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, 2011 | QUARTERLY REPORT |
Dear Shareholder:
I am pleased to report net income of $6,141,000 for the fourth quarter of 2011 which is a $1,257,000 increase over fourth quarter of 2010, or 25.7%. Year-to-date earnings for 2011 were a record $23,368,000 which represents a $5,787,000 increase over the prior year. Return on average assets was 1.78% and return on average equity was 15.3% for the year which places Citizens & Northern near the very top of its peer group.
The main factor for our strong earnings is a result of our continued improving net interest margin. This improvement is basically a result of lower interest expense and a credit to provision for loan losses due to minimal loan losses. At year-end non-performing assets to total assets stood at .73%.
We are encouraged by the continued rise in our stock price which closed the year at $18.47 per share, an increase of 24.29% over the prior year-end.
We continue to face many challenges as we move into 2012. While parts of the local economy have benefited significantly from the Marcellus Shale exploration, the national economy remains weak and the regulatory burden will increase with many of the provisions of Dodd-Frank taking full effect.
I am confident that Citizens & Northern is well positioned to meet these challenges. I solicit your continued support as our dedicated employees and Board of Directors continually strives to enhance shareholder value.
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 |
DIRECTOR EMERITUS
R. Robert DeCamp
CITIZENS & NORTHERN BANK
1-877-838-2517
OFFICES
428 S. Main Street, ATHENS, PA 18810
3 Main Street, CANISTEO, NY 14823
10 N Main Street, COUDERSPORT, PA 16915
111 Main Street, DUSHORE, PA 18614
563 Main Street, EAST SMITHFIELD, PA 18817
104 Main Street, ELKLAND, PA 16920
135 East Fourth Street, EMPORIUM, PA 15834
6250 County Route 64, HORNELL, NY 14843
230-232 Railroad Street, JERSEY SHORE, PA 17740
102 E. Main Street, KNOXVILLE, PA 16928
514 Main Street, LAPORTE, PA 18626
4534 Williamson Trail LIBERTY, PA 16930
1085 S. Main Street, MANSFIELD, PA 16933
612 James Monroe Avenue, MONROETON, PA 18832
3461 Rte.405 Highway, MUNCY, PA 17756
100 Maple Street, PORT ALLEGANY, PA 16743
24 Thompson Street, RALSTON, PA 17763
1827 Elmira Street, SAYRE, PA 18840
2 E. Mountain Ave., SO. WILLIAMSPORT, PA 17702
41 Main Street, TIOGA, PA 16946
428 Main Street, TOWANDA, PA18848
Court House Square, TROY, PA 16947
90-92 Main Street, WELLSBORO, PA 16901
130 Court Street, WILLIAMSPORT, PA 17701
1510 Dewey Ave., WILLIAMSPORT, PA 17702
Route 6, WYSOX, PA 18854
TRUST & FINANCIAL MANAGEMENT GROUP
3 Main Street, Canisteo, NY 14823 | 607-698-4295 |
10 N Main Street, Coudersport, PA 16915 | 800-921-9150 |
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, | |||||||||||||||||
| 2011 | 2011 | 2010 | 2011 | 2010 | ||||||||||||||||
| (Current) | (Prior Qtr) | (Prior Yr) | (Current) | (Prior Yr) | ||||||||||||||||
| Interest and Dividend Income | $ | 15,198 | $ | 15,317 | $ | 15,500 | $ | 61,256 | $ | 62,114 | ||||||||||
| Interest Expense | 2,804 | 3,108 | 4,310 | 13,556 | 19,245 | |||||||||||||||
| Net Interest Income | 12,394 | 12,209 | 11,190 | 47,700 | 42,869 | |||||||||||||||
| (Credit) Provision for Loan Losses | (87 | ) | (37 | ) | 719 | (285 | ) | 1,191 | ||||||||||||
| Net Interest Income After (Credit) Provision for Loan Losses | 12,481 | 12,246 | 10,471 | 47,985 | 41,678 | |||||||||||||||
| Other Income | 3,711 | 3,999 | 3,468 | 13,938 | 13,838 | |||||||||||||||
| Net Gains on Available-for-sale Securities | 188 | 26 | 64 | 2,216 | 829 | |||||||||||||||
| Noninterest Expenses | 7,948 | 8,052 | 7,708 | 32,057 | 31,490 | |||||||||||||||
| Income Before Income Tax Provision | 8,432 | 8,219 | 6,295 | 32,082 | 24,855 | |||||||||||||||
| Income Tax Provision | 2,291 | 2,230 | 1,411 | 8,714 | 5,800 | |||||||||||||||
| Net Income | 6,141 | 5,989 | 4,884 | 23,368 | 19,055 | |||||||||||||||
| U.S. Treasury Preferred Dividends | - | - | - | - | 1,474 | |||||||||||||||
| Net Income Available to Common Shareholders | $ | 6,141 | $ | 5,989 | $ | 4,884 | $ | 23,368 | $ | 17,581 | ||||||||||
CONDENSED, CONSOLIDATED BALANCE SHEET DATA
(In Thousands, Except Per Share Data) (Unaudited)
| DEC. 31, | SEPT. 30, | DEC. 31, | ||||||||||
| 2011 | 2011 | 2010 | ||||||||||
| ASSETS | ||||||||||||
| Cash & Due from Banks | $ | 60,575 | $ | 55,754 | $ | 46,301 | ||||||
| Available-for-sale Securities | 481,685 | 472,113 | 443,956 | |||||||||
| Loans Held for Sale | 939 | 1,218 | 5,247 | |||||||||
| Loans, Net | 700,610 | 697,702 | 721,304 | |||||||||
| Intangible Assets | 12,154 | 12,182 | 12,268 | |||||||||
| Other Assets | 67,772 | 73,085 | 87,512 | |||||||||
| TOTAL ASSETS | $ | 1,323,735 | $ | 1,312,054 | $ | 1,316,588 | ||||||
| LIABILITIES | ||||||||||||
| Deposits | $ | 1,018,206 | $ | 995,730 | $ | 1,004,348 | ||||||
| Repo Sweep Accounts | 4,950 | 19,234 | 18,413 | |||||||||
| Total Deposits and Repo Sweeps | 1,023,156 | 1,014,964 | 1,022,761 | |||||||||
| Borrowed Funds | 125,363 | 128,024 | 148,495 | |||||||||
| Other Liabilities | 7,831 | 7,856 | 6,388 | |||||||||
| TOTAL LIABILITIES | 1,156,350 | 1,150,844 | 1,177,644 | |||||||||
| SHAREHOLDERS' EQUITY | ||||||||||||
| Common Shareholders' Equity, Excluding Accumulated | ||||||||||||
| Other Comprehensive Income (Loss) | 157,225 | 152,726 | 140,545 | |||||||||
| Accumulated Other Comprehensive Income (Loss): | ||||||||||||
| Net Unrealized Gains/Losses on | ||||||||||||
| Available-for-sale Securities | 10,791 | 8,787 | (1,351 | ) | ||||||||
| Defined Benefit Plans | (631 | ) | (303 | ) | (250 | ) | ||||||
| TOTAL SHAREHOLDERS' EQUITY | 167,385 | 161,210 | 138,944 | |||||||||
| TOTAL LIABILITIES & SHAREHOLDERS' EQUITY | $ | 1,323,735 | $ | 1,312,054 | $ | 1,316,588 | ||||||
CONDENSED, CONSOLIDATED FINANCIAL HIGHLIGHTS
(In Thousands, Except Per Share Data) (Unaudited)
| YEAR ENDED | % | |||||||||||
| DECEMBER 31, | INCREASE | |||||||||||
| 2011 | 2010 | (DECREASE) | ||||||||||
| EARNINGS PERFORMANCE | ||||||||||||
| Net Income | $ | 23,368 | $ | 19,055 | 22.63 | % | ||||||
| Return on Average Assets | 1.78 | % | 1.44 | % | 23.61 | % | ||||||
| Return on Average Equity | 15.30 | % | 12.69 | % | 20.57 | % | ||||||
| BALANCE SHEET HIGHLIGHTS | ||||||||||||
| Total Assets | $ | 1,323,735 | $ | 1,316,588 | 0.54 | % | ||||||
| Available-for-Sale Securities | 481,685 | 443,956 | 8.50 | % | ||||||||
| Loans (Net) | 700,610 | 721,304 | -2.87 | % | ||||||||
| Allowance for Loan Losses | 7,705 | 9,107 | -15.39 | % | ||||||||
| Deposits and Repo Sweep Accounts | 1,023,156 | 1,022,761 | 0.04 | % | ||||||||
| Trust Assets Under Management | 634,782 | 608,843 | 4.26 | % | ||||||||
| SHAREHOLDERS' VALUE | ||||||||||||
| (PER COMMON SHARE) | ||||||||||||
| Net Income - Basic | $ | 1.92 | $ | 1.45 | 32.41 | % | ||||||
| Net Income - Diluted | $ | 1.92 | $ | 1.45 | 32.41 | % | ||||||
| Dividends | $ | 0.58 | $ | 0.39 | 48.72 | % | ||||||
| Common Book Value | $ | 13.77 | $ | 11.43 | 20.47 | % | ||||||
| Tangible Common Book Value | $ | 12.77 | $ | 10.42 | 22.55 | % | ||||||
| Market Value (Last Trade) | $ | 18.47 | $ | 14.86 | 24.29 | % | ||||||
| Market Value / Common Book Value | 134.13 | % | 130.01 | % | 3.17 | % | ||||||
| Market Value / Tangible Common Book Value | 144.64 | % | 142.61 | % | 1.42 | % | ||||||
| Price Earnings Multiple | 9.62 | 10.25 | -6.15 | % | ||||||||
| Dividend Yield | 3.14 | % | 2.62 | % | 19.85 | % | ||||||
| SAFETY AND SOUNDNESS | ||||||||||||
| Tangible Common Equity / Tangible Assets | 11.84 | % | 9.71 | % | 21.94 | % | ||||||
| Nonperforming Assets / Total Assets | 0.73 | % | 0.92 | % | -20.65 | % | ||||||
| Allowance for Loan Losses / Total Loans | 1.09 | % | 1.25 | % | -12.80 | % | ||||||
| Total Risk Based Capital Ratio (a) | 20.76 | % | 17.17 | % | 20.91 | % | ||||||
| Tier 1 Risk Based Capital Ratio (a) | 19.55 | % | 15.87 | % | 23.19 | % | ||||||
| Leverage Ratio (a) | 10.82 | % | 9.20 | % | 17.61 | % | ||||||
| AVERAGE BALANCES | ||||||||||||
| Average Assets | $ | 1,313,445 | $ | 1,326,145 | -0.96 | % | ||||||
| Average Equity | 152,718 | 150,133 | 1.72 | % | ||||||||
(a) Capital ratios are estimated.