Attached files
file | filename |
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8-K - CITIZENS & NORTHERN CORP | v208317_8k.htm |
EX-99.1 - CITIZENS & NORTHERN CORP | v208317_ex99-1.htm |
EX-99.3 - CITIZENS & NORTHERN CORP | v208317_ex99-3.htm |
EXHIBIT
99.2
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, 2010
|
QUARTERLY
REPORT
|
Dear
Shareholder:
I am
pleased to report net income of $4,884,000 for the fourth quarter of 2010 which
is a $642,000 increase over the fourth quarter of 2009, or
15.1%. Year-to-date earnings for 2010 were a record $17,581,000 which
represents a $58,344,000 increase over the prior year. Redemption of
the outstanding preferred stock during the third quarter positively affected
fourth quarter net income by $373,000. Return on average assets was
1.44% and return on average equity was 12.69% for the year which places Citizens
& Northern near the top of its peer group.
Total
assets remained relatively unchanged over the past quarter and
year. A deleveraging of the balance sheet over the past year has
resulted in the reduction of borrowed funds by
$52,747,000. Historically low investment yields precipitated the
decision to deleverage the balance sheet. Management increased the
provision for loan losses by $530,000 over the prior quarter but asset quality
remains strong with nonperforming assets being .92% of total
assets.
We are
encouraged by the continued rise in our stock price which closed the year at
$14.86 per share, an increase of 55.77% over the prior year-end.
As we
close a very successful 2010, I solicit your continued support as we strive to
enhance shareholder value. 2011 will present many challenges but with
the dedicated effort of our employees and Board of Directors I am confident that
we will succeed.
Charles
H. Updegraff, Jr.
Chairman,
President, & CEO
CITIZENS
& NORTHERN CORPORATION
BOARD
OF DIRECTORS
Charles
H. Updegraff, Jr. - Chairman
Dennis
F. Beardslee
|
Raymond
R. Mattie
|
Jan
E. Fisher
|
Edward
H. Owlett, III
|
R.
Bruce Haner
|
Leonard
Simpson
|
Susan
E. Hartley
|
James
E. Towner
|
Leo
F. Lambert
|
Ann
M. Tyler
|
Edward
L. Learn
|
DIRECTORS
EMERITI
R.
Robert DeCamp
|
Karl
W. Kroeck
|
CITIZENS
& NORTHERN BANK
OFFICES
428
S. Main Street, ATHENS, PA
18810
|
570-888-2291
|
3
Main Street, CANISTEO,
NY 14823
|
607-698-4295
|
10
N Main Street, COUDERSPORT, PA
16915
|
814-274-9150
|
111
Main Street, DUSHORE, PA
18614
|
570-928-8124
|
563
Main Street, EAST
SMITHFIELD, PA 18817
|
570-596-3131
|
104
Main Street, ELKLAND,
PA 16920
|
814-258-5111
|
135
East Fourth Street, EMPORIUM, PA
15834
|
814-486-1112
|
6250
County Route 64, HORNELL,
NY 14843
|
607-324-4081
|
230-232
Railroad Street, JERSEY
SHORE, PA 17740
|
570-398-4555
|
102
E. Main Street, KNOXVILLE, PA
16928
|
814-326-4151
|
514
Main Street, LAPORTE, PA
18626
|
570-946-4011
|
4534
Williamson Trail LIBERTY, PA
16930
|
570-324-2331
|
1085
S. Main Street, MANSFIELD, PA
16933
|
570-662-1111
|
612
James Monroe Avenue, MONROETON, PA
18832
|
570-265-2157
|
3461
Rte.405 Highway, MUNCY, PA
17756
|
570-546-6666
|
100
Maple Street, PORT
ALLEGANY, PA 16743
|
814-642-2571
|
24
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
|
1510
Dewey Ave., WILLIAMSPORT, PA
17702
|
570-323-9305
|
Route
6, WYSOX, PA
18854
|
570-265-9148
|
TRUST
& FINANCIAL MANAGEMENT GROUP
|
|
3
Main Street, Canisteo, NY
14823
|
607-698-4295
|
10
N Main Street, Coudersport, PA
16915
|
800-921-9150
|
135
East Fourth Street, Emporium, PA
15834
|
814-274-1929
|
1827
Elmira Street, Sayre, PA
18840
|
888-760-8192
|
428
Main Street, Towanda, PA
18848
|
888-987-8784
|
90-92
Main Street, Wellsboro, PA
16901
|
888-487-8784
|
130
Court Street, Williamsport,
PA 17701
|
866-732-7213
|
ACCOUNT SERVICES
- 90-92 Main St., Wellsboro, PA 16901
|
|
BANKCARD SERVICES
- 90-92 Main St., Wellsboro PA 16901
|
800-577-8001
|
ELECTRONIC BANKING – 10
Nichols St., Wellsboro, PA 16901
|
877-838-2517
|
www.cnbankpa.com
|
|
C&N FINANCIAL SERVICES
CORPORATION – 90-92 Main Street, Wellsboro, PA
|
866-ASK-CNFS
|
www.cnfinancialservices.com
|
CONDENSED,
CONSOLIDATED EARNINGS INFORMATION
|
|||||
(In
Thousands, Except Per Share
Data) (Unaudited)
|
|||||
4TH
|
3RD
|
4TH
|
YEAR
ENDED
|
||
QUARTER
|
QUARTER
|
QUARTER
|
DECEMBER
31,
|
||
2010
|
2010
|
2009
|
2010
|
2009
|
|
(Current)
|
(Prior
Qtr)
|
(Prior
Yr)
|
(Current)
|
(Prior
Yr)
|
|
Interest
and Dividend Income
|
$ 15,500
|
$ 15,495
|
$ 16,256
|
$ 62,114
|
$ 67,976
|
Interest
Expense
|
4,310
|
4,639
|
5,670
|
19,245
|
24,456
|
Net
Interest Income
|
11,190
|
10,856
|
10,586
|
42,869
|
43,520
|
Provision
for Loan Losses
|
719
|
189
|
126
|
1,191
|
680
|
Net
Interest Income After Provision for Loan Losses
|
10,471
|
10,667
|
10,460
|
41,678
|
42,840
|
Other
Income (a)
|
3,480
|
3,575
|
3,663
|
13,917
|
13,021
|
Net
Gains (Losses) on Available-for-sale Securities
|
64
|
388
|
(318)
|
829
|
(83,840)
|
Other
Expenses (a)
|
7,720
|
8,095
|
7,682
|
31,569
|
34,011
|
Income
(Loss) Before Income Tax Provision (Credit)
|
6,295
|
6,535
|
6,123
|
24,855
|
(61,990)
|
Income
Tax Provision (Credit)
|
1,411
|
1,671
|
1,508
|
5,800
|
(22,655)
|
Net
Income (Loss)
|
4,884
|
4,864
|
4,615
|
19,055
|
(39,335)
|
U.S.
Treasury Preferred Dividends
|
-
|
729
|
373
|
1,474
|
1,428
|
Net
Income (Loss) Available to Common
Shareholders
|
$ 4,884
|
$ 4,135
|
$ 4,242
|
$ 17,581
|
$ (40,763)
|
Adjustments
to Calculate Core Earnings (b):
|
|||||
Net
Income (Loss)
|
$ 4,884
|
$ 4,864
|
$ 4,615
|
$ 19,055
|
$ (39,335)
|
Add:
OTTI Losses
|
-
|
-
|
956
|
433
|
85,363
|
Less:
Realized gains on assets previously written down
|
(38)
|
(334)
|
(947)
|
(707)
|
(1,308)
|
Add/Less:
Income Tax (c)
|
(135)
|
114
|
(516)
|
(280)
|
(28,206)
|
Core
Earnings (b)
|
$ 4,711
|
$ 4,644
|
$ 4,108
|
$ 18,501
|
$ 16,514
|
Core
Earnings Available to Common Shareholders
(b)
|
$ 4,711
|
$ 3,915
|
$ 3,735
|
$ 17,027
|
$ 15,086
|
PER
COMMON SHARE DATA:
|
|||||
Net
Income (Loss) - Basic
|
$0.40
|
$0.34
|
$0.42
|
$1.45
|
($4.40)
|
Net
Income (Loss) - Diluted
|
$0.40
|
$0.34
|
$0.42
|
$1.45
|
($4.40)
|
Dividend
Per Share
|
$0.12
|
$0.10
|
$0.00
|
$0.39
|
$0.72
|
Number
Shares Used in Computation - Basic
|
12,148,541
|
12,136,516
|
10,141,903
|
12,131,039
|
9,271,869
|
Number
Shares Used in Computation - Diluted
|
12,148,772
|
12,136,516
|
10,141,903
|
12,131,039
|
9,271,869
|
Number
Shares Used in Computation - Diluted - for
|
|||||
Ratios
Based on Core Earnings (b)
|
12,148,772
|
12,136,516
|
10,141,903
|
12,131,039
|
9,272,489
|
CONDENSED,
CONSOLIDATED BALANCE SHEET DATA
|
|||
(In
Thousands, Except Per Share
Data) (Unaudited)
|
|||
DEC.
31,
|
SEPT.
30,
|
DEC.
31,
|
|
2010
|
2010
|
2009
|
|
ASSETS
|
|||
Cash
& Due from Banks
|
$ 46,301
|
$ 53,225
|
$ 92,065
|
Available-for-sale
Securities
|
443,956
|
433,392
|
396,288
|
Loans
Held for Sale (a)
|
5,247
|
561
|
592
|
Loans,
Net (a)
|
721,304
|
717,526
|
712,746
|
Intangible
Assets
|
12,268
|
12,312
|
12,444
|
Other Assets
|
87,512
|
91,092
|
107,660
|
TOTAL ASSETS
|
$ 1,316,588
|
$ 1,308,108
|
$ 1,321,795
|
LIABILITIES
|
|||
Deposits
|
$ 1,004,348
|
$ 983,516
|
$ 926,789
|
Repo Sweep Accounts
|
18,413
|
18,402
|
34,229
|
Total
Deposits and Repo Sweeps
|
1,022,761
|
1,001,918
|
961,018
|
Borrowed
Funds
|
148,495
|
158,654
|
201,242
|
Other Liabilities
|
6,388
|
6,454
|
7,125
|
TOTAL LIABILITIES
|
1,177,644
|
1,167,026
|
1,169,385
|
SHAREHOLDERS'
EQUITY
|
|||
Preferred
Stock
|
-
|
-
|
25,749
|
Common
Shareholders' Equity, Excluding Accumulated
|
|||
Other
Comprehensive Income (Loss)
|
140,545
|
136,920
|
127,552
|
Accumulated
Other Comprehensive Income (Loss):
|
|||
Net
Unrealized Gains/Losses on
|
|||
Available-for-sale
Securities
|
(1,351)
|
4,394
|
(522)
|
Defined Benefit
Plans
|
(250)
|
(232)
|
(369)
|
TOTAL SHAREHOLDERS' EQUITY
|
138,944
|
141,082
|
152,410
|
TOTAL LIABILITIES & SHAREHOLDERS'
EQUITY
|
$ 1,316,588
|
$ 1,308,108
|
$ 1,321,795
|
CONDENSED,
CONSOLIDATED FINANCIAL HIGHLIGHTS
|
|||
(In
Thousands, Except Per Share
Data) (Unaudited)
|
|||
YEAR
ENDED
|
%
|
||
DECEMBER
31,
|
INCREASE
|
||
2010
|
2009
|
(DECREASE)
|
|
EARNINGS
PERFORMANCE
|
|||
Net
Income (Loss)
|
$ 19,055
|
$ (39,335)
|
NM
|
Return
on Average Assets
|
1.44%
|
-3.03%
|
NM
|
Return
on Average Equity
|
12.69%
|
-27.74%
|
NM
|
Core
Earnings (b)
|
$ 18,501
|
$ 16,514
|
12.03%
|
Core
Earnings/Average Assets (b)
|
1.40%
|
1.27%
|
10.24%
|
Core
Earnings/Average Equity (b)
|
12.32%
|
11.65%
|
5.75%
|
BALANCE
SHEET HIGHLIGHTS
|
|||
Total
Assets
|
$ 1,316,588
|
$ 1,321,795
|
-0.39%
|
Available-for-Sale
Securities
|
443,956
|
396,288
|
12.03%
|
Loans
(Net)
|
721,304
|
712,746
|
1.20%
|
Allowance
for Loan Losses
|
9,107
|
8,265
|
10.19%
|
Deposits
and Repo Sweep Accounts
|
1,022,761
|
961,018
|
6.42%
|
Trust
Assets Under Management
|
608,843
|
605,062
|
0.62%
|
SHAREHOLDERS'
VALUE
|
|||
(PER
COMMON SHARE)
|
|||
Net
Income - Basic
|
$1.45
|
($4.40)
|
NM
|
Net
Income - Diluted
|
$1.45
|
($4.40)
|
NM
|
Core
Earnings - Basic (b)
|
$1.40
|
$1.63
|
-14.11%
|
Core
Earnings - Diluted (b)
|
$1.40
|
$1.63
|
-14.11%
|
Dividends
|
$0.39
|
$0.72
|
-45.83%
|
Common
Book Value
|
$11.43
|
$10.46
|
9.27%
|
Tangible
Common Book Value
|
$10.42
|
$9.43
|
10.50%
|
Market
Value (Last Trade)
|
$14.86
|
$9.54
|
55.77%
|
Market
Value / Common Book Value
|
130.01%
|
91.20%
|
42.55%
|
Market
Value / Tangible Common Book Value
|
142.61%
|
101.17%
|
40.97%
|
Price
Earnings Multiple
|
10.25
|
NM
|
NM
|
Dividend
Yield
|
2.62%
|
7.55%
|
-65.30%
|
SAFETY
AND SOUNDNESS
|
|||
Tangible
Common Equity / Tangible Assets
|
9.71%
|
8.72%
|
11.35%
|
Nonperforming
Assets / Total Assets
|
0.92%
|
0.76%
|
21.65%
|
Allowance
for Loan Losses / Total Loans
|
1.25%
|
1.15%
|
8.70%
|
Total
Risk Based Capital Ratio (d)
|
17.08%
|
17.89%
|
-4.52%
|
Tier
1 Risk Based Capital Ratio (d)
|
15.78%
|
16.70%
|
-5.48%
|
Leverage
Ratio (d)
|
9.17%
|
9.86%
|
-6.99%
|
AVERAGE
BALANCES
|
|||
Average
Assets
|
$1,326,145
|
$1,296,086
|
2.32%
|
Average
Equity
|
150,133
|
141,787
|
5.89%
|
NM - Not
meaningful.
(a)
Certain information that was previously reported has been reclassified for
consistency with the current presentation.
(b) Core
Earnings is an earnings performance measurement which management has defined to
exclude other-than-temporary impairment (OTTI) losses on available-for-sale
securities and realized gains on securities for which OTTI has previously been
recognized. Core Earnings is a performance measurement that is not
based on U.S. generally accepted accounting principles
(GAAP). Management believes Core Earnings information is meaningful
for evaluating the Corporation's operating performance, because it excludes some
of the impact of market volatility as it relates to investments in pooled
trust-preferred securities and other securities. The disclosure of
Core Earnings should not be viewed as a substitute for results determined in
accordance with GAAP, nor is it necessarily comparable to non-GAAP performance
measures that may be presented by other companies. This table
includes a reconciliation of Core Earnings to net (loss) income, the most
directly comparable GAAP financial measure.
(c)
Income tax has been allocated to non-core gains and losses at 34%, adjusted for
a valuation allowance on deferred tax assets associated with losses from
securities classified as capital assets for federal income tax reporting
purposes. A valuation allowance of $886,000 was recorded in the third
quarter 2009, was reduced to $373,000 in the fourth quarter 2009, further
reduced to $148,000 in the 2nd quarter 2010 and reduced to $0 in the fourth
quarter 2010.
(d)
Capital ratios as of December 31, 2010 are estimated.