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 ------------------ ------------------------------- CITIZENS & NORTHERN CORPORATION (Exact name of Registrant as specified in its charter) Pennsylvania 23-2451943 - ------------ ---------- (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 1 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 - --------------------- ------------------------ 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 2 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. 3 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. 4 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 ---- 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. 6 (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. 7 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 - -------------- --------------------------------------- Date Craig G. Litchfield President and Chief Executive Officer March 19, 1999 By: /s/ James W. Seipler - -------------- --------------------------------------- Date James W. Seipler Treasurer 8 BOARD OF DIRECTORS J. ROBERT BOWER /s/ CRAIG G. LITCHFIELD /s/ - ----------------------------------- -------------------------------------- J. Robert Bower Craig G. Litchfield R. ROBERT DECAMP /s/ LAWRENCE F. MASE /s/ - ----------------------------------- -------------------------------------- R. Robert DeCamp Lawrence F. Mase ADELBERT E. ELDRIDGE /s/ ROBERT J. MURPHY /s/ - ----------------------------------- -------------------------------------- Adelbert E. Eldridge Robert J. Murphy WILLIAM K. FRANCIS /s/ EDWARD H. OWLETT, III /s/ - ----------------------------------- -------------------------------------- William K. Francis Edward H. Owlett, III R. BRUCE HANER /s/ F. DAVID PENNYPACKER /s/ - ----------------------------------- -------------------------------------- R. Bruce Haner F, David Pennypacker SUSAN E. HARTLEY /s/ LEONARD SIMPSON /s/ - ----------------------------------- -------------------------------------- Susan E. Hartley Leonard Simpson KARL W. KROECK /s/ DONALD E. TREAT /s/ - ----------------------------------- -------------------------------------- Karl W. Kroeck Donald E. Treat EDWARD L. LEARN /s/ - ----------------------------------- Edward L. Learn 9 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. 10