DEF 14A: Citizens & Northern Corporation Announces Annual Meeting of Shareholders

Citizens & Northern Corporation will hold its annual meeting of shareholders on April 25, 2024, in a virtual format.

Summary

• Citizens & Northern Corporation (CZNC) is holding its Annual Meeting of Shareholders on April 25, 2024, at 2:00 P.M. in a virtual format.
• Shareholders of record as of February 6, 2024, are entitled to vote on the election of four Class I directors, an advisory vote on executive compensation, and the ratification of Baker Tilly US, LLP as the independent registered public accounting firm for the year ending December 31, 2024.
• The Board of Directors recommends voting FOR the election of the director nominees, FOR the approval of executive compensation, and FOR the ratification of the accounting firm.
• Shareholders can vote online, by telephone, or by mail, with specific deadlines for each method.
• The proxy statement and annual report are available online.
• The corporation's net income for the year ended December 31, 2023, was $24,148,000, or $1.57 per diluted share.

Sentiment

Score: 6

Explanation: The document presents a mix of positive and negative financial results, with a generally neutral tone. While there are some areas of concern, the company is taking steps to address them.

Positives

• The Board of Directors is recommending shareholders vote FOR all proposals.
• The corporation's Core ROAE of 11.41% was at the 49th percentile as compared to results for the peer group, resulting in a corporate performance-based payout to the NEOs equal to 97.32% of target for 2023.
• Approximately 87% of shareholders approved the compensation paid to the named executive officers at the 2023 annual meeting.

Negatives

• Net interest income decreased $2.7 million, or 3.3%.
• The net interest margin decreased to 3.47% on a fully taxable equivalent basis for 2023 from 3.77% in 2022.
• Total revenue for 2023 totaled $106.7 million, or 91.0% of the target amount.
• For purposes of this KPI, annual average deposits includes the Corporation's total deposits except for brokered deposits. The target award criterion for growth in annual average deposits was a 6.2% growth rate over annual average core deposits in 2022 of $1.947 billion. Total average annual deposits in 2023 was $1.925 billion, or a 1.2% reduction from the 2022 average.

Risks

• The proxy statement contains forward-looking statements that are subject to various risks and uncertainties, including changes in economic conditions, interest rates, and competition.
• Recent adverse developments in the banking industry highlighted by high-profile bank failures and the potential impact of such developments on consumer confidence, sources of liquidity and capital funding, and regulatory responses to these developments.
• Fraud and cyber malfunction risks as usage of artificial intelligence continues to expand.

Future Outlook

The Corporation's management expects to recover the 2023 loss in less than one year from reinvestment in assets with higher yields as compared to the yields on the assets sold or surrendered.

Management Comments

• 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.
• The Compensation Committee values the opinions of shareholders and carefully evaluates the say-on-pay advisory vote results when determining future compensation.

Industry Context

The document references a peer group of publicly traded commercial banks and thrifts in the Mid-Atlantic region used for compensation benchmarking.

Comparison to Industry Standards

• The Corporation compares its Core ROAE and Core ROAA to a peer group of publicly traded commercial banks and thrifts within MD, NJ, NY, OH, PA and WV with total assets between 0.5 and 2.0 times the Corporation (CZNC) as of September 30, 2023.
• The 20 institutions selected for inclusion in the 2023 Peer Group: ACNB Corporation, Civista Bancshares, Inc., Franklin Financial Services Corporation, Penns Woods Bancorp, Inc., AmeriServ Financial, Inc., CNB Financial Corporation, LCNB Corp., Peoples Financial Services Corp., Arrow Financial Corporation, Codorus Valley Bancorp, Inc., Mid Penn Bancorp, Inc., SB Financial Group, Inc., Chemung Financial Corporation, Fidelity D&D Bancorp, Inc., Norwood Financial Corp., Shore Bancshares, Inc., Citizens Financial Services, Inc., First United Corporation, Orrstown Financial Services, Inc., Summit Financial Group, Inc.

Related Party Transactions

• Certain directors and officers of the Corporation and Bank and their affiliates (including corporations of which such persons are officers or greater than 10% beneficial owners) were customers of, and had transactions with, the Corporation and Bank in the ordinary course of business during the year ended December 31, 2023.
• Such transactions included the purchase of certificates of deposit and extensions of credit in the ordinary course of business on substantially the same terms, including interest rates and collateral requirements, as those prevailing at the time for comparable transactions with third parties and did not involve more than the normal risks of collectability or present other unfavorable features.

Stakeholder Impact

• The outcome of the shareholder vote on executive compensation will influence future compensation decisions.
• The election of directors will shape the leadership and strategic direction of the company.
• The financial performance of the company impacts shareholders, employees, and the communities it serves.

Next Steps

• Shareholders are encouraged to vote on the proposals outlined in the proxy statement.
• The Board of Directors will consider the outcome of the advisory vote on executive compensation when making future compensation decisions.

Key Dates

Keywords

Annual Meeting, Shareholders, Proxy Statement, Executive Compensation, Board of Directors, Director Election, Baker Tilly, Audit Firm, Virtual Meeting, Voting