DEF: Citizens & Northern Corp. Sets 2026 Annual Meeting Agenda

Citizens & Northern Corporation announces its 2026 Annual Meeting of Shareholders to address director elections, executive compensation, and auditor ratification, alongside a review of 2025 financial performance.

Summary

• The Annual Meeting of Shareholders is scheduled for Thursday, April 23, 2026, at 2:00 P.M. local time, in a virtual-only format.
• Shareholders will vote on the election of one Class II director for a two-year term and three Class III directors for three-year terms.
• An advisory (non-binding) resolution to approve Named Executive Officer compensation will be considered.
• The ratification of Crowe LLP as the independent registered public accounting firm for the year ending December 31, 2026, is on the agenda.
• The Board of Directors recommends voting FOR all nominees, FOR executive compensation, and FOR auditor ratification.
• The Corporation completed its merger with Susquehanna Community Financial, Inc. on October 1, 2025, issuing approximately 2.3 million shares valued at $44.6 million, increasing stockholders' equity by $44.4 million, net of equity issuance costs.
• Susquehanna contributed approximately $596.2 million in total assets, $393.6 million in total loans, and $501.5 million in deposits at the acquisition date.
• Net income for 2025 was $23,427,000 ($1.46 per diluted share), a decrease from $25,958,000 ($1.69 per diluted share) in 2024.
• Adjusted earnings (non-GAAP), excluding merger-related expenses, were $29,777,000 ($1.85 per diluted share) for 2025.
• Net interest income increased by $12,738,000 in 2025, partly due to the Susquehanna merger.
• Average total loans increased by $137,995,000 (7.3%) and average total deposits increased by $170,215,000 (8.3%) in 2025.
• The net interest margin was 3.61% for 2025, up from 3.30% in 2024.
• The provision for credit losses increased to $6,073,000 in 2025 from $2,195,000 in 2024.
• Noninterest income increased by $1,643,000 in 2025, with $665,000 from the Susquehanna acquisition.
• Noninterest expenses increased by $13,731,000 in 2025, including $7,940,000 in merger-related expenses.
• The corporate performance-based payout to Named Executive Officers (NEOs) under the short-term incentive plan was 141.4% of target for 2025.
• CEO J. Bradley Scovill's total compensation for 2025 was $1,041,499, and the CEO Pay Ratio for 2025 was 16.6 times that of the median employee.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a generally positive filing, driven by successful merger integration and strong underlying operational performance as evidenced by adjusted earnings and incentive payouts, despite a reported GAAP net income decrease due to merger-related expenses and increased credit loss provisions.

Positives

• Successful completion of the merger with Susquehanna Community Financial, Inc. on October 1, 2025, adding $596.2 million in total assets, $393.6 million in total loans, and $501.5 million in deposits.
• Net interest income increased by $12,738,000 in 2025, benefiting from the Susquehanna merger.
• Average total loans grew by 7.3% ($137,995,000) and average total deposits grew by 8.3% ($170,215,000) in 2025.
• Net interest margin improved to 3.61% in 2025 from 3.30% in 2024.
• Noninterest income increased by $1,643,000 in 2025, partly due to the acquisition and growth in interchange revenue and trust revenue.
• Corporate performance-based payout to Named Executive Officers (NEOs) under the short-term incentive plan was 141.4% of target, indicating strong performance against budget for PPNR-NCOs.
• All NEOs meet or are on track to meet minimum stock ownership requirements.
• The Corporation met the performance conditions for 2024 and 2025 Long-Term Incentive (LTI) awards, and 50% of the 2023 LTI awards (Core Return on Average Equity) vested.

Negatives

• Net income decreased to $23,427,000 ($1.46 per diluted share) in 2025 from $25,958,000 ($1.69 per diluted share) in 2024.
• Provision for credit losses significantly increased to $6,073,000 in 2025 from $2,195,000 in 2024, including increases in the allowance for credit losses (ACL) related to qualitative factors and the Susquehanna acquisition.
• Noninterest expenses were higher by $13,731,000 in 2025, including $7,940,000 of merger-related expenses.
• 50% of the performance conditions for the 2023 LTI awards (Core Return on Average Assets) were not met, leading to forfeitures of restricted stock for NEOs.
• The Efficiency Ratio for 2025 was 64.90%, which is higher than the target of 63.00%, indicating less efficiency.

Risks

• Changes in monetary and fiscal policies of the Federal Reserve Board and the U.S. Government, particularly related to changes in interest rates.
• Changes in general economic conditions.
• The potential for adverse developments in the banking industry that could have a negative impact on consumer confidence.
• The Corporation's credit standards and its on-going credit assessment processes might not protect it from significant credit losses.
• Difficulties in integrating the operations of the former Susquehanna Community Financial, Inc. (acquired by the Corporation on October 1, 2025).
• Legislative or regulatory changes.
• Downturn in demand for loan, deposit, and other financial services in the Corporation's market area.
• Increased competition from other banks and non-bank providers of financial services.
• Technological changes and increased technology-related costs.
• Information security breach or other technology difficulties or failures.
• Changes in accounting principles, or the application of generally accepted accounting principles.
• Fraud and cyber malfunction risks as usage of artificial intelligence continues to expand.
• Integration efforts between the Corporation and Susquehanna may divert the attention of the management teams and cause a loss in the momentum of their ongoing businesses.
• Success in Susquehanna's geographic market area will require the Corporation to attract and retain key personnel and to differentiate itself from competitors.

Future Outlook

The Corporation's executive compensation program is designed to support the achievement of specific annual, long-term, and strategic goals, aligning executive interests with shareholders. The program aims to provide competitive total compensation, weighted towards variable pay based on corporate and individual performance, contributing to shareholder value creation. The Corporation assumes no obligation to update forward-looking statements beyond what is required by law.

Management Comments

• "The Board of Directors recommends that you vote FOR the election of each of the nominees for director listed in the enclosed proxy statement; FOR approval of the advisory, non-binding resolution approving the compensation of the Corporations Named Executive Officers; and FOR ratification of the appointment of Crowe LLP as the Corporations independent registered public accounting firm for the year ending December 31, 2026."
• "We recognize that our ability to create value on a consistent basis is highly dependent upon the effectiveness of our team. At C&N Bank, we are committed to creating value through relationships."
• "We believe that the compensation program for executives should directly support the achievement of specific annual, long-term and strategic goals of the business, and, thereby, align the interests of executives with the interests of our shareholders."
• "We do not believe that the Corporations compensation programs and practices present any risks that are reasonably likely to have a material adverse effect on the Corporation."
• "The Compensation Committee believes that the shareholder vote reflects fundamental support for our compensation philosophy. Accordingly, we have not modified our practices or philosophy as a result of the 2025 advisory vote."

Industry Context

StockSavvy.ai notes that Citizens & Northern Corporation's strategic acquisition of Susquehanna Community Financial, Inc. reflects a broader trend in the regional banking sector towards consolidation to achieve scale and expand market presence. The increase in net interest margin and average loans/deposits post-merger indicates successful initial integration and market capture, a critical factor for regional banks facing competitive pressures and evolving interest rate environments. The focus on PPNR-NCOs as a key performance metric for executive compensation aligns with industry best practices emphasizing core profitability and risk management, especially pertinent in a period of rising credit loss provisions across the banking sector.

Comparison to Industry Standards

• The Corporation's executive compensation peer group for 2025 included 21 publicly traded commercial banks with asset sizes ranging from approximately 0.5 to 2.0 times the Corporation's asset size, headquartered in Pennsylvania, New Jersey, New York, Maryland, West Virginia, and Ohio, with a preference for those with Trust Assets Under Management.
• The peer group includes ACNB Corporation, Codorus Valley Bancorp, Inc., Norwood Financial Corp., Arrow Financial Corporation, ESSA Bancorp, Inc., Orange County Bancorp, Inc., AmeriServ Financial, Inc., Fidelity D&D Bancorp, Inc., Orrstown Financial Services, Inc., Chemung Financial Corporation, First United Corporation, Peoples Financial Services Corp., Citizens Financial Services, Inc., Franklin Financial Services Corporation, Penns Woods Bancorp, Inc., Civista Bancshares, Inc., LCNB Corp., SB Financial Group, Inc., CNB Financial Corporation, Mid Penn Bancorp, Inc., and Shore Bancshares, Inc.
• For 2025 LTI awards, the Corporation achieved the 35th percentile rank for (PPNR-NCOs)/Average Equity and the 65th percentile rank for (PPNR-NCOs)/Average Assets compared to its Performance Peer Group, indicating strong performance in these metrics.
• For 2023 LTI awards, the Corporation met the 35th percentile threshold for Core Return on Average Equity (Core ROAE) but did not meet the 65th percentile threshold for Core Return on Average Assets (Core ROAA) compared to its peer group.

Management Changes

Corporate Governance

Related Party Transactions

• Certain directors and officers of the Corporation and Bank and their affiliates were customers of, and had transactions with, the Corporation and Bank in the ordinary course of business during 2025.
• These transactions, including purchase of certificates of deposit and extensions of credit, were on substantially the same terms as with third parties and did not involve more than normal risks of collectability.
• No related person transactions requiring disclosure (exceeding the lesser of $120,000 or 1% of total assets) occurred in 2025.

Stakeholder Impact

• Shareholders will vote on key governance matters (director elections, executive compensation, auditor ratification). The merger with Susquehanna increased stockholders' equity, but diluted earnings per share decreased, while adjusted earnings per share increased. The CEO pay ratio is disclosed.
• Employees benefit from competitive compensation, benefits (including healthcare and retirement), training, and development programs. The merger with Susquehanna involved integration efforts and the need to attract and retain key personnel in the new market.
• Customers are central to the Corporation's mission of "Creating value through lifelong relationships." The merger expanded the market area and customer base.
• Communities are part of the Corporation's mission and values, including the "Giving Back, Giving Together community service program."
• Creditors should note that assets in the nonqualified supplemental retirement income plan (SERP) and deferred compensation plan trusts are subject to the claims of the Bank's creditors in the event of insolvency.

Next Steps

• Shareholders to vote on director elections, executive compensation, and auditor ratification at the Annual Meeting on April 23, 2026.
• The Board of Directors will consider the outcome of the say-on-pay advisory vote when determining future executive compensation arrangements.
• The Corporation will continue to purchase D&O Coverage for directors and officers as long as it is available on a commercially reasonable basis.
• Shareholders wishing to submit proposals for the 2027 Annual Meeting must do so by November 14, 2026.

Key Dates

Recommendation

The filing presents a mixed financial picture for 2025, with a decrease in GAAP net income and an increase in credit loss provisions, largely influenced by merger-related expenses. However, the successful integration of Susquehanna Community Financial, Inc. and the resulting growth in assets, loans, and deposits, coupled with an improved net interest margin and strong adjusted earnings (non-GAAP), indicate solid underlying operational performance. The above-target executive incentive payouts based on PPNR-NCOs further support this. While the increased provision for credit losses warrants monitoring, the strategic growth and positive adjusted metrics suggest the company is navigating its environment effectively. Given the recent merger and its associated costs and benefits still being integrated, a "hold" recommendation is appropriate, allowing investors to observe the sustained impact of the acquisition and the company's ability to translate operational gains into consistent GAAP profitability.

Keywords

Banking, Financial Services, SEC Filing, Proxy Statement, Corporate Governance, Executive Compensation, Merger & Acquisition, Financial Performance, Risk Management, Shareholder Meeting, Director Election, Auditor Ratification, Citizens & Northern Corporation, CZNC, Susquehanna Community Financial