What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-05-09 compared with 2024-11-06 · 223 added, 336 removed, 755 unchanged (43% of the section changed)

2 unchanged sentences

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

September 30,

(In Thousands, Except Share and Per Share Data)

21 unchanged sentences

TOTAL LIABILITIES

COMMITMENTS AND CONTINGENT LIABILITIES

STOCKHOLDERS' EQUITY

6 unchanged sentences

authorized 30,000,000 shares;

issued 16,030,172 and outstanding 15,414,132 at September 30, 2024;

issued 16,030,172 and outstanding 15,482,848 at March 31, 2025;

issued 16,030,172 and outstanding 15,433,494 at December 31, 2024

2 unchanged sentences

Treasury stock, at cost;

616,040 shares at September 30, 2024 and 735,037

547,324 shares at March 31, 2025 and 596,678

shares at December 31, 2024

7 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(In Thousands, Except Per Share Data)

12 unchanged sentences

Net interest income

Provision (credit) for credit losses

Net interest income after provision (credit) for credit losses

Provision for credit losses

Net interest income after provision for credit losses

NONINTEREST INCOME

7 unchanged sentences

Other noninterest income

Realized gains on available-for-sale debt securities, net

Total noninterest income

10 unchanged sentences

Income tax provision

EARNINGS PER COMMON SHARE - BASIC

EARNINGS PER COMMON SHARE - DILUTED

EARNINGS PER COMMON SHARE - BASIC AND DILUTED

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

3 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(In Thousands)

1 unchanged sentence

Unrealized holding gains (losses) on available-for-sale debt securities

Reclassification adjustment for gains realized in income

Reclassification adjustment for losses (gains) realized in income

Other comprehensive income (loss) on available-for-sale debt securities

1 unchanged sentence

Changes from plan amendments and actuarial gains and losses

Amortization of prior service cost and net actuarial loss and curtailment gain included in net periodic benefit cost

Other comprehensive loss on pension and postretirement obligations

Amortization of prior service cost, net actuarial gain and curtailment gain included in net periodic benefit cost

Other comprehensive income (loss) on pension and postretirement obligations

Other comprehensive income (loss) before income tax

1 unchanged sentence

Net other comprehensive income (loss)

Comprehensive income (loss)

Comprehensive income

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

2 unchanged sentences

(In Thousands) (Unaudited)

Nine Months Ended

September 30,

Three Months Ended

(In Thousands)

1 unchanged sentence

Adjustments to reconcile net income to net cash provided by operating activities:

Provision (credit) for credit losses

Realized gains on available-for-sale debt securities, net

Provision for credit losses

Net amortization of securities

4 unchanged sentences

Deferred income taxes

Decrease in fair value of servicing rights

Decrease (increase) in fair value of servicing rights

Net gains from sale of loans

2 unchanged sentences

Increase in accrued interest receivable and other assets

Increase in accrued interest payable and other liabilities

Decrease in accrued interest payable and other liabilities

Net Cash Provided by Operating Activities

CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from maturities of certificates of deposit

Proceeds from sales of available-for-sale debt securities

Proceeds from calls and maturities of available-for-sale debt securities

4 unchanged sentences

Net increase in loans

Proceeds from bank-owned life insurance

Purchase of premises and equipment

2 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES:

Net increase in deposits

Net decrease in short-term borrowings

Net increase (decrease) in deposits

Net (decrease) increase in short-term borrowings

Proceeds from long-term borrowings - FHLB advances

2 unchanged sentences

Common dividends paid

Net Cash Provided by Financing Activities

INCREASE IN CASH AND CASH EQUIVALENTS

Net Cash (Used in) Provided by Financing Activities

DECREASE IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

1 unchanged sentence

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Increase (decrease) in accrued purchase of available-for-sale debt securities

Assets acquired through foreclosure of real estate loans

Increase in other assets from surrender of bank-owned life insurance

Leased assets obtained in exchange for new operating lease liabilities

6 unchanged sentences

Comprehensive

Three Months Ended September 30, 2024

Balance, June 30, 2024

Other comprehensive income, net

Cash dividends declared on common stock, $ .28 per share

Shares issued for dividend reinvestment plan

Restricted stock granted

Stock-based compensation expense

Treasury stock purchases

Balance, September 30, 2024

Three Months Ended September 30, 2023

Balance, June 30, 2023

Other comprehensive loss, net

Cash dividends declared on common stock, $ .28 per share

Shares issued for dividend reinvestment plan

Forfeiture of restricted stock

Stock-based compensation expense

Purchase of restricted stock for tax withholding

Treasury stock purchases

Balance, September 30, 2023

Comprehensive

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

Balance, December 31, 2024

6 unchanged sentences

Purchase of restricted stock for tax withholding

Treasury stock purchases

Balance, September 30, 2024

Nine Months Ended September 30, 2023

Balance, March 31, 2025

Three Months Ended March 31, 2024

Balance, December 31, 2023

Adoption of ASU 2016-13 (CECL)

Other comprehensive loss, net

5 unchanged sentences

Purchase of restricted stock for tax withholding

Treasury stock purchases

Balance, September 30, 2023

Balance, March 31, 2024

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

10 unchanged sentences

GAAP”) for a complete set of financial statements.

Operating results reported for the nine-month period ended September 30, 2024 might not be indicative of the results for the year ending December 31, 2024.

Operating results reported for the three-month period ended March 31, 2025 might not be indicative of the results for the year ending December 31, 2025.

The Corporation evaluates subsequent events through the date of filing with the Securities and Exchange Commission.

RECENT ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board (FASB) issues Accounting Standard Updates (ASUs) to communicate changes to the FASB Accounting Standard Codification (ASC).

The Financial Accounting Standards Board (FASB) issues Accounting Standard Updates (ASUs) to communicate changes to the FASB Accounting Standards Codification (ASC).

This section provides a summary description of recent ASUs that have significant implications (elected or required) within the consolidated financial statements, or that management expects may have a significant impact on consolidated financial statements issued in the foreseeable future.

CECL ADOPTION

On January 1, 2023, the Corporation adopted ASU 2016-13 Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments (ASC 326).

This standard replaced the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology.

The Corporation adopted ASC 326 using the modified retrospective approach for all financial assets measured at amortized cost and off-balance sheet credit exposures.

The following table illustrates the impact on the allowance for credit losses from the adoption of ASC 326:

(In Thousands)

January 1, 2023

December 31, 2022

Loans receivable

Allowance for credit losses on loans

Allowance for credit losses on off-balance sheet exposures (included in accrued interest and other liabilities)

Deferred tax asset, net

Retained earnings

Recently Issued but Not Yet Effective Accounting Pronouncements

1 unchanged sentence

Improvements to Income Tax Disclosures which improves the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction.

2023-09 is effective for public business entities

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

for annual periods beginning after December 15, 2024.

2023-09 is effective for public business entities for annual periods beginning after December 15, 2024.

The ASU may be adopted on a prospective or retrospective basis and early adoption is permitted.

The Corporation is currently evaluating the impact the new guidance will have on disclosures related to income taxes.

In December 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), which requires disclosure of certain costs and expenses in the notes to the consolidated financial statements.

The amendments in this ASU will become effective for fiscal years beginning after December 15, 2026, and will be effective for interim periods with fiscal years beginning after December 15, 2027, with early adoption permitted.

The amendments will be applied prospectively with the option for retrospective application .

The Corporation is currently evaluating the impact of the standard to our consolidated financial statement disclosures.

PER SHARE DATA

Basic earnings per common share are calculated using the two-class method to determine income attributable to common shareholders.

Earnings per common share are calculated using the two-class method to determine income attributable to common shareholders.

Unvested restricted stock awards that contain nonforfeitable rights to dividends are considered participating securities under the two-class method.

1 unchanged sentence

Income attributable to common shareholders is then divided by weighted-average common shares outstanding for the period to determine basic earnings per common share.

Diluted earnings per common share are calculated under the more dilutive of either the treasury method or the two-class method.

Diluted earnings per common share is computed using weighted-average common shares outstanding, plus weighted-average common shares available from the exercise of all dilutive stock options, less the number of shares that could be repurchased with the proceeds of stock option exercises based on the average share price of the Corporation’s common stock during the period.

The Corporation’s basic and diluted earnings per share are the same because there are no potential dilutive shares of common stock outstanding.

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

(In Thousands, Except Share and Per Share Data)

Three Months Ended

Nine Months Ended

September 30,

Dividends and undistributed earnings allocated to participating securities

Net income attributable to common shares

Basic weighted-average common shares outstanding

Basic earnings per common share (a)

Net income attributable to common shares

Basic weighted-average common shares outstanding

Dilutive effect of potential common stock arising from stock options

Diluted weighted-average common shares outstanding

Diluted earnings per common share (a)

Weighted-average common shares outstanding

Earnings per common share - Basic and Diluted

Weighted-average nonvested restricted shares outstanding

(a) Basic and diluted earnings per share under the two-class method are determined on net income reported on the consolidated statements of income, less earnings allocated to non-vested restricted shares with nonforfeitable dividends (participating securities).

Anti-dilutive stock options are excluded from earnings per share calculations.

There were no anti-dilutive instruments outstanding in the three-month and nine-month periods ended September 30, 2024.

The weighted-average number of anti-dilutive instruments outstanding was 8,934 in the three-month period ended September 30, 2023 and 0 in the nine-month period ended September 30, 2023.

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

COMPREHENSIVE INCOME

2 unchanged sentences

(In Thousands)

Three Months Ended September 30, 2024

Available-for-sale debt securities:

Unrealized holding gains on available-for-sale debt securities

Reclassification adjustment for (gains) realized in income

Other comprehensive income from available-for-sale debt securities

Unfunded pension and postretirement obligations:

Amortization of prior service cost and net actuarial loss included in net periodic benefit cost

Other comprehensive loss on unfunded retirement obligations

Total other comprehensive income

(In Thousands)

Three Months Ended September 30, 2023

Available-for-sale debt securities:

Unrealized holding losses on available-for-sale debt securities

Reclassification adjustment for (gains) realized in income

Other comprehensive loss from available-for-sale debt securities

Unfunded pension and postretirement obligations:

Amortization of prior service cost and net actuarial loss included in net periodic benefit cost

Other comprehensive loss on unfunded retirement obligations

Total other comprehensive loss

(In Thousands)

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

Available-for-sale debt securities:

4 unchanged sentences

Changes from plan amendments and actuarial gains and losses

Amortization of prior service cost and net actuarial loss and curtailment gain included in net periodic benefit cost

Other comprehensive loss on unfunded retirement obligations

Amortization of prior service cost and net actuarial gain included in net periodic benefit cost

Other comprehensive income on unfunded retirement obligations

Total other comprehensive income

(In Thousands)

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Available-for-sale debt securities:

4 unchanged sentences

Changes from plan amendments and actuarial gains and losses

Amortization of prior service cost and net actuarial loss included in net periodic benefit cost

Amortization of prior service cost and net actuarial gain included in net periodic benefit cost

Other comprehensive loss on unfunded retirement obligations

Total other comprehensive loss

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

The amounts shown in the table immediately above are included in the following line items in the consolidated statements of income:

1 unchanged sentence

Consolidated Statements of Income

Reclassification adjustment for (gains) realized in income (before-tax)

Realized gains on available-for-sale debt securities, net

Amortization of prior service cost and net actuarial loss and curtailment gain included in net periodic benefit cost (before-tax)

Amortization of prior service cost and net actuarial gain and curtailment gain included in net periodic benefit cost (before-tax)

Other noninterest expense

1 unchanged sentence

Income tax provision

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

Changes in the components of accumulated other comprehensive (loss) income are as follows and are presented net of tax:

3 unchanged sentences

(Loss) Income

Three Months Ended September 30, 2024

Balance, beginning of period

Other comprehensive income (loss) during three months ended September 30, 2024

Balance, end of period

Three Months Ended September 30, 2023

Balance, beginning of period

Other comprehensive loss during three months ended September 30, 2023

Balance, end of period

(In Thousands)

Comprehensive

on Securities

(Loss) Income

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

Balance, beginning of period

Other comprehensive income (loss) during nine months ended September 30, 2024

Other comprehensive income during three months ended March 31, 2025

Balance, end of period

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Balance, beginning of period

Other comprehensive loss during nine months ended September 30, 2023

Other comprehensive loss during three months ended March 31, 2024

Balance, end of period

CASH AND DUE FROM BANKS

Cash and due from banks at September 30, 2024 and December 31, 2023 include the following:

Cash and due from banks at March 31, 2025 and December 31, 2024 include the following:

(In Thousands)

September 30,

Cash and cash equivalents

1 unchanged sentence

Total cash and due from banks

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

Certificates of deposit are issues by U.S.

2 unchanged sentences

The Corporation maintains cash and cash equivalents with certain financial institutions in excess of the FDIC insurance limit.

Amortized cost and fair value of available-for-sale debt securities at September 30, 2024 and December 31, 2023 are summarized as follows:

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

Amortized cost and fair value of available-for-sale debt securities at March 31, 2025 and December 31, 2024 are summarized as follows.

No allowance for credit losses was recorded at March 31, 2025 and December 31, 2024.

(In Thousands)

September 30, 2024

March 31, 2025

Obligations of the U.S.

24 unchanged sentences

Total available-for-sale debt securities

The following table presents gross unrealized losses and fair value of available-for-sale debt securities with unrealized loss positions aggregated by length of time that individual securities have been in a continuous unrealized loss position at September 30, 2024 and December 31, 2023 for which an allowance for credit losses has not been recorded:

The following table presents gross unrealized losses and fair value of available-for-sale debt securities with unrealized loss positions aggregated by length of time that individual securities have been in a continuous unrealized loss position at March 31, 2025 and December 31, 2024 for which an allowance for credit losses has not been recorded:

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

September 30, 2024

March 31, 2025

Less Than 12 Months

11 unchanged sentences

Commercial mortgage-backed securities

Private label commercial mortgage-backed securities

December 31, 2024

12 unchanged sentences

Commercial mortgage-backed securities

Private label commercial mortgage-backed securities

Gross realized gains and losses from available-for-sale debt securities were as follows:

(In Thousands)

Three Months Ended

Nine Months Ended

September 30,

Gross realized gains from sales

Gross realized losses from sales

Net realized (losses) gains

As reflected in the table above, gross unrealized holding losses on available-for-sale debt securities totaled $ 42,819,000 at March 31, 2025 and $ 47,806,000 at December 31, 2024.

At March 31, 2025, the Corporation did not have the intent to sell, nor is it more likely than not it will be required to sell, these securities before it is able to recover the amortized cost basis.

The unrealized holding losses were consistent with increases in market interest rates that have occurred subsequent to the purchase of most of the securities.

At March 31, 2025 and December 31, 2024, management performed an assessment for possible credit losses of the Corporation’s debt securities on an issue-by-issue basis, relying on information obtained from various sources, including publicly available financial data, ratings by external agencies, brokers and other sources.

At March 31, 2025 and December 31, 2024, all of the Corporation’s holdings of bank holding company debt securities, obligations of states and political subdivisions and private label commercial mortgage-backed securities were investment grade and there have been no payment defaults.

Based on the results of the assessment, there was no ACL required on available-for-sale debt securities in an unrealized loss position at March 31, 2025 and December 31, 2024.

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

The amortized cost and fair value of available-for-sale debt securities by contractual maturity are shown in the following table as of September 30, 2024.

There were no gross realized gains and losses from the sale of available-for-sale debt securities for the three months ended March 31, 2025 and 2024.

The amortized cost and fair value of available-for-sale debt securities by contractual maturity are shown in the following table as of March 31, 2025.

Actual maturities may differ from contractual maturities because counterparties may have the right to call or prepay obligations with or without call or prepayment penalties.

(In Thousands)

September 30, 2024

March 31, 2025

Due in one year or less

11 unchanged sentences

In the table above, mortgage-backed securities and collateralized mortgage obligations are shown in one period.

Investment securities carried at $ 220,482,000 at September 30, 2024 and $ 232,437,000 at December 31, 2023 were pledged as collateral for public deposits, trusts and certain other deposits as provided by law.

Investment securities carried at $ 168,981,000 at March 31, 2025 and $ 190,949,000 at December 31, 2024 were pledged as collateral for public deposits, trusts and certain other deposits as provided by law.

See Note 8 for information concerning securities pledged to secure borrowing arrangements.

A summary of information management considered in evaluating debt and equity securities for credit losses at September 30, 2024 and December 31, 2023 is provided below.

Debt Securities

As reflected in the table above, gross unrealized holding losses on available-for-sale debt securities totaled $ 39,850,000 at September 30, 2024 and $ 49,564,000 at December 31, 2023.

At September 30, 2024, the Corporation does not have the intent to sell, nor is it more likely than not it will be required to sell, these securities before it is able to recover the amortized cost basis.

The unrealized holding losses were consistent with increases in market interest rates that have occurred subsequent to the purchase of most of the securities.

At September 30, 2024 and December 31, 2023, management performed an assessment for possible credit losses of the Corporation’s debt securities on an issue-by-issue basis, relying on information obtained from various sources, including publicly available financial data, ratings by external agencies, brokers and other sources.

At September 30, 2024 and December 31, 2023, all of the Corporation’s holdings of bank holding company debt securities, obligations of states and political subdivisions and private label commercial mortgage-backed securities were investment grade and there have been no payment defaults.

Based on the results of the assessment, there was no allowance for credit losses (“ACL”) required on available-for-sale debt securities in an unrealized loss position at September 30, 2024 and December 31, 2023.

Equity Securities

1 unchanged sentence

As a member, C&N Bank is required to purchase and maintain stock in FHLB-Pittsburgh.

There is no active market for

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

FHLB-Pittsburgh stock, and it must ordinarily be redeemed by FHLB-Pittsburgh in order to be liquidated.

C&N Bank’s investment in FHLB-Pittsburgh stock, included in other assets in the consolidated balance sheets, was $ 15,971,000 at September 30, 2024 and $ 15,214,000 at December 31, 2023.

The Corporation evaluated its holding of FHLB-Pittsburgh stock for impairment and deemed the stock to not be impaired at September 30, 2024 and December 31, 2023.

There is no active market for FHLB-Pittsburgh stock, and it must ordinarily be redeemed by FHLB-Pittsburgh in order to be liquidated.

C&N Bank’s investment in FHLB-Pittsburgh stock, included in other assets in the consolidated balance sheets, was $ 14,834,000 at March 31, 2025 and $ 15,018,000 at December 31, 2024.

The Corporation evaluated its holding of FHLB-Pittsburgh stock for impairment and deemed the stock to not be impaired at March 31, 2025 and December 31, 2024.

In making this determination, management concluded that recovery of total outstanding par value, which equals the carrying value, is expected.

3 unchanged sentences

There is no active market for Federal Reserve Bank stock, and it must ordinarily be redeemed by the Federal Reserve Bank of Philadelphia in order to be liquidated.

C&N Bank’s investment in Federal Reserve Bank stock, included in other assets in the consolidated balance sheets, was $ 6,288,000 at September 30, 2024 and $ 6,252,000 at December 31, 2023.

The Corporation has a marketable equity security included in other assets in the consolidated balance sheets with a carrying value of $ 889,000 at September 30, 2024 and $ 871,000 December 31, 2023, consisting exclusively of one mutual fund.

There was an unrealized loss on the mutual fund of $ 111,000 at September 30, 2024 and $ 129,000 at December 31, 2023.

Changes in the unrealized gains or losses on this security, which are included in other noninterest income in the consolidated statements of income, were a gain of $ 31,000 in the third quarter 2024, a loss of $ 27,000 in the third quarter 2023, a gain of $ 18,000 in the nine-month period ended September 30, 2024 and a loss of $ 27,000 in the nine-month period ended September 30, 2023.

C&N Bank’s investment in Federal Reserve Bank stock, included in other assets in the consolidated balance sheets, was $ 6,311,000 at March 31, 2025 and $ 6,299,000 at December 31, 2024.

The Corporation has a marketable equity security included in other assets in the consolidated balance sheets with a carrying value of $ 876,000 at March 31, 2025 and $ 863,000 December 31, 2024, consisting exclusively of one mutual fund.

There was an unrealized loss on the mutual fund of $ 124,000 at March 31, 2025 and $ 137,000 at December 31, 2024.

Changes in the unrealized gains or losses on

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

this security, which are included in other noninterest income in the consolidated statements of income, were a gain of $ 13,000 in the first quarter 2025 and a loss of $ 9,000 in the first quarter 2024.

LOANS AND ALLOWANCE FOR CREDIT LOSSES

Loans receivable at September 30, 2024 and December 31, 2023 are summarized as follows:

Loans receivable at March 31, 2025 and December 31, 2024 are summarized as follows:

Summary of Loans by Type

(In Thousands)

September 30,

Commercial real estate - non-owner occupied

4 unchanged sentences

allowance for credit losses on loans

In the table above, outstanding loan balances are presented net of deferred loan origination fees, net, of $ 4,309,000 at September 30, 2024 and $ 4,459,000 at December 31, 2023.

In the table above, outstanding loan balances are presented net of deferred loan origination fees, net, of $ 4,005,000 at March 31, 2025 and $ 4,136,000 at December 31, 2024.

The Corporation grants loans to individuals as well as commercial and tax-exempt entities.

1 unchanged sentence

Although the Corporation has a diversified loan portfolio, a significant portion of its debtors’ ability to honor their contracts is dependent on the local economic conditions within the region.

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

The following tables presents an analysis of past due loans as of September 30, 2024 and December 31, 2023:

The following tables presents an analysis of past due loans as of March 31, 2025 and December 31, 2024:

(In Thousands)

As of September 30, 2024

As of March 31, 2025

Still Accruing

Commercial real estate - non-owner occupied

5 unchanged sentences

As of December 31, 2024

Still Accruing

Commercial real estate - non-owner occupied

3 unchanged sentences

Consumer loans

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

The Corporation uses an internal risk rating system.

6 unchanged sentences

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

The following table presents the recorded investment in loans by credit quality indicators by year of origination as of September 30, 2024:

The following table presents the amortized cost of loans by credit quality indicators by year of origination as of March 31, 2025:

(In Thousands)

23 unchanged sentences

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

The following table presents the recorded investment in loans by credit quality indicators by year of origination as of December 31, 2023:

The following table presents the amortized cost of loans by credit quality indicators by year of origination as of December 31, 2024:

Term Loans by Year of Origination

24 unchanged sentences

The following tables are a summary of the Corporation’s nonaccrual loans by major categories for the periods indicated.

September 30, 2024

March 31, 2025

Nonaccrual Loans with

19 unchanged sentences

Consumer loans

The Corporation recognized interest income on nonaccrual loans of $ 234,000 and $ 750,000 in the three and nine months ended September 30, 2024 and $ 317,000 and $ 744,000 in the three and nine months ended September 30, 2023.

The following table represents the accrued interest receivable written off by reversing interest income during the three-month and nine-month periods ended September 30, 2024 and 2023:

The Corporation recognized interest income on nonaccrual loans of $ 230,000 in the three months ended March 31, 2025 and $ 231,000 in the three months ended March 31, 2024.

The following table represents the accrued interest receivable written off by reversing interest income during the three-month periods ended March 31, 2025 and 2024:

Three Months Ended

Nine Months Ended

(In Thousands)

September 30, 2024

September 30, 2023

September 30, 2024

September 30, 2023

March 31, 2025

March 31, 2024

Commercial real estate - non-owner occupied

Commercial real estate - owner occupied

All other commercial loans

8 unchanged sentences

● All other commercial loans include loans typically secured by business assets including inventory, equipment and receivables.

Also within this category, commercial construction and land loans and some commercial lines of credit are secured by real estate.

This category also included commercial construction and land loans and some commercial lines of credit that are secured by real estate.

● Residential mortgage loans are typically secured by first mortgages, and in some cases could be secured by a second mortgage.

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

● Consumer loans are generally secured by automobiles, motorcycles, recreational vehicles and other personal property.

Some consumer loans are unsecured and have no underlying collateral.

The following table details the amortized cost of collateral dependent loans, which are individually evaluated to determine expected credit losses, and the related allowance for credit losses on loans allocated to these loans:

September 30, 2024

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

March 31, 2025

December 31, 2024

3 unchanged sentences

All other commercial loans

Consumer loans

Allowance for Credit Losses

The allowance for credit losses (“ACL”) on loans represents management’s estimate of lifetime credit losses inherent in loans as of the balance sheet date.

The allowance for credit losses (“ACL”) on loans represents management’s estimate of lifetime credit losses inherent in loans as of the consolidated balance sheet date.

The ACL on loans includes two primary components:

4 unchanged sentences

and (c) an additional adjustment to expected credit losses is made, based on an economic forecast, and applied for the first 2 years of the weighted-average remaining life of the portfolio.

The following table summarizes the activity related to the allowance for credit losses for the three and nine months ended September 30, 2024 and 2023.

real estate -

(In Thousands)

Balance, June 30, 2024

Provision (credit) for credit losses on loans

Balance, September 30, 2024

The following table summarizes the activity related to the allowance for credit losses for the three months ended March 31, 2025 and 2024.

real estate -

3 unchanged sentences

Provision (credit) for credit losses on loans

Balance, September 30, 2024

Balance, March 31, 2025

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

2 unchanged sentences

(In Thousands)

Balance, June 30, 2023

Provision (credit) for credit losses on loans

Balance, September 30, 2023

real estate -

(In Thousands)

Balance, December 31, 2023

Adoption of ASU 2016-13 (CECL)

Provision (credit) for credit losses on loans

Balance, September 30, 2023

The ACL on loans individually evaluated decreased to $ 173,000 at September 30, 2024 from $ 1,230,000 at June 30, 2024 and $ 743,000 at December 31, 2023, primarily from partial charge-offs on three loans with individual ACLs at June 30, 2024, including two loans with individual ACLs at December 31, 2023.

The ACL on loans collectively evaluated was $ 20,269,000 at September 30, 2024, $ 19,152,000 at June 30, 2024 and $ 18,465,000 at December 31, 2023.

The increase in the ACL at September 30, 2024 as compared to June 30, 2024 included an increase related to the economic forecast, an increase in the WARM method estimate based on the Corporation’s net charge-off experience and a net increase related to changes in qualitative adjustments.

The increase in the ACL at September 30, 2024 as compared to December 31, 2023 included a net increase related to changes in qualitative adjustments and the net impact of an increase in loans receivable, partially offset by a decrease in the WARM method estimate.

Balance, March 31, 2024

The ACL on loans individually evaluated increased to $ 189,000 at March 31, 2025 from $ 122,000 at December 31, 2024.

At March 31,2025, there were loans to two borrowers with a total amortized cost basis of $ 945,000 for which individual ACLs were recorded.

At December 31, 2024, there were loans to one borrower with a total amortized cost basis of $ 258,000 for which an individual ACL was recorded.

The ACL on loans collectively evaluated was $ 19,983,000 at March 31, 2025, up from $ 19,913,000 at December 31, 2024.

The increase in the collectively evaluated portion of the ACL at March 31, 2025 as compared to December 31, 2024 included a net increase related to changes in qualitative adjustments partially offset by decreases in the WARM method estimate based on the Corporation’s net charge-off experience and in the economic forecast.

Modifications Made to Borrowers Experiencing Financial Difficulty

1 unchanged sentence

Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses because of the measurement methodologies used to estimate the allowance, a change to the allowance for credit losses is generally not recorded upon modification.

During the three and nine months ended September 30, 2024 and September 30, 2023, the Corporation made no modifications to borrowers experiencing financial difficulty.

The following table depicts the performance of two loans which were in nonaccrual status at September 30, 2024 that were modified in the fourth quarter 2023:

During the three months ended March 31, 2025 and March 31, 2024, the Corporation made no modifications of loans to borrowers experiencing financial difficulty.

The following table presents the performance of such loans that have been modified in the twelve-month period preceding March 31, 2025 and the twelve-month period preceding March 31, 2024 (in thousands):

(In Thousands)

Payment Status (Amortized Cost Basis)

September 30, 2024

March 31, 2025

Current or Past Due Less than 30 Days

90+ Days Past Due

Commercial real estate - non-owner occupied

Non-owner occupied

The loan that was current at September 30, 2024 matured October 5, 2024, and the Corporation and borrower are engaged in negotiations regarding an extension of the loan term.

The Corporation received principal payments totaling $ 40,000 during the nine months ended September 30, 2024 and recorded a partial charge-off of $ 640,000 on this loan in the third quarter 2024.

There was no specific allowance

Commercial real estate - owner occupied

(In Thousands)

Payment Status (Amortized Cost Basis)

March 31, 2024

Current or Past Due Less than 30 Days

90+ Days Past Due

Commercial real estate - non-owner occupied

As shown, in the table immediately above, at March 31, 2025 one loan secured by owner occupied commercial real estate with an amortized cost of $ 217,000 and one of the loans secured by non-owner occupied commercial real estate with an amortized cost basis of $ 1,801,000 were in nonaccrual status.

For the loan secured by non-owner occupied real estate with an amortized cost basis of $ 1,801,000 at March 31, 2025, the Corporation had extended the maturity for 12 months in the fourth quarter 2023.

In 2024, the borrower continued to experience financial difficulty, and the Corporation provided another six-month extension of the maturity.

The Corporation recorded a partial charge-off of $ 640,000 on this loan in 2024.

There was no specific ACL on this loan at March 31, 2025 and December 31, 2024.

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

on this loan at September 30, 2024, while the specific allowance on the loan was $ 455,000 at June 30, 2024 and $ 486,000 at December 30, 2023.

The loan that was past due more than 90 days in the table above was in default with its modified terms at September 30, 2024.

The Corporation received payments totaling $ 24,000 during the nine months September 30, 2024, all of which were applied to principal.

There was a specific allowance on this loan of $ 14,000 at September 30, 2024 and $ 38,000 at June 30, 2024 and December 31, 2023.

Except as described above, at September 30, 2024 and December 31, 2023, the Corporation had no commitments to lend any additional funds on modified loans and during the three month and nine month periods ended September 30, 2024 and September 30, 2023, the Corporation had no loans that defaulted during the period and had been modified preceding the payment default when the borrower was experiencing financial difficulty at the time of modification.

The loan that was past due more than 90 days at March 31, 2024 in the table above was in default with its modified terms at March 31, 2025 and March 31, 2024.

The Corporation received payments totaling $ 228,000 in the twelve-month period ended March 31, 2025, all of which were applied to principal.

The amortized cost basis of the loan was $ 1,153,000 at March 31, 2025.

Except as described above, the Corporation had no commitments to lend any additional funds on modified loans during the three months ended March 31, 2025 and 2024, and the Corporation had no loans that defaulted during the three months ended March 31, 2025 and 2024 that had been modified preceding the payment default when the borrower was experiencing financial difficulty at the time of modification.

The carrying amount of foreclosed residential real estate properties held as a result of obtaining physical possession (included in foreclosed assets held for sale in the unaudited consolidated balance sheets) is as follows:

(In Thousands)

September 30,

Foreclosed residential real estate

The recorded investment of consumer mortgage loans secured by residential real properties for which formal foreclosure proceedings were in process is as follows:

The amortized cost of consumer mortgage loans secured by residential real properties for which formal foreclosure proceedings were in process is as follows:

(In Thousands)

September 30,

Residential real estate in process of foreclosure

1 unchanged sentence

These financial instruments include commitments to extend credit and standby letters of credit.

The contract amounts of these financial instruments at September 30, 2024 and December 31, 2023 are as follows:

September 30,

The contract amounts of these financial instruments at March 31, 2025 and December 31, 2024 are as follows:

(In Thousands)

5 unchanged sentences

The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over their estimated lives.

The allowance for credit losses for off-balance sheet exposures of $ 593,000 at September 30, 2024 and $ 690,000 at December 31, 2023, is included in accrued interest and other liabilities on the unaudited consolidated balance sheets.

The following table presents the balance and activity in the allowance for credit losses for off-balance sheet exposures for the three and nine months ended September 30, 2024 and 2023:

The allowance for credit losses for off-balance sheet exposures of $ 463,000 at March 31, 2025 and $ 455,000 at December 31, 2024, is included in accrued interest and other liabilities on the unaudited consolidated balance sheets.

The following table presents the balance and activity in the allowance for credit losses for off-balance sheet exposures for the three months ended March 31, 2025 and 2024:

Three Months Ended

Nine Months Ended

(In Thousands)

September 30, 2024

September 30, 2023

September 30, 2024

September 30, 2023

March 31, 2025

March 31, 2024

Beginning Balance

Adjustment to allowance for off-balance sheet exposures for adoption of ASU 2016-13

Credit for unfunded commitments

Ending Balance, September 30

Provision (credit) for unfunded commitments

Ending Balance, March 31

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

GOODWILL AND OTHER INTANGIBLE ASSETS

GOODWILL AND CORE DEPOSIT INTANGIBLES, NET

Goodwill represents the excess of the cost of acquisitions over the fair value of the net assets acquired.

At September 30, 2024 and December 31, 2023, the net carrying value of goodwill was $ 52,505,000 .

At March 31, 2025 and December 31, 2024, the net carrying value of goodwill was $ 52,505,000 .

Information related to core deposit intangibles is as follows:

(In Thousands)

September 30,

Accumulated amortization

2 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Amortization expense

3 unchanged sentences

(In Thousands)

September 30,

FHLB-Pittsburgh borrowings

1 unchanged sentence

Total short-term borrowings

At September 30, 2024, short-term borrowings included short-term advances maturing in the third and fourth quarters of 2024 totaling $ 10,000,000 with a weighted average interest rate of 5.29 %.

At December 31, 2023, short-term borrowings included an overnight borrowing from FHLB-Pittsburgh of $ 6,500,000 at an interest rate of 5.68 % and short-term advances maturing in the first quarter 2024 totaling $ 25,000,000 with a weighted average interest rate of 5.60 %.

The weighted average interest rate on total short-term borrowings outstanding was 0.10 % at March 31, 2025 and December 31, 2024.

The Corporation engages in repurchase agreements with certain commercial customers.

These agreements provide that the Corporation sells specified investment securities to the customers on an overnight basis and repurchases them on the following business day.

The weighted average rate paid by the Corporation on customer repurchase agreements was 0.10 % at September 30, 2024 and December 31, 2023.

The carrying value of the underlying securities was $ 1,440,000 at September 30, 2024 and $ 2,400,000 at December 31, 2023.

The FHLB-Pittsburgh loan facility is collateralized by qualifying loans secured by real estate with a book value totaling $ 1,337,673,000 at September 30, 2024 and $ 1,323,008,000 at December 31, 2023.

The weighted average rate paid by the Corporation on customer repurchase agreements was 0.10 % at March 31, 2025 and December 31, 2024.

The carrying value of the underlying securities was $ 580,000 at March 31, 2025 and $ 2,500,000 at December 31, 2024.

The FHLB-Pittsburgh loan facility is collateralized by qualifying loans secured by real estate with a book value totaling $ 1,347,840,000 at March 31, 2025 and $ 1,351,770,000 at December 31, 2024.

Also, the FHLB-Pittsburgh loan facility requires the Corporation to invest in established amounts of FHLB-Pittsburgh stock.

The carrying values of the Corporation’s holdings of FHLB-Pittsburgh stock (included in other assets in the consolidated balance sheets) were $ 15,971,000 at September 30, 2024 and $ 15,214,000 at December 31, 2023.

The Corporation’s total credit facility with FHLB-Pittsburgh was $ 945,142,000 at September 30, 2024, including an unused (available) amount of $ 737,284,000 .

The carrying values of the Corporation’s holdings of FHLB-Pittsburgh stock (included in other assets in the consolidated balance sheets) were $ 14,834,000 at March 31, 2025 and $ 15,018,000 at December 31, 2024.

The Corporation’s total credit facility with FHLB-Pittsburgh was $ 948,970,000 at March 31, 2025, including an unused (available) amount of $ 772,430,000 .

At December 31, 2024, the Corporation’s total credit facility with FHLB-Pittsburgh was $ 938,691,000 , including an unused (available) amount of $ 749,999,000 .

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

The Corporation had available credit with other correspondent banks totaling $ 75,000,000 at September 30, 2024 and December 31, 2023.

The Corporation had available credit with other correspondent banks totaling $ 75,000,000 at March 31, 2025 and December 31, 2024.

These lines of credit are primarily unsecured.

No amounts were outstanding at September 30, 2024 or December 31, 2023.

No amounts were outstanding at March 31, 2025 or December 31, 2024.

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

The Corporation has a line of credit with the Federal Reserve Bank of Philadelphia’s Discount Window.

At September 30, 2024, the Corporation had available credit in the amount of $ 18,602,000 on this line with no outstanding advances.

At March 31, 2025, the Corporation had available credit in the amount of $ 17,431,000 on this line with no outstanding advances.

At December 31, 2024, the Corporation had available credit in the amount of $ 18,093,000 on this line with no outstanding advances.

As collateral for this line, the Corporation has pledged available-for-sale securities with a carrying value of $ 19,387,000 at September 30, 2024 and $ 20,829,000 at December 31, 2023.

As collateral for this line, the Corporation has pledged available-for-sale securities with a carrying value of $ 18,236,000 at March 31, 2025 and $ 18,881,000 at December 31, 2024.

LONG-TERM BORROWINGS – FHLB ADVANCES

1 unchanged sentence

(In Thousands)

September 30,

Loans maturing in 2025 with a weighted-average rate of 4.38 %

3 unchanged sentences

Loans maturing in 2029 with a weighted-average rate of 4.42 %

Total long-term FHLB-Pittsburgh borrowings

Weighted-average rates are presented as of September 30, 2024.

Weighted-average rates are presented as of March 31, 2025.

In 2021, the Corporation issued and sold $ 15.0 million in aggregate principal amount of 2.75 % Fixed Rate Senior Unsecured Notes due 2026 (the "Senior Notes").

4 unchanged sentences

Debt issuance costs are amortized over the term of the Senior Notes as an adjustment of the effective interest rate.

Amortization of debt issuance costs associated with the Senior Notes totaling $ 17,000 in the third quarter 2024 and $ 51,000 for the nine-month period ended September 30, 2024, and $ 16,000 in the third quarter 2023 and $ 49,000 for the nine-month period ended September 30, 2023, was included in interest expense in the unaudited consolidated statements of income.

At September 30, 2024 and December 31, 2023, outstanding Senior Notes are as follows:

Amortization of debt issuance costs associated with the Senior Notes totaling $ 18,000 in the first quarter 2025 and $ 17,000 in the first quarter 2024 was included in interest expense in the unaudited consolidated statements of income.

At March 31, 2025 and December 31, 2024, outstanding Senior Notes are as follows:

(In Thousands)

September 30,

Senior Notes with an aggregate par value of $ 15,000,000 ;

6 unchanged sentences

From June 1, 2026 to maturity or early redemption, the interest rate will reset quarterly to an interest rate per annum equal to the three-month Secured Overnight Financing Rate provided by the Federal Reserve Bank of New York plus 259 basis points.

The Corporation is entitled to redeem the Subordinated Notes, in whole or in part, at any time on or after June 1, 2026, and to

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

redeem the Subordinated Notes at any time in whole upon certain other events.

The Corporation is entitled to redeem the Subordinated Notes, in whole or in part, at any time on or after June 1, 2026, and to redeem the Subordinated Notes at any time in whole upon certain other events.

Any redemption of the Subordinated Notes will be subject to prior regulatory approval to the extent required.

1 unchanged sentence

The Subordinated Notes are unsecured, subordinated obligations of the Corporation only and are not obligations of, and are not guaranteed by, any subsidiary of the Corporation.

The Subordinated Notes rank junior in right to payment to the Corporation's current and future senior indebtedness, including the Senior Notes (described above).

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

Subordinated Notes rank junior in right to payment to the Corporation's current and future senior indebtedness, including the Senior Notes (described above).

The Subordinated Notes are intended to qualify as Tier 2 capital for regulatory capital purposes.

1 unchanged sentence

Debt issuance costs are amortized through June 1, 2026 as an adjustment of the effective interest rate.

Amortization of debt issuance costs associated with the Subordinated Notes totaling $ 29,000 in the third quarter 2024 and $ 85,000 for the nine-month period ended September 30, 2024, and $ 27,000 in the third quarter 2023 and $ 79,000 for the nine-month period ended September 30, 2023, was included in interest expense in the unaudited consolidated statements of income.

At September 30, 2024 and December 31, 2023, the carrying amounts of subordinated debt agreements are as follows:

Amortization of debt issuance costs associated with the Subordinated Notes totaling $ 29,000 in the first quarter 2025 and $ 28,000 in the first quarter 2024, was included in interest expense in the unaudited consolidated statements of income.

At March 31, 2025 and December 31, 2024, the carrying amounts of subordinated debt agreements are as follows:

(In Thousands)

September 30,

Agreements with a par value of $ 25,000,000 ;

4 unchanged sentences

The Corporation has a stock incentive plan for selected officers and the independent directors.

The first quarter 2024 restricted stock awards to employees vest ratably over three years , and the 2024 restricted stock awards for the independent directors vest over one year .

During the three-month period ended September 30, 2024, there was a time-based award of 20,000 shares of restricted stock to the President and Chief Executive Officer pursuant to an amended and restated Employment Agreement with a vesting date of April 30, 2027.

Following is a summary of restricted stock awards granted in the nine-month period ended September 30, 2024:

The Corporation made first quarter 2025 restricted stock awards to employees that vest ratably over three years .

Following is a summary of restricted stock awards granted in the three-month period ended March 31, 2025:

(Dollars in Thousands)

Nine Months Ended September 30, 2024 awards:

Time-based awards to independent directors

Three Months Ended March 31, 2025 awards:

Time-based awards to employees

1 unchanged sentence

Compensation cost related to restricted stock is recognized based on the fair value of the stock at the grant date over the vesting period, adjusted for estimated and actual forfeitures.

Total stock-based compensation expense attributable to restricted stock awards amounted to $ 383,000 in the third quarter 2024 and $ 320,000 in the third quarter 2023.

Total stock-based compensation expense attributable to restricted stock awards amounted to $ 1,099,000 in the nine-month period ended September 30, 2024 and $ 1,015,000 in the nine-month period ended September 30, 2023.

Total stock-based compensation expense attributable to restricted stock awards amounted to $ 325,000 in the first quarter 2025 and $ 326,000 in the first quarter 2024.

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

2 unchanged sentences

On March 27, 2024, a putative class action lawsuit was filed in the US District Court for the Western District of Texas by investors in a purported Ponzi scheme operated by two individuals, one of whom maintained accounts at C&N Bank.

The plaintiffs have sued C&N Bank, along with another bank, and additional law firm and accounting firm defendants.

The plaintiffs have sued C&N Bank, along with another bank, an additional law firm and accounting firm defendants.

The case is styled Goldovsky, et al.

Rausch, et al.

Rauld, et al.

Plaintiffs have asserted claims against C&N Bank and the other bank for aiding and abetting alleged violations of the Texas Securities Act, and additional claims against the legal and accounting professionals for statutory fraud, common law fraud, negligent misrepresentation, and knowing participation in breach of fiduciary duty.

3 unchanged sentences

The court has stayed the motions to dismiss pending consideration of the class action certification application.

Discovery as to the class action qualification is underway, with depositions of the named plaintiffs scheduled.

Following depositions of the four plaintiffs on issues germane to class action certification, C&N Bank and each of the other defendants have filed briefs in opposition to the plaintiffs’ class certification motion.

A hearing on the motion for class certification took place on February 18, 2025.

By order of the District Court judge dated March 27, 2025, C&N Bank’s motion to dismiss for wont of personal jurisdiction was granted.

To date, the plaintiffs have not petitioned the Court of Appeals for leave to appeal the order to dismiss.

C&N Bank believes that it has substantial defenses against the action, and it intends to defend itself against the plaintiffs’ allegations.

14 unchanged sentences

As the interest rate swaps associated with this program do not meet the hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings.

The aggregate notional amount of interest rate swaps was $ 143,070,000 at September 30, 2024 and $ 150,028,000 at December 31, 2023.

There were no interest rate swaps originated in the nine-month periods ended September 30, 2024, and 2023.

There were no gross amounts of interest rate swap-related assets and liabilities not offset in the consolidated balance sheets at September 30, 2024.

The aggregate notional amount of interest rate swaps was $ 140,772,000 at March 31, 2025 and $ 141,940,000 at December 31, 2024.

There were no interest rate swaps originated in the three-month periods ended March 31, 2025, and 2024.

There were no gross amounts of interest rate swap-related assets and liabilities not offset in the consolidated balance sheets at March 31, 2025 and December 31, 2024.

The Corporation has entered into an RPA with another institution as a means to assume a portion of the credit risk associated with a loan structure which includes a derivative instrument, in exchange for fee income commensurate with the risk assumed.

This type of derivative is referred to as an “RPA In.” In addition, in an effort to reduce the credit risk associated with an interest rate swap agreement with a borrower for whom the Corporation has provided a loan structured with a derivative, the Corporation purchased an RPA from an institution participating in the facility in exchange for a fee commensurate with the risk shared.

This type of derivative is referred to as an “RPA Out.” The net impact on the consolidated statements of income from RPAs was a decrease in other noninterest income of $ 1,000 in the third quarter 2024 and an increase of $ 1,000 in the nine-month period ended September 30, 2024 as compared to an increase of $ 1,000 in the third quarter 2023 and $ 19,000 in the nine months ended September 30, 2023.

The table below presents the fair value of the Corporation’s derivative financial instruments as well as their classification on the consolidated balance sheets at September 30, 2024 and December 31, 2023:

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

institution participating in the facility in exchange for a fee commensurate with the risk shared.

This type of derivative is referred to as an “RPA Out.” There was no net impact on the consolidated statements of income from RPAs in the first quarter 2025 as compared to an increase of $ 1,000 , included in other noninterest income, in the first quarter 2024.

The table below presents the fair value of the Corporation’s derivative financial instruments as well as their classification on the consolidated balance sheets at March 31, 2025 and December 31, 2024:

(In Thousands)

At September 30, 2024

At March 31, 2025

At December 31, 2024

8 unchanged sentences

Further, if the Corporation were to fail to maintain its status as a well or adequately capitalized institution, then the counterparties could terminate the derivative positions, and the Corporation would be required to settle its obligations under the agreements.

There was interest-bearing cash pledged as collateral against the Corporation’s liability related to the interest rate swaps of $ 1,350,000 at September 30, 2024 and $ 1,360,000 at December 31, 2023.

There was interest-bearing cash pledged as collateral against the Corporation’s liability related to the interest rate swaps of $ 1,090,000 at March 31, 2025 and at December 31, 2024.

FAIR VALUE MEASUREMENTS AND FAIR VALUES OF FINANCIAL INSTRUMENTS

14 unchanged sentences

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

At September 30, 2024 and December 31, 2023, assets and liabilities measured at fair value and the valuation methods used are as follows:

September 30, 2024

At March 31, 2025 and December 31, 2024, assets and liabilities measured at fair value and the valuation methods used are as follows:

March 31, 2025

Quoted Prices

55 unchanged sentences

Nonrecurring fair value measurements, assets:

Impaired loans, net

Loans individually evaluated for credit loss, net

Foreclosed assets held for sale

10 unchanged sentences

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

At September 30, 2024 and December 31, 2023, quantitative information regarding valuation techniques and the significant unobservable inputs used for assets measured on a recurring basis using unobservable inputs (Level 3 methodologies) are as follows:

At March 31, 2025 and December 31, 2024, quantitative information regarding valuation techniques and the significant unobservable inputs used for assets measured on a recurring basis using unobservable inputs (Level 3 methodologies) are as follows:

Fair Value at

18 unchanged sentences

Increases (decreases) in future expected interest rates tend to increase (decrease) the fair value of the Corporation’s servicing rights because of changes in expected prepayment behavior by the borrowers on the underlying loans.

Unrealized gains (losses) in fair value of servicing rights are included in Loan servicing fees, net, in the unaudited consolidated statements of income.

Following is a reconciliation of activity for Level 3 assets measured at fair value on a recurring basis:

1 unchanged sentence

Three Months Ended

Nine Months Ended

September 30, 2024

September 30, 2023

September 30, 2024

September 30, 2023

March 31, 2025

March 31, 2024

Servicing rights balance, beginning of period

Originations of servicing rights

Unrealized loss included in earnings

Unrealized (loss) gain included in earnings

Servicing rights balance, end of period

4 unchanged sentences

The discounts also include estimated costs to sell the property.

The estimated fair value determined for individually evaluated loans secured by real estate and foreclosed assets held for sale used unobservable inputs (Level 3 methodologies).

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

At September 30, 2024 and December 31, 2023, quantitative information regarding valuation techniques and the significant unobservable inputs used for nonrecurring fair value measurements using Level 3 methodologies are as follows:

At March 31, 2025 and December 31, 2024, quantitative information regarding valuation techniques and the significant unobservable inputs used for nonrecurring fair value measurements using Level 3 methodologies are as follows:

(Dollars In Thousands)

2 unchanged sentences

Loans individually evaluated for credit loss:

Commercial real estate - non-owner occupied

Sales comparison

Discount to appraised value

Commercial real estate - owner occupied

1 unchanged sentence

Discount to appraised value

All other commercial Loans

Liquidation of accounts receivable

Discount to borrower's financial statement value

Total loans individually evaluated for credit loss

3 unchanged sentences

Discount to appraised value

62 %- 84 % ( 76 )

Commercial real estate

7 unchanged sentences

Loans individually evaluated for credit loss:

Commercial real estate - non-owner occupied

Sales comparison

Discount to appraised value

22 %- 30 % (25)

Commercial real estate - owner occupied

1 unchanged sentence

Discount to appraised value

All other commercial loans

Liquidation & SBA guaranty

Discount to appraised value

0 %- 76 % (17)

Total loans individually evaluated for credit loss

3 unchanged sentences

Discount to appraised value

20 %- 62 % (50)

Commercial real estate

12 unchanged sentences

(In Thousands)

September 30, 2024

March 31, 2025

December 31, 2024

8 unchanged sentences

Short-term borrowings

Long-term borrowings

Subordinated debt

Long-term borrowings - FHLB advances

Senior notes, net

Subordinated debt, net

Accrued interest payable

SEGMENT REPORTING

The Corporation’s one reportable segment is determined by the President and Chief Executive Officer, who is the designated chief operating decision maker, based upon information provided about the Corporation’s products and services offered, primarily community banking operations.

The chief operating decision maker uses consolidated net income to assess performance by comparing it to and monitoring it against budget and prior year results.

In addition, the chief operating decision maker uses the consolidated net income to benchmark the Corporation against its competitors.

This information is used to manage resources to drive business and net earnings growth, including investment in key strategic priorities, as well as determine the Corporation's ability to return capital to shareholders.

Loans, investments, deposits and assets held in a fiduciary or custodial capacity provide the revenues in the banking operation.

Interest expense, provisions for credit losses, and payroll provide the significant expenses in the banking operation.

All operations are domestic.

Segment performance is evaluated using consolidated net income.

Three Months Ended

(In Thousands)

March 31, 2025

March 31, 2024

Interest income

Interest expense

Net interest income

Provision for credit losses

Net interest income after provision for credit losses

Other income:

Total other income

Other Expense:

Salaries and employee benefits

Other segment expenses (1)

Total noninterest expense

Income before income tax provision

Income tax provision

(1 ) Other segment expenses included expenses for professional fees, data processing and telecommunications, occupancy and Pennsylvania shares tax.

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

The Corporation’s segment assets represent the total assets as presented in the consolidated balance sheets at March 31, 2025 and December 31, 2024.

SUBSEQUENT EVENTS

On April 23, 2025, the Corporation announced that it had entered into an Agreement and Plan of Merger with Susquehanna Community Financial, Inc.

(“SQCF”) pursuant to which it will acquire SQCF.

SQCF is the financial holding company for Susquehanna Community Bank (“Susquehanna”), which operates 7 banking offices in Central Pennsylvania.

SQCF had assets of $ 598 million as of March 31, 2025.

Under the terms of the definitive agreement, each share of SQCF’s common stock issued and outstanding immediately prior to the effective time of the merger will be converted into the right to receive 0.80 shares of the Corporation’s common stock.

Holders of SQCF common stock prior to the consummation of the merger will own approximately 13 % of the Corporation’s common stock outstanding immediately following the consummation of the merger.

The merger, which is expected to close in the fourth quarter of 2025, is subject to the satisfaction of customary closing conditions, including receipt of customary regulatory approvals and approval by SQCF’s shareholders.

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements