Part I. Financial Information This section presents the unaudited consolidated financial statements and management's discussion and analysis for Citizens & Northern Corporation [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements and notes for the periods ended June 30, 2025, and December 31, 2024 [Consolidated Balance Sheets (Unaudited)](index=3&type=section&id=Consolidated%20Balance%20Sheets%20(Unaudited)%20%E2%80%93June%2030,%202025%20and%20December%2031,%202024) Unaudited consolidated balance sheets detailing assets, liabilities, and stockholders' equity for June 30, 2025, and December 31, 2024 | Metric | June 30, 2025 (Thousands) | December 31, 2024 (Thousands) | | :-------------------------------- | :-------------------------- | :---------------------------- | | **Assets** | | | | Total cash and due from banks | $99,619 | $126,174 | | Available-for-sale debt securities | $406,052 | $402,380 | | Loans, net | $1,897,559 | $1,875,813 | | TOTAL ASSETS | $2,610,875 | $2,610,653 | | **Liabilities** | | | | Total deposits | $2,109,776 | $2,093,909 | | Total borrowings | $180,240 | $207,669 | | TOTAL LIABILITIES | $2,324,518 | $2,335,369 | | **Stockholders' Equity** | | | | TOTAL STOCKHOLDERS' EQUITY | $286,357 | $275,284 | - Total assets remained relatively stable at **$2.61 billion** from December 31, 2024, to June 30, 2025[8](index=8&type=chunk) - Total stockholders' equity increased by **$11.07 million**, or **4.0%**, from **$275.28 million** to **$286.36 million** during the six-month period[8](index=8&type=chunk) [Consolidated Statements of Income (Unaudited)](index=4&type=section&id=Consolidated%20Statements%20of%20Income%20(Unaudited)%20%E2%80%93%20Three-month%20and%20Six-month%20Periods%20Ended%20June%2030,%202025%20and%202024) Unaudited consolidated statements of income for the three-month and six-month periods ended June 30, 2025, and 2024 | Metric (Thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total interest and dividend income | $32,454 | $31,326 | $64,163 | $61,662 | | Total interest expense | $11,312 | $11,881 | $23,046 | $23,176 | | Net interest income | $21,142 | $19,445 | $41,117 | $38,486 | | Provision for credit losses | $2,354 | $565 | $2,590 | $1,519 | | Noninterest income | $8,142 | $7,854 | $15,150 | $14,529 | | Noninterest expense | $19,398 | $19,255 | $38,441 | $37,559 | | NET INCOME | $6,117 | $6,113 | $12,410 | $11,419 | | EARNINGS PER COMMON SHARE - BASIC AND DILUTED | $0.40 | $0.40 | $0.80 | $0.74 | - Net income for the three months ended June 30, 2025, was **$6.117 million**, a slight increase from **$6.113 million** in the same period of 2024[10](index=10&type=chunk) - For the six months ended June 30, 2025, net income increased by **$0.991 million**, or **8.7%**, to **$12.410 million** compared to **$11.419 million** in 2024[10](index=10&type=chunk) - Basic and diluted EPS remained flat at **$0.40** for the three-month period but increased to **$0.80** from **$0.74** for the six-month period[10](index=10&type=chunk) [Consolidated Statements of Comprehensive Income (Unaudited)](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Unaudited)%20%E2%80%93%20Three-month%20and%20Six-month%20Periods%20Ended%20June%2030,%202025%20and%202024) Unaudited consolidated statements of comprehensive income for the three-month and six-month periods ended June 30, 2025, and 2024 | Metric (Thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income | $6,117 | $6,113 | $12,410 | $11,419 | | Other comprehensive income (loss), net | $2,016 | $(655) | $6,087 | $(2,924) | | Comprehensive income | $8,133 | $5,458 | $18,497 | $8,495 | - Comprehensive income significantly increased for both the three-month and six-month periods ended June 30, 2025, primarily driven by a positive shift in other comprehensive income (loss) from available-for-sale debt securities[12](index=12&type=chunk) - For the six-month period, other comprehensive income, net, was **$6.087 million** in 2025, a substantial improvement from a loss of **$2.924 million** in 2024[12](index=12&type=chunk) [Consolidated Statements of Cash Flows (Unaudited)](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)%20%E2%80%93%20Six-month%20Periods%20Ended%20June%2030,%202025%20and%202024) Unaudited consolidated statements of cash flows for the six-month periods ended June 30, 2025, and 2024 | Cash Flow Activity (Thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | | Net Cash Provided by Operating Activities | $10,096 | $14,362 | | Net Cash Used in Investing Activities | $(20,709) | $(37,065) | | Net Cash (Used in) Provided by Financing Activities | $(15,692) | $66,487 | | (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | $(26,305) | $43,784 | | CASH AND CASH EQUIVALENTS, END OF PERIOD | $97,269 | $96,562 | - Net cash provided by operating activities decreased by **$4.266 million** in the first six months of 2025 compared to 2024[14](index=14&type=chunk) - Investing activities used less cash in 2025, while financing activities shifted from providing **$66.487 million** in cash in 2024 to using **$15.692 million** in 2025, primarily due to a net decrease in deposits and FHLB advances[14](index=14&type=chunk) [Consolidated Statements of Changes in Stockholders' Equity (Unaudited)](index=7&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity%20(Unaudited)%20%E2%80%93%20Three-month%20and%20Six-month%20Periods%20Ended%20June%2030,%202025%20and%202024) Unaudited consolidated statements of changes in stockholders' equity for the three-month and six-month periods ended June 30, 2025, and 2024 | Equity Component (Thousands) | Balance, Dec 31, 2024 | Net Income (6M 2025) | Other Comprehensive Income, net (6M 2025) | Cash Dividends Paid (6M 2025) | Balance, June 30, 2025 | | :----------------------------- | :-------------------- | :------------------- | :---------------------------------------- | :----------------------------- | :--------------------- | | Common Stock | $16,030 | - | - | - | $16,030 | | Paid-in Capital | $14

[Condensed Consolidated Financial Statements](index=1&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents the company's consolidated earnings and balance sheet data, highlighting key financial performance and position changes over recent periods [Condensed, Consolidated Earnings Information](index=1&type=section&id=Condensed,%20Consolidated%20Earnings%20Information) The company reported a slight increase in net income for Q2 2025 compared to Q2 2024, while net income for the six months ended June 30, 2025, showed an 8.68% increase year-over-year. Net interest income grew, but was partially offset by a significant increase in the provision for credit losses | Metric | 2nd Quarter 2025 ($, Thousands) | 2nd Quarter 2024 ($, Thousands) | $ Incr. (Decr.) | % Incr. (Decr.) | | :----------------------------------- | :------------------------------ | :------------------------------ | :-------------- | :-------------- | | Net Interest Income | 21,142 | 19,445 | 1,697 | 8.73 % | | Provision for Credit Losses | 2,354 | 565 | 1,789 | 316.64 % | | Net Income | 6,117 | 6,113 | 4 | 0.07 % | | Net Income Attributable to Common Shares | 6,068 | 6,066 | 2 | 0.03 % | | Net Income - Basic and Diluted (Per Share) | 0.40 | 0.40 | 0.00 | 0.00 % | | Dividends Per Share | 0.28 | 0.28 | 0.00 | 0.00 % | | Metric | Six Months Ended June 30, 2025 ($, Thousands) | Six Months Ended June 30, 2024 ($, Thousands) | $ Incr. (Decr.) | % Incr. (Decr.) | | :----------------------------------- | :------------------------------------------ | :------------------------------------------ | :-------------- | :-------------- | | Net Interest Income | 41,117 | 38,486 | 2,631 | 6.84 % | | Provision for Credit Losses | 2,590 | 1,519 | 1,071 | 70.51 % | | Net Income | 12,410 | 11,419 | 991 | 8.68 % | | Net Income Attributable to Common Shares | 12,310 | 11,333 | 977 | 8.62 % | | Net Income - Basic and Diluted (Per Share) | 0.80 | 0.74 | 0.06 | 8.11 % | | Dividends Per Share | 0.56 | 0.56 | 0.00 | 0.00 % | [Condensed, Consolidated Balance Sheet Data](index=2&type=section&id=Condensed,%20Consolidated%20Balance%20Sheet%20Data) Total assets increased modestly by 0.68% year-over-year, driven primarily by growth in loans and deposits. Borrowed funds decreased significantly, while stockholders' equity saw a healthy increase | Metric | June 30, 2025 ($, Thousands) | June 30, 2024 ($, Thousands) | $ Incr. (Decr.) | % Incr. (Decr.) | | :----------------------------------- | :--------------------------- | :--------------------------- | :-------------- | :-------------- | | TOTAL ASSETS | 2,610,875 | 2,593,122 | 17,753 | 0.68 % | | Loans, Net | 1,897,559 | 1,872,825 | 24,734 | 1.32 % | | Deposits | 2,109,776 | 2,059,309 | 50,467 | 2.45 % | | Borrowed Funds | 144,427 | 202,523 | (58,096) | (28.69)% | | TOTAL LIABILITIES | 2,324,518 | 2,329,901 | (5,383) | (0.23)% | | TOTAL STOCKHOLDERS' EQUITY | 286,357 | 263,221 | 23,136 | 8.79 % | | Net Unrealized Losses on Available-for-sale Debt Securities | (31,017) | (41,710) | 10,693 | (25.64)% | [Financial Highlights and Key Ratios](index=3&type=section&id=Financial%20Highlights%20and%20Key%20Ratios) This section provides an overview of the company's key financial performance metrics, balance sheet highlights, and critical safety and soundness ratios [Earnings Performance](index=3&type=section&id=Earnings%20Performance) Net income for the three months ended June 30, 2025, remained stable, while the six-month period saw an 8.68% increase. Return on average assets and equity showed mixed trends, with a slight decline for the quarter but an improvement for the six-month period | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Increase (Decrease) | | :----------------------------------- | :------------------------------- | :------------------------------- | :-------------------- | | Net Income ($, Thousands) | 6,117 | 6,113 | 0.07 % | | Return on Average Assets (Annualized) | 0.94 % | 0.96 % | (2.08)% | | Return on Average Equity (Annualized) | 8.66 % | 9.46 % | (8.46)% | | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Increase (Decrease) | | :----------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | | Net Income ($, Thousands) | 12,410 | 11,419 | 8.68 % | | Return on Average Assets (Annualized) | 0.96 % | 0.90 % | 6.67 % | | Return on Average Equity (Annualized) | 8.85 % | 8.79 % | 0.68 % | [Pre-Tax, Pre-Provision Net Revenue (PPNR) (Non-GAAP)](index=3&type=section&id=Pre-Tax,%20Pre-Provision%20Net%20Revenue%20(PPNR)%20(Non-GAAP)) Pre-Tax, Pre-Provision Net Revenue (PPNR) showed strong growth for both the three-month and six-month periods, indicating improved underlying operational performance before credit loss provisions and taxes | Metric | Three Months Ended June 30, 2025 ($, Thousands) | Three Months Ended June 30, 2024 ($, Thousands) | % Increase (Decrease) | | :----------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :-------------------- | | PPNR | 10,273 | 8,246 | 24.58 % | | PPNR (Annualized) as a % of Average Assets | 1.59 % | 1.29 % | 23.26 % | | PPNR (Annualized) as a % of Average Equity | 14.54 % | 12.76 % | 13.95 % | | Metric | Six Months Ended June 30, 2025 ($, Thousands) | Six Months Ended June 30, 2024 ($, Thousands) | % Increase (Decrease) | | :----------------------------------- | :------------------------------------------ | :------------------------------------------ | :-------------------- | | PPNR | 18,424 | 15,853 | 16.22 % | | PPNR (Annualized) as a % of Average Assets | 1.43 % | 1.25 % | 14.40 % | | PPNR (Annualized) as a % of Average Equity | 13.14 % | 12.20 % | 7.70 % | [Balance Sheet Highlights](index=3&type=section&id=Balance%20Sheet%20Highlights) The balance sheet showed modest growth in total assets, loans, and deposits. The allowance for credit losses increased, reflecting a more conservative approach to potential loan defaults | Metric | June 30, 2025 | June 30, 2024 | % Increase (Decrease) | | :----------------------------------- | :--------------------------- | :--------------------------- | :-------------------- | | Total Assets ($, Thousands) | 2,610,875 | 2,593,122 | 0.68 % | | Available-for-Sale Debt Securities ($, Thousands) | 406,052 | 401,145 | 1.22 % | | Loans, Net ($, Thousands) | 1,897,559 | 1,872,825 | 1.32 % | | Allowance for Credit Losses on Loans (%) | 21,699 | 20,382 | 6.46 % | | Deposits ($, Thousands) | 2,109,776 | 2,059,309 | 2.45 % | [Stockholders' Value (Per Common Share)](index=3&type=section&id=Stockholders'%20Value%20(Per%20Common%20Share)) Key per-share metrics showed positive trends, with basic and diluted net income per share increasing by 8.11% and common book value growing by 7.83%. Tangible common book value also saw a significant increase | Metric | June 30, 2025 | June 30, 2024 | % Increase (Decrease) | | :----------------------------------- | :------------ | :------------ | :-------------------- | | Net Income - Basic and Diluted ($) | $ 0.80 | $ 0.74 | 8.11 % | | Dividends ($) | $ 0.56 | $ 0.56 | 0.00 % | | Common Book Value ($) | $ 18.46 | $ 17.12 | 7.83 % | | Tangible Common Book Value (Non-GAAP) ($) | $ 14.95 | $ 13.56 | 10.25 % | | Market Value (Last Trade) ($) | $ 18.94 | $ 17.89 | 5.87 % | | Common Shares Outstanding, End of Period (Shares) | 15,514,943 | 15,375,982 | 0.90 % | [Safety and Soundness Ratios](index=4&type=section&id=Safety%20and%20Soundness%20Ratios) Capital ratios improved across the board, indicating enhanced safety and soundness. However, nonperforming assets as a percentage of total assets increased, suggesting a slight deterioration in asset quality | Metric | June 30, 2025 | June 30, 2024 | % Increase (Decrease) | | :----------------------------------- | :------------ | :------------ | :-------------------- | | Tangible Common Equity / Tangible Assets (%) | 9.07 % | 8.21 % | 10.48 % | | Nonperforming Assets / Total Assets (%) | 0.98 % | 0.76 % | 28.95 % | | Allowance for Credit Losses / Total Loans (%) | 1.13 % | 1.08 % | 4.63 % | | Total Risk Based Capital Ratio (%) | 15.98 % | 15.50 % | 3.10 % | | Tier 1 Risk Based Capital Ratio (%) | 13.54 % | 13.10 % | 3.36 % | | Common Equity Tier 1 Risk Based Capital Ratio (%) | 13.54 % | 13.10 % | 3.36 % | | Leverage Ratio (%) | 10.22 % | 9.85 % | 3.76 % | [Efficiency Ratio (Non-GAAP)](index=4&type=section&id=Efficiency%20Ratio%20(Non-GAAP)) The efficiency ratio improved by 4.00% for the six months ended June 30, 2025, indicating better cost management relative to revenue generation | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Increase (Decrease) | | :----------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | | Efficiency Ratio (%) | 67.51 % | 70.32 % | (4.00)% | [Quarterly Financial Performance](index=5&type=section&id=Quarterly%20Financial%20Performance) This section details the company's financial performance and position on a quarterly basis, showing trends in income, expenses, assets, and liabilities [Quarterly Condensed, Consolidated Income Statement Information](index=5&type=section&id=Quarterly%20Condensed,%20Consolidated%20Income%20Statement%20Information) Net income showed some quarterly fluctuations, with Q2 2025 being stable compared to Q2 2024 but lower than Q1 2025 and Q4 2024. The provision for credit losses significantly increased in Q2 2025 | Metric ($, Thousands) | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | | :----------------------------------- | :------------ | :------------- | :---------------- | :----------------- | :------------ | | Interest and dividend income | 32,454 | 31,709 | 33,329 | 33,087 | 31,326 | | Interest expense | 11,312 | 11,734 | 12,856 | 12,931 | 11,881 | | Net interest income | 21,142 | 19,975 | 20,473 | 20,156 | 19,445 | | Provision (credit) for credit losses | 2,354 | 236 | (531) | 1,207 | 565 | | Noninterest income | 8,142 | 7,008 | 7,547 | 7,133 | 7,854 | | Noninterest expense | 19,398 | 19,043 | 18,430 | 18,269 | 19,255 | | Net income | 6,117 | 6,293 | 8,174 | 6,365 | 6,113 | | Basic and diluted earnings per common share | 0.40 | 0.41 | 0.53 | 0.41 | 0.40 | [Quarterly Condensed, Consolidated Balance Sheet Information](index=6&type=section&id=Quarterly%20Condensed,%20Consolidated%20Balance%20Sheet%20Information) Total assets remained relatively stable across the quarters. Deposits showed a gradual increase, while borrowed funds consistently decreased. Stockholders' equity demonstrated a steady upward trend | Metric ($, Thousands) | June 30, 2025 | March 31, 2025 | Dec. 31, 2024 | Sept. 30, 2024 | June 30, 2024 | | :----------------------------------- | :------------ | :------------- | :------------ | :------------- | :------------ | | TOTAL ASSETS | 2,610,875 | 2,609,228 | 2,610,653 | 2,670,822 | 2,593,122 | | Loans, Net | 1,897,559 | 1,878,260 | 1,875,813 | 1,872,322 | 1,872,825 | | Deposits | 2,109,776 | 2,102,141 | 2,093,909 | 2,135,879 | 2,059,309 | | Borrowed Funds | 144,427 | 154,994 | 167,939 | 186,043 | 202,523 | | TOTAL LIABILITIES | 2,324,518 | 2,327,397 | 2,335,369 | 2,393,517 | 2,329,901 | | TOTAL STOCKHOLDERS' EQUITY | 286,357 | 281,831 | 275,284 | 277,305 | 263,221 | | Brokered Deposits (Included in Total Deposits) | 5,005 | 22,022 | 24,021 | 45,051 | 59,501 | [Asset Portfolio and Quality](index=7&type=section&id=Asset%20Portfolio%20and%20Quality) This section analyzes the composition and quality of the company's asset portfolio, including debt securities, loan types, and credit loss provisions [Available-for-Sale Debt Securities](index=7&type=section&id=Available-for-Sale%20Debt%20Securities) The fair value of available-for-sale debt securities remained relatively stable across the quarters, with a slight increase from June 30, 2024, to June 30, 2025. Unrealized losses on these securities decreased significantly over the year | Metric ($, Thousands) | June 30, 2025 | March 31, 2025 | December 31, 2024 | June 30, 2024 | | :----------------------------------- | :------------ | :------------- | :---------------- | :------------ | | Total Available-for-Sale Debt Securities (Amortized Cost) | 445,817 | 450,837 | 449,923 | 453,944 | | Total Available-for-Sale Debt Securities (Fair Value) | 406,052 | 408,463 | 402,380 | 401,145 | [Summary of Loans by Type](index=7&type=section&id=Summary%20of%20Loans%20by%20Type) The loan portfolio showed a slight increase in total gross loans year-over-year. Commercial real estate (non-owner occupied) and consumer loans experienced growth, while residential mortgage loans saw a decrease | Loan Type ($, Thousands) | June 30, 2025 | March 31, 2025 | December 31, 2024 | June 30, 2024 | | :----------------------------------- | :------------ | :------------- | :---------------- | :------------ | | Commercial real estate - non-owner occupied | 757,961 | 733,704 | 739,565 | 723,964 | | Commercial real estate - owner occupied | 261,157 | 260,248 | 261,071 | 267,169 | | All other commercial loans | 430,499 | 436,179 | 423,277 | 431,106 | | Residential mortgage loans | 398,496 | 402,248 | 408,009 | 409,824 | | Consumer loans | 71,145 | 66,053 | 63,926 | 61,144 | | Total Gross Loans | 1,919,258 | 1,898,432 | 1,895,848 | 1,893,207 | | Less: allowance for credit losses on loans | (21,699) | (20,172) | (20,035) | (20,382) | | Loans, net | 1,897,559 | 1,878,260 | 1,875,813 | 1,872,825 | [Non-Owner Occupied Commercial Real Estate](index=9&type=section&id=Non-Owner%20Occupied%20Commercial%20Real%20Estate) Within non-owner occupied commercial real estate, office and retail sectors represent the largest portions of the portfolio, with office loans accounting for 24.2% of this category and 6.1% of total loans | Loan Type ($, Thousands) | June 30, 2025 ($, Thousands) | % of Non-owner Occupied CRE | % of Total Loans | | :----------------------------------- | :------------ | :-------------------------- | :--------------- | | Office | 118,007 | 24.2 % | 6.1 % | | Retail | 89,485 | 18.3 % | 4.7 % | | Industrial | 83,334 | 17.1 % | 4.3 % | | Hotels | 69,163 | 14.2 % | 3.6 % | | Mixed Use | 60,177 | 12.3 % | 3.1 % | | Other | 67,984 | 13.9 % | 3.5 % | | Total Non-owner Occupied CRE Loans | 488,150 | | | [Past Due Loans and Nonperforming Assets](index=9&type=section&id=Past%20Due%20Loans%20and%20Nonperforming%20Assets) Nonperforming assets and loans have shown an increasing trend over the past year, with nonperforming assets as a percentage of total assets rising from 0.76% to 0.98% | Metric ($, Thousands) | June 30, 2025 | March 31, 2025 | December 31, 2024 | June 30, 2024 | | :----------------------------------- | :------------ | :------------- | :---------------- | :------------ | | Total nonaccrual loans | 25,190 | 24,106 | 23,842 | 19,579 | | Total nonperforming loans | 25,276 | 24,130 | 23,961 | 19,599 | | Total nonperforming assets | 25,678 | 24,329 | 24,142 | 19,780 | | Total nonperforming loans as a % of total loans | 1.32 % | 1.27 % | 1.26 % | 1.04 % | | Total nonperforming assets as a % of assets | 0.98 % | 0.93 % | 0.92 % | 0.76 % | | Allowance for credit losses as a % of total loans | 1.13 % | 1.06 % | 1.06 % | 1.08 % | [Analysis of the Allowance for Credit Losses on Loans](index=9&type=section&id=Analysis%20of%20the%20Allowance%20for%20Credit%20Losses%20on%20Loans) The allowance for credit losses on loans increased to $21.7 million by June 30, 2025, driven by a higher provision for credit losses, despite an increase in net charge-offs | Metric ($, Thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Balance, beginning of period | 20,172 | 20,023 | 20,035 | 19,208 | | Net charge-offs | (548) | (207) | (639) | (352) | | Provision for credit losses on loans | 2,075 | 566 | 2,303 | 1,526 | | Balance, end of period | 21,699 | 20,382 | 21,699 | 20,382 | | Net charge-offs as a % of average gross loans (annualized) | 0.12 % | 0.04 % | 0.07 % | 0.04 % | [Analysis of the Provision for Credit Losses](index=10&type=section&id=Analysis%20of%20the%20Provision%20for%20Credit%20Losses) The total provision for credit losses significantly increased for both the three-month and six-month periods ending June 30, 2025, primarily due to higher provisions for loans receivable | Metric ($, Thousands) | 3 Months Ended June 30, 2025 ($, Thousands) | 3 Months Ended June 30, 2024 ($, Thousands) | 6 Months Ended June 30, 2025 ($, Thousands) | 6 Months Ended June 30, 2024 ($, Thousands) | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Loans receivable | 2,075 | 566 | 2,303 | 1,526 | | Off-balance sheet exposures | 279 | (1) | 287 | (7) | | Total provision for credit losses | 2,354 | 565 | 2,590 | 1,519 | [Interest Income and Expense Analysis](index=11&type=section&id=Interest%20Income%20and%20Expense%20Analysis) This section provides a detailed analysis of the company's interest income and expenses, including net interest income and profitability metrics [Comparison of Interest Income and Expense](index=11&type=section&id=Comparison%20of%20Interest%20Income%20and%20Expense) Total interest income increased for both the three-month and six-month periods, primarily driven by higher interest from loans receivable. Total interest expense decreased for the three-month period but remained stable for the six-month period, leading to an increase in net interest income | Metric ($, Thousands) | 3 Months Ended June 30, 2025 ($, Thousands) | 3 Months Ended June 30, 2024 ($, Thousands) | 6 Months Ended June 30, 2025 ($, Thousands) | 6 Months Ended June 30, 2024 ($, Thousands) | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Interest Income | 32,674 | 31,528 | 64,594 | 62,059 | | Total Interest Expense | 11,312 | 11,881 | 23,046 | 23,176 | | Net Interest Income (GAAP) | 21,142 | 19,445 | 41,117 | 38,486 | | Net Interest Income (Fully Taxable-Equivalent Basis) | 21,362 | 19,647 | 41,548 | 38,883 | [Analysis of Average Daily Balances and Rates](index=12&type=section&id=Analysis%20of%20Average%20Daily%20Balances%20and%20Rates) Average earning assets increased, primarily due to growth in loans receivable. The interest rate spread and net interest income to earning assets both improved for the three-month and six-month periods, indicating better profitability from interest-earning activities | Metric | 3 Months Ended 6/30/2025 | 3 Months Ended 6/30/2024 | 6 Months Ended 6/30/2025 | 6 Months Ended 6/30/2024 | | :----------------------------------- | :----------------------- | :----------------------- | :----------------------- | :----------------------- | | Total Earning Assets ($, Thousands) | 2,432,500 | 2,385,593 | 2,426,188 | 2,370,098 | | Total Interest-bearing Liabilities ($, Thousands) | 1,782,056 | 1,765,318 | 1,785,073 | 1,756,208 | | Interest Rate Spread (%) | 2.84 % | 2.61 % | 2.77 % | 2.62 % | | Net Interest Income/Earning Assets (%) | 3.52 % | 3.31 % | 3.45 % | 3.30 % | | Cost of Interest-bearing deposits (%) | 2.34 % | 2.46 % | 2.40 % | 2.41 % | | Cost of Total borrowed funds (%) | 4.27 % | 4.25 % | 4.27 % | 4.26 % | [Noninterest Income and Expense Analysis](index=16&type=section&id=Noninterest%20Income%20and%20Expense%20Analysis) This section examines the company's noninterest income and expense components, highlighting trends in operational revenue and costs [Comparison of Noninterest Income](index=16&type=section&id=Comparison%20of%20Noninterest%20Income) Total noninterest income increased for both the three-month and six-month periods, primarily driven by growth in 'Other noninterest income' and interchange revenue from debit card transactions | Metric ($, Thousands) | 3 Months Ended June 30, 2025 ($, Thousands) | 3 Months Ended June 30, 2024 ($, Thousands) | 6 Months Ended June 30, 2025 ($, Thousands) | 6 Months Ended June 30, 2024 ($, Thousands) | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total noninterest income | 8,142 | 7,854 | 15,150 | 14,529 | | Trust revenue | 1,967 | 2,014 | 4,069 | 3,911 | | Brokerage and insurance revenue | 554 | 527 | 1,052 | 1,066 | | Service charges on deposit accounts | 1,422 | 1,472 | 2,862 | 2,790 | | Interchange revenue from debit card transactions | 1,218 | 1,089 | 2,254 | 2,102 | | Net gains from sales of loans | 312 | 235 | 517 | 426 | | Other noninterest income | 2,030 | 1,943 | 3,162 | 2,960 | [Comparison of Noninterest Expense](index=16&type=section&id=Comparison%20of%20Noninterest%20Expense) Total noninterest expense remained relatively stable for the three-month period and saw a modest increase for the six-month period. Salaries and employee benefits continued to be the largest component, while merger-related expenses were incurred in Q2 2025 | Metric ($, Thousands) | 3 Months Ended June 30, 2025 ($, Thousands) | 3 Months Ended June 30, 2024 ($, Thousands) | 6 Months Ended June 30, 2025 ($, Thousands) | 6 Months Ended June 30, 2024 ($, Thousands) | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total noninterest expense | 19,398 | 19,255 | 38,441 | 37,559 | | Salaries and employee benefits | 11,067 | 11,023 | 22,826 | 22,585 | | Net occupancy and equipment expense | 1,403 | 1,333 | 2,862 | 2,783 | | Data processing and telecommunications expenses | 1,981 | 2,003 | 4,052 | 3,995 | | Other noninterest expense | 3,401 | 3,437 | 5,755 | 5,299 | | Merger-related expenses | 167 | 0 | 167 | 0 | [Liquidity Information](index=17&type=section&id=Liquidity%20Information) This section details the company's liquidity position, including available credit facilities and the coverage of uninsured deposits [Available Credit Facilities and Uninsured Deposits](index=17&type=section&id=Available%20Credit%20Facilities%20and%20Uninsured%20Deposits) The company maintains substantial available credit facilities, totaling over $1 billion, providing robust liquidity. While uninsured deposits increased, highly liquid available funding significantly exceeded uninsured and uncollateralized deposits, indicating a strong liquidity position | Metric ($, Thousands) | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :----------------------------------- | :------------ | :------------- | :------------ | | Total credit facilities | 1,038,164 | 1,041,401 | 1,037,459 | | Total Deposits - C&N Bank | 2,127,673 | 2,120,521 | 2,074,806 | | Estimated Total Uninsured Deposits | 649,184 | 621,542 | 605,765 | | Uninsured and Uncollateralized Deposits | 515,563 | 483,364 | 447,497 | | Uninsured and Uncollateralized Deposits as a % of Total Deposits | 24.2 % | 22.8 % | 21.6 % | | Highly Liquid Available Funding | 1,140,248 | 1,135,357 | 1,051,981 | | Highly Liquid Available Funding as a % of Uninsured Deposits | 175.6 % | 182.7 % | 173.7 % | | Highly Liquid Available Funding as a % of Uninsured and Uncollateralized Deposits | 221.2 % | 234.9 % | 235.1 % |

Core Viewpoint - Citizens & Northern Corporation (C&N) and Susquehanna Community Financial, Inc. (SQCF) have announced a merger agreement, with both boards unanimously approving the plan, which will see SQCF merge into C&N [1][3]. Company Overview - C&N is the bank holding company for Citizens & Northern Bank, operating 28 banking offices and one loan production office, with consolidated assets of $2.6 billion as of March 31, 2025 [4]. - SQCF is the financial holding company for Susquehanna Community Bank, which operates 7 banking offices and had assets of $598 million as of March 31, 2025 [4]. Merger Details - The merger will create a combined entity with approximately $3.2 billion in assets, enhancing C&N's market presence in central and southeast Pennsylvania [4][5]. - SQCF shareholders will receive 0.80 shares of C&N common stock for each share of SQCF, implying a total consideration of $44.3 million [6]. - Post-merger, SQCF shareholders will own about 13% of C&N's common stock [6]. Strategic Benefits - The merger is expected to be approximately 17% accretive to earnings per share in 2026, while resulting in single-digit tangible book value dilution at close [6]. - This strategic combination will enhance C&N's service capabilities and diversify its loan portfolio and funding base, increasing overall resiliency and efficiency [5]. Leadership Changes - Chris Trate, current SQCF Board Chairman, will join the C&N and C&N Bank boards, while Dave Runk will become an EVP and Strategic Advisor at C&N Bank [7]. - Jeffrey Hollenbach, President and COO at Susquehanna, will lead the Susquehanna market as Region President [7]. Transaction Timeline - The merger is subject to customary closing conditions, including regulatory approvals and SQCF shareholder approval, with an expected closing in the fourth quarter of 2025 [8].

Financial Performance - Net income for Q1 2025 was $6,293,000, or $0.41 per diluted share, compared to $5,306,000, or $0.35 per diluted share in Q1 2024, representing a 18.6% increase in net income [127]. - Noninterest income for Q1 2025 was $7,008,000, an increase of $333,000, or 5.0%, from Q1 2024 [130]. - The income tax provision for Q1 2025 was $1,411,000, or 18.3% of pre-tax income, an increase from $1,152,000, or 17.8% of pre-tax income in Q1 2024 [132]. - The effective tax rate for the first quarter of 2025 was 18.3%, up from 17.8% in the first quarter of 2024, correlating with an increase in pre-tax income of $1,246,000 [153]. Interest Income and Expenses - Net interest income increased to $19,975,000 in Q1 2025, up $934,000 from Q1 2024, with a net interest margin rising to 3.38% from 3.29% [127]. - Fully taxable equivalent net interest income for Q1 2025 was $20,186,000, an increase of $950,000 (4.9%) compared to Q1 2024 [136]. - Interest income totaled $31,920,000 in 2025, reflecting an increase of $1,389,000 (4.5%) from 2024 [137]. - Interest expense increased by $439,000 to $11,734,000 in 2025 from $11,295,000 in 2024 [141]. - Interest expense on deposits rose by $701,000, with the average rate increasing to 2.45% in 2025 from 2.35% in 2024 [142]. Loans and Deposits - Average total loans receivable rose by $40,187,000, or 2.2%, while average total deposits increased by $59,904,000, or 3.0% [127]. - Total gross loans increased to $1,898,432,000 as of March 31, 2025, compared to $1,895,848,000 at December 31, 2024, reflecting a slight growth [175]. - Total deposits increased to $2,102,141,000 as of March 31, 2025, up $8,232,000 (0.4%) from $2,093,909,000 at December 31, 2024 [197]. - Average total deposits for Q1 2025 were $2,061,182,000, representing a 3.0% increase compared to $2,001,278,000 for Q1 2024 [197]. Credit Quality and Losses - The provision for credit losses was $236,000 in Q1 2025, down from $954,000 in Q1 2024, with net charge-offs totaling $91,000 compared to $145,000 in the prior year [127]. - The allowance for credit losses (ACL) as a percentage of gross loans receivable was 1.06% at March 31, 2025, compared to 1.07% at March 31, 2024 [177]. - Total nonperforming assets were $24,329,000 at March 31, 2025, up from $24,142,000 at December 31, 2024 [182]. - Total nonperforming loans were $24,130,000, representing 1.27% of total loans as of March 31, 2025, compared to 1.26% at December 31, 2024 [191]. Capital and Equity - The total stockholders' equity, excluding accumulated other comprehensive loss, increased to $312,427,000 as of March 31, 2025, compared to $301,032,000 in the previous year, reflecting a growth of 3.66% [148]. - As of March 31, 2025, the consolidated total capital to risk-weighted assets ratio was 16.02%, exceeding the minimum requirement of 11% [204]. - C&N Bank's Tier 1 capital to risk-weighted assets ratio was 14.15%, above the minimum requirement of 9% [204]. - The capital conservation buffer for C&N Bank was 7.23% as of March 31, 2025, allowing for no payout limitations on dividends [205]. Acquisitions and Mergers - The corporation announced a pending acquisition of Susquehanna Community Financial, Inc. with assets of $598 million, expected to close in Q4 2025 [124][126]. - Following the merger, holders of Susquehanna's common stock will own approximately 13% of the corporation's common stock outstanding [126]. Risk Management - The Corporation's interest rate risk management includes simulations for potential changes in net interest income and economic value of equity [212]. - The modeling results indicate that net interest income and economic value of equity are projected to decrease under both rising and falling interest rate scenarios [216]. - The fair value of available-for-sale debt securities has decreased due to rising interest rates, impacting the Corporation's stockholders' equity [217]. Stock Repurchase and Dividends - The Corporation announced a treasury stock repurchase program allowing for the repurchase of up to 750,000 shares, with 723,966 shares available as of March 31, 2025 [206]. - Future dividend payments and stock repurchases will depend on maintaining a strong financial condition and regulatory requirements [207].

Group 1 - Citizens & Northern (CZNC) reported quarterly earnings of $0.41 per share, missing the Zacks Consensus Estimate of $0.44 per share, but showing an increase from $0.35 per share a year ago, resulting in an earnings surprise of -6.82% [1] - The company posted revenues of $27.19 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 3.91%, compared to year-ago revenues of $25.72 million [2] - Citizens & Northern shares have increased approximately 4.7% since the beginning of the year, contrasting with the S&P 500's decline of -10.1% [3] Group 2 - The current consensus EPS estimate for the coming quarter is $0.48 on revenues of $29 million, and for the current fiscal year, it is $1.91 on revenues of $115.9 million [7] - The Zacks Industry Rank for Banks - Northeast is currently in the top 23% of over 250 Zacks industries, indicating a favorable outlook for the industry [8]

Financial Performance - Net income for Q1 2025 was $6,293,000, an increase of 18.60% compared to $5,306,000 in Q1 2024[1] - Net income for the quarter ended March 31, 2025, was $6,293,000, a decrease of 22.9% compared to $8,174,000 for the same period in 2024[7] - Noninterest income for Q1 2025 was $7,008,000, up 4.99% from $6,675,000 in Q1 2024[5] - Noninterest income for the quarter was $7,008,000, down from $7,547,000 in the previous quarter, representing a decrease of 7.1%[7] - The company reported a basic and diluted earnings per share of $0.41 for the quarter, down from $0.53 in the same quarter last year[7] Interest Income and Expenses - Net interest income after provision for credit losses rose to $19,739,000, reflecting a 9.13% increase from $18,087,000 in the previous year[1] - Net interest income after provision for credit losses was $19,739,000, down from $21,004,000 in the previous quarter, reflecting a decrease of 6.0%[7] - Total interest income decreased to $31,920 thousand for the three months ended March 31, 2025, down from $33,546 thousand in the previous quarter, reflecting a decline of approximately 4.8%[17] - Total interest expense decreased to $11,734 thousand for the three months ended March 31, 2025, compared to $12,856 thousand in the previous quarter, a reduction of about 8.7%[17] Assets and Liabilities - Total assets increased by 3.48% to $2,609,228,000 from $2,521,537,000 year-over-year[3] - Total assets as of March 31, 2025, were $2,609,228,000, a slight decrease from $2,610,653,000 as of December 31, 2024[8] - Total stockholders' equity increased to $281,831,000 from $275,284,000 in the previous quarter, reflecting a growth of 2.0%[8] - The total assets of the company as of March 31, 2025, were $2,575,150[19] Capital and Equity - Return on average assets (annualized) improved to 0.98% from 0.84%, marking a 16.67% increase[5] - Return on average equity (annualized) increased to 9.05% from 8.13%, representing an 11.32% rise[5] - Common book value per share increased to $18.20, a 7.00% rise from $17.01 in the previous year[5] - The total risk-based capital ratio increased to 16.00% from 15.54%, reflecting a 2.96% improvement in capital strength[6] - The total stockholders' equity, excluding accumulated other comprehensive loss, was $312,427 as of March 31, 2025[19] Credit Quality - The provision for credit losses was $236,000, compared to a credit of $531,000 in the previous quarter, indicating a shift in credit quality assessment[7] - Total nonperforming loans increased to $24,130 thousand as of March 31, 2025, up from $23,961 thousand in December 31, 2024, representing a 0.7% increase[12] - Total nonperforming assets rose to $24,329 thousand, compared to $24,142 thousand in the previous quarter, marking a 0.8% increase[12] - The allowance for credit losses as a percentage of total loans remained stable at 1.06% for both March 31, 2025, and December 31, 2024[12] - Net charge-offs for the three months ended March 31, 2025, were $91 thousand, compared to $14 thousand for the previous quarter, indicating a significant increase in charge-offs[13] - The provision for credit losses on loans was $228 thousand for the three months ended March 31, 2025, compared to a credit of $393 thousand in the previous quarter[14] Operational Efficiency - The efficiency ratio improved to 70.03% from 70.64%, indicating enhanced operational efficiency[6] - Total noninterest expense rose to $19,043 for the three months ended March 31, 2025, compared to $18,430 in the previous quarter[22] Deposits - Deposits grew by 5.32% to $2,102,141,000 compared to $1,995,903,000 in the prior year[3] - Total deposits reached $2,061,182, with uninsured deposits estimated at $621,542, representing 22.8% of total deposits[24] Other Financial Metrics - Total earning assets as of March 31, 2025, amounted to $2,419,806, with a return of 5.35%[19] - Total loans receivable increased to $1,899,433, with a taxable return of 6.03%[19] - The interest rate spread for the three months ended March 31, 2025, was 2.69%[19] - Highly liquid available funding as a percentage of uninsured deposits was 182.7% as of March 31, 2025[24]

Loan Portfolio and Credit Risk - A significant portion of the Corporation's loan portfolio consists of commercial real estate loans, which are generally viewed as having more risk of default compared to residential real estate loans[27]. - The Corporation's loan portfolio is primarily concentrated in the Northern tier/Northcentral regions of Pennsylvania, Southern tier of New York, and Southeastern and Southcentral Pennsylvania, making it vulnerable to local economic conditions[32]. - The Corporation has adopted the current expected credit loss (CECL) methodology for estimating credit losses, which may not prevent unexpected losses[26]. - The total outstanding balance of loans the Corporation has repurchased due to noncompliance was $2,671,000 as of December 31, 2024[141]. - The total provision for credit losses included $2,430,000 related to loans receivable and a credit of $235,000 for off-balance sheet exposures[147]. - The ACL on collectively evaluated commercial loans increased by $1,746,000, reflecting changes in external indexes and an increase in past due loans[149]. - Total nonperforming assets increased to $24.1 million as of December 31, 2024, up from $18.8 million in 2023, representing a rise of 28%[151]. - Nonperforming loans as a percentage of total loans was 1.26% at December 31, 2024, compared to 0.99% in 2023[158]. - The provision for credit losses on loans increased to $2.430 million in 2024 from $0.753 million in 2023, marking a growth of 223%[159]. Financial Performance and Assets - Total loans outstanding at December 31, 2024 were $1,895,848,000, an increase of $47,709,000 (2.6%) from December 31, 2023[136]. - Total gross loans increased to $1,895,848,000 in 2024, up from $1,848,139,000 in 2023, representing a growth of 2.6%[144]. - The Corporation's total commercial loans increased by $49,632,000 (3.6%) year-over-year, driven by growth in owner-occupied commercial real estate loans[137]. - Commercial loans represented 75% of the loan portfolio at year-end 2024, while residential loans accounted for 22%[135]. - Residential mortgage loans amounted to $408,009,000, representing 21.5% of total loans in 2024[144]. - The Corporation's mortgage-backed securities portfolio had a total balance of $449,923,000 with a weighted-average yield of 2.63%[133]. - The fair value of available-for-sale debt securities in excess of pledging obligations was $236,945,000 at December 31, 2024[169]. - As of December 31, 2024, the fair value of the Corporation's available-for-sale debt securities portfolio was $402.4 million, representing a decrease of 10.6% from the amortized cost basis[48]. Regulatory and Economic Environment - The Federal Reserve raised the Federal Funds rate to a range of 5.25% to 5.50% at December 31, 2023, after maintaining a rate of 0% to 0.25% throughout 2021[30]. - Regulatory changes and increased scrutiny on commercial real estate lending could lead to higher costs and restrictions on lending activities[28]. - The Corporation's financial condition could be adversely affected by significant fluctuations in interest rates and the interconnectedness of financial institutions[31][46]. Deposits and Funding - Total deposits reached $2,093,909,000 at December 31, 2024, an increase of $79,103,000 (3.9%) from $2,014,806,000 at December 31, 2023[170]. - Estimated uninsured deposits amounted to $632.8 million, or 30.0% of total deposits, up from $592.2 million, or 29.2% at December 31, 2023[171]. - Highly liquid available funding totaled $1.1 billion at December 31, 2024, representing 170.7% of uninsured deposits and 229.4% of total uninsured and uncollateralized deposits[172]. - The Corporation's total credit facilities amounted to $1,031,784,000 at December 31, 2024, an increase from $1,021,827,000 at December 31, 2023[168]. Personnel and Cybersecurity - The Corporation's ability to attract and retain qualified personnel is critical for its future success, with intense competition for talent in the financial services industry[34]. - Cybersecurity risks are a significant concern, as the Corporation collects and stores sensitive data, making it vulnerable to potential breaches and attacks[35]. Shareholder and Capital Management - During the year ended December 31, 2024, the Corporation repurchased 26,034 shares for a total cost of $443,000, at an average price of $17.02 per share[179]. - C&N Bank's Capital Conservation Buffer was 7.19% at December 31, 2024, exceeding the minimum requirement of 2.5%[177].

Financial Performance - Citizens & Northern (CZNC) reported quarterly earnings of $0.53 per share, exceeding the Zacks Consensus Estimate of $0.45 per share, and up from $0.28 per share a year ago, representing an earnings surprise of 17.78% [1] - The company posted revenues of $28.24 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 1.57%, compared to year-ago revenues of $25.27 million [2] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.43 on revenues of $27.7 million, and for the current fiscal year, it is $1.80 on revenues of $113.6 million [7] - The estimate revisions trend for Citizens & Northern is mixed, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market in the near future [6] Industry Context - The Banks - Northeast industry, to which Citizens & Northern belongs, is currently in the top 20% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Performance - Net income for Q4 2024 reached $8,174,000, a 91.83% increase from $4,261,000 in Q4 2023[1] - Net Income for Q4 2024 reached $8,174,000, a 92.5% increase from $4,261,000 in Q4 2023[7] - Basic Earnings per Common Share for Q4 2024 was $0.53, compared to $0.28 in Q4 2023, representing an increase of 89.29%[7] - Noninterest income decreased by 13.45% to $7,547,000 in Q4 2024, down from $8,720,000 in Q4 2023[1] - Noninterest Income for Q4 2024 was $7,547,000, compared to $8,720,000 in Q4 2023, a decrease of 13.41%[7] - Noninterest income for the year ended December 31, 2024, was $29,209,000, up from $27,453,000 in 2023, reflecting a growth of 6.4%[23] Asset and Equity Growth - Total assets increased by 3.78% to $2,610,653,000 as of December 31, 2024, from $2,515,584,000 in 2023[3] - Total Assets as of December 31, 2024, were $2,610,653,000, up from $2,515,584,000 a year earlier[8] - Total stockholders' equity increased to $275,284,000 from $262,381,000, marking a growth of 4.67%[8] - Total stockholders' equity as of December 31, 2024, was $275,450,000, up from $242,488,000 in 2023, indicating a growth of 13.6%[18] - Average Assets grew by 4.88% to $2,583,106 from $2,462,856[6] Loan and Deposit Trends - Loans, net increased by 2.56% to $1,875,813,000 in 2024, compared to $1,828,931,000 in 2023[5] - Total loans reached $1,895,848,000 as of December 31, 2024, up from $1,848,139,000 a year earlier, reflecting an increase of approximately 2.6%[10] - Total deposits rose by 3.93% to $2,093,909,000 in 2024, up from $2,014,806,000 in 2023[5] - Total deposits, including interest-bearing and demand deposits, reached $2,057,570,000 as of December 31, 2024, compared to $1,971,926,000 in 2023[20] Interest Income and Expense - Interest and dividend income increased by 10.23% to $33,329,000 in Q4 2024, compared to $30,236,000 in Q4 2023[1] - Total interest income for the three months ended December 31, 2024, was $33,546,000, an increase from $30,435,000 in the same period of 2023, representing a growth of 6.9%[16] - Net Interest Income for Q4 2024 was $20,473,000, up from $19,594,000 in Q4 2023, reflecting an increase of 4.49%[7] - Interest expense for the three months ended December 31, 2024, was $12,856,000, compared to $10,642,000 in the same period of 2023, indicating a rise of 20.8%[16] Credit Quality and Losses - The provision for credit losses showed a significant decrease of 155.84%, resulting in a credit provision of $(531,000) in Q4 2024, compared to $951,000 in Q4 2023[1] - The provision for credit losses was $(531,000) for the fourth quarter of 2024, indicating a reversal compared to a provision of $2,195,000 for the full year 2023[14] - Nonperforming Assets to Total Assets rose to 0.92%, an increase of 22.67% compared to 0.75%[6] - Total nonperforming assets were $24,142,000 as of December 31, 2024, compared to $18,845,000 a year earlier, reflecting an increase of approximately 28.5%[12] - Nonperforming loans as a percentage of total loans stood at 1.26% as of December 31, 2024, slightly down from 1.29% in the previous quarter and up from 0.99% a year ago[12] Efficiency and Ratios - Return on average assets (annualized) improved to 1.24% in Q4 2024, compared to 0.69% in Q4 2023, reflecting a 79.71% increase[5] - Efficiency Ratio improved to 68.04% from 69.51%, a decrease of 2.11%[6] - The interest rate spread for the three months ended December 31, 2024, was 2.59%, slightly down from 2.65% in the previous year[18] - The interest rate spread decreased to 2.59% for the year ended December 31, 2024, down from 2.91% in 2023[20] Securities and Investments - Total Available-for-Sale Debt Securities amounted to $449,923,000 with a fair value of $402,380,000 as of December 31, 2024, compared to $464,968,000 and $415,755,000 respectively as of December 31, 2023, indicating a decrease in both categories[9] - The company reported a net gain from sales of loans of $1,158,000 for the year ended December 31, 2024, compared to $723,000 in 2023, reflecting a significant increase of 60.1%[23] Liquidity - Estimated total uninsured deposits were $632,804,000 as of December 31, 2024, representing 22.3% of total deposits[25] - Highly liquid available funding as a percentage of uninsured deposits was 170.7% as of December 31, 2024, indicating strong liquidity management[25]

Company Overview - Citizens & Northern Corporation (CZNC) is currently experiencing significant activity in the options market, particularly with the Dec. 20, 2024 $25 Call option showing high implied volatility, indicating potential for a major price movement [1] Analyst Sentiment - The company holds a Zacks Rank of 4 (Sell) within the Banks – Northeast industry, which is positioned in the top 19% of the Zacks Industry Rank [3] - Over the past 30 days, no analysts have increased earnings estimates for the current quarter, while one analyst has lowered the estimates, resulting in a decrease of the Zacks Consensus Estimate from 46 cents per share to 44 cents [3] Options Market Insights - The high implied volatility suggests that options traders are anticipating a significant price movement for Citizens & Northern shares, which could indicate an upcoming event that may lead to a rally or sell-off [2][4] - Seasoned options traders often seek to sell premium on options with high implied volatility, aiming to benefit from the decay of the option's value if the underlying stock does not move as much as expected by expiration [4]