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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998 Commission file number: 0-16084
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CITIZENS & NORTHERN CORPORATION
(Exact name of Registrant as specified in its charter)
Pennsylvania 23-2451943
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
90-92 MAIN STREET, WELLSBORO, PA 16901
(Address of principal executive offices) (Zip code)
(Registrant's telephone number including area code) 570-265-6171
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to section 12(g) of the Act:
COMMON STOCK Par Value $1.00
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No ____
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
Title Outstanding
Common Stock $1.00 par value 5,153,629 shares March 1, 1999
The aggregate market value of the registrant's common stock held by
non-affiliates at
March 1 1999: $181,377,015. (a date within 60 days of the date hereof
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DOCUMENTS INCORPORATED BY REFERENCE
Excerpts from the Registrants Annual Report to Shareholders are incorporated
herein by reference in response to Part II, hereof. The Registrant's definitive
Proxy statement to be used in connection with the 1998 Annual Meeting of
shareholders to be held on April 20, 1999 is incorporated herein by reference in
partial response to Part III.
Location in Form 10-K Incorporated Information
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PART II
Item 5. Market for Registrant's Common Page 46 of the Annual Report
Stock and Related Stockholder Matters
Item 6. Selected Financial Data Pages 47 and 48 of the Annual Report
Item 7. Management's Discussion and Analysis Pages 29 through 46 of the Annual Report
of the Financial Condition and Results
Operations.
Item 7a. Quantitative and Qualitative Disclosures Pages 41 through 43 of the Annual Report
About Market Risk
Item 8. Financial Statements and Pages 8 through 11 and 47 through 48 of the
Supplementary Data Annual Report
PART III
Item 10. Directors and Executive Officers Pages 2 through 6 of the Proxy Statement
of the Registrant
Item 11. Executive Compensation Pages 6 through 9 of the Proxy Statement
Item 12. Security Ownership of certain Pages 2 through 6 of the Proxy statement
Beneficial Owners and Management
Item 13. Certain Relationships and Related Page 24 of the Annual Report
Transactions Page 11 of the Proxy Statement
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PART I
ITEM 1. BUSINESS
The information appearing in the Annual Report under the caption
"Description of Business" on page 49 is herein incorporated by reference.
REGULATION AND SUPERVISION
THE CORPORATION
The Corporation is a one-bank holding company formed under the
provisions of Section 3 of the Federal Reserve Act. The Corporation is under the
direct supervision of the Federal Reserve Board and must comply with the
reporting requirements of the Federal Bank Holding Company Act.
A one-bank or multi-bank holding company is prohibited under Section 3
(a)(3) of the Act from acquiring either directly or indirectly 5% or more of the
voting shares of any bank or bank holding company without prior Board approval.
Additionally, Section 3 (a)(3) prevents, without prior Board approval, an
existing bank holding company from increasing its ownership in an existing
subsidiary bank unless a majority (greater than 50 percent) of the shares are
already owned (Section 3 (a)(B) ). A bank holding company which owns more than
50 percent of a bank's shares may buy and sell those shares freely without Board
approval, provided the ownership never drops to 50 percent or less. If the
holding company owns 50 percent or less of a bank's shares, prior Board approval
is required before such additional acquisition of shares takes place until
ownership exceeds 50 percent.
Under current Pennsylvania law, which became effective March 4, 1990,
bank holding companies located in any state may acquire banks and bank holding
companies located in Pennsylvania provided that the laws of such state grant
reciprocal rights to Pennsylvania bank holding companies and that 75% of the
domestic deposits are located in a state granting reciprocity.
THE BANK
The Bank is a state chartered nonmember bank, supervised by and under
the reporting requirements of the Pennsylvania Department of Banking and the
Federal Deposit Insurance Corporation
YEAR 2000 COMPLIANCE
Information relating to the Corporation's Year 2000 readiness and
compliance may be found in the Company's Annual Report under the caption
"Management's Discussion and Analysis of the Financial Condition and Results of
Operations" on pages 44 and 45, and is herein incorporated by reference.
ITEM 2. PROPERTIES
Information relating to the location of banking offices is located on
page 49 of the Annual Report of the Corporation and is herein incorporated by
reference.
There are no encumbrances against any of the properties owned by the
Bank.
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ITEM 3. LEGAL PROCEEDINGS
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted during the fourth quarter of the fiscal year
covered by this report to a vote of security holders, through the solicitation
of proxies or otherwise.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information appearing in the Annual Report under the caption
"Quarterly Share Data" on page 46 and the "Summary of Quarterly Financial Data"
on page 48 is herein incorporated by reference.
ITEM 6. SELECTED FINANCIAL DATA
The "Five Year Summary of Operations" on page 47 of the Annual Report
is herein incorporated by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
The information appearing in the Annual Report under the caption
"Management's Discussion and Analysis of the Financial Condition and Results of
Operations" on pages 29 through 46, is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information appearing in the Company's Annual Report under the
caption "Management's Discussion and Analysis of the Financial Condition and
Results of Operations" on pages 41 through 43, is incorporated herein by
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is incorporated by reference to
the Financial Statements and Notes to Consolidated Financial Statements on pages
8 through 27 and to the Quarterly Financial Data on page 48 of the Company's
Annual Report to Shareholders for the year ended December 31, 1998.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Identification of Directors. The information appearing under the
caption "Election of Directors" on pages 1 through 3 of the Corporation's Proxy
Statement dated March 22, 1999, is herein incorporated by reference.
(b) Identification of Executive Officers. The information appearing
under the caption "Corporation's and Bank's Executive Officers" on pages 5 and 6
of the Corporation's Proxy Statement dated March 22, 1999, is herein
incorporated by reference.
ITEM 11. EXECUTIVE COMPENSATION
Information appearing under the caption "Executive Compensation" on
page 7 and 8 of the Corporation's Proxy Statement dated March 22, 1999, is
herein incorporated by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information appearing under the caption "Election of Directors" on
pages 1 through 3 and under the caption "Corporation's and Bank's Executive
Officers" on pages 5 through 7 of the Corporation's Proxy Statement is herein
incorporated by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information appearing in footnote 13 to the Consolidated Financial
Statements included on page 24 in the Annual Report is herein incorporated by
reference.
Information appearing under the caption "Certain Transactions" on page
11 of the Corporation's Proxy Statement is herein incorporated by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1). The following consolidated financial statements and reports are set
forth in Item 8.
Page
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Independent Auditors' Report 27
Financial Statements:
Consolidated Balance Sheet - December 31, 1998 and 1997 8
Consolidated Statement of Income - Years Ended
December 31, 1998, 1997 and 1996 9
Consolidated Statement of Changes in Stockholders' Equity -
Years Ended December 31, 1998, 1997 and 1996 10
5
Consolidated Statement of Cash Flows - Years Ended
December 31, 1998, 1997 and 1996 11
Notes to Consolidated Financial statements 12-26
(2). Financial statement schedules are either omitted because inapplicable or
included in the financial statements or related notes. Individual financial
statements of Bucktail Life Insurance Company, a consolidated subsidiary have
been omitted, as neither the assets nor the income from continuing operations
before taxes exceed ten percent of the consolidated totals.
(3). Exhibits (numbered as in Item 601 of Regulation S-K)
2. Plan of Acquisition, Reorganization, Arrangement,
Liquidation or Succession Not applicable
3. (i) Articles of Incorporation *
3. (ii) Bylaws of the Registrant *
4. Articles of Incorporation of the Registrant as Currently
in effect *
9. Voting Trust Agreement Not applicable
10. Material Contracts Not applicable
11. Statement re Computation of Per Share Earnings Not applicable
12. Statements re Computation of Ratios Not applicable
13. Annual Report to Shareholders Page 11
16. Letter re Change in Certifying Accountant Not applicable
18. Letter re Change in Accounting Principles Not applicable
21. List of Subsidiaries Page 10
22. Published Report Regarding Matters Submitted to
Vote of Security Holders Not applicable
23. Consent of Independent Auditors Page 12
24. Power of Attorney Not applicable
27. Financial Data Schedules None
28. Information from Reports Furnished to State
Insurance Regulatory Authorities Not applicable
99. Additional Exhibits
* Omitted in the interest of brevity
(b) No reports on Form 8-K were filed during the quarter ended
December 31, 1998.
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(c) Exhibits - the required exhibits are included under 14 (a) (3) of
Form 10 - K.
(d) Financial Statement schedules are omitted because the required information
is not applicable or is included elsewhere herein.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
March 19, 1999 By: /s/ Craig G. Litchfield
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Date Craig G. Litchfield
President and Chief Executive Officer
March 19, 1999 By: /s/ James W. Seipler
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Date James W. Seipler
Treasurer
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BOARD OF DIRECTORS
J. ROBERT BOWER /s/ CRAIG G. LITCHFIELD /s/
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J. Robert Bower Craig G. Litchfield
R. ROBERT DECAMP /s/ LAWRENCE F. MASE /s/
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R. Robert DeCamp Lawrence F. Mase
ADELBERT E. ELDRIDGE /s/ ROBERT J. MURPHY /s/
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Adelbert E. Eldridge Robert J. Murphy
WILLIAM K. FRANCIS /s/ EDWARD H. OWLETT, III /s/
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William K. Francis Edward H. Owlett, III
R. BRUCE HANER /s/ F. DAVID PENNYPACKER /s/
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R. Bruce Haner F, David Pennypacker
SUSAN E. HARTLEY /s/ LEONARD SIMPSON /s/
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Susan E. Hartley Leonard Simpson
KARL W. KROECK /s/ DONALD E. TREAT /s/
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Karl W. Kroeck Donald E. Treat
EDWARD L. LEARN /s/
- -----------------------------------
Edward L. Learn
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EXHIBIT INDEX
3.(i) Articles of Incorporation of the Registrant as currently in effect are
herein incorporated by reference to Exhibit D to Registrant's Form S-4,
Registration Statement dated March 27, 1987.
3.(ii) Bylaws of the Registrant as currently in effect are herein
incorporated by reference to Exhibit E to Registrant's Form S-4,
Registration Statement dated March 27, 1987
4. Articles of Incorporation of the Registrant as currently in effect are
herein incorporated by reference to Exhibit D to Registrant's Form S-4,
Registration Statement dated March 27, 1987.
10. Page 29 of Registrant's Form S-4, Registration Statement dated March 27,
1987, is herein incorporated by reference.
13. Annual Report to Shareholders
21. List of Subsidiaries
23. Consent of Parente, Randolph, Orlando, Carey & Associates, Independent
Auditors.
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