UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

⌧ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

◻ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _________________________.

Commission file number: 000-16084

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)

570-724-3411

(Registrant’s telephone number including area code)

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	CZNC	NASDAQ Capital Market

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 ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of “large accelerated filer,” accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ◻ Accelerated filer ⌧ Non-accelerated filer ◻ Smaller reporting company ☐ 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. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ⌧

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.


Common Stock ($1.00 par value)	15,493,056 Shares Outstanding on August 3, 2022

Table of Contents

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share and Per Share Data) (Unaudited)


	June 30,		December 31,
	2022		2021
ASSETS
Cash and due from banks:
Noninterest-bearing	$	37,735	$	16,729
Interest-bearing		31,452		88,219
Total cash and due from banks		69,187		104,948
Available-for-sale debt securities, at fair value		526,837		517,679

Loans receivable		1,657,604		1,564,849
Allowance for loan losses		(14,547)		(13,537)
Loans, net		1,643,057		1,551,312

Bank-owned life insurance		30,941		30,669
Accrued interest receivable		7,740		7,235
Bank premises and equipment, net		21,829		20,683
Foreclosed assets held for sale		505		684
Deferred tax asset, net		16,331		5,887
Goodwill		52,505		52,505
Core deposit intangibles, net		3,097		3,316
Other assets		38,689		32,730
TOTAL ASSETS	$	2,410,718	$	2,327,648

LIABILITIES
Deposits:
Noninterest-bearing	$	552,767	$	521,206
Interest-bearing		1,411,503		1,403,854
Total deposits		1,964,270		1,925,060
Short-term borrowings		90,042		1,803
Long-term borrowings - FHLB advances		36,791		28,042
Senior notes, net		14,733		14,701
Subordinated debt, net		24,553		33,009
Accrued interest and other liabilities		21,710		23,628
TOTAL LIABILITIES		2,152,099		2,026,243

STOCKHOLDERS' EQUITY
Preferred stock, $1,000 par value; authorized 30,000 shares; $1,000 liquidation
preference per share; no shares issued		0		0
Common stock, par value $1.00 per share; authorized 20,000,000 shares;
issued 16,030,172 and outstanding 15,499,214 at June 30, 2022;
issued 16,030,172 and outstanding 15,759,090 at December 31, 2021		16,030		16,030
Paid-in capital		143,417		144,453
Retained earnings		148,187		142,612
Treasury stock, at cost; 530,958 shares at June 30, 2022 and 271,082
shares at December 31, 2021		(13,013)		(6,716)
Accumulated other comprehensive (loss) income		(36,002)		5,026
TOTAL STOCKHOLDERS' EQUITY		258,619		301,405
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	$	2,410,718	$	2,327,648

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Table of Contents

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

Consolidated Statements of Income

(In Thousands Except Per Share Data) (Unaudited)


	Three Months Ended				Six Months Ended
	June 30,		June 30,		June 30,		June 30,
	2022		2021		2022		2021
INTEREST INCOME
Interest and fees on loans:
Taxable	$	17,927	$	18,075	$	36,476	$	37,566
Tax-exempt		467		411		921		850
Income from available-for-sale debt securities:
Taxable		2,036		1,187		4,005		2,300
Tax-exempt		768		663		1,490		1,305
Other interest and dividend income		111		92		190		161
Total interest and dividend income		21,309		20,428		43,082		42,182
INTEREST EXPENSE
Interest on deposits		1,130		1,217		2,040		2,495
Interest on short-term borrowings		122		7		123		22
Interest on long-term borrowings - FHLB advances		55		109		104		243
Interest on senior notes, net		120		57		238		57
Interest on subordinated debt, net		257		357		620		601
Total interest expense		1,684		1,747		3,125		3,418
Net interest income		19,625		18,681		39,957		38,764
Provision for loan losses		308		744		1,199		1,003
Net interest income after provision for loan losses		19,317		17,937		38,758		37,761
NONINTEREST INCOME
Trust revenue		1,715		1,807		3,501		3,433
Brokerage and insurance revenue		566		506		1,088		832
Service charges on deposit accounts		1,322		1,073		2,557		2,088
Interchange revenue from debit card transactions		1,056		998		2,019		1,879
Net gains from sale of loans		220		925		602		1,989
Loan servicing fees, net		358		146		568		394
Increase in cash surrender value of life insurance		137		145		272		295
Other noninterest income		1,456		700		2,044		2,172
Realized (losses) gains on available-for-sale debt securities, net		(1)		2		1		2
Total noninterest income		6,829		6,302		12,652		13,084
NONINTEREST EXPENSE
Salaries and employee benefits		10,265		9,499		20,872		18,394
Net occupancy and equipment expense		1,308		1,219		2,719		2,523
Data processing and telecommunications expense		1,720		1,487		3,343		2,867
Automated teller machine and interchange expense		347		355		731		692
Pennsylvania shares tax		488		490		976		981
Professional fees		480		598		969		1,145
Other noninterest expense		2,431		1,751		4,315		4,506
Total noninterest expense		17,039		15,399		33,925		31,108
Income before income tax provision		9,107		8,840		17,485		19,737
Income tax provision		1,618		1,780		3,101		3,890
NET INCOME	$	7,489	$	7,060	$	14,384	$	15,847
EARNINGS PER COMMON SHARE - BASIC	$	0.48	$	0.44	$	0.92	$	0.99
EARNINGS PER COMMON SHARE - DILUTED	$	0.48	$	0.44	$	0.92	$	0.99

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Table of Contents

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

Consolidated Statements of Comprehensive (Loss) Income

(In Thousands) (Unaudited)


Part I. Financial Information

Item 1. Financial Statements

Consolidated Balance Sheets (Unaudited) – June 30, 2022 and December 31, 2021			Page 3

Consolidated Statements of Income (Unaudited) – Three-month and Six-month Periods Ended June 30, 2022 and 2021			Page 4

Consolidated Statements of Comprehensive (Loss) Income (Unaudited) – Three-month and Six-month Periods Ended June 30, 2022 and 2021			Page 5

Consolidated Statements of Cash Flows (Unaudited) – Six-month Periods Ended June 30, 2022 and 2021			Page 6

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) – Three-month and Six-month Periods June 30, 2022 and 2021			Pages 7 – 8

Notes to Unaudited Consolidated Financial Statements			Pages 9 – 37

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			Pages 38 – 63

Item 3. Quantitative and Qualitative Disclosures About Market Risk			Pages 63 – 65

Item 4. Controls and Procedures			Page 65

Part II. Other Information			Pages 65 – Error! Bookmark not defined.

Signatures			Page 68