<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
FOR THE QUARTER ENDED: MARCH 31, 1995
COMMISSION FILE NUMBER: 0-16084
-------
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 filled 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 April 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>
March 31, December 31,
(In Thousands) 1995 1994
-------------------------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
Cash & Due From Banks 11,898 11,572
Interest Bearing Deposits 1,091 835
-------------------------
Total Cash and Cash Equivalents 12,989 12,407
Available-for-Sale Securities 274,113 260,624
Held-to-Maturity Securities 1,366 1,196
Loans, Net 253,009 254,243
Bank Premises and Equipment 6,835 6,920
Foreclosed Assets Held for Sale 592 644
Accrued Interest on Bonds and Loans 3,980 3,861
Other Assets 4,206 6,583
-------------------------
TOTAL ASSETS 557,090 546,478
-------------------------
-------------------------
LIABILITIES
Deposits:
Noninterest Bearing 40,734 42,855
Interest-Bearing 365,138 356,408
-------------------------
Total Deposits 405,872 399,263
Dividends Payable 794 786
Borrowed Funds 94,500 98,500
Accrued Interest and Other Liabilities 3,044 1,133
-------------------------
TOTAL LIABILITIES 504,210 499,682
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 11,574 10,610
Retained Earnings 40,675 39,743
-------------------------
Total 57,316 56,385
Unrealized Holding Loss on
Available-for-Sale Securities (3,436) (8,589)
Less: Treasury Stock at Cost
104,060 shares at March 31, 1995 (1,000)
103,030 shares at December 31, 1994 (1,000)
-------------------------
TOTAL STOCKHOLDERS' EQUITY 52,880 46,796
-------------------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY 557,090 546,478
-------------------------
-------------------------
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
2
<PAGE>
CITIZENS & NORTHERN CORPORATION - FORM 10-Q
Part I - Financial Information (continued)
Item 1. - Financial Information (continued)
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
(Dollars in Thousands except Per Share Data)
3 Months Ending Fiscal Year to Date
March 31, 3 Months Ending March 31,
1995 1994 1995 1994
(Current) (Prior Year) (Current) (Prior Year)
--------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and Fees on Loans $ 6,123 $ 5,548 $ 6,123 $ 5,548
Interest on Balances with Depository Institutions 8 33 8 33
Interest on Loans to Political Subdivisions 101 69 101 69
Interest on Federal Funds Sold 63 8 63 8
Income from Available-for-Sale and
Held-to-Maturity Securities:
Taxable 3,630 3,550 3,630 3,550
Tax Exempt 627 679 627 679
Dividends 182 162 182 162
--------------- ------------ --------------- ------------
Total Interest and Dividend Income 10,734 10,049 10,734 10,049
INTEREST EXPENSE
Interest on Deposits 4,607 3,524 4,607 3,524
Interest on Other Borrowings 1,488 1,081 1,488 1,081
--------------- ------------ --------------- ------------
Total Interest Expense 6,095 4,605 6,095 4,605
--------------- ------------ --------------- ------------
Interest Margin 4,639 5,444 4,639 5,444
Provision for Loan Losses 184 184 184 184
--------------- ------------ --------------- ------------
Interest Margin After Provision for Possible Loan Losses 4,455 5,260 4,455 5,260
OTHER INCOME
Service Charges on Deposit Accounts 274 246 274 246
Service Charges and Fees 63 61 63 61
Trust Department Income 189 106 189 106
Insurance Commissions, Fees and Premiums 157 144 157 144
Other Operating Income 35 300 35 300
Realized Gains on Available-for-Sale and
Held-to-Maturity Securities, Net 774 542 774 542
--------------- ------------ --------------- ------------
Total Other Income 1,492 1,399 1,492 1,399
OTHER EXPENSES
Salaries and Wages 1,364 1,257 1,364 1,257
Pensions and Other Employee Benefits 460 460 460 460
Occupancy Expense, Net 180 187 180 187
Furniture and Equipment Expense 152 126 152 126
Other Operating Expense 1,491 1,356 1,491 1,356
--------------- ------------ --------------- ------------
Total Other Expenses 3,647 3,386 3,647 3,386
--------------- ------------ --------------- ------------
Income Before Income Tax Provision 2,300 3,273 2,300 3,273
Income Tax Provision 575 820 575 820
--------------- ------------ --------------- ------------
NET INCOME $ 1,725 $ 2,453 $ 1,725 $ 2,453
--------------- ------------ --------------- ------------
--------------- ------------ --------------- ------------
PER SHARE DATA:
NET INCOME $ 0.35 $ 0.49 $ 0.35 $ 0.49
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 $ 0.16 $ 0.15 $ 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 Ended March 31,
1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 1,725 $ 2,453
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities
Provision for Possible Loan Losses 184 184
Realized (Gain), on Available-for-Sale and
Held-to-Maturity Securities, Net (774) (542)
Gain on Sale of Other Assets - (265)
Provision for Depreciation 184 143
Accretion and Amortization 78 (132)
Deferred Income Tax - (21)
(Increase) in Accrued Interest
Receivable and Other Assets (397) (2,410)
Increase in Accrued Interest Payable and
Other liabilities 1,917 3,296
- - ----------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities 2,917 2,706
- - ----------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the Maturity of Held-to-Maturity Securities 28 33
Purchase of Held-to-Maturity Securities (198) (219)
Proceeds from Sales of Available-for-Sale Securities 1,435 36,571
Proceeds from Maturities of Available-for-Sale Securities 5,016 16,382
Purchase of Available-for-Sale Securities (11,434) (47,239)
Net Decrease in Loans 1,050 1,099
Proceeds from the Sale of Other Assets 265
Purchase of Premises and Equipment (99) (269)
Sale of Other Real Estate 162 42
Purchase of Other RealEstate (110) -
- - ----------------------------------------------------------------------------------------
Net Cash Used in Investing Activities (4,150) 6,665
- - ----------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Increase in Deposits 6,609 666
(Decrease) in Short Term Borrowings (14,000) (7,333)
Proceeds from Long Term Borrowings 10,000 -
Dividends Declared (794) (737)
- - ----------------------------------------------------------------------------------------
Net Cash Provided by Financing Activities 1,815 (7,404)
- - ----------------------------------------------------------------------------------------
INCREASE IN CASH AND CASH EQUIVALENTS 582 1,967
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 12,407 13,122
- - ----------------------------------------------------------------------------------------
CASH AND EQUIVALENTS, END OF PERIOD $ 12,989 $ 15,089
- - ----------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest Paid $ 8,688 $ 18,197
- - ----------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------
Income Taxes Paid $ 2 $ 2,851
- - ----------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------
</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 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 quarter ending
March 31, 1995 of $ 1,725,000, or $ .35 per common share, this compares to
$ 2,453,000 or $ .49 per share for the quarter ending March 31, 1994.
The decline in net income reflects the increase in interest rates that
occurred during 1994 as the Federal Reserve attempted to control inflation.
The net spread for the first quarter of 1995 was 2.75 percent compared to
3.67 percent for the comparable quarter in 1994.
The directors and management of the Corporation expect that 1995 will
be a profitable year, however 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 3.67 percent for the quarter ending
March 31, 1994 to 2.75 percent for the quarter ending March 31, 1995. The net
spread for the quarter ending December 31, 1994 was 3.39 percent. The gross rate
of return on earning assets for the quarters ending March 31, 1995, December 31,
1994 and March 31, 1994 was 8.10 percent, 7.91 percent and 7.81 percent,
respectively. Even though the gross rate of return continues to increase as new
and maturing assets reprice, the cost of interest bearing liabilities has been
increasing at a faster rate, this is due to the much shorter maturity schedule
of the liabilities. The gross cost of interest bearing liabilities respectively
for the quarters ending March 31, 1995, December 31, 1994 and March 31, 1994 was
5.35 percent, 4.52 percent and 4.14 percent.
Repriced liabilities that have the greatest impact on the net interest
spread are Money Market accounts and Federal Home Loan Bank borrowings. Money
market accounts account for approximately 20 percent of the interest bearing
liabilities and reprice weekly. The average cost of those funds has increased
223 basis points since the end of March 1994. Other borrowings consist of
Repurchase agreements and term borrowings. They comprise 20 percent of the
interest bearing liabilities and the average rate paid on those liabilities has
increased 156 basis points since March 31, 1994.
Individual Retirement accounts also carry an interest rate that is
higher than other institutions in our market area, however the Corporation
considers the accounts core deposits which support a substantial portion of the
loan portfolio and is therefore willing to pay a higher rate.
It is expected that the net spread will stabilize during the second
quarter of 1995 and gradually widen during the third and fourth quarters of 1995
as loans and other maturing assets begin to reflect higher rates. This
assumption is based on the current interest rate structure and precludes further
rate increases by the Federal Reserve Open Market Committee.
Tables I and II are provided to reflect average balances and rates paid
for the quarters ended March 31, 1995, December 31, 1994 and March 31, 1994
respectfully.
6
<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 I - ANALYSIS OF THE EFFECT OF VOLUME AND RATE CHANGES IN INTEREST INCOME
AND INTEREST EXPENSE
<TABLE>
<CAPTION>
Quarters ended March 31, 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 $ - $ 1 $ 1
Securities of Other U.S. Government Agencies and Corporations 182 3 185
Mortgage Backed Securities (309) 240 (69)
Obligations of States and Political Subdivisions (4) (48) (52)
Stock 16 4 20
Other Securities (79) 42 (37)
- - ---------------------------------------------------------------------------------------------------------------
Total Available-for-Sale Securities (194) 242 48
- - ---------------------------------------------------------------------------------------------------------------
Held-to-Maturity Securities
U. S. Treasury Securities - - -
Securities of Other U.S. Government Agencies and Corporations - - -
Mortgage Backed Securities (3) (1) (4)
Obligations of States and Political Subdivisions - - -
Stock - - -
Other Securities - - -
- - ---------------------------------------------------------------------------------------------------------------
Total Held-to-Maturity Securities (3) (1) (4)
- - ---------------------------------------------------------------------------------------------------------------
Interest-bearing Due from Banks (5) (20) (25)
Federal Funds Sold 48 7 55
Loans:
Real Estate Loans 405 140 545
Consumer (6) (31) (37)
Agricultural - 8 8
Commercial/Industrial (3) 63 60
Other (3) 1 (2)
Political Subdivisions 25 7 32
Leases - - -
- - ---------------------------------------------------------------------------------------------------------------
Total Loans 418 188 606
- - ---------------------------------------------------------------------------------------------------------------
Total Interest Income 264 416 680
- - ---------------------------------------------------------------------------------------------------------------
INTEREST BEARING LIABILITIES
Interest Checking 97 116 213
Money Market 158 412 570
Savings (16) 2 (14)
Certificates of Deposit (96) 193 97
Individual Retirement Accounts 156 51 207
Other Time Deposits (1) (2) (3)
Federal Funds Purchased (203) 95 (108)
Other Borrowed Funds 196 319 515
- - ---------------------------------------------------------------------------------------------------------------
Total Interest Expense 291 1,186 1,477
- - ---------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME (27) (770) (797)
- - ---------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------
</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
3/31/95 % 12/31/94 % 3/31/94 %
<S> <C> <C> <C> <C> <C> <C>
EARNING ASSETS
Available-for-Sale Securities:
U. S. Treasury Securities $ 2,511 5.17 2,512 5.10 2,513 5.03
Securities of Other U.S. Government Agencies
and Corporations 13,096 6.38 9,761 6.32 1,495 5.65
Mortgage Backed Securities 200,931 6.67 219,627 6.40 219,713 6.23
Obligations of States and Political Subdivisions 40,501 6.28 40,464 6.56 40,757 6.76
Stock 13,467 5.48 13,010 5.12 12,301 5.33
Other Securities 3,987 6.51 4,011 9.35 8,900 5.41
- - ------------------------------------------------------------------------------------------------------------------------------------
Total Available-for-Sale Securities 274,493 6.52 289,386 6.39 285,679 6.22
- - ------------------------------------------------------------------------------------------------------------------------------------
Held-to-Maturity Securities
U. S. Treasury Securities - - 50 6.00 - -
Securities of Other U. S. Government
Agencies and Corporations - - - - - -
Mortgage Backed Securities 1,074 7.17 1,185 7.34 1,263 7.30
Obligations of States and Political Subdivisions - - - - - -
Stock - - - - - -
Other Securities - - - - - -
- - ------------------------------------------------------------------------------------------------------------------------------------
Total Held-to-Maturity Securities 1,074 7.17 1,235 7.29 1,263 7.30
- - ------------------------------------------------------------------------------------------------------------------------------------
Interest-bearing Due from Banks 1,105 2.94 1,114 5.92 1,802 7.35
Federal Funds Sold 4,166 6.13 346 3.76 980 3.33
Loans:
Real Estate Loans 196,770 8.89 185,535 8.61 178,312 8.50
Consumer 36,665 15.39 35,073 16.53 36,824 15.64
Agricultural 3,045 10.26 3,028 9.78 3,036 9.12
Commercial/Industrial 13,502 10.00 13,843 8.81 13,625 8.07
Other 203 7.99 272 6.99 343 6.42
Political Subdivisions 6,276 6.53 5,244 6.01 4,695 5.87
Leases 139 8.75 152 8.55 152 9.03
- - ------------------------------------------------------------------------------------------------------------------------------------
Total Loans 256,600 9.84 243,147 9.72 236,987 9.53
Less Unearned Discount - - - - (2) -
Net Loans & Leases 256,600 9.84 243,147 9.72 236,985 9.53
- - ------------------------------------------------------------------------------------------------------------------------------------
Total Earning Assets 537,428 8.10 535,227 7.91 526,709 7.81
Cash 12,082 - 13,775 - 12,673 -
Securities Valuation Reserve (12,413) - (851) - - -
Allowance for Possible Loan Losses (4,301) - (4,064) - (3,895) -
Other Assets 9,221 - 4,372 - 8,122 -
Bank Premises & Equipment 6,883 - 6,199 - 5,506 -
- - ------------------------------------------------------------------------------------------------------------------------------------
Total Assets 548,910 - 554,658 - 549,115 -
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
INTEREST-BEARING LIABILITIES
Interest Checking 50,222 3.72 41,061 3.31 39,663 2.54
Money Market 87,178 5.18 79,050 3.84 74,826 2.95
Savings 41,341 3.06 53,853 2.50 53,290 2.48
Certificates of Deposit 105,166 5.05 109,174 4.43 112,908 4.35
Individual Retirement Accounts 77,525 7.23 70,537 6.92 68,777 6.93
Other Time Deposits 2,285 2.66 2,555 2.39 2,426 3.04
Federal Funds Purchased 1,578 5.91 11,565 4.31 15,533 3.42
Other Borrowed Funds 96,167 6.18 92,614 5.17 83,292 4.62
- - ------------------------------------------------------------------------------------------------------------------------------------
Total Interest-bearing Liabilities 461,462 5.35 460,409 4.52 450,715 4.14
Demand Deposits 38,561 - 39,282 - 37,225 -
Other Liabilities 2,083 - 2,877 - 5,973 -
- - ------------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 502,106 - 502,568 - 492,913 -
Stockholders' Equity 54,997 - 52,629 - 55,202 -
- - ------------------------------------------------------------------------------------------------------------------------------------
Securities Valuation Reserve (8,193) (539)
- - ------------------------------------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders'
Equity $ 548,910 - 554,658 - 549,115 -
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
Interest Rate Spread 2.75 3.39 3.67
---------------------------------------------------------------------------
</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 looks at portfolio quality and a review of historical
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 that is 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.
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 five year history of the Allowance for Possible
Loan Losses and projection for the current year. Table V projects estimated
losses using the last five 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
<TABLE>
<CAPTION>
Actual Actual Probable Worst Case
Mar. 31, 1995 Dec. 31, 1994 Dec. 31, 1995 Dec. 31, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Beginning Balance January 1, 1994 4,228,741 3,816,982 4,228,741 4,228,741
Provision Charged to Earnings 184,125 737,496 737,000 737,000
Recoveries 27,998 194,312 166,000 166,000
Charge-offs (83,562) (520,049) (525,000) (928,000)
--------------------------------------------------------------
Ending Balance 4,357,302 4,228,741 4,606,741 4,203,741
--------------------------------------------------------------
--------------------------------------------------------------
</TABLE>
9
<PAGE>
CITIZENS AND NORTHERN - FORM 10-Q
Part I Financial Information (continued)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
TABLE IV
LOAN LOSS HISTORY FOR THE PAST SIX YEARS
(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 9.2 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 4.7 x
ACCRUING LNS CONTR
90 DAYS PAST DUE 2,800 2,743 2,899 2,532 3,810 2,425 1,684 2699
NET CHARGE OFFS AS
A % OF PROVISION 48.7 % 44.2 % 34.9 % 39.1 % 99.7 % 35.3 % 80.7 % 67.9 %
YEAR END NON-PERF 650 624 843 1,351 417 309 264 637
ALLOWANCE AS A %
OF NET LOANS (1) 1.69 % 1.64 % 1.60 % 1.49 % 1.28 % 1.33 % 1.43 % 1.49 %
PEER GROUP (2) 1.60 % 1.65 % 1.82 % 1.42 % 1.44 % 1.34 % 1.32 % 1.77 %
<FN>
*GROSS LOANS LESS UNEARNED DISCOUNT
(1) At March 31, 1995
(2) At December 31, 1995
</TABLE>
TABLE V
Reserve for Possible Loan Losses--Allocation
<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 Agriculture 23,500 22,649 26,376 22,712 23,541 21,120 23,316 1.94836 457,865
Real Estate --Construction 2,500 2,593 2,224 993 982 1,249 1,757 0 0
Real Estate -- Mortgage 200,000 193,095 170,532 162,434 136,716 121,987 164,127 0.01619 32,380
Credit cards and Related Plans 9,750 9,896 9,212 9,991 6,694 5,738 8,547 0.98951 96,477
All Other Loans to Individuals 31,000 30,094 30,282 29,182 31,762 35,605 31,321 0.44334 137,435
Lease Financing 150 145 154 162 129 164 151 0.44334 665
Total 266,900 258,472 238,780 225,474 199,824 185,863 229,219 0 0
Letter of Credit Commitments 4,500 4,415 5,046 4,670 N/A N/A 4,658 1.94836 87,676
Other Commitments 0
Consumer 25,000 24,202 23,323 22,174 N/A N/A 23,675 0.44334 110,835
Mortgage 9,600 9,566 9,466 9,117 N/A N/A 9,437 0.01619 1,554
Commercial 10,000 9,901 9,790 5,670 N/A N/A 8,840 1.94836 194,836
Fasb No. 114 Nonperforming Loans 165,127 N/A N/A N/A N/A N/A 165,127 165,127
Total Reserve Allocation 1,284,851
Unallocated Portion 3,072,149
---------
Total Reserve Balance 4,367,000
---------
</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 March 31, 1995 and March 31 1994 and the amount and percentage
of change by category.
TABLE VI
MAJOR CATEGORIES OF OTHER INCOME
(In Thousands)
<TABLE>
<CAPTION>
Period Ended
March 31, $ %
1,995 1994 Change Change
<S> <C> <C> <C> <C>
Service Charges on Deposit Accounts 274 246 28 11.38
Service Charges and Fees 63 61 2 3.28
Trust Department Income 189 106 83 78.30
Insurance Commissions, Fees and Premiums 157 144 13 9.03
Other Operating Income 35 300 (265) (88.33)
Realized Gains on Available-for-Sale and
Held-to-Maturity Securities, Net 774 542 232 42.80
---------------------------------
Total Other Income 1,492 1,399 93 6.65
---------------------------------
---------------------------------
</TABLE>
Other fees increased over 6 percent for the comparable periods. Service
charges and fees increased $28,000 due to increased usage of deposit account
services provided by the Bank. Trust Department fees increased 78 percent over
the same period in 1994 , the increase was due to the settlement fees collected
from the settlement of several large estates.
Other operating income decreased significantly during the first quarter of
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 the gain were excluded from the March 1994
total the two periods would have shown no change.
Realized gains on the sale of Available-for-Sale investments amounted to
$774,000 for the first quarter of 1995. The gain resulted from the sale of
several equity securities which management felt had become overpriced or the
Corporation had to divest themselves of the securities as they were not traded
on a recognized exchange. The recorded gains in the first quarter of 1994 was
also the result of stocks which had to sold as they were not listed stocks.
11
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM - 10Q
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 March 31, 1995 and March 31, 1994
TABLE VII
MAJOR CATEGORIES OF OTHER EXPENSE
(In Thousands)
<TABLE>
<CAPTION>
Period Ended
December 31, $ %
1994 1993 Change Change
<S> <C> <C> <C> <C>
Salaries and Wages 1,364 1,257 107 8.51
Pensions and Other Employee Benefits 460 460 0 0.00
Occupancy Expense, Net 180 187 (7) (3.74)
Furniture and Equipment Expense 152 126 26 20.63
Other Operating Expense 1,491 1,356 135 9.96
---------------------------------
Total Other Expense 3,647 3,386 261 7.71
---------------------------------
---------------------------------
</TABLE>
Salaries and wages increased just over 8 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 at March 31, 1994 was
187, compared to 196 at March 31, 1995. Merit raises effective January 1, 1995
were in the 5 to 6 percent range.
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 this category was the purchase of a check imaging system which
became operational in August of 1994. The cost of the system was approximately
$900,000, which caused an increase in depreciation expense.
Other expense increased $135,000 over the same period in 1994. There was no
single large contributing factor to the increase, however FDIC expense,
Pennsylvania Shares tax and Bank examination charges were up significantly over
the same period last year.
12
<PAGE>
STATEMENT OF CONDITION
Average total assets of the Corporation for the quarter ending March 31,
1995 declined when compared to the quarter ending December 31, 1994. This was
due to the sale of approximately $20,000,000 in Available-for-Sale securities
and a reduction of the short term debt used to fund the investments. The sold
investments consisted of Mortgage-backed investments and were sold in late
December 1994. Total average assets increased nearly $13,000,000 when compared
to the period ending March 31, 1994. The increase was due to an increase in
average deposits of $13,263,000 since March 31, 1994. Average total deposits
have increased $6,866,000 since year end 1994.
Average total loans have increased $13,453,000 and $19,613,000 since
December 31, 1994 and March 31, 1994 respectively, the increase is most notable
in loans secured by real estate. Other loan categories remain relatively
unchanged.
Interest rate swings have caused wide fluctuations in the market value of
the Available-for-Sale securities, thus causing large adjustment to the capital
account. The net adjustment to capital for March 31, 1995, December 31, 1994 and
March 31, 1994 was ($3,436,000), ($8,592,000) and ($733,000) respectively.
Interest rates have declined slightly and stabilized since March 31, 1995, which
has further improved the market value.
The Corporation's capital remains strong at 13.9 percent of total deposits
and 10 percent of total assets on March 31, 1995. Including the net market value
adjustment for the Available-fore-Sale securities the ratios would be 13 percent
and 9.5 percent respectively. The ratio of capital to deposits and total assets
at March 31, 1994 were 13.4 and 9.7 percent respectively. All capital ratios are
well above regulatory requirements.
The reader should refer to table II and table VIII on pages 8 and 14. Table
II reflects average balances for the periods ending March 31, 1995, December 31,
1994 and March 31, 1994. Table VIII reflects the estimated market values of
assets and liabilities at March 31, 1995.
13
<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 VIII
ESTIMATED MARKET VALUES
FOR THE PERIOD ENDING MARCH 31, 1995
<TABLE>
<CAPTION>
CARRYING FAIR
VALUE VALUE DIFFERENCE
<S> <C> <C> <C>
ASSETS
Loans:
Gross Loans 257,366 263,709 6,343
Less: Loan Loss Reserve (4,357) (4,357) 0
Net Loans 253,009 259,352 6,343
Held-to-Maturity Securities
U. S. Government Securities 1,366 1,346 (20)
Total Held-to-Maturity Securities 1,366 1,346 (20)
LIABILITIES
Deposits:
Money Market 87,477 87,318 (159)
Interest Checking 41,510 41,488 (22)
Club Accounts 1,615 1,615 0
Certificates of Deposit 105,600 108,662 3,062
Golden Passbook 999 1,074 75
Regular/Key Savings 49,472 53,200 3,728
Individual Retirement Accounts 78,465 81,881 3,416
Total Interest Bearing Deposits 365,138 375,238 10,100
Borrowings:
Fixed Rate Borrowings 23,500 23,513 13
Variable Rate Borrowings 40,000 40,088 88
Total Borrowings 63,500 63,601 101
Federal Funds Purchased 6,000 6,000 0
Repurchase Agreements 25,000 25,014 14
</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
LIQUIDITY AND INTEREST RATE SENSITIVITY
The Corporation's ability to absorb short term deposit fluctuations or
unusually heavy loan demand, should they occur, are met by using a flexline of
credit available through the Federal Home Loan Bank of Pittsburgh or by short
term 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 to 90 days.
At March 31, 1995 the Corporation was borrowing $31,000,000 on a short term
basis and $43,500,000 in long term borrowings due to mature within 120 days.
This short term borrowing creates a large negative gap which narrows the net
interest spread and lowers the net interest margin in the short term. During the
period from March 31, 1994 to March 31, 1995 interest rates have increased
approximately 200 basis points, this will cause 1995 earning to decline slightly
from the record earnings posted during 1993 and 1994.
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 market
depreciation had declined to $ 5,205,000.
The Corporation uses a computer model to measure the theoretical effect of
interest rates 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 Condition
and Results of Operations (continued)
TABLE IX
RATE SENSITIVE ASSETS AND RATE SENSITIVE LIABILITIES
FOR THE PERIOD ENDING AT MARCH 31, 1995
<TABLE>
<CAPTION>
Greater Greater Greater Greater
Than Than Than 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 991 - 100 - -
"Available-for-Sale" Securities
U.S. Treasury Securities 2,373 - - - -
U.S. Agency Securities 12,738 - - - -
Mortgage Backed Securities 195,399 - - - -
Municipals 41,440 - - - -
Other Bonds 4,444 - - - -
Stocks 17,719 - - - -
Total "Available-for-Sale" Securities 274,113 0 0 0 0
"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 1,684 - - - -
Real Estate-Mortgage 46,245 13,767 32,710 23,793 21,450
Consumer 8,025 2,408 4,594 9,589 2,401
Agriculture 649 187 484 1,070 484
Commercial 10,212 390 676 1,136 650
Other 172 2 21 28 -
Political Subdivisions 925 155 320 1,269 1,206
Leases 9 9 18 72 39
Total Loans 67,921 16,918 38,823 36,957 26,230
Less: Unearned Discount - - - - -
Allowance for Loan Losses - - - - -
- - ---------------------------------------
Net Loans and Leases 67,921 16,918 38,823 36,957 26,230
- - ---------------------------------------------------------------------------------------------
Cash and Due From Banks - - - - -
- - ---------------------------------------
Other Assets 3,980 - - - -
- - -----------------------------------------------
Total Assets 347,005 16,918 38,923 36,957 26,529
- - ---------------------------------------------------------------------------------------------
LIABILITIES AND EQUITY
Interest Bearing Deposits:
Money Market 87,537 - - - -
NOW and SNOW 41,510 - - - -
Christmas/Fund Clubs 425 - 1,190 - -
CD's 25,019 24,497 19,100 16,213 20,609
Reg/Key Savings - - - - -
GPS - - - - -
IRA's - - - - -
Total Interest-Bearing Deposits 154,491 24,497 20,290 16,213 20,609
Demand Deposits - - - - -
Repurchase Agreements 25,000 - - - -
Federal Funds Purchased 6,000 - - - -
Borrowed Funds:
Variable 23,500 - - - -
Fixed 40,000 - - - -
- - ---------------------------------------------------------------------------------------------
Total Borrowed Funds 63,500 0 0 0 -
- - ---------------------------------------------------------------------------------------------
Other Liabilities 794 - - - -
- - ---------------------------------------------------------------------------------------------
Stockholder's Equity - - - - -
- - ---------------------------------------------------------------------------------------------
Total Liabilities and Equity 249,785 24,497 20,290 16,213 20,609
Interest Rate Sensitivity Gap $97,220 ($7,579) $18,633 $20,744 $5,920
- - ---------------------------------------------------------------------------------------------
<CAPTION>
Greater Greater Greater
Than Than Than
5-10 10-20 20 Non-
Years Years Years Interest Total
<S> <C> <C> <C> <C> <C>
ASSETS
Interest-Bearing Deposits - - - - 1,091
"Available-for-Sale" Securities
U.S. Treasury Securities - - - - 2,373
U.S. Agency Securities - - - - 12,738
Mortgage Backed Securities - - - - 195,399
Municipals - - - - 41,440
Other Bonds - - - - 4,444
Stocks - - - - 17,719
Total "Available-for-Sale" Securities 0 0 - 0 274,113
"Held-to-Maturity" Securities:
U.S. Treasury Securities - - - - 299
Mortgage Backed Securities 63 792 212 - 1,067
Total "Held-to-Maturity" Securities: 63 792 212 - 1,366
Loans and Lease Financing:
Real Estate-Construction - 1,684
Real Estate-Mortgage 38,964 18,692 4 - 195,625
Consumer 492 66 9,146 - 36,721
Agriculture 104 47 - - 3,025
Commercial 165 - - - 13,229
Other - - - - 223
Political Subdivisions 1,602 1,221 33 - 6,731
Leases - - - - 147
Total Loans 41,327 20,026 9,183 - 257,385
Less: Unearned Discount - - - (19) (19)
Allowance for Loan Losses - - - (4,357) (4,357)
---------------------------------------------------------
Net Loans and Leases 41,327 20,026 9,183 (4,376) 253,009
---------------------------------------------------------
Cash and Due From Banks - - - 11,898 11,898
---------------------------------------------------------
Other Assets - - - 11,633 15,613
---------------------------------------------------------
Total Assets 41,390 20,818 9,395 19,155 557,090
---------------------------------------------------------
LIABILITIES AND EQUITY
Interest Bearing Deposits:
Money Market - - - - 87,537
NOW and SNOW - - - - 41,510
Christmas/Fund Clubs - - - - 1,615
CD's 107 - - - 105,545
Reg/Key Savings - - 49,466 - 49,466
GPS - - 999 - 999
IRA's - - 78,466 - 78,466
Total Interest-Bearing Deposits 107 - 128,931 - 365,138
Demand Deposits - - - 40,734 40,734
Repurchase Agreements - - - - 25,000
Federal Funds Purchased - - - - 6,000
Borrowed Funds:
Variable - - - - 23,500
Fixed - - - - 40,000
---------------------------------------------------------
Total Borrowed Funds - - - - 63,500
---------------------------------------------------------
Other Liabilities - - - 3,044 3,838
---------------------------------------------------------
Stockholder's Equity - - - 52,880 52,880
---------------------------------------------------------
Total Liabilities and Equity 107 - 128,931 96,658 557,090
Interest Rate Sensitivity Gap $41,283 $20,818 ($119,536) ($77,503) ($0)
---------------------------------------------------------
</TABLE>
16
<PAGE>
CITIZENS & 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 X
RATE SHOCK ANALYSIS
COMPARISON OF EXECUTIVE SUMMARIES
FOR THE PERIOD ENDING MARCH 31, 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 20,647 21,560 22,473 23,385 24,298 25,211 26,138 27,037 27,949
INVESTMENTS 17,525 17,730 17,934 18,139 18,343 18,548 18,752 18,957 19,161
TOTAL INT INC 38,172 39,290 40,407 41,524 42,641 43,759 44,890 45,994 47,110
INTEREST EXPENSE
DEPOSITS 7,039 9,923 12,808 15,692 18,577 21,461 24,345 27,230 30,114
BORROWINGS 1,032 1,289 1,547 1,804 2,061 2,319 2,576 2,834 3,091
F F PURCHASED 1,077 1,692 2,325 2,976 3,645 4,333 5,038 5,762 6,505
TOTAL INT EXP 9,148 12,904 16,680 20,472 24,283 28,113 31,959 35,826 39,710
NET INT INC BEF
RATE SWAPS/FIXTURES/
OTHER ADJUST 29,024 26,386 23,727 21,052 18,358 15,646 12,931 10,168 7,400
NET INT INC 29,024 26,386 23,727 21,052 18,358 15,646 12,931 10,168 7,400
MEMO:
NET INT INC
TAX EQUIV 30,413 27,759 25,087 22,397 19,689 16,962 14,217 11,453 8,670
LN LOSS PROV 737 737 737 737 737 737 737 737 737
NET AFTER PROV 28,287 25,649 22,990 20,315 17,621 14,909 12,194 9,431 6,663
OTHER OPER INC 1,950 1,950 1,950 1,950 1,950 1,950 1,950 1,950 1,950
OTHER OPER EXP 13,093 13,093 13,093 13,093 13,093 13,093 13,093 13,093 13,093
INC BEFORE TAXES 17,144 14,506 11,847 9,172 6,478 3,766 1,051 (1,712)(4,480)
TAXES 4,913 4,025 3,131 2,231 1,325 412 (506)(1,431)(2,361)
NET INCOME 12,231 10,481 8,716 6,941 5,153 3,354 1,557 (281)(2,119)
DIVIDENDS 3,300 3,300 3,300 3,300 3,300 3,300 3,300 3,300 3,300
</TABLE>
17
<PAGE>
CITIZENS & 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 XI
RATE SHOCK ANALYSIS
COMPARISON OF EQUITY MARKET VALUES
FOR THE PERIOD ENDING MARCH 31, 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 562,227 562,227 562,227 562,227 562,227 562,227 562,227 562,227 562,227
MARKET VALUE 676,369 648,051 622,187 598,497 576,738 556,698 538,194 521,065 505,170
CHANGE 114,142 85,824 59,960 36,270 14,511 (5,529) (24,033) (41,162) (57,057)
LIABILITIES
BOOK VALUE 514,757 514,757 514,757 514,757 514,757 514,757 514,757 514,757 514,757
MARKET VALUE 559,180 546,838 535,324 524,577 514,540 505,161 496,392 488,186 480,503
CHANGE (44,423) (32,081) (20,567) (9,820) 217 9,596 18,365 26,571 34,254
EQUITY
BEG BALANCE 47,471 47,471 47,471 47,471 47,471 47,471 47,471 47,471 47,471
ASSET CHANGE 114,142 85,824 59,960 36,270 14,511 (5,529) (24,033) (41,162) (57,057)
LIAB CHANGE (44,423) (32,081) (20,567) (9,820) 217 9,596 18,365 26,571 34,254
MARKET VALUE 117,190 101,214 86,864 73,921 62,199 51,538 41,803 32,880 24,668
DURATION
ASSETS 4.480 4.276 4.086 3.907 3.741 3.585 3.440 3.304 3.177
LIABILITIES 2.898 2.807 2.720 2.637 2.557 2.480 2.406 2.336 2.270
EQUITY 12.031 12.212 12.499 12.923 13.535 14.417 15.708 17.668 20.851
</TABLE>
TABLE XII
CURRENT EXPOSURE TO HYPOTHETICAL CHANGES IN INTEREST RATES
FOR THE PERIOD ENDING MARCH 31, 1995
PERCENTAGE CHANGE IN:
<TABLE>
<CAPTION>
CHANGES IN NET INTEREST INCOME MV OF PORTFOLIO EQUITY
INT RATES PROJECTED PROJECTED
(BASIS POINTS) CHANGE (%) CHANGE (%)
<S> <C> <C>
400 -46.6 -60.3
300 -34.8 -47.1
200 -23.1 -32.8
100 -11.5 -17.1
0 0.0 0.0
-100 11.4 18.8
-200 22.8 39.7
-300 34.1 62.7
-400 45.3 88.4
</TABLE>
MEMO:
NET INTEREST INCOME PROJECTED UNDER CONSTANT INT RATES: 22,962.7
MARKET VALUE OF PORTFOLIO EQUITY UNDER CURRENT INT RATES: 62,198.7
18
<PAGE>
CITIZENS AND NORTHERN CORPORATION - FORM 10-Q
Part II - Other Information
Item 1. Legal Proceedings
Citizens and Northern is not a litigant in any pending material lawsuits.
It is the opinion of the counsel of Citizens and Northern Corporation that
minor lawsuits which are pending will not have a significant or materially
detrimental effect on the capital of the Corporation or in any way effect the
results of operations.
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
March 31, 1995
b. No reports on Form 8-K were filed during the period ending
March 31, 1995
19
<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 May 5, 1995 /s/ WILLIAM K FRANCIS
-------------------------------------
William K. Francis
President and Chief Executive Officer
Date May 5, 1995 /s/ JAMES W SEIPLER
--------------------------------------
James W. Seipler
Treasurer
(Chief financial Officer)
20
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<CIK> 0000810958
<NAME> CITIZENS AND NORTHERN CORP
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 11,898
<INT-BEARING-DEPOSITS> 1,091
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 274,113
<INVESTMENTS-CARRYING> 1,366
<INVESTMENTS-MARKET> 1,389
<LOANS> 253,009
<ALLOWANCE> 4,357
<TOTAL-ASSETS> 557,090
<DEPOSITS> 405,872
<SHORT-TERM> 64,500
<LIABILITIES-OTHER> 3,838
<LONG-TERM> 30,000
<COMMON> 5,067
0
0
<OTHER-SE> 47,813
<TOTAL-LIABILITIES-AND-EQUITY> 557,090
<INTEREST-LOAN> 6224
<INTEREST-INVEST> 4439
<INTEREST-OTHER> 71
<INTEREST-TOTAL> 10,734
<INTEREST-DEPOSIT> 4,607
<INTEREST-EXPENSE> 6,095
<INTEREST-INCOME-NET> 4,639
<LOAN-LOSSES> 184
<SECURITIES-GAINS> 774
<EXPENSE-OTHER> 3,647
<INCOME-PRETAX> 2,300
<INCOME-PRE-EXTRAORDINARY> 2,300
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1725
<EPS-PRIMARY> .35
<EPS-DILUTED> .35
<YIELD-ACTUAL> 8.10
<LOANS-NON> 566
<LOANS-PAST> 2815
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 4229
<CHARGE-OFFS> 84
<RECOVERIES> 28
<ALLOWANCE-CLOSE> 4357
<ALLOWANCE-DOMESTIC> 1285
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 3072
</TABLE>
