Citizens & Northern (NASDAQ: CZNC) more than doubles Q2 2026 profit

Q: How did Citizens & Northern (CZNC) perform in Q2 2026?

Citizens & Northern reported Q2 2026 net income of 14,057 (in thousands) , up from 6,117 (in thousands), with earnings per share of $0.79 versus $0.40. Total interest and dividend income increased to 41,566 (in thousands) from 32,454 (in thousands).

Q: What is Citizens & Northern (CZNC)'s credit quality and allowance for credit losses?

At June 30, 2026, loans receivable totaled 2,348,847 (in thousands) with an allowance for credit losses on loans of 32,583 (in thousands) . Nonaccrual loans were 39,748 (in thousands), and past-due loans 30–89 days totaled 7,047 (in thousands).

Filing Impact

(High)

Filing Sentiment

(Neutral)

Form Type

10-Q

Rhea-AI Filing Summary

Citizens & Northern Corporation reported stronger profitability for the quarter ended June 30, 2026. Net income was 14,057 (in thousands), up from 6,117 (in thousands), and earnings per share were $0.79 versus $0.40. Net interest income rose to 29,618 (in thousands), while the provision for credit losses was a credit of 1,846 (in thousands).

For the first six months of 2026, net income was 14,330 (in thousands) compared with 12,410 (in thousands) and earnings per share were $0.81 versus $0.80. At June 30, 2026, total assets were 3,151,984 (in thousands), loans receivable 2,348,847 (in thousands) and deposits 2,603,735 (in thousands). Stockholders’ equity was 346,139 (in thousands), and gross unrealized holding losses on available-for-sale debt securities totaled $31,757,000.

Results reflect the October 1, 2025 acquisition of Susquehanna Community Financial, Inc. Citizens & Northern issued approximately 2.3 million shares for merger consideration valued at $44.6 million, recording goodwill of $10.8 million, a core deposit intangible of $10.7 million, and acquiring $393.6 million of loans and $501.5 million of deposits.

Positive

Quarter ended June 30, 2026 net income more than doubled year over year to 14,057 (in thousands), with earnings per share increasing to $0.79 from $0.40.

Negative

None.

Filing Explained

At June 30, 2026, the company reported $31,757,000 of unrealized losses on debt securities; it had no intent, and was not more likely than not required, to sell them before recovering amortized cost, and no allowance for credit losses was required. This is an accumulated-other-comprehensive-loss balance, not a realized securities loss or a securities credit-loss allowance.

Key Figures

Q2 2026 Net Income: 14,057 (in thousands) Six-month 2026 Net Income: 14,330 (in thousands) Total Assets: 3,151,984 (in thousands) +5 more

8 metrics

Q2 2026 Net Income 14,057 (in thousands) Three months ended June 30, 2026

Six-month 2026 Net Income 14,330 (in thousands) Six months ended June 30, 2026

Total Assets 3,151,984 (in thousands) Balance at June 30, 2026

Total Deposits 2,603,735 (in thousands) Balance at June 30, 2026

Loans Receivable 2,348,847 (in thousands) Balance at June 30, 2026

Allowance for Credit Losses on Loans 32,583 (in thousands) Balance at June 30, 2026

Unrealized Losses on AFS Securities $31,757,000 Gross unrealized holding losses at June 30, 2026

Susquehanna Merger Consideration $44.6 million Value of shares issued in October 1, 2025 acquisition

Key Terms

available-for-sale debt securities, allowance for credit losses, core deposit intangible asset, other comprehensive income, +2 more

6 terms

available-for-sale debt securities financial

"Available-for-sale debt securities, at fair value | 496,829"

A type of debt investment—like bonds or loans a company buys—that the company intends to hold for a while but may sell before it matures. Think of it as lending money with the option to sell the IOU; changes in its market value alter the company’s reported net worth now but usually don’t affect reported profit until the investment is actually sold, so investors watch these holdings for balance-sheet risk and potential future gains or losses.

allowance for credit losses financial

"Allowance for credit losses | ( 32,583 )"

Allowance for credit losses is a reserve set aside by a financial institution to cover potential losses from borrowers who may not repay their loans. It acts like a safety net, helping the institution prepare for loans that might turn sour. For investors, it signals how cautious the institution is about the quality of its loans and potential risks to its financial health.

core deposit intangible asset financial

"a core deposit intangible asset of $10.7 million"

An intangible asset recorded by a bank when it pays more than the fair value of a target’s net assets because it is buying valuable customer deposit relationships—essentially paying for a base of low-cost, stable accounts. Investors care because this is a non-cash item that is written down or amortized over time, which affects reported earnings and book value and signals how much a buyer values the reliability and cost advantages of those deposits; think of it as paying extra for a loyal customer list that brings ongoing cash at a low cost.

other comprehensive income financial

"Comprehensive income is the total of net income and other comprehensive income"

Other comprehensive income is a section of a company’s financial statements that records gains and losses not shown in the regular profit-and-loss line, such as paper gains or losses on certain investments, pension plan adjustments, and changes from converting foreign operations. These items don’t represent cash earned or spent today but change a company’s reported net worth, like value swings in things stored in a closet rather than money in your wallet, and help investors spot hidden strengths or risks to long-term financial health.

collateralized loan obligations financial

"Asset-backed securities, Collateralized loan obligations | 8,000"

A collateralized loan obligation is a financial product that pools many corporate loans and repackages them into slices sold to investors, with some slices offering steady, lower returns and others offering higher returns but more risk. Like splitting a pizza into pieces for different tastes, CLOs let investors pick their preferred risk level and help banks fund lending, so changes in CLO performance influence credit availability and can move markets.

unfunded pension and postretirement obligations financial

"Unfunded pension and postretirement obligations: changes from plan amendments"

AI-generated analysis. How Rhea-AI works. Not financial advice.

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10-Q Quarterly Reports: What Changes Quarter to Quarter →

Available on EDGAR 08/07/2026 - 11:53 AM Accepted by SEC EDGAR 08/07/2026 - 11:52 AM

FAQ

How did Citizens & Northern (CZNC) perform in Q2 2026?

Citizens & Northern reported Q2 2026 net income of 14,057 (in thousands), up from 6,117 (in thousands), with earnings per share of $0.79 versus $0.40. Total interest and dividend income increased to 41,566 (in thousands) from 32,454 (in thousands).

What were Citizens & Northern (CZNC)'s results for the first half of 2026?

For the six months ended June 30, 2026, Citizens & Northern generated net income of 14,330 (in thousands) compared with 12,410 (in thousands) a year earlier. Earnings per share were $0.81, slightly above $0.80 for the same period of 2025.

What is the size of Citizens & Northern (CZNC)'s balance sheet as of June 30, 2026?

As of June 30, 2026, Citizens & Northern reported total assets of 3,151,984 (in thousands), loans receivable of 2,348,847 (in thousands) and total deposits of 2,603,735 (in thousands). Stockholders’ equity totaled 346,139 (in thousands) at the same date.

What are the key details of Citizens & Northern (CZNC)'s Susquehanna acquisition?

On October 1, 2025, Citizens & Northern acquired Susquehanna Community Financial, issuing about 2.3 million shares for merger consideration of $44.6 million. The deal added $393.6 million of loans, $147.6 million of securities and $501.5 million of deposits, plus goodwill of $10.8 million.

How large are Citizens & Northern (CZNC)'s unrealized losses on securities?

Gross unrealized holding losses on available-for-sale debt securities were $31,757,000 at June 30, 2026, compared with $30,835,000 at December 31, 2025. Accumulated other comprehensive loss in stockholders’ equity was 23,961 (in thousands) at June 30, 2026.

What is Citizens & Northern (CZNC)'s credit quality and allowance for credit losses?

At June 30, 2026, loans receivable totaled 2,348,847 (in thousands) with an allowance for credit losses on loans of 32,583 (in thousands). Nonaccrual loans were 39,748 (in thousands), and past-due loans 30–89 days totaled 7,047 (in thousands).

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2026

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

For the transition period from _______________ to _________________________.

Commission file number: 000-16084

CITIZENS & NORTHERN CORPORATION

(Exact name of Registrant as specified in its charter)


PENNSYLVANIA		23-2451943
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

90-92 MAIN STREET, WELLSBORO, PA 16901

(Address of principal executive offices) (Zip code)

570-724-3411

(Registrant’s telephone number including area code)

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


Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock Par Value $1.00	CZNC	NASDAQ Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

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

Yes ⌧ No ◻

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

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

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

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

Yes ☐ No ⌧

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


Common Stock ($1.00 par value)	17,934,867 Shares Outstanding on August 3, 2026

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

CITIZENS & NORTHERN CORPORATION

Index


Part I. Financial Information

Item 1. Financial Statements

Consolidated Balance Sheets (Unaudited) –June 30, 2026 and December 31, 2025			Page 3

Consolidated Statements of Income (Unaudited) – Three-month and Six-month Periods Ended June 30, 2026 and 2025			Page 4

Consolidated Statements of Comprehensive Income (Unaudited) – Three-month and Six-month Periods Ended June 30, 2026 and 2025			Page 5

Consolidated Statements of Cash Flows (Unaudited) – Six-month Periods Ended June 30, 2026 and 2025			Page 6

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) – Three-month and Six-month Periods Ended June 30, 2026 and 2025			Page 7

Notes to Unaudited Consolidated Financial Statements			Pages 8 –31

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			Pages 32 – 56

Item 3. Quantitative and Qualitative Disclosures About Market Risk			Pages 57 – 59

Item 4. Controls and Procedures			Pages 59 – 59

Part II. Other Information

Item 1. Legal Proceedings			Page 60

Item 1A. Risk Factors			Page 60

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			Page 60

Item 3. Default upon Senior Securities			Page 61

Item 4. Mine Safety Disclosures			Page 61

Item 5. Other Information			Page 61

Item 6. Exhibits			Page 62

Signatures			Page 63

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

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


		June 30,			December 31,
		2026			2025
ASSETS
Cash and due from banks:
Noninterest-bearing		$	25,947		$	22,289
Interest-bearing			56,590			23,767
Total cash and due from banks			82,537			46,056
Available-for-sale debt securities, at fair value			496,829			506,575

Loans receivable			2,348,847			2,354,365
Allowance for credit losses			(32,583)			(31,048)
Loans, net			2,316,264			2,323,317

Bank-owned life insurance			62,136			61,094
Accrued interest receivable			10,941			11,594
Bank premises and equipment, net			26,712			27,755
Foreclosed assets held for sale			181			189
Deferred tax asset, net			18,617			17,615
Goodwill			63,311			63,311
Core deposit intangibles, net			9,944			11,573
Other assets			64,512			63,390
TOTAL ASSETS		$	3,151,984		$	3,132,469

LIABILITIES
Deposits:
Noninterest-bearing		$	557,892		$	531,442
Interest-bearing			2,045,843			2,033,274
Total deposits			2,603,735			2,564,716
Short-term borrowings			14,643			28,618
Long-term borrowings - FHLB advances			130,392			120,935
Senior notes, net			0			14,970
Subordinated debt, net			25,000			24,949
Accrued interest and other liabilities			32,075			36,567
TOTAL LIABILITIES			2,805,845			2,790,755

COMMITMENTS AND CONTINGENT LIABILITIES

STOCKHOLDERS' EQUITY
Preferred stock, $1,000 par value; authorized 30,000 shares; $1,000 liquidation
preference per share; no shares issued			0			0
Common stock, par value $1.00 per share; authorized 30,000,000 shares;
issued 18,303,120 and outstanding 17,942,105 at June 30, 2026;
issued 18,303,120 and outstanding 17,823,444 at December 31, 2025			18,303			18,303
Paid-in capital			184,340			185,696
Retained earnings			175,519			171,214
Treasury stock, at cost; 361,015 shares at June 30, 2026 and 479,676
shares at December 31, 2025			(8,062)			(10,704)
Accumulated other comprehensive loss			(23,961)			(22,795)
TOTAL STOCKHOLDERS' EQUITY			346,139			341,714
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY		$	3,151,984		$	3,132,469

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

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

Consolidated Statements of Income

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


		Three Months Ended				Six Months Ended
		June 30,		June 30,		June 30,		June 30,
		2026		2025		2026		2025
INTEREST INCOME
Interest and fees on loans:
Taxable		$	36,583	$	28,051	$	72,224	$	55,554
Tax-exempt			629		602		1,248		1,194
Income from available-for-sale debt securities:
Taxable			3,507		2,329		7,025		4,631
Tax-exempt			562		579		1,124		1,152
Other interest and dividend income			285		893		533		1,632
Total interest and dividend income			41,566		32,454		82,154		64,163
INTEREST EXPENSE
Interest on deposits			9,820		9,284		19,878		18,876
Interest on short-term borrowings			337		1		613		1
Interest on long-term borrowings - FHLB advances			1,423		1,674		2,869		3,463
Interest on senior notes, net			81		120		202		241
Interest on subordinated debt, net			287		233		520		465
Total interest expense			11,948		11,312		24,082		23,046
Net interest income			29,618		21,142		58,072		41,117
(Credit) provision for credit losses			(1,846)		2,354		11,756		2,590
Net interest income after (credit) provision for credit losses			31,464		18,788		46,316		38,527
NONINTEREST INCOME
Trust revenue			2,242		1,967		4,327		4,069
Brokerage and insurance revenue			816		554		1,404		1,052
Service charges on deposit accounts			1,761		1,422		3,411		2,862
Interchange revenue from debit card transactions			1,347		1,218		2,614		2,254
Net gains from sale of loans			608		312		978		517
Loan servicing fees, net			193		173		301		311
Increase in cash surrender value of life insurance			527		466		1,042		923
Other noninterest income			2,305		2,030		3,891		3,162
Realized gains on available-for-sale debt securities, net			1		0		27		0
Total noninterest income			9,800		8,142		17,995		15,150
NONINTEREST EXPENSE
Salaries and employee benefits			13,197		11,067		26,398		22,826
Net occupancy and equipment expense			1,728		1,403		3,619		2,862
Data processing and telecommunications expense			2,249		1,981		4,698		4,052
Automated teller machine and interchange expense			535		403		1,118		790
Pennsylvania shares tax			587		470		1,172		966
Professional fees			744		506		1,383		1,023
Merger-related expenses			0		167		0		167
Other noninterest expense			4,799		3,401		8,163		5,755
Total noninterest expense			23,839		19,398		46,551		38,441
Income before income tax provision			17,425		7,532		17,760		15,236
Income tax provision			3,368		1,415		3,430		2,826
NET INCOME		$	14,057	$	6,117	$	14,330	$	12,410
EARNINGS PER COMMON SHARE - BASIC AND DILUTED		$	0.79	$	0.40	$	0.81	$	0.80

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

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

Consolidated Statements of Comprehensive Income

(In Thousands) (Unaudited)


		Three Months Ended				Six Months Ended
		June 30,		June 30,		June 30,		June 30,
		2026		2025		2026		2025
Net income		$	14,057	$	6,117	$	14,330	$	12,410

Available-for-sale debt securities:
Unrealized holding gains (losses) on available-for-sale debt securities			1,044		2,609		(1,420)		7,778
Reclassification adjustment for gains realized in income			(1)		0		(27)		0
Other comprehensive income (loss) on available-for-sale debt securities			1,043		2,609		(1,447)		7,778

Unfunded pension and postretirement obligations:
Changes from plan amendments and actuarial gains and losses			0		0		(9)		69
Amortization of prior service cost and net actuarial gain included in net periodic benefit cost			(14)		(22)		(36)		(44)
Other comprehensive (loss) income on pension and postretirement obligations			(14)		(22)		(45)		25

Other comprehensive income (loss) before income tax			1,029		2,587		(1,492)		7,803
Income tax related to other comprehensive (income) loss			(228)		(571)		326		(1,716)

Other comprehensive income (loss), net			801		2,016		(1,166)		6,087

Comprehensive income		$	14,858	$	8,133	$	13,164	$	18,497

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

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands) (Unaudited)


		Six Months Ended
		June 30,		June 30,
		2026		2025
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	14,330	$	12,410
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses			11,756		2,590
Realized gains on available-for-sale debt securities, net			(27)		0
Net amortization of available-for-sale debt securities			691		710
Increase in cash surrender value of life insurance			(1,042)		(923)
Depreciation and amortization of bank premises and equipment			1,376		1,115
Net amortization (accretion) of acquisition accounting adjustments			358		(60)
Stock-based compensation			650		656
Deferred income taxes			(676)		36
Decrease in fair value of servicing rights			263		101
Net gains from sale of loans			(978)		(517)
Origination of loans held for sale			(38,153)		(17,775)
Proceeds from sales of loans held for sale			35,531		16,713
Decrease (increase) in accrued interest receivable and other assets			4,320		(88)
Decrease in accrued interest payable and other liabilities			(4,373)		(4,947)
Other			52		75
Net Cash Provided by Operating Activities			24,078		10,096
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of certificates of deposit			250		250
Proceeds from calls and maturities of available-for-sale debt securities			29,548		20,897
Purchase of available-for-sale debt securities			(21,913)		(17,501)
Redemption of Federal Home Loan Bank of Pittsburgh stock			10,021		946
Purchase of Federal Home Loan Bank of Pittsburgh stock			(11,408)		(320)
Purchase of Federal Reserve Bank stock			(58)		(22)
Net increase in loans			(3,690)		(24,008)
Purchase of premises and equipment			(338)		(1,027)
Other			37		76
Net Cash Provided by (Used in) Investing Activities			2,449		(20,709)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits			39,093		15,867
Net decrease in short-term borrowings			(13,975)		(1,955)
Proceeds from long-term borrowings - FHLB advances			33,054		0
Repayments of long-term borrowings - FHLB advances			(23,597)		(21,557)
Redemption of senior notes			(15,000)		0
Purchases of treasury stock			(210)		(208)
Common dividends paid			(9,161)		(7,839)
Net Cash Provided by (Used in) Financing Activities			10,204		(15,692)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			36,731		(26,305)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			44,706		123,574
CASH AND CASH EQUIVALENTS, END OF PERIOD		$	81,437	$	97,269
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Assets acquired through foreclosure of real estate loans		$	0	$	231
Leased assets obtained in exchange for new operating lease liabilities		$	58	$	1,126
Interest paid		$	24,428	$	23,615
Income taxes paid		$	81	$	4,833

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

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

Consolidated Statements of Changes in Stockholders’ Equity

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


									Accumulated
									Other
	Common	Treasury	Common		Paid-in		Retained		Comprehensive		Treasury
Three Months Ended June 30, 2026	Shares	Shares	Stock		Capital		Earnings		Loss		Stock		Total
Balance, March 31, 2026	18,303,120	393,162	$	18,303	$	184,325	$	166,476	$	(24,762)	$	(8,778)	$	335,564
Net income								14,057						14,057
Other comprehensive income, net										801				801
Cash dividends declared on common stock, $.28 per share								(5,014)						(5,014)
Shares issued for dividend reinvestment plan		(20,398)				(31)						455		424
Restricted stock granted		(16,581)				(370)						370		0
Forfeiture of restricted stock		3,562				79						(79)		0
Stock-based compensation expense						337								337
Purchase of restricted stock for tax withholding		1,270										(30)		(30)
Balance, June 30, 2026	18,303,120	361,015	$	18,303	$	184,340	$	175,519	$	(23,961)	$	(8,062)	$	346,139

Three Months Ended June 30, 2025
Balance, March 31, 2025	16,030,172	547,324	$	16,030	$	142,968	$	167,741	$	(32,690)	$	(12,218)	$	281,831
Net income								6,117						6,117
Other comprehensive income, net										2,016				2,016
Cash dividends declared on common stock, $.28 per share								(4,337)						(4,337)
Shares issued for dividend reinvestment plan		(20,352)				(54)						453		399
Restricted stock granted		(12,700)				(284)						284		0
Forfeiture of restricted stock		957				21						(21)		0
Stock-based compensation expense						331								331
Balance, June 30, 2025	16,030,172	515,229	$	16,030	$	142,982	$	169,521	$	(30,674)	$	(11,502)	$	286,357


										Accumulated
										Other
		Common	Treasury	Common		Paid-in		Retained		Comprehensive		Treasury
Six Months Ended June 30, 2026		Shares	Shares	Stock		Capital		Earnings		Loss		Stock		Total
Balance, December 31, 2025		18,303,120	479,676	$	18,303	$	185,696	$	171,214	$	(22,795)	$	(10,704)	$	341,714
Net income									14,330						14,330
Other comprehensive loss, net											(1,166)				(1,166)
Cash dividends declared on common stock, $.56 per share									(10,025)						(10,025)
Shares issued for dividend reinvestment plan			(38,284)				(8)						854		846
Restricted stock granted			(95,445)				(2,131)						2,131		0
Forfeiture of restricted stock			5,840				133						(133)		0
Stock-based compensation expense							650								650
Purchase of restricted stock for tax withholding			9,228										(210)		(210)
Balance, June 30, 2026		18,303,120	361,015	$	18,303	$	184,340	$	175,519	$	(23,961)	$	(8,062)	$	346,139

Six Months Ended June 30, 2025
Balance, December 31, 2024		16,030,172	596,678	$	16,030	$	143,565	$	165,778	$	(36,761)	$	(13,328)	$	275,284
Net income									12,410						12,410
Other comprehensive income, net											6,087				6,087
Cash dividends declared on common stock, $.56 per share									(8,667)						(8,667)
Shares issued for dividend reinvestment plan			(38,743)				(69)						864		795
Restricted stock granted			(55,661)				(1,243)						1,243		0
Forfeiture of restricted stock			3,222				73						(73)		0
Stock-based compensation expense							656								656
Purchase of restricted stock for tax withholding			9,733										(208)		(208)
Balance, June 30, 2025		16,030,172	515,229	$	16,030	$	142,982	$	169,521	$	(30,674)	$	(11,502)	$	286,357

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

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

Notes to Unaudited Consolidated Financial Statements

1. BASIS OF INTERIM PRESENTATION AND STATUS OF RECENT ACCOUNTING PRONOUNCEMENTS

The consolidated financial statements include the accounts of Citizens & Northern Corporation and its subsidiaries, Citizens & Northern Bank (“C&N Bank”), Bucktail Life Insurance Company and Citizens & Northern Investment Corporation (collectively, “Corporation”). The consolidated financial statements also include C&N Bank’s wholly-owned subsidiaries, C&N Financial Services, LLC and Northern Tier Holding LLC. C&N Bank is the sole member of C&N Financial Services, LLC and Northern Tier Holding LLC. All material intercompany balances and transactions have been eliminated in consolidation.

The consolidated financial information included herein, except the consolidated balance sheet dated December 31, 2025, is unaudited. Such information reflects all adjustments (consisting solely of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations, comprehensive income, cash flows and changes in stockholders’ equity for the interim periods; however, the information does not include all disclosures required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for a complete set of financial statements.

Operating results reported for the six-month period ended June 30, 2026 might not be indicative of the results for the year ending December 31, 2026. 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 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.

Recently Issued but Not Yet Effective Accounting Pronouncements

In December of 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. We are currently evaluating the impact of the standard to our consolidated financial statement disclosures.

2. BUSINESS COMBINATION

On October 1, 2025, the Corporation completed its acquisition of Susquehanna Community Financial, Inc. (“Susquehanna”). Susquehanna was the parent company of Susquehanna Community Bank, with seven banking offices located in Lycoming, Northumberland, Snyder and Union Counties in Pennsylvania. The Susquehanna acquisition has contributed significantly to growth in the size of the Corporation’s balance sheet and in net interest income, noninterest income and noninterest expenses.

In connection with the acquisition, the Corporation issued approximately 2.3 million shares of common stock to the former Susquehanna shareholders, resulting in merger consideration valued at $44.6 million and an increase in stockholders’ equity of $44.4 million, net of issuance costs. Intangible assets recorded included goodwill of $10.8 million and a core deposit intangible asset of $10.7 million. Assets acquired included loans valued at $393.6 million, securities valued at $147.6 million, bank-owned life insurance valued at $8.0 million and cash and due from banks of $6.1 million. Liabilities assumed included deposits valued at $501.5 million and short-term borrowings valued at $45.8 million. The assets purchased and liabilities assumed were recorded at their preliminary estimated fair values at the time of closing and may be adjusted for up to one year subsequent to the acquisition. There were no adjustments to the fair value measurements of assets acquired or liabilities assumed in the six months ended June 30, 2026.

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

Merger-related expenses related to the acquisition of Susquehanna totaled $167,000 in the second quarter and six months ended June 30, 2025. There were no merger-related expenses in the six months ended June 30, 2026.

3. PER SHARE DATA

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. Distributed dividends and an allocation of undistributed net income to participating securities reduce the amount of income attributable to common shareholders. Income attributable to common shareholders is then divided by weighted-average common shares outstanding for the period to determine basic earnings per common share. The Corporation’s basic and diluted earnings per share are the same because there are no potential dilutive shares of common stock outstanding.


(In Thousands, Except Share and Per Share Data)	Three Months Ended					Six Months Ended
	June 30,		June 30,			June 30,		June 30,
	2026		2025			2026		2025

Net income	$	14,057	$	6,117		$	14,330	$	12,410
Less: Dividends and undistributed earnings allocated to participating securities		0		(49)			0		(100)
Net income attributable to common shares	$	14,057	$	6,068		$	14,330	$	12,310
Weighted-average common shares outstanding		17,771,901		15,359,004			17,752,327		15,348,824
Earnings per common share - Basic and Diluted	$	0.79	$	0.40		$	0.81	$	0.80
Weighted-average nonvested restricted shares outstanding		153,487		123,844			149,810		124,570

4. COMPREHENSIVE INCOME

Comprehensive income is the total of (1) net income, and (2) all other changes in equity from non-stockholder sources, which are referred to as other comprehensive income (loss). The components of other comprehensive income (loss), and the related tax effects, were as follows:


(In Thousands)		Before-Tax			Income Tax			Net-of-Tax
		Amount			Effect			Amount
Three Months Ended June 30, 2026
Available-for-sale debt securities:
Unrealized holding gain on available-for-sale debt securities		$	1,044		$	(231)		$	813
Reclassification adjustment for (gains) realized in income			(1)			0			(1)
Other comprehensive income from available-for-sale debt securities			1,043			(231)			812
Unfunded pension and postretirement obligations:
Amortization of prior service cost and net actuarial gains included in net periodic benefit cost			(14)			3			(11)
Other comprehensive loss on unfunded retirement obligations			(14)			3			(11)
Total other comprehensive income		$	1,029		$	(228)		$	801


(In Thousands)		Before-Tax			Income Tax			Net-of-Tax
		Amount			Effect			Amount
Three Months Ended June 30, 2025
Available-for-sale debt securities:
Unrealized holding gains on available-for-sale debt securities		$	2,609		$	(576)		$	2,033
Reclassification adjustment for (gains) realized in income			0			0			0
Other comprehensive income from available-for-sale debt securities			2,609			(576)			2,033
Unfunded pension and postretirement obligations:
Amortization of prior service cost and net actuarial loss included in net periodic benefit cost			(22)			5			(17)
Other comprehensive loss on unfunded retirement obligations			(22)			5			(17)
Total other comprehensive income		$	2,587		$	(571)		$	2,016

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q


(In Thousands)		Before-Tax			Income Tax			Net-of-Tax
		Amount			Effect			Amount
Six Months Ended June 30, 2026
Available-for-sale debt securities:
Unrealized holding loss on available-for-sale debt securities		$	(1,420)			311		$	(1,109)
Reclassification adjustment for (gains) realized in income			(27)			6			(21)
Other comprehensive loss from available-for-sale debt securities			(1,447)			317			(1,130)
Unfunded pension and postretirement obligations:
Changes from plan amendments and actuarial gains and losses			(9)			2			(7)
Amortization of prior service cost and net actuarial loss included in net periodic benefit cost			(36)			7			(29)
Other comprehensive loss on unfunded retirement obligations			(45)			9			(36)
Total other comprehensive loss		$	(1,492)		$	326		$	(1,166)


(In Thousands)		Before-Tax			Income Tax			Net-of-Tax
		Amount			Effect			Amount
Six Months Ended June 30, 2025
Available-for-sale debt securities:
Unrealized holding gains on available-for-sale debt securities		$	7,778		$	(1,711)		$	6,067
Reclassification adjustment for (gains) realized in income			0			0			0
Other comprehensive income from available-for-sale debt securities			7,778			(1,711)			6,067
Unfunded pension and postretirement obligations:
Changes from plan amendments and actuarial gains and losses			69			(15)			54
Amortization of prior service cost and net actuarial gain included in net periodic benefit cost			(44)			10			(34)
Other comprehensive income on unfunded retirement obligations			25			(5)			20
Total other comprehensive income		$	7,803		$	(1,716)		$	6,087

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


		Affected Line Item in the
Description		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 gain included in net periodic benefit cost (before-tax)		Other noninterest expense
Income tax effect		Income tax provision

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


(In Thousands)		Unrealized					Accumulated
		(Losses)			Unfunded		Other
		Gains			Retirement		Comprehensive
		on Securities			Obligations		(Loss) Income
Three Months Ended June 30, 2026
Balance, beginning of period		$	(25,096)		$	334	$	(24,762)
Other comprehensive income during three months ended June 30, 2026			812			(11)		801
Balance, end of period		$	(24,284)		$	323	$	(23,961)

Three Months Ended June 30, 2025
Balance, beginning of period		$	(33,050)		$	360	$	(32,690)
Other comprehensive income during three months ended June 30, 2025			2,033			(17)		2,016
Balance, end of period		$	(31,017)		$	343	$	(30,674)

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(In Thousands)		Unrealized					Accumulated
		(Losses)			Unfunded		Other
		Gains			Retirement		Comprehensive
		on Securities			Obligations		(Loss) Income
Six Months Ended June 30, 2026
Balance, beginning of period		$	(23,154)		$	359	$	(22,795)
Other comprehensive loss during six months ended June 30, 2026			(1,130)			(36)		(1,166)
Balance, end of period		$	(24,284)		$	323	$	(23,961)

Six Months Ended June 30, 2025
Balance, beginning of period		$	(37,084)		$	323	$	(36,761)
Other comprehensive income during six months ended June 30, 2025			6,067			20		6,087
Balance, end of period		$	(31,017)		$	343	$	(30,674)

5. CASH AND DUE FROM BANKS

Cash and due from banks at June 30, 2026 and December 31, 2025 include the following:


(In Thousands)		June 30,			December 31,
		2026			2025
Cash and cash equivalents		$	81,437		$	44,706
Certificates of deposit			1,100			1,350
Total cash and due from banks		$	82,537		$	46,056

Certificates of deposit are issues by U.S. banks with original maturities greater than three months. Each certificate of deposit is fully FDIC-insured. The Corporation maintains cash and cash equivalents with certain financial institutions in excess of the FDIC insurance limit.

6. SECURITIES

Amortized cost and fair value of available-for-sale debt securities at June 30, 2026 and December 31, 2025 are summarized as follows.


(In Thousands)		June 30, 2026
					Gross			Gross
					Unrealized			Unrealized
		Amortized			Holding			Holding			Fair
		Cost			Gains			Losses			Value

Obligations of the U.S. Treasury		$	8,036		$	0		$	(603)		$	7,433
Obligations of U.S. Government agencies			10,776			0			(759)			10,017
Bank holding company debt securities			40,097			21			(1,261)			38,857
Obligations of states and political subdivisions:
Tax-exempt			102,543			292			(6,874)			95,961
Taxable			50,172			0			(6,318)			43,854
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities			150,796			283			(6,398)			144,681
Residential collateralized mortgage obligations			59,098			19			(2,640)			56,477
Commercial mortgage-backed securities			98,443			0			(6,904)			91,539
Asset-backed securities,
Collateralized loan obligations			8,000			10			0			8,010
Total available-for-sale debt securities		$	527,961		$	625		$	(31,757)		$	496,829

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(In Thousands)		December 31, 2025
					Gross			Gross
					Unrealized			Unrealized
		Amortized			Holding			Holding			Fair
		Cost			Gains			Losses			Value

Obligations of the U.S. Treasury		$	8,047		$	0		$	(565)		$	7,482
Obligations of U.S. Government agencies			11,423			3			(677)			10,749
Bank holding company debt securities			36,103			8			(2,035)			34,076
Obligations of states and political subdivisions:
Tax-exempt			105,149			317			(7,107)			98,359
Taxable			50,306			4			(6,158)			44,152
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities			148,865			679			(5,623)			143,921
Residential collateralized mortgage obligations			65,782			107			(2,182)			63,707
Commercial mortgage-backed securities			99,095			23			(6,487)			92,631
Private label commercial mortgage-backed securities			3,490			0			(1)			3,489
Asset-backed securities,
Collateralized loan obligations			8,000			9			0			8,009
Total available-for-sale debt securities		$	536,260		$	1,150		$	(30,835)		$	506,575

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 June 30, 2026 and December 31, 2025 for which an allowance for credit losses has not been recorded:


June 30, 2026	Less Than 12 Months				12 Months or More				Total
(In Thousands)	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
Obligations of the U.S. Treasury	$	0	$	0	$	7,433	$	(603)	$	7,433	$	(603)
Obligations of U.S. Government agencies		1,918		(3)		8,099		(756)		10,017		(759)
Bank holding company debt securities		11,716		(148)		23,887		(1,113)		35,603		(1,261)
Obligations of states and political subdivisions:
Tax-exempt		5,970		(47)		78,285		(6,827)		84,255		(6,874)
Taxable		2,338		(245)		41,516		(6,073)		43,854		(6,318)
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities		67,433		(693)		51,758		(5,705)		119,191		(6,398)
Residential collateralized mortgage obligations		35,217		(389)		18,285		(2,251)		53,502		(2,640)
Commercial mortgage-backed securities		29,654		(498)		61,885		(6,406)		91,539		(6,904)
Total	$	154,246	$	(2,023)	$	291,148	$	(29,734)	$	445,394	$	(31,757)

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q


December 31, 2025	Less Than 12 Months				12 Months or More				Total
(In Thousands)	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
Obligations of the U.S. Treasury	$	0	$	0	$	7,482	$	(565)	$	7,482	$	(565)
Obligations of U.S. Government agencies		0		0		8,570		(677)		8,570		(677)
Bank holding company debt securities		2,188		(44)		23,008		(1,991)		25,196		(2,035)
Obligations of states and political subdivisions:
Tax-exempt		0		0		86,724		(7,107)		86,724		(7,107)
Taxable		1,324		(218)		42,027		(5,940)		43,351		(6,158)
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities		20,235		(51)		57,647		(5,572)		77,882		(5,623)
Residential collateralized mortgage obligations		0		0		23,194		(2,182)		23,194		(2,182)
Commercial mortgage-backed securities		27,643		(183)		62,605		(6,304)		90,248		(6,487)
Private label commercial mortgage-backed securities		3,489		(1)		0		0		3,489		(1)
Total	$	54,879	$	(497)	$	311,257	$	(30,338)	$	366,136	$	(30,835)

As reflected in the table above, gross unrealized holding losses on available-for-sale debt securities totaled $31,757,000 at June 30, 2026 and $30,835,000 at December 31, 2025. At June 30, 2026, 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 June 30, 2026 and December 31, 2025, 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 June 30, 2026 and December 31, 2025, all of the Corporation’s holdings of bank holding company debt securities, obligations of states and political subdivisions, private label commercial mortgage-backed securities and collateralized loan obligations 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 June 30, 2026 and December 31, 2025.

Gross realized gains and losses from the sale of available-for-sale debt securities for the three and six months ended June 30, 2026 and 2025 were as follows:


(In Thousands)		Three Months Ended				Six Months Ended
		June 30,		June 30,		June 30,		June 30,
		2026		2025		2026		2025
Gross realized gains from sales		$	1	$	0	$	27	$	0
Gross realized losses from sales			0		0		0		0
Net realized gains (losses)		$	1	$	0	$	27	$	0
Income tax provision related to net realized gains (losses)		$	0	$	0	$	6	$	0

The amortized cost and fair value of available-for-sale debt securities by contractual maturity are shown in the following table as of June 30, 2026. 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.

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(In Thousands)		June 30, 2026
		Amortized			Fair
		Cost			Value
Due in one year or less		$	5,103		$	5,070
Due from one year through five years			43,526			41,274
Due from five years through ten years			84,626			80,674
Due after ten years			78,369			69,104
Sub-total			211,624			196,122
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities			150,796			144,681
Residential collateralized mortgage obligations			59,098			56,477
Commercial mortgage-backed securities			98,443			91,539
Asset-backed securities,
Collateralized loan obligations			8,000			8,010
Total		$	527,961		$	496,829

The Corporation’s mortgage-backed securities, collateralized mortgage obligations and asset-backed securities have stated maturities that may differ from actual maturities due to borrowers’ ability to prepay obligations. Cash flows from such investments are dependent upon the performance of the underlying mortgage loans and are generally influenced by the level of interest rates. In the table above, mortgage-backed securities, collateralized mortgage obligations and asset-backed securities are shown in one period.

Investment securities carried at $218,205,000 at June 30, 2026 and $215,252,000 at December 31, 2025 were pledged as collateral for public deposits, trusts and certain other deposits as provided by law. See Note 9 for information concerning securities pledged to secure borrowing arrangements.

Equity Securities

C&N Bank is a member of the Federal Home Loan Bank of Pittsburgh (FHLB-Pittsburgh), which is one of 11 regional Federal Home Loan Banks. As a member, C&N Bank is required to purchase and maintain stock in FHLB-Pittsburgh. 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 $20,111,000 at June 30, 2026 and $18,724,000 at December 31, 2025. The Corporation evaluated its holding of FHLB-Pittsburgh stock for impairment and deemed the stock to not be impaired at June 30, 2026 and December 31, 2025. In making this determination, management concluded that recovery of total outstanding par value, which equals the carrying value, is expected. The decision was based on review of financial information that FHLB-Pittsburgh has made publicly available.

C&N Bank is a member of the Federal Reserve System. As a member, C&N Bank is required to purchase and maintain stock in the Federal Reserve Bank of Philadelphia. 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 $7,695,000 at June 30, 2026 and $7,637,000 at December 31, 2025.

The Corporation has a marketable equity security included in other assets in the consolidated balance sheets with a carrying value of $881,000 at June 30, 2026 and $890,000 at December 31, 2025, consisting exclusively of one mutual fund. There was an unrealized loss on the mutual fund of $119,000 at June 30, 2026 and $110,000 at December 31, 2025. 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 loss of $4,000 in the second quarter of 2026 and a gain of $2,000 in the second quarter of 2025, a loss of $9,000 in the six-month period ended June 30, 2026 and a gain of $15,000 in the six-month period ended June 30, 2025.

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7. LOANS AND ALLOWANCE FOR CREDIT LOSSES

Loans receivable at June 30, 2026 and December 31, 2025 are summarized as follows:

Summary of Loans by Type

(In Thousands)


		June 30,			December 31,
		2026			2025
Commercial real estate - non-owner occupied		$	923,879		$	927,738
Commercial real estate - owner occupied			325,002			311,792
All other commercial loans			544,075			560,537
Residential mortgage loans			443,076			443,950
Consumer loans			112,815			110,348
Total			2,348,847			2,354,365
Less: allowance for credit losses on loans			(32,583)			(31,048)
Loans, net		$	2,316,264		$	2,323,317

In the table above, outstanding loan balances are presented net of deferred loan origination fees of $4,166,000 at June 30, 2026 and $4,074,000 at December 31, 2025.

The Corporation grants loans to individuals as well as commercial and tax-exempt entities. Commercial, residential and personal loans are made to customers geographically concentrated in Northcentral Pennsylvania, the Southern tier of New York State, Southeastern Pennsylvania and Southcentral Pennsylvania. 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.

The following tables present an analysis of past due loans as of June 30, 2026 and December 31, 2025:


(In Thousands)	As of June 30, 2026
	Past Due		Past Due
	30-89		90+ Days		Nonaccrual		Current		Total
	Days		Still Accruing		Loans		Loans		Loans
Commercial real estate - non-owner occupied	$	39	$	0	$	16,608	$	907,232	$	923,879
Commercial real estate - owner occupied		648		0		6,110		318,244		325,002
All other commercial loans		4,899		333		11,648		527,195		544,075
Residential mortgage loans		1,150		0		4,491		437,435		443,076
Consumer loans		311		13		891		111,600		112,815
Total	$	7,047	$	346	$	39,748	$	2,301,706	$	2,348,847


(In Thousands)	As of December 31, 2025
	Past Due		Past Due
	30-89		90+ Days		Nonaccrual		Current		Total
	Days		Still Accruing		Loans		Loans		Loans
Commercial real estate - non-owner occupied	$	2,619	$	0	$	10,766	$	914,353	$	927,738
Commercial real estate - owner occupied		2,453		54		5,955		303,330		311,792
All other commercial loans		6,287		0		11,102		543,148		560,537
Residential mortgage loans		6,365		0		4,324		433,261		443,950
Consumer loans		585		34		689		109,040		110,348
Total	$	18,309	$	88	$	32,836	$	2,303,132	$	2,354,365

The Corporation uses an internal risk rating system. Under the risk rating system, the Corporation classifies problem or potential problem loans as “Special Mention,” “Substandard,” or “Doubtful” on the basis of currently existing facts, conditions and values. Loans that do not currently expose the Corporation to sufficient risk to warrant classification as Substandard or Doubtful, but possess weaknesses that deserve management’s close attention, are deemed to be Special Mention. Substandard loans include those characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected. Loans classified as Doubtful have all the weaknesses inherent in those classified as Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Loans not classified are included in the “Pass” rows in the table that follows.

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The following table presents the amortized cost of loans by credit quality indicators by year of origination as of June 30, 2026 and gross charge-offs for the six months ended June 30, 2026:


(In Thousands)	Term Loans by Year of Origination
	2026		2025		2024		2023		2022		Prior		Revolving		Total
Commercial real estate - non-owner occupied
Pass	$	55,803	$	77,306	$	76,579	$	153,910	$	165,096	$	354,560	$	0	$	883,254
Special Mention		0		323		29		23		7,465		13,007		0		20,847
Substandard		0		0		95		812		8,607		10,264		0		19,778
Doubtful		0		0		0		0		0		0		0		0
Total commercial real estate - non-owner occupied	$	55,803	$	77,629	$	76,703	$	154,745	$	181,168	$	377,831	$	0	$	923,879
Year-to-date gross charge-offs	$	0	$	0	$	0	$	0	$	10,196	$	256	$	0	$	10,452
Commercial real estate - owner occupied
Pass	$	32,518	$	33,796	$	27,531	$	34,225	$	50,507	$	120,015	$	1,999	$	300,591
Special Mention		0		0		7,911		269		740		5,714		0		14,634
Substandard		0		0		0		458		831		8,488		0		9,777
Doubtful		0		0		0		0		0		0		0		0
Total commercial real estate - owner occupied	$	32,518	$	33,796	$	35,442	$	34,952	$	52,078	$	134,217	$	1,999	$	325,002
Year-to-date gross charge-offs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
All other commercial loans
Pass	$	32,691	$	112,483	$	40,646	$	29,074	$	43,203	$	97,639	$	141,215	$	496,951
Special Mention		103		3,110		891		2,942		66		6,786		4,542		18,440
Substandard		0		430		12,838		0		1,273		10,353		3,790		28,684
Doubtful		0		0		0		0		0		0		0		0
Total all other commercial loans	$	32,794	$	116,023	$	54,375	$	32,016	$	44,542	$	114,778	$	149,547	$	544,075
Year-to-date gross charge-offs	$	0	$	0	$	0	$	0	$	168	$	215	$	108	$	491
Residential mortgage loans
Pass	$	22,600	$	47,406	$	43,855	$	49,165	$	80,117	$	194,895	$	0	$	438,038
Special Mention		0		0		0		0		0		0		0		0
Substandard		0		0		35		1,003		375		3,625		0		5,038
Doubtful		0		0		0		0		0		0		0		0
Total residential mortgage loans	$	22,600	$	47,406	$	43,890	$	50,168	$	80,492	$	198,520	$	0	$	443,076
Year-to-date gross charge-offs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Consumer loans
Pass	$	1,425	$	2,031	$	1,430	$	1,219	$	1,494	$	1,555	$	102,517	$	111,671
Special Mention		0		0		0		0		0		0		0		0
Substandard		0		0		3		12		0		138		991		1,144
Doubtful		0		0		0		0		0		0		0		0
Total consumer loans	$	1,425	$	2,031	$	1,433	$	1,231	$	1,494	$	1,693	$	103,508	$	112,815
Year-to-date gross charge-offs	$	0	$	0	$	11	$	35	$	0	$	0	$	144	$	190
Total Loans
Pass	$	145,037	$	273,022	$	190,041	$	267,593	$	340,417	$	768,664	$	245,731	$	2,230,505
Special Mention		103		3,433		8,831		3,234		8,271		25,507		4,542		53,921
Substandard		0		430		12,971		2,285		11,086		32,868		4,781		64,421
Doubtful		0		0		0		0		0		0		0		0
Total	$	145,140	$	276,885	$	211,843	$	273,112	$	359,774	$	827,039	$	255,054	$	2,348,847
Year-to-date gross charge-offs	$	0	$	0	$	11	$	35	$	10,364	$	471	$	252	$	11,133

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The following table presents the amortized cost of loans by credit quality indicators by year of origination as of December 31, 2025 and gross charge-offs for the year ended December 31, 2025:


	Term Loans by Year of Origination
(In Thousands)	2025		2024		2023		2022		2021		Prior		Revolving		Total
Commercial real estate - non-owner occupied
Pass	$	82,832	$	84,330	$	149,720	$	171,419	$	90,420	$	295,369	$	0	$	874,090
Special Mention		77		30		1,942		15,920		2,073		8,045		0		28,087
Substandard		0		102		838		10,459		1,980		12,182		0		25,561
Doubtful		0		0		0		0		0		0		0		0
Total commercial real estate - non-owner occupied	$	82,909	$	84,462	$	152,500	$	197,798	$	94,473	$	315,596	$	0	$	927,738
Year-to-date gross charge-offs	$	0	$	0	$	0	$	0	$	0	$	807	$	0	$	807
Commercial real estate - owner occupied
Pass	$	34,602	$	36,786	$	35,411	$	53,260	$	51,396	$	80,809	$	0	$	292,264
Special Mention		0		357		2,406		1,159		805		5,127		0		9,854
Substandard		0		0		354		131		2,167		7,022		0		9,674
Doubtful		0		0		0		0		0		0		0		0
Total commercial real estate - owner occupied	$	34,602	$	37,143	$	38,171	$	54,550	$	54,368	$	92,958	$	0	$	311,792
Year-to-date gross charge-offs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
All other commercial loans
Pass	$	123,534	$	45,148	$	64,103	$	46,670	$	44,056	$	64,539	$	134,404	$	522,454
Special Mention		1,380		522		32		100		4,443		732		2,028		9,237
Substandard		470		12,932		0		1,471		6,933		3,748		3,292		28,846
Doubtful		0		0		0		0		0		0		0		0
Total all other commercial loans	$	125,384	$	58,602	$	64,135	$	48,241	$	55,432	$	69,019	$	139,724	$	560,537
Year-to-date gross charge-offs	$	0	$	0	$	0	$	0	$	333	$	0	$	263	$	596
Residential mortgage loans
Pass	$	46,534	$	45,988	$	53,163	$	83,848	$	45,494	$	164,033	$	0	$	439,060
Special Mention		0		0		0		0		0		0		0		0
Substandard		0		22		901		424		200		3,343		0		4,890
Doubtful		0		0		0		0		0		0		0		0
Total residential mortgage loans	$	46,534	$	46,010	$	54,064	$	84,272	$	45,694	$	167,376	$	0	$	443,950
Year-to-date gross charge-offs	$	0	$	0	$	0	$	0	$	0	$	5	$	0	$	5
Consumer loans
Pass	$	2,751	$	2,062	$	1,780	$	1,850	$	506	$	2,460	$	97,976	$	109,385
Special Mention		0		0		0		0		0		0		0		0
Substandard		1		7		6		0		2		170		777		963
Doubtful		0		0		0		0		0		0		0		0
Total consumer loans	$	2,752	$	2,069	$	1,786	$	1,850	$	508	$	2,630	$	98,753	$	110,348
Year-to-date gross charge-offs	$	0	$	0	$	33	$	40	$	3	$	0	$	242	$	318
Total Loans
Pass	$	290,253	$	214,314	$	304,177	$	357,047	$	231,872	$	607,210	$	232,380	$	2,237,253
Special Mention		1,457		909		4,380		17,179		7,321		13,904		2,028		47,178
Substandard		471		13,063		2,099		12,485		11,282		26,465		4,069		69,934
Doubtful		0		0		0		0		0		0		0		0
Total	$	292,181	$	228,286	$	310,656	$	386,711	$	250,475	$	647,579	$	238,477	$	2,354,365
Year-to-date gross charge-offs	$	0	$	0	$	33	$	40	$	336	$	812	$	505	$	1,726

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

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


	June 30, 2026
	Nonaccrual Loans with		Nonaccrual Loans		Total Nonaccrual
(In Thousands)	No Allowance		with an Allowance		Loans
Commercial real estate - non-owner occupied	$	15,212	$	1,396	$	16,608
Commercial real estate - owner occupied		5,621		489		6,110
All other commercial loans		7,925		3,723		11,648
Residential mortgage loans		4,491		0		4,491
Consumer loans		891		0		891
Total	$	34,140	$	5,608	$	39,748


		December 31, 2025
		Nonaccrual Loans with		Nonaccrual Loans		Total Nonaccrual
(In Thousands)		No Allowance		with an Allowance		Loans
Commercial real estate - non-owner occupied		$	9,343	$	1,423	$	10,766
Commercial real estate - owner occupied			5,470		485		5,955
All other commercial loans			7,609		3,493		11,102
Residential mortgage loans			4,324		0		4,324
Consumer loans			689		0		689
Total		$	27,435	$	5,401	$	32,836

The Corporation recognized interest income on nonaccrual loans of $258,000 and $557,000 in the three and six-month periods ended June 30, 2026, respectively and $227,000 and $457,000 in the three and six-month periods ended June 30, 2025, respectively.

The following table represents the accrued interest receivable written off by reversing interest income during the three-and six month periods ended June 30, 2026 and 2025:


	Three Months Ended		Three Months Ended		Six Months Ended		Six Months Ended
(In Thousands)	June 30, 2026		June 30, 2025		June 30, 2026		June 30, 2025
Commercial real estate - non-owner occupied	$	0	$	0	$	99	$	0
Commercial real estate - owner occupied		0		51		5		51
All other commercial loans		24		0		32		0
Residential mortgage loans		4		3		9		8
Consumer loans		6		0		7		0
Total	$	34	$	54	$	152	$	59

The Corporation has certain loans for which repayment is dependent upon the operation or sale of collateral, as the borrower is experiencing financial difficulty. The underlying collateral can vary based upon the type of loan. The following discussion provides more detail about the types of collateral that secure collateral dependent loans:

●

Commercial real estate loans can be secured by either owner occupied commercial real estate or non-owner occupied investment commercial real estate. Typically, owner occupied commercial real estate loans are secured by office buildings, warehouses, manufacturing facilities and other commercial and industrial properties occupied by operating companies. Non-owner occupied commercial real estate loans are generally secured by office buildings and complexes, retail facilities, multifamily complexes, land under development, industrial properties, as well as other commercial or industrial real estate.

●

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

●

Consumer loans are generally secured by automobiles, motorcycles, recreational vehicles and other personal property. Some consumer loans are unsecured and have no underlying collateral.

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

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 allocated to these loans:


	June 30, 2026				December 31, 2025
	Amortized				Amortized
(In Thousands)	Cost		Allowance		Cost		Allowance
Commercial real estate - non-owner occupied	$	16,719	$	140	$	10,876	$	140
Commercial real estate - owner occupied		6,447		261		6,325		266
All other commercial loans		15,077		2,235		14,551		2,366
Residential mortgage loans		371		0		350		0
Consumer loans		249		0		326		0
Total	$	38,863	$	2,636	$	32,428	$	2,772

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 consolidated balance sheet date. The ACL on loans includes two primary components: (i) an allowance established on loans which share similar risk characteristics which are collectively evaluated for credit losses, and (ii) an allowance established on loans which do not share similar risk characteristics with any loan segment and which are individually evaluated for credit losses.

Management determines the ACL on loans that are collectively evaluated by considering the following: (a) the weighted-average remaining maturity (WARM) method is used to estimate credit losses, based on the Corporation’s historical loss experience, for pools of loans with similar risk and cash flow characteristics; (b) subjective adjustments are made, generally increasing the ACL, for qualitative risk factors that are deemed likely to cause estimated credit losses to differ from historical experience; and (c) an additional adjustment to expected credit losses is made, based on an economic forecast, and applied for the first two years of the weighted-average remaining life of the portfolio.

The allowance for credit losses is adjusted by qualitative factors to capture current economic conditions and risk characteristics not fully reflected in historical data. At June 30, 2026, the Corporation refined its estimation methodology for calculating some of the qualitative factors, including changes in the application of external data used to assess trends in regional economic conditions, commercial real estate values and residential real estate values. Management believes these refinements in methodology result in an improved estimate of the impact on the ACL of recent trends in the external data.

The following table summarizes the activity related to the allowance for credit losses for the three-month and six-month periods ended June 30, 2026 and 2025.


	Commercial		Commercial		All
	real estate -		real estate -		other		Residential
	nonowner		owner		commercial		mortgage		Consumer
(In Thousands)	occupied		occupied		loans		loans		loans		Total
Balance, March 31, 2026	$	20,769	$	3,599	$	6,416	$	2,657	$	391	$	33,832
Charge-offs		0		0		(224)		0		(76)		(300)
Recoveries		675		0		0		1		27		703
(Credit) provision for credit losses on loans		(1,721)		(125)		109		12		73		(1,652)
Balance, June 30, 2026	$	19,723	$	3,474	$	6,301	$	2,670	$	415	$	32,583


	Commercial		Commercial		All
	real estate -		real estate -		other		Residential
	nonowner		owner		commercial		mortgage		Consumer
(In Thousands)	occupied		occupied		loans		loans		loans		Total
Balance, December 31, 2025	$	19,462	$	4,086	$	5,505	$	1,629	$	366	$	31,048
Charge-offs		(10,452)		0		(491)		0		(190)		(11,133)
Recoveries		675		0		1		1		51		728
Provision (credit) for credit losses on loans		10,038		(612)		1,286		1,040		188		11,940
Balance, June 30, 2026	$	19,723	$	3,474	$	6,301	$	2,670	$	415	$	32,583

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q


	Commercial		Commercial		All
	real estate -		real estate -		other		Residential
	nonowner		owner		commercial		mortgage		Consumer
(In Thousands)	occupied		occupied		loans		loans		loans		Total
Balance, March 31, 2025	$	12,060	$	2,769	$	3,594	$	1,281	$	468	$	20,172
Charge-offs		(9)		0		(541)		(5)		(27)		(582)
Recoveries		0		0		1		1		32		34
Provision (credit) for credit losses on loans		1,042		286		837		37		(127)		2,075
Balance, June 30, 2025	$	13,093	$	3,055	$	3,891	$	1,314	$	346	$	21,699


	Commercial		Commercial		All
	real estate -		real estate -		other		Residential
	nonowner		owner		commercial		mortgage		Consumer
(In Thousands)	occupied		occupied		loans		loans		loans		Total
Balance, December 31, 2024	$	11,964	$	2,844	$	3,361	$	1,356	$	510	$	20,035
Charge-offs		(9)		0		(541)		(5)		(144)		(699)
Recoveries		0		0		2		2		56		60
Provision (credit) for credit losses on loans		1,138		211		1,069		(39)		(76)		2,303
Balance, June 30, 2025	$	13,093	$	3,055	$	3,891	$	1,314	$	346	$	21,699

In the three-month period ended June 30, 2026, the credit for credit losses on loans was $1,652,000. The credit for credit losses included the impact on the ACL of changes in qualitative factors, net recoveries of $403,000 and a reduction in loans receivable. The reduction in the ACL related to qualitative factors included the net impact of changes in external data referred to above, as well as changes in other factors included in management’s estimate at June 30, 2026 as compared to March 31, 2026.

The provision for credit losses on loans was $11,940,000 for the six months ended June 30, 2026 as compared to $2,303,000 for the six months ended June 30, 2025. The increase in provision in the six months ended June 30, 2026 was driven by the impact on the ACL of an elevated level of net charge-offs and was partially offset by net decreases in the ACL related to changes in qualitative factors. The reduction in the ACL related to qualitative factors included the net impact of changes in external data referred to above, as well as changes in other factors included in management’s estimate at June 30, 2026 as compared to December 31, 2025.

The significant increase in charge-offs for the six months ended June 30, 2026 was due to a non-owner occupied, commercial real estate loan originated in 2022 in the amount of $24 million of which $7,200,000 was participated with another financial institution. The loan is secured by a first lien on the leasehold interests of an approximately 190,000 square foot Class A office property with multiple buildings and tenants, located in Bucks County, PA. The loss of a large tenant as well as cash flow requirements of the borrower’s other properties (which the Corporation has not financed) caused the loan to be downgraded to substandard and placed in nonaccrual status as of March 31, 2026 and June 30, 2026. The Corporation obtained an updated appraisal in April 2026 which was significantly lower than the original appraisal when the loan was originated, resulting in the recording of a charge-off of $10,056,000 in the first quarter 2026. At June 30, 2026, the amortized cost basis of the loan, net of the partial charge-off, was $5,665,000.

On April 30, 2026, the Corporation entered into a forbearance agreement related to the Class A office property loan referred to in the preceding paragraph with the borrower and the surety (collectively, the “Obligors”). During the second quarter 2026, the borrower made payments consistent with the terms of this forbearance agreement, including payments that were recorded as reductions in the amortized cost basis of the loan totaling $171,000. The forbearance period expired on July 10, 2026. While many requirements of the forbearance agreement were met, the Obligors did not satisfy all the terms of the forbearance agreement, including, among other things, the requirement for the establishment of a $3,000,000 escrow account to fund tenant improvements and pay leasing commissions on new tenants. There was no adjustment to the ACL at June 30, 2026 resulting from the Obligors’ defaults and the Corporation’s subsequent actions.

The ACL on loans individually evaluated decreased to $2,636,000 at June 30, 2026 from $2,772,000 at December 31, 2025, including an ACL of $2,414,000 at June 30, 2026 on acquired PCD loans as part of the Susquehanna acquisition.

The ACL on loans collectively evaluated was $29,947,000 at June 30, 2026, down from $31,177,000 at March 31, 2026 but up from $28,276,000 at December 31, 2025. Changes in the collectively evaluated portion of the ACL at June 30, 2026 as compared to March

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

31, 2026 and December 31, 2025, included the impact of changes in the WARM method estimate based on the Corporation’s net charge-off experience and net decreases related to changes in qualitative adjustments and the economic forecast.

Modifications Made to Borrowers Experiencing Financial Difficulty

The Corporation closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. 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 six months ended June 30, 2026 and 2025, the Corporation made no modifications of loans to borrowers experiencing financial difficulty.

The following table presents the performance of such loans that were modified in the twelve-month period preceding June 30, 2025:


(In Thousands)		Payment Status (Amortized Cost Basis)
June 30, 2025		Current or Past Due Less than 30 Days		30-89 Days Past Due			90+ Days Past Due			Total
Commercial real estate - non-owner occupied		$	2,585	$	0		$	0		$	2,585
Commercial real estate - owner occupied			217		0			0			217
Total		$	2,802	$	0		$	0		$	2,802

During the second quarter 2026, a loan secured by non-owner occupied real estate with an amortized cost basis of $1,717,000 included in the table above was paid off by the borrower through third-party financing. The Corporation recorded a $675,000 recovery upon repayment of this loan.

The Corporation had no commitments to lend any additional funds on modified loans at June 30, 2026 and 2025. The Corporation had no loans that defaulted during the three and six months ended June 30, 2026 and 2025 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)	June 30,		December 31,
	2026		2025
Foreclosed residential real estate	$	25	$	33

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)	June 30,		December 31,
	2026		2025
Residential real estate in process of foreclosure	$	371	$	433

The Corporation is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. The contract amounts of these financial instruments at June 30, 2026 and December 31, 2025 were as follows:


		June 30,			December 31,
(In Thousands)		2026			2025
Commitments to extend credit		$	474,891		$	506,996
Standby letters of credit			62,133			58,914

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

loans sold with recourse, when there is a contractual obligation to extend credit and when this extension of credit is not unconditionally cancellable (i.e. commitment cannot be canceled at any time). The allowance for off-balance sheet credit exposures is adjusted through the (credit) provision for credit losses. 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 $845,000 at June 30, 2026 and $1,029,000 at December 31, 2025, is included in accrued interest and other liabilities in 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 six months ended June 30, 2026 and 2025:


		Three Months Ended				Six Months Ended
(In Thousands)	June 30, 2026		June 30, 2025		June 30, 2026		June 30, 2025
Beginning Balance	$	1,039	$	463	$	1,029	$	455
(Credit) provision for unfunded commitments		(194)		279		(184)		287
Ending Balance, June 30	$	845	$	742	$	845	$	742

8. 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 June 30, 2026 and December 31, 2025, the net carrying value of goodwill was $63,311,000. There were no changes in the carrying value of goodwill in the six-month periods ended June 30, 2026 and 2025. During the fourth quarter of 2025, $10.8 million of goodwill was added through the merger with Susquehanna.

Information related to core deposit intangibles is as follows:


(In Thousands)		June 30,			December 31,
		2026			2025
Gross amount		$	17,329			17,329
Accumulated amortization			(7,385)			(5,756)
Net		$	9,944		$	11,573

Amortization expense related to core deposit intangibles is included in other noninterest expense in the consolidated statements of income, as follows:


(In Thousands)	Three Months Ended				Six Months Ended
	June 30,		June 30,		June 30,		June 30,
	2026		2025		2026		2025
Amortization expense	$	814	$	106	$	1,629	$	212

In the three and six months ended June 30, 2026, amortization expense included $715,000 and $1,431,000 related to the Susquehanna acquisition as described in Note 2 and $99,000 and $198,000 related to previous acquisitions. In the three and six months ended June 30, 2025, amortization expense was related to previous acquisitions.

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

9. BORROWED FUNDS

SHORT-TERM BORROWINGS

Short-term borrowings (initial maturity within one year) include the following:


(In Thousands)		June 30,			December 31,
		2026			2025
FHLB-Pittsburgh borrowings		$	14,260		$	27,000
Customer repurchase agreements			383			1,618
Total short-term borrowings		$	14,643		$	28,618

At June 30, 2026, short-term borrowings from FHLB-Pittsburgh included advances maturing in the third quarter 2026 with a weighted average interest rate of 3.76%. At December 31, 2025, the short-term borrowing from FHLB-Pittsburgh was an overnight borrowing of $27,000,000, at an interest rate of 3.93%.

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 both June 30, 2026 and December 31, 2025. The carrying value of the underlying securities was $390,000 at June 30, 2026 and $1,630,000 at December 31, 2025.

The FHLB-Pittsburgh loan facility is collateralized by qualifying loans secured by real estate with a book value totaling $1,653,918,000 at June 30, 2026 and $1,624,412,000 at December 31, 2025. 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 $20,111,000 at June 30, 2026 and $18,724,000 at December 31, 2025. The Corporation’s total credit facility with FHLB-Pittsburgh was $1,153,138,000 at June 30, 2026, including an unused (available) amount of $971,125,000. At December 31, 2025, the Corporation’s total credit facility with FHLB-Pittsburgh was $971,946,000, including an unused (available) amount of $785,822,000.

The Corporation had available credit with other correspondent banks totaling $75,000,000 at June 30, 2026 and December 31, 2025. These lines of credit are primarily unsecured. No amounts were outstanding at June 30, 2026 or December 31, 2025.

The Corporation has a line of credit with the Federal Reserve Bank of Philadelphia’s Discount Window. At June 30, 2026, the Corporation had available credit in the amount of $24,882,000 on this line with no outstanding advances. At December 31, 2025, the Corporation had available credit in the amount of $25,484,000 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 $26,330,000 at June 30, 2026 and $26,947,000 at December 31, 2025.

LONG-TERM BORROWINGS – FHLB ADVANCES

Long-term borrowings from FHLB-Pittsburgh were as follows:


(In Thousands)	June 30,			December 31,
	2026			2025
Loans maturing in 2026 with a weighted-average rate of 4.79%		24,421			48,018
Loans maturing in 2027 with a weighted-average rate of 3.98%		55,583			34,571
Loans maturing in 2028 with a weighted-average rate of 4.15%		32,069			26,027
Loans maturing in 2029 with a weighted-average rate of 4.35%		18,319			12,319
Total long-term FHLB-Pittsburgh borrowings	$	130,392		$	120,935

Note: Weighted-average rates are presented as of June 30, 2026.

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

SENIOR NOTES

In 2021, the Corporation issued and sold $15,000,000 in aggregate principal amount of 2.75% Fixed Rate Senior Unsecured Notes due June 1, 2026 (the "Senior Notes"). The Senior Notes were recorded, net of debt issuance costs of $337,000, at an initial carrying amount of $14,663,000. On June 1, 2026, the senior notes with an aggregate par value of $15,000,000 matured and were redeemed. At December 31, 2025, the outstanding Senior Notes had a total carrying value of $14,970,000, bearing interest at 2.75% with an effective interest rate of 3.23%.

Debt issuance costs were 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 $12,000 in the second quarter 2026 and $30,000 for the six-month period ended June 30, 2026 and $17,000 in the second quarter 2025 and $35,000 for the six-month period ended June 30, 2025 was included in interest expense on senior notes, net in the unaudited consolidated statements of income.

SUBORDINATED DEBT

In 2021, the Corporation issued and sold $25.0 million in aggregate principal amount of 3.25% Fixed-to-Floating Rate Subordinated Notes due 2031 (the "Subordinated Notes"). The Subordinated Notes mature on June 1, 2031 and had a fixed annual interest rate of 3.25%, to June 1, 2026. 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 Term Secured Overnight Financing Rate plus 259 basis points. At June 30, 2026, the interest rate on the outstanding subordinated notes was 6.25%. At December 31, 2025, the effective interest rate on the outstanding Subordinated Notes, including the impact of debt issuance costs amortization, was 3.74%. The Corporation is entitled to redeem the Subordinated Notes, in whole or in part, at any time on or after June 1, 2026. Any redemption of the Subordinated Notes will be subject to prior regulatory approval to the extent required.

The Subordinated Notes are not subject to redemption at the option of the holders. 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. The Subordinated Notes are intended to qualify as Tier 2 capital for regulatory capital purposes, subject to a reduction of $5,000,000 per year in the amount qualifying as Tier 2 capital. At June 30, 2026, the Corporation has included $20,000,000 of the Subordinated Notes in Tier 2 Capital.

The Subordinated Notes were recorded, net of debt issuance costs of $563,000, at an initial carrying amount of $24,437,000. Debt issuance costs were amortized through June 1, 2026 as an adjustment of the effective interest rate. Amortization of debt issuance costs associated with the Subordinated Notes totaling $21,000 in the second quarter 2026 and $51,000 for the six-month period ended June 30, 2026 and $29,000 in the second quarter 2025 and $58,000 for the six-month period ended June 30, 2025, was included in interest expense on subordinated debt, net in the unaudited consolidated statements of income.

At June 30, 2026 and December 31, 2025, the carrying amounts of subordinated debt agreements were as follows:


(In Thousands)		June 30,			December 31,
		2026			2025
Agreements with a par value of $25,000,000; maturing in June 2031 and redeemable at par on or after June 1, 2026		$	25,000		$	24,949
Total carrying value		$	25,000		$	24,949

10. STOCK-BASED COMPENSATION PLANS

The Corporation has a stock incentive plan for selected officers and the independent directors. Awards to employees vest ratably over three years except for a time-based award granted in June 2026 of 6,861 shares of restricted stock with 50% vesting in May 2028 and 50% vesting in May 2029. Time-based awards to the independent directors vest ratably over one year. Following is a summary of restricted stock awards granted in the six-month period ended June 30, 2026:

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(Dollars in Thousands)				Aggregate
				Grant
				Date
		Number of		Fair
		Shares		Value
Six Months Ended June 30, 2026 awards:
Time-based awards to independent directors		9,720		$	225
Time-based awards to employees		64,479			1,410
Performance-based awards to employees		21,246			464
Total		95,445		$	2,099

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 $337,000 in the second quarter 2026 and $331,000 in the second quarter 2025. Total stock-based compensation expense attributable to restricted stock awards amounted to $650,000 in the six-month period ended June 30, 2026 and $656,000 in the six-month period ended June 30, 2025.

11. CONTINGENCIES

In the normal course of business, the Corporation is subject to pending and threatened litigation in which claims for monetary damages are asserted. In management’s opinion, the Corporation’s financial position and results of operations will not be materially affected by the outcome of these legal proceedings.

12. DERIVATIVE FINANCIAL INSTRUMENTS

The Corporation is a party to derivative financial instruments. These financial instruments consist of interest rate swap agreements and risk participation agreements (RPAs) which contain master netting and collateral provisions designed to protect the party at risk.

Interest rate swaps with commercial loan banking customers were executed to facilitate their respective risk management strategies. Under the terms of these arrangements, the commercial banking customers effectively exchanged their floating interest rate exposures on loans into fixed interest rate exposures. Those interest rate swaps have been simultaneously economically hedged by offsetting interest rate swaps with a third party, such that the Corporation has effectively exchanged its fixed interest rate exposures for floating rate exposures. These derivatives are not designated as hedges and are not speculative. Rather, these derivatives result from a service provided to certain customers. 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 $129,546,000 at June 30, 2026 and $136,776,000 at December 31, 2025. There were no interest rate swaps originated in the six-month period ended June 30, 2026. The Corporation originated one interest rate swap with a notional amount of $1,800,000 in the six-month period ended June 30, 2025. Fee income on the interest swap originated in the six-month period ended June 30, 2025 of $24,000 was included in other noninterest income in the consolidated statements of income. There were no gross amounts of interest rate swap-related assets and liabilities not offset in the consolidated balance sheets at June 30, 2026 and December 31, 2025.

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.” There was an increase of $2,000 included in other income from RPAs in the second quarter of 2026 and in the six-month period ended June 30, 2026. There was an increase of $9,000 included in other noninterest income from RPAs in the second quarter 2025 and in the six-month period ended June 30, 2025.

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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 June 30, 2026 and December 31, 2025:


(In Thousands)	At June 30, 2026								At December 31, 2025
	Asset Derivatives				Liability Derivatives				Asset Derivatives				Liability Derivatives
	Notional		Fair		Notional		Fair		Notional		Fair		Notional		Fair
	Amount		Value (1)		Amount		Value (2)		Amount		Value (1)		Amount		Value (2)
Interest rate swap agreements	$	64,773	$	1,057	$	64,773	$	1,057	$	68,388	$	1,318	$	68,388	$	1,318
RPA Out		6,751		0		0		0		6,823		2		0		0
RPA In		0		0		13,318		1		0		0		13,660		5

(1)	Included in other assets in the consolidated balance sheets.

(2)	Included in accrued interest and other liabilities in the consolidated balance sheets.

The Corporation’s agreements with its derivative counterparties provide that, if the Corporation defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Corporation could also be declared in default on its derivative obligations. 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 $1,400,000 at June 30, 2026 and December 31, 2025.

13. FAIR VALUE MEASUREMENTS AND FAIR VALUES OF FINANCIAL INSTRUMENTS

The Corporation measures certain assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FASB Topic 820, “Fair Value Measurements and Disclosures” establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The hierarchy prioritizes the inputs used in determining valuations into three levels. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows:

Level 1 – Fair value is based on unadjusted quoted prices in active markets that are accessible to the Corporation for identical assets or liabilities. These generally provide the most reliable evidence and are used to measure fair value whenever available.

Level 2 – Fair value is based on significant inputs, other than Level 1 inputs, that are observable either directly or indirectly for substantially the full term of the asset or liability through corroboration with observable market data. Level 2 inputs include quoted market prices in active markets for similar assets or liabilities, quoted market prices in markets that are not active for identical or similar assets or liabilities and other observable inputs.

Level 3 – Fair value is based on significant unobservable inputs. Examples of valuation methodologies that would result in Level 3 classification include option pricing models, discounted cash flows and other similar techniques.

The Corporation monitors and evaluates available data relating to fair value measurements on an ongoing basis and recognizes transfers among the levels of the fair value hierarchy as of the date of an event or change in circumstances that affects the valuation method chosen. Examples of such changes may include the market for a particular asset or liability becoming active or inactive, changes in the availability of quoted prices, or changes in the availability of other market data.

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At June 30, 2026 and December 31, 2025, assets and liabilities measured at fair value and the valuation methods used were as follows:


	June 30, 2026
	Quoted Prices		Other Observable		Unobservable
	in Active Markets		Inputs		Inputs		Total
(In Thousands)	(Level 1)		(Level 2)		(Level 3)		Fair Value
Recurring fair value measurements, assets:
AVAILABLE-FOR-SALE DEBT SECURITIES:
Obligations of the U.S. Treasury	$	7,433	$	0	$	0	$	7,433
Obligations of U.S. Government agencies		0		10,017		0		10,017
Bank holding company debt securities		0		38,857		0		38,857
Obligations of states and political subdivisions:
Tax-exempt		0		95,961		0		95,961
Taxable		0		43,854		0		43,854
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities		0		144,681		0		144,681
Residential collateralized mortgage obligations		0		56,477		0		56,477
Commercial mortgage-backed securities		0		91,539		0		91,539
Asset-backed securities,
Collateralized loan obligations		0		8,010		0		8,010
Total available-for-sale debt securities		7,433		489,396		0		496,829
Marketable equity security		881		0		0		881
Servicing rights		0		0		3,864		3,864
Interest rate swap agreements, assets		0		1,057		0		1,057
Total recurring fair value measurements, assets	$	8,314	$	490,453	$	3,864	$	502,631

Recurring fair value measurements, liabilities:
RPA In	$	0	$	1	$	0	$	1
Interest rate swap agreements, liabilities		0		1,057		0		1,057
Total recurring fair value measurements, liabilities	$	0	$	1,058	$	0	$	1,058

Nonrecurring fair value measurements, assets:
Loans individually evaluated for credit loss, net	$	0	$	0	$	2,972	$	2,972
Foreclosed assets held for sale		0		0		181		181
Total nonrecurring fair value measurements, assets	$	0	$	0	$	3,153	$	3,153

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	December 31, 2025
	Quoted Prices		Other Observable		Unobservable
	in Active Markets		Inputs		Inputs		Total
(In Thousands)	(Level 1)		(Level 2)		(Level 3)		Fair Value
Recurring fair value measurements, assets:
AVAILABLE-FOR-SALE DEBT SECURITIES:
Obligations of the U.S. Treasury	$	7,482	$	0	$	0	$	7,482
Obligations of U.S. Government agencies		0		10,749		0		10,749
Bank holding company debt securities		0		34,076		0		34,076
Obligations of states and political subdivisions:
Tax-exempt		0		98,359		0		98,359
Taxable		0		44,152		0		44,152
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities		0		143,921		0		143,921
Residential collateralized mortgage obligations		0		63,707		0		63,707
Commercial mortgage-backed securities		0		92,631		0		92,631
Private label commercial mortgage-backed securities		0		3,489		0		3,489
Asset-backed securities,
Collateralized loan obligations		0		8,009		0		8,009
Total available-for-sale debt securities		7,482		499,093		0		506,575
Marketable equity security		890		0		0		890
Servicing rights		0		0		3,893		3,893
RPA Out		0		2		0		2
Interest rate swap agreements, assets		0		1,318		0		1,318
Total recurring fair value measurements, assets	$	8,372	$	500,413	$	3,893	$	512,678

Recurring fair value measurements, liabilities,
RPA In	$	0	$	5	$	0	$	5
Interest rate swap agreements, liabilities		0		1,318		0		1,318
Total recurring fair value measurements, liabilities	$	0	$	1,323	$	0	$	1,323

Nonrecurring fair value measurements, assets:
Loans individually evaluated for credit loss, net	$	0	$	0	$	2,629	$	2,629
Foreclosed assets held for sale		0		0		189		189
Total nonrecurring fair value measurements, assets	$	0	$	0	$	2,818	$	2,818

Level 2 valuation techniques used to measure fair value for the financial instruments in the preceding tables are as follows:

Available-for-sale debt securities - Level 2 debt securities are valued by a third-party pricing service. The pricing service uses pricing models that vary based on asset class and incorporate available market information, including quoted prices of investment securities with similar characteristics. Because many fixed income securities do not trade on a daily basis, pricing models use available information, as applicable, through processes such as benchmark yield curves, benchmarking of like securities, sector groupings and matrix pricing.

Derivative instruments - Interest rate SWAP agreements, RPA Out and RPA In - The fair value of derivatives are based on valuation models using observable market data as of the measurement date, valued by a third-party pricing service using quantitative models that utilize multiple market inputs. The inputs include prices and indices to generate continuous yield or pricing curves, estimates of current and potential future credit exposure and calculated discounted cash flow factors to value the position. The majority of market inputs are actively quoted and can be validated through external sources, including brokers, market transactions and third-party pricing services.

Management’s evaluation and selection of valuation techniques and the unobservable inputs used in determining the fair values of assets valued using Level 3 methodologies include sensitive assumptions. Other market participants might use substantially different assumptions, which could result in calculations of fair values that would be substantially different than the amount calculated by management.

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At June 30, 2026 and December 31, 2025, quantitative information regarding valuation techniques and the significant unobservable inputs used for assets measured on a recurring basis using unobservable inputs (Level 3 methodologies) was as follows:

 

Fair Value at

6/30/2026

Valuation

Unobservable

Method or Value As of

Asset

(In Thousands)

Technique

Input(s)

6/30/2026

Servicing rights

3,864

Discounted cash flow

Discount rate

Rate used through modeling period

Loan prepayment speeds

131

Weighted-average PSA

 

Fair Value at

12/31/2025

Valuation

Unobservable

Method or Value As of

Asset

(In Thousands)

Technique

Input(s)

12/31/2025

Servicing rights

3,893

Discounted cash flow

Discount rate

Rate used through modeling period

Loan prepayment speeds

124

Weighted-average PSA

The fair value of servicing rights is affected by expected future interest rates. 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.

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


(In Thousands)		Three Months Ended						Six Months Ended
		June 30, 2026			June 30, 2025			June 30, 2026			June 30, 2025
Servicing rights balance, beginning of period		$	3,813		$	2,767		$	3,893		$	2,782
Originations of servicing rights			141			84			233			138
Unrealized loss included in earnings			(90)			(32)			(262)			(101)
Servicing rights balance, end of period		$	3,864		$	2,819		$	3,864		$	2,819

Loans are individually evaluated for credit loss when they do not share similar risk characteristics as similar loans within its loan pool. Foreclosed assets held for sale consist of real estate acquired by foreclosure. For individually evaluated loans secured by real estate and foreclosed assets held for sale, estimated fair values are determined primarily using values from third-party appraisals. Appraised values are discounted to arrive at the estimated selling price of the collateral, which is considered to be the estimated fair value. 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).

At June 30, 2026 and December 31, 2025, quantitative information regarding valuation techniques and the significant unobservable inputs used for nonrecurring fair value measurements using Level 3 methodologies was as follows:


(Dollars In Thousands)										Range (Weighted
				Valuation						Average)
		Balance at		Allowance at		Fair Value at		Valuation	Unobservable	Discount at
Asset		6/30/2026		6/30/2026		6/30/2026		Technique	Inputs	6/30/2026

Loans individually evaluated for credit loss:
Commercial real estate - nonowner occupied		$	1,396	$	140	$	1,256	Sales comparison	Discount to appraised value	18%-77% (66)	%
Commercial real estate - owner occupied			489		261		228	Sales comparison	Discount to appraised value	31% (31)	%
All other commercial Loans			3,723		2,235		1,488	Sales comparison	Discount to appraised value	0%-100% (81)	%
Total loans individually evaluated for credit loss		$	5,608	$	2,636	$	2,972
Foreclosed assets held for sale - real estate:
Residential (1-4 family)		$	25	$	0	$	25	Sales comparison	Discount to appraised value	62% (62)	%
Commercial real estate			156		0		156	Sales comparison	Discount to appraised value	34% (34)	%
Total foreclosed assets held for sale		$	181	$	0	$	181

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(Dollars In Thousands)										Range (Weighted
				Valuation						Average)
		Balance at		Allowance at		Fair Value at		Valuation	Unobservable	Discount at
Asset		12/31/2025		12/31/2025		12/31/2025		Technique	Inputs	12/31/2025

Loans individually evaluated for credit loss:
Commercial real estate - nonowner occupied		$	1,423	$	140	$	1,283	Sales comparison	Discount to appraised value	18%-77% (66)	%
Commercial real estate - owner occupied			485		266		219	Sales comparison	Discount to appraised value	34% (34)	%
All other commercial Loans			3,493		2,366		1,127	Sales comparison	Discount to appraised value	0%-100% (82)	%
Total loans individually evaluated for credit loss		$	5,401	$	2,772	$	2,629
Foreclosed assets held for sale - real estate:
Residential (1-4 family)		$	33	$	0	$	33	Sales comparison	Discount to appraised value	62%-84% (72)	%
Commercial real estate			156		0		156	Sales comparison	Discount to appraised value	18%-77% (34)	%
Total foreclosed assets held for sale		$	189	$	0	$	189

Certain of the Corporation’s financial instruments are not measured at fair value in the consolidated financial statements. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. Certain financial instruments and all nonfinancial instruments are excluded from disclosure requirements. Therefore, the aggregate fair value amounts presented may not represent the underlying fair value of the Corporation.

The estimated fair values, and related carrying amounts, of the Corporation’s financial instruments that are not recorded at fair value were as follows:


(In Thousands)		Fair Value		June 30, 2026						December 31, 2025
		Hierarchy		Carrying			Fair			Carrying			Fair
		Level		Amount			Value			Amount			Value
Financial assets:
Cash and cash equivalents		Level 1		$	81,437		$	81,437		$	44,706		$	44,706
Certificates of deposit		Level 2			1,100			1,095			1,350			1,331
Restricted equity securities (included in other assets)		N/A			28,068			28,068			26,623			26,623
Loans, net		Level 3			2,316,264			2,261,928			2,323,317			2,261,934
Accrued interest receivable		Level 2			10,941			10,941			11,594			11,594

Financial liabilities:
Deposits with no stated maturity		Level 2			2,030,520			2,030,520			1,958,011			1,958,011
Time deposits		Level 2			573,215			570,767			606,705			603,494
Short-term borrowings		Level 2			14,643			14,634			28,618			28,618
Long-term borrowings - FHLB advances		Level 2			130,392			130,299			120,935			122,211
Senior notes, net		Level 2			0			0			14,970			14,751
Subordinated debt, net		Level 2			25,000			24,251			24,949			23,361
Accrued interest payable		Level 2			1,391			1,391			1,744			1,744

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14. 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, (credit) 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				Six Months Ended
(In Thousands)		June 30, 2026		June 30, 2025		June 30, 2026		June 30, 2025
Interest income	$	41,566	$	32,454	$	82,154	$	64,163
Interest expense		11,948		11,312		24,082		23,046
Net interest income		29,618		21,142		58,072		41,117
(Credit) provision for credit losses		(1,846)		2,354		11,756		2,590
Net interest income after (credit) provision for credit losses		31,464		18,788		46,316		38,527
Other income:
Other noninterest income		9,799		8,142		17,968		15,150
Realized gains on available-for-sale debt securities, net		1		0		27		0
Total noninterest income		9,800		8,142		17,995		15,150
Other noninterest expense:
Salaries and employee benefits		13,197		11,067		26,398		22,826
Other segment expenses (1)		10,642		8,331		20,153		15,615
Total noninterest expense		23,839		19,398		46,551		38,441
Income before income tax provision		17,425		7,532		17,760		15,236
Income tax provision		3,368		1,415		3,430		2,826
NET INCOME	$	14,057	$	6,117	$	14,330	$	12,410

(1 ) Other segment expenses included expenses for professional fees, data processing and telecommunications, net occupancy and equipment, automated teller machine and interchange, Pennsylvania shares tax, merger-related expenses and other noninterest expenses.

The Corporation’s segment assets represent the total assets as presented in the consolidated balance sheets at June 30, 2026 and December 31, 2025.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Certain statements in this section and elsewhere in this Quarterly Report on Form 10-Q are forward-looking statements for purposes of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. Such forward-looking statements may include financial and other projections as well as statements regarding the Corporation that may include future plans, objectives, performance, revenues, growth, profits, operating expenses or the Corporation’s underlying assumptions. Citizens & Northern Corporation and its wholly-owned subsidiaries (collectively, the “Corporation”) intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Reform Act of 1995. Forward-looking statements are not historical facts, are based on certain assumptions and describe future plans, business objectives and expectations, and are generally identifiable by the use of words such as, “may”, “would”, “will”, “should”, “likely”, “possibly”, “expect”, “anticipate”, “intend”, “pro forma”, “estimate”, “target”, “potentially”, “probably”, “outlook”, “predict”, “contemplate”, “continue”, “strategic”, “objective”, “plan”, “forecast”, “project”, “believe” and “goal” or other similar words, phrases or concepts. Persons reading this document are cautioned that such statements are only predictions, and that the Corporation’s actual future results or performance may be materially different. A number of factors could cause our actual results, events or developments, or industry results, to be materially different from any future results, events or developments expressed, implied or anticipated by such forward-looking statements. In addition to factors previously disclosed in the reports filed by the Corporation with the U.S. Securities and Exchange Commission, including our most recent annual report on Form 10-K and subsequent filings, and those identified elsewhere in this document, the following factors, among others, could cause actual results to differ materially from forward looking statements:

●	changes in monetary and fiscal policies of the Federal Reserve Board and the U.S. Government, particularly related to changes in interest rates

●	changes in general economic conditions, including unfavorable conditions and trends related to costs of living, unemployment levels, inflation, tariffs and economic growth

●	military conflicts including the conflict in the Middle East and the possible expansion of such conflict and the potential geopolitical and economic consequences

●	the potential for adverse developments in the banking industry that could have a negative impact on customer confidence

●	the possibility that the Corporation’s credit standards and its on-going credit assessment processes might not protect it from significant credit losses

●	difficulties in integrating the operations of the former Susquehanna (acquired by the Corporation October 1, 2025)

●	legislative or regulatory changes

●	downturn in demand for loan, deposit and other financial services in the Corporation’s market area

●	increased competition from other banks and non-bank providers of financial services

●	technological changes and increased technology-related costs

●	information security breaches or other technology difficulties or failures

●	changes in, or the application of, U.S GAAP with respect to the presentation of the Corporation’s financial statements

●	fraud and cyber malfunction risks as usage of artificial intelligence continues to expand

●	integration efforts between the Corporation and Susquehanna may divert the attention of the management teams of the Corporation and Susquehanna and cause a loss in the momentum of their ongoing businesses

●	success of the Corporation in Susquehanna’s geographic market area will require the Corporation to attract and retain key personnel in the market and to differentiate the Corporation from its competitors in the market

These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. All forward-looking statements and information made herein are based on management’s current beliefs and assumptions as of the date of filing of this document. The Corporation does not undertake to update forward-looking statements.

BUSINESS COMBINATION

On October 1, 2025, the Corporation completed its acquisition of Susquehanna Community Financial, Inc. (“Susquehanna”). Susquehanna was the parent company of Susquehanna Community Bank, with seven banking offices located in Lycoming, Northumberland, Snyder and Union Counties in Pennsylvania. In connection with the acquisition, the Corporation issued approximately 2.3 million shares of common stock to the former Susquehanna shareholders, resulting in merger consideration valued at $44.6 million

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and an increase in stockholders’ equity of $44.4 million, net of issuance costs. Intangible assets recorded included goodwill of $10.8 million and a core deposit intangible asset of $10.7 million. Assets acquired included loans valued at $393.6 million, securities valued at $147.6 million, bank-owned life insurance valued at $8.0 million and cash and due from banks of $6.1 million. Liabilities assumed included deposits valued at $501.5 million and short-term borrowings valued at $45.8 million. The assets purchased and liabilities assumed were recorded at their preliminary estimated fair values at the time of closing and may be adjusted for up to one year subsequent to the acquisition. There were no adjustments to the fair value measurements of assets acquired or liabilities assumed in the first six months of 2026.

EARNINGS OVERVIEW

Second Quarter 2026 as Compared to Second Quarter 2025

Second quarter 2026 net income was $14,057,000, or $0.79 per diluted share, as compared to $6,117,000, or $0.40 per diluted share, in the second quarter 2025. Significant variances were as follows:

●

Net interest income of $29,618,000 in the second quarter 2026 was $8,476,000 higher than in the second quarter 2025, including the benefit of income from growth in net earning assets resulting from the Susquehanna merger. The net interest margin increased to 4.07% in the second quarter 2026 from 3.52% in the second quarter 2025. The interest rate spread increased 0.71%, as the average yield on earning assets increased 0.31% while the average rate on interest-bearing liabilities decreased 0.40%. Average total earning assets increased $508,544,000 from the second quarter 2025, as average total loans receivable increased $480,770,000, including the impact of loans acquired from Susquehanna, and average available-for-sale debt securities increased $79,739,000 while average interest-bearing due from banks decreased $53,262,000. Average total deposits increased $487,729,000, including the impact of deposits assumed from Susquehanna, while average brokered deposits decreased $8,450,000.

●

The credit for credit losses was $1,846,000 in the second quarter 2026 as compared to a provision of $2,354,000 in the second quarter 2025. The credit for credit losses in the second quarter 2026 included the impact on the allowance for credit losses (“ACL”) of changes in qualitative factors, net recoveries of $403,000 and a reduction in loans receivable. The provision in the second quarter 2025 resulted mainly from increases in the ACL related to changes in qualitative factors and an economic forecast. In the second quarter 2026, net recoveries totaled $403,000 or 0.07% (annualized) of average loans receivable compared to net charge-offs of $548,000 or 0.12% (annualized) of average loans receivable in the second quarter 2025. During the second quarter 2026, there was a $675,000 recovery on a loan classified as nonaccrual that was paid off by a borrower through third-party financing. The ACL was 1.39% of gross loans receivable at June 30, 2026, down from 1.42% at March 31, 2026 and up from 1.32% at December 31, 2025 and 1.13% at June 30, 2025.

●

Noninterest income of $9,800,000 in the second quarter 2026 increased $1,658,000 from the second quarter 2025 result. Significant variances included the following:

Service charges on deposit accounts of $1,761,000 increased $339,000, reflecting an increase in volume of fees.

Net gains from sale of loans of $608,000 increased $296,000, reflecting an increase in volume of residential mortgage loans sold and includes the impact of $207,000 in net gains from sale of loans primarily attributable to Susquehanna region lending personnel.

Other noninterest income of $2,305,000 increased $275,000, including an increase of $123,000 in dividends on Federal Home Loan Bank of Pittsburgh stock.

Trust revenue of $2,242,000 increased $275,000, consistent with appreciation in the trading prices of many U.S. equity securities and an increase in new business.

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Brokerage and insurance revenue of $816,000 increased $262,000, reflecting an increase in volume of new transactions.

Interchange revenue from debit card transactions of $1,347,000 increased $129,000, including an increase in volume-related incentive income.

●

Noninterest expense of $23,839,000 in the second quarter 2026 increased $4,441,000 from the second quarter 2025 result, reflecting the impact of the Susquehanna acquisition. Significant variances included the following:

Salaries and employee benefits expense of $13,197,000 increased $2,130,000, including the impact of the Susquehanna acquisition, while cash and stock-based incentive compensation decreased $225,000.

Other noninterest expense of $4,799,000 increased $1,398,000 from the second quarter 2025 total. Within this category, significant variances included the following:

◾Core deposit intangible amortization expense increased $708,000, related to core deposits assumed from Susquehanna.

◾

FDIC insurance expense increased $260,000 from the second quarter of 2026, reflecting the impact of the Susquehanna acquisition.

◾

Collection expense, net increased $103,000 to $98,000 for the second quarter 2026 from a credit of $5,000 for the second quarter 2025.

Net occupancy and equipment expense of $1,728,000 was $325,000 higher than in the second quarter 2025, including the impact of the Susquehanna acquisition and increases in snow removal/lawn care, light and power and repairs and maintenance expenses.

Data processing and telecommunications expenses of $2,249,000 were $268,000 higher than in the second quarter 2025, reflecting higher software license expense of $189,000 and higher internet banking expenses of $66,000, primarily related to the Susquehanna acquisition.

●

The income tax provision of $3,368,000, or 19.3% of pre-tax income, for the second quarter 2026 increased $1,953,000 from $1,415,000, or 18.8% of pre-tax income, for the second quarter 2025 reflecting an increase in pre-tax income.

Six Months Ended June 30, 2026 as Compared to Six Months Ended June 30, 2025

Net income for the six-month period ended June 30, 2026 was $14,330,000, or $0.81 per diluted share, as compared to $12,410,000, or $0.80 per diluted share, for the first six months of 2025. Significant variances were as follows:

●

Net interest income of $58,072,000 in the first six months of 2026 was $16,955,000 higher than in the first six months of 2025, including the benefit of income from growth in net earning assets resulting from the Susquehanna merger. The consolidated net interest margin increased to 4.02% for the six months ended June 30, 2026 from 3.45% for the six months ended June 30, 2025. The interest rate spread increased 0.73%, as the average yield on earning assets increased 0.31% while the average rate on interest-bearing liabilities decreased 0.42%. Average total earning assets increased $507,185,000 as average total loans receivable increased $473,193,000, including the impact of loans acquired from Susquehanna, and average available-for-sale debt securities increased $80,636,000 while average interest-bearing due from banks decreased $47,851,000. Average total deposits increased $493,355,000, including the impact of deposits assumed from Susquehanna, while average brokered deposits decreased $16,347,000.

●

For the six months ended June 30, 2026, the provision for credit losses was $11,756,000 as compared to $2,590,000 in 2025. The increase in provision in the six months ended June 30, 2026 was driven by the impact on the ACL of an

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elevated level of net charge-offs and was partially offset by decreases in the ACL related to changes in qualitative factors. Net charge-offs totaled $10,405,000, or 0.88% (annualized) of average loans receivable in the six months ended June 30, 2026 compared to $639,000 or 0.07% (annualized) of average loans receivable in the six months ended June 30, 2025. The significant increase in charge-offs in the six months ended June 30, 2026 was due to a non-owner occupied, commercial real estate loan originated in 2022 in the amount of $24 million of which $7,200,000 was participated with another financial institution. The loss of a large tenant as well as cash flow requirements of the borrower’s other properties (which the Corporation has not financed) caused the loan to be downgraded to substandard and placed on nonaccrual status as of June 30, 2026 and March 31, 2026. The Corporation obtained an updated appraisal in April 2026 which was significantly lower than the original appraisal when the loan was originated, resulting in a charge-off of $10,056,000 which was recorded in the first quarter 2026. In the second quarter 2026, the Corporation entered into a forbearance agreement with the borrower. During the second quarter 2026, the borrower made payments consistent with the terms of the forbearance agreement, including payments the Corporation recorded as reductions in the amortized cost basis of the loan totaling $171,000. At June 30, 2026, the amortized cost basis of the loan, net of the partial charge-off, is $5,665,000.

●

Noninterest income totaled $17,995,000 in the first six months of 2026, up $2,845,000 from the total for the first six months of 2025. The inclusion of Susquehanna in 2026 contributed significantly to volume-related increases in several categories of noninterest income. Significant variances included the following:

Other noninterest income of $3,891,000 increased $729,000, including a conversion assistance payment of $241,000 related to the integration of former Susquehanna brokerage accounts to the Corporation’s wealth management platform, an increase of $201,000 in dividends on Federal Home Loan Bank of Pittsburgh stock and an increase of $82,000 in credit card interchange fees.

Service charges on deposit accounts of $3,411,000 increased $549,000, reflecting an increase in volume of fees.

Net gains from sale of loans of $978,000 increased $461,000, reflecting an increase in volume of residential mortgage loans sold and includes the impact of $340,000 in net gains from sale of loans primarily attributable to Susquehanna region lending personnel.

Interchange revenue from debit card transactions of $2,614,000 increased $360,000, including an increase in volume-related incentive income.

Brokerage and insurance revenues of $1,404,000 increased $352,000, reflecting an increase in volume of new transactions.

Trust revenue of $4,327,000 increased $258,000, consistent with appreciation in the trading prices of many U.S. equity securities and an increase in new business.

●

Noninterest expense totaled $46,551,000 for the first six months of 2026, an increase of $8,110,000 from the total for the first six months of 2025. The inclusion of Susquehanna in 2026 contributed to volume-related increases in several categories of noninterest expense. Significant variances included the following:

Salaries and employee benefits expense of $26,398,000 increased $3,572,000, including the impact of the Susquehanna acquisition. Health insurance costs increased $608,000, or 32%, due to an increase in claims on the partially self-insured plan while cash and stock-based incentive compensation decreased $503,000.

Other noninterest expense of $8,163,000 increased $2,408,000. Within this category, significant variances included the following:

◾

Core deposit intangible amortization expense increased $1,417,000, including $1,431,000 related to core deposits assumed from Susquehanna.

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◾

FDIC insurance expense increased $503,000 from 2025, reflecting the impact of the Susquehanna acquisition.

Net occupancy and equipment expense was $757,000 higher than in 2025, including $412,000 related to the Susquehanna acquisition and increases in snow removal/lawn care, light and power and repairs and maintenance.

Data processing expense was $646,000 higher than in 2025 reflecting higher software license expense of $368,000 and higher internet banking expenses of $236,000, mainly due to the Susquehanna acquisition.

Professional fees increased $360,000, including an increase in employment search firm fees.

ATM and interchange expenses increased $328,000, reflecting the impact of the Susquehanna acquisition.

●

The income tax provision of $3,430,000, or 19.3% of pre-tax income, for 2026 increased $604,000 from $2,826,000, or 18.5% of pre-tax income, for 2025 reflecting an increase in pre-tax income for 2026.

TABLE I – QUARTERLY FINANCIAL DATA


(Dollars In Thousands,	For the Three Months Ended :
Except Per Share Data)	June 30,		March 31,		December 31,		September 30,		June 30,
(Unaudited)	2026		2026		2025		2025		2025
Interest and dividend income	$	41,566	$	40,588	$	41,404	$	33,650	$	32,454
Interest expense		11,948		12,134		12,931		11,387		11,312
Net interest income		29,618		28,454		28,473		22,263		21,142
(Credit) provision for credit losses		(1,846)		13,602		1,320		2,163		2,354
Net interest income after (credit) provision for credit losses		31,464		14,852		27,153		20,100		18,788
Noninterest income		9,800		8,195		8,398		7,304		8,142
Merger-related expenses		0		0		6,891		882		167
Other noninterest expenses		23,839		22,712		23,268		18,507		19,231
Income before income tax provision		17,425		335		5,392		8,015		7,532
Income tax provision		3,368		62		926		1,464		1,415
Net income	$	14,057	$	273	$	4,466	$	6,551	$	6,117
Net income attributable to common shares	$	14,057	$	273	$	4,437	$	6,498	$	6,068
Basic and diluted earnings per common share	$	0.79	$	0.02	$	0.25	$	0.42	$	0.40

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NONINTEREST INCOME

TABLE II – COMPARISON OF NONINTEREST INCOME


(Dollars in Thousands)	Three Months Ended
	June 30,					$	%
	2026		2025			Change	Change
Trust revenue	$	2,242	$	1,967	$	275	14.0	%
Brokerage and insurance revenue		816		554		262	47.3	%
Service charges on deposit accounts		1,761		1,422		339	23.8	%
Interchange revenue from debit card transactions		1,347		1,218		129	10.6	%
Net gains from sales of loans		608		312		296	94.9	%
Loan servicing fees, net		193		173		20	11.6	%
Increase in cash surrender value of life insurance		527		466		61	13.1	%
Other noninterest income		2,305		2,030		275	13.5	%
Realized gains on available-for-sale debt securities, net		1		0		1	N/M
Total noninterest income	$	9,800	$	8,142	$	1,658	20.4	%


(Dollars in Thousands)	Six Months Ended
	June 30,					$	%
	2026		2025			Change	Change
Trust revenue	$	4,327	$	4,069	$	258	6.3	%
Brokerage and insurance revenue		1,404		1,052		352	33.5	%
Service charges on deposit accounts		3,411		2,862		549	19.2	%
Interchange revenue from debit card transactions		2,614		2,254		360	16.0	%
Net gains from sales of loans		978		517		461	89.2	%
Loan servicing fees, net		301		311		(10)	(3.2)	%
Increase in cash surrender value of life insurance		1,042		923		119	12.9	%
Other noninterest income		3,891		3,162		729	23.1	%
Realized gains on available-for-sale debt securities, net		27		0		27	N/M
Total noninterest income	$	17,995	$	15,150	$	2,845	18.8	%

N/M Not Meaningful

NONINTEREST EXPENSE

TABLE III - COMPARISON OF NONINTEREST EXPENSE


(Dollars in Thousands)	Three Months Ended
	June 30,				$		%
	2026		2025		Change		Change
Salaries and employee benefits	$	13,197	$	11,067	$	2,130	19.2	%
Net occupancy and equipment expense		1,728		1,403		325	23.2	%
Data processing and telecommunications expense		2,249		1,981		268	13.5	%
Automated teller machine and interchange expense		535		403		132	32.8	%
Pennsylvania shares tax		587		470		117	24.9	%
Professional fees		744		506		238	47.0	%
Other noninterest expense		4,799		3,401		1,398	41.1	%
Total noninterest expense, excluding merger-related expenses	$	23,839	$	19,231	$	4,608	24.0	%
Merger-related expenses		0		167		(167)	0.0	%
Total noninterest expense	$	23,839	$	19,398	$	4,441	22.9	%

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(Dollars in Thousands)	Six Months Ended
	June 30,				$		%
	2026		2025		Change		Change
Salaries and employee benefits		26,398	$	22,826	$	3,572	15.6	%
Net occupancy and equipment expense		3,619		2,862		757	26.5	%
Data processing and telecommunications expense		4,698		4,052		646	15.9	%
Automated teller machine and interchange expense		1,118		790		328	41.5	%
Pennsylvania shares tax		1,172		966		206	21.3	%
Professional fees		1,383		1,023		360	35.2	%
Other noninterest expense		8,163		5,755		2,408	41.8	%
Total noninterest expense, excluding merger-related expenses		46,551		38,274		8,277	21.6	%
Merger-related expenses		0		167		(167)	(100.0)	%
Total noninterest expense	$	46,551	$	38,441	$	8,110	21.1	%

Additional detailed information concerning fluctuations in the Corporation’s earnings results and other financial information are provided in other sections of Management’s Discussion and Analysis.

CRITICAL ACCOUNTING POLICIES

The presentation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect many of the reported amounts and disclosures. Actual results could differ from these estimates.

Business Combinations – The Corporation accounts for its mergers and acquisitions using the acquisition method of accounting under the provisions of FASB ASC Topic 805 ("ASC 805"), Business Combinations. Under ASC 805, the assets acquired, including identified intangible assets such as core deposit intangibles and liabilities assumed in a business combination are recognized at their acquisition-date fair value, while transaction costs and restructuring costs associated with the business combination are expensed as incurred. The excess of the merger consideration over the fair value of assets acquired and liabilities assumed, if any, is allocated to goodwill.

The valuations are based upon management’s assumptions of future growth rates, future attrition, discount rates and other relevant factors, which involves a significant level of estimation and uncertainty. In addition, management engaged independent third-party specialists to assist in the development of the fair values of the acquired assets and assumed liabilities. The preliminary estimates of fair values may be adjusted for a period of time subsequent to the acquisition date if new information is obtained about facts and circumstances that existed as of the merger date that, if known, would have affected the measurement of the amounts recognized as of that date. Adjustments would be recorded to goodwill during the current reporting period.

Examples of the impacted acquired assets and assumed liabilities include loans, deposits, identifiable intangible assets and certain other assets and liabilities.

For acquired loans at the merger date, management evaluated and classified loans based upon whether the loans had experienced a more-than-insignificant amount of credit deterioration since origination. To determine the fair value of the loans, significant estimates and assumptions were applied, including projected cash flows, discount rates, repayment speeds, credit loss severity rates, default rates and realizable collateral values. In November 2025, the Financial Accounting Standards Board issued Accounting Standards Update 2025-08, Financial Instruments – Credit Losses (“ASU 2025-08”). The Corporation adopted ASU 2025-08 in accounting for the Susquehanna acquisition. Consistent with ASU 2025-08, the Corporation recorded loans receivable at fair value plus an allowance for credit losses of $7.1 million, including allowances totaling $2.6 million on loans with more than insignificant deterioration in credit quality subsequent to origination (“PCD”) loans and an allowance of $4.5 million on non-PCD loans at acquisition.

Allowance for Credit Losses on Loans – A material estimate that is particularly susceptible to significant change is the determination of the allowance for credit losses (ACL) on loans. The Corporation maintains an ACL on loans which represents management’s estimate of expected net charge-offs over the life of the loans. The ACL includes two primary components: (i) an allowance established on loans which share similar risk characteristics collectively evaluated for credit losses (collective basis), and (ii) an allowance established on loans which do not share similar risk characteristics with any loan segment and which are individually evaluated for credit losses (individual basis). Management considers the determination of the ACL on loans to be critical because it requires significant judgment

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regarding estimates of expected credit losses based on the Corporation’s historical loss experience, current conditions and economic forecasts. Management’s evaluation is based upon a continuous review of the Corporation’s loans, with consideration given to evaluations resulting from examinations performed by regulatory authorities. Note 7 to the unaudited consolidated financial statements provides an overview of the process management uses for determining the ACL, and additional discussion of the ACL is provided in a separate section below of Management’s Discussion and Analysis.

The ACL may increase or decrease due to changes in economic conditions affecting borrowers and macroeconomic variables, including new information regarding existing problem loans, identification of additional problem loans, changes in the fair value of underlying collateral, unforeseen events such as natural disasters and pandemics, and other factors. Because current economic conditions and forecasts can change and future events are inherently difficult to predict, the anticipated amount of estimated credit losses on loans, and therefore the appropriateness of the ACL, could change significantly.

The allowance for credit losses is adjusted by qualitative factors to capture current economic conditions and risk characteristics not fully reflected in historical data. During the three months ended June 30, 2026, the Corporation refined its estimation methodology for calculating some of the qualitative factors, including changes in the application of external data used to assess trends in regional economic conditions, commercial real estate values and residential real estate values. Management believes these refinements in methodology result in an improved estimate of the impact on the ACL of recent trends in the external data.

NET INTEREST INCOME

The Corporation’s primary source of operating income is net interest income, which is equal to the difference between the amounts of interest income and interest expense. Tables IV, V and VI include information regarding the Corporation’s net interest income for the three-month and six-month periods ended June 30, 2026 and 2025. In each of these tables, the amounts of interest income earned on tax-exempt securities and loans have been adjusted to a fully taxable-equivalent basis. Management believes presentation of net interest income on a fully taxable-equivalent basis, which is a non-U.S. GAAP financial measure, provides investors with meaningful information for purposes of comparing returns on tax-exempt securities and loans with returns on taxable securities and loans. Accordingly, the amount of net interest income on a fully taxable-equivalent basis reflected in these tables exceed the net interest income amounts presented in the consolidated financial statements. A reconciliation of net interest income on a fully taxable-equivalent basis to the closest U.S. GAAP financial measure is included with Table IV. The discussion that follows is based on amounts in the related tables.

Three-Month Periods Ended June 30, 2026 and 2025

Fully taxable equivalent net interest income (a non-U.S. GAAP measure) was $29,855,000 in the second quarter of 2026, $8,493,000 (39.8%) higher than in the second quarter of 2025, including the benefit of income from growth in net earning assets resulting from the Susquehanna merger. As presented in Table VI, the net impact of changes in volume increased net interest income by $6,058,000 in the second quarter 2026 as compared to second quarter 2025 and changes in interest rates increased net interest income by $2,435,000 in the second quarter 2026 as compared to second quarter 2025. The increase in net interest income reflected an increase in interest income of $9,129,000 and an increase in interest expense of $636,000. As presented in Table V, the Net Interest Margin was 4.07% in the second quarter 2026 as compared to 3.52% in the second quarter 2025, and the “Interest Rate Spread” (excess of average rate of return on earning assets over average cost of funds on interest-bearing liabilities) increased to 3.55% in 2026 from 2.84% in 2025. The average yield on earning assets of 5.70% was 0.31% higher in 2026 compared to 2025, and the average rate on interest-bearing liabilities of 2.15% in 2026 was 0.40% lower. Accretion of acquisition accounting valuation adjustments related to the Susquehanna merger had a positive impact of $416,000 including accretion of $379,000 on loans and $37,000 on time deposits.

INTEREST INCOME AND EARNING ASSETS

Interest income totaled $41,803,000 in 2026, an increase of $9,129,000, or 27.9%, from 2025.

Interest and fees from loans receivable increased $8,568,000 in 2026 as compared to 2025. In 2026, the fully taxable equivalent yield on loans was 6.29%, up from 6.07% in 2025, reflecting the effects of loans acquired from Susquehanna and valued based on current market yields as of October 1, 2025 as well as gradual paydowns on loans originated prior to interest rates rising in 2022 and 2023 with more recent loans originated at higher market rates. Average outstanding loans receivable increased $480,770,000 (25.3%) to $2,382,190,000 in 2026 from $1,901,420,000 in 2025 including the impact of the Susquehanna acquisition as well as organic growth.

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Interest income from available-for-sale debt securities, on a fully taxable-equivalent basis, totaled $4,156,000 in 2026, up $1,169,000 from 2025. The average balance (at amortized cost) increased $79,739,000 from 2025 and the average yield on the portfolio increased to 3.16% in 2026 from 2.67% in 2025. The Susquehanna merger resulted in an initial increase in available-for-sale debt securities of $147,617,000. The majority of these securities were sold, and a significant portion of the proceeds were reinvested in securities contributing to the increase in average balance and yield.

Income from interest-bearing due from banks totaled $232,000 in 2026, a decrease of $623,000 from 2025. Within this category, the largest asset balance in 2026 and 2025 has been interest-bearing deposits held with the Federal Reserve. The average yield on interest-bearing due from banks decreased to 3.50% in 2026 from 4.29% in 2025. The average balance of interest-bearing due from banks was $26,606,000 in 2026, down from $79,868,000 in 2025.

INTEREST EXPENSE AND INTEREST-BEARING LIABILITIES

Interest expense increased $636,000 to $11,948,000 in 2026 from $11,312,000 in 2025.

Interest expense on deposits increased $536,000, as the average balance of interest-bearing deposits increased $432,070,000 while the average rate on interest-bearing deposits decreased to 1.95% in 2026 from 2.34% in 2025. The increase in average deposit balances included the impact of the Susquehanna acquisition as well as organic growth. In comparing 2026 to 2025, average interest checking deposits increased $154,475,000, average savings deposits increased $149,192,000, average time deposits increased $93,499,000, average noninterest-bearing demand deposits increased $55,659,000 and average total money market accounts increased $34,904,000.

Interest expense on borrowed funds increased $100,000 in 2026 as compared to 2025. Interest expense on short-term borrowings was $337,000 in 2026 compared to $1,000 in 2025 as the average balance of short-term borrowings increased to $34,880,000 in 2026 from $980,000 in 2025. Interest expense on long-term borrowings (FHLB advances) decreased $251,000 to $1,423,000 in 2026 from $1,674,000 in 2025. The average balance of long-term borrowings was $133,004,000 in 2026, down from an average balance of $149,704,000 in 2025. Borrowings are classified as long-term within the Tables based on their term at origination or assumption in business combinations. The average rate on total borrowed funds was 4.21% in 2026 compared to 4.27% in 2025.

On June 1, 2026, senior notes totaling $15,000,000 matured and were redeemed. Also on June 1, 2026, the interest rate on subordinated notes totaling $25,000,000 adjusted from a fixed rate of 3.25% to a variable rate that will reset quarterly based on the Term Secured Overnight Financing Rate plus 259 basis points. At June 30, 2026, the interest rate on the outstanding subordinated notes was 6.25%. The Corporation is entitled to redeem the subordinated notes, in whole or in part, at any time on or after June 1, 2026, subject to regulatory approval to the extent required.

More information regarding borrowed funds is provided in Note 9 to the unaudited consolidated financial statements.

Six-Month Periods Ended June 30, 2026 and 2025

For the six-month periods, fully taxable equivalent net interest income was $58,540,000 in 2026, which was $16,992,000 (40.9%) higher than in 2025 including the benefit of income from growth in net earning assets resulting from the Susquehanna merger. The increase in net interest income reflected an increase in interest income of $18,028,000 and an increase in interest expense of $1,036,000. As presented in Table VI, the net impact of changes in volume increased net interest income by $12,007,000 in the six-month period ended June 30, 2026 as compared to the six-month period ended June 30, 2025 and changes in interest rates increased net interest income by $4,985,000 in the six-month period ended June 30, 2026 as compared to the six-month period ended June 30, 2025. As presented in Table V, the Net Interest Margin was 4.02% in the first six months of 2026 as compared to 3.45% in the first six months of 2025, and the “Interest Rate Spread” (excess of average rate of return on earning assets over average cost of funds on interest-bearing liabilities) increased to 3.50% in 2026 from 2.77% in 2025. The average yield on earning assets of 5.68% was 0.31% higher in 2026 as compared to 2025, while the average rate on interest-bearing liabilities of 2.18% in 2026 was 0.42% lower compared to 2025.

INTEREST INCOME AND EARNING ASSETS

Interest income totaled $82,622,000 in 2026, an increase of $18,028,000 from 2025.

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

Interest and fees from loans receivable increased $16,743,000 in 2026 as compared to 2025. In 2026, the fully taxable equivalent yield on loans was 6.27%, up from 6.05% in 2025, reflecting the effects of loans acquired from Susquehanna and valued based on current market yields as of October 1, 2025 as well as gradual paydowns on loans originated prior to interest rates rising in 2022 and 2023 with more recent loans originated at higher market rates. Average outstanding loans receivable increased $473,193,000 (24.9%) to $2,373,625,000 in 2026 from $1,900,432,000 in 2025 including the impact of the Susquehanna acquisition as well as organic growth.

Interest income from available-for-sale debt securities, on a fully taxable-equivalent basis, totaled $8,321,000 in 2026, up $2,384,000 from 2025. The average balance (at amortized cost) increased $80,636,000 from 2025 and the average yield on the portfolio increased to 3.17% in 2026 from 2.66% in 2025. The Susquehanna merger resulted in an initial increase in available-for-sale debt securities of $147,617,000. The majority of these securities were sold, and a significant portion of the proceeds were reinvested in securities contributing to the increase in average balance and yield.

Income from interest-bearing due from banks totaled $450,000 in 2026, a decrease of $1,126,000 from 2025. Within this category, the largest asset balance in 2026 and 2025 has been interest-bearing deposits held with the Federal Reserve. The average yield on interest-bearing due from banks decreased to 3.48% in 2026 from 4.30% in 2025. The average balance of interest-bearing due from banks was $26,064,000 in 2026, down from $73,915,000 in 2025.

INTEREST EXPENSE AND INTEREST-BEARING LIABILITIES

For the six-month periods, interest expense increased $1,036,000 to $24,082,000 in 2026 from $23,046,000 in 2025.

Interest expense on deposits increased $1,002,000, as the average balance of interest-bearing deposits increased $433,767,000 while the average rate on interest-bearing deposits decreased to 1.98% in 2026 from 2.40% in 2025. The increase in average deposit balances included the impact of the Susquehanna acquisition as well as organic growth. Average total deposits (interest-bearing and noninterest-bearing) amounted to $2,568,895,000 for the first six months of 2026, up $493,355,000 (23.8%) from the first six months of 2025. Within average total deposits, average brokered deposits were $1,184,000 with an average interest rate of 3.75% in 2026, down from $17,531,000 with an average interest rate of 4.69% in 2025. In comparing 2026 to 2025, average savings accounts increased $157,594,000, average interest checking deposits increased $142,667,000, average time deposits increased $100,821,000, average noninterest-bearing demand deposits increased $59,588,000 and average money market accounts increased $32,685,000.

Interest expense on borrowed funds increased $34,000 in 2026 as compared to 2025. Interest expense on short-term borrowings of $613,000 in 2026 was up from $1,000 in 2025 as the average balance of short-term borrowings increased to $31,560,000 in 2026 from $1,189,000 in 2025. The average rate on short-term borrowings was 3.92% in 2026 compared to 0.17% in 2025. Interest expense on long-term borrowings (FHLB advances) decreased $594,000 to $2,869,000 in 2026 from $3,463,000 in 2025 as the average balance of long-term borrowings decreased to $133,516,000 in 2026 from $156,013,000 in 2025 and the average rate on long-term borrowings was 4.33% in 2026 compared to 4.48% in 2025. Borrowings are classified as long-term within the Tables based on their term at origination or assumption in business combinations. The average rate on total borrowed funds was 4.19% in 2026 and 4.27% in 2025.

More information regarding borrowed funds is provided in Note 9 to the unaudited consolidated financial statements.

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

TABLE IV - ANALYSIS OF INTEREST INCOME AND EXPENSE


	Three Months Ended							Six Months Ended
	June 30,				Increase/		.	June 30,				Increase/
(In Thousands)	2026		2025		(Decrease)			2026		2025		(Decrease)
INTEREST INCOME
Interest-bearing due from banks	$	232	$	855	$	(623)		$	450	$	1,576	$	(1,126)
Available-for-sale debt securities:
Taxable		3,507		2,329		1,178			7,025		4,631		2,394
Tax-exempt		649		658		(9)			1,296		1,306		(10)
Total available-for-sale debt securities		4,156		2,987		1,169			8,321		5,937		2,384
Loans receivable:
Taxable		36,583		28,051		8,532			72,224		55,554		16,670
Tax-exempt		779		743		36			1,544		1,471		73
Total loans receivable		37,362		28,794		8,568			73,768		57,025		16,743
Other earning assets		53		38		15			83		56		27
Total Interest Income		41,803		32,674		9,129			82,622		64,594		18,028

INTEREST EXPENSE
Interest-bearing deposits:
Interest checking		2,513		2,708		(195)			4,841		5,435		(594)
Money market		1,914		1,948		(34)			3,764		3,929		(165)
Savings		739		49		690			1,587		98		1,489
Time deposits		4,654		4,579		75			9,686		9,414		272
Total interest-bearing deposits		9,820		9,284		536			19,878		18,876		1,002
Borrowed funds:
Short-term		337		1		336			613		1		612
Long-term - FHLB advances		1,423		1,674		(251)			2,869		3,463		(594)
Senior notes, net		81		120		(39)			202		241		(39)
Subordinated debt, net		287		233		54			520		465		55
Total borrowed funds		2,128		2,028		100			4,204		4,170		34
Total Interest Expense		11,948		11,312		636			24,082		23,046		1,036

Net Interest Income	$	29,855	$	21,362	$	8,493		$	58,540	$	41,548	$	16,992

Note: Interest income from tax-exempt securities and loans has been adjusted to a fully taxable-equivalent basis (a non-U.S. GAAP measure), using the Corporation’s marginal federal income tax rate of 21%. The following table reconciles net interest income under U.S. GAAP as compared to net interest income as adjusted to a fully taxable-equivalent basis.


(In Thousands)	Three Months Ended						Six Months Ended
	June 30,				Increase/		June 30,				Increase/
	2026		2025		(Decrease)		2026		2025		(Decrease)
Net Interest Income Under U.S. GAAP	$	29,618	$	21,142	$	8,476	$	58,072	$	41,117	$	16,955
Add: fully taxable-equivalent interest income adjustment from tax-exempt securities		87		79		8		172		154		18
Add: fully taxable-equivalent interest income adjustment from tax-exempt loans		150		141		9		296		277		19
Net Interest Income as adjusted to a fully taxable-equivalent basis - Non-U.S. GAAP	$	29,855	$	21,362	$	8,493	$	58,540	$	41,548	$	16,992

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

TABLE V - Analysis of Average Daily Balances and Rates


(Dollars in Thousands)	Three Months		(3)		Three Months		(3)		Six Months		(3)		Six Months		(3)
	Ended		Rate of		Ended		Rate of		Ended		Rate of		Ended		Rate of
	6/30/2026		Return/		6/30/2025		Return/		6/30/2026		Return/		6/30/2025		Return/
	Average		Cost of		Average		Cost of		Average		Cost of		Average		Cost of
	Balance		Funds %		Balance		Funds %		Balance		Funds %		Balance		Funds %
EARNING ASSETS
Interest-bearing due from banks	$	26,606	3.50	%	$	79,868	4.29	%	$	26,064	3.48	%	$	73,915	4.30	%
Available-for-sale debt securities, at amortized cost:
Taxable		424,311	3.32	%		338,539	2.76	%		425,912	3.33	%		339,045	2.75	%
Tax-exempt (1)		103,807	2.51	%		109,840	2.40	%		104,257	2.51	%		110,488	2.38	%
Total available-for-sale debt securities		528,118	3.16	%		448,379	2.67	%		530,169	3.17	%		449,533	2.66	%
Loans receivable:
Taxable		2,293,653	6.40	%		1,814,171	6.20	%		2,282,445	6.38	%		1,811,622	6.18	%
Tax-exempt (1)		88,537	3.53	%		87,249	3.42	%		91,180	3.41	%		88,810	3.34	%
Total loans receivable (2)		2,382,190	6.29	%		1,901,420	6.07	%		2,373,625	6.27	%		1,900,432	6.05	%
Other earning assets		4,130	5.15	%		2,833	5.38	%		3,515	4.76	%		2,308	4.89	%
Total Earning Assets		2,941,044	5.70	%		2,432,500	5.39	%		2,933,373	5.68	%		2,426,188	5.37	%
Bank-owned life insurance		61,796				51,844				61,537				51,615
Intangible assets		73,711				54,425				74,118				54,477
Other assets		78,605				53,390				81,917				51,421
Total Assets	$	3,155,156			$	2,592,159			$	3,150,945			$	2,583,701

INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Interest checking	$	697,007	1.45	%	$	542,532	2.00	%	$	683,564	1.43	%	$	540,897	2.03	%
Money market		399,142	1.92	%		364,238	2.15	%		392,401	1.93	%		359,716	2.20	%
Savings		347,745	0.85	%		198,553	0.10	%		354,863	0.90	%		197,269	0.10	%
Time deposits		579,748	3.22	%		486,249	3.78	%		591,033	3.30	%		490,212	3.87	%
Total interest-bearing deposits		2,023,642	1.95	%		1,591,572	2.34	%		2,021,861	1.98	%		1,588,094	2.40	%
Borrowed funds:
Short-term		34,880	3.88	%		980	0.41	%		31,560	3.92	%		1,189	0.17	%
Long-term - FHLB advances		133,004	4.29	%		149,704	4.49	%		133,516	4.33	%		156,013	4.48	%
Senior notes, net		10,050	3.23	%		14,926	3.22	%		12,501	3.26	%		14,917	3.26	%
Subordinated debt, net		24,993	4.61	%		24,874	3.76	%		24,979	4.20	%		24,860	3.77	%
Total borrowed funds		202,927	4.21	%		190,484	4.27	%		202,556	4.19	%		196,979	4.27	%
Total Interest-bearing Liabilities		2,226,569	2.15	%		1,782,056	2.55	%		2,224,417	2.18	%		1,785,073	2.60	%
Demand deposits (noninterest bearing)		553,828				498,169				547,034				487,446
Other liabilities		35,510				29,260				36,820				30,761
Total Liabilities		2,815,907				2,309,485				2,808,271				2,303,280
Stockholders' equity, excluding accumulated other comprehensive loss		363,636				315,520				365,233				313,982
Accumulated other comprehensive loss		(24,387)				(32,846)				(22,559)				(33,561)
Total Stockholders' Equity		339,249				282,674				342,674				280,421
Total Liabilities and Stockholders' Equity	$	3,155,156			$	2,592,159			$	3,150,945			$	2,583,701
Interest Rate Spread			3.55	%			2.84	%			3.50	%			2.77	%
Net Interest Income/Earning Assets (Net Interest Margin)			4.07	%			3.52	%			4.02	%			3.45	%

Total Deposits (Interest-bearing and Demand)	$	2,577,470			$	2,089,741			$	2,568,895			$	2,075,540
Brokered Deposits	$	132	3.04	%	$	8,582	4.47	%	$	1,184	3.75	%	$	17,531	4.69	%

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

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

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

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

TABLE VI - ANALYSIS OF VOLUME AND RATE CHANGES


(In Thousands)	Three Months Ended 6/30/2026 vs. 6/30/2025						.	Six Months Ended 6/30/2026 vs. 6/30/2025
	Change in		Change in		Total			Change in		Change in		Total
	Volume		Rate		Change			Volume		Rate		Change
EARNING ASSETS
Interest-bearing due from banks	$	(487)	$	(136)	$	(623)		$	(870)	$	(256)	$	(1,126)
Available-for-sale debt securities:
Taxable		657		521		1,178			1,323		1,071		2,394
Tax-exempt		(38)		29		(9)			(76)		66		(10)
Total available-for-sale debt securities		619		550		1,169			1,247		1,137		2,384
Loans receivable:
Taxable		7,622		910		8,532			14,848		1,822		16,670
Tax-exempt		12		24		36			40		33		73
Total loans receivable		7,634		934		8,568			14,888		1,855		16,743
Other earning assets		17		(2)		15			29		(2)		27
Total Interest Income		7,783		1,346		9,129			15,294		2,734		18,028

INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Interest checking		663		(858)		(195)			1,234		(1,828)		(594)
Money market		178		(212)		(34)			339		(504)		(165)
Savings		63		627		690			135		1,354		1,489
Time deposits		804		(729)		75			1,770		(1,498)		272
Total interest-bearing deposits		1,708		(1,172)		536			3,478		(2,476)		1,002
Borrowed funds:
Short-term		235		101		336			332		280		612
Long-term - FHLB advances		(179)		(72)		(251)			(486)		(108)		(594)
Senior notes, net		(40)		1		(39)			(39)		0		(39)
Subordinated debt, net		1		53		54			2		53		55
Total borrowed funds		17		83		100			(191)		225		34
Total Interest Expense		1,725		(1,089)		636			3,287		(2,251)		1,036

Net Interest Income	$	6,058	$	2,435	$	8,493		$	12,007	$	4,985	$	16,992

(1)	Changes in income on tax-exempt securities and loans are presented on a fully taxable-equivalent basis, using the Corporation’s marginal federal income tax rate of 21%.

(2)	The change in interest due to both volume and rates has been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amount of the change in each.

INCOME TAXES

The income tax provision in interim periods is based on the Corporation’s estimate of the effective tax rate expected to be applicable for the full year. The income tax provision for the second quarter 2026 of $3,368,000 was $1,953,000 higher than the provision for the second quarter 2025, and the provision for the six months ended June 30, 2026 of $3,430,000 was $604,000 higher than the amount for the first six months of 2025 due to a higher amount of pre-tax income in 2026. The effective tax rate (tax provision as a percentage of pre-tax income) was 19.3% in the second quarter 2026 compared to 18.8% in the second quarter 2025 and 19.3% for the first six months of 2026 as compared to 18.5% for the first six months of 2025. The Corporation’s effective tax rates differ from the statutory federal rate of 21% principally because of the effects of tax-exempt interest income, nondeductible interest expense, state income taxes and other permanent differences.

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

The Corporation recognizes deferred tax assets and liabilities based on differences between the consolidated financial statement carrying amounts and the tax basis of assets and liabilities. The net deferred tax asset at June 30, 2026 and December 31, 2025 represents the following temporary difference components:


		June 30,			December 31,
(In Thousands)		2026			2025
Deferred tax assets:
Unrealized holding losses on available-for-sale debt securities		$	6,848		$	6,531
Allowance for credit losses on loans			7,098			6,765
Acquisition accounting adjustment on loans			1,450			1,727
Deferred compensation			2,090			2,008
Deferred loan origination fees			722			712
Operating leases liability			748			780
Net operating loss carryforward			263			305
Accrued incentive compensation			290			735
Bank premises and equipment			100			56
Other deferred tax assets			2,242			1,708
Total deferred tax assets			21,851			21,327

Deferred tax liabilities:
Core deposit intangibles			2,166			2,522
Right-of-use assets from operating leases			722			780
Mortgage servicing rights			178			210
Defined benefit plans - ASC 835			88			97
Other deferred tax liabilities			80			103
Total deferred tax liabilities			3,234			3,712
Deferred tax asset, net		$	18,617		$	17,615

The Corporation regularly reviews deferred tax assets for recoverability based on history of earnings, expectations for future earnings and expected timing of reversals of temporary differences. Realization of deferred tax assets ultimately depends on the existence of sufficient taxable income.

Management believes the recorded net deferred tax asset at June 30, 2026 is fully realizable; however, if management determines the Corporation will be unable to realize all or part of the net deferred tax asset, the Corporation would adjust the deferred tax asset, which would negatively impact earnings.

SECURITIES

Management continually evaluates several objectives in determining the size, securities mix and other characteristics of the available-for-sale debt securities (investment) portfolio. Key objectives include supporting liquidity needs and maximizing return on earning assets within reasonable risk parameters.

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

The composition of the available-for-sale debt securities portfolio at June 30, 2026 and December 31, 2025, 2024 and 2023 is as follows:


(Dollars In Thousands)	June 30, 2026					December 31, 2025					December 31, 2024					December 31, 2023
	Amortized		Fair			Amortized		Fair			Amortized		Fair			Amortized		Fair
	Cost		Value			Cost		Value			Cost		Value			Cost		Value
Obligations of the U.S. Treasury	$	8,036		7,433		$	8,047		7,482		$	8,067		7,118		$	12,325		11,290
Obligations of U.S. Government agencies		10,776		10,017			11,423		10,749			10,154		9,025			11,119		9,946
Bank holding company debt securities		40,097		38,857			36,103		34,076			28,958		25,246			28,952		23,500
Obligations of states and political subdivisions:
Tax-exempt		102,543		95,961			105,149		98,359			111,995		101,302			113,464		104,199
Taxable		50,172		43,854			50,306		44,152			51,147		42,506			58,720		50,111
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities		150,796		144,681			148,865		143,921			104,378		94,414			105,549		95,405
Residential collateralized mortgage obligations		59,098		56,477			65,782		63,707			53,389		49,894			50,212		46,462
Commercial mortgage-backed securities		98,443		91,539			99,095		92,631			73,470		64,501			76,412		66,682
Private label commercial mortgage-backed securities		0		0			3,490		3,489			8,365		8,374			8,215		8,160
Asset-backed securities,
Collateralized loan obligations		8,000		8,010			8,000		8,009			0		0			0		0
Total Available-for-Sale Debt Securities	$	527,961	$	496,829		$	536,260	$	506,575		$	449,923	$	402,380		$	464,968	$	415,755

Net Unrealized Loss			$	(31,132)				$	(29,685)				$	(47,543)				$	(49,213)
Net Unrealized Loss as a % of Amortized Cost				(5.9)	%				(5.5)	%				(10.6)	%				(10.6)	%

As reflected in the table above, the fair value of available-for-sale securities was lower than the amortized cost basis by $31,132,000, or 5.9%, at June 30, 2026, $29,685,000, or 5.5%, at December 31, 2025, $47,543,000, or 10.6%, at December 31, 2024 and $49,213,000, or 10.6%, at December 31, 2023. The volatility in the fair value of the portfolio, including the significant reduction in fair value, resulted from changes in interest rates.

Additional information regarding the potential impact of interest rate changes on all of the Corporation’s financial instruments is provided in Item 3, Quantitative and Qualitative Disclosures about Market Risk.

As described in Note 6 to the unaudited consolidated financial statements, management determined the Corporation does not have the intent to sell, nor is it more likely than not that it will be required to sell, available-for-sale debt securities in an unrealized loss position at June 30, 2026 before it is able to recover the amortized cost basis. Further, management reviewed the Corporation’s holdings as of June 30, 2026 and concluded there were no credit-related declines in fair value. Additional information related to the types of securities held at June 30, 2026, other than securities issued or guaranteed by U.S. Government entities or agencies, was as follows:

●

Bank holding company debt securities – The Corporation’s holdings of bank holding company debt securities included one senior and fourteen subordinated securities with face amounts ranging from $250,000 to $5 million. There have been no payment defaults on the securities. All of the obligors have publicly traded common stock. At June 30, 2026, one of the securities with a face amount of $400,000 is unrated, and the rest of securities have external ratings ranging from BBB-/Baa3 to A-.

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

●

Obligations of states and political subdivisions (municipal bonds) – All of the Corporation’s holdings of municipal bonds were investment grade and there have been no payment defaults. Summary ratings information at June 30, 2026, based on the amortized cost basis and reflecting the lowest enhanced or underlying rating by Moody’s, Standard & Poors or Fitch, is as follows: AAA or pre-refunded – 20% of the portfolio; AA – 72%; A – 8%.

●

Collateralized loan obligations (CLOs) – There were three CLOs securities, all of which were from the most senior payment (subordination) classes of their respective issuances. These securities were investment grade (rated Aaa), and there have been no payment defaults on these securities.

Based on the results of management’s assessment, there was no ACL required on available-for-sale debt securities in an unrealized loss position at June 30, 2026.

FINANCIAL CONDITION

This section includes information regarding the Corporation’s lending activities or other significant changes or exposures that are not otherwise addressed in Management’s Discussion and Analysis. Significant changes in the average balances of the Corporation’s earning assets and interest-bearing liabilities are described in the Net Interest Income section of Management’s Discussion and Analysis. Other significant balance sheet items, including securities, the allowance for credit losses and stockholders’ equity, are discussed in separate sections of Management’s Discussion and Analysis. There are no significant concerns that have arisen related to the Corporation’s off-balance sheet loan commitments or outstanding letters of credit at June 30, 2026.

Table VII shows the composition of the loan portfolio at June 30, 2026 and at year-end from 2021 through 2025. Throughout this time period, the portfolio was primarily commercial in nature. At June 30, 2026, commercial loans represented 76% of the portfolio while residential loans totaled 19% of the portfolio. As shown in Table VII, total loans receivable were higher by $458,517,000 at December 31, 2025 as compared to December 31, 2024. On October 1, 2025, $393,587,000 of gross loans receivable, net of purchase accounting adjustments, were recorded pursuant to the acquisition of Susquehanna.

Also included in Table VII is additional detail as of June 30, 2026 and December 31, 2025 regarding the composition of the non-owner occupied commercial real estate loan portfolio. As shown in Table VII, at June 30, 2026, the amortized cost of non-owner occupied commercial real estate loans for which the primary purpose is utilization of office space by third parties was $107,923,000, or 4.6% of gross loans receivable. At June 30, 2026, within this segment there were two loans with a total amortized cost basis of $6,832,000 in nonaccrual status with no individual allowances, including the loan discussed in the Earnings Overview and Provision and Allowance for Credit Losses section with a partial charge-off of $10,056,000 in the first quarter 2026 and an amortized cost basis at June 30, 2026 of $5,665,000. During the second quarter of 2026, a nonaccrual loan within this category of $1,717,000 was paid off by the borrower through third-party financing and a $675,000 recovery was recorded. The remainder of the non-owner occupied commercial real estate loans with a primary purpose of office space utilization were in accrual status with no individual allowance at June 30, 2026.

While the Corporation’s lending activities are primarily concentrated in its market areas, a portion of the Corporation’s commercial loan segment consists of participation loans. Participation loans represent portions of larger commercial transactions for which other institutions are the “lead banks”. Although not the lead bank, the Corporation conducts detailed underwriting and monitoring of participation loan opportunities. Total participation loans outstanding amounted to $102,228,000 at June 30, 2026, down from $107,351,000 at December 31, 2025.

The Corporation is a party to financial instruments with off-balance sheet risk, including commitments to extend credit and standby letters of credit. At June 30, 2026, the total contract amount of commitments to extend credit was $474,891,000 as compared to $506,996,000 at December 31, 2025, and the contract amount of standby letters of credit was $62,133,000 at June 30, 2026 as compared to $58,914,000 at December 31, 2025.

The Corporation maintains an allowance for off-balance sheet credit exposures such as unfunded balances for existing lines of credit, commitments to extend future credit, commercial letters of credit and credit enhancement obligations related to residential mortgage loans sold with recourse, when there is a contractual obligation to extend credit and when this extension of credit is not unconditionally cancellable (i.e. commitment cannot be canceled at any time). The allowance for off-balance sheet credit exposures is adjusted as a

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

(credit) provision for credit loss expense. 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 $845,000 at June 30, 2026 and $1,029,000 at December 31, 2025, is included in accrued interest and other liabilities in the unaudited consolidated balance sheets.

The Corporation originates and sells residential mortgage loans to the secondary market through the MPF Xtra program administered by the Federal Home Loan Banks of Pittsburgh and Chicago. Residential mortgages originated and sold through the MPF Xtra program consist primarily of conforming, prime loans sold to the Federal National Mortgage Association (Fannie Mae), a quasi-government entity. The Corporation also originates and sells residential mortgage loans to the secondary market through the MPF Original program, administered by the Federal Home Loan Banks of Pittsburgh and Chicago. Residential mortgages originated and sold through the MPF Original program consist primarily of conforming, prime loans sold to the Federal Home Loan Bank of Pittsburgh. The Corporation also originates and sells mortgages under the Pennsylvania Housing Finance Agency and other programs though the volume of sales has been small in comparison to the volume under the MPF programs.

For loan sales originated under the MPF programs, the Corporation provides customary representations and warranties to investors that specify, among other things, that the loans have been underwritten to the standards established by the investor. The Corporation may be required to repurchase a loan and reimburse a portion of fees received or reimburse the investor for a credit loss incurred on a loan, if it is determined that the representations and warranties have not been met. Such repurchases or reimbursements generally result from an underwriting or documentation deficiency. At June 30, 2026, the total outstanding balance of loans the Corporation has repurchased as a result of identified instances of noncompliance amounted to $2,532,000, and the corresponding total outstanding balance of repurchased loans at December 31, 2025 was $2,598,000.

At June 30, 2026, outstanding balances of loans sold and serviced through the MPF Xtra and Original programs totaled $454,642,000, including loans sold through the MPF Xtra program of $175,388,000 and loans sold through the Original program of $279,254,000. At December 31, 2025, outstanding balances of loans sold and serviced through the MPF Xtra and Original programs totaled $450,120,000, including loans sold through the MPF Xtra program of $177,464,000 and loans sold through the Original program of $272,656,000. Based on the fairly limited volume of required repurchases to date, no allowance has been established for representation and warranty exposures as of June 30, 2026 and December 31, 2025.

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

TABLE VII - SUMMARY OF LOANS BY TYPE

Summary of Loans by Type


(In Thousands)			June 30,		December 31,
		2026			2025			2024			2023			2022			2021
Commercial real estate - non-owner occupied:
Non-owner occupied		$	550,607		$	569,974		$	471,171		$	499,104		$	454,386		$	358,352
Multi-family (5 or more) residential			170,179			160,284			105,174			64,076			55,406			49,054
1-4 Family - commercial purpose			203,093			197,480			163,220			174,162			165,805			175,027
Total commercial real estate - non-owner occupied			923,879			927,738			739,565			737,342			675,597			582,433
Commercial real estate - owner occupied			325,002			311,792			261,071			237,246			205,910			196,083
All other commercial loans:
Commercial and industrial			127,268			128,679			96,665			78,832			95,368			118,488
Commercial lines of credit			149,546			139,727			120,078			117,236			141,444			106,338
Political subdivisions			86,701			96,349			94,009			79,031			86,663			75,401
Commercial construction and land			111,462			123,887			92,741			104,123			60,892			59,505
Other commercial loans			69,098			71,895			19,784			20,471			25,710			26,498
Total all other commercial loans			544,075			560,537			423,277			399,693			410,077			386,230
Residential mortgage loans:
1-4 Family - residential			405,339			411,827			383,797			389,262			363,005			327,593
1-4 Family residential construction			37,737			32,123			24,212			24,452			30,577			23,151
Total residential mortgage			443,076			443,950			408,009			413,714			393,582			350,744
Consumer loans:
Consumer lines of credit (including HELOCs)			98,962			94,060			47,196			41,503			36,650			33,522
All other consumer			13,853			16,288			16,730			18,641			18,224			15,837
Total consumer			112,815			110,348			63,926			60,144			54,874			49,359
Total			2,348,847			2,354,365			1,895,848			1,848,139			1,740,040			1,564,849
Less: allowance for credit losses on loans			(32,583)			(31,048)			(20,035)			(19,208)			(16,615)			(13,537)
Loans, net		$	2,316,264		$	2,323,317		$	1,875,813		$	1,828,931		$	1,723,425		$	1,551,312

Additional details regarding the composition of the non-owner occupied commercial real estate loan portfolio, excluding multi-family (5 or more) residential and 1-4 Family-commercial purpose loans, at June 30, 2026 and December 31, 2025 was as follows:

NON-OWNER OCCUPIED COMMERCIAL REAL ESTATE


(In Thousands)	June 30,		% of Non-owner		% of		December 31,
	2026		Occupied CRE		Total Loans		2025
Retail	$	112,665	20.5	%	4.8	%	$	104,513
Office		107,923	19.6	%	4.6	%		125,175
Industrial		96,526	17.5	%	4.1	%		99,476
Hotels		76,171	13.8	%	3.2	%		82,692
Self Storage Facilities		59,772	10.9	%	2.5	%		55,434
Mixed Use		58,871	10.7	%	2.5	%		64,390
Other		38,679	7.0	%	1.6	%		38,294
Total Non-owner Occupied CRE Loans	$	550,607	100.0	%	23.4	%	$	569,974
Total Gross Loans	$	2,348,847					$	2,354,365

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

PROVISION AND ALLOWANCE FOR CREDIT LOSSES

A summary of the (credit) provision for credit losses for the three-month and six-month periods ended June 30, 2026 and 2025 is as follows:


(In Thousands)	3 Months		3 Months		6 Months		6 Months
	Ended		Ended		Ended		Ended
	June 30,		June 30,		June 30,		June 30,
	2026		2025		2026		2025
(Credit) provision for credit losses:
Loans receivable	$	(1,652)	$	2,075	$	11,940	$	2,303
Off-balance sheet exposures		(194)		279		(184)		287
Total (credit) provision for credit losses	$	(1,846)	$	2,354	$	11,756	$	2,590

For the quarter ended June 30, 2026, there was a credit for credit losses (reduction in expense) of $1,846,000 as compared to a provision for credit losses of $2,354,000 in the second quarter 2025. For the six months ended June 30, 2026, there was a provision for credit losses of $11,756,000, compared to a provision for credit losses of $2,590,000 in 2025. The credit for credit losses in the second quarter 2026 included the impact on the allowance for credit losses (“ACL”) of changes in qualitative factors, net recoveries of $403,000 and a reduction in loans receivable. The increase in the provision in the six months ended June 30, 2026 was driven by the impact of the elevated level of net charge-offs, including a charge-off in the first quarter 2026 of $10,056,000 on a non-owner occupied commercial real estate loan discussed in more detail in the Earnings Overview section and was partially offset by net decreases in the ACL related to changes in qualitative factors. The ACL was 1.39% of gross loans receivable at June 30, 2026, down from 1.42% at March 31, 2026 and up from 1.32% December 31, 2025 and 1.13% at June 30, 2025.

As shown in Table IX, the ACL on loans individually evaluated decreased to $2,636,000 at June 30, 2026 from $2,772,000 at December 31, 2025, including an ACL of $2,414,000 at June 30, 2026 on acquired PCD loans as part of the Susquehanna acquisition.

Table IX also summarizes collectively evaluated components of the ACL, including the most significant changes at June 30, 2026 as compared to December 31, 2025 summarized as follows:

●

Commercial real estate loans – nonowner occupied – The collectively determined ACL increased $2,412,000, reflecting the impact of an increase in average net charge-off experience and an increase in a qualitative factor related to regional economic conditions, partially offset by reductions in qualitative factors related to regional commercial real estate values and credit concentrations.

●

Residential mortgage – The collectively determined ACL increased $1,041,000, reflecting the impact of increases in qualitative factors related to residential real estate values and regional economic conditions.

●

Commercial real estate – owner occupied and All other commercial loans – The collectively determined ACL decreased by a total of $1,831,000, mainly due to the net effect of reductions in qualitative factors related to regional commercial real estate values and credit concentrations, partially offset by an increase in a qualitative factor related to regional economic conditions.

In the first six months of 2026, net charge-offs totaled $10,405,000, or 0.88% (annualized) of average outstanding loans. Table VIII shows annual average net charge-off rates over the prior five calendar years ranging from a high of 0.26% in 2022 to a low of 0.01% in 2023.

Total nonperforming assets were $40,275,000 at June 30, 2026, up $7,162,000 from December 31, 2025. Nonperforming loans increased $7,170,000 from December 31, 2025. The increase in nonperforming assets and nonperforming loans in 2026 included the impact of classifying the nonowner occupied commercial real estate loan referenced above as nonaccrual at June 30, 2026. Table X shows that total nonperforming assets as a percentage of total assets was 1.28% at June 30, 2026, up from 1.06% at December 31, 2025. Table X

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also shows that total nonperforming assets as a percentage of assets as of year-end 2021 through 2024, ranged from a high of 1.04% at December 31, 2021 to a low of 0.75% at December 31, 2023.

Over the period from 2021through 2025 and the first 6 months of 2026, each period includes a few large commercial relationships that have required significant monitoring and workout efforts. As a result, a limited number of relationships may significantly impact the total amount of allowance required on individual loans and may significantly impact the (credit) provision for credit losses and the amount of total charge-offs reported in any one period.

Management believes it has been prudent in its decisions concerning identification of loans requiring individual evaluation for credit loss, estimates of loss, and nonaccrual status; however, the actual losses realized from these relationships could vary materially from the ACL calculated as of June 30, 2026. Management continues to closely monitor its commercial loan relationships for credit losses and will adjust its estimates of loss and decisions concerning nonaccrual status, if appropriate.

Tables VIII through X present historical data related to loans and the allowance for credit losses.

TABLE VIII - ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES ON LOANS


(Dollars In Thousands)
	Six Months Ended
	June 30,						Years Ended December 31
	2026			2025			2025			2024			2023			2022			2021
Balance, beginning of year	$	31,048		$	20,035		$	20,035		$	19,208		$	16,615		$	13,537		$	11,385
Adoption of ASU 2016-13 (CECL)		0			0			0			0			2,104			0			0
Allowance recorded in business combination- PCD loans		0			0			2,637			0			0			0			0
Allowance recorded in business combination- Non PCD loans		0			0			4,437			0			0			0			0
Charge-offs		(11,133)			(699)			(1,726)			(1,716)			(356)			(4,245)			(1,575)
Recoveries		728			60			109			113			92			68			66
Net charge-offs		(10,405)			(639)			(1,617)			(1,603)			(264)			(4,177)			(1,509)
Provision for credit losses on loans		11,940			2,303			5,556			2,430			753			7,255			3,661
Balance, end of period	$	32,583		$	21,699		$	31,048		$	20,035		$	19,208		$	16,615		$	13,537
Net charge-offs as a % of average loans (annualized)		0.88	%		0.07	%		0.08	%		0.09	%		0.01	%		0.26	%		0.09	%

TABLE IX - COMPONENTS OF THE ALLOWANCE FOR CREDIT LOSSES ON LOANS


(In Thousands)	June 30,		December 31,		December 31,		December 31,		January 1,
	2026		2025		2024		2023		2023
Loans individually evaluated	$	2,636	$	2,772	$	122	$	743	$	751
Loans collectively evaluated:
Commercial real estate - nonowner occupied		19,583		17,171		11,964		10,379		9,641
Commercial real estate - owner occupied		3,213		3,820		2,722		2,111		1,765
All other commercial loans		4,066		5,290		3,361		3,811		3,914
Residential mortgage		2,670		1,629		1,356		1,764		2,407
Consumer		415		366		510		400		241
Total Allowance	$	32,583	$	31,048	$	20,035	$	19,208	$	18,719

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

PRIOR TO CECL ADOPTION


(In Thousands)		As of December 31,
		2022			2021
ASC 310 - Impaired loans - individually evaluated		$	453		$	740
ASC 450 - Collectively evaluated:
Commercial			10,845			7,553
Residential mortgage			4,073			4,338
Consumer			244			235
Unallocated			1,000			671
Total Allowance		$	16,615		$	13,537

TABLE X - PAST DUE LOANS AND NONPERFORMING ASSETS


(Dollars In Thousands)		June 30,			As of December 31,
		2026			2025			2024			2023			2022			2021
Collateral dependent loans with a valuation allowance		$	5,608		$	5,401		$	258		$	7,786		$	3,460		$	6,540
Collateral dependent loans without a valuation allowance			33,255			27,027			29,867			3,478			14,871			2,636
Purchased credit impaired loans			0			0			0			0			1,027			6,558
Total collateral dependent loans		$	38,863		$	32,428		$	30,125		$	11,264		$	19,358		$	15,734
Total loans past due 30-89 days and still accruing		$	7,047		$	18,309		$	5,658		$	9,275		$	7,079		$	5,106
Nonperforming assets:
Purchased credit impaired loans		$	0		$	0		$	0		$	0		$	1,027		$	6,558
Other nonaccrual loans			39,748			32,836			23,842			15,177			22,058			12,441
Total nonaccrual loans			39,748			32,836			23,842			15,177			23,085			18,999
Total loans past due 90 days or more and still accruing			346			88			119			3,190			2,237			2,219
Total nonperforming loans			40,094			32,924			23,961			18,367			25,322			21,218
Foreclosed assets held for sale (real estate)			181			189			181			478			275			684
Total nonperforming assets		$	40,275		$	33,113		$	24,142		$	18,845		$	25,597		$	21,902

Total nonperforming loans as a % of loans			1.71	%		1.40	%		1.26	%		0.99	%		1.46	%		1.36	%
Total nonperforming assets as a % of assets			1.28	%		1.06	%		0.92	%		0.75	%		1.04	%		0.94	%
Nonaccrual loans as a % of loans			1.69	%		1.39	%		1.26	%		0.82	%		1.33	%		1.21	%
Allowance for credit losses as a % of nonaccrual loans			81.97	%		94.55	%		84.03	%		79.01	%		71.97	%		71.25	%
Allowance for credit losses as a % of total loans			1.39	%		1.32	%		1.06	%		1.04	%		0.95	%		0.87	%

Included in the table above at June 30, 2026 and December 31, 2025 were loans acquired from Susquehanna with credit deterioration (“PCD loans”) totaled as follows:


(Dollars In Thousands)		June 30,			December 31,
		2026			2025
		PCD Loans			PCD Loans
Collateral dependent loans with a valuation allowance		$	4,975		$	5,138
Collateral dependent loans without a valuation allowance			7,428			5,553
Total collateral dependent loans		$	12,403		$	10,691
Total loans past due 30-89 days and still accruing		$	2,150		$	5,810
Nonperforming assets,
Total nonaccrual loans		$	8,371		$	6,762
Total amortized cost basis of PCD loans		$	22,193		$	23,646

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

LIQUIDITY

Liquidity is the ability to quickly raise cash at a reasonable cost. An adequate liquidity position permits the Corporation to pay creditors, compensate for unforeseen deposit fluctuations and fund unexpected loan demand.

The Corporation maintains borrowing facilities with the Federal Home Loan Bank of Pittsburgh, secured by various mortgage loans. In addition, the Corporation maintains overnight borrowing facilities with several correspondent banks that provide a source of day-to-day liquidity.

The Corporation has a line of credit with the Federal Reserve Bank of Philadelphia’s Discount Window. Management intends to use this line of credit as a contingency funding source. As collateral for the line, the Corporation has pledged available-for-sale debt securities with a carrying value of $24,882,000 at June 30, 2026.

The Corporation’s outstanding, available, and total credit facilities at June 30, 2026 and December 31, 2025 are as follows:


		Outstanding						Available						Total Credit
(In Thousands)		June 30,			December 31,			June 30,			December 31,			June 30,			December 31,
		2026			2025			2026			2025			2026			2025
Federal Home Loan Bank of Pittsburgh		$	166,252		$	170,922		$	971,125		$	785,822		$	1,153,138		$	971,946
Federal Reserve Bank Discount Window			0			0			24,882			25,484			24,882			25,484
Other correspondent banks			0			0			75,000			75,000			75,000			75,000
Total credit facilities		$	166,252		$	170,922		$	1,071,007		$	886,306		$	1,253,020		$	1,072,430

At June 30, 2026, the Corporation’s outstanding credit facilities with the Federal Home Loan Bank of consisted of short-term borrowings totaling $14,260,000, long-term borrowings with par values totaling $130,392,000 and letters of credit totaling $21,600,000. At December 31, 2025, the Corporation’s outstanding credit facilities with the Federal Home Loan Bank of Pittsburgh consisted of overnight borrowing of $27,000,000, long-term borrowings with par values totaling $120,935,000 and letters of credit totaling $22,987,000. Availability on the facility is also reduced by accrued interest payable on the borrowings and by the total of the Corporation’s credit enhancement obligations on residential mortgage loans sold under the MPF Original Program. Additional information regarding borrowed funds is included in Note 9 to the unaudited consolidated financial statements.

Additionally, the Corporation uses “RepoSweep” arrangements to borrow funds from commercial banking customers on an overnight basis. If required to raise cash in an emergency situation, the Corporation could sell available-for-sale securities to meet its obligations or use repurchase agreements placed with brokers to borrow funds secured by investment assets. At June 30, 2026, the carrying value of available-for-sale securities in excess of amounts required to meet pledging or repurchase agreement obligations was $316,129,000.

Deposits totaled $2,603,735,000 at June 30, 2026, up $39,019,000 from December 31, 2025. Average total deposits were $493,355,000 or 23.8% higher for the six months ended June 30, 2026 as compared to the first six months of 2025. Deposits of $501,488,000 were assumed from Susquehanna, effective October 1, 2025.

As shown in the table below, at June 30, 2026, estimated uninsured deposits totaled $820.2 million, or 31.4%, of total deposits, as compared to $811.2 million, or 31.4% of total deposits at December 31, 2025. Included in uninsured deposits are deposits collateralized by securities (almost exclusively municipal deposits) totaling $167.8 million at June 30, 2026. As shown in the table below, total uninsured and uncollateralized deposits amounted to 25.0% of total deposits at June 30, 2026, as compared to 24.7% of total deposits at December 31, 2025.

As summarized in the table that immediately follows, the Corporation’s highly liquid sources of available funds described above, including unused borrowing capacity with the Federal Home Loan Bank of Pittsburgh, unused availability on the Federal Reserve Bank of Philadelphia’s discount window, available federal funds lines with other banks and unencumbered available-for-sale debt securities, totaled $1.4 billion at June 30, 2026. Available funding from these sources totaled 169.1% of uninsured deposits and 212.6% of total uninsured and uncollateralized deposits at June 30, 2026.

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q


Uninsured Deposits Information	June 30,			December 31,
	2026			2025
Total Deposits - C&N Bank	$	2,610,552		$	2,584,952

Estimated Total Uninsured Deposits	$	820,235		$	811,209
Portion of Uninsured Deposits that are
Collateralized		167,823			172,585
Uninsured and Uncollateralized Deposits	$	652,412		$	638,624

Uninsured and Uncollateralized Deposits as
a % of Total Deposits		25.0	%		24.7	%

Available Funding from Credit Facilities	$	1,071,007		$	886,306
Fair Value of Available-for-sale Debt
Securities in Excess of Pledging Obligations		316,129			319,624
Highly Liquid Available Funding	$	1,387,136		$	1,205,930

Highly Liquid Available Funding as a % of
Uninsured Deposits		169.1	%		148.7	%

Highly Liquid Available Funding as a % of
Uninsured and Uncollateralized Deposits		212.6	%		188.8	%

Based on the ample sources of highly liquid funds as described above, management believes the Corporation is well-positioned to meet its short-term and long-term funding obligations.

STOCKHOLDERS’ EQUITY AND CAPITAL ADEQUACY

Details concerning capital ratios at June 30, 2026 and December 31, 2025 are presented below. Management believes, as of June 30, 2026, that the Corporation and C&N Bank meet all capital adequacy requirements to which they are subject and maintain a capital conservation buffer (described in more detail below) that allows the Corporation and C&N Bank to avoid limitations on capital distributions, including dividend payments and certain discretionary bonus payments to executive officers. Further, as reflected in the table below, the Corporation’s and C&N Bank’s capital ratios at June 30, 2026 and December 31, 2025 exceed the Corporation’s Board policy threshold levels.

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q


(Dollars in Thousands)																		Minimum To Be
													Minimum To Maintain					Well
								Minimum					Capital Conservation					Capitalized Under				Minimum To Meet
								Capital					Buffer at Reporting					Prompt Corrective				the Corporation's
		Actual						Requirement					Date					Action Provisions				Policy Thresholds
		Amount			Ratio		Amount			Ratio		Amount			Ratio		Amount			Ratio		Amount			Ratio
June 30, 2026:
Total capital to risk-weighted assets:
Consolidated		$	348,687		14.52	%	$	192,064		≥8	%	$	252,085		≥10.5	%	$	240,081		≥10	%	$	264,089		≥11	%
C&N Bank			338,125		14.10	%		191,854		≥8	%		251,808		≥10.5	%		239,817		≥10	%		263,799		≥11	%
Tier 1 capital to risk-weighted assets:
Consolidated			298,665		12.44	%		144,048		≥6	%		204,068		≥8.5	%		192,064		≥8	%		216,072		≥9	%
C&N Bank			308,136		12.85	%		143,890		≥6	%		203,844		≥8.5	%		191,854		≥8	%		215,835		≥9	%
Common equity tier 1 capital to risk-weighted assets:
Consolidated			298,665		12.44	%		108,036		≥4.5	%		168,056		≥7.0	%		156,052		≥6.5	%		180,060		≥7.5	%
C&N Bank			308,136		12.85	%		107,918		≥4.5	%		167,892		≥7.0	%		155,811		≥6.5	%		179,863		≥7.5	%
Tier 1 capital to average assets:
Consolidated			298,665		9.62	%		124,145		≥4	%		N/A		N/A			155,181		≥5	%		248,290		≥8	%
C&N Bank			308,136		9.96	%		123,687		≥4	%		N/A		N/A			154,609		≥5	%		247,375		≥8	%

December 31, 2025:
Total capital to risk-weighted assets:
Consolidated		$	346,139		14.45	%	$	191,582		≥8	%	$	251,452		≥10.5	%	$	239,478		≥10	%	$	263,425		≥11	%
C&N Bank			330,427		13.82	%		191,318		≥8	%		251,105		≥10.5	%		239,148		≥10	%		263,062		≥11	%
Tier 1 capital to risk-weighted assets:
Consolidated			291,746		12.18	%		143,687		≥6	%		203,556		≥8.5	%		191,582		≥8	%		215,530		≥9	%
C&N Bank			300,983		12.59	%		143,489		≥6	%		203,275		≥8.5	%		191,318		≥8	%		215,233		≥9	%
Common equity tier 1 capital to risk-weighted assets:
Consolidated			291,746		12.18	%		107,765		≥4.5	%		167,634		≥7.0	%		155,661		≥6.5	%		179,608		≥7.5	%
C&N Bank			300,983		12.59	%		107,616		≥4.5	%		167,403		≥7.0	%		155,446		≥6.5	%		179,361		≥7.5	%
Tier 1 capital to average assets:
Consolidated			291,746		9.32	%		125,149		≥4	%		N/A		N/A			156,437		≥5	%		250,299		≥8	%
C&N Bank			300,983		9.66	%		124,597		≥4	%		N/A		N/A			155,747		≥5	%		249,195		≥8	%

To avoid limitations on capital distributions, including dividend payments and certain discretionary bonus payments to executive officers, a banking organization subject to the rule must hold a capital conservation buffer composed of common equity tier 1 capital above its minimum risk-based capital requirements. The buffer is measured relative to risk-weighted assets. At June 30, 2026, the minimum risk-based capital ratios, and the capital ratios including the capital conservation buffer, were as follows:


Minimum common equity tier 1 capital ratio	4.5	%
Minimum common equity tier 1 capital ratio plus capital conservation buffer	7.0	%
Minimum tier 1 capital ratio	6.0	%
Minimum tier 1 capital ratio plus capital conservation buffer	8.5	%
Minimum total capital ratio	8.0	%
Minimum total capital ratio plus capital conservation buffer	10.5	%

A banking organization with a buffer greater than 2.5% over the minimum risk-based capital ratios would not be subject to additional limits on dividend payments or discretionary bonus payments; however, a banking organization with a buffer less than 2.5% would be subject to increasingly stringent limitations as the buffer approaches zero. Also, a banking organization is prohibited from making dividend payments or discretionary bonus payments if its eligible retained income is negative in that quarter and its capital conservation buffer ratio was less than 2.5% as of the beginning of that quarter. Eligible net income is defined as net income for the four calendar quarters preceding the current calendar quarter, net of any distributions and associated tax effects not already reflected in net income. A summary of payout restrictions based on the capital conservation buffer is as follows:

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q


Capital Conservation Buffer		Maximum Payout
(as a % of risk-weighted assets)		(as a % of eligible retained income)
Greater than 2.5%		No payout limitation applies
≤2.5% and >1.875%		60	%
≤1.875% and >1.25%		40	%
≤1.25% and >0.625%		20	%
≤0.625%		0	%

At June 30, 2026, the Corporation’s Capital Conservation Buffer was 6.44% and C&N Bank’s Capital Conservation Buffer was 6.10%.

On September 25, 2023, the Corporation announced a treasury stock repurchase program with no expiration that can be suspended or terminated by the Board of Directors, in its sole discretion. Under this program, the Corporation is authorized to repurchase up to 750,000 shares of its common stock. There were no shares repurchased during the first six months of 2026. At June 30, 2026, there were 723,465 shares available to be repurchased under the program.

Future dividend payments and repurchases of common stock will depend upon maintenance of a strong financial condition, future earnings and capital and regulatory requirements. In addition, the Corporation and C&N Bank are subject to restrictions on the amount of dividends that may be paid without approval of banking regulatory authorities. The Corporation’s ability to pay dividends, repurchase stock or engage in other activities may be limited by the Federal Reserve if the Corporation fails to hold capital commensurate with its overall risk profile.

The Corporation’s total stockholders’ equity is affected by fluctuations in the fair values of available-for-sale debt securities. The difference between amortized cost and fair value of available-for-sale debt securities, net of deferred income tax, is included in accumulated other comprehensive (loss) income within stockholders’ equity. Accumulated other comprehensive (loss) income is excluded from the Bank’s and the Corporation’s regulatory capital ratios. The balance in accumulated other comprehensive loss related to unrealized losses on available-for-sale debt securities, net of deferred income tax, amounted to $24,284,000 at June 30, 2026 and $23,154,000 at December 31, 2025. Changes in accumulated other comprehensive loss are excluded from earnings and directly increase or decrease stockholders’ equity. To the extent unrealized losses on available-for-sale debt securities result from credit losses, unrealized losses are recorded as a charge against earnings. The securities section of Management’s Discussion and Analysis and Note 6 to the unaudited consolidated financial statements provide additional information concerning management’s evaluation of available-for-sale debt securities for credit losses at June 30, 2026.

Tangible common equity is a non- U.S. GAAP measure, and tangible common book value per share and tangible common equity as a percentage of tangible assets are non- U.S. GAAP ratios. Management believes this non- U.S. GAAP information is helpful in evaluating the strength of the Corporation’s capital and in providing an alternative presentation of the Corporation’s net worth. Information at June 30, 2026 and December 31, 2025 is as follows:


(Dollars In Thousands, Except Per Share Data)	June 30,			December 31,
	2026			2025
Total Assets	$	3,151,984		$	3,132,469
Less: Intangible Asset, Goodwill		(63,311)			(63,311)
Less: Intangible Asset, Core Deposit Intangibles, net		(9,944)			(11,573)
Related Tax Effect on Core Deposit Intangibles, net		2,188			2,546
Tangible Assets (1)	$	3,080,917		$	3,060,131
Total Stockholders' Equity	$	346,129		$	341,714
Less: Intangible Asset, Goodwill		(63,311)			(63,311)
Less: Intangible Asset, Core Deposit Intangibles, net		(9,944)			(11,573)
Related Tax Effect on Core Deposit Intangibles, net		2,188			2,546
Tangible Common Equity (2)	$	275,062		$	269,376

Common Shares Outstanding, End of Period (3)		17,942,105			17,823,444
Common Book Value per Share (GAAP)	$	19.29		$	19.17
Tangible Common Book Value per Share = (2)/(3)	$	15.33		$	15.11
Tangible Common Equity (2) / Tangible Assets (1)		8.93	%		8.80	%

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

MARKET RISK

Market risk is the risk of loss arising from adverse changes in market rates and prices of the Corporation’s financial instruments. In addition to the effects of interest rates, the market prices of the Corporation’s available-for-sale debt securities are affected by fluctuations in the risk premiums (amounts of spread over risk-free rates) demanded by investors. Management attempts to limit the risk that economic conditions would force the Corporation to sell securities for realized losses by maintaining a strong capital position (discussed in the “Stockholders’ Equity and Capital Adequacy” section of Management’s Discussion and Analysis) and ample sources of liquidity (discussed in the “Liquidity” section of Management’s Discussion and Analysis).

The Corporation’s major category of market risk, interest rate risk, is discussed in the following section.

INTEREST RATE RISK

The Corporation uses a simulation model to calculate the potential effects of interest rate fluctuations on net interest income and the economic value of equity (“EVE”). For purposes of these calculations, EVE includes the discounted present values of financial instruments, such as securities, loans, deposits and borrowed funds, and the book values of nonfinancial assets and liabilities, such as premises and equipment and accrued expenses. The model measures and projects the amount of potential changes in net interest income and calculates the discounted present value of anticipated cash flows of financial instruments, assuming an immediate increase or decrease in interest rates. Management ordinarily runs a variety of scenarios within a range of plus or minus 100-400 basis points of current rates.

The projected results based on the model include the impact of estimates, at each level of interest rate change, regarding cash flows from principal repayments on loans and mortgage-backed securities and call activity on other investment securities. Further, the projected results are impacted by assumptions regarding the run-off and the extent of sensitivity to interest rate changes of deposits with no stated maturity (checking, savings and money market accounts). Actual results could vary significantly from these estimates, which could result in significant differences in the calculations of projected changes in net interest income and EVE. Also, the model does not make estimates related to changes in the composition of the deposit portfolio that could occur due to rate competition, and the table does not necessarily reflect changes that management would make to realign the portfolio as a result of changes in interest rates.

The Corporation’s Board of Directors has established policy guidelines for acceptable levels of interest rate risk, based on an immediate increase or decrease in interest rates. The policy limits acceptable fluctuations in net interest income from the baseline (flat rates) one-year scenario and variances in EVE from the baseline values based on current rates.

Table XI, which follows this discussion, is based on the results of calculations performed using the simulation model as of June 30, 2026 and December 31, 2025. The Table shows that as of the respective dates, the changes in net interest income and changes in economic value of equity were within the policy limits in all scenarios.

Based on June 30, 2026 and December 31, 2025 data, the amounts of net interest income decrease, as compared to the amounts based on current interest rates, in both the upward and downward rate scenarios. Similarly, at June 30, 2026 and December 31, 2025, EVE is modeled to decrease compared to the 0 basis point scenario in all of the rising and falling rate scenarios The modeling results reflect the impact of management’s assumptions that the Corporation’s deposit rates would rise in the increasing rate scenarios to a greater extent than they would fall in the decreasing rate scenarios. Further, results in the downward rate scenarios reflect limitations on the benefit of falling rates on some deposit types due to a 0% assumed floor.

Under U.S. generally accepted accounting principles, available-for-sale debt securities are carried at fair value as of each balance sheet date. The difference between amortized cost and fair value of available-for-sale debt securities, net of deferred income tax, is included in accumulated other comprehensive income (loss) within stockholders’ equity. Increases in interest rates have caused the fair value of the Corporation’s available-for-sale debt securities to decrease, resulting in an accumulated other comprehensive loss related to securities of $24.3 million at June 30, 2026. In contrast, most of the Corporation’s other financial instruments, including loans receivable (held for investment), deposits and borrowed funds are carried on the balance sheet at historical cost without adjustment for the impact of changes in interest rates.

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

TABLE XI – THE EFFECT OF HYPOTHETICAL CHANGES IN INTEREST RATES


June 30, 2026 Data
(In Thousands)	Period Ending June 30, 2027

Basis Point		Interest		Interest			Net Interest		NII		NII
Change in Rates		Income		Expense			Income (NII)		% Change		Risk Limit
+400	$	199,756	$	100,139		$	99,617		(17.7)	%	25.0	%
+300		192,187		84,783			107,404		(11.2)	%	20.0	%
+200		184,570		70,971			113,599		(6.1)	%	15.0	%
+100		176,823		58,701			118,122		(2.4)	%	10.0	%
0		168,945		47,976			120,969		0.0	%	0.0	%
-100		160,628		41,605			119,023		(1.6)	%	10.0	%
-200		150,958		35,310			115,648		(4.4)	%	15.0	%
-300		140,701		29,526			111,175		(8.1)	%	20.0	%
-400		129,496		24,261			105,235		(13.0)	%	25.0	%

	Economic Value of Equity at June 30, 2026

		Present		Present			Present
Basis Point		Value		Value			Value
Change in Rates		Equity		% Change			Risk Limit
+400	$	634,263		(15.4)	%		40.0	%
+300		676,754		(9.8)	%		30.0	%
+200		712,137		(5.1)	%		25.0	%
+100		737,402		(1.7)	%		15.0	%
0		750,099		0.0	%		0.0	%
-100		723,064		(3.6)	%		15.0	%
-200		668,299		(10.9)	%		25.0	%
-300		597,620		(20.3)	%		30.0	%
-400		512,022		(31.7)	%		40.0	%

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q


December 31, 2025 Data
(In Thousands)	Period Ending December 31, 2026

Basis Point		Interest		Interest			Net Interest		NII		NII
Change in Rates		Income		Expense			Income (NII)		% Change		Risk Limit
+400	$	190,241	$	101,840		$	88,401		(22.4)	%	25.0	%
+300		183,502		86,341			97,161		(14.7)	%	20.0	%
+200		176,675		72,323			104,352		(8.4)	%	15.0	%
+100		169,739		59,787			109,952		(3.5)	%	10.0	%
0		162,684		48,733			113,951		0.0	%	0.0	%
-100		155,164		41,661			113,503		(0.4)	%	10.0	%
-200		146,491		34,657			111,834		(1.9)	%	15.0	%
-300		136,961		28,400			108,561		(4.7)	%	20.0	%
-400		126,625		23,288			103,337		(9.3)	%	25.0	%

	Economic Value of Equity at December 31, 2025

		Present		Present			Present
Basis Point		Value		Value			Value
Change in Rates		Equity		% Change			Risk Limit
+400	$	572,841		(16.8)	%		40.0	%
+300		614,522		(10.7)	%		30.0	%
+200		649,738		(5.6)	%		25.0	%
+100		675,284		(1.9)	%		15.0	%
0		688,389		0.0	%		0.0	%
-100		665,037		(3.4)	%		15.0	%
-200		617,865		(10.2)	%		25.0	%
-300		553,948		(19.5)	%		30.0	%
-400		474,663		(31.0)	%		40.0	%

ITEM 4. CONTROLS AND PROCEDURES

The Corporation’s management, under the supervision of and with the participation of the Corporation’s Chief Executive Officer and Chief Financial Officer, has carried out an evaluation of the design and effectiveness of the Corporation’s disclosure controls and procedures as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Securities Exchange Act of 1934 as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Corporation’s disclosure controls and procedures are effective to ensure that all material information required to be disclosed in reports the Corporation files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms.

There were no significant changes made to the Corporation’s internal control over financial reporting that occurred during the period covered by this report that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

The Corporation and C&N Bank are involved in various legal proceedings incidental to their business. Management believes the aggregate liability, if any, resulting from such pending and threatened legal proceedings will not have a material effect on the Corporation’s financial condition or results of operations.

Item 1A. Risk Factors

There have been no material changes from the risk factors previously disclosed in Item 1A of the Corporation’s Annual Report on Form 10-K filed March 6, 2026.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

On September 25, 2023, the Corporation announced a treasury stock repurchase program. Under the approved program, the Corporation is authorized to repurchase up to 750,000 shares of the Corporation’s common stock, or slightly less than 5% of the Corporation’s issued and outstanding shares at August 4, 2023. The program was effective when publicly announced and will continue thereafter until suspended or terminated by the Board of Directors, in its sole discretion. All shares of common stock repurchased pursuant to the program shall be held as treasury shares and be available for use and reissuance for purposes as and when determined by the Board of Directors including, without limitation, pursuant to the Corporation’s Dividend Reinvestment and Stock Purchase and Sale Plan and its equity compensation program. There were no shares repurchased under the repurchase program during the second quarter 2026. At June 30, 2026, there were 723,465 shares available to be repurchased under the program.

The following table sets forth a summary of purchases by the Corporation, in the open market, of its equity securities during the second quarter 2026:


							Total Number of		Maximum
							Shares		Number of
							Purchased		Shares that May
							as Part of		Yet
							Publicly		be Purchased
		Total Number		Average			Announced		Under
		of Shares		Price Paid			Plans		the Plans or
Period		Purchased		per Share			or Programs		Programs
April 1 - 30, 2026		0		$	0		0		723,465
May 1 - 31, 2026		0		$	0		0		723,465
June 1 - 30, 2026		0		$	0		0		723,465
Total		0		$	0		0

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Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

The table below details the directors or executive officers for whom a written plan for the purchase of the Corporation’s common stock that is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) became effective in the second quarter 2026.


Name	Title	Effective date	Expiration date
Katherine W. Shattuck	Director	May 1, 2026	April 30, 2027
Frank G. Pellegrino	Director	May 1, 2026	April 30, 2027

The written plan provides for the directors to receive designated fees for their service as directors in the form of the Corporation’s common stock to be purchased in the open market by the Corporation’s transfer agent. Each of the directors identified above asserted they were not aware of material nonpublic information about the Corporation or its common stock at the time they adopted the written plan.

Except as noted above, during the three months ended June 30, 2026, no director or officer of the Corporation adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement”, as each term is defined in Item 408(a) of Regulation S-K.

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Item 6. Exhibits


2.1	Agreement and Plan of Merger dated April 23, 2025 between Susquehanna Community Financial, Inc. and Citizens & Northern Corporation	Incorporated by reference to Exhibit 2.1 of the Corporation’s Form 8-K filed April 23, 2025

3.1	Articles of Incorporation	Incorporated by reference to Exhibit 3.1 of the Corporation’s Form 10-Q filed May 6, 2022

3.2	By-laws	Incorporated by reference to Exhibit 3.1 of the Corporation’s Form 8-K filed February 18, 2022

10.1	Form of Time-Based Restricted Stock agreement dated June 19, 2026 between the Corporation and William F. Van Sant, III pursuant to the Citizens & Northern Corporation 2023 Equity Incentive Plan	Filed herewith

31.	Rule 13a-14(a)/15d-14(a) certifications:

31.1	Certification of Chief Executive Officer	Filed herewith

31.2	Certification of Chief Financial Officer	Filed herewith

32.	Section 1350 certifications	Filed herewith

101.INS	Inline XBRL Instance Document.	Filed herewith

101.SCH	Inline XBRL Schema Document.	Filed herewith

101.CAL	Inline XBRL Calculation Linkbase Document.	Filed herewith

101.DEF	Inline XBRL Definition Linkbase Document.	Filed herewith

101.LAB	Inline XBRL Label Linkbase Document.	Filed herewith

101.PRE	Inline XBRL Presentation Linkbase Document.	Filed herewith

104	The cover page of the Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, formatted in Inline XBRL (contained in Exhibit 101).	Filed herewith

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

SIGNATURES

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


		CITIZENS & NORTHERN CORPORATION


August 7, 2026		By: /s/ J. Bradley Scovill
Date		President and Chief Executive Officer



August 7, 2026		By: /s/ Mark A. Hughes
Date		Treasurer and Chief Financial Officer

Source: View Original Filing on SEC EDGAR