Sale" Securities 291,601
"Held-to-Maturity" Securities:
U.S.Treasury Securities 299
Mortgage Backed Securities 51 778 202 1,031
Total "Held-to-Maturity" Securities: 51 778 202 1,330
Loans and Lease Financing:
Real Estate-Construction 1,053
Real Estate-Mortgage 42,406 21,719 4 198,230
Consumer 425 59 9,120 37,231
Agricultural 80 24 3,123
Commercial 200 13,804
Other 256
Political Subdivisions 1,348 1,547 21 6,723
Leases 194
Total Loans 44,459 23,349 9,145 260,614
Less: Unearned Discount (34) (34)
Allowance for Loan Losses (4,473) (4,473)
Net Loans and Leases 44,459 23,349 9,145 (4,507) 256,107
Cash and Due From Banks 13,033 13,033
Other Assets 8,816 12,673
Total Assets 44,510 24,127 9,347 17,342 575,845
LIABILITIES AND EQUITY
Interest-Bearing Deposits:
Money Market 87,830
NOW and SNOW 41,710
Christmas/Fund Clubs 1,882
CD's 44 110,050
Reg/Key Savings 48,827 48,827
GPS 1,011 1,011
IRA's 79,194 79,194
Total Interest-Bearing Deposits 44 129,032 370,504
Demand Deposits 42,462 42,462
Repurchase Agreements 50,000
Federal Funds Purchased 16,000
Borrowed Funds:
Variable 23,500
Fixed 10,000
Total Borrowed Funds 33,500
Other Liabilities 3,827 4,621
Stockholders' Equity 58,758 58,758
Total Liabilities and Equity 44 129,032 105,047 575,845
Interest Rate Sensitivity Gap 44,466 24,127 (119,685) (87,705)
</TABLE>
16
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10-Q
Part I - Financial Information (continued)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
CAPITAL ADEQUACY
Total capital of the Corporation excluding unrealized gains on Available-
for-Sale investments totaled $58,189,000, $56,385,000, and $54,774,000 at June
30, 1995, December 31, 1994, and June 30, 1994 respectively. The ratio of
capital to assets for the same periods was 10.10 percent, 10.31 percent, and
9.94 percent respectively.
The Corporation's risk based capital ratio, which measures the amount of
risk assets to total capital, was 18.59 percent, 18.36 percent, and 17.17
percent for the periods ending June 30, 1995, December 31, 1994, and June 30,
1994 respectively. The ratios exclude the Available-for Sale market value
adjustment as mandated by SFAS No. 115.
Management is aware of the possible detrimental effect that a large
negative gap can have on the capital of the Corporation during prolonged periods
of rising interest rates. However, management continually monitors interest
rates and their effect on net interest income and the market value of the
Corporation's asset base.
There are no planned capital expenditures that will have a material effect
on the capital ratios of the Corporation or the results of operations.
17
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10-Q
Part I - Financial Information (continued)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
TABLE X
RATE SHOCK ANALYSIS
COMPARISON OF EXECUTIVE SUMMARIES
FOR THE PERIOD ENDING June 30, 1995
(In Thousands)
<TABLE>
<CAPTION>
-4.00 -3.00 -2.00 -1.00 FLAT 1.00 2.00 3.00 4.00
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT
INTEREST INCOME
LOANS 20,964 21,855 22,747 23,639 24,531 25,423 26,315 27,207 28,099
INVESTMENTS 18,301 18,432 18,563 18,694 18,825 18,956 19,087 19,218 19,350
TOTAL INT INC 39,265 40,287 41,310 42,333 43,356 44,379 45,402 46,425 47,449
INTEREST EXPENSE
DEPOSITS 6,542 9,396 12,250 15,104 17,958 20,812 23,666 26,520 29,374
BORROWINGS 760 845 930 1,016 1,101 1,186 1,272 1,357 1,443
F F PURCHASED 1,495 2,271 3,064 3,876 4,707 5,557 6,425 7,313 8,220
TOTAL INT EXP 8,797 12,512 16,244 19,996 23,766 27,555 31,363 35,190 39,037
NET INT INC BEFORE
RATE SWAPS/FUTURES/
OTHER ADJUST 30,468 27,775 25,066 22,337 19,590 16,824 14,039 11,235 8,412
NET INT INCOME 30,468 27,775 25,066 22,337 19,590 16,824 14,039 11,235 8,412
MEMO:
NET INT INC
TAX EQUIV 31,975 29,267 26,540 23,794 21,030 18,246 15,443 12,621 9,780
LN LOSS PROV 737 737 737 737 737 737 737 737 737
NET AFTER PROV 29,731 27,038 24,329 21,600 18,853 16,087 13,302 10,498 7,675
OTHER OPER INC 2,050 2,050 2,050 2,050 2,050 2,050 2,050 2,050 2,050
OTHER OPER EXP 13,062 13,062 13,062 13,062 13,062 13,062 13,062 13,062 13,062
INC BEFORE TAXES 18,719 16,026 13,317 10,588 7,841 5,075 2,290 (514) (3,337)
TAXES 5,369 4,465 3,555 2,639 1,716 787 (148) (1,089) (2,037)
NET INCOME 13,350 11,561 9,762 7,949 6,125 4,288 2,438 575 (1,300)
DIVIDENDS 3,300 3,300 3,300 3,300 3,300 3,300 3,300 3,300 3,300
</TABLE>
18
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10-Q
Part I - Financial Information (continued)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
TABLE XI
RATE SHOCK ANALYSIS
COMPARISON OF EQUITY MARKET VALUES
FOR THE PERIOD ENDING June 30, 1995
(In Thousands)
<TABLE>
<CAPTION>
-4.00 -3.00 -2.00 -1.00 FLAT 1.00 2.00 3.00 4.00
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
BOOK VALUE 568,597 568,597 568,597 568,597 568,597 568,597 568,597 568,597 568,597
MARKET VALUE 693,485 660,267 630,215 602,941 578,113 565,464 548,034 532,290 516,728
CHANGE 124,888 91,670 61,618 34,344 9,516 (3,133) (20,563) (36,307) (51,869)
LIABILITIES
BOOK VALUE 515,165 515,165 515,165 515,165 515,165 515,165 515,165 515,165 515,165
MARKET VALUE 562,304 549,580 537,713 526,639 516,299 509,256 503,040 496,834 491,732
CHANGE (47,139) (34,415) (22,548) (11,474) (1,134) 5,909 12,125 18,331 23,433
EQUITY
BEG BALANCE 53,433 53,433 53,433 53,433 53,433 53,433 53,433 53,433 53,433
ASSET CHANGE 124,888 91,670 61,618 34,344 9,516 (3,133) (20,563) (36,307) (51,869)
LIAB CHANGE (47,139) (34,415) (22,548) (11,474) (1,134) 5,909 12,125 18,331 23,433
MARKET VALUE 131,182 110,688 92,503 76,303 61,815 56,209 44,995 35,457 24,997
DURATION
ASSETS 5.286 5.043 4.816 4.604 4.406 4.274 4.123 3.986 3.853
LIABILITIES 2.939 2.846 2.758 2.672 2.590 2.538 2.493 2.446 2.407
EQUITY 15.349 15.950 16.782 17.938 19.578 20.003 22.352 25.568 32.293
</TABLE>
19
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10-Q
Part I - Financial Information (continued)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
TABLE XII
CURRENT EXPOSURE TO HYPOTHETICAL CHANGES IN INTEREST RATES
FOR THE PERIOD ENDING June 30, 1995
PERCENTAGE CHANGE IN:
CHANGES IN NET INTEREST INCOME MV OF PORTFOLIO EQUITY
INT RATES PROJECTED PROJECTED
(BASIS POINTS) CHANGE (%) CHANGE (%)
400 -41.4 -59.6
300 -35.4 -42.6
200 -23.7 -27.2
100 -12.3 -9.1
0 0.0 0.0
-100 13.1 23.4
-200 26.2 49.6
-300 39.2 79.1
-400 52.0 112.2
20
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10-Q
Part II - Other Information
Item 1. Legal Proceedings
Citizens and Northern Corporation is not a litigant in any pending
lawsuits.
It is the opinion of the counsel of Citizens and Northern Corporation
that minor lawsuits that are pending will not have a significant or materially
detrimental effect on the capital of the Corporation or in any way affect the
results of operations.
Item 4. Submission of Matters to a Vote of security Holders
The Annual Meeting of Shareholders of Citizens & Northern corporation
was held on Tuesday, April 18, 1995. The Board of Directors fixed the close of
business on March 3, 1995 as the record date for the determination of
stockholders entitled to notice of and to vote at the Annual Meeting and at any
adjournment thereof. On this record date, there were outstanding and entitled to
vote 4,962,456 shares of Common Stock.
The total number of votes cast were 3,716,102. all were voted by proxy
for the following purposes and with the following results.
1. The election of the following as Class II Directors to serve for
a term of three years.
R. James Dunham Leonard Simpson
Edward L. Learn Donald E. Treat
John H. Macafee
The total votes in favor of any one of the above-listed Directors were
not less than 3,680,564
2. The approval and adoption of the Citizens & Northern Corporation
1995 Stock Incentive Plan.
Total Votes in Favor 3,445,734
Total Votes Against 167,157
Total Votes Abstained 103,211
3. The ratification of the action of the Board of Directors in the
appointment of the firm of Parente, Randolph, Orlando, Carey & Associates as
independent auditors of the Corporation.
Total votes in Favor 3,675,703
Total Votes Against 8,736
Total Votes Abstained 31,663
21
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10-Q
Part II - Other Information (continued)
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits filed as part of this report are listed below:
Exhibit 1 -- Quarterly Report to Shareholders for period ending
June 30, 1995
b. No reports on Form 8-K were filed during the period ending
June 30, 1995
22
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10-Q
SIGNATURE PAGE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date August 7, 1995 WILLIAM K FRANCIS /S/
-----------------------
William K. Francis
President and Chief Executive Officer
Date August 7, 1995 JAMES W SEIPLER /S/
-----------------------
James W. Seipler
Treasurer
(Chief Financial Officer)
23
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> JUN-30-1995
<CASH> 14134
<SECURITIES> 292931
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 6671
<DEPRECIATION> 0
<TOTAL-ASSETS> 575845
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 5067
0
0
<OTHER-SE> 53691
<TOTAL-LIABILITY-AND-EQUITY> 575845
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 368
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4223
<INCOME-TAX> 831
<INCOME-CONTINUING> 3392
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3392
<EPS-PRIMARY> .32
<EPS-DILUTED> 0
</TABLE>
