-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SS0dZzo+blodafOkOIFU/mw3cyhXAXYAf5e6tLYqS93wwHbAnysmBMwWIvl9G3hy SP/rPZ/BPRgwOHhTwEReEw== 0000950152-06-000206.txt : 20060113 0000950152-06-000206.hdr.sgml : 20060113 20060113171424 ACCESSION NUMBER: 0000950152-06-000206 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20051231 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060113 DATE AS OF CHANGE: 20060113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CITIZENS & NORTHERN CORP CENTRAL INDEX KEY: 0000810958 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 232451943 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-16084 FILM NUMBER: 06530696 BUSINESS ADDRESS: STREET 1: 90-92 MAIN ST CITY: WELLSBORO STATE: PA ZIP: 16901 BUSINESS PHONE: 7172656171 MAIL ADDRESS: STREET 1: 90-92 MAIN ST CITY: WELLSBORO STATE: PA ZIP: 16901 8-K 1 l17845ae8vk.txt CITIZENS & NORTHERN CORPORATION 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) December 31, 2005 ----------------- CITIZENS & NORTHERN CORPORATION ------------------------------- (Exact name of registrant as specified in its charter) Pennsylvania 0-16084 23-2451943 - ------------------------------- ---------------- ------------------- (State or other jurisdiction of (Commission (I.R.S. Employer incorporation) File Number) Identification No.) 90-92 Main Street, Wellsboro, PA 16901 - ---------------------------------------- --------- (Address of Principal Executive Office) (Zip Code) Registrant's telephone number, including area code (570) 724-3411 -------------- N/A ----- (Former name or former address, if changed since last report) ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION Citizens & Northern Corporation announced the unaudited, consolidated financial results for Citizens & Northern Corporation and subsidiaries for the annual and three-month periods ended December 31, 2005. On January 13, 2006, Citizens & Northern Corporation issued a press release titled "C&N Announces December 31, 2005 Unaudited Financial Results," a copy of which is filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference. Also, Citizens & Northern Corporation's "Quarterly Report," a report that includes unaudited financial information, will be mailed to shareholders on or about January 20, 2006. A copy of the Quarterly Report is filed as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference. ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS (a) Not applicable. (b) Not applicable. (c) Not applicable. (d) Exhibits. Exhibit 99.1: Press Release issued by Citizens & Northern Corporation dated January 13, 2006, titled "C&N Announces 2005 Unaudited Financial Results." Exhibit 99.2: Quarterly Report, which includes unaudited financial information. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned, thereunto duly authorized. CITIZENS & NORTHERN CORPORATION Date: 1/13/06 By: Craig G. Litchfield /s/ --------------------------- Chairman, President and Chief Executive Officer EX-99.1 2 l17845aexv99w1.txt EXHIBIT 99.1 EXHIBIT 99.1 (PRESS RELEASE CITIZENS & NORTHERN BANK LOGO) Contact: Yvonne Gill January 13, 2006 570-724-0247 yvonneg@cnbankpa.com C&N ANNOUNCES 2005 UNAUDITED FINANCIAL RESULTS FOR IMMEDIATE RELEASE: WELLSBORO, PA - Citizens & Northern Corporation announced the unaudited, consolidated financial results for Citizens & Northern Corporation and subsidiaries for the year ended December 31, 2005, and for the fourth quarter 2005, which are highlighted below. FINANCIAL HIGHLIGHTS FOR THE YEAR ENDED DECEMBER 31, 2005: o Net Income was $12,984,000 for the year ended December 31, 2005, down 12.6% from net income of $14,863,000 for 2004. Net Income Per Share was $1.57 (Basic) and $1.55 (Diluted) for 2005, as compared to $1.80 (Basic) and $1.79 (Diluted) for 2004. o Return on Average Assets was 1.13% for 2005, as compared to 1.33% for 2004. Return on Average Equity was 9.80% for 2005, as compared to 11.58% for 2004. o Cash Dividends declared by C&N increased by 4.5% for 2005 over 2004, to $0.93 per share. o Total assets amounted to $1,162,954,000 as of December 31, 2005, up 3.6% from December 31, 2004. The increase in assets resulted almost exclusively from C&N's acquisition of First State Bank (through the acquisition of Canisteo Valley Corporation, the parent company of First State Bank) in the third quarter 2005. o Net loans increased 12.6%, to $644,938,000 at December 31, 2005 from $572,826,000 at December 31, 2004. Excluding First State Bank, the increase in net loans was 8.8%. o Total deposits and repo sweep accounts increased 12.5%, to $784,799,000 at December 31, 2005 from $697,723,000. Excluding First State Bank, the increase in deposits and repo sweeps was 7.2%. o Assets under management by C&N's Trust and Financial Management Group increased 9.2%, to $418,259,000 at December 31, 2005 from $383,062,000 at December 31, 2004. o Tangible Equity/Tangible Assets Ratio was 10.75% at December 31, 2004. Banking regulatory agencies consider 5% to be the minimum threshold, for purposes of this ratio, for banks to be considered well capitalized. C&N's 2005 earnings results reflected the impact of a flat yield curve, a significant increase in noninterest expense, and other factors. Despite substantial loan growth, the net interest margin increased only slightly in 2005 over 2004. Increases in short-term interest rates contributed to a 13.6% increase in interest expense, while relatively flat (and at times, declining) long-term rates dampened the positive earnings effect of the growth in loans. The impact of rising interest costs became especially apparent in the fourth quarter, as the interest margin fell to $8,787,000 from $9,145,000 in the third quarter. Further, in light of the flat yield curve, the opportunities were very limited for earning a positive spread from maintaining borrowed funds and holding investment securities. Accordingly, the December 31, 2005 balance of available-for-sale securities was $50,513,000 lower than the year-end 2004 balance, and the December 31, 2005 balance of short-term (excluding customer repurchase agreements) and long-term borrowings was $44,622,000 lower than year-end 2004. Noninterest expense increased $2,961,000 (11.4%) in 2005 over 2004. Total salaries and benefit expenses increased $1,438,000, or 10.1% in 2005 over 2004, primarily due to new hires to accommodate expansion into new branches and for several support functions. Furniture and equipment expense increased $859,000, or 47.6%, mainly due to depreciation and maintenance costs associated with the new core banking software system, which was implemented in the fourth quarter 2004. The provision for loan losses increased $626,000 in 2005 over 2004, mainly due to estimates of possible future charge-offs on several large commercial loans, as well as volume-related increases in the portions of the provision determined based on historical net charge-off and subjective factors. In the fourth quarter 2005, C&N realized a gain from the sale of credit card receivables of $1,906,000. After the sale, C&N continues to offer credit cards, but now as an agent for a national credit card issuer. Also in the fourth quarter 2005, C&N had net losses from sales of securities of $586,000, resulting in a $1,075,000 reduction in net securities gains in 2005 as compared to 2004. The fourth quarter 2005 losses were mainly from sales of securities that were purchased in 2003 and 2004, when market yields were lower than current conditions. Other (noninterest) income totaled $7,636,000 in 2005, an increase of $714,000, or 10.3%, over 2004. This category includes several sources of revenue. The sources of revenue with the largest increases in 2005 included the following: fees related to credit card operations of $175,000; dividends from Federal Home Loan Bank of Pittsburgh stock of $152,000; and debit card fees of $100,000. FINANCIAL HIGHLIGHTS FOR THE FOURTH QUARTER 2005: o Net Income in the fourth quarter 2005 was $3,104,000, as compared to $4,063,000 in the fourth quarter 2004. Net Income for the fourth quarter 2005 was down 5.6% from third quarter 2005 Net Income of $3,287,000. Net Income Per Share (Basic and Diluted) was $0.37 in the fourth quarter 2005, down from $0.39 (Basic) and $0.38 (Diluted) in the third quarter 2005, and down from $0.49 (Basic and Diluted) in the fourth quarter 2004. o Cash Dividends declared by C&N increased to $0.24 per share for the fourth quarter 2005 from $0.23 per share for the fourth quarter 2004. Citizens & Northern Corporation is the parent company of Citizens & Northern Bank and First State Bank. Citizens & Northern Bank is a local, independent community bank providing complete financial, investment and insurance services through 20 full service offices throughout Tioga, Bradford, Sullivan and Lycoming counties in Pennsylvania. First State Bank provides banking services through its offices in Canisteo and South Hornell, NY. C&N can be found on the worldwide web at www.cnbankpa.com. First State Bank can be found on the web at www.fsbcanisteo.com. The Company's stock is listed on NASDAQ Capital Market Securities under the symbol CZNC. EX-99.2 3 l17845aexv99w2.txt EXHIBIT 99.2 EXHIBIT 99.2 [CITIZENS & NORTHERN CORPORATION LOGO] 90-92 Main Street, P.O. Box 58 Wellsboro, PA 16901 Phone: (570) 724-3411 Fax: (570) 723-8097 E-Mail: cnemail@cnbankpa.com Web Page: http://www.cnbankpa.com Stock Symbol: CZNC Chartered 1864 FEDERAL DEPOSIT INSURANCE CORP DECEMBER 31, 2005 QUARTERLY REPORT Dear Shareholder: Your company continues to build its base for the future. In the second half of 2005, we added one new community office, Jersey Shore, and the First State Bank with offices in Canisteo and South Hornell, New York. By March of 2006, the 21st Citizens & Northern Office will open in Old Lycoming Township. This expansion is in addition to the two new offices we opened in 2004 in Williamsport and South Williamsport. This growth initiative has a cost, which is reflected in the net income for 2005. Even though we increased interest and dividend income by 5.5%, due mostly to a 12.6% increase in loans, the continuing monetary tightening by the Federal Reserve of the Fed Funds rate (eight 1/4% increases during 2005) with the corresponding need for us to remain competitive for deposits has increased our interest expense by over 13.6%. As the short end of the rate curve rose substantially, the long end actually fell slightly. Thus the competitive rates for loans and fixed income securities have not increased commensurately. This resulted in nominal growth in our interest margin, when the expenses related to our growth initiative grew substantially. Thus our net income decreased by 12.6%. At the end of the quarter, we did realize a one-time gain of $1.9 million from the sale of our credit card portfolio. The decision to sell was based on our inability to grow the portfolio to a level that would allow us to absorb the costs of implementing more sophisticated security to avoid losses from fraud. We will still offer our customers credit cards as an agent bank. We offset some of the gain with losses on sale of some low yielding securities to enhance future income opportunities. Also, we increased the provision for loan losses in the 4th quarter, resulting in a provision $626,000 higher than 2004. Growth in the loan portfolio along with estimates of possible losses were the main reasons for the increase. Trust Assets under management ended the year at $418.3 million. The growth can be attributed to both gain on investments and the sales efforts of our very competent Trust staff. We look forward to the challenges that the new year brings. Thank you for your continued support. Craig G. Litchfield Chairman, President & CEO CITIZENS & NORTHERN CORPORATION BOARD OF DIRECTORS CRAIG G. LITCHFIELD CHAIRMAN OF THE BOARD Dennis F. Beardslee Leo F. Lambert R. Robert DeCamp Edward L. Learn Jan E. Fisher Edward H. Owlett, III R. Bruce Haner Leonard Simpson Susan E. Hartley James E. Towner Karl W. Kroeck Ann M. Tyler DIRECTORS EMERITI F. David Pennypacker CITIZENS & NORTHERN BANK OFFICES 428 S. Main Street, ATHENS, PA 18810 570-888-2291 111 Main Street, DUSHORE, PA 18614 570-928-8124 Main Street, EAST SMITHFIELD, PA 18817 570-596-3131 104 Main Street, ELKLAND, PA 16920 814-258-5111 230-232 Railroad Street, JERSEY SHORE, PA 17740 570-398-4555 102 E. Main Street, KNOXVILLE, PA 16928 814-326-4151 Main Street, LAPORTE, PA 18626 570-946-4011 Main Street, LIBERTY, PA 16930 570-324-2331 1085 S. Main Street, MANSFIELD, PA 16933 570-662-1111 Route 220, MONROETON, PA 18832 570-265-2157 3461 Rte.405 Highway, MUNCY, PA 17756 570-546-6666 Thompson Street, RALSTON, PA 17763 570-995-5421 1827 Elmira Street, SAYRE, PA 18840 570-888-2220 2 E. Mountain Ave., SO. WILLIAMSPORT, PA 17702 570-601-3016 41 Main Street, TIOGA, PA 16946 570-835-5236 428 Main Street, TOWANDA, PA18848 570-265-6171 Court House Square, TROY, PA 16947 570-297-2159 90-92 Main Street, WELLSBORO, PA 16901 570-724-3411 130 Court Street, WILLIAMSPORT, PA 17701 570-320-0100 Route 6, WYSOX, PA 18854 570-265-9148 TRUST & FINANCIAL MANAGEMENT GROUP 90-92 Main Street, WELLSBORO, PA 16901 800-487-8784 428 Main Street, TOWANDA, PA 18848 888-987-8784 503 N. Elmira Street, SAYRE, PA 18840 888-760-8192 3461 Rte 405 Highway, MUNCY, PA 17756 570-546-6666 130 Court Street, WILLIAMSPORT, PA 17701 570-601-6000 ACCOUNT SERVICES - 90-92 Main St, Wellsboro, PA 16901 800-726-2265 BANKCARD SERVICES - 11822 Route 6, Wellsboro PA 16901 800-676-6639 FUNDS MANAGEMENT - 90-92 Main St., Wellsboro, PA 16901 800-577-9397 www.fmt@cnbankpa.com INTERNET BANKING - 90-92 Main St., Wellsboro, PA 16901 570-724-0266 www.cnbankpa.com C&N FINANCIAL SERVICES CORPORATION - 68 Main Street, Wellsboro, PA 866-ASK-CNFS www.cnfinancialservices.com CANISTEO VALLEY CORPORATION 3 Main Street, Canisteo, NY 14823 607-698-4295 FIRST STATE BANK OFFICES 3 Main Street, CANISTEO, NY 14823 607-698-4295 111 Main Street, HORNELL, NY 14843 607-324-4081 www.fsbcanisteo.com
CONSOLIDATED STATEMENT OF INCOME (In Thousands, Except Per Share Data) (Unaudited)
3 MONTHS ENDED 12 MONTHS ENDED DECEMBER DECEMBER 2005 2004 2005 2004 (CURRENT) (PRIOR YR) (CURRENT) (PRIOR YR) --------- ---------- --------- ---------- Interest and Dividend Income $ 15,936 $ 14,991 $ 61,108 $ 57,922 Interest Expense 7,149 5,745 25,687 22,606 - --------------------------------------------------------------------------------------------------------------------------------- Interest Margin 8,787 9,246 35,421 35,316 Provision for Loan Losses 901 350 2,026 1,400 - --------------------------------------------------------------------------------------------------------------------------------- Interest Margin After Provision for Loan Losses 7,886 8,896 33,395 33,916 Other Income 1,895 1,815 7,636 6,922 Realized Gains on Securities, Net (586) 1,133 1,802 2,877 Gain from Sale of Credit Card Loans 1,906 - 1,906 - Other Expenses 7,358 6,746 28,962 26,001 - --------------------------------------------------------------------------------------------------------------------------------- Income Before Income Tax Provision 3,743 5,098 15,777 17,714 Income Tax Provision 639 1,035 2,793 2,851 - --------------------------------------------------------------------------------------------------------------------------------- NET INCOME $ 3,104 $ 4,063 $ 12,984 $ 14,863 ================================================================================================================================= PER SHARE DATA (**): Net Income - Basic $0.37 $0.49 $1.57 $1.80 Net Income - Diluted $0.37 $0.49 $1.55 $1.79 Dividend Per Share $0.24 $0.23 $0.93 $0.89 Number Shares Used in Computation - Basic 8,302,932 8,265,639 8,292,141 8,265,639 Number Shares Used in Computation - Diluted 8,343,951 8,312,577 8,350,926 8,312,577
CONSOLIDATED BALANCE SHEET (In Thousands, Except Per Share Data) (Unaudited)
DEC. 31, DEC. 31, 2005 2004 ---- ---- ASSETS Cash & Due from Banks $ 26,446 $ 18,953 Available-for-Sale Securities 427,298 475,085 Loans, Net 644,938 572,826 Intangible Assets 3,383 - Other Assets 60,889 56,138 - ---------------------------------------------------------------------------------------------------------------- TOTAL ASSETS $1,162,954 $ 1,123,002 ================================================================================================================ LIABILITIES Deposits $ 757,065 $ 676,545 Repo Sweep Accounts 27,734 21,178 - ---------------------------------------------------------------------------------------------------------------- Total Deposits and Repo Sweeps 784,799 697,723 Borrowed Funds 239,205 283,827 Other Liabilities 6,982 9,867 - ---------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES 1,030,986 991,417 - ---------------------------------------------------------------------------------------------------------------- SHAREHOLDERS' EQUITY Shareholders' Equity, Excluding Net Unrealized Gains/Losses on Available-for sale Securities 127,270 121,050 Net Unrealized Gains/Losses on Available- for-sale Securities (*) 4,698 10,535 - ---------------------------------------------------------------------------------------------------------------- TOTAL SHAREHOLDERS' EQUITY 131,968 131,585 - ---------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $1,162,954 $ 1,123,002 ================================================================================================================
CONSOLIDATED FINANCIAL HIGHLIGHTS (In Thousands, Except Per Share Data) (Unaudited)
12 MONTHS ENDED % DECEMBER INCREASE 2005 2004 (DECREASE) ---- ---- ---------- EARNINGS PERFORMANCE Net Income $ 12,984 $ 14,863 -12.64% Return on Average Assets 1.13% 1.33% -15.04% Return on Average Assets, Excluding Unrealized Gains/Losses on Available-for-Sale Securities (***) 1.14% 1.35% -15.56% Return on Average Equity 9.80% 11.58% -15.37% Return on Average Equity, Excluding Unrealized Gains/Losses on Available-for-Sale Securities (***) 10.38% 12.63% -17.81% BALANCE SHEET HIGHLIGHTS Total Assets $ 1,162,954 $ 1,123,002 3.56% Available-for-Sale Securities 427,298 475,085 -10.06% Loans (Net) 644,938 572,826 12.59% Allowance for Loan Losses 8,361 6,787 23.19% Deposits and Repo Sweep Accounts 784,799 697,723 12.48% Trust Assets Under Management 418,259 383,062 9.19% SHAREHOLDERS' VALUE (PER SHARE) (**) Net Income - Basic $ 1.57 $ 1.80 -12.78% Net Income - Diluted $ 1.55 $ 1.79 -13.41% Dividends $ 0.93 $ 0.89 4.49% Book Value $ 15.89 $ 15.92 -0.19% Book Value, Excluding Unrealized Gains/Losses on Available-for- sale Securities (***) $ 15.33 $ 14.65 4.64% Market Value (Last Trade) $ 25.63 $ 27.00 -5.07% Market Value / Book Value 161.30% 169.60% -4.89% Market Value / Book Value, Excluding Unrealized Gains/Losses on Available-for-Sale Securities (***) 167.19% 184.30% -9.28% Price Earnings Multiple 16.32 15.00 8.80% Dividend Yield 3.63% 3.30% 10.00% SAFETY AND SOUNDNESS Tangible Equity / Tangible Assets, Excluding Unrealized Gains/Losses on Available-for-Sale Securities (***) 10.75% 10.93% -1.69% Nonperforming Assets / Total Assets 0.55% 0.69% -20.29% Allowance for Loan Losses / Total Loans 1.28% 1.17% 9.40% Risk Based Capital Ratio 18.19% 18.89% -3.71% AVERAGE BALANCES Average Assets $ 1,146,727 $ 1,114,041 2.93% Average Assets, Excluding Unrealized Gains/Losses on Available-for-sale Securities 1,135,530 1,097,859 3.43% Average Equity 132,465 128,374 3.19% Average Equity, Excluding Unrealized Gains/Losses on Available-for-sale Securities 125,076 117,695 6.27%
(*) Net unrealized gains/losses on available-for-sale securities are presented as "Accumulated Other Comprehensive Income" in the annual and quarterly financial statements filed with the Securities and Exchange Commission. (**) For purposes of per share calculations, the market value and number of outstanding shares have been retroactively adjusted for the effects of 1% stock dividends issued in January of each year presented. (***) Generally accepted accounting principles ("GAAP") require that available-for-sale securities be reported at fair value, with unrealized gains and losses excluded from earnings and reported separately through shareholders' equity, net of tax. Management believes there is an inherent mismatch between the income statement and balance sheet related to unrealized gains/losses that may create a material inconsistency in the calculation of earnings-based ratios. Further, the amount of unrealized gains or losses may vary widely from period-to-period, depending on the financial markets as a whole and interest rate movements. Therefore, management has provided these "non-GAAP" ratios because we believe they provide meaningful information for evaluating the Corporation's financial position and results of operations. -----END PRIVACY-ENHANCED MESSAGE-----