<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
CITIZENS AND NORTHERN CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
CITIZENS & NORTHERN CORPORATION
90-92 Main Street
Wellsboro, Pennsylvania 16901
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD TUESDAY, APRIL 16, 1996
TO THE HOLDERS OF THE COMMON STOCK OF THE CORPORATION:
Notice is hereby given that the Annual Meeting of the holders of the common
stock of Citizens & Northern Corporation (the "Corporation") will be held at the
Wellsboro Office, located at 90-92 Main Street, Wellsboro, Pennsylvania, on
Tuesday, April 16, 1996 at 2:00 P.M., local time, for the following purposes:
1. To elect five directors to Class III to serve for a term of 3 years;
2. To ratify 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; and
3. To transact such other business as may properly be brought before the
meeting or any adjournment or adjournments thereof.
Only stockholders of record at the close of business on March 1, 1996,
are entitled to notice of, and to vote at, the meeting. Such stockholders may
vote in person or by proxy.
ALL STOCKHOLDERS ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED
PROXY IN THE ACCOMPANYING ENVELOPE, WHETHER OR NOT YOU EXPECT TO ATTEND THE
MEETING. If you do attend the meeting, you may, if you wish, withdraw your
proxy and vote your shares in person.
By Order of the Board of Directors,
Kathleen M. Osgood
Corporate Secretary
March 18, 1996
<PAGE>
CITIZENS & NORTHERN CORPORATION
90-92 Main Street
Wellsboro, Pennsylvania 16901
PROXY STATEMENT
Annual Meeting of Stockholders -- April 16, 1996
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Citizens & Northern Corporation to be used
at the Annual Meeting of Stockholders of the Corporation to be held on Tuesday,
April 16, 1996, at 2:00 P.M. at the Wellsboro Office, located at 90-92 Main
Street, Wellsboro, Pennsylvania, and at any adjournment thereof. The
approximate date upon which this Proxy Statement and proxy will first be mailed
to stockholders is March 18, 1996.
The Corporation's Board of Directors is soliciting proxies in connection
with the Meeting. Shares represented by properly completed proxies will be
voted in accordance with the instructions indicated thereon unless such proxies
have previously been revoked. If no direction is indicated, such shares will be
voted in favor of the election as directors of the nominees named below, in
favor of the ratification of the appointment of the firm of Parente, Randolph,
Orlando, Carey & Associates as the Corporation's independent auditors, and in
the discretion of the proxy holder as to any other matters which may properly
come before the Meeting or any adjournment thereof. A proxy may be revoked at
any time before it is voted by written notice to the Secretary of the
Corporation or by attending the Meeting and voting in person.
The Corporation will bear the entire cost of soliciting proxies for the
Meeting. In addition to the use of the mails, proxies may be solicited by
personal interview, telephone, and telegram by the Corporation's directors,
officers and employees. Arrangements may also be made with custodians, nominees
and fiduciaries for forwarding proxy material to beneficial owners of stock held
of record by such persons, and the Corporation may reimburse such custodians,
nominees and fiduciaries for reasonable out-of-pocket expenses incurred by them
in connection therewith.
The Board of Directors has fixed the close of business on March 1, 1996, 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 the record
date, there were outstanding and entitled to vote 5,012,081 shares of Common
Stock. Common stockholders will be entitled to one vote per share on all
matters to be submitted at the meeting. The Articles of Incorporation of the
Corporation do not permit cumulative voting.
No person is known by the Corporation to have beneficially owned 5% or more
of the outstanding common stock of the Corporation as of March 1, 1996.
PROPOSAL 1 -- ELECTION OF DIRECTORS
The Articles of Incorporation of the Corporation provide that the Board of
Directors shall consist of not less than five nor more than twenty-five
directors and that within these limits the numbers of directors shall be as
established by the Board of Directors. The Board of Directors has set the
number of directors at fifteen. The Articles further provide that the Board
shall be classified into three classes, as nearly equal in number as possible.
One class of directors is to be elected annually. Five directors to Class III
are to be elected at the Annual Meeting to serve for a three year term. It is
the intention of the persons named as proxyholders on the enclosed form of
proxy, unless other directions are given, to vote all shares which they
represent for the election of management's nominees named in the tabulation
below. Any stockholder who wishes to withhold authority from the proxyholders
to vote for the election of directors, or to withhold authority to vote for any
individual nominee, may do so by marking the proxy to that effect. Each
director elected will continue in office until a successor has been elected.
The Board of Directors recommends a vote for the election of the nominees listed
below, each of whom has consented to be named as a nominee and to serve if
elected. If for any reason any nominee named is not a candidate (which is not
expected) when the election occurs, proxies will be voted for a substitute
nominee determined by the Board of Directors.
1
<PAGE>
The following table sets forth certain information about the nominees, all
of whom except Mr. Kroeck and Mr. Litchfield, are presently members of the
Board, and about the other directors whose terms of office will continue after
the Annual Meeting:
<TABLE>
<CAPTION>
Shares Percent of
Name and Principal Occupation Age as of First Became Beneficially Common Stock
for Last Five Years Record Date Director (1) Owned (2) Outstanding
- ----------------------------- ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
CLASS III - MANAGEMENT'S NOMINEES FOR A 3 YEAR TERM ENDING IN 1999:
J. Robert Bower 61 1967 34,601 (3) .69
Pharmacist, formerly with
Fay's Drug Co., Inc.
William K. Francis 64 1971 43,113 (4) .86
Chairman, President & Chief
Executive Officer of Citizens &
Northern Corporation and
Citizens & Northern Bank
Karl W. Kroeck 56 1,232 .02
Farmer
Craig G. Litchfield 48 6,805 (5) .14
Senior Vice President of Citizens &
Northern Corporation and Citizens &
Northern Bank
Lawrence F. Mase 61 1990 4,829 .10
President of Mase's, Inc.
CLASS I - CONTINUING DIRECTORS WITH TERMS EXPIRING IN 1997:
R. Robert DeCamp 55 1988 744 .01
President & Chief Executive Officer
of Patterson Lumber Company, Inc.
Adelbert E. Eldridge 63 1989 4,927 (6) .10
Retired Regional Director of
Susquehanna Region of Pennsylvania
Electric Co.
Robert J. Murphy 63 1988 6,469 .13
Retired, formerly Attorney in law firm
of Davis, Murphy, Niemiec & Smith
Edward H. Owlett, III 41 1994 3,761 (7) .08
Attorney in law firm of
Owlett, Lewis & Ginn, P.C.
F. David Pennypacker 54 1993 2,855 .06
Certified Public Accountant in firm
of Pennypacker & Zeigler, P.C.
2
<PAGE>
CLASS II -- CONTINUING DIRECTORS WITH TERMS EXPIRING IN 1998:
R. James Dunham 65 1960 3,694 (8) .07
President of R.J. Dunham Inc.
Department Store
Edward L. Learn 48 1989 1,135 .02
Owner, Learn Hardware & Building
Supply, formerly Manager of
Purina Mills, Inc.
John H. Macafee 65 1974 16,151 .32
Owner and Operator of
Mapoval Farms, Inc.
Leonard Simpson 47 1989 14,960 (9) .30
Attorney at Law, formerly Sullivan
County District Attorney
Donald E. Treat 62 1966 10,621 .21
Owner of Treat Hardware
All Directors and Executive Officers
as a Group (17 persons) 155,897 3.11
</TABLE>
(1) Includes service as director of the Corporation's predecessor, Citizens &
Northern Bank.
(2) Number of shares of Corporation common stock beneficially owned, directly
or indirectly, as of January 12, 1996. Unless otherwise indicated in a
footnote below, each individual holds sole voting and investment authority
with respect to the shares listed. This information has been furnished by
each individual.
(3) Mr. Bower disclaims beneficial ownership of 10,414 shares included above
that are held individually by his wife. Includes 1,010 shares held in an
IRA for the benefit of Mr. Bower.
(4) Mr. Francis disclaims beneficial ownership of 18,920 shares included above
that are held individually by his wife and 122 shares held for his
granddaughter.
(5) Mr. Litchfield disclaims beneficial ownership of 969 shares held
individually by his wife and a total of 687 shares included above that are
held with his daughters.
(6) Includes 3,060 shares held in a self-directed IRA for the benefit of Mr.
Eldridge.
(7) Mr. Owlett disclaims beneficial ownership of 1,319 shares included above
that are held for his nephew and 1,319 shares held for his niece.
(8) Includes 664 shares held in a trust for Mr. Dunham's children.
(9) Includes 1,264 shares held in a SEP-IRA Plan for the benefit of Mr.
Simpson's retirement plan.
No person named above as a nominee or director has any family relationship
with any other person so named.
3
<PAGE>
BOARD OF DIRECTOR COMMITTEES,
ATTENDANCE AT MEETINGS AND COMPENSATION OF DIRECTORS
Both the Corporation's and the Bank's By-Laws provide that the Board may
create any number of committees of the Board as it deems necessary or
appropriate from time to time. As of the date hereof, no Board committees of
the Corporation have been established.
The Bank has an Audit Committee consisting of nine non-employee members of
the Board of Directors. The members of the Committee are Adelbert E. Eldridge,
Laurence R. Kingsley, Edward L. Learn, John H. Macafee, Lawrence F. Mase, Robert
J. Murphy, Edward H. Owlett, III, F. David Pennypacker and Donald E. Treat. The
primary function of the Audit Committee is to review the internal audit program
as performed by the internal auditors, recommend to the Board of Directors the
independent auditors for the year, and review the examinations and reports from
those persons. The Audit Committee held three meetings in 1995.
The Bank has an Executive Committee consisting of six members of the Board
of Directors who are as follows: R. Robert DeCamp, R. James Dunham, William K.
Francis, John H. Macafee, Robert J. Murphy, and Leonard Simpson, as well as
Craig G. Litchfield, Senior Vice President of the Corporation and Bank. The
function of this committee is to recommend policy procedures. During 1995, the
Executive Committee held five meetings. The Executive Committee also functions
as a nominating committee and an investment committee.
The Salary and Pension Committee of the Bank, which held two meetings in
1995, consisted of the following six non-employee members of the Board of
Directors: R. Robert DeCamp, R. James Dunham, John H. Macafee, Robert J.
Murphy, F. David Pennypacker and Leonard Simpson. The committee is charged with
reviewing compensation for all officers and employees of the Bank and
administering the retirement and benefit plans.
The Trust Investment Committee of the Bank, which met ten times in 1995,
consists of four members of the Board of Directors; namely, J. Robert Bower, R.
James Dunham, Edward L. Learn and Leonard Simpson. Thomas L. Briggs, Trust
Officer of the Bank, is also a member of this committee, which determines the
policy and investments of the Trust Department, the acceptance of all fiduciary
relationships and relinquishments of all fiduciary relationships. The committee
keeps minutes of their meetings which are reviewed monthly by the Board of
Directors.
The Bank also has an Asset Liability Committee, which consisted of R.
Robert DeCamp, William K. Francis, Robert J. Murphy and F. David Pennypacker,
four members of the Board of Directors, as well as James W. Seipler, Treasurer
of the Corporation, and Craig G. Litchfield, Senior Vice President of the
Corporation. This committee met eleven times during 1995. The purpose of the
committee is to stabilize and improve profitability by balancing the
relationship between risk and return over an extended period of time.
The Board of Directors of the Corporation met twelve times and the Board of
Directors of the Bank met fourteen times in 1995. All of the directors attended
at least 75% or more of the combined number of meetings of the Corporation, Bank
and their committees of which they were members.
All directors of the Corporation are directors of the Bank. Each director
who is not an officer of the Corporation or Bank received an annual retainer of
$6,000 and an attendance fee of $100 for each meeting of the Board attended. In
addition, each such director received a fee of $100 for attendance at each
committee meeting. The aggregate amount of directors' retainers and fees paid
during 1995 was $144,900.
CORPORATION'S AND BANK'S EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
current executive officers of the Corporation and the Bank.
4
<PAGE>
<TABLE>
<CAPTION>
Shares Percent of
Age as of Beneficially Common Stock
Name and Position for Last Five Years Record Date Owned (1) Outstanding
- ------------------------------------- ----------- ------------ ------------
<S> <C> <C> <C>
William K. Francis 64 43,113 (2) .86
Chairman, President and C.E.O. of the
Corporation since 1987; Chairman, President
and C.E.O. of the Bank since 1982
Craig G. Litchfield 48 6,805 (3) .14
Senior Vice President of the Corporation and the
Bank since 1994, formerly Vice President of the
Bank since 1982
Robert W. Anderson 57 5,388 .11
Vice President, Data Processing, of the Bank
since 1969
James W. Seipler 54 8,584 (4) .17
Treasurer of the Corporation since 1987;
Controller and Cashier of the Bank since 1971
</TABLE>
(1) Number of shares of Corporation common stock beneficially owned, directly
or indirectly, as of January 12, 1996. Unless otherwise indicated in a
footnote below, each individual holds sole voting and investment authority
with respect to the shares listed. This information has been furnished by
each individual.
(2) Includes 18,920 shares held individually by his wife and 122 shares held
for his granddaughter, in which Mr. Francis disclaims beneficial ownership.
(3) Mr. Litchfield disclaims beneficial ownership of 969 shares held
individually by his wife and a total of 687 shares included above that are
held with his daughters.
(4) Mr. Seipler disclaims beneficial ownership of 564 shares included above
that are held jointly with his sons.
None of the above executive officers has any family relationship with any
other executive officer or with any director of the Corporation.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Salary & Pension Committee ("Committee") of the Board of Directors
establishes compensation policies, plans and programs which are intended to
accomplish three objectives: to attract and retain highly capable and well
qualified executives; to focus executives' efforts on increasing long-term
stockholder value; and to reward executives at levels which are competitive with
the marketplace for similar positions and commensurate with the performance of
each executive and of Citizens & Northern. Each member of the Committee is an
independent non-employee director. The Committee establishes the salaries of
the other executive officers with input from the Chief Executive Officer and all
decisions relating to the compensation of the executive officers are reviewed by
the Board of Directors.
With the lack of long-term incentive compensation plans in the past, the
Committee recognizes the need to adjust base compensation accordingly. The key
elements in Citizens & Northern's executive compensation program, all determined
by individual and corporate performance, are base salary compensation, annual
incentive compensation and equitable retirement benefits.
5
<PAGE>
Annual compensation for the Chief Executive Officer is determined in
essentially the same way as for other executives, recognizing that the CEO has
overall responsibility for the performance of Citizens & Northern. The
Committee believes that the CEO compensation should be heavily influenced by the
performance of the Corporation. The Committee established the CEO's base salary
by considering the salaries of CEOs of comparably-sized banks and their
performance according to salary information compiled by both regional and
national benefit and salary surveys.
In establishing his base salary, the Committee reached the following
conclusions regarding company performance: Survey comparison of Citizens &
Northern established a survey Peer Group of 27 independent banks whose 1994
average asset size equaled C&N's and further narrowed their Peer Group to a Core
Group of 23 banks with an ROA of 1.00% or higher. Citizens & Northern's net
income was 24% higher than the average of the Peer Group. C&N's return on
assets for 1994 was 1.35%, 19% better than the Peer Group average and 10% better
than a Core Group average of high-performing banks. C&N's 1994 return on equity
of 14.4% was also 37% better than the Peer Group average, while on par with the
Core Group average. Mr. Francis' base salary is competitive at 7% above CEOs
who receive the same compensation package; however, his total compensation with
bonus and incentives falls to 92% of par behind Core Group CEOs. In 1994, the
Committee established the Chief Executive Officer's 1995 base salary at
$220,000, representing a 10% increase over 1994.
The annual compensation of the Chief Executive Officer and executive
officers is reviewed annually by the Committee, except for decisions about
awards under the Incentive Award Plan. These awards are made solely by the
attainment of specific measurable performance indicators, which are return on
assets, performance to budget, deposit growth and past-due reduction. If the
target is met, awards are calculated for each participant based upon the level
of corporate performance relative to the target. C&N's Incentive Award Plan
caps the award at 25% of base compensation, while the Peer Group awarded cash
bonuses to CEOs averaging 26%.
The Corporation approved a non-qualified Supplemental Income Plan effective
January 1, 1989. It was designed for the purpose of retaining talented
executives and to promote in these executives a strong interest in the long-
term, successful operation of the Corporation. The Plan supplements the lower
retirement benefits of executives in comparison with average total retirement
benefits paid non-executives. The Plan is an unfunded plan and is subject to
the general creditors of the Corporation.
The Corporation approved a Stock Incentive Plan effective January 1, 1995.
The Stock Incentive Plan is designed to advance the development, growth and
financial condition of the Corporation while attracting, retaining and rewarding
executives.
The Committee believes that the concepts discussed above further the
stockholders' interests since a significant part of executive compensation is
based on obtaining results for the stockholders. The Committee bases its review
on experience of its own members, on information requested from management and
information compiled by various independent compensation consultants. The
Committee believes that the program encourages responsible management of the
Corporation.
Members of the Compensation Committee,
R. Robert DeCamp, Chairman Robert J. Murphy
R. James Dunham F. David Pennypacker
John H. Macafee Leonard Simpson
EXECUTIVE COMPENSATION
The summary compensation table contains information with respect to
annual compensation for services in all capacities to the Corporation and Bank
for the fiscal years ending December 31, 1995, 1994 and 1993 of
6
<PAGE>
those persons who were, at December 31, 1995, (i) the Chief Executive Officer
and (ii) the four (4) other most highly compensated executives to the extent
such persons' total salary and bonus exceeded $100,000:
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other All
Annual Restricted Options/ Other
Compen- Stock SARs LTIP Compen-
Name and Salary(l) Bonus sation(2) Awards Awards Payouts sation(3)
Principal Position YEAR ($) ($) ($) (#) (#) ($) ($)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WILLIAM K. FRANCIS 1995 220,000 55,000 X 0 0 0 66,388
President, Chairman 1994 200,000 50,000 X 0 0 0 55,796
& CEO 1993 180,000 45,000 X 0 0 0 53,278
CRAIG G. LITCHFIELD 1995 140,000 35,000 X 0 2,500 0 15,771
Senior Vice President 1994 117,115 29,279 X 0 0 0 13,655
1993 92,000 23,000 X 0 0 0 11,814
ROBERT W. ANDERSON 1995 100,000 25,000 X 0 1,700 0 18,494
Vice President 1994 92,000 23,000 X 0 0 0 16,053
1993 86,000 21,500 X 0 0 0 15,445
JAMES W. SEIPLER 1995 100,000 25,000 X 0 1,700 0 16,716
Controller and 1994 92,000 23,000 X 0 0 0 14,530
Cashier 1993 86,000 21,500 X 0 0 0 14,122
</TABLE>
(1) The amounts shown in this column represent annual base salary.
(2) The Bank provides automobiles and certain other benefits for certain of its
principal officers in connection with the business of the Bank. The value
of personal benefits to the officers individually is not included in the
table above because the aggregate amount of such other compensation is less
than 10% of the cash compensation paid to the individual as reported above.
(3) The amount indicated includes the Bank's contribution to the Savings &
Retirement Plan (401k) and the Non-Qualified Supplemental Executive
Retirement Plan.
STOCK INCENTIVE PLAN
In 1995, the Corporation's Board of Directors adopted and the stockholders
approved the Citizens & Northern Corporation Stock Incentive Plan. On December
21, 1995 ("Grant Date"), the Board of Directors granted non-qualified stock
options for key officers of the Bank, the right to purchase shares of the
Corporation Common Stock at a price of $20.00. The period of the options shall
be ten (10) years, commencing from the date of the grant. Not more than twenty
percent (20%) of the shares optioned may be exercised in any one year during the
term of the option, commencing with the Grant Date. The Option shall not be
exercisable until one year from the date of the grant. Shares granted under
option in 1995 were 12,100. At December 31, 1995, there were 47,900 shares
reserved for future grants. No stock options were awarded or are outstanding
for Mr. Francis.
OPTION / SAR GRANTS
The following table sets forth information concerning stock options granted
in 1995 under the Stock Incentive Plan to the Chief Executive Officer and the
four most highly compensated executives of the Corporation named in the Summary
Compensation Table:
7
<PAGE>
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e) (f)
% of Total
Number of Options/
Securities SARs Granted Exercise Grant
Underlying to Employees or Base Date
Options/SARs in Fiscal Price Expiration Present
Name Granted Year ($/Share) Date Value ($)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
William K. Francis 0 0
Craig G. Litchfield 2,500 20.66% $20.00 12/21/2005 $50,000
Robert W. Anderson 1,700 14.05% $20.00 12/21/2005 $34,000
James W. Seipler 1,700 14.05% $20.00 12/21/2005 $34,000
</TABLE>
AGGREGATED STOCK OPTION EXERCISES DURING 1995
AND YEAR-END OPTION VALUES
The following table sets forth information concerning the exercise during
1995 of options granted under the Stock Incentive Plan by the four most highly
compensated executives of the Corporation named in the Summary Compensation
Table:
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of Securities
Value Underlying Unexercised Value of Unexercised
Shares Realized Options at In-the-Money Options on
Acquired on Shares December 31, 1995 December 31, 1995 (1)
Name on Exercise Acquired Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Craig G. Litchfield 0 0 0 2,500 $0.00 $1,250.00
Robert W. Anderson 0 0 0 1,700 $0.00 $ 850.00
James W. Seipler 0 0 0 1,700 $0.00 $ 850.00
</TABLE>
(1) Based upon $20.50 per share market value at December 31, 1995.
PERFORMANCE GRAPH
Set forth below is a chart comparing the Corporation's cumulative return to
stockholders against the cumulative return of the S&P 500 Index and a Peer Group
Index of similar banking organizations selected by the Corporation for the five
year period commencing January 1, 1990 and ending December 31, 1995. The index
values are market weighted, dividend reinvestment numbers which measure the
total return for investing $100.00 five years ago. This meets SEC requirements
for showing dividend reinvestment share performance over a five year period and
measures the return to an investor for placing $100.00 into a group of bank
stocks and letting the money set with all dividends being reinvested into the
stock paying the dividend.
8
<PAGE>
CITIZENS & NORTHERN CORPORATION
COMPARISON OF 5 YEAR CUMULATIVE RETURN
[Graph]
PERIOD ENDING
<TABLE>
<CAPTION>
12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
<S> <C> <C> <C> <C> <C> <C>
C&N $ 100.00 $ 110.96 $ 129.92 $ 190.57 $ 247.93 $ 261.73
Peer Group $ 100.00 $ 100.15 $ 128.23 $ 182.79 $ 213.20 $ 227.56
S&P 500 Index $ 100.00 $ 126.31 $ 131.95 $ 141.25 $ 139.08 $ 186.52
</TABLE>
All ten institutions in the peer group selected by the Corporation are
headquartered in Pennsylvania, have total assets of $200 to $600 Million, market
capitalization of at least $25 Million, and are not listed on the NASDAQ
National Market System. This peer group consists of ACNB Corporation,
Gettysburg; CNB Financial Corporation, Clearfield; Drovers Bancshares
Corporation, York; First West Chester Corporation, West Chester; Franklin
Financial Service Corporation, Chambersburg; Hanover Bancorp, Inc., Hanover;
Penn Security Bank and Trust Company, Scranton; Penn Rock Financial Services
Corporation, Blue Ball; Penns Woods Bancorp, Inc., Jersey Shore; and Sterling
Financial Corporation, Lancaster. This is the same peer group that was used in
1995.
PENSION PLAN
The Citizens & Northern Bank Pension Plan (the "Plan") is intended to
provide a defined retirement benefit to participants without regard to the
profits of the Bank. Employees are neither required nor permitted to contribute
to the Plan. Annual contributions by the Bank are determined actuarially. To
participate in the Plan, an employee must be 21 years of age and have completed
one year of service. A participant's retirement benefit, which becomes fully
vested after 5 years of service, is based on compensation and credited service
with the Bank. For purposes of determining a retirement benefit, the term
"compensation" is defined to include an employee's total remuneration received
from the Bank, including base salary and overtime. Benefits are a percentage of
the average compensation for the five consecutive years of highest compensation
preceding retirement, multiplied by the number of years of completed service, up
to 25 years. The Bank's Trust Department serves as Trustee under the Plan.
The following table indicates, for purposes of illustration, the
approximate amounts of annual retirement income which would be payable under the
terms of the Plan, in the form of a straight life annuity, to a participant who
retired as of December 31, 1995, at age 65, under various assumptions as to
compensation and years of credited service. For any plan year beginning after
December 31, 1993, the Pension Plan benefits are determined
9
<PAGE>
on only the first $150,000 in compensation as determined by the Commissioner of
the Internal Revenue Service and as prescribed by law.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
Years of Credited Service
AVERAGE ANNUAL COMPENSATION 15 20 25 (or more)
- --------------------------- ---------------------------------------
<S> <C> <C> <C>
$ 75,000 $14,747 $19,662 $24,578
$100,000 $20,559 $27,412 $34,265
$125,000 $26,372 $35,162 $43,953
$150,000 $32,184 $42,912 $53,640
$175,000 $32,184 $42,912 $53,640
$200,000 $32,184 $42,912 $53,640
$225,000 $32,184 $42,912 $53,640
$250,000 $32,184 $42,912 $53,640
</TABLE>
The credited years of service under the Plan as of December 31, 1995 for
Francis, Litchfield, Anderson and Seipler were 24, 23, 24 and 30 years,
respectively.
In December, 1989, the Bank established a non-qualified supplemental
executive retirement plan for certain key executive employees ("Executive
Plan"). The Executive Plan provides a retirement benefit for executives who
retire after attaining age 62 and 5 years of plan service in an amount
determined annually by the Directors. The Executive Plan may be terminated by
the Board of Directors at any time. In 1994, the amounts accrued pursuant to
the Executive Plan for the accounts of the officers named in the Summary
Compensation Table set forth herein, is included as "All Other Long Term
Compensation". Future estimated benefits do not take compensation into
consideration.
SAVINGS PLAN
The Citizens & Northern Savings and Retirement Plan ("Savings Plan") is
qualified under Section 401(k) of the Internal Revenue Code. It allows a
participant to authorize the deposit into the Plan of before tax earnings of
from 1% to 15% of his compensation as they may elect. Under the Tax Reform Act,
the maximum amount of elective contributions that could be made by a participant
during 1995 was Nine Thousand Two Hundred Forty Dollars ($9,240.00), also
subject to the $150,000 compensation limit. All officers and employees of
Citizens & Northern Bank, including the officers names in the Summary
Compensation Table set forth herein, are eligible to participate in the 401(k)
Plan. A participant may also make voluntary contributions to the Plan from
after tax savings of up to 10% of his compensation. The Bank is required to
contribute a basic employer contribution equal to at least 2% of each eligible
participant's compensation; in addition, the Bank may make a discretionary basic
contribution. The total actual basic employer contribution for 1995 was equal
to 4%. In addition, the Bank makes matching contributions equal to 100% of the
participant's before tax contributions up to 3% of his compensation and equal to
50% of such contributions between 3% and 5% of his compensation. The Bank's
basic contributions are invested in the common stock of the Corporation. All
participants' contributions and the Bank's matching contributions, at the
participants' election, are invested in either a Fixed Fund or an Equity Fund
maintained by the Bank as Trustee. In 1995, the Bank's contribution to the
Savings Plan for the accounts of the officers named in the Summary Compensation
Table set forth herein is included as "All Other Long Term Compensation".
Substantially all officers and employees of the Bank are eligible to participate
in the Savings Plan.
INCENTIVE AWARD PLAN
The Board of Directors of the Bank has adopted an Incentive Award Plan for
certain members of the management group of the Bank in order to promote a
superior level of performance relating the Bank's financial goals. Under the
Incentive Award Plan, if predetermined performance goals are realized by the
Bank in a given
10
<PAGE>
fiscal year, the participants will receive awards ranging up to a maximum of 25%
of their base salaries (i.e., salary before reduction for the Savings Plan and
without regard to incentive award payments).
Under the Incentive Award Plan, immediately before the beginning of each
year the Salary Committee of the Board of Directors of the Bank will designate
the participants in the Plan and set a minimum and maximum level of awards for
each class of participants and the individual performance and financial goals of
the Bank or appropriate unit to be achieved. The Salary Committee, at its
discretion, may adjust award payments under the Incentive Award Plan based on
extraordinary circumstances, conflicts with long-term financial and development
objectives, or below standard individual participant performance. All awards
under the Incentive Award Plan will be paid in cash and are paid as soon as
practical after the end of a plan year.
CERTAIN TRANSACTIONS
Certain directors and officers of the Corporation and Bank and their
associates (including corporations of which such persons are officers or 10%
beneficial owners) were customers of, and had transactions with the Bank in the
ordinary course of business during the year ended December 31, 1995. Similar
transactions may be expected to take place in the future. Such transactions
included the purchase of certificates of deposit and extensions of credit in the
ordinary course of business on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with other persons and did not involve more than the normal risks
of collectibility or present other unfavorable features. The Bank expects that
any other transactions with directors and officers and their associates in the
future will be conducted on the same basis.
The law firm of Owlett, Lewis & Ginn, P.C., of which Director Owlett is an
employee and in which he has an interest, acts as legal counsel for the
Corporation and the Bank.
PROPOSAL 2 -- RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Parente, Randolph, Orlando, Carey & Associates has been the independent
public accounting firm appointed by the Bank since 1981, and has been selected
by the Board as the independent public accounting firm for the Corporation and
the Bank for 1996. No member of the firm or any of its associates has a
financial interest in the Corporation. Parente, Randolph, Orlando, Carey &
Associates provides, in addition to audit services, non-audit professional
services such as preparation of income tax returns, consultations, and various
other services. Non-audit services are considered to have no effect on the
independence of accountants. A representative of Parente, Randolph, Orlando,
Carey & Associates is expected to be present at the Annual Meeting to answer
appropriate questions from stockholders and will be afforded an opportunity to
make any statement that the firm desires.
The Board of Directors recommends a vote "FOR" ratification of the
appointment of Parente, Randolph, Orlando, Carey & Associates as independent
auditors of the Corporation.
STOCKHOLDER PROPOSALS
Any proposal intended to be presented by a stockholder of the Corporation
at the Corporation's 1997 Annual Meeting must be received by the Corporation no
later than January 9, 1997 to be considered for inclusion in the Corporation's
proxy statement for such meeting. Any proposal should be addressed to the
Secretary of the Corporation, 90-92 Main Street, Wellsboro, Pennsylvania 16901.
OTHER MATTERS
The management of the Corporation does not intend to bring any other
matters before the Annual Meeting and is not presently informed of any other
business which others may bring before such meeting. However, if any other
matters should properly come before such meeting or any adjournment thereof, it
is the intention of the persons named in the accompanying proxy to vote on such
matters as they, in their discretion, determine.
11
<PAGE>
ADDITIONAL INFORMATION
The Corporation's Annual Report for the year 1995, including financial
statements as certified by Parente, Randolph, Orlando, Carey & Associates, was
mailed with this Proxy Statement on or about March 18, 1996, to the stockholders
of record as of the close of business on March 1, 1996.
A COPY OF THE CORPORATION'S 1995 ANNUAL REPORT ON FORM 10-K FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE FINANCIAL STATEMENTS AND
SCHEDULES THERETO, WILL BE FURNISHED FREE OF CHARGE TO STOCKHOLDERS. WRITTEN
REQUEST SHOULD BE DIRECTED TO THE TREASURER, CITIZENS & NORTHERN CORPORATION,
90-92 MAIN STREET, WELLSBORO, PA, 16901, OR BY PHONE AT 717-724-3411.
By Order of the Board of Directors,
Kathleen M. Osgood
Corporate Secretary
Dated: March 18, 1996
12
<PAGE>
CITIZENS & NORTHERN CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 16, 1996
The undersigned hereby appoints R. Robert DeCamp and Edward L. Learn, and each
or either of them, as the attorneys and proxies of the undersigned, with full
power of substitution in each, to vote all shares of the common stock of
Citizens & Northern Corporation which the undersigned would be entitled to vote
if personally present at the Annual Meeting of Stockholders to be held on
Tuesday, April 16, 1996 at 2:00 P.M. (local time), at 90-92 Main Street,
Wellsboro, Pennsylvania 16901, and at any adjournments thereof, and to vote as
follows:
1. ELECTION OF CLASS III DIRECTORS.
Nominees: J. Robert Bower, William K. Francis, Karl W. Kroeck,
Craig G. Litchfield and Lawrence P. Mase.
/ / VOTE FOR all nominees listed above / / VOTE WITHHELD from all
(except as marked to the contrary below) nominees listed above.
--------------------------------------------------------------
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name on the space provided above.)
2. APPROVAL OF THE APPOINTMENT OF THE FIRM OF PARENTE, RANDOLPH, ORLANDO,
CAREY & ASSOCIATES AS INDEPENDENT AUDITORS.
/ / VOTE FOR / / VOTE AGAINST / / ABSTAIN
3. OTHER MATTERS. In their discretion, to vote with respect to any other
matters that may properly come before the Meeting or any adjournments
thereof.
(over)
- --------------------------------------------------------------------------------
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DIRECTED HEREIN BY THE
STOCKHOLDER. UNLESS OTHERWISE INDICATED, THIS PROXY WILL BE VOTED FOR THE
ELECTION AS DIRECTORS OF THE NOMINEES LISTED IN PROPOSAL I AND FOR PROPOSAL 2.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. When shares are held as joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Dated:_______________________________, 1996
___________________________________________
Signature
___________________________________________
Signature
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED POSTAGE-PAID ENVELOPE.
