Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

January 18, 2024

Date of Report (Date of earliest event reported)

Citizens & Northern Corporation

(Exact name of registrant as specified in its charter)


Pennsylvania	0-16084	23-2451943
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Ident. No.)

90-92 Main Street, Wellsboro, Pennsylvania		16901
(Address of principal executive offices)		(Zip Code)

(570) 724-3411

Registrant’s telephone number, including area code

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $1.00 per share	CZNC	Nasdaq Capital Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

ITEM 2.02. Results of Operations and Financial Condition

Citizens & Northern Corporation (the “Company”) announced unaudited, consolidated financial results for the year ended December 31, 2023. On January 18, 2024, the Company issued a press release titled “C&N Declares Dividend and Announces Fourth Quarter 2023 Unaudited Financial Results,” a copy of which is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference. Supplemental, unaudited financial information is furnished as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference.

ITEM 9.01. Financial Statements and Exhibits

(a) Not applicable.

(b) Not applicable.

(d) Exhibits.


	Exhibit 99.1: Press Release issued by Citizens & Northern Corporation dated January 18, 2024, titled “C&N Declares Dividend and Announces Fourth Quarter 2023 Unaudited Financial Results.”

	Exhibit 99.2: Supplemental, unaudited financial information.

	Exhibit 104: Cover Page Interactive Data File (embedded in the cover page formatted in Inline XBRL)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	CITIZENS & NORTHERN CORPORATION

Dated: January 18, 2024	By:	/s/ Mark A. Hughes
		Mark A. Hughes
		Treasurer and Chief Financial Officer

Exhibit 99.1


		Contact: Charity Frantz
January 18, 2024		570-724-0225
		charityf@cnbankpa.com

C&N DECLARES DIVIDEND AND ANNOUNCES FOURTH QUARTER 2023 UNAUDITED FINANCIAL RESULTS

For Immediate Release:

Wellsboro, PA – Citizens & Northern Corporation (“C&N”) (NASDAQ: CZNC) announced its most recent dividend declaration and its unaudited, consolidated financial results for the three-month and annual periods ended December 31, 2023. C&N’s principal activity is community banking, and the largest subsidiary is Citizens & Northern Bank (the “Bank”).

Highlights:

●

Fourth quarter 2023 net income was $4,261,000, or $0.28 diluted earnings per share, as compared to $0.50 per diluted share in the third quarter 2023 and $0.50 per diluted share in the fourth quarter 2022. Net income for the year ended December 31, 2023, was $24,148,000 or $1.57 diluted earnings per share, as compared to $26,618,000 or $1.71 per diluted share for the year ended December 31, 2022.

●

In December 2023, C&N repositioned its available-for-sale securities portfolio and its investments in bank-owned life insurance (“BOLI”). As a result of the repositioning, C&N recognized a net charge to earnings of approximately $1.253 million, or $0.08 per diluted share in the fourth quarter 2023 reflecting the net impact of: (1) a $3.0 million pre-tax loss and after-tax loss of $2.4 million from the sale of available-for-sale debt securities with an amortized cost basis of $45.5 million, (2) a tax charge of $950,000 from initiating the surrender of BOLI with a book value of $14.3 million, and (3) noninterest income of $2.1 million from a one-time enhancement on a $30 million purchase of new BOLI. Proceeds from the sale of securities were used in the $30 million purchase of BOLI as noted and in purchases totaling $13.7 million of debt securities in December 2023. C&N’s management expects to recover the fourth quarter 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.

●

The net interest margin was 3.31% in the fourth quarter 2023 as compared to 3.35% in the third quarter 2023 and 3.89% in the fourth quarter 2022. The net interest margin was 3.47% for the year ended December 31, 2023, down from 3.77% in 2022.

●

The provision for credit losses was $951,000 in the fourth quarter 2023 and $186,000 for the year ended December 31, 2023. The provision for credit losses included the impact of increases in the allowance for credit losses (ACL) related to changes in qualitative factors and in estimated future net charge-offs related to the economic forecast component of the ACL and a reduction in C&N’s average net charge-off experience.

●

Total loans receivable increased $17.5 million, or 3.8% (annualized) at December 31, 2023 from September 30, 2023. Average loans receivable increased 4.3% (annualized) during the fourth quarter 2023 from the third quarter 2023. Average loans receivable were higher by 10.1% for the year ended December 31, 2023 as compared to 2022.

●

Nonperforming loans totaled 0.99% of total loans at December 31, 2023, up from 0.92% at September 30, 2023 and down from 1.46% at December 31, 2022. Total nonperforming assets were 0.75% of total assets at December 31, 2023, up from 0.70% at September 30, 2023 and down from 1.04% at December 31, 2022.

●

Total deposits decreased $10.2 million at December 31, 2023 from September 30, 2023. Total deposits, excluding brokered deposits, were lower by 2.5% (annualized) from September 30, 2023. Average total deposits increased 5.4% (annualized) during the fourth quarter 2023 from the third quarter 2023. Average total deposits were 0.4% lower for the year ended December 31, 2023, as compared to the year ended December 31, 2022.

●

At December 31, 2023, estimated uninsured and uncollateralized deposits totaled 21.7% of the Bank’s total deposits. C&N maintains highly liquid sources of available funds, including unused borrowing capacity with the Federal Home Loan Bank of Pittsburgh and the Federal Reserve Bank of Philadelphia and available federal funds lines with other banks, as well as available-for-sale debt securities with a fair value in excess of collateral obligations. At December 31, 2023, available funding from these sources totaled 187.2% of uninsured deposits and 251.3% of uninsured and uncollateralized deposits.

Dividend Declared and Unaudited Financial Information

On January 18, 2024, C&N’s Board of Directors declared a regular quarterly cash dividend of $0.28 per share. The dividend is payable on February 9, 2024 to shareholders of record as of January 29, 2024.

Highlights related to C&N’s fourth quarter and December 31, 2023 annual unaudited U.S. GAAP earnings results as compared to results for the third quarter 2023, fourth quarter 2022 and the year ended December 31, 2022 are presented below.

Fourth Quarter 2023 as Compared to Third Quarter 2023

Net income was $4,261,000, or $0.28 per diluted share, for the fourth quarter 2023 as compared to $7,591,000, or $0.50 per diluted share, for the third quarter 2023. As previously described, results for the fourth quarter 2023 included the impact of a $1.253 million charge, or $0.08 per diluted share, related to the repositioning of available-for-sale securities and BOLI investments. Other significant variances were as follows:

◾

Net interest income of $19,594,000 in the fourth quarter 2023 was down $69,000 from the third quarter 2023. The net interest margin was 3.31% in the fourth quarter 2023, down from 3.35% in the third quarter 2023. The net interest spread decreased 0.08%, as the average rate on interest-bearing liabilities increased 0.24%, while the average yield on earning assets increased 0.16%.

◾

There was a provision for credit losses of $951,000 in the fourth quarter 2023 compared to a credit for credit losses (reduction in expense) of $1,225,000 in the third quarter 2023. The provision in the fourth quarter 2023 included the impact of increases in qualitative factors used as adjustments of C&N’s historical loss experience in estimating the ACL at December 31, 2023 for the commercial portion of the portfolio and an increase in estimated future net charge-offs based on an economic forecast. The credit in the third quarter 2023 included the impact of reductions in the ACL at September 30, 2023 from changes related to an economic forecast, changes in qualitative adjustments and a reduction in C&N’s average net charge-off experience. The ACL as a percentage of gross loans receivable increased to 1.04% at December 31, 2023 from 0.99% at September 30, 2023. Net charge-offs totaled $39,000 in the fourth quarter 2023 and $38,000 in the third quarter 2023.

◾

Noninterest income of $8,720,000 in the fourth quarter 2023 increased $2,231,000 from the third quarter 2023 amount including the BOLI enhancement of $2,100,000 received in the fourth quarter 2023 as noted earlier.

◾

Net losses on available-for-sale debt securities were $3,042,000 for the fourth quarter with no comparable amount in third quarter 2023. As previously discussed, C&N sold available-for-sale debt securities with an amortized cost basis of $45.5 million in December 2023 in connection with a repositioning of available-for-sale securities and BOLI investments.

◾

Noninterest expense of $18,399,000 in the fourth quarter 2023 increased $459,000 from the third quarter 2022 amount. Significant variances included the following:

Salaries and employee benefits expense of $11,113,000 increased $235,000 from the third quarter 2023 as health care expense increased $275,000 due to higher claims on C&N’s partially self-insured plan.

Other noninterest expense of $2,790,000 increased $213,000 from the third quarter 2023. Within this category, significant variances included the following:

◾

Other operational losses included an accrued charge of $427,000 related to a trust department tax compliance matter.

◾

Legal fees totaled $59,000 in the fourth quarter 2023, a decrease of $129,000 from the third quarter 2023 total, mainly due to lower fees incurred related to non-litigation-related corporate matters.

◾

The income tax provision of $1,661,000, or 28.0% of pre-tax income for the fourth quarter 2023 decreased $185,000 from $1,846,000, or 19.6% of pre-tax income for the third quarter 2023. The higher effective tax rate in the fourth quarter 2023 as compared to the third quarter 2023 reflects the tax charge of $950,000 for the initiated surrender of BOLI partially offset by the non-taxable income of $2,100,000 from the one-time enhancement on $30 million purchase of new BOLI.

Fourth Quarter 2023 as Compared to Fourth Quarter 2022

Fourth quarter 2023 net income was $4,261,000, or $0.28 per diluted share, as compared to $7,779,000, or $0.50 per diluted share, in the fourth quarter 2022. As previously described, results for the fourth quarter 2023 included the impact of a $1.253 million charge, or $0.08 per diluted share, related to the repositioning of available-for-sale securities and BOLI investments. Other significant variances were as follows:

◾

Net interest income of $19,594,000 in the fourth quarter 2023 was $2,698,000 lower than the fourth quarter 2022 total. The interest rate spread decreased 0.97%, as the average rate on interest-bearing liabilities increased 1.56%, while the average yield on earning assets increased 0.59%. The net interest margin was 3.31% in the fourth quarter 2023, down from 3.89% in the fourth quarter 2022.

◾

As described in more detail above, the provision for credit losses was $951,000 in the fourth quarter 2023, down $1,311,000 from the fourth quarter 2022 provision of $2,262,000. The higher provision in 2022 included the impact of partial charge-offs in 2022 on a commercial real estate secured participation loan. The charge-offs resulted from the borrower’s default due to deterioration in financial performance.

◾

Noninterest income of $8,720,000 in the fourth quarter 2023 increased $2,610,000 from the fourth quarter 2022 amount. Significant variances included the following:

Earnings from the increase in cash surrender value of life insurance of $2,253,000 increased $2,113,000 from the fourth quarter 2022 including the recognition of $2,100,000 in income from a one-time enhancement on a $30 million purchase of new BOLI as described above.

Net gains from sale of loans of $273,000 increased $249,000 from the fourth quarter 2022, reflecting an increase in the volume of residential mortgage loans sold.

Trust revenue of $1,913,000 increased $164,000, consistent with recent appreciation in the trading prices of many U.S. equity securities and includes revenue from new business.

Other noninterest income of $1,168,000 increased $136,000 as dividends on FHLB-Pittsburgh stock totaled $308,000, an increase of $99,000 from the fourth quarter 2022. Additionally, in the fourth quarter 2023, C&N recognized income of $94,000 from dividends on Federal Reserve Bank stock with no comparable amount in 2022, income of $79,000 from a life insurance arrangement with no comparable amount in 2022, and income of $64,000, with no comparable amount in 2022, from a conversion assistance payment received related to a change in wealth management platform for providing brokerage and investment advisory services. Included in the fourth quarter 2022, was $268,000 of income from interest rate swap fees on commercial loans, with no comparable amount in 2023.

◾

Net losses on available-for-sale debt securities related to the repositioning previously discussed totaled $3,042,000 in the fourth quarter 2023 compared to net losses of $1,000 in the fourth quarter 2022.

◾

Noninterest expense of $18,399,000 in the fourth quarter 2023 increased $1,812,000 from the fourth quarter 2022 amount. Significant variances included the following:

Salaries and employee benefits expense of $11,113,000 increased $978,000, including increases in estimated cash and stock-based incentive compensation expense of $635,000 consistent with comparisons in both years of C&N’s earnings performance to that of defined peer groups and an increase in base salaries expense of $350,000, or 4.8%.

Other noninterest expense of $2,790,000 increased $879,000 from the fourth quarter 2022. Within this category, significant variances included the following:

◾

Other operational losses included net increase in expense of $590,000 to $473,000 in other losses in the fourth quarter 2023 from a net reduction in expense of $117,000 in the fourth quarter 2022. Included in the fourth quarter 2023 is $427,000 related to the trust department tax compliance matter noted previously while most of the reduction in other losses in 2022 was from recoveries or reversals of previously recorded charges related to trust department tax compliance matters. Also included in other operational losses was $64,000 of expenses related to check fraud in the fourth quarter 2023 with no comparable amount in the fourth quarter 2022.

◾

FDIC insurance expense increased $115,000 from the fourth quarter of 2022, reflecting the impact of an increase in base deposit insurance assessment rate applicable to all FDIC-insured banks.

Data processing and telecommunications expense of $1,923,000 increased $179,000 from the fourth quarter 2022, including the impact of increases in software licensing and maintenance costs as well as costs related to enhancements of data management capabilities.

Automated teller machine and interchange expense of $308,000 decreased $165,000 from the fourth quarter 2022, including the impact of incentive-related credits offset against a portion of 2023 expense.

Pennsylvania shares tax expense of $392,000 is lower by $101,000 from the fourth quarter 2022, consistent with a reduction in C&N Bank’s equity that provides the base for determining the annual tax.

◾

The income tax provision of $1,661,000, or 28.0% of pre-tax income for the fourth quarter 2023 decreased $112,000 from $1,773,000, or 18.6% of pre-tax income for the fourth quarter 2022. The higher effective tax rate in the fourth quarter 2023 as compared to the fourth quarter 2022 reflects the tax charge of $950,000 for the initiated surrender of BOLI and the impact of an increase in trust department tax compliance- related penalties, partially offset by the non-taxable income of $2,100,000 from the one-time enhancement on $30 million purchase of new BOLI.

Year Ended December 31, 2023 as Compared to Year Ended December 31, 2022

Net income for the year ended December 31, 2023 was $24,148,000, or $1.57 per diluted share, as compared to $26,618,000, or $1.71 per diluted share, for the year ended December 31, 2022. As previously described, results for 2023 included the impact of a $1.253 million charge, or $0.08 per diluted share, related to the repositioning of available-for-sale securities and BOLI investments. Other significant variances were as follows:

◾

For the year ended December 31, 2023, net interest income totaled $80,400,000, $2,728,000 lower than in 2022. The interest rate spread decreased 0.66%, as the average rate on interest-bearing liabilities was higher by 1.36% while the average yield on earning assets increased 0.70%. The net interest margin was 3.47% in

2023, down from 3.77% in 2022. Average total earning assets increased $101,418,000 in 2023 over 2022, including an increase in average loans receivable of $164,055,000, or 10.1%. Average interest-bearing deposits increased $27,528,000 while average total deposits decreased $8,486,000, or 0.4%, in 2023 as compared to 2022.

◾

For the year ended December 31, 2023, there was a provision for credit losses of $186,000, a decrease of $7,069,000 in expense compared to $7,255,000 in 2022. The provision for 2023 included expense related to loans receivable of $753,000 and a credit related to off-balance sheet exposures of $567,000. The expense related to loans receivable was mainly attributable to qualitative adjustments of C&N’s historical loss experience in estimating the ACL and the impact of an economic forecast, as well as a reduction in C&N’s average net charge-off experience, used in the calculation of the ACL. The ACL as a percentage of gross loans receivable was 1.04% at December 31, 2023 as compared to 1.08% at January 1, 2023 upon the initial adoption of CECL. For the year ended December 31, 2023, net charge-offs totaled $264,000 or 0.01% of gross loans receivable as compared to $4,177,000 or 0.26% of gross loans receivable in 2022.

◾

Noninterest income totaled $27,453,000 for the year ended December 31, 2023, up $3,041,000 from the total for the year ended December 31, 2022. Significant variances included the following:

Increase in cash surrender value of life insurance of $2,703,000 increased $2,158,000 in 2023 from 2022 including $2,100,000 in income from a one-time enhancement on a $30 million purchase of new BOLI as previously discussed.

Other noninterest income of $4,610,000 increased $912,000 as dividends on FHLB-Pittsburgh stock totaled $1,138,000, an increase of $541,000. Additionally, in 2023, C&N recognized income of $156,000 from dividends on Federal Reserve Bank stock with no comparable amount in 2022 and income of $234,000, with no comparable amount in 2022, from a conversion assistance payment received related to a change in wealth management platform for providing brokerage and investment advisory services.

Service charges on deposit accounts of $5,567,000 increased $548,000 as the volume of consumer and business overdraft activity increased and included in 2022 was a reduction in income of $290,000 related to refunds of consumer overdraft fees as the result of updated regulatory guidance on certain overdraft fees.

Trust revenue of $7,413,000 increased $419,000 reflecting revenue from new business.

Brokerage and insurance revenue of $1,675,000 decreased $616,000 due to a reduction in sales volume.

Loan servicing fees, net, of $602,000 decreased $358,000, as the fair value of servicing rights decreased $200,000 in 2023 as compared to an increase of $126,000 in 2022.

◾

Net losses on available-for-sale debt securities were $3,036,000 for the year ended December 31, 2023, compared to net gains on available-for-sale debt securities of $20,000 for the year ended December 31, 2022. The net losses on available-for-sale debt securities of $3,036,000 for the year ended December 31, 2023, were primarily from the sales in the fourth quarter related to the previously described repositioning of the portfolio.

◾

Noninterest expense totaled $74,148,000 for the year ended December 31, 2023, an increase of $6,193,000 from the total for the year ended December 31, 2022. Significant variances included the following:

Other noninterest expense of $11,233,000 increased $3,012,000. Within this category, significant variances included the following:

◾

Other operational losses included net increase in expense of $854,000 to $505,000 in other losses in 2023 from a net reduction in expense of $349,000 in 2022. Included in 2023 is $427,000 related to the trust department tax compliance matter noted previously while most of the reduction in other losses in 2022 was from recoveries or reversals of previously recorded charges related to trust department tax compliance matters. Also included in other operational losses was $232,000 of expenses related to check fraud in 2023 with no comparable amount in 2022.

◾

FDIC insurance expense increased $481,000, reflecting the impact of the increase in base deposit insurance assessment rate previously described.

◾

Legal fees totaled $759,000 in 2023, an increase of $261,000, mainly due to fees incurred related to non-litigation-related corporate matters.

◾In 2023, the allowance for disallowed SBA claims decreased $90,000, resulting in a reduction in expense of the same amount, reflecting better than previously estimated claims experience. The comparable amount in 2022 was a reduction in expense of $367,000. At December 31, 2023, there was no remaining allowance for disallowed SBA claims.

◾Included in 2022 was a reduction of $172,000 in expense related to credit losses on off balance sheet exposures. In 2023, the net credit for credit losses related to off-balance sheet exposures of $211,000 is included in the provision for credit losses in the consolidated statements of income.

Salaries and employee benefits expense of $44,195,000 increased $2,362,000, including increases in base salaries expense of $1,713,000, or 6.0% and in estimated cash and stock-based incentive compensation expense of $670,000 consistent with comparisons in both years of C&N’s earnings performance to that of defined peer groups.

Data processing and telecommunications expense of $7,582,000 increased $776,000, including the impact of increases in software licensing and maintenance costs as well as costs related to enhancements of data management capabilities.

Professional fees of $2,497,000 increased $492,000, including $389,000 of conversion costs related to a change in wealth management platform for providing brokerage and investment advisory services.

Pennsylvania shares tax expense of $1,602,000 in 2023 is lower by $354,000, consistent with a reduction in C&N Bank’s equity that provides the base for determining the annual tax.

◾

The income tax provision of $6,335,000, or 20.8% of pre-tax income for the year ended December 31, 2023 increased $603,000 from $5,732,000, or 17.7% of pre-tax income for the year ended December 31, 2022. The higher effective rate in 2023 includes: (1) the tax charge of $950,000 for the initiated surrender of BOLI; (2) an increase in nondeductible interest expense; (3) the impact of the increase in trust department tax compliance-related penalties; and (4) the impact of the permanent difference related to stock-based compensation resulting in an increase in taxable income in 2023 as compared to a deduction in 2022 due to the reduction in CZNC stock price. Partially offsetting the higher effective rate in 2023 was the non-taxable income of $2,100,000 from a one-time enhancement on $30 million purchase of new BOLI.

Other Information:

Changes in other unaudited financial information are as follows:

◾

Total assets amounted to $2,515,584,000 at December 31, 2023, up from $2,483,949,000 at September 30, 2023 and $2,454,307,000 at December 31, 2022.

◾

The amortized cost of available-for-sale debt securities decreased to $464,968,000 at December 31, 2023 from $505,440,000 at September 30, 2023 and $561,794,000 at December 31, 2022. The fair value of available-for-sale debt securities at December 31, 2023 was lower than the amortized cost basis by $49,213,000, or 10.6%. In comparison, the aggregate unrealized loss position was $76,302,000 (15.1%) at September 30, 2023 and $63,761,000 (11.3%) at December 31, 2022. The unrealized decrease in fair value of the portfolio has resulted from an increase in interest rates as compared to rates when the securities were purchased. Management reviewed the available-for-sale debt securities as of December 31, 2023 and concluded there were no credit-related declines in fair value and that the unrealized losses on all of the securities in an unrealized loss position are considered temporary.

◾

Gross loans receivable totaled $1,848,139,000 at December 31, 2023, an increase of $17,469,000 (1.0%) from total loans at September 30, 2023 and an increase of $108,099,000 (6.2%) from total loans at December 31, 2022. In comparing outstanding balances at December 31, 2023 and 2022, total commercial loans were up $82,697,000 (6.4%), reflecting growth in non-owner occupied commercial real estate loans of $61,745,000 and owner occupied commercial real estate loans of $31,336,000 and a net decrease of $10,384,000 in other commercial loans. Within other commercial loans, the outstanding balance of commercial construction and land loans increased $43,231,000, offset by decreases in the outstanding balances of commercial and industrial, commercial lines of credit, loans to political subdivisions and other commercial loans. Total residential mortgage loans were up $20,132,000 (5.1%) and total consumer loans increased $5,270,000 (9.6%). The outstanding balance of residential mortgage loans originated and serviced by C&N that have been sold to third parties was $323.3 million at December 31, 2023, down $2.4 million (0.7%) from December 31, 2022.

◾

At December 31, 2023, the recorded investment in non-owner occupied commercial real estate loans for which the primary purpose is utilization of office space by third parties was $94,341,000, or 5.1% of gross loans receivable. At December 31, 2023, within this segment there were two loans with a total recorded investment of $3,908,000 in nonaccrual status with specific allowances totaling $524,000. The remainder of the non-owner occupied commercial real estate loans with a primary purpose of office space utilization were in accrual status with no specific allowance at December 31, 2023.

◾

Total nonperforming assets as a percentage of total assets was 0.75% at December 31, 2023, up from 0.70% at September 30, 2023 and down from 1.04% at December 31, 2022. Total nonperforming assets were $18.8 million at December 31, 2023, up from $17.4 million at September 30, 2023 and down from $25.6 million at December 31, 2022. At December 31, 2023, total loans receivable individually evaluated with an allowance were $7,786,000, with specific allowances (included in the total ACL on loans receivable) totaling $743,000. In comparison, at September 30, 2023 loans individually evaluated with an allowance totaled $7,681,000 with specific allowances totaling $820,000, and at December 31, 2022 loans individually evaluated with an allowance totaled $3,460,000 with specific allowances totaling $453,000.

◾

Deposits totaled $2,014,806,000 at December 31, 2023, down $10,191,000 (0.5%) from $2,024,997,000 at September 30, 2023. Total deposits, excluding brokered deposits, were down $12,048,000 (0.6%) at December 31, 2023 from September 30, 2023. Total deposits were up $17,213,000 (0.9%) at December 31, 2023 as compared to December 31, 2022, including an increase in brokered deposits of $43,386,000. At December 31, 2023, C&N’s estimated uninsured deposits totaled $592.2 million, or 29.2% of the Bank’s total deposits, as compared to $603.0 million, or 29.5% of the Bank’s total deposits at September 30, 2023. Included in uninsured deposits are deposits collateralized by securities (almost exclusively municipal deposits) totaling $151.0 million, or 7.4% of the Bank’s total deposits at December 31, 2023.

◾

C&N maintained highly liquid sources of available funds totaling $1.1 billion at December 31, 2023, including unused borrowing capacity with the Federal Home Loan Bank of Pittsburgh of $737.8 million, unused availability on the Federal Reserve Bank of Philadelphia’s discount window of $20.0 million, available federal funds lines with

other banks of $95 million and available-for-sale debt securities with a fair value in excess of collateral obligations of $256.1 million. At December 31, 2023, available funding from these sources totaled 187.2% of uninsured deposits, and 251.3% of uninsured and uncollateralized deposits.

◾

The outstanding balance of borrowed funds, including Federal Home Loan Bank advances, repurchase agreements, senior notes and subordinated debt, totaled $211,759,000 at December 31, 2023, up from $188,032,000 at September 30, 2023 and $181,781,000 at December 31, 2022. Federal Home Loan Bank borrowings maturing overnight or within 3 months totaled $37,500,000 at December 31, 2023, up from $23,790,000 at September 30, 2023 and down from $77,000,000 at December 31, 2022.

◾

Total stockholders’ equity was $262,381,000 at December 31, 2023, up from $240,205,000 at September 31, 2023 and $249,325,000 at December 31, 2022. Within stockholders’ equity, the portion of accumulated other comprehensive loss related to available-for-sale debt securities was $38,878,000 at December 31, 2023, $60,278,000 at September 30, 2023 and $50,370,000 at December 31, 2022. The volatility in stockholders’ equity related to accumulated other comprehensive loss from available-for-sale debt securities has been caused by significant fluctuations in interest rates including overall significant increases in rates as compared to market rates when most of C&N’s securities were purchased. Accumulated other comprehensive loss is excluded from C&N’s regulatory capital ratios.

◾

On September 25, 2023, the Corporation announced a new treasury stock repurchase program. Under this program, C&N is authorized to repurchase up to 750,000 shares of its common stock. No shares have been repurchased under this program through December 31, 2023.

◾

Citizens & Northern Bank is subject to various regulatory capital requirements. At December 31, 2023, Citizens & Northern Bank maintains regulatory capital ratios that exceed all capital adequacy requirements. Management expects the Bank to remain well-capitalized for the foreseeable future.

◾

Trust assets under management by C&N’s Wealth Management Group amounted to $1,188,082,000 at December 31, 2023, up 5.3% from $1,128,600,000 at September 30, 2023, and up 11.7% from $1,063,615,000 at December 31, 2022. Fluctuations in values of assets under management reflect the impact of market volatility.

◾

Under U.S. GAAP, interest income on tax-exempt securities and loans are reported at their nominal amounts, with the tax benefit accounted for as a reduction in the income tax provision. C&N presents certain analyses and ratios with net interest income determined on a fully taxable-equivalent basis, which are non-GAAP financial measures as presented. C&N believes presentation of net interest income on a fully taxable-equivalent basis provides investors with meaningful information for purposes of comparing the returns on tax-exempt securities and loans with returns on taxable securities and loans. The excess of net interest income on a fully taxable-equivalent basis over the amounts reported under U.S. GAAP was $199,000, $212,000 and $303,000 for the fourth quarter 2023, third quarter 2023 and fourth quarter 2022, respectively. The excess of net interest income on a fully taxable-equivalent basis over the amounts reported under U.S. GAAP was $919,000 for the year ended December 31, 2023, and $1,226,000 for the year ended December 31, 2022.

Citizens & Northern Corporation is the bank holding company for Citizens & Northern Bank, headquartered in Wellsboro, Pennsylvania which operates 29 banking offices located in Bradford, Bucks, Cameron, Chester, Lycoming, McKean, Potter, Sullivan, Tioga, York and Lancaster Counties in Pennsylvania and Steuben County in New York, as well as a loan production office in Elmira, New York. Citizens & Northern Corporation trades on NASDAQ under the symbol “CZNC.” For more information about Citizens & Northern Bank and Citizens & Northern Corporation, visit www.cnbankpa.com.

Safe Harbor Statement: Except for historical information contained herein, the matters discussed in this release are forward-looking statements. Investors are cautioned that all forward-looking statements involve risks and uncertainty, including without limitation, the following: 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; recent adverse developments in the banking industry highlighted by high-profile bank failures and the potential impact of such developments on customer confidence, sources of liquidity and capital funding, and regulatory responses to these developments; C&N’s credit standards and its on-going credit assessment processes might not protect it from significant credit losses; legislative or regulatory changes; downturn in demand for loan, deposit and other financial

services in C&N’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; and failure to achieve merger-related synergies and difficulties in integrating the business and operations of acquired institutions. Citizens & Northern disclaims any intention or obligation to publicly update or revise any forward-looking statements, whether as a result of events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

EXHIBIT 99.2 – Supplemental, Unaudited Financial Information

CONDENSED, CONSOLIDATED EARNINGS INFORMATION

(Dollars In Thousands, Except Per Share Data)

(Unaudited)



	4TH		4TH
	QUARTER		QUARTER
	2023		2022		$ Incr. (Decr.)		% Incr. (Decr.)
Interest and Dividend Income	$	30,236	$	25,855	$	4,381	16.94	%
Interest Expense		10,642		3,563		7,079	198.68	%
Net Interest Income		19,594		22,292		(2,698)	(12.10)	%
Provision for Credit Losses		951		2,262		(1,311)	(57.96)	%
Net Interest Income After Provision for Credit Losses		18,643		20,030		(1,387)	(6.92)	%
Noninterest Income		8,720		6,110		2,610	42.72	%
Net Realized Losses on Available-for-sale Debt Securities		(3,042)		(1)		(3,041)	NM (2)
Noninterest Expense		18,399		16,587		1,812	10.92	%
Income Before Income Tax Provision		5,922		9,552		(3,630)	(38.00)	%
Income Tax Provision		1,661		1,773		(112)	(6.32)	%
Net Income	$	4,261	$	7,779	$	(3,518)	(45.22)	%
Net Income Attributable to Common Shares (1)	$	4,231	$	7,711	$	(3,480)	(45.13)	%
PER COMMON SHARE DATA:
Net Income - Basic	$	0.28	$	0.50	$	(0.22)	(44.00)	%
Net Income - Diluted	$	0.28	$	0.50	$	(0.22)	(44.00)	%
Dividends Per Share	$	0.28	$	0.28	$	0.00	0.00	%
Number of Shares Used in Computation - Basic		15,175,013		15,374,579
Number of Shares Used in Computation - Diluted		15,175,013		15,377,161


	YEAR ENDED
	DECEMBER 31,
	2023		2022		$ Incr. (Decr.)		% Incr. (Decr.)
Interest and Dividend Income	$	113,504	$	92,647	$	20,857	22.51	%
Interest Expense		33,104		9,519		23,585	247.77	%
Net Interest Income		80,400		83,128		(2,728)	(3.28)	%
Provision for Credit Losses		186		7,255		(7,069)	(97.44)	%
Net Interest Income After Provision for Credit Losses		80,214		75,873		4,341	5.72	%
Noninterest Income		27,453		24,412		3,041	12.46	%
Net Realized (Losses) Gains on Available-for-sale Debt Securities		(3,036)		20		(3,056)	NM (2)
Noninterest Expense		74,148		67,955		6,193	9.11	%
Income Before Income Tax Provision		30,483		32,350		(1,867)	(5.77)	%
Income Tax Provision		6,335		5,732		603	10.52	%
Net Income	$	24,148	$	26,618	$	(2,470)	(9.28)	%
Net Income Attributable to Common Shares (1)	$	23,962	$	26,381	$	(2,419)	(9.17)	%
PER COMMON SHARE DATA:
Net Income - Basic	$	1.57	$	1.71	$	(0.14)	(8.19)	%
Net Income - Diluted	$	1.57	$	1.71	$	(0.14)	(8.19)	%
Dividends Per Share	$	1.12	$	1.12	$	0.00	0.00	%
Number of Shares Used in Computation - Basic		15,241,859		15,455,432
Number of Shares Used in Computation - Diluted		15,241,859		15,458,531

(1)

Basic and diluted net income per common share are determined based on net income less earnings allocated to nonvested restricted shares with nonforfeitable dividends.

(2)

Not meaningful.

CONDENSED, CONSOLIDATED BALANCE SHEET DATA

(Dollars In Thousands)

(Unaudited)


	December 31,		December 31,
	2023		2022		$ Incr. (Decr.)		% Incr. (Decr.)
ASSETS
Cash & Due from Banks	$	56,878	$	55,048	$	1,830	3.32	%
Available-for-sale Debt Securities		415,755		498,033		(82,278)	(16.52)	%
Loans, Net		1,828,931		1,723,425		105,506	6.12	%
Bank-Owned Life Insurance		63,674		31,214		32,460	103.99	%
Bank Premises and Equipment, Net		21,632		21,574		58	0.27	%
Deferred Tax Asset, Net		17,441		20,884		(3,443)	(16.49)	%
Intangible Assets		54,974		55,382		(408)	(0.74)	%
Other Assets		56,299		48,747		7,552	15.49	%
TOTAL ASSETS	$	2,515,584	$	2,454,307	$	61,277	2.50	%

LIABILITIES
Deposits	$	2,014,806	$	1,997,593	$	17,213	0.86	%
Borrowed Funds - Federal Home Loan Bank and Repurchase Agreements		172,211		142,409		29,802	20.93	%
Senior Notes, Net		14,831		14,765		66	0.45	%
Subordinated Debt, Net		24,717		24,607		110	0.45	%
Other Liabilities		26,638		25,608		1,030	4.02	%
TOTAL LIABILITIES		2,253,203		2,204,982		48,221	2.19	%

STOCKHOLDERS' EQUITY
Common Stockholders' Equity, Excluding Accumulated
Other Comprehensive Loss		300,818		299,203		1,615	0.54	%
Accumulated Other Comprehensive Loss:
Net Unrealized Losses on Available-for-sale Debt Securities		(38,878)		(50,370)		11,492	(22.82)	%
Defined Benefit Plans		441		492		(51)	(10.37)	%
TOTAL STOCKHOLDERS' EQUITY		262,381		249,325		13,056	5.24	%
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	$	2,515,584	$	2,454,307	$	61,277	2.50	%

CONDENSED, CONSOLIDATED FINANCIAL HIGHLIGHTS

(Dollars In Thousands, Except Per Share Data)

(Unaudited)


	FOR THE
	THREE MONTHS ENDED						%
	December 31,						INCREASE
	2023			2022			(DECREASE)
EARNINGS PERFORMANCE
Net Income	$	4,261		$	7,779		(45.22)	%
Return on Average Assets (Annualized)		0.69	%		1.29	%	(46.51)	%
Return on Average Equity (Annualized)		7.03	%		12.90	%	(45.50)	%

	AS OF OR FOR THE
	YEAR ENDED						%
	December 31,						INCREASE
	2023			2022			(DECREASE)
EARNINGS PERFORMANCE
Net Income	$	24,148		$	26,618		(9.28)	%
Return on Average Assets		0.98	%		1.12	%	(12.50)	%
Return on Average Equity		9.72	%		10.04	%	(3.19)	%

BALANCE SHEET HIGHLIGHTS
Total Assets	$	2,515,584		$	2,454,307		2.50	%
Available-for-Sale Debt Securities		415,755			498,033		(16.52)	%
Loans, Net		1,828,931			1,723,425		6.12	%
Allowance for Credit Losses:
Allowance for Credit Losses on Loans		19,208			16,615		15.61	%
Allowance for Credit Losses on Off-Balance Sheet Exposures		690			425		62.35	%
Deposits		2,014,806			1,997,593		0.86	%

OFF-BALANCE SHEET
Outstanding Balance of Mortgage Loans Sold with Servicing Retained	$	323,298		$	325,677		(0.73)	%
Trust Assets Under Management		1,188,082			1,063,615		11.70	%

STOCKHOLDERS' VALUE (PER COMMON SHARE)
Net Income - Basic	$	1.57		$	1.71		(8.19)	%
Net Income - Diluted	$	1.57		$	1.71		(8.19)	%
Dividends	$	1.12		$	1.12		0.00	%
Common Book Value	$	17.15		$	16.07		6.72	%
Tangible Common Book Value (a)	$	13.56		$	12.50		8.48	%
Market Value (Last Trade)	$	22.43		$	22.86		(1.88)	%
Market Value / Common Book Value		130.79	%		142.25	%	(8.06)	%
Market Value / Tangible Common Book Value		165.41	%		182.88	%	(9.55)	%
Price Earnings Multiple		14.29			13.37		6.88	%
Dividend Yield		4.99	%		4.90	%	1.84	%
Common Shares Outstanding, End of Period		15,295,135			15,518,819		(1.44)	%

CONDENSED, CONSOLIDATED FINANCIAL HIGHLIGHTS (Continued)

(Dollars In Thousands, Except Per Share Data)

(Unaudited)


	AS OF OR FOR THE
	YEAR ENDED						%
	DECEMBER 31,						INCREASE
	2023			2022			(DECREASE)
SAFETY AND SOUNDNESS
Tangible Common Equity / Tangible Assets (a)		8.43	%		8.08	%	4.33	%
Nonperforming Assets / Total Assets		0.75	%		1.04	%	(27.88)	%
Allowance for Credit Losses / Total Loans		1.04	%		0.95	%	9.47	%
Total Risk Based Capital Ratio (b)		15.69	%		15.72	%	(0.19)	%
Tier 1 Risk Based Capital Ratio (b)		13.28	%		13.43	%	(1.12)	%
Common Equity Tier 1 Risk Based Capital Ratio (b)		13.28	%		13.43	%	(1.12)	%
Leverage Ratio (b)		9.88	%		10.11	%	(2.27)	%

AVERAGE BALANCES
Average Assets	$	2,462,856		$	2,372,788		3.80	%
Average Equity	$	248,494		$	265,093		(6.26)	%

EFFICIENCY RATIO (c)
Net Interest Income on a Fully Taxable-Equivalent
Basis (c)	$	81,319		$	84,354		(3.60)	%
Noninterest Income, Excluding Net Realized (Losses) Gains on Available-for-sale Debt Securities		27,453			24,412		12.46	%
Less: Enhancement Fee Included in Noninterest Income Related to Purchase of Bank-Owned Life Insurance		(2,100)			0
Total (1)	$	106,672		$	108,766		(1.93)	%
Noninterest Expense (2)	$	74,148		$	67,955		9.11	%
Efficiency Ratio = (2)/(1)		69.51	%		62.48	%	11.25	%

(a)Tangible common book value per share and tangible common equity as a percentage of tangible assets are non-U.S. GAAP ratios. Management believes this non-GAAP information is helpful in evaluating the strength of the C&N's capital and in providing an alternative, conservative valuation of C&N's net worth. The ratios shown above are based on the following calculations of tangible assets and tangible common equity:


Total Assets	$	2,515,584	$	2,454,307
Less: Intangible Assets, Primarily Goodwill		(54,974)		(55,382)
Tangible Assets	$	2,460,610	$	2,398,925
Total Stockholders' Equity	$	262,381	$	249,325
Less: Intangible Assets, Primarily Goodwill		(54,974)		(55,382)
Tangible Common Equity (3)	$	207,407	$	193,943

Common Shares Outstanding, End of Period (4)		15,295,135		15,518,819
Tangible Common Book Value per Share = (3)/(4)	$	13.56	$	12.50

(b)Capital ratios for the most recent period are estimated.

(c)The efficiency ratio is a non-GAAP ratio that is calculated as shown above. For purposes of calculating the efficiency ratio, net interest income on a fully taxable-equivalent basis includes amounts of interest income on tax-exempt securities and loans that have been increased to a fully taxable-equivalent basis, using C&N's marginal federal income tax rate of 21%. A reconciliation of net interest income under U.S. GAAP as compared to net interest income as adjusted to a fully taxable-equivalent basis is provided in Exhibit 99.2 under the table “COMPARISON OF INTEREST INCOME AND EXPENSE”.

QUARTERLY CONDENSED, CONSOLIDATED

INCOME STATEMENT INFORMATION

(Dollars In Thousands, Except Per Share Data)

(Unaudited)


		For the Three Months Ended:
	December 31,		September 30,		June 30,		March 31,		December 31,		September 30,		June 30,		March 31,
	2023		2023		2023		2023		2022		2022		2022		2022
Interest income	$	30,236	$	29,118	$	28,011	$	26,139	$	25,855	$	23,710	$	21,309	$	21,773
Interest expense		10,642		9,455		7,649		5,358		3,563		2,831		1,684		1,441
Net interest income		19,594		19,663		20,362		20,781		22,292		20,879		19,625		20,332
Provision (credit) for credit losses		951		(1,225)		812		(352)		2,262		3,794		308		891
Net interest income after provision (credit) for credit losses		18,643		20,888		19,550		21,133		20,030		17,085		19,317		19,441
Noninterest income		8,720		6,489		6,635		5,609		6,110		5,651		6,830		5,821
Net realized (losses) gains on securities		(3,042)		0		(1)		7		(1)		20		(1)		2
Noninterest expense		18,399		17,940		18,722		19,087		16,587		17,443		17,039		16,886
Income before income tax provision		5,922		9,437		7,462		7,662		9,552		5,313		9,107		8,378
Income tax provision		1,661		1,846		1,419		1,409		1,773		858		1,618		1,483
Net income	$	4,261	$	7,591	$	6,043	$	6,253	$	7,779	$	4,455	$	7,489	$	6,895
Net income attributable to common shares	$	4,231	$	7,534	$	5,996	$	6,201	$	7,711	$	4,416	$	7,419	$	6,835
Basic earnings per common share	$	0.28	$	0.50	$	0.39	$	0.40	$	0.50	$	0.29	$	0.48	$	0.44
Diluted earnings per common share	$	0.28	$	0.50	$	0.39	$	0.40	$	0.50	$	0.29	$	0.48	$	0.44

QUARTERLY CONDENSED, CONSOLIDATED

BALANCE SHEET INFORMATION

(In Thousands) (Unaudited)


	As of:
	Dec. 31,		Sept. 30,		June 30,		March 31,		Dec. 31,		Sept. 30,		June 30,			March 31,
	2023		2023		2023		2023		2022		2022		2022			2022
ASSETS
Cash & Due from Banks	$	56,878	$	52,658	$	51,762	$	52,212	$	55,048	$	64,044	$	69,187	$	114,346
Available-for-Sale Debt Securities		415,755		429,138		445,695		472,814		498,033		487,980		526,837		532,913
Loans, Net		1,828,931		1,812,585		1,795,454		1,726,793		1,723,425		1,674,076		1,643,057		1,523,919
Bank-Owned Life Insurance		63,674		31,557		31,504		31,352		31,214		31,074		30,941		30,805
Bank Premises and Equipment, Net		21,632		21,267		20,970		21,277		21,574		21,881		21,829		21,169
Deferred Tax Asset, Net		17,441		23,731		20,687		18,914		20,884		22,327		16,331		11,818
Intangible Assets		54,974		55,076		55,178		55,280		55,382		55,492		55,602		55,711
Other Assets		56,299		57,937		49,530		51,230		48,747		43,306		46,934		39,690
TOTAL ASSETS	$	2,515,584	$	2,483,949	$	2,470,780	$	2,429,872	$	2,454,307	$	2,400,180	$	2,410,718	$	2,330,371

LIABILITIES
Deposits (1)	$	2,014,806	$	2,024,997	$	2,010,118	$	1,916,040	$	1,997,593	$	2,039,595	$	1,964,270	$	1,960,952
Borrowed Funds - Federal Home Loan Bank and Repurchase Agreements		172,211		148,529		146,694		192,097		142,409		57,920		126,833		22,938
Senior Notes, Net		14,831		14,814		14,798		14,781		14,765		14,749		14,733		14,717
Subordinated Debt, Net		24,717		24,689		24,661		24,634		24,607		24,580		24,553		33,031
Other Liabilities		26,638		30,715		26,392		26,752		25,608		24,547		21,710		22,525
TOTAL LIABILITIES		2,253,203		2,243,744		2,222,663		2,174,304		2,204,982		2,161,391		2,152,099		2,054,163

STOCKHOLDERS' EQUITY
Common Stockholders' Equity, Excluding Accumulated Other Comprehensive Loss		300,818		300,031		296,190		298,365		299,203		295,258		294,621		296,386
Accumulated Other Comprehensive Loss:
Net Unrealized Losses on Available-for-sale Debt Securities		(38,878)		(60,278)		(48,536)		(43,271)		(50,370)		(56,766)		(36,307)		(20,492)
Defined Benefit Plans		441		452		463		474		492		297		305		314
TOTAL STOCKHOLDERS' EQUITY		262,381		240,205		248,117		255,568		249,325		238,789		258,619		276,208
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	$	2,515,584	$	2,483,949	$	2,470,780	$	2,429,872	$	2,454,307	$	2,400,180	$	2,410,718	$	2,330,371

(1) Brokered Deposits (Included in Total Deposits)	$	64,369	$	62,512	$	70,653	$	15,117	$	20,983	$	32,375	$	35,974	$	33,748

AVAILABLE-FOR-SALE DEBT SECURITIES

(In Thousands)


	December 31, 2023				September 30, 2023				December 31, 2022
	Amortized		Fair		Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value		Cost		Value
Obligations of the U.S. Treasury	$	12,325	$	11,290	$	33,938	$	30,557	$	35,166	$	31,836
Obligations of U.S. Government agencies		11,119		9,946		21,372		18,796		25,938		23,430
Bank holding company debt securities		28,952		23,500		28,950		22,311		28,945		25,386
Obligations of states and political subdivisions:
Tax-exempt		113,464		104,199		123,598		104,453		146,149		132,623
Taxable		58,720		50,111		65,408		53,457		68,488		56,812
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities		105,549		95,405		109,102		94,469		112,782		99,941
Residential collateralized mortgage obligations		50,212		46,462		38,267		33,397		44,868		40,296
Commercial mortgage-backed securities		76,412		66,682		76,627		63,672		91,388		79,686
Private label commercial mortgage-backed securities		8,215		8,160		8,178		8,026		8,070		8,023
Total Available-for-Sale Debt Securities	$	464,968	$	415,755	$	505,440	$	429,138	$	561,794	$	498,033

SUMMARY OF LOANS BY TYPE

(Excludes Loans Held for Sale)

(In Thousands)


	December 31,		September 30,		December 31,
	2023		2023		2022
Commercial real estate - non-owner occupied
Non-owner occupied	$	499,104	$	503,434	$	454,386
Multi-family (5 or more) residential		64,076		61,061		55,406
1-4 Family - commercial purpose		174,162		172,792		165,805
Total commercial real estate - non-owner occupied		737,342		737,287		675,597
Commercial real estate - owner occupied		237,246		231,112		205,910
All other commercial loans:
Commercial and industrial		78,832		80,960		95,368
Commercial lines of credit		117,236		122,189		141,444
Political subdivisions		79,031		80,415		86,663
Commercial construction and land		104,123		91,014		60,892
Other commercial loans		20,471		21,125		25,710
Total all other commercial loans		399,693		395,703		410,077
Residential mortgage loans:
1-4 Family - residential		389,262		385,777		363,005
1-4 Family residential construction		24,452		24,236		30,577
Total residential mortgage		413,714		410,013		393,582
Consumer loans:
Consumer lines of credit (including HELCs)		41,503		37,736		36,650
All other consumer		18,641		18,819		18,224
Total consumer		60,144		56,555		54,874
Total		1,848,139		1,830,670		1,740,040
Less: allowance for credit losses on loans		(19,208)		(18,085)		(16,615)
Loans, net	$	1,828,931	$	1,812,585	$	1,723,425

ADJUSTMENTS TO GROSS AMORTIZED COST OF LOANS

(In Thousands)


	Three Months Ended						Year Ended
	December 31,		September 30,		December 31,		December 31,		December 31,
	2023		2023		2022		2023		2022
Market Rate Adjustment
Adjustments to gross amortized cost of loans at beginning of period	$	(1,016)	$	(1,000)	$	(861)	$	(916)	$	(637)
Accretion (amortization) recognized in interest income		46		(16)		(55)		(54)		(279)
Adjustments to gross amortized cost of loans at end of period	$	(970)	$	(1,016)	$	(916)	$	(970)	$	(916)
Credit Adjustment on Non-impaired Loans
Adjustments to gross amortized cost of loans at beginning of period	$	(1,299)	$	(1,446)	$	(2,095)	$	(1,840)	$	(3,335)
Accretion recognized in interest income		136		147		255		677		1,495
Adjustments to gross amortized cost of loans at end of period	$	(1,163)	$	(1,299)	$	(1,840)	$	(1,163)	$	(1,840)

PAST DUE LOANS AND NONPERFORMING ASSETS

(Dollars In Thousands)


	December 31,			September 30,			December 31,
	2023			2023			2022
Loans individually evaluated with a valuation allowance	$	7,786		$	7,861		$	3,460
Loans individually evaluated without a valuation allowance		3,478			4,146			14,871
Purchased credit impaired loans		0			0			1,027
Total individually evaluated loans	$	11,264		$	12,007		$	19,358

Total loans past due 30-89 days and still accruing	$	9,275		$	3,675		$	7,079

Nonperforming assets:
Purchased credit impaired loans	$	0		$	0		$	1,027
Other nonaccrual loans		15,177			15,501			22,058
Total nonaccrual loans		15,177			15,501			23,085
Total loans past due 90 days or more and still accruing		3,190			1,292			2,237
Total nonperforming loans		18,367			16,793			25,322
Foreclosed assets held for sale (real estate)		478			633			275
Total nonperforming assets	$	18,845		$	17,426		$	25,597

Total nonperforming loans as a % of total loans		0.99	%		0.92	%		1.46	%
Total nonperforming assets as a % of assets		0.75	%		0.70	%		1.04	%
Allowance for credit losses as a % of total loans		1.04	%		0.99	%		0.95	%

ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES ON LOANS

(In Thousands)


	3 Months		3 Months		Year		Year
	Ended		Ended		Ended		Ended
	December 31,		September 30,		December 31,		December 31,
	2023		2023		2023		2022
Balance, beginning of period	$	18,085	$	19,056	$	16,615	$	13,537
Adoption of ASU 2016-13 (CECL)		0		0		2,104		0
Charge-offs		(57)		(98)		(356)		(4,245)
Recoveries		18		60		92		68
Net charge-offs		(39)		(38)		(264)		(4,177)
Provision (credit) for credit losses on loans		1,162		(933)		753		7,255
Balance, end of period	$	19,208	$	18,085	$	19,208	$	16,615

ANALYSIS OF THE PROVISION (CREDIT) FOR CREDIT LOSSES

(In Thousands)


	3 Months		3 Months		Year		Year
	Ended		Ended		Ended		Ended
	December 31,		September 30,		December 31,		December 31,
	2023		2023		2023		2022
Provision (credit) for credit losses:
Loans receivable	$	1,162	$	(933)	$	753	$	7,255
Off-balance sheet exposures (1)		(211)		(292)		(567)		0
Total provision (credit) for credit losses	$	951	$	(1,225)	$	186	$	7,255

(1) The (credit) provision for credit losses on off-balance sheet exposures prior to January 1, 2023 was included in other noninterest expense in the consolidated statements of income.

COMPARISON OF INTEREST INCOME AND EXPENSE

(In Thousands)


	Three Months Ended						Year Ended
	December 31,		September 30,		December 31,		December 31,		December 31,
	2023		2023		2022		2023		2022
INTEREST INCOME
Interest-bearing due from banks	$	447	$	345	$	310	$	1,379	$	645
Available-for-sale debt securities:
Taxable		2,115		2,077		2,217		8,555		8,360
Tax-exempt		654		681		910		2,815		3,721
Total available-for-sale debt securities		2,769		2,758		3,127		11,370		12,081
Loans receivable:
Taxable		26,529		25,526		21,979		98,843		77,641
Paycheck Protection Program		3		3		59		11		958
Tax-exempt		663		680		675		2,756		2,471
Total loans receivable		27,195		26,209		22,713		101,610		81,070
Other earning assets		24		18		8		64		77
Total Interest Income		30,435		29,330		26,158		114,423		93,873

INTEREST EXPENSE
Interest-bearing deposits:
Interest checking		2,809		2,360		844		7,668		1,833
Money market		2,032		1,669		818		5,686		2,088
Savings		57		60		66		243		257
Time deposits		3,742		3,175		898		10,636		2,460
Total interest-bearing deposits		8,640		7,264		2,626		24,233		6,638
Borrowed funds:
Short-term		322		677		127		3,240		429
Long-term - FHLB advances		1,329		1,164		460		4,230		896
Senior notes, net		120		120		120		479		477
Subordinated debt, net		231		230		230		922		1,079
Total borrowed funds		2,002		2,191		937		8,871		2,881
Total Interest Expense		10,642		9,455		3,563		33,104		9,519

Net Interest Income	$	19,793	$	19,875	$	22,595	$	81,319	$	84,354

Note: Interest income from tax-exempt securities and loans has been adjusted to a fully taxable-equivalent basis, using C&N’s marginal federal income tax rate of 21%. The following table is a reconciliation of net interest income under U.S. GAAP as compared to net interest income as adjusted to a fully taxable-equivalent basis.


(In Thousands)	Three Months Ended						Year Ended
	December 31,		September		December 31,		December 31,		December 31,
	2023		2023		2022		2023		2022
Net Interest Income Under U.S. GAAP	$	19,594	$	19,663	$	22,292	$	80,400	$	83,128
Add: fully taxable-equivalent interest income adjustment from tax-exempt securities		74		84		167		388		720
Add: fully taxable-equivalent interest income adjustment from tax-exempt loans		125		128		136		531		506
Net Interest Income as adjusted to a fully taxable-equivalent basis	$	19,793	$	19,875	$	22,595	$	81,319	$	84,354

ANALYSIS OF AVERAGE DAILY BALANCES AND RATES

(Dollars in Thousands)


	3 Months				3 Months				3 Months
	Ended		Rate of		Ended		Rate of		Ended		Rate of
	12/31/2023		Return/		9/30/2023		Return/		12/31/2022		Return/
	Average		Cost of		Average		Cost of		Average		Cost of
	Balance		Funds %		Balance		Funds %		Balance		Funds %
EARNING ASSETS
Interest-bearing due from banks	$	37,555	4.72	%	$	31,729	4.31	%	$	40,288	3.05	%
Available-for-sale debt securities, at amortized cost:
Taxable		372,797	2.25	%		379,709	2.17	%		415,538	2.12	%
Tax-exempt		121,143	2.14	%		124,435	2.17	%		146,466	2.46	%
Total available-for-sale debt securities		493,940	2.22	%		504,144	2.17	%		562,004	2.21	%
Loans receivable:
Taxable		1,751,926	6.01	%		1,729,835	5.85	%		1,609,563	5.42	%
Paycheck Protection Program		121	9.84	%		137	8.69	%		1,044	22.42	%
Tax-exempt		84,349	3.12	%		87,026	3.10	%		88,583	3.02	%
Total loans receivable		1,836,396	5.88	%		1,816,998	5.72	%		1,699,190	5.30	%
Other earning assets		1,534	6.21	%		1,468	4.86	%		1,048	3.03	%
Total Earning Assets		2,369,425	5.10	%		2,354,339	4.94	%		2,302,530	4.51	%
Cash		21,019				22,068				23,154
Unrealized loss on securities		(72,605)				(63,110)				(70,583)
Allowance for credit losses		(18,575)				(19,540)				(16,612)
Bank-owned life insurance		32,980				31,559				31,127
Bank premises and equipment		21,532				21,132				21,752
Intangible assets		55,025				55,125				55,433
Other assets		78,558				74,483				64,341
Total Assets	$	2,487,359			$	2,476,056			$	2,411,142

INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Interest checking	$	521,432	2.14	%	$	512,074	1.83	%	$	478,012	0.70	%
Money market		354,854	2.27	%		340,618	1.94	%		427,378	0.76	%
Savings		218,810	0.10	%		232,240	0.10	%		262,269	0.10	%
Time deposits		429,898	3.45	%		406,436	3.10	%		295,920	1.20	%
Total interest-bearing deposits		1,524,994	2.25	%		1,491,368	1.93	%		1,463,579	0.71	%
Borrowed funds:
Short-term		24,196	5.28	%		49,157	5.46	%		14,229	3.54	%
Long-term - FHLB advances		132,089	3.99	%		119,395	3.87	%		62,998	2.90	%
Senior notes, net		14,822	3.21	%		14,808	3.22	%		14,757	3.23	%
Subordinated debt, net		24,704	3.71	%		24,676	3.70	%		24,594	3.71	%
Total borrowed funds		195,811	4.06	%		208,036	4.18	%		116,578	2.73	%
Total Interest-bearing Liabilities		1,720,805	2.45	%		1,699,404	2.21	%		1,580,157	0.89	%
Demand deposits		491,944				498,724				563,567
Other liabilities		32,122				30,749				26,171
Total Liabilities		2,244,871				2,228,877				2,169,895
Stockholders' equity, excluding accumulated other comprehensive loss		299,401				296,577				296,717
Accumulated other comprehensive loss		(56,913)				(49,398)				(55,470)
Total Stockholders' Equity		242,488				247,179				241,247
Total Liabilities and Stockholders' Equity	$	2,487,359			$	2,476,056			$	2,411,142
Interest Rate Spread			2.65	%			2.73	%			3.62	%
Net Interest Income/Earning Assets			3.31	%			3.35	%			3.89	%

Total Deposits (Interest-bearing and Demand)	$	2,016,938			$	1,990,092			$	2,027,146

(1)Annualized rates of return on tax-exempt securities and loans are presented on a fully taxable-equivalent basis, using C&N’s marginal federal income tax rate of 21%.

(2)	Nonaccrual loans have been included with loans for the purpose of analyzing net interest earnings.

(3)	Rates of return on earning assets and costs of funds have been presented on an annualized basis.

ANALYSIS OF AVERAGE DAILY BALANCES AND RATES

(Dollars in Thousands)


	Year				Year
	Ended		Rate of		Ended		Rate of
	12/31/2023		Return/		12/31/2022		Return/
	Average		Cost of		Average		Cost of
	Balance		Funds %		Balance		Funds%
EARNING ASSETS
Interest-bearing due from banks	$	32,709	4.22	%	$	51,407	1.25	%
Available-for-sale debt securities, at amortized cost:
Taxable		389,456	2.20	%		410,033	2.04	%
Tax-exempt		125,920	2.24	%		148,344	2.51	%
Total available-for-sale debt securities		515,376	2.21	%		558,377	2.16	%
Loans receivable:
Taxable		1,703,697	5.80	%		1,533,417	5.06	%
Paycheck Protection Program		142	7.75	%		8,406	11.40	%
Tax-exempt		88,310	3.12	%		86,271	2.86	%
Total loans receivable		1,792,149	5.67	%		1,628,094	4.98	%
Other earning assets		1,383	4.63	%		2,321	3.32	%
Total Earning Assets		2,341,617	4.89	%		2,240,199	4.19	%
Cash		22,108				22,685
Unrealized loss on securities		(63,118)				(38,784)
Allowance for credit losses		(18,498)				(14,962)
Bank-owned life insurance		31,808				30,925
Bank premises and equipment		21,330				21,559
Intangible assets		55,176				55,599
Other assets		72,433				55,567
Total Assets	$	2,462,856			$	2,372,788

INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Interest checking	$	488,761	1.57	%	$	443,107	0.41	%
Money market		347,130	1.64	%		443,084	0.47	%
Savings		238,760	0.10	%		257,156	0.10	%
Time deposits		381,488	2.79	%		285,264	0.86	%
Total interest-bearing deposits		1,456,139	1.66	%		1,428,611	0.46	%
Borrowed funds:
Short-term		62,926	5.15	%		21,766	1.97	%
Long-term - FHLB advances		110,943	3.81	%		40,194	2.23	%
Senior notes, net		14,798	3.24	%		14,733	3.24	%
Subordinated debt, net		24,662	3.74	%		27,116	3.98	%
Total borrowed funds		213,329	4.16	%		103,809	2.78	%
Total Interest-bearing Liabilities		1,669,468	1.98	%		1,532,420	0.62	%
Demand deposits		515,787				551,801
Other liabilities		29,107				23,474
Total Liabilities		2,214,362				2,107,695
Stockholders' equity, excluding accumulated other comprehensive loss		297,894				295,447
Accumulated other comprehensive loss		(49,400)				(30,354)
Total Stockholders' Equity		248,494				265,093
Total Liabilities and Stockholders' Equity	$	2,462,856			$	2,372,788
Interest Rate Spread			2.91	%			3.57	%
Net Interest Income/Earning Assets			3.47	%			3.77	%

Total Deposits (Interest-bearing and Demand)	$	1,971,926			$	1,980,412

(1)Annualized rates of return on tax-exempt securities and loans are presented on a fully taxable-equivalent basis, using C&N’s marginal federal income tax rate of 21%.

(2)	Nonaccrual loans have been included with loans for the purpose of analyzing net interest earnings.

COMPARISON OF NONINTEREST INCOME

(In Thousands)


	Three Months Ended						Year Ended
	December 31,		September 30,		December 31,		December 31,		December 31,
	2023		2023		2022		2023		2022
Trust revenue	$	1,913	$	1,919	$	1,749	$	7,413	$	6,994
Brokerage and insurance revenue		486		394		507		1,675		2,291
Service charges on deposit accounts		1,446		1,443		1,357		5,567		5,019
Interchange revenue from debit card transactions		1,045		1,098		1,098		4,160		4,148
Net gains from sales of loans		273		237		24		723		757
Loan servicing fees, net		136		154		203		602		960
Increase in cash surrender value of life insurance		2,253		160		140		2,703		545
Other noninterest income		1,168		1,084		1,032		4,610		3,698
Total noninterest income, excluding realized gains (losses) on securities, net	$	8,720	$	6,489	$	6,110	$	27,453	$	24,412

COMPARISON OF NONINTEREST EXPENSE

(In Thousands)


	Three Months Ended						Year Ended
	December 31,		September 30,		December 31,		December 31,		December 31,
	2023		2023		2022		2023		2022
Salaries and employee benefits	$	11,113	$	10,878	$	10,135	$	44,195	$	41,833
Net occupancy and equipment expense		1,364		1,268		1,316		5,357		5,533
Data processing and telecommunications expenses		1,923		1,823		1,744		7,582		6,806
Automated teller machine and interchange expense		308		504		473		1,682		1,601
Pennsylvania shares tax		392		403		493		1,602		1,956
Professional fees		509		487		515		2,497		2,005
Other noninterest expense		2,790		2,577		1,911		11,233		8,221
Total noninterest expense	$	18,399	$	17,940	$	16,587	$	74,148	$	67,955

NON-OWNER OCCUPIED COMMERCIAL REAL ESTATE

(In Thousands)


Loan Type	December 31,		% of Non-owner		% of
	2023		Occupied CRE		Total Loans
Industrial	$	109,160	21.9	%	5.9	%
Retail		94,824	19.0	%	5.1	%
Office		94,341	18.9	%	5.1	%
Hotels		73,094	14.6	%	4.0	%
Mixed Use		59,687	12.0	%	3.2	%
Other		67,998	13.6	%	3.7	%
Total Non-owner Occupied CRE Loans	$	499,104
Total Gross Loans	$	1,848,139

LIQUIDITY INFORMATION

(In Thousands)


Available Credit Facilities	Outstanding						Available						Total Credit
	Dec. 31,		September 30,		Dec. 31,		Dec. 31,		September 30,		Dec. 31,		Dec. 31,		September 20,		Dec. 31,
	2023		2023		2022		2023		2023		2022		2023		2023		2022
Federal Home Loan Bank of Pittsburgh	$	189,021	$	165,951	$	150,099	$	737,824	$	752,847	$	689,279	$	926,845	$	918,798	$	839,378
Federal Reserve Bank Discount Window		0		0		0		19,982		20,766		23,107		19,982		20,766		23,107
Other correspondent banks		0		0		0		95,000		95,000		95,000		95,000		95,000		95,000
Total credit facilities	$	189,021	$	165,951	$	150,099	$	852,806	$	868,613	$	807,386	$	1,041,827	$	1,034,564	$	957,485


Uninsured Deposits Information	December 31,			September 30,			December 31,
	2023			2023			2022
Total Deposits - C&N Bank	$	2,030,909		$	2,040,506		$	2,016,666

Estimated Total Uninsured Deposits	$	592,206		$	602,957		$	689,435
Portion of Uninsured Deposits that are
Collateralized		151,031			188,927			205,886
Uninsured and Uncollateralized Deposits	$	441,175		$	414,030		$	483,549

Uninsured and Uncollateralized Deposits as
a % of Total Deposits		21.7	%		20.3	%		24.0	%

Available Funding from Credit Facilities	$	852,806		$	868,613		$	807,386
Fair Value of Available-for-sale Debt
Securities in Excess of Pledging Obligations		256,058			227,667			272,475
Highly Liquid Available Funding	$	1,108,864		$	1,096,280		$	1,079,861

Highly Liquid Available Funding as a % of
Uninsured Deposits		187.2	%		181.8	%		156.6	%

Highly Liquid Available Funding as a % of
Uninsured and Uncollateralized Deposits		251.3	%		264.8	%		223.3	%

Document and Entity Information	Jan. 18, 2024
Cover [Abstract]
Document Type	8-K
Document Period End Date	Jan. 18, 2024
Securities Act File Number	0-16084
Entity Registrant Name	Citizens & Northern Corporation
Entity Incorporation, State or Country Code	PA
Entity Tax Identification Number	23-2451943
Entity Address, Address Line One	90-92 Main Street
Entity Address, City or Town	Wellsboro
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	16901
City Area Code	570
Local Phone Number	724-3411
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, par value $1.00 per share
Trading Symbol	CZNC
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false
Entity Central Index Key	0000810958
Amendment Flag	false

N-2	Jan. 18, 2024
Cover [Abstract]
Entity Central Index Key	0000810958
Amendment Flag	false
Securities Act File Number	0-16084
Document Type	8-K
Entity Registrant Name	Citizens & Northern Corporation
Entity Address, Address Line One	90-92 Main Street
Entity Address, City or Town	Wellsboro
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	16901
City Area Code	570
Local Phone Number	724-3411
Entity Emerging Growth Company	false