[10-Q] CITIZENS & NORTHERN CORP Quarterly Earnings Report

Q: How did CZNC perform in Q3 2025?

Net income was $6.551 million and EPS was $0.42 , up from $6.365 million and $0.41 in Q3 2024.

Q: What was CZNC’s net interest income in Q3 2025?

Net interest income was $22.263 million , compared with $20.156 million a year earlier.

Q: What were CZNC’s key noninterest items in Q3 2025?

Noninterest income was $7.304 million . Noninterest expense was $19.389 million , including $0.882 million of merger-related expenses.

Q: How did credit costs trend for CZNC?

The provision for credit losses was $2.163 million in Q3 2025, up from $1.207 million in Q3 2024.

Q: What is CZNC’s balance sheet size and deposit base?

Total assets were $2.664 billion and deposits were $2.166 billion as of September 30, 2025.

Q: How did accumulated other comprehensive income change?

AOCI improved to $(26.026) million from $(36.761) million at December 31, 2024, driven by higher unrealized gains on securities.

Q: What were CZNC’s nine-month 2025 results?

Year-to-date net income totaled $18.961 million with EPS of $1.22 , up from $17.784 million and $1.16 in 2024.

Filing Impact

(Moderate)

Filing Sentiment

(Neutral)

Form Type

10-Q

Rhea-AI Filing Summary

Citizens & Northern Corporation reported Q3 2025 results, with net income of $6.551 million and earnings per share of $0.42, up from $6.365 million and $0.41 a year ago. Net interest income rose to $22.263 million from $20.156 million as interest expense eased. The provision for credit losses increased to $2.163 million from $1.207 million.

Noninterest income was $7.304 million versus $7.133 million, while noninterest expense was $19.389 million versus $18.269 million and included $0.882 million of merger-related expenses. For the nine months, net income totaled $18.961 million (EPS $1.22) versus $17.784 million (EPS $1.16).

On the balance sheet, total assets were $2.664 billion, loans (net) were $1.922 billion, and available-for-sale securities were $415.313 million as of September 30, 2025. Deposits were $2.166 billion, long-term FHLB advances declined to $132.894 million, and stockholders’ equity improved to $293.959 million. Accumulated other comprehensive loss improved to $(26.026) million from $(36.761) million at year-end, reflecting higher unrealized gains on securities.

Insights

Solid quarterly net interest income and stable earnings; expenses include merger costs.

CZNC posted $6.551M net income in Q3 2025 with EPS of $0.42, modestly higher year over year. Net interest income improved to $22.263M as deposit and borrowing costs moderated, while the provision for credit losses rose to $2.163M.

Noninterest income held steady at $7.304M. Noninterest expense increased to $19.389M and included merger-related expenses of $0.882M, which are not core run-rate costs. Balance sheet trends show deposits at $2.166B, loans (net) at $1.922B, and reduced FHLB advances at $132.894M.

Equity rose to $293.959M and accumulated other comprehensive loss improved to $(26.026)M on securities valuation. Actual impact will depend on credit performance and expense normalization in subsequent quarters.

11/07/2025 - 01:19 PM

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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 September 30, 2025

◻ 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)	17,801,873 Shares Outstanding on November 5, 2025

Table of Contents

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

CITIZENS & NORTHERN CORPORATION

Index


Part I. Financial Information

Item 1. Financial Statements

Consolidated Balance Sheets (Unaudited) –September 30, 2025 and December 31, 2024			Page 3

Consolidated Statements of Income (Unaudited) – Three-month and Nine-month Periods Ended September 30, 2025 and 2024			Page 4

Consolidated Statements of Comprehensive Income (Unaudited) – Three-month and Nine-month Periods Ended September 30, 2025 and 2024			Page 5

Consolidated Statements of Cash Flows (Unaudited) – Nine-month Periods Ended September 30, 2025 and 2024			Page 6

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) – Three-month and Nine-month Periods Ended September 30, 2025 and 2024			Page 7

Notes to Unaudited Consolidated Financial Statements			Pages 8 –33

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			Pages 34 – 57

Item 3. Quantitative and Qualitative Disclosures About Market Risk			Pages 58 – 60

Item 4. Controls and Procedures			Page 60

Part II. Other Information

Item 1. Legal Proceedings			Page 61

Item 1A. Risk Factors			Page 61

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			Page 61– 62

Item 3. Default upon Senior Securities			Page 62

Item 4. Mine Safety Disclosures			Page 62

Item 5. Other Information			Page 62

Item 6. Exhibits			Page 62– 63

Signatures			Page 64

Table of Contents

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

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


	September 30,		December 31,
(In Thousands, Except Share and Per Share Data)	2025		2024
ASSETS
Cash and due from banks:
Noninterest-bearing	$	27,430	$	21,110
Interest-bearing		95,660		105,064
Total cash and due from banks		123,090		126,174
Available-for-sale debt securities, at fair value		415,313		402,380

Loans receivable		1,945,107		1,895,848
Allowance for credit losses		(23,474)		(20,035)
Loans, net		1,921,633		1,875,813

Bank-owned life insurance		52,614		51,214
Accrued interest receivable		9,656		8,735
Bank premises and equipment, net		21,055		21,338
Foreclosed assets held for sale		402		181
Deferred tax asset, net		16,759		19,098
Goodwill		52,505		52,505
Core deposit intangibles, net		1,762		2,080
Other assets		49,244		51,135
TOTAL ASSETS	$	2,664,033	$	2,610,653

LIABILITIES
Deposits:
Noninterest-bearing	$	508,475	$	486,566
Interest-bearing		1,657,260		1,607,343
Total deposits		2,165,735		2,093,909
Short-term borrowings		1,489		2,488
Long-term borrowings - FHLB advances		132,894		165,451
Senior notes, net		14,952		14,899
Subordinated debt, net		24,919		24,831
Accrued interest and other liabilities		30,085		33,791
TOTAL LIABILITIES		2,370,074		2,335,369

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 16,030,172 and outstanding 15,531,700 at September 30, 2025;
issued 16,030,172 and outstanding 15,433,494 at December 31, 2024		16,030		16,030
Paid-in capital		143,352		143,565
Retained earnings		171,733		165,778
Treasury stock, at cost; 498,472 shares at September 30, 2025 and 596,678
shares at December 31, 2024		(11,130)		(13,328)
Accumulated other comprehensive loss		(26,026)		(36,761)
TOTAL STOCKHOLDERS' EQUITY		293,959		275,284
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	$	2,664,033	$	2,610,653

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

Table of Contents

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

Consolidated Statements of Income

(In Thousands Except Per Share Data) (Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,		September 30,		September 30,		September 30,
(In Thousands, Except Per Share Data)	2025		2024		2025		2024
INTEREST INCOME
Interest and fees on loans:
Taxable	$	29,085	$	28,099	$	84,639	$	82,292
Tax-exempt		590		610		1,784		1,749
Income from available-for-sale debt securities:
Taxable		2,390		2,136		7,021		6,409
Tax-exempt		568		572		1,720		1,685
Other interest and dividend income		1,017		1,670		2,649		2,614
Total interest and dividend income		33,650		33,087		97,813		94,749
INTEREST EXPENSE
Interest on deposits		9,456		10,412		28,332		28,617
Interest on short-term borrowings		0		184		1		1,141
Interest on long-term borrowings - FHLB advances		1,577		1,983		5,040		5,294
Interest on senior notes, net		121		120		362		360
Interest on subordinated debt, net		233		232		698		695
Total interest expense		11,387		12,931		34,433		36,107
Net interest income		22,263		20,156		63,380		58,642
Provision for credit losses		2,163		1,207		4,753		2,726
Net interest income after provision for credit losses		20,100		18,949		58,627		55,916
NONINTEREST INCOME
Trust revenue		2,056		1,946		6,125		5,857
Brokerage and insurance revenue		490		523		1,542		1,589
Service charges on deposit accounts		1,471		1,546		4,333		4,336
Interchange revenue from debit card transactions		1,137		1,103		3,391		3,205
Net gains from sale of loans		408		360		925		786
Loan servicing fees, net		107		74		418		434
Increase in cash surrender value of life insurance		477		458		1,400		1,372
Other noninterest income		1,158		1,123		4,320		4,083
Total noninterest income		7,304		7,133		22,454		21,662
NONINTEREST EXPENSE
Salaries and employee benefits		11,293		10,875		34,119		33,460
Net occupancy and equipment expense		1,336		1,377		4,198		4,160
Data processing and telecommunications expense		1,939		1,882		5,991		5,877
Automated teller machine and interchange expense		529		510		1,319		1,470
Pennsylvania shares tax		469		433		1,435		1,300
Professional fees		445		555		1,468		1,625
Merger-related expenses		882		0		1,049		0
Other noninterest expense		2,496		2,637		8,251		7,936
Total noninterest expense		19,389		18,269		57,830		55,828
Income before income tax provision		8,015		7,813		23,251		21,750
Income tax provision		1,464		1,448		4,290		3,966
NET INCOME	$	6,551	$	6,365	$	18,961	$	17,784
EARNINGS PER COMMON SHARE - BASIC AND DILUTED	$	0.42	$	0.41	$	1.22	$	1.16

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				Nine Months Ended
	September 30,		September 30,		September 30,		September 30,
(In Thousands)	2025		2024		2025		2024
Net income	$	6,551	$	6,365	$	18,961	$	17,784

Available-for-sale debt securities:
Unrealized holding gains on available-for-sale debt securities		5,979		13,829		13,757		10,243
Reclassification adjustment for losses (gains) realized in income		0		0		0		0
Other comprehensive income on available-for-sale debt securities		5,979		13,829		13,757		10,243

Unfunded pension and postretirement obligations:
Changes from plan amendments and actuarial gains and losses		0		0		69		394
Amortization of prior service cost, net actuarial loss and curtailment gain included in net periodic benefit cost		(21)		(22)		(65)		(532)
Other comprehensive (loss) income on pension and postretirement obligations		(21)		(22)		4		(138)

Other comprehensive income before income tax		5,958		13,807		13,761		10,105
Income tax related to other comprehensive income		(1,310)		(2,510)		(3,026)		(1,732)

Other comprehensive income, net		4,648		11,297		10,735		8,373

Comprehensive income	$	11,199	$	17,662	$	29,696	$	26,157

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)


	Nine Months Ended
	September 30,		September 30,
(In Thousands)	2025		2024
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	18,961	$	17,784
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses		4,753		2,726
Net amortization of securities		1,056		1,269
Increase in cash surrender value of life insurance		(1,400)		(1,372)
Depreciation and amortization of bank premises and equipment		1,676		1,632
Net accretion of acquisition accounting adjustment		(66)		(197)
Stock-based compensation		993		1,099
Deferred income taxes		(687)		(1,338)
Decrease in fair value of servicing rights		200		172
Net gains from sale of loans		(925)		(786)
Origination of loans held for sale		(31,334)		(27,070)
Proceeds from sales of loans held for sale		32,689		24,773
Decrease (increase) in accrued interest receivable and other assets		852		(3,196)
(Decrease) increase in accrued interest payable and other liabilities		(5,456)		5,340
Other		112		124
Net Cash Provided by Operating Activities		21,424		20,960
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of certificates of deposit		1,000		1,250
Proceeds from calls and maturities of available-for-sale debt securities		35,499		28,734
Purchase of available-for-sale debt securities		(35,731)		(11,516)
Redemption of Federal Home Loan Bank of Pittsburgh stock		1,596		5,991
Purchase of Federal Home Loan Bank of Pittsburgh stock		(924)		(6,748)
Purchase of Federal Reserve Bank stock		(32)		(36)
Net increase in loans		(49,839)		(45,752)
Proceeds from bank-owned life insurance		0		14,289
Purchase of premises and equipment		(1,453)		(1,554)
Proceeds from sale of foreclosed assets		58		293
Other		2		33
Net Cash Used in Investing Activities		(49,824)		(15,016)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits		71,826		121,077
Net decrease in short-term borrowings		(999)		(22,448)
Proceeds from long-term borrowings - FHLB advances		0		59,386
Repayments of long-term borrowings - FHLB advances		(32,557)		(23,083)
Purchases of treasury stock		(208)		(655)
Common dividends paid		(11,746)		(11,636)
Net Cash Provided by Financing Activities		26,316		122,641
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(2,084)		128,585
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		123,574		52,778
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	121,490	$	181,363
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Increase in accrued purchase of available-for-sale debt securities	$	0	$	911
Assets acquired through foreclosure of real estate loans	$	231	$	0
Leased assets obtained in exchange for new operating lease liabilities	$	1,126	$	187
Interest paid	$	34,753	$	35,134
Income taxes paid	$	6,548	$	4,839

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 September 30, 2025	Shares	Shares	Stock		Capital		Earnings		Loss		Stock		Total
Balance, June 30, 2025	16,030,172	515,229	$	16,030	$	142,982	$	169,521	$	(30,674)	$	(11,502)	$	286,357
Net income								6,551						6,551
Other comprehensive income, net										4,648				4,648
Cash dividends declared on common stock, $.28 per share								(4,339)						(4,339)
Shares issued for dividend reinvestment plan		(20,886)				(61)						466		405
Forfeiture of restricted stock		4,129				94						(94)		0
Stock-based compensation expense						337								337
Balance, September 30, 2025	16,030,172	498,472	$	16,030	$	143,352	$	171,733	$	(26,026)	$	(11,130)	$	293,959

Three Months Ended September 30, 2024
Balance, June 30, 2024	16,030,172	654,190	$	16,030	$	143,352	$	159,859	$	(41,361)	$	(14,659)	$	263,221
Net income								6,365						6,365
Other comprehensive income, net										11,297				11,297
Cash dividends declared on common stock, $.28 per share								(4,304)						(4,304)
Shares issued for dividend reinvestment plan		(21,688)				(81)						484		403
Restricted stock granted		(20,000)				(448)						448		0
Stock-based compensation expense						383								383
Treasury stock purchases		3,538										(60)		(60)
Balance, September 30, 2024	16,030,172	616,040	$	16,030	$	143,206	$	161,920	$	(30,064)	$	(13,787)	$	277,305


									Accumulated
									Other
	Common	Treasury	Common		Paid-in		Retained		Comprehensive		Treasury
Nine Months Ended September 30, 2025	Shares	Shares	Stock		Capital		Earnings		Loss		Stock		Total
Balance, December 31, 2024	16,030,172	596,678	$	16,030	$	143,565	$	165,778	$	(36,761)	$	(13,328)	$	275,284
Net income								18,961						18,961
Other comprehensive income, net										10,735				10,735
Cash dividends declared on common stock, $.84 per share								(13,006)						(13,006)
Shares issued for dividend reinvestment plan		(59,629)				(130)						1,330		1,200
Restricted stock granted		(55,661)				(1,243)						1,243		0
Forfeiture of restricted stock		7,351				167						(167)		0
Stock-based compensation expense						993								993
Purchase of restricted stock for tax withholding		9,733										(208)		(208)
Balance, September 30, 2025	16,030,172	498,472	$	16,030	$	143,352	$	171,733	$	(26,026)	$	(11,130)	$	293,959

Nine Months Ended September 30, 2024
Balance, December 31, 2023	16,030,172	735,037	$	16,030	$	144,388	$	157,028	$	(38,437)	$	(16,628)	$	262,381
Net income								17,784						17,784
Other comprehensive loss, net										8,373				8,373
Cash dividends declared on common stock, $.84 per share								(12,892)						(12,892)
Shares issued for dividend reinvestment plan		(64,476)				(237)						1,452		1,215
Restricted stock granted		(92,860)				(2,094)						2,094		0
Forfeiture of restricted stock		2,076				50						(50)		0
Stock-based compensation expense						1,099								1,099
Purchase of restricted stock for tax withholding		10,229										(212)		(212)
Treasury stock purchases		26,034										(443)		(443)
Balance, September 30, 2024	16,030,172	616,040	$	16,030	$	143,206	$	161,920	$	(30,064)	$	(13,787)	$	277,305

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, 2024, 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 nine-month period ended September 30, 2025 might not be indicative of the results for the year ending December 31, 2025. The Corporation evaluates subsequent events through the date of filing with the Securities and Exchange Commission.

RECENT ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board (FASB) issues Accounting Standard Updates (ASUs) to communicate changes to the FASB Accounting 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 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures which improves the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. ASU No. 2023-09 is effective for public business entities for annual periods beginning after December 15, 2024. The ASU may be adopted on a prospective or retrospective basis and early adoption is permitted. The Corporation is currently evaluating the impact the new guidance will have on disclosures related to income taxes; however, management does not expect it will have a significant impact on its consolidated financial statements.

In December 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), which requires disclosure of certain costs and expenses in the notes to the consolidated financial statements. The amendments in this ASU will become effective for fiscal years beginning after December 15, 2026, and will be effective for interim periods with fiscal years beginning after December 15, 2027, with early adoption permitted. The amendments will be applied prospectively with the option for retrospective application. The Corporation is currently evaluating the impact of the standard to our consolidated financial statement disclosures.

2. 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.

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q


(In Thousands, Except Share and Per Share Data)	Three Months Ended				Nine Months Ended
	September 30,		September 30,		September 30,		September 30,
	2025		2024		2025		2024

Net income	$	6,551	$	6,365	$	18,961	$	17,784
Less: Dividends and undistributed earnings allocated to participating securities		(53)		(54)		(153)		(140)
Net income attributable to common shares	$	6,498	$	6,311	$	18,808	$	17,644
Weighted-average common shares outstanding		15,398,262		15,267,120		15,371,733		15,254,124
Earnings per common share - Basic and Diluted	$	0.42	$	0.41	$	1.22	$	1.16
Weighted-average nonvested restricted shares outstanding		126,451		131,302		125,204		121,035

3. 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, are as follows:


(In Thousands)	Before-Tax		Income Tax		Net-of-Tax
	Amount		Effect		Amount
Three Months Ended September 30, 2025
Available-for-sale debt securities:
Unrealized holding gains on available-for-sale debt securities	$	5,979	$	(1,314)	$	4,665
Reclassification adjustment for (gains) realized in income		0		0		0
Other comprehensive income from available-for-sale debt securities		5,979		(1,314)		4,665
Unfunded pension and postretirement obligations:
Amortization of prior service cost and net actuarial loss included in net periodic benefit cost		(21)		4		(17)
Other comprehensive loss on unfunded retirement obligations		(21)		4		(17)
Total other comprehensive income	$	5,958	$	(1,310)	$	4,648


(In Thousands)	Before-Tax		Income Tax		Net-of-Tax
	Amount		Effect		Amount
Three Months Ended September 30, 2024
Available-for-sale debt securities:
Unrealized holding gains on available-for-sale debt securities	$	13,829	$	(2,515)	$	11,314
Reclassification adjustment for (gains) realized in income		0		0		0
Other comprehensive income from available-for-sale debt securities		13,829		(2,515)		11,314
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	$	13,807	$	(2,510)	$	11,297


(In Thousands)	Before-Tax		Income Tax		Net-of-Tax
	Amount		Effect		Amount
Nine Months Ended September 30, 2025
Available-for-sale debt securities:
Unrealized holding gains on available-for-sale debt securities	$	13,757		(3,025)	$	10,732
Reclassification adjustment for (gains) realized in income		0		0		0
Other comprehensive income from available-for-sale debt securities		13,757		(3,025)		10,732
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 loss included in net periodic benefit cost		(65)		14		(51)
Other comprehensive income on unfunded retirement obligations		4		(1)		3
Total other comprehensive income	$	13,761	$	(3,026)	$	10,735

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q


(In Thousands)	Before-Tax		Income Tax		Net-of-Tax
	Amount		Effect		Amount
Nine Months Ended September 30, 2024
Available-for-sale debt securities:
Unrealized holding gains on available-for-sale debt securities	$	10,243	$	(1,761)	$	8,482
Reclassification adjustment for (gains) realized in income		0		0		0
Other comprehensive income from available-for-sale debt securities		10,243		(1,761)		8,482
Unfunded pension and postretirement obligations:
Changes from plan amendments and actuarial gains and losses		394		(83)		311
Amortization of prior service cost and net actuarial loss and curtailment gain included in net periodic benefit cost		(532)		112		(420)
Other comprehensive loss on unfunded retirement obligations		(138)		29		(109)
Total other comprehensive income	$	10,105	$	(1,732)	$	8,373

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
Amortization of prior service cost and net actuarial gain and curtailment 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 are presented net of tax:


(In Thousands)	Unrealized				Accumulated
	(Losses)		Unfunded		Other
	Gains		Retirement		Comprehensive
	on Securities		Obligations		(Loss) Income
Three Months Ended September 30, 2025
Balance, beginning of period	$	(31,017)	$	343	$	(30,674)
Other comprehensive income (loss) during three months ended September 30, 2025		4,665		(17)		4,648
Balance, end of period	$	(26,352)	$	326	$	(26,026)

Three Months Ended September 30, 2024
Balance, beginning of period	$	(41,710)	$	349	$	(41,361)
Other comprehensive income (loss) during three months ended September 30, 2024		11,314		(17)		11,297
Balance, end of period	$	(30,396)	$	332	$	(30,064)


(In Thousands)	Unrealized				Accumulated
	(Losses)		Unfunded		Other
	Gains		Retirement		Comprehensive
	on Securities		Obligations		(Loss) Income
Nine Months Ended September 30, 2025
Balance, beginning of period	$	(37,084)	$	323	$	(36,761)
Other comprehensive income during nine months ended September 30, 2025		10,732		3		10,735
Balance, end of period	$	(26,352)	$	326	$	(26,026)

Nine Months Ended September 30, 2024
Balance, beginning of period	$	(38,878)	$	441	$	(38,437)
Other comprehensive income (loss) during nine months ended September 30, 2024		8,482		(109)		8,373

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

Balance, end of period

(30,396)

332

(30,064)

4. CASH AND DUE FROM BANKS

Cash and due from banks at September 30, 2025 and December 31, 2024 include the following:


(In Thousands)	September 30,		December 31,
	2025		2024
Cash and cash equivalents	$	121,490	$	123,574
Certificates of deposit		1,600		2,600
Total cash and due from banks	$	123,090	$	126,174

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.

5. SECURITIES

Amortized cost and fair value of available-for-sale debt securities at September 30, 2025 and December 31, 2024 are summarized as follows. No allowance for credit losses was recorded at September 30, 2025 and December 31, 2024.


(In Thousands)	September 30, 2025
			Gross		Gross
			Unrealized		Unrealized
	Amortized		Holding		Holding		Fair
	Cost		Gains		Losses		Value

Obligations of the U.S. Treasury	$	8,052	$	0	$	(623)	$	7,429
Obligations of U.S. Government agencies		9,436		0		(766)		8,670
Bank holding company debt securities		28,963		0		(2,672)		26,291
Obligations of states and political subdivisions:
Tax-exempt		105,922		275		(8,669)		97,528
Taxable		50,373		1		(6,512)		43,862
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities		107,771		451		(6,287)		101,935
Residential collateralized mortgage obligations		54,678		52		(2,310)		52,420
Commercial mortgage-backed securities		72,433		13		(6,749)		65,697
Private label commercial mortgage-backed securities		3,471		0		0		3,471
Asset-backed securities,
Collateralized loan obligations		8,000		11		(1)		8,010
Total available-for-sale debt securities	$	449,099	$	803	$	(34,589)	$	415,313

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q


(In Thousands)	December 31, 2024
			Gross		Gross
			Unrealized		Unrealized
	Amortized		Holding		Holding		Fair
	Cost		Gains		Losses		Value

Obligations of the U.S. Treasury	$	8,067	$	0	$	(949)	$	7,118
Obligations of U.S. Government agencies		10,154		0		(1,129)		9,025
Bank holding company debt securities		28,958		0		(3,712)		25,246
Obligations of states and political subdivisions:
Tax-exempt		111,995		238		(10,931)		101,302
Taxable		51,147		0		(8,641)		42,506
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities		104,378		6		(9,970)		94,414
Residential collateralized mortgage obligations		53,389		10		(3,505)		49,894
Commercial mortgage-backed securities		73,470		0		(8,969)		64,501
Private label commercial mortgage-backed securities		8,365		9		0		8,374
Total available-for-sale debt securities	$	449,923	$	263	$	(47,806)	$	402,380

The following table presents gross unrealized losses and fair value of available-for-sale debt securities with unrealized loss positions aggregated by length of time that individual securities have been in a continuous unrealized loss position at September 30, 2025 and December 31, 2024 for which an allowance for credit losses has not been recorded:


September 30, 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	$	7,429	$	(623)	$	7,429	$	(623)
Obligations of U.S. Government agencies		0		0		8,670		(766)		8,670		(766)
Bank holding company debt securities		0		0		26,291		(2,672)		26,291		(2,672)
Obligations of states and political subdivisions:
Tax-exempt		554		(11)		86,573		(8,658)		87,127		(8,669)
Taxable		0		0		43,289		(6,512)		43,289		(6,512)
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities		6,631		(32)		59,944		(6,255)		66,575		(6,287)
Residential collateralized mortgage obligations		15,224		(28)		21,952		(2,282)		37,176		(2,310)
Commercial mortgage-backed securities		861		(10)		62,464		(6,739)		63,325		(6,749)
Private label commercial mortgage-backed securities		0		0		0		0		0		0
Asset-backed securities,
Collateralized loan obligations		2,999		(1)		0		0		2,999		(1)
Total	$	26,269	$	(82)	$	316,612	$	(34,507)	$	342,881	$	(34,589)

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q


December 31, 2024	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	$	7,118		(949)	$	7,118	$	(949)
Obligations of U.S. Government agencies		0		0		9,025		(1,129)		9,025		(1,129)
Bank holding company debt securities		0		0		25,246		(3,712)		25,246		(3,712)
Obligations of states and political subdivisions:
Tax-exempt		6,581		(58)		91,316		(10,873)		97,897		(10,931)
Taxable		0		0		42,506		(8,641)		42,506		(8,641)
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities		22,777		(375)		69,282		(9,595)		92,059		(9,970)
Residential collateralized mortgage obligations		19,586		(156)		27,157		(3,349)		46,743		(3,505)
Commercial mortgage-backed securities		2,314		(38)		62,187		(8,931)		64,501		(8,969)
Total	$	51,258	$	(627)	$	333,837	$	(47,179)	$	385,095	$	(47,806)

As reflected in the table above, gross unrealized holding losses on available-for-sale debt securities totaled $34,589,000 at September 30, 2025 and $47,806,000 at December 31, 2024. At September 30, 2025, the Corporation did not have the intent to sell, nor is it more likely than not it will be required to sell, these securities before it is able to recover the amortized cost basis. The unrealized holding losses were consistent with increases in market interest rates that have occurred subsequent to the purchase of most of the securities.

At September 30, 2025 and December 31, 2024, management performed an assessment for possible credit losses of the Corporation’s debt securities on an issue-by-issue basis, relying on information obtained from various sources, including publicly available financial data, ratings by external agencies, brokers and other sources. At September 30, 2025 and December 31, 2024, 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 September 30, 2025 and December 31, 2024.

There were no gross realized gains and losses from the sale of available-for-sale debt securities for the three and nine months ended September 30, 2025 and 2024.

The amortized cost and fair value of available-for-sale debt securities by contractual maturity are shown in the following table as of September 30, 2025. Actual maturities may differ from contractual maturities because counterparties may have the right to call or prepay obligations with or without call or prepayment penalties.

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q


(In Thousands)	September 30, 2025
	Amortized		Fair
	Cost		Value
Due in one year or less	$	2,691	$	2,679
Due from one year through five years		36,667		35,024
Due from five years through ten years		78,966		73,179
Due after ten years		84,422		72,898
Sub-total		202,746		183,780
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities		107,771		101,935
Residential collateralized mortgage obligations		54,678		52,420
Commercial mortgage-backed securities		72,433		65,697
Private label commercial mortgage-backed securities		3,471		3,471
Asset-backed securities,
Collateralized loan obligations		8,000		8,010
Total	$	449,099	$	415,313

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 $205,194,000 at September 30, 2025 and $190,949,000 at December 31, 2024 were pledged as collateral for public deposits, trusts and certain other deposits as provided by law. See Note 8 for information concerning securities pledged to secure borrowing arrangements.

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 $14,346,000 at September 30, 2025 and $15,018,000 at December 31, 2024. The Corporation evaluated its holding of FHLB-Pittsburgh stock for impairment and deemed the stock to not be impaired at September 30, 2025 and December 31, 2024. In making this determination, management concluded that recovery of total outstanding par value, which equals the carrying value, is expected. 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 $6,331,000 at September 30, 2025 and $6,299,000 at December 31, 2024.

The Corporation has a marketable equity security included in other assets in the consolidated balance sheets with a carrying value of $887,000 at September 30, 2025 and $863,000 at December 31, 2024, consisting exclusively of one mutual fund. There was an unrealized loss on the mutual fund of $113,000 at September 30, 2025 and $137,000 at December 31, 2024. Changes in the unrealized gains or losses on this security, which are included in other noninterest income in the consolidated statements of income, were a gain of $9,000 in the third quarter of 2025 and a gain of $31,000 in the third quarter of 2024, a gain of $24,000 in the nine-month period ended September 30, 2025 and a gain of $18,000 in the nine-month period ended September 30, 2024.

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

6. LOANS AND ALLOWANCE FOR CREDIT LOSSES

Loans receivable at September 30, 2025 and December 31, 2024 are summarized as follows:

Summary of Loans by Type

(In Thousands)


	September 30,		December 31,
	2025		2024
Commercial real estate - non-owner occupied	$	765,366	$	739,565
Commercial real estate - owner occupied		260,365		261,071
All other commercial loans		449,175		423,277
Residential mortgage loans		396,810		408,009
Consumer loans		73,391		63,926
Total		1,945,107		1,895,848
Less: allowance for credit losses on loans		(23,474)		(20,035)
Loans, net	$	1,921,633	$	1,875,813

In the table above, outstanding loan balances are presented net of deferred loan origination fees of $4,021,000 at September 30, 2025 and $4,136,000 at December 31, 2024.

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 September 30, 2025 and December 31, 2024:


(In Thousands)	As of September 30, 2025
	Past Due		Past Due
	30-89		90+ Days		Nonaccrual		Current		Total
	Days		Still Accruing		Loans		Loans		Loans
Commercial real estate - non-owner occupied	$	31	$	0	$	6,845	$	758,490	$	765,366
Commercial real estate - owner occupied		717		0		4,791		254,857		260,365
All other commercial loans		272		995		9,801		438,107		449,175
Residential mortgage loans		1,278		0		4,055		391,477		396,810
Consumer loans		211		30		270		72,880		73,391
Total	$	2,509	$	1,025	$	25,762	$	1,915,811	$	1,945,107


(In Thousands)	As of December 31, 2024
	Past Due		Past Due
	30-89		90+ Days		Nonaccrual		Current		Total
	Days		Still Accruing		Loans		Loans		Loans
Commercial real estate - non-owner occupied	$	266	$	0	$	7,370	$	731,929	$	739,565
Commercial real estate - owner occupied		0		62		1,725		259,284		261,071
All other commercial loans		296		0		10,006		412,975		423,277
Residential mortgage loans		4,934		0		4,310		398,765		408,009
Consumer loans		162		57		431		63,276		63,926
Total	$	5,658	$	119	$	23,842	$	1,866,229	$	1,895,848

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. Risk ratings are updated any time that conditions or the situation warrants. 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 September 30, 2025:


(In Thousands)	Term Loans by Year of Origination
	2025		2024		2023		2022		2021		Prior		Revolving		Total
Commercial real estate - non-owner occupied
Pass	$	53,250	$	65,536	$	107,900	$	149,368	$	76,627	$	268,253	$	0	$	720,934
Special Mention		78		31		582		15,998		804		4,738		0		22,231
Substandard		0		106		840		9,782		0		11,473		0		22,201
Doubtful		0		0		0		0		0		0		0		0
Total commercial real estate - non-owner occupied	$	53,328	$	65,673	$	109,322	$	175,148	$	77,431	$	284,464	$	0	$	765,366
Year-to-date gross charge-offs	$	0	$	0	$	0	$	0	$	0	$	9	$	0	$	9
Commercial real estate - owner occupied
Pass	$	19,593	$	24,980	$	31,686	$	49,970	$	46,419	$	71,348	$	0	$	243,996
Special Mention		0		360		378		829		814		5,563		0		7,944
Substandard		0		0		0		0		2,217		6,208		0		8,425
Doubtful		0		0		0		0		0		0		0		0
Total commercial real estate - owner occupied	$	19,593	$	25,340	$	32,064	$	50,799	$	49,450	$	83,119	$	0	$	260,365
Year-to-date gross charge-offs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
All other commercial loans
Pass	$	65,748	$	42,675	$	66,799	$	37,466	$	35,968	$	43,265	$	123,303	$	415,224
Special Mention		19		501		36		80		28		2,509		8,359		11,532
Substandard		0		10,749		0		3,610		4,892		1,119		2,049		22,419
Doubtful		0		0		0		0		0		0		0		0
Total all other commercial loans	$	65,767	$	53,925	$	66,835	$	41,156	$	40,888	$	46,893	$	133,711	$	449,175
Year-to-date gross charge-offs	$	0	$	0	$	0	$	0	$	333	$	0	$	253	$	586
Residential mortgage loans
Pass	$	26,375	$	39,628	$	43,545	$	73,911	$	46,258	$	162,643	$	0	$	392,360
Special Mention		0		0		0		0		0		0		0		0
Substandard		0		0		407		333		129		3,581		0		4,450
Doubtful		0		0		0		0		0		0		0		0
Total residential mortgage loans	$	26,375	$	39,628	$	43,952	$	74,244	$	46,387	$	166,224	$	0	$	396,810
Year-to-date gross charge-offs	$	0	$	0	$	0	$	0	$	0	$	5	$	0	$	5
Consumer loans
Pass	$	2,331	$	2,340	$	2,031	$	1,978	$	557	$	733	$	62,870	$	72,840
Special Mention		0		0		0		5		0		0		0		5
Substandard		2		4		2		0		0		65		473		546
Doubtful		0		0		0		0		0		0		0		0
Total consumer loans	$	2,333	$	2,344	$	2,033	$	1,983	$	557	$	798	$	63,343	$	73,391
Year-to-date gross charge-offs	$	0	$	0	$	33	$	40	$	0	$	0	$	148	$	221
Total Loans
Pass	$	167,297	$	175,159	$	251,961	$	312,693	$	205,829	$	546,242	$	186,173	$	1,845,354
Special Mention		97		892		996		16,912		1,646		12,810		8,359		41,712
Substandard		2		10,859		1,249		13,725		7,238		22,446		2,522		58,041
Doubtful		0		0		0		0		0		0		0		0
Total	$	167,396	$	186,910	$	254,206	$	343,330	$	214,713	$	581,498	$	197,054	$	1,945,107
Year-to-date gross charge-offs	$	0	$	0	$	33	$	40	$	333	$	14	$	401	$	821

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

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


	Term Loans by Year of Origination
(In Thousands)	2024		2023		2022		2021		2020		Prior		Revolving		Total
Commercial real estate - non-owner occupied
Pass	$	59,708	$	99,900	$	161,497	$	78,884	$	51,851	$	243,578	$	0	$	695,418
Special Mention		0		0		16,233		1,371		0		8,188		0		25,792
Substandard		116		0		9,928		0		0		8,311		0		18,355
Doubtful		0		0		0		0		0		0		0		0
Total commercial real estate - non-owner occupied	$	59,824	$	99,900	$	187,658	$	80,255	$	51,851	$	260,077	$	0	$	739,565
Year-to-date gross charge-offs	$	0	$	0	$	0	$	0	$	0	$	757	$	0	$	757
Commercial real estate - owner occupied
Pass	$	25,552	$	33,533	$	52,207	$	49,410	$	11,444	$	76,558	$	0	$	248,704
Special Mention		0		0		0		0		0		961		0		961
Substandard		0		5,125		729		2,367		0		3,185		0		11,406
Doubtful		0		0		0		0		0		0		0		0
Total commercial real estate - owner occupied	$	25,552	$	38,658	$	52,936	$	51,777	$	11,444	$	80,704	$	0	$	261,071
Year-to-date gross charge-offs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
All other commercial loans
Pass	$	73,812	$	74,301	$	44,245	$	44,367	$	23,084	$	30,656	$	109,121	$	399,586
Special Mention		533		0		2,306		2		0		0		2,147		4,988
Substandard		44		0		3,478		5,229		109		1,078		8,765		18,703
Doubtful		0		0		0		0		0		0		0		0
Total all other commercial loans	$	74,389	$	74,301	$	50,029	$	49,598	$	23,193	$	31,734	$	120,033	$	423,277
Year-to-date gross charge-offs	$	0	$	0	$	427	$	60	$	21	$	122	$	0	$	630
Residential mortgage loans
Pass	$	41,450	$	48,937	$	80,789	$	50,108	$	35,601	$	146,231	$	0	$	403,116
Special Mention		0		0		0		0		0		0		0		0
Substandard		0		380		0		85		82		4,346		0		4,893
Doubtful		0		0		0		0		0		0		0		0
Total residential mortgage loans	$	41,450	$	49,317	$	80,789	$	50,193	$	35,683	$	150,577	$	0	$	408,009
Year-to-date gross charge-offs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Consumer loans
Pass	$	3,859	$	3,441	$	2,848	$	1,013	$	599	$	679	$	50,860	$	63,299
Special Mention		0		0		0		0		0		0		0		0
Substandard		0		8		4		0		0		71		544		627
Doubtful		0		0		0		0		0		0		0		0
Total consumer loans	$	3,859	$	3,449	$	2,852	$	1,013	$	599	$	750	$	51,404	$	63,926
Year-to-date gross charge-offs	$	0	$	69	$	130	$	7	$	8	$	1	$	114	$	329
Total Loans
Pass	$	204,381	$	260,112	$	341,586	$	223,782	$	122,579	$	497,702	$	159,981	$	1,810,123
Special Mention		533		0		18,539		1,373		0		9,149		2,147		31,741
Substandard		160		5,513		14,139		7,681		191		16,991		9,309		53,984
Doubtful		0		0		0		0		0		0		0		0
Total	$	205,074	$	265,625	$	374,264	$	232,836	$	122,770	$	523,842	$	171,437	$	1,895,848
Year-to-date gross charge-offs	$	0	$	69	$	557	$	67	$	29	$	880	$	114	$	1,716

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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.


	September 30, 2025
	Nonaccrual Loans with		Nonaccrual Loans		Total Nonaccrual
(In Thousands)	No Allowance		with an Allowance		Loans
Commercial real estate - non-owner occupied	$	6,582	$	263	$	6,845
Commercial real estate - owner occupied		4,791		0		4,791
All other commercial loans		9,801		0		9,801
Residential mortgage loans		4,055		0		4,055
Consumer loans		270		0		270
Total	$	25,499	$	263	$	25,762


	December 31, 2024
	Nonaccrual Loans with		Nonaccrual Loans		Total Nonaccrual
(In Thousands)	No Allowance		with an Allowance		Loans
Commercial real estate - non-owner occupied	$	7,370	$	0	$	7,370
Commercial real estate - owner occupied		1,467		258		1,725
All other commercial loans		10,006		0		10,006
Residential mortgage loans		4,310		0		4,310
Consumer loans		431		0		431
Total	$	23,584	$	258	$	23,842

The Corporation recognized interest income on nonaccrual loans of $203,000 and $660,000 in the three and nine months ended September 30, 2025, respectively and $234,000 and $750,000 in the three and nine months ended September 30, 2024, respectively.

The following table represents the accrued interest receivable written off by reversing interest income during the three-month and nine-month periods ended September 30, 2025 and 2024:


	Three Months Ended		Three Months Ended		Nine Months Ended		Nine Months Ended
(In Thousands)	September 30, 2025		September 30, 2024		September 30, 2025		September 30, 2024
Commercial real estate - non-owner occupied	$	2	$	0	$	2	$	19
Commercial real estate - owner occupied		0		0		51		10
All other commercial loans		6		79		6		197
Residential mortgage loans		5		6		13		24
Consumer loans		0		4		0		8
Total	$	13	$	89	$	72	$	258

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.

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

●

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

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


	September 30, 2025				December 31, 2024
	Amortized				Amortized
(In Thousands)	Cost		Allowance		Cost		Allowance
Commercial real estate - non-owner occupied	$	6,845	$	51	$	7,370	$	0
Commercial real estate - owner occupied		4,791		0		6,749		122
All other commercial loans		9,801		0		16,006		0
Total	$	21,437	$	51	$	30,125	$	122

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 2 years of the weighted-average remaining life of the portfolio.

The following table summarizes the activity related to the allowance for credit losses for the three and nine months ended September 30, 2025 and 2024.


	Commercial		Commercial		All
	real estate -		real estate -		other		Residential
	nonowner		owner		commercial		mortgage		Consumer
(In Thousands)	occupied		occupied		loans		loans		loans		Total
Balance, June 30, 2025	$	13,093	$	3,055	$	3,891	$	1,314	$	346	$	21,699
Charge-offs		0		0		(45)		0		(77)		(122)
Recoveries		0		0		0		1		27		28
Provision for credit losses on loans		730		176		530		394		39		1,869
Balance, September 30, 2025	$	13,823	$	3,231	$	4,376	$	1,709	$	335	$	23,474


	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		(586)		(5)		(221)		(821)
Recoveries		0		0		2		3		83		88
Provision (credit) for credit losses on loans		1,868		387		1,599		355		(37)		4,172
Balance, September 30, 2025	$	13,823	$	3,231	$	4,376	$	1,709	$	335	$	23,474

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	Commercial		Commercial		All
	real estate -		real estate -		other		Residential
	nonowner		owner		commercial		mortgage		Consumer
(In Thousands)	occupied		occupied		loans		loans		loans		Total
Balance, June 30, 2024	$	12,177	$	2,901	$	3,678	$	1,112	$	514	$	20,382
Charge-offs		(640)		0		(570)		0		(58)		(1,268)
Recoveries		0		0		5		1		25		31
Provision (credit) for credit losses on loans		381		(28)		311		647		(14)		1,297
Balance, September 30, 2024	$	11,918	$	2,873	$	3,424	$	1,760	$	467	$	20,442


	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, 2023	$	12,010	$	2,116	$	2,918	$	1,764	$	400	$	19,208
Charge-offs		(757)		0		(630)		0		(297)		(1,684)
Recoveries		0		0		40		4		51		95
Provision (credit) for credit losses on loans		665		757		1,096		(8)		313		2,823
Balance, September 30, 2024	$	11,918	$	2,873	$	3,424	$	1,760	$	467	$	20,442

The ACL on loans individually evaluated decreased to $51,000 at September 30, 2025 from $122,000 at December 31, 2024. At September 30, 2025, there was a loan to one borrower with a amortized cost basis of $263,000 for which an individual ACL was recorded. At December 31, 2024, there were loans to one borrower with a total amortized cost basis of $258,000 for which an individual ACL was recorded.

The ACL on loans collectively evaluated was $23,423,000 at September 30, 2025, up from $19,913,000 at December 31, 2024. The increase in the collectively evaluated portion of the ACL at September 30, 2025 as compared to December 31, 2024 included a net increase related to changes in qualitative adjustments, partially offset by a decrease in the portion of the ACL based on the WARM method estimated losses resulting partially from a reduction in the estimated average life of the portfolio. The increase in the ACL at September 30, 2025 from December 31, 2024 related to changes in qualitative adjustments included increases in estimates based on: the volume and severity of past due, nonaccrual and criticized or adversely classified loans; regional and local economic conditions; and regional values of residential housing.

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 nine months ended September 30, 2025 and September 30, 2024, the Corporation made no modifications of loans to borrowers experiencing financial difficulty.

The following table presents the performance of such loans that have been modified in the twelve-month period preceding September 30, 2025 and the twelve-month period preceding September 30, 2024 (in thousands):


(In Thousands)	Payment Status (Amortized Cost Basis)
September 30, 2025	Current or Past Due Less than 30 Days		90+ Days Past Due		Total
Commercial real estate - non-owner occupied	$	2,572	$	0	$	2,572
Commercial real estate - owner occupied		217		0		217
Total	$	2,789	$	0	$	2,789

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(In Thousands)	Payment Status (Amortized Cost Basis)
September 30, 2024	Current or Past Due Less than 30 Days		90+ Days Past Due		Total
Commercial real estate - non-owner occupied	$	1,846	$	1,357	$	3,203

Included in performance of loans modified in the twelve-month period preceding September 30, 2025 table above, was one loan secured by non-owner occupied commercial real estate with an amortized cost basis of $1,781,000 that was in nonaccrual status at September 30, 2025. The Corporation had extended the maturity of that loan for 12 months in the fourth quarter 2023. In 2024, the borrower continued to experience financial difficulty, and the Corporation provided another six-month extension of the maturity. The Corporation recorded a partial charge-off of $640,000 on this loan in 2024. There was no specific ACL on this loan at September 30, 2025 and December 31, 2024.

The loan that was past due more than 90 days at September 30, 2024 in the table above was in default with its modified terms at September 30, 2024. The Corporation received payments totaling $264,000 in the twelve-month period ended September 30, 2025, all of which were applied to principal. The amortized cost basis of the loan was $1,093,000 at September 30, 2025.

The Corporation had no commitments to lend any additional funds on modified loans during the three and nine months ended September 30, 2025 and 2024, and the Corporation had no loans that defaulted during the three and nine months ended September 30, 2025 and 2024 that had been modified preceding the payment default when the borrower was experiencing financial difficulty at the time of modification.

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


(In Thousands)	September 30,		December 31,
	2025		2024
Foreclosed residential real estate	$	246	$	25

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


(In Thousands)	September 30,		December 31,
	2025		2024
Residential real estate in process of foreclosure	$	433	$	717

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 September 30, 2025 and December 31, 2024 are as follows:


	September 30,		December 31,
(In Thousands)	2025		2024
Commitments to extend credit	$	426,396	$	380,003
Standby letters of credit		58,653		64,586

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 through the 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 $1,036,000 at September 30, 2025 and $455,000 at December 31, 2024, is included in accrued interest and other liabilities on the unaudited consolidated balance sheets.

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The following table presents the balance and activity in the allowance for credit losses for off-balance sheet exposures for the three and nine months ended September 30, 2025 and 2024:


		Three Months Ended				Nine Months Ended
(In Thousands)	September 30, 2025		September 30, 2024		September 30, 2025		September 30, 2024
Beginning Balance	$	742	$	683	$	455	$	690
Provision (credit) for unfunded commitments		294		(90)		581		(97)
Ending Balance, September 30	$	1,036	$	593	$	1,036	$	593

7. GOODWILL AND CORE DEPOSIT INTANGIBLES, NET

Goodwill represents the excess of the cost of acquisitions over the fair value of the net assets acquired. At September 30, 2025 and December 31, 2024, the net carrying value of goodwill was $52,505,000.

Information related to core deposit intangibles is as follows:


(In Thousands)	September 30,		December 31,
	2025		2024
Gross amount	$	6,639	$	6,639
Accumulated amortization		(4,877)		(4,559)
Net	$	1,762	$	2,080

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				Nine Months Ended
	September 30,		September 30,		September 30,		September 30,
	2025		2024		2025		2024
Amortization expense	$	106	$	97	$	318	$	292

8. BORROWED FUNDS

SHORT-TERM BORROWINGS

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


(In Thousands)	September 30,		December 31,
	2025		2024
FHLB-Pittsburgh borrowings	$	0	$	0
Customer repurchase agreements		1,489		2,488
Total short-term borrowings	$	1,489	$	2,488

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 September 30, 2025 and December 31, 2024. The carrying value of the underlying securities was $1,490,000 at September 30, 2025 and $2,500,000 at December 31, 2024.

The FHLB-Pittsburgh loan facility is collateralized by qualifying loans secured by real estate with a book value totaling $1,386,299,000 at September 30, 2025 and $1,351,770,000 at December 31, 2024. Also, the FHLB-Pittsburgh loan facility requires the Corporation to invest in established amounts of FHLB-Pittsburgh stock. The carrying values of the Corporation’s holdings of FHLB-Pittsburgh stock

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(included in other assets in the consolidated balance sheets) were $14,346,000 at September 30, 2025 and $15,018,000 at December 31, 2024. The Corporation’s total credit facility with FHLB-Pittsburgh was $973,060,000 at September 30, 2025, including an unused (available) amount of $802,213,000. At December 31, 2024, the Corporation’s total credit facility with FHLB-Pittsburgh was $938,691,000, including an unused (available) amount of $749,999,000. At September 30, 2025 and December 31, 2024, the Corporation’s use of the FHLB-Pittsburgh facility included borrowed funds (detailed below) and letters of credit totaling $27,987,000 at September 30, 2025 and $23,241,000 at December 31, 2024. 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.

The Corporation had available credit with other correspondent banks totaling $75,000,000 at September 30, 2025 and December 31, 2024. These lines of credit are primarily unsecured. No amounts were outstanding at September 30, 2025 or December 31, 2024.

The Corporation has a line of credit with the Federal Reserve Bank of Philadelphia’s Discount Window. At September 30, 2025, the Corporation had available credit in the amount of $25,228,000 on this line with no outstanding advances. At December 31, 2024, the Corporation had available credit in the amount of $18,093,000 on this line with no outstanding advances. As collateral for this line, the Corporation has pledged available-for-sale securities with a carrying value of $26,732,000 at September 30, 2025 and $18,881,000 at December 31, 2024.

LONG-TERM BORROWINGS – FHLB ADVANCES

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


(In Thousands)	September 30,		December 31,
	2025		2024
Loans maturing in 2025 with a weighted-average rate of 4.66%		11,959		44,516
Loans maturing in 2026 with a weighted-average rate of 4.61%		48,018		48,018
Loans maturing in 2027 with a weighted-average rate of 4.24%		34,571		34,571
Loans maturing in 2028 with a weighted-average rate of 4.30%		26,027		26,027
Loans maturing in 2029 with a weighted-average rate of 4.42%		12,319		12,319
Total long-term FHLB-Pittsburgh borrowings	$	132,894	$	165,451

Note: Weighted-average rates are presented as of September 30, 2025.

SENIOR NOTES

In 2021, the Corporation issued and sold $15.0 million in aggregate principal amount of 2.75% Fixed Rate Senior Unsecured Notes due 2026 (the "Senior Notes"). The Senior Notes mature on June 1, 2026 and bear interest at a fixed annual rate of 2.75%. The Corporation is not entitled to redeem the Senior Notes, in whole or in part, at any time prior to maturity and the Senior Notes are not subject to redemption by the holders. The Senior Notes are unsecured and unsubordinated obligations of the Corporation only and are not obligations of, and are not guaranteed by, any subsidiary of the Corporation.

The Senior Notes were recorded, net of debt issuance costs of $337,000, at an initial carrying amount of $14,663,000. Debt issuance costs are amortized over the term of the Senior Notes as an adjustment of the effective interest rate. Amortization of debt issuance costs associated with the Senior Notes totaling $18,000 in the third quarter 2025 and $53,000 for the nine-month period ended September 30, 2025 and $17,000 in the third quarter 2024 and $51,000 for the nine-month period ended September 30, 2024 was included in interest expense on senior notes, net in the unaudited consolidated statements of income.

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At September 30, 2025 and December 31, 2024, outstanding Senior Notes are as follows:


(In Thousands)	September 30,		December 31,
	2025		2024
Senior Notes with an aggregate par value of $15,000,000; bearing interest at 2.75% with an effective interest rate of 3.23%; maturing in June 2026	$	14,952	$	14,899
Total carrying value	$	14,952	$	14,899

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 bear interest at a fixed annual 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 Secured Overnight Financing Rate provided by the Federal Reserve Bank of New York plus 259 basis points. The Corporation is entitled to redeem the Subordinated Notes, in whole or in part, at any time on or after June 1, 2026, and to redeem the Subordinated Notes at any time in whole upon certain other events. Any redemption of the Subordinated Notes will be subject to prior regulatory approval to the extent required.

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, including the Senior Notes (described above). The Subordinated Notes are intended to qualify as Tier 2 capital for regulatory capital purposes.

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 are amortized through June 1, 2026 as an adjustment of the effective interest rate. Amortization of debt issuance costs associated with the Subordinated Notes totaling $30,000 in the third quarter 2025 and $88,000 for the nine-month period ended September 30, 2025 and $29,000 in the third quarter 2024 and $85,000 for the nine-month period ended September 30, 2024, was included in interest expense on subordinated debt, net in the unaudited consolidated statements of income.

At September 30, 2025 and December 31, 2024, the carrying amounts of subordinated debt agreements are as follows:


(In Thousands)	September 30,		December 31,
	2025		2024
Agreements with a par value of $25,000,000; bearing interest at 3.25% with an effective interest rate of 3.74%; maturing in June 2031 and redeemable at par in June 2026	$	24,919	$	24,831
Total carrying value	$	24,919	$	24,831

9. STOCK-BASED COMPENSATION PLANS

The Corporation has a stock incentive plan for selected officers and the independent directors. The first quarter 2025 restricted stock awards to employees vest ratably over three years, and the second quarter 2025 restricted stock awards to the independent directors vest over one year. Following is a summary of restricted stock awards granted in the nine-month period ended September 30, 2025:

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(Dollars in Thousands)		Aggregate
		Grant
		Date
	Number of	Fair
	Shares	Value
Nine Months Ended September 30, 2025 awards:
Time-based awards to independent directors	12,700	$	250
Time-based awards to employees	31,113		684
Performance-based awards to employees	11,848		261
Total	55,661	$	1,195

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 third quarter 2025 and $383,000 in the third quarter 2024. Total stock-based compensation expense attributable to restricted stock awards amounted to $993,000 in the nine-month period ended September 30, 2025 and $1,099,000 in the nine-month period ended September 30, 2024.

10. CONTINGENCIES

Class Action Litigation

On March 27, 2024, a putative class action lawsuit was filed in the US District Court for the Western District of Texas by investors in a purported Ponzi scheme operated by two individuals, one of whom maintained accounts at C&N Bank. The plaintiffs have sued C&N Bank, along with another bank, and additional law firm and accounting firm defendants. The case is styled Goldovsky, et al. v. Rauld, et al. Plaintiffs asserted claims against C&N Bank and the other bank for aiding and abetting alleged violations of the Texas Securities Act, and additional claims against the legal and accounting professionals for statutory fraud, common law fraud, negligent misrepresentation, and knowing participation in breach of fiduciary duty.

C&N Bank filed motions to dismiss the Texas case for wont of personal jurisdiction and failure to state a claim. The Plaintiffs responded to those motions. By order of the District Court judge dated March 27, 2025, C&N Bank’s motion to dismiss for wont of personal jurisdiction was granted.

Plaintiffs filed an application for certification of the Texas suit as a class action. On October 16, 2025, the District Court in Texas issued an order denying the plaintiffs’ motion for class certification.

On May 23, 2025, C&N Bank was served with a complaint filed by Goldovsky, et al in the US District Court for the Middle District of Pennsylvania. The complaint is predicated upon Texas securities law, alleging substantially the same facts and asserting the same legal arguments as in the Texas case. C&N Bank filed motions to dismiss the Pennsylvania case. Plaintiffs filed a motion to certify the case as class action. C&N Bank filed its response brief in opposition to class certification in the Pennsylvania case on October 22, 2025.

C&N Bank believes that it has substantial defenses against the action, and it intends to defend itself against the plaintiffs’ allegations. Based on the information available to the Corporation, the Corporation does not believe at this time that a loss is probable in this matter, nor can a range of possible losses be determined. Accordingly, no liability has been recorded for this litigation matter in the accompanying consolidated financial statements. The Corporation’s estimate may change from time to time, and actual losses could vary.

Other Matters

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 would not be materially affected by the outcome of these legal proceedings.

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11. 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 $137,920,000 at September 30, 2025 and $141,940,000 at December 31, 2024. The Corporation originated one interest rate swap in the nine-month period ended September 30, 2025. The notional amount of the swap was $1,791,000 at September 30, 2025. Fee income on the interest swap originated in the nine-month period ended September 30, 2025 of $24,000 was included in other noninterest income in the consolidated statements of income. There were no interest rate swaps originated in the nine-month period ended September 30, 2024. There were no gross amounts of interest rate swap-related assets and liabilities not offset in the consolidated balance sheets at September 30, 2025 and December 31, 2024.

The Corporation has entered into an RPA with another institution as a means to assume a portion of the credit risk associated with a loan structure which includes a derivative instrument, in exchange for fee income commensurate with the risk assumed. This type of derivative is referred to as an “RPA In.” In addition, in an effort to reduce the credit risk associated with an interest rate swap agreement with a borrower for whom the Corporation has provided a loan structured with a derivative, the Corporation purchased an RPA from an institution participating in the facility in exchange for a fee commensurate with the risk shared. This type of derivative is referred to as an “RPA Out.” There was an increase of $1,000 included in other noninterest income from RPAs in the third quarter 2025 and $10,000 in the nine-month period ended September 30, 2025 as compared to a decrease of $1,000, included in other noninterest income, in the third quarter 2024 and an increase of $1,000 in the nine-month period ended September 30, 2024.

The table below presents the fair value of the Corporation’s derivative financial instruments as well as their classification on the consolidated balance sheets at September 30, 2025 and December 31, 2024:


(In Thousands)	At September 30, 2025								At December 31, 2024
	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	$	68,960	$	1,483	$	68,960	$	1,483	$	70,970	$	2,385	$	70,970	$	2,385
RPA Out		6,856		3		0		0		6,957		2		0		0
RPA In		0		0		13,831		7		0		0		9,916		2

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

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

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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 September 30, 2025 and $1,090,000 at December 31, 2024.

12. 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 September 30, 2025 and December 31, 2024, assets and liabilities measured at fair value and the valuation methods used are as follows:


	September 30, 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	$	7,429	$	0	$	0	$	7,429
Obligations of U.S. Government agencies		0		8,670		0		8,670
Bank holding company debt securities		0		26,291		0		26,291
Obligations of states and political subdivisions:
Tax-exempt		0		97,528		0		97,528
Taxable		0		43,862		0		43,862
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities		0		101,935		0		101,935
Residential collateralized mortgage obligations		0		52,420		0		52,420
Commercial mortgage-backed securities		0		65,697		0		65,697
Private label commercial mortgage-backed securities		0		3,471		0		3,471
Asset-backed securities,
Collateralized loan obligations		0		8,010		0		8,010
Total available-for-sale debt securities		7,429		407,884		0		415,313
Marketable equity security		887		0		0		887
Servicing rights		0		0		2,839		2,839
RPA Out		0		3		0		3
Interest rate swap agreements, assets		0		1,483		0		1,483
Total recurring fair value measurements, assets	$	8,316	$	409,370	$	2,839	$	420,525

Recurring fair value measurements, liabilities:
RPA In	$	0	$	7	$	0	$	7
Interest rate swap agreements, liabilities		0		1,483		0		1,483
Total recurring fair value measurements, liabilities	$	0	$	1,490	$	0	$	1,490

Nonrecurring fair value measurements, assets:
Loans individually evaluated for credit loss, net	$	0	$	0	$	212	$	212
Foreclosed assets held for sale		0		0		402		402
Total nonrecurring fair value measurements, assets	$	0	$	0	$	614	$	614

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	December 31, 2024
	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	$	7,118	$	0	$	0	$	7,118
Obligations of U.S. Government agencies		0		9,025		0		9,025
Bank holding company debt securities		0		25,246		0		25,246
Obligations of states and political subdivisions:
Tax-exempt		0		101,302		0		101,302
Taxable		0		42,506		0		42,506
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities		0		94,414		0		94,414
Residential collateralized mortgage obligations		0		49,894		0		49,894
Commercial mortgage-backed securities		0		64,501		0		64,501
Private label commercial mortgage-backed securities		0		8,374		0		8,374
Total available-for-sale debt securities		7,118		395,262		0		402,380
Marketable equity security		863		0		0		863
Servicing rights		0		0		2,782		2,782
RPA Out		0		2		0		2
Interest rate swap agreements, assets		0		2,385		0		2,385
Total recurring fair value measurements, assets	$	7,981	$	397,649	$	2,782	$	408,412

Recurring fair value measurements, liabilities,
RPA In	$	0	$	2	$	0	$	2
Interest rate swap agreements, liabilities		0		2,385		0		2,385
Total recurring fair value measurements, liabilities	$	0	$	2,387	$	0	$	2,387

Nonrecurring fair value measurements, assets:
Loans individually evaluated for credit loss, net	$	0	$	0	$	136	$	136
Foreclosed assets held for sale		0		0		181		181
Total nonrecurring fair value measurements, assets	$	0	$	0	$	317	$	317

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 September 30, 2025 and December 31, 2024, quantitative information regarding valuation techniques and the significant unobservable inputs used for assets measured on a recurring basis using unobservable inputs (Level 3 methodologies) are as follows:

Fair Value at

9/30/2025

Valuation

Unobservable

Method or Value As of

Asset

(In Thousands)

Technique

Input(s)

9/30/2025

Servicing rights

2,839

Discounted cash flow

Discount rate

13.00

Rate used through modeling period

Loan prepayment speeds

123.00

Weighted-average PSA

Fair Value at

12/31/2024

Valuation

Unobservable

Method or Value As of

Asset

(In Thousands)

Technique

Input(s)

12/31/2024

Servicing rights

2,782

Discounted cash flow

Discount rate

13.00

Rate used through modeling period

Loan prepayment speeds

116.00

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				Nine Months Ended
	September 30, 2025		September 30, 2024		September 30, 2025		September 30, 2024
Servicing rights balance, beginning of period	$	2,819	$	2,720	$	2,782	$	2,659
Originations of servicing rights		119		91		257		195
Unrealized loss included in earnings		(99)		(129)		(200)		(172)
Servicing rights balance, end of period	$	2,839	$	2,682	$	2,839	$	2,682

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).

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At September 30, 2025 and December 31, 2024, quantitative information regarding valuation techniques and the significant unobservable inputs used for nonrecurring fair value measurements using Level 3 methodologies are as follows:


(Dollars In Thousands)									Range (Weighted
			Valuation						Average)
	Balance at		Allowance at		Fair Value at		Valuation	Unobservable	Discount at
Asset	9/30/2025		9/30/2025		9/30/2025		Technique	Inputs	9/30/2025

Loans individually evaluated for credit loss:
Commercial real estate - nonowner occupied	$	263	$	51	$	212	Sales comparison	Discount to appraised value	45% (45)	%
Total loans individually evaluated for credit loss	$	263	$	51	$	212
Foreclosed assets held for sale - real estate:
Residential (1-4 family)	$	246	$	0	$	246	Sales comparison	Discount to appraised value	1%-84% (25)	%
Commercial real estate		156		0		156	Sales comparison	Discount to appraised value	18%-77% (34)	%
Total foreclosed assets held for sale	$	402	$	0	$	402


(Dollars In Thousands)									Range (Weighted
			Valuation						Average)
	Balance at		Allowance at		Fair Value at		Valuation	Unobservable	Discount at
Asset	12/31/2024		12/31/2024		12/31/2024		Technique	Inputs	12/31/2024

Loans individually evaluated for credit loss:
Commercial real estate - owner occupied	$	258	$	122	$	136	Sales comparison & SBA guaranty	Discount to appraised value	95% (95)	%
Total loans individually evaluated for credit loss	$	258	$	122	$	136
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	18%-77% (34)	%
Total foreclosed assets held for sale	$	181	$	0	$	181

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.

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


(In Thousands)	Fair Value	September 30, 2025				December 31, 2024
	Hierarchy	Carrying		Fair		Carrying		Fair
	Level	Amount		Value		Amount		Value
Financial assets:
Cash and cash equivalents	Level 1	$	121,490	$	121,490	$	123,574	$	123,574
Certificates of deposit	Level 2		1,600		1,571		2,600		2,513
Restricted equity securities (included in other assets)	N/A		20,927		20,927		21,567		N/A
Loans, net	Level 3		1,921,633		1,856,861		1,875,813		1,789,044
Accrued interest receivable	Level 2		9,656		9,656		8,735		8,735

Financial liabilities:
Deposits with no stated maturity	Level 2		1,661,238		1,661,238		1,609,552		1,609,552
Time deposits	Level 2		504,497		502,416		484,357		484,900
Short-term borrowings	Level 2		1,489		1,489		2,488		2,488
Long-term borrowings - FHLB advances	Level 2		132,894		134,251		165,451		165,616
Senior notes, net	Level 2		14,952		14,538		14,899		13,579
Subordinated debt, net	Level 2		24,919		22,986		24,831		21,051
Accrued interest payable	Level 2		1,309		1,309		1,771		1,771

13. SEGMENT REPORTING

The Corporation’s one reportable segment is determined by the President and Chief Executive Officer, who is the designated chief operating decision maker, based upon information provided about the Corporation’s products and services offered, primarily community banking operations. The chief operating decision maker uses consolidated net income to assess performance by comparing it to and monitoring it against budget and prior year results. In addition, the chief operating decision maker uses the consolidated net income to benchmark the Corporation against its competitors. This information is used to manage resources to drive business and net earnings growth, including investment in key strategic priorities, as well as determine the Corporation's ability to return capital to shareholders. Loans, investments, deposits and assets held in a fiduciary or custodial capacity provide the revenues in the banking operation. Interest expense, provisions for credit losses, and payroll provide the significant expenses in the banking operation. All operations are domestic.

Segment performance is evaluated using consolidated net income.


	Three Months Ended				Nine Months Ended
(In Thousands)		September 30, 2025		September 30, 2024		September 30, 2025		September 30, 2024
Interest income	$	33,650	$	33,087	$	97,813	$	94,749
Interest expense		11,387		12,931		34,433		36,107
Net interest income		22,263		20,156		63,380		58,642
Provision for credit losses		2,163		1,207		4,753		2,726
Net interest income after provision for credit losses		20,100		18,949		58,627		55,916
Other income:
Other noninterest income		7,304		7,133		22,454		21,662
Total other income		7,304		7,133		22,454		21,662
Other Noninterest Expense:
Salaries and employee benefits		11,293		10,875		34,119		33,460
Merger-related expenses		882		0		1,049		0
Other segment expenses (1)		7,214		7,394		22,662		22,368
Total noninterest expense		19,389		18,269		57,830		55,828
Income before income tax provision		8,015		7,813		23,251		21,750
Income tax provision		1,464		1,448		4,290		3,966
NET INCOME	$	6,551	$	6,365	$	18,961	$	17,784

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(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 and other noninterest expenses.

The Corporation’s segment assets represent the total assets as presented in the consolidated balance sheets at September 30, 2025 and December 31, 2024.

14. SUBSEQUENT EVENT- COMPLETED MERGER

On October 1, 2025, the Corporation completed its previously announced merger with Susquehanna Community Financial, Inc. (“Susquehanna”). Susquehanna was the parent company of Susquehanna Community Bank, with seven banking offices located in Lycoming, Northumberland, Synder and Union counties in Pennsylvania. Pursuant to the Agreement and Plan of Merger dated April 23, 2025 between the Corporation and Susquehanna, Susquehanna merged with and into the Corporation, with the Corporation as the surviving corporation in the Merger. Immediately following the completion of the Merger, Susquehanna Community Bank, the wholly owned subsidiary of Susquehanna, merged with and into the C&N Bank, with C&N Bank surviving. Upon completion of the merger, shareholders of Susquehanna became entitled to exchange each share of Susquehanna common stock owned for 0.80 shares of the Corporation’s common stock.

Based on the average of the high and low trading price of the Corporation’s common stock of $19.64 per share on October 1, 2025, the total purchase consideration is valued at approximately $44.6 million. As of September 30, 2025, Susquehanna reported total assets of $587 million, including gross loans of $400 million, total deposits of $501 million and total stockholders’ equity of $36 million. As of the date the Corporation’s September 30, 2025 financial statements are issued, some of the information required to be disclosed under U.S. GAAP was not available since, given the short period between the October 1, 2025 merger date and the financial statement issuance, the calculation of the fair value of all material Susquehanna assets acquired and liabilities assumed had not yet been completed.

In the first nine months of 2025, the Corporation incurred pre-tax merger-related expenses related to the Susquehanna transaction of $1,049,000, including expenses totaling $882,000 in the third quarter of 2025. Merger-related expenses recorded through September 30, 2025 included initial expenses related to conversion of Susquehanna’s core customer system data into the Corporation’s core system and legal and other professional expenses.

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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 statements of 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 SEC, 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

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

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

●legislative or regulatory changes

●downturn in demand for loan, deposit and other financial services in 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, generally accepted accounting principles 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 Community Financial, Inc., (“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.

RECENTLY COMPLETED MERGER

On October 1, 2025, C&N completed its previously announced merger with Susquehanna. Susquehanna was the parent company of Susquehanna Community Bank, with seven banking offices located in Lycoming, Northumberland, Synder and Union counties in Pennsylvania. Pursuant to the Agreement and Plan of Merger dated April 23, 2025 between the Corporation and Susquehanna, Susquehanna merged with and into the Corporation, with the Corporation as the surviving corporation in the Merger. Immediately following the completion of the Merger, Susquehanna Community Bank, the wholly owned subsidiary of Susquehanna, merged with and into C&N Bank, with C&N Bank surviving. Upon completion of the merger, shareholders of Susquehanna became entitled to exchange each share of Susquehanna common stock owned for 0.80 shares of the Corporation’s common stock.

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Based on the average of the high and low trading price of the Corporation’s common stock of $19.64 per share on October 1, 2025, the total purchase consideration in the merger is valued at approximately $44.6 million. As of September 30, 2025, Susquehanna reported total assets of $587 million, including gross loans of $400 million, total deposits of $501 million and total stockholders’ equity of $36 million. As of the date the Corporation’s September 30, 2025 financial statements are issued, some of the information required to be disclosed under U.S. GAAP was not available since, given the short period between the October 1, 2025 merger date and the financial statement issuance, the calculation of the fair value of all material Susquehanna assets acquired and liabilities assumed had not yet been completed.

In the first nine months of 2025, the Corporation incurred pre-tax merger-related expenses related to the Susquehanna transaction of $1,049,000, including expenses totaling $882,000 in the third quarter of 2025. Management estimates total pre-tax merger-related expenses associated with the Susquehanna transaction will be approximately $7.5 million, with most of the expenses expected to be incurred in the fourth quarter of 2025. Merger-related expenses will include expenses related to conversion of Susquehanna’s core customer system data into the Corporation’s core system, severance and similar expenses and legal and other professional expenses.

EARNINGS OVERVIEW

Third Quarter 2025 as Compared to Third Quarter 2024

Third quarter 2025 net income was $6,551,000, or $0.42 per diluted share, as compared to $6,365,000, or $0.41 per diluted share, in the third quarter 2024. Excluding the effects of merger-related expenses, net of taxes, of $697,000, adjusted earnings (non-GAAP) per share were $0.47 per diluted share for the third quarter 2025. See “Reconciliation of Net Income and Diluted Earnings Per Share to Non-GAAP Measure” for additional information. Other significant variances were as follows:

●

Net interest income of $22,263,000 in the third quarter 2025 was $2,107,000 higher than in the third quarter 2024. The net interest margin increased to 3.62% in the third quarter 2025 from 3.29% in the third quarter 2024. The interest rate spread increased 0.39%, as the average yield on earning assets increased 0.08% while the average rate on interest-bearing liabilities decreased 0.31%. Average total deposits increased $41,554,000 despite a decrease in average brokered deposits of $53,846,000 and average total borrowed funds decreased $56,519,000. Average total earning assets increased $1,585,000 from the third quarter 2024, as average total loans receivable increased $37,761,000, or 2.0%, while average interest-bearing due from banks decreased $31,228,000 or 26.0%.

●

The provision for credit losses was $2,163,000 for the third quarter 2025, compared to a provision for credit losses of $1,207,000 in the third quarter 2024. The provision for the third quarter 2025 included a provision related to loans receivable of $1,869,000 and a provision related to off-balance sheet exposures of $294,000. The provision in the third quarter of 2025 mainly resulted from increases in the allowance for credit losses (“ACL”) related to changes in qualitative factors partially offset by a decrease resulting from changes in an economic forecast. Net charge-offs totaled $94,000, or 0.02% (annualized) of average loans receivable, in the third quarter of 2025 as compared to $1,237,000, or 0.26% (annualized) of average loans receivable, in the third quarter of 2024. The ACL as a percentage of gross loans receivable was 1.21% at September 30, 2025, an increase from 1.08% at September 30, 2024.

●

Noninterest income of $7,304,000 in the third quarter 2025 increased $171,000 from the third quarter 2024 result, including trust revenue of $2,056,000 which increased $110,000, or 5.7%, reflecting an increase in estate and pension fees.

●

Noninterest expense totaled $19,389,000 in the third quarter of 2025, an increase of $1,120,000 from $18,269,000 in third quarter of 2024. Excluding merger-related expenses of $882,000, non-interest expense totaled $18,507,000 in the third quarter of 2025, an increase of $238,000 from the third quarter of 2024 result. Significant variances included the following:

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Salaries and employee benefits expense of $11,293,000 increased $418,000 from the third quarter of 2024 including increases of $172,000 in health insurance expense, $150,000 in cash and stock-based compensation and an increase in base salaries expense of $77,000, or 1.0%.

Other noninterest expense of $2,496,000 decreased $141,000 from the third quarter 2024 as legal fees and expenses totaled $60,000, a decrease of $158,000 from $218,000 in the third quarter of 2024.

Nine Months Ended September 30, 2025 as Compared to Nine Months Ended September 30, 2024

Net income for the nine-month period ended September 30, 2025 was $18,961,000, or $1.22 per diluted share, as compared to $17,784,000, or $1.16 per diluted share, for the first nine months of 2024. Excluding the impact of merger-related expenses, net of taxes of $850,000, adjusted earnings (non-GAAP) for the first nine months of 2025 were $19,811,000, or $1.28 per diluted share. See “Reconciliation of Net Income and Diluted Earnings Per Share to Non-GAAP Measure” for additional information Other significant variances were as follows:

●

Net interest income totaled $63,380,000 in the nine months ended September 30, 2025, an increase of $4,738,000 from the total for the first nine months of 2024. The net interest margin was 3.51% for the first nine months of 2025, up from 3.30% in the corresponding period of 2024. The interest rate spread increased 0.23%, as the average rate on interest-bearing liabilities was 0.14% lower while the average yield on earning assets increased 0.09%. Average total earning assets increased $37,834,000, including an increase in average loans receivable of $32,050,000, or 1.7%, and an increase in interest-bearing due from banks of $13,434,000. Average total deposits increased $58,280,000, or 2.9%, despite a $57,141,000 reduction in average brokered deposits to $13,287,000 for the first nine months of 2025 as compared to $70,428,000 for the first nine months of 2024, while average total borrowed funds decreased $44,150,000.

●

For the nine months ended September 30, 2025, the provision for credit losses was $4,753,000, an increase of $2,027,000 from the provision for the first nine months of 2024. The provision in the nine months ended September 30, 2025 included the impact of increases in the ACL related to changes in qualitative factors partially offset by a reduction related to changes in the Corporation’s average net charge-off experience. In the first nine months of 2025, the ACL on loans receivable increased $3,439,000 to 1.21% at September 30, 2025 as compared to 1.06% at December 31, 2024. Net charge-offs totaled $733,000, or 0.05% (annualized) of average loans receivable for the nine months ended September 30, 2025 compared to $1,589,000, or 0.11% (annualized) of average loans receivable for the first nine months of 2024.

●

Noninterest income totaled $22,454,000 in the first nine months of 2025, up $792,000 from the total for the first nine months of 2024. Significant variances included the following:

Trust revenue of $6,125,000 increased $268,000, consistent with appreciation in the trading prices of many U.S. equity securities and included an increase in estate fees.

Other noninterest income of $4,320,000 increased $237,000, including increases in credit enhancement fees of $69,000, income from merchant services of $55,000, income from tax credits related to donations of $51,000 and letter of credit fees of $50,000.

Interchange revenue from debit card transactions of $3,391,000 increased $186,000, including an increase in volume-related incentive income.

Net gains from sale of loans of $925,000 increased $139,000, reflecting an increase in volume of residential mortgage loans sold.

●

Noninterest expense totaled $57,830,000 for the first nine months of 2025, an increase of $2,002,000 from $55,828,000for the first nine months of 2024. Excluding merger-related expenses of $1,049,000, non-interest expense

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totaled $56,781,000 for the first nine months of 2025, an increase of $953,000 from the total for the first nine months of 2024. Significant variances included the following:

Salaries and employee benefits expense of $34,119,000 increased $659,000, including increases of $548,000 in cash-and stock-based incentive compensation and $137,000 in wealth management-related commissions, while base salaries decreased $52,000.

Other noninterest expense of $8,251,000 increased $315,000. Within this category, significant variances included the following:

◾

In 2025, there was a reduction in expense associated with the defined benefit postretirement medical benefit plan of $49,000. In comparison, in 2024, there was a reduction in expense of $513,000 related to the defined benefit postretirement medical benefit plan, including a curtailment gain of $469,000. In addition, pension costs from a frozen defined benefit plan increased $93,000 to $109,000 in 2025 from $14,000 in 2024, primarily from a settlement charge of $87,000 in 2025, and net collection expense increased $60,000 to $38,000 in 2025 as compared to net recoveries of $22,000 in 2024.

◾

Legal fees totaled $199,000 in the first nine months of 2025, a decrease of $292,000 from 2024.

●

The income tax provision of $4,290,000, or 18.5% of pre-tax income for 2025 increased $324,000 from $3,966,000, or 18.2% of pre-tax income, for 2024. The increase in income tax provision was consistent with the increase in pre-tax income of $1,501,000.

The following table provides a reconciliation of the Corporation’s third quarter and September 30, 2025 year-to-date unaudited earnings results under U.S. generally accepted accounting principles (U.S. GAAP) to comparative non-U.S. GAAP results excluding merger-related expenses. Management believes disclosure of unaudited third quarter and September 30, 2025 earnings results, adjusted to exclude the impact of merger-related expenses, provides useful information for comparative purposes.

RECONCILIATION OF NET INCOME AND DILUTED EARNINGS PER SHARE TO NON-GAAP MEASURE:


	Three Months Ended				Nine Months Ended
(Dollars In Thousands, Except Per Share Data)	September 30,		September 30,		September 30,		September 30,
(Unaudited)	2025		2024		2025		2024
Calculation of Adjusted Net Income:
Net Income (GAAP) (A)	$	6,551	$	6,365	$	18,961	$	17,784
Add: Merger-related expenses (B)		882		0		1,049		0
Less: Tax effect of merger-related expenses (C)		(185)		0		(199)		0
Adjusted Net Income (D=A+B-C) - Non-GAAP	$	7,248	$	6,365	$	19,811	$	17,784
Adjusted Net Income Attributable to Common Shares - Non-GAAP	$	7,189	$	6,311	$	19,651	$	17,644

Number of Shares Used in Computation - Basic and Diluted		15,398,262		15,267,120		15,371,733		15,254,124
Net Income- Basic and Diluted per Common Share - GAAP	$	0.42	$	0.41	$	1.22	$	1.16
Adjusted Net Income- Basic and Diluted Per Common Share - Non-GAAP	$	0.47	$	0.41	$	1.28	$	1.16

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TABLE I – QUARTERLY FINANCIAL DATA


(Dollars In Thousands,	For the Three Months Ended :
Except Per Share Data)	September 30,		June 30,		March 31,		December 31,		September 30,
(Unaudited)	2025		2025		2025		2024		2024
Interest and dividend income	$	33,650	$	32,454	$	31,709	$	33,329	$	33,087
Interest expense		11,387		11,312		11,734		12,856		12,931
Net interest income		22,263		21,142		19,975		20,473		20,156
Provision (credit) for credit losses		2,163		2,354		236		(531)		1,207
Net interest income after provision (credit) for credit losses		20,100		18,788		19,739		21,004		18,949
Noninterest income		7,304		8,142		7,008		7,547		7,133
Merger-related expenses		882		167		0		0		0
Other noninterest expenses		18,507		19,231		19,043		18,430		18,269
Income before income tax provision		8,015		7,532		7,704		10,121		7,813
Income tax provision		1,464		1,415		1,411		1,947		1,448
Net income	$	6,551	$	6,117	$	6,293	$	8,174	$	6,365
Net income attributable to common shares	$	6,498	$	6,068	$	6,242	$	8,103	$	6,311
Basic and diluted earnings per common share	$	0.42	$	0.40	$	0.41	$	0.53	$	0.41

NONINTEREST INCOME

TABLE II – COMPARISON OF NONINTEREST INCOME


(Dollars in Thousands)	Three Months Ended
	September 30,					$	%
	2025		2024			Change	Change
Trust revenue	$	2,056	$	1,946	$	110	5.7	%
Brokerage and insurance revenue		490		523		(33)	(6.3)	%
Service charges on deposit accounts		1,471		1,546		(75)	(4.9)	%
Interchange revenue from debit card transactions		1,137		1,103		34	3.1	%
Net gains from sales of loans		408		360		48	13.3	%
Loan servicing fees, net		107		74		33	44.6	%
Increase in cash surrender value of life insurance		477		458		19	4.1	%
Other noninterest income		1,158		1,123		35	3.1	%
Total noninterest income	$	7,304	$	7,133	$	171	2.4	%


(Dollars in Thousands)	Nine Months Ended
	September 30,					$	%
	2025		2024			Change	Change
Trust revenue	$	6,125	$	5,857	$	268	4.6	%
Brokerage and insurance revenue		1,542		1,589		(47)	(3.0)	%
Service charges on deposit accounts		4,333		4,336		(3)	(0.1)	%
Interchange revenue from debit card transactions		3,391		3,205		186	5.8	%
Net gains from sales of loans		925		786		139	17.7	%
Loan servicing fees, net		418		434		(16)	(3.7)	%
Increase in cash surrender value of life insurance		1,400		1,372		28	2.0	%
Other noninterest income		4,320		4,083		237	5.8	%
Total noninterest income	$	22,454	$	21,662	$	792	3.7	%

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

NONINTEREST EXPENSE

TABLE III - COMPARISON OF NONINTEREST EXPENSE


(Dollars in Thousands)	Three Months Ended
	September 30,				$		%
	2025		2024		Change		Change
Salaries and employee benefits	$	11,293	$	10,875	$	418	3.8	%
Net occupancy and equipment expense		1,336		1,377		(41)	(3.0)	%
Data processing and telecommunications expense		1,939		1,882		57	3.0	%
Automated teller machine and interchange expense		529		510		19	3.7	%
Pennsylvania shares tax		469		433		36	8.3	%
Professional fees		445		555		(110)	(19.8)	%
Other noninterest expense		2,496		2,637		(141)	(5.3)	%
Total noninterest expense, excluding merger-related expenses		18,507		18,269		238	1.3	%
Merger-related expenses		882		0		882	0.0	%
Total noninterest expense	$	19,389	$	18,269	$	1,120	6.1	%


(Dollars in Thousands)	Nine Months Ended
	September 30,				$		%
	2025		2024		Change		Change
Salaries and employee benefits		34,119	$	33,460	$	659	2.0	%
Net occupancy and equipment expense		4,198		4,160		38	0.9	%
Data processing and telecommunications expense		5,991		5,877		114	1.9	%
Automated teller machine and interchange expense		1,319		1,470		(151)	(10.3)	%
Pennsylvania shares tax		1,435		1,300		135	10.4	%
Professional fees		1,468		1,625		(157)	(9.7)	%
Other noninterest expense		8,251		7,936		315	4.0	%
Total noninterest expense, excluding merger-related expenses		56,781		55,828		953	1.7	%
Merger-related expenses		1,049		0		1,049	0.0	%
Total noninterest expense	$	57,830	$	55,828	$	2,002	3.6	%

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. generally accepted accounting principles requires management to make estimates and assumptions that affect many of the reported amounts and disclosures. Actual results could differ from these estimates.

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 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 6 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.

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

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.

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 nine-month periods ended September 30, 2025 and 2024. 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-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 GAAP financial measure is included with Table IV. The discussion that follows is based on amounts in the related tables.

Three-Month Periods Ended September 30, 2025 and 2024

Fully taxable equivalent net interest income (a non-GAAP measure) was $22,481,000 in the third quarter of 2025, $2,120,000 (10.4%) higher than in the third quarter of 2024. The increase in net interest income reflected an increase in interest income of $576,000 and a decrease in interest expense of $1,544,000. As presented in Table V, the Net Interest Margin was 3.62% in the third quarter 2025 as compared to 3.29% in the third quarter 2024, 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 2.94% in 2025 from 2.55% in 2024. The average yield on earning assets of 5.46% was 0.08% higher in 2025 compared to 2024, and the average rate on interest-bearing liabilities of 2.52% in 2025 was 0.31% lower. Additionally, average total deposits increased $41,554,000 despite a decrease in average brokered deposits of $53,846,000 and total average borrowed funds decreased $56,519,000. Average total earning assets increased $1,585,000 from the third quarter 2024, as average total loans receivable increased $37,761,000 while average interest-bearing due from banks decreased $31,228,000. As presented in Table VI, the net impact of changes in interest rates increased net interest income in the third quarter 2025 as compared to third quarter 2024 by $1,483,000 and changes in volume of earning assets and interest-bearing liabilities increased net interest income by $637,000.

INTEREST INCOME AND EARNING ASSETS

Interest income totaled $33,868,000 in 2025, an increase of $576,000, or 1.7%, from 2024.

Interest and fees from loans receivable increased $964,000 in 2025 as compared to 2024. The fully taxable equivalent yield on loans in 2025 increased to 6.14% from 6.08% in 2024, reflecting the effects of 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 $37,761,000, or 2.0% to $1,926,231,000 in 2025 from $1,888,470,000 in 2024.

Income from interest-bearing due from banks totaled $982,000 in 2025, a decrease of $640,000 from the total for 2024. Within this category, the largest asset balance in 2025 and 2024 has been interest-bearing deposits held with the Federal Reserve. The average yield on interest-bearing due from banks was 4.39% in 2025, down from 5.38% in 2024. The average balance of interest-bearing due from banks was $88,657,000 in 2025, down $31,228,000 from $119,885,000 in 2024. The net decrease in average interest-bearing due from banks for 2025 as compared to 2024 reflected net uses of cash for loan growth and a decrease in borrowed funds partially offset by net sources of cash from deposit growth and a reduction in average available-for-sale debt securities.

Interest income from available-for-sale debt securities, on a fully taxable-equivalent basis, totaled $3,039,000 in 2025, up $265,000 from 2024, as the average yield on available-for-sale debt securities was 2.71% in 2025, up from 2.45% in 2024. The average balance (at amortized cost) of available-for-sale debt securities decreased $4,681,000 between periods.

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

INTEREST EXPENSE AND INTEREST-BEARING LIABILITIES

Interest expense decreased $1,544,000 to $11,387,000 in 2025 from $12,931,000 in 2024.

Interest expense on deposits decreased $956,000, as the average rate decreased to 2.32% in 2025 from 2.62% in 2024 while the average balance of interest-bearing deposits increased $31,611,000. Average total deposits (interest-bearing and noninterest-bearing) increased $41,554,000 or 2.0% in the third quarter of 2025 as compared to 2024. Within average deposits, average brokered deposits were $4,936,000 at an average rate of 4.18% in the third quarter of 2025 as compared to $58,782,000 at an average rate of 5.28% in the third quarter of 2024. In comparing the third quarter 2025 to the third quarter 2024, average total money market accounts increased $20,274,000, average time deposits increased $13,341,000, average noninterest-bearing demand deposits increased $9,943,000 and average interest checking deposits increased $1,716,000 while average savings deposits decreased $3,720,000.

Interest expense on borrowed funds decreased $588,000 in 2025 as compared to 2024. Interest expense on short-term borrowings was less than $1,000 in the third quarter 2025 compared to $184,000 in the third quarter 2024 as the average balance of short-term borrowings decreased to $658,000 in 2025 from $15,038,000 in 2024. Interest expense on long-term borrowings (FHLB advances) decreased $406,000 to $1,577,000 in 2025 from $1,983,000 in 2024. The average balance of long-term borrowings was $138,749,000 in 2025, down from an average balance of $181,075,000 in 2024. The average rate on long-term borrowings was 4.51% in 2025 compared to 4.36% in 2024. Borrowings are classified as long-term within the Tables based on their term at origination or assumption in business combinations.

More information regarding borrowed funds is provided in Note 8 to the unaudited consolidated financial statements.

Nine Month Periods Ended September 30, 2025 and 2024

For the nine-month periods, fully taxable equivalent net interest income was $64,029,000 in 2025, which was $4,785,000 or 8.1% higher than in 2024. The increase in net interest income reflected an increase in interest income of $3,111,000 and a decrease in interest expense of $1,674,000. As presented in Table VI, the net impact of changes in interest rates increased net interest income for the nine months ended September 30, 2025 over the nine months ended September 30, 2024 by $3,362,000 and the net impact of changes in volume of earning assets and interest-bearing liabilities increased net interest income by $1,423,000. As presented in Table V, the Net Interest Margin was 3.51% in the first nine months of 2025 as compared to 3.30% in the first nine months of 2024, 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 2.83% in 2025 from 2.60% in 2024. The average yield on earning assets of 5.40% was 0.09% higher in 2025 as compared to 2024, while the average rate on interest-bearing liabilities of 2.57% in 2025 was 0.14% lower compared to 2024.

INTEREST INCOME AND EARNING ASSETS

Interest income totaled $98,462,000 in 2025, an increase of $3,111,000 from 2024.

Interest and fees from loans receivable increased $2,396,000 in 2025 as compared to 2024. In the nine-month period ended September 30, 2025, the fully taxable equivalent yield on loans was 6.08%, up from 6.01% in the first nine months of 2024, reflecting the effects of 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 $32,050,000 or 1.7% to $1,909,126,000 in 2025 from $1,877,076,000 in 2024.

Income from interest-bearing due from banks totaled $2,558,000 in 2025, an increase of $37,000 from 2024. The average balance of interest-bearing due from banks was $78,883,000 in 2025, up from $65,449,000 in 2024. Within this category, the largest asset balance in 2025 and 2024 has been interest-bearing deposits held with the Federal Reserve. The average yield on interest-bearing due from banks was 4.34% in 2025, down from 5.15% in 2024.

Interest income from available-for-sale debt securities, on a fully taxable-equivalent basis, totaled $8,976,000 in 2025, up $680,000 from 2024, as the average yield on available-for-sale debt securities was 2.68% in 2025, up from 2.43% in 2024. The average balance (at amortized cost) of available-for-sale debt securities decreased to $448,032,000 in 2025 from $455,944,000 in 2024.

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INTEREST EXPENSE AND INTEREST-BEARING LIABILITIES

For the nine-month periods, interest expense decreased $1,674,000 to $34,433,000 in 2025 from $36,107,000 in 2024.

Interest expense on deposits decreased $285,000, as the average rate on interest-bearing deposits was 2.37% in 2025 and 2.48% in 2024. The average balance of interest-bearing deposits increased $54,971,000. Average total deposits (interest-bearing and noninterest-bearing) amounted to $2,092,615,000 for the first nine months of 2025, up $58,280,000 or 2.9% from the first nine months of 2024. Within average total deposits, average brokered deposits (primarily time and money market) were $13,287,000 with an average interest rate of 4.63% in 2025, down from $70,428,000 with an average interest rate of 5.24% in 2024. Average time deposits increased $35,528,000, average interest checking deposits increased $17,102,000, average money market accounts increased $12,318,000 and average noninterest-bearing demand deposits increased $3,309,000, while average balance of savings accounts decreased $9,977,000.

Interest expense on borrowed funds decreased $1,389,000 in 2025 as compared to 2024. Interest expense on short-term borrowings of $1,000 in 2025 was down from $1,141,000 in 2024 as the average balance of short-term borrowings decreased to $1,010,000 in 2025 from $29,086,000 in 2024. The average rate on short-term borrowings was 0.13% in 2025 compared to 5.24% in 2024. Interest expense on long-term borrowings (FHLB advances) decreased $254,000 to $5,040,000 in 2025 from $5,294,000 in 2024. The average rate on long-term borrowings was 4.49% in 2025 compared to 4.25% in 2024 while the average balance of long-term borrowings decreased to $150,195,000 in 2025 from $166,454,000 in 2024. Borrowings are classified as long-term within the Tables based on their term at origination or assumption in business combinations.

More information regarding borrowed funds is provided in Note 8 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						Nine Months Ended
	September 30,				Increase/		September 30,				Increase/
(In Thousands)	2025		2024		(Decrease)		2025		2024		(Decrease)
INTEREST INCOME
Interest-bearing due from banks	$	982	$	1,622	$	(640)	$	2,558	$	2,521	$	37
Available-for-sale debt securities:
Taxable		2,390		2,136		254		7,021		6,409		612
Tax-exempt		649		638		11		1,955		1,887		68
Total available-for-sale debt securities		3,039		2,774		265		8,976		8,296		680
Loans receivable:
Taxable		29,085		28,099		986		84,639		82,292		2,347
Tax-exempt		727		749		(22)		2,198		2,149		49
Total loans receivable		29,812		28,848		964		86,837		84,441		2,396
Other earning assets		35		48		(13)		91		93		(2)
Total Interest Income		33,868		33,292		576		98,462		95,351		3,111

INTEREST EXPENSE
Interest-bearing deposits:
Interest checking		2,770		3,240		(470)		8,205		8,882		(677)
Money market		2,034		2,159		(125)		5,963		6,256		(293)
Savings		50		50		0		148		157		(9)
Time deposits		4,602		4,963		(361)		14,016		13,322		694
Total interest-bearing deposits		9,456		10,412		(956)		28,332		28,617		(285)
Borrowed funds:
Short-term		0		184		(184)		1		1,141		(1,140)
Long-term - FHLB advances		1,577		1,983		(406)		5,040		5,294		(254)
Senior notes, net		121		120		1		362		360		2
Subordinated debt, net		233		232		1		698		695		3
Total borrowed funds		1,931		2,519		(588)		6,101		7,490		(1,389)
Total Interest Expense		11,387		12,931		(1,544)		34,433		36,107		(1,674)

Net Interest Income	$	22,481	$	20,361	$	2,120	$	64,029	$	59,244	$	4,785

Note: Interest income from tax-exempt securities and loans has been adjusted to a fully taxable-equivalent basis (a non-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						Nine Months Ended
	September 30,				Increase/		September 30,				Increase/
	2025		2024		(Decrease)		2025		2024		(Decrease)
Net Interest Income Under U.S. GAAP	$	22,263	$	20,156	$	2,107	$	63,380	$	58,642	$	4,738
Add: fully taxable-equivalent interest income adjustment from tax-exempt securities		81		66		15		235		202		33
Add: fully taxable-equivalent interest income adjustment from tax-exempt loans		137		139		(2)		414		400		14
Net Interest Income as adjusted to a fully taxable-equivalent basis - Non-GAAP	$	22,481	$	20,361	$	2,120	$	64,029	$	59,244	$	4,785

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

TABLE V - Analysis of Average Daily Balances and Rates


(Dollars in Thousands)	Three Months				Three Months				Nine Months				Nine Months
	Ended		Rate of		Ended		Rate of		Ended		Rate of		Ended		Rate of
	9/30/2025		Return/		9/30/2024		Return/		9/30/2025		Return/		9/30/2024		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	$	88,657	4.39	%	$	119,885	5.38	%	$	78,883	4.34	%	$	65,449	5.15	%
Available-for-sale debt securities, at amortized cost:
Taxable		337,101	2.81	%		336,246	2.53	%		338,390	2.77	%		342,677	2.50	%
Tax-exempt		107,978	2.38	%		113,514	2.24	%		109,642	2.38	%		113,267	2.23	%
Total available-for-sale debt securities		445,079	2.71	%		449,760	2.45	%		448,032	2.68	%		455,944	2.43	%
Loans receivable:
Taxable		1,841,875	6.26	%		1,797,224	6.22	%		1,821,817	6.21	%		1,787,982	6.15	%
Tax-exempt		84,356	3.42	%		91,246	3.27	%		87,309	3.37	%		89,094	3.22	%
Total loans receivable		1,926,231	6.14	%		1,888,470	6.08	%		1,909,126	6.08	%		1,877,076	6.01	%
Other earning assets		2,809	4.94	%		3,076	6.21	%		2,477	4.91	%		2,215	5.61	%
Total Earning Assets		2,462,776	5.46	%		2,461,191	5.38	%		2,438,518	5.40	%		2,400,684	5.31	%
Cash		22,592				24,987				21,890				22,619
Unrealized loss on securities		(39,294)				(47,806)				(42,068)				(51,792)
Allowance for credit losses		(22,040)				(20,643)				(20,989)				(20,141)
Bank-owned life insurance		52,321				50,470				51,853				51,647
Bank premises and equipment		21,263				21,793				21,310				21,858
Intangible assets		54,320				54,730				54,424				54,827
Other assets		73,209				73,320				72,730				81,988
Total Assets	$	2,625,147			$	2,618,042			$	2,597,668			$	2,561,690

INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Interest checking	$	545,004	2.02	%	$	543,288	2.37	%	$	542,281	2.02	%	$	525,179	2.26	%
Money market		376,761	2.14	%		356,487	2.41	%		365,460	2.18	%		353,142	2.37	%
Savings		194,592	0.10	%		198,312	0.10	%		196,367	0.10	%		206,344	0.10	%
Time deposits		499,049	3.66	%		485,708	4.07	%		493,190	3.80	%		457,662	3.89	%
Total interest-bearing deposits		1,615,406	2.32	%		1,583,795	2.62	%		1,597,298	2.37	%		1,542,327	2.48	%
Borrowed funds:
Short-term		658	0.00	%		15,038	4.87	%		1,010	0.13	%		29,086	5.24	%
Long-term - FHLB advances		138,749	4.51	%		181,075	4.36	%		150,195	4.49	%		166,454	4.25	%
Senior notes, net		14,944	3.21	%		14,875	3.21	%		14,926	3.24	%		14,857	3.24	%
Subordinated debt, net		24,905	3.71	%		24,787	3.72	%		24,875	3.75	%		24,759	3.75	%
Total borrowed funds		179,256	4.27	%		235,775	4.25	%		191,006	4.27	%		235,156	4.25	%
Total Interest-bearing Liabilities		1,794,662	2.52	%		1,819,570	2.83	%		1,788,304	2.57	%		1,777,483	2.71	%
Demand deposits		510,802				500,859				495,317				492,008
Other liabilities		31,823				29,226				31,119				29,527
Total Liabilities		2,337,287				2,349,655				2,314,740				2,299,018
Stockholders' equity, excluding accumulated other comprehensive loss		318,175				305,808				315,395				303,209
Accumulated other comprehensive loss		(30,315)				(37,421)				(32,467)				(40,537)
Total Stockholders' Equity		287,860				268,387				282,928				262,672
Total Liabilities and Stockholders' Equity	$	2,625,147			$	2,618,042			$	2,597,668			$	2,561,690
Interest Rate Spread			2.94	%			2.55	%			2.83	%			2.60	%
Net Interest Income/Earning Assets			3.62	%			3.29	%			3.51	%			3.30	%

Total Deposits (Interest-bearing and Demand)	$	2,126,208			$	2,084,654			$	2,092,615			$	2,034,335
Brokered Deposits	$	4,936	4.18	%	$	58,782	5.28	%	$	13,287	4.63	%	$	70,428	5.24	%

(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 9/30/2025 vs. 9/30/2024						.	Nine Months Ended 9/30/2025 vs. 9/30/2024
	Change in		Change in		Total			Change in		Change in		Total
	Volume		Rate		Change			Volume		Rate		Change
EARNING ASSETS
Interest-bearing due from banks	$	(304)	$	(336)	$	(640)		$	469	$	(432)	$	37
Available-for-sale debt securities:
Taxable		6		248		254			(82)		694		612
Tax-exempt		(32)		43		11			(62)		130		68
Total available-for-sale debt securities		(26)		291		265			(144)		824		680
Loans receivable:
Taxable		739		247		986			1,517		830		2,347
Tax-exempt		(56)		34		(22)			(44)		93		49
Total loans receivable		683		281		964			1,473		923		2,396
Other earning assets		(2)		(11)		(13)			11		(13)		(2)
Total Interest Income		351		225		576			1,809		1,302		3,111

INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Interest checking		23		(493)		(470)			280		(957)		(677)
Money market		120		(245)		(125)			211		(504)		(293)
Savings		0		0		0			(9)		0		(9)
Time deposits		130		(491)		(361)			1,005		(311)		694
Total interest-bearing deposits		273		(1,229)		(956)			1,487		(1,772)		(285)
Borrowed funds:
Short-term		(89)		(95)		(184)			(567)		(573)		(1,140)
Long-term - FHLB advances		(472)		66		(406)			(538)		284		(254)
Senior notes, net		0		1		1			1		1		2
Subordinated debt, net		2		(1)		1			3		0		3
Total borrowed funds		(559)		(29)		(588)			(1,101)		(288)		(1,389)
Total Interest Expense		(286)		(1,258)		(1,544)			386		(2,060)		(1,674)

Net Interest Income	$	637	$	1,483	$	2,120		$	1,423	$	3,362	$	4,785

(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 third quarter 2025 of $1,464,000 was $16,000 higher than the provision for the third quarter 2024, and the provision for the nine months ended September 30, 2025 of $4,290,000 was $324,000 higher than the amount for the first nine months of 2025 due to a higher amount of pre-tax income in 2025. The effective tax rate (tax provision as a percentage of pre-tax income) was 18.3% in the third quarter 2025 compared to 18.5% in the third quarter 2024 and 18.5% for the first nine months of 2025 as compared to 18.2% for the first nine months of 2024. 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 September 30, 2025 and December 31, 2024 represents the following temporary difference components:


	September 30,		December 31,
(In Thousands)	2025		2024
Deferred tax assets:
Unrealized holding losses on securities	$	7,434	$	10,459
Allowance for credit losses on loans		5,121		4,400
Acquisition accounting adjustment on loans		247		333
Deferred compensation		1,556		1,465
Operating leases liability		815		692
Deferred loan origination fees		696		697
Net operating loss carryforward		347		423
Accrued incentive compensation		564		678
Other deferred tax assets		1,598		1,520
Total deferred tax assets		18,378		20,667

Deferred tax liabilities:
Right-of-use assets from operating leases		815		692
Core deposit intangibles		385		456
Bank premises and equipment		279		290
Defined benefit plans - ASC 835		91		90
Other deferred tax liabilities		49		41
Total deferred tax liabilities		1,619		1,569
Deferred tax asset, net	$	16,759	$	19,098

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 September 30, 2025 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 September 30, 2025 and December 31, 2024, 2023 and 2022 is as follows:


(Dollars In Thousands)	September 30, 2025					December 31, 2024					December 31, 2023					December 31, 2022
	Amortized		Fair			Amortized		Fair			Amortized		Fair			Amortized		Fair
	Cost		Value			Cost		Value			Cost		Value			Cost		Value
Obligations of the U.S. Treasury	$	8,052		7,429		$	8,067		7,118		$	12,325		11,290		$	35,166	$	31,836
Obligations of U.S. Government agencies		9,436		8,670			10,154		9,025			11,119		9,946			25,938		23,430
Bank holding company debt securities		28,963		26,291			28,958		25,246			28,952		23,500			28,945		25,386
Obligations of states and political subdivisions:
Tax-exempt		105,922		97,528			111,995		101,302			113,464		104,199			146,149		132,623
Taxable		50,373		43,862			51,147		42,506			58,720		50,111			68,488		56,812
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities		107,771		101,935			104,378		94,414			105,549		95,405			112,782		99,941
Residential collateralized mortgage obligations		54,678		52,420			53,389		49,894			50,212		46,462			44,868		40,296
Commercial mortgage-backed securities		72,433		65,697			73,470		64,501			76,412		66,682			91,388		79,686
Private label commercial mortgage-backed securities		3,471		3,471			8,365		8,374			8,215		8,160			8,070		8,023
Asset-backed securities,
Collateralized loan obligations		8,000		8,010			0		0			0		0			0		0
Total Available-for-Sale Debt Securities	$	449,099	$	415,313		$	449,923	$	402,380		$	464,968	$	415,755		$	561,794	$	498,033

Aggregate Unrealized Loss			$	(33,786)				$	(47,543)				$	(49,213)				$	(63,761)
Aggregate Unrealized Loss as a % of Amortized Cost				(7.5)	%				(10.6)	%				(10.6)	%				(11.3)	%

As reflected in the table above, the fair value of available-for-sale securities was lower than the amortized cost basis by $33,786,000, or 7.5% at September 30, 2025, $47,543,000, or 10.6%, at December 31, 2024, $49,213,000, or 10.6%, at December 31, 2023 and $63,761,000, or 11.3%, at December 31, 2022. The volatility in the fair value of the portfolio, including the reduction in fair value, resulted from changes in interest rates. The table also shows that the amortized cost basis of the portfolio has been reduced to $449,099,000 at September 30, 2025 from $561,794,000 at December 31, 2022 as proceeds from maturities and sales have been used to help fund loan growth and for other purposes.

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 5 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 September 30, 2025 before it is able to recover the amortized cost basis. Further, management reviewed the Corporation’s holdings as of September 30, 2025 and concluded there were no credit-related declines in fair value. Additional information related to the types of securities held at September 30, 2025, other than securities issued or guaranteed by U.S. Government entities or agencies, is as follows:

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●

Bank holding company debt securities – All of the Corporation’s holdings of bank holding company debt securities were investment grade and there have been no payment defaults. There were seven securities with face amounts ranging from $3 million to $5 million, including one senior security and six subordinated securities. All of the issuers have publicly traded common stock. At September 30, 2025, the securities have external ratings ranging from BBB-/Baa3 to A-.

●

Obligations of states and political subdivisions (municipal bonds) –Most of the Corporation’s holdings of municipal bonds were investment grade and there have been no payment defaults. Summary ratings information at September 30, 2025, 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 – 19% of the portfolio; AA – 73%; A – 8%.

●

Private label commercial mortgage-backed security (PLCMBS) – There was one PLCMBS security which was from the most senior payment (subordination) class. This security was investment grade (rated Aaa), and there have been no payment defaults on this security.

●

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 September 30, 2025.

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 September 30, 2025.

Table VII shows the composition of the loan portfolio at September 30, 2025 and at year-end from 2020 through 2024. Throughout this time period, the portfolio was primarily commercial in nature. At September 30, 2025, commercial loans represented 76% of the portfolio while residential loans totaled 20% of the portfolio.

Also included in Table VII is additional detail regarding the composition of the non-owner occupied commercial real estate loan portfolio at September 30, 2025. As shown in Table VII, 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 $117,046,000, or 6.0% of gross loans receivable. Within this segment there were two loans with a total amortized cost basis of $2,874,000 in nonaccrual status with no individual allowances and 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 September 30, 2025.

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 $33,518,000 at September 30, 2025, down from $35,129,000 at December 31, 2024.

The Corporation is a party to financial instruments with off-balance sheet risk, including commitments to extend credit and standby letters of credit. At September 30, 2025, the total contract amount of commitments to extend credit was $426,396,000 as compared to $380,003,000 at December 31, 2024, and the contract amount of standby letters of credit was $58,653,000 at September 30, 2025 as compared to $64,586,000 at December 31, 2024.

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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 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 $1,036,000 at September 30, 2025 and $455,000 at December 31, 2024, 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.

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 September 30, 2025, the total outstanding balance of loans the Corporation has repurchased as a result of identified instances of noncompliance amounted to $2,635,000, and the corresponding total outstanding balance of repurchased loans at December 31, 2024 was $3,029,000.

At September 30, 2025, outstanding balances of loans sold and serviced through the MPF Xtra and Original programs totaled $335,330,000, including loans sold through the MPF Xtra program of $153,657,000 and loans sold through the Original program of $181,673,000. At December 31, 2024, outstanding balances of loans sold and serviced through the MPF Xtra and Original programs totaled $329,766,000, including loans sold through the MPF Xtra program of $158,302,000 and loans sold through the Original program of $171,464,000. Based on the fairly limited volume of required repurchases to date, no allowance has been established for representation and warranty exposures as of September 30, 2025 and December 31, 2024.

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

TABLE VII - SUMMARY OF LOANS BY TYPE

Summary of Loans by Type


(In Thousands)		September 30,	December 31,
	2025		2024		2023		2022		2021		2020
Commercial real estate - non-owner occupied:
Non-owner occupied	$	497,295	$	471,171	$	499,104	$	454,386	$	358,352	$	328,662
Multi-family (5 or more) residential		108,376		105,174		64,076		55,406		49,054		54,893
1-4 Family - commercial purpose		159,695		163,220		174,162		165,805		175,027		198,918
Total commercial real estate - non-owner occupied		765,366		739,565		737,342		675,597		582,433		582,473
Commercial real estate - owner occupied		260,365		261,071		237,246		205,910		196,083		191,075
All other commercial loans:
Commercial and industrial		112,667		96,665		78,832		95,368		118,488		222,923
Commercial lines of credit		133,726		120,078		117,236		141,444		106,338		105,802
Political subdivisions		82,728		94,009		79,031		86,663		75,401		46,295
Commercial construction and land		100,015		92,741		104,123		60,892		59,505		41,000
Other commercial loans		20,039		19,784		20,471		25,710		26,498		29,310
Total all other commercial loans		449,175		423,277		399,693		410,077		386,230		445,330
Residential mortgage loans:
1-4 Family - residential		369,452		383,797		389,262		363,005		327,593		356,532
1-4 Family residential construction		27,358		24,212		24,452		30,577		23,151		18,736
Total residential mortgage		396,810		408,009		413,714		393,582		350,744		375,268
Consumer loans:
Consumer lines of credit (including HELOCs)		58,888		47,196		41,503		36,650		33,522		34,566
All other consumer		14,503		16,730		18,641		18,224		15,837		15,497
Total consumer		73,391		63,926		60,144		54,874		49,359		50,063
Total		1,945,107		1,895,848		1,848,139		1,740,040		1,564,849		1,644,209
Less: allowance for credit losses on loans		(23,474)		(20,035)		(19,208)		(16,615)		(13,537)		(11,385)
Loans, net	$	1,921,633	$	1,875,813	$	1,828,931	$	1,723,425	$	1,551,312	$	1,632,824

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 September 30, 2025 is as follows:

NON-OWNER OCCUPIED COMMERCIAL REAL ESTATE


(In Thousands)	September 30,		% of Non-owner		% of
	2025		Occupied CRE		Total Loans
Office	$	117,046	23.5	%	6.0	%
Industrial		89,953	18.1	%	4.6	%
Retail		88,328	17.8	%	4.5	%
Hotels		72,776	14.6	%	3.7	%
Mixed Use		62,872	12.6	%	3.2	%
Other		66,320	13.3	%	3.4	%
Total Non-owner Occupied CRE Loans	$	497,295
Total Gross Loans	$	1,945,107

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

PROVISION AND ALLOWANCE FOR CREDIT LOSSES

A summary of the provision for credit losses for the three-month and nine-month periods ended September 30, 2025 and 2024 is as follows:


(In Thousands)	3 Months		3 Months		9 Months		9 Months
	Ended		Ended		Ended		Ended
	September 30,		September 30,		September 30,		September 30,
	2025		2024		2025		2024
Provision for credit losses:
Loans receivable	$	1,869	$	1,297	$	4,172	$	2,823
Off-balance sheet exposures		294		(90)		581		(97)
Total provision for credit losses	$	2,163	$	1,207	$	4,753	$	2,726

For the quarter ended September 30, 2025, there was a provision for credit losses of $2,163,000, an increase of $956,000 from a provision for credit losses of $1,207,000 in the third quarter 2024. For the nine months ended September 30, 2025, there was a provision for credit losses of $4,753,000, an increase of $2,027,000 compared to $2,726,000 in 2024. The provision in the nine months ended September 30, 2025 included the impact of increases in the ACL related to changes in qualitative factors partially offset by a reduction in the portion of the ACL based on the Corporation’s WARM method estimated losses resulting partially from a reduction in the estimated average life of the portfolio. The ACL was 1.21% of gross loans receivable at September 30, 2025, up from 1.13% at June 30, 2025 and 1.06% at December 31, 2024.

As shown in Table IX, the ACL on loans individually evaluated decreased to $51,000 at September 30, 2025 from $122,000 at December 31, 2024. At September 30, 2025, there was a loan to one borrower with an amortized cost basis of $263,000 for which an individual ACL was recorded. At December 21, 2024, there were loans to one borrower with a total amortized cost basis of $258,000 for which individual ACLs were recorded.

Table IX also shows that, at September 30, 2025 as compared to December 31, 2024, the ACL related to collectively evaluated commercial loans increased by a total of $3,332,000 and the ACL on collectively evaluated residential mortgage loans increased $353,000 while the ACL on collectively evaluated consumer loans decreased $175,000. The net increase in the collectively determined portion of the ACL included the impact of an aggregate increase from changes in qualitative adjustments, partially offset by a decrease in WARM method estimated losses resulting partially from a reduction in the estimated average life of the portfolio. The increase in the ACL at September 30, 2025 from December 31, 2024 related to changes in qualitative adjustments included increases in estimates based on: the volume and severity of past due, nonaccrual and criticized or adversely classified loans; regional and local economic conditions; and regional values of residential housing.

In the first nine months of 2025, net charge-offs totaled $733,000, or 0.05% (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.

As presented in Table X, collateral dependent loans totaled $21,437,000 at September 30, 2025, down from $30,125,000 at December 31, 2024. The decrease from December 31, 2024 included two loans related to one relationship with a total amortized cost basis of $11,023,000 at December 31, 2024 that were paid off in April 2025.

Total nonperforming assets were $27,189,000 at September 30, 2025, up $3,047,000 from December 31, 2024. Nonperforming loans increased $2,826,000 from December 31, 2024. Nonperforming loans included an increase in nonaccrual loans of $1,920,000 from December 31, 2024 and an increase of $906,000 in loans past due 90 days or more still accruing from December 31, 2024. Table X shows that total nonperforming assets as a percentage of total assets was 1.02% at September 30, 2025, up from 0.92% at December 31,

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2024. Table X also shows that total nonperforming assets as a percentage of assets as of year-end 2020 through 2024, ranged from a high of 1.10% at December 31, 2020 to a low of 0.75% at December 31, 2023.

Table X also shows that loans past due 30-89 days totaled $2,509,000 at September 30, 2025, down from $5,658,000 at December 31, 2024 as there was a net decrease of $3,656,000 in 1-4 Family residential loans past due 30-89 days from December 31, 2024.

Over the period 2020-2024 and the first 9 months of 2025, 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 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 September 30, 2025. 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)
	Nine Months Ended September 30,						Years Ended December 31,
	2025			2024			2024			2023			2022			2021			2020
Balance, beginning of year	$	20,035		$	19,208		$	19,208		$	16,615		$	13,537		$	11,385		$	9,836
Adoption of ASU 2016-13 (CECL)		0			0			0			2,104			0			0			0
Charge-offs		(821)			(1,684)			(1,716)			(356)			(4,245)			(1,575)			(2,465)
Recoveries		88			95			113			92			68			66			101
Net charge-offs		(733)			(1,589)			(1,603)			(264)			(4,177)			(1,509)			(2,364)
Provision for credit losses on loans		4,172			2,823			2,430			753			7,255			3,661			3,913
Balance, end of period	$	23,474		$	20,442		$	20,035		$	19,208		$	16,615		$	13,537		$	11,385
Net charge-offs as a % of average loans (annualized)		0.05	%		0.11	%		0.09	%		0.01	%		0.26	%		0.09	%		0.16	%

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


(In Thousands)	September 30,		December 31,		December 31,		January 1,
	2025		2024		2023		2023
Loans individually evaluated	$	51	$	122	$	743	$	751
Loans collectively evaluated:
Commercial real estate - nonowner occupied		13,772		11,964		10,379		9,641
Commercial real estate - owner occupied		3,231		2,722		2,111		1,765
All other commercial loans		4,376		3,361		3,811		3,914
Residential mortgage		1,709		1,356		1,764		2,407
Consumer		335		510		400		241
Total Allowance	$	23,474	$	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		2020
ASC 310 - Impaired loans - individually evaluated	$	453	$	740	$	925
ASC 450 - Collectively evaluated:
Commercial		10,845		7,553		5,545
Residential mortgage		4,073		4,338		4,091
Consumer		244		235		239
Unallocated		1,000		671		585
Total Allowance	$	16,615	$	13,537	$	11,385

TABLE X - PAST DUE LOANS AND NONPERFORMING ASSETS


(Dollars In Thousands)	September 30,			As of December 31,
	2025			2024			2023			2022			2021			2020
Collateral dependent loans with a valuation allowance	$	263		$	258		$	7,786		$	3,460		$	6,540		$	8,082
Collateral dependent loans without a valuation allowance		21,174			29,867			3,478			14,871			2,636			2,895
Purchased credit impaired loans		0			0			0			1,027			6,558			6,841
Total collateral dependent loans	$	21,437		$	30,125		$	11,264		$	19,358		$	15,734		$	17,818
Total loans past due 30-89 days and still accruing	$	2,509		$	5,658		$	9,275		$	7,079		$	5,106		$	5,918
Nonperforming assets:
Purchased credit impaired loans	$	0		$	0		$	0		$	1,027		$	6,558		$	6,841
Other nonaccrual loans		25,762			23,842			15,177			22,058			12,441			14,575
Total nonaccrual loans		25,762			23,842			15,177			23,085			18,999			21,416
Total loans past due 90 days or more and still accruing		1,025			119			3,190			2,237			2,219			1,975
Total nonperforming loans		26,787			23,961			18,367			25,322			21,218			23,391
Foreclosed assets held for sale (real estate)		402			181			478			275			684			1,338
Total nonperforming assets	$	27,189		$	24,142		$	18,845		$	25,597		$	21,902		$	24,729

Total nonperforming loans as a % of loans		1.38	%		1.26	%		0.99	%		1.46	%		1.36	%		1.42	%
Total nonperforming assets as a % of assets		1.02	%		0.92	%		0.75	%		1.04	%		0.94	%		1.10	%
Nonaccrual loans as a % of loans		1.32	%		1.26	%		0.82	%		1.33	%		1.21	%		1.30	%
Allowance for credit losses as a % of nonaccrual loans		91.12	%		84.03	%		79.01	%		71.97	%		71.25	%		53.16	%
Allowance for credit losses as a % of total loans		1.21	%		1.06	%		1.04	%		0.95	%		0.87	%		0.69	%

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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 $26,732,000 at September 30, 2025.

The Corporation’s outstanding, available, and total credit facilities at September 30, 2025 and December 31, 2024 are as follows:


	Outstanding				Available				Total Credit
(In Thousands)	September 30,		December 31,		September 30,		December 31,		September 30,		December 31,
	2025		2024		2025		2024		2025		2024
Federal Home Loan Bank of Pittsburgh	$	155,881	$	188,692	$	802,213	$	749,999	$	973,060	$	938,691
Federal Reserve Bank Discount Window		0		0		25,228		18,093		25,228		18,093
Other correspondent banks		0		0		75,000		75,000		75,000		75,000
Total credit facilities	$	155,881	$	188,692	$	902,441	$	843,092	$	1,073,288	$	1,031,784

At September 30, 2025, the Corporation’s outstanding credit facilities with the Federal Home Loan Bank of Pittsburgh consisted of long-term borrowings with par values totaling $132,894,000 and letters of credit totaling $22,987,000. At December 31, 2024, the Corporation’s outstanding credit facilities with the Federal Home Loan Bank of Pittsburgh consisted of long-term borrowings with par values totaling $165,451,000 and letters of credit totaling $23,241,000. 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 8 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 September 30, 2025, the carrying value of available-for-sale securities in excess of amounts required to meet pledging or repurchase agreement obligations was $244,348,000.

Deposits totaled $2,165,735,000 at September 30, 2025, up $71,826,000 or 3.4% from $2,093,909,000 at December 31, 2024. Average total deposits were $58,280,000 or 2.9% higher for the nine months ended September 30, 2025 as compared to the first nine months of 2024 despite a reduction in average brokered deposits of $57,141,000. Brokered deposits, consisting of short-term certificates of deposit and money market funds, totaled $5,004,000 at September 30, 2025, a decrease of $19,017,000 from December 31, 2024.

As shown in the table below, at September 30, 2025, estimated uninsured deposits totaled $696.5 million, or 31.9%, of total deposits, as compared to $632.8 million, or 30.0% of total deposits at December 31, 2024. Included in uninsured deposits are deposits collateralized by securities (almost exclusively municipal deposits) totaling $178.5 million at September 30, 2025. As shown in the table below, total uninsured and uncollateralized deposits amounted to 23.7% of total deposits at September 30, 2025, as compared to 22.3% at December 31, 2024.

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,

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

totaled $1.1 billion at September 30, 2025. Available funding from these sources totaled 164.6% of uninsured deposits and 221.4% of total uninsured and uncollateralized deposits at September 30, 2025.


Uninsured Deposits Information	September 30,			December 31,
	2025			2024
Total Deposits - C&N Bank	$	2,184,401		$	2,111,547

Estimated Total Uninsured Deposits	$	696,542		$	632,804
Portion of Uninsured Deposits that are
Collateralized		178,525			161,958
Uninsured and Uncollateralized Deposits	$	518,017		$	470,846

Uninsured and Uncollateralized Deposits as
a % of Total Deposits		23.7	%		22.3	%

Available Funding from Credit Facilities	$	902,441		$	843,092
Fair Value of Available-for-sale Debt
Securities in Excess of Pledging Obligations		244,348			236,945
Highly Liquid Available Funding	$	1,146,789		$	1,080,037

Highly Liquid Available Funding as a % of
Uninsured Deposits		164.6	%		170.7	%

Highly Liquid Available Funding as a % of
Uninsured and Uncollateralized Deposits		221.4	%		229.4	%

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

In August 2018, the Federal Reserve Board issued an interim final rule that expanded applicability of the Board’s small bank holding company capital adequacy policy statement. The interim final rule raised the policy statement’s asset threshold from $1 billion to $3 billion in total consolidated assets for a bank holding company or savings and loan holding company that: (1) is not engaged in significant nonbanking activities; (2) does not conduct significant off-balance sheet activities; and (3) does not have a material amount of debt or equity securities, other than trust-preferred securities, outstanding. The interim final rule provides that, if warranted for supervisory purposes, the Federal Reserve may exclude a company from the threshold increase. Management believes the Corporation meets the conditions of the Federal Reserve’s small bank holding company policy statement and is therefore excluded from consolidated capital requirements at September 30, 2025; however, management believes the Corporation will likely be subject to the consolidated capital requirements in future periods due to the completion of the previously described acquisition of Susquehanna. Further, at September 30, 2025, C&N Bank remains subject to regulatory capital requirements administered by the federal banking agencies.

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

Details concerning capital ratios at September 30, 2025 and December 31, 2024 are presented below. Management believes, as of September 30, 2025, that C&N Bank meets all capital adequacy requirements to which it is subject and maintains a capital conservation buffer (described in more detail below) that allows C&N Bank to avoid limitations on capital distributions, including dividend payments and certain discretionary bonus payments to executive officers. For comparison purposes, the Corporation’s capital ratios are presented along with those of C&N Bank in the table below. Further, as reflected in the table below, the Corporation’s and C&N Bank’s capital ratios at September 30, 2025 and December 31, 2024 exceed the Corporation’s Board policy threshold levels.


(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
September 30, 2025:
Total capital to risk-weighted assets:
Consolidated	$	315,170	16.01	%	N/A	N/A		N/A	N/A		N/A	N/A		$	216,568	≥11	%
C&N Bank		299,291	15.23	%	157,241	≥8	%	206,379	≥10.5	%	196,551	≥10	%		216,206	≥11	%
Tier 1 capital to risk-weighted assets:
Consolidated		265,741	13.50	%	N/A	N/A		N/A	N/A		N/A	N/A			177,192	≥9	%
C&N Bank		274,781	13.98	%	117,931	≥6	%	167,069	≥8.5	%	157,241	≥8	%		176,896	≥9	%
Common equity tier 1 capital to risk-weighted assets:
Consolidated		265,741	13.50	%	N/A	N/A		N/A	N/A		N/A	N/A			147,660	≥7.5	%
C&N Bank		274,781	13.98	%	88,448	≥4.5	%	137,586	≥7.0	%	127,758	≥6.5	%		147,413	≥7.5	%
Tier 1 capital to average assets:
Consolidated		265,741	10.21	%	N/A	N/A		N/A	N/A		N/A	N/A			208,229	≥8	%
C&N Bank		274,781	10.61	%	103,559	≥4	%	N/A	N/A		129,449	≥5	%		207,119	≥8	%

December 31, 2024:
Total capital to risk-weighted assets:
Consolidated	$	302,783	15.95	%	N/A	N/A		N/A	N/A		N/A	N/A		$	208,779	≥11	%
C&N Bank		287,721	15.19	%	151,567	≥8	%	198,832	≥10.5	%	189,459	≥10	%		208,405	≥11	%
Tier 1 capital to risk-weighted assets:
Consolidated		257,462	13.56	%	N/A	N/A		N/A	N/A		N/A	N/A			170,819	≥9	%
C&N Bank		267,231	14.10	%	113,675	≥6	%	161,040	≥8.5	%	151,567	≥8	%		170,513	≥9	%
Common equity tier 1 capital to risk-weighted assets:
Consolidated		257,462	13.56	%	N/A	N/A		N/A	N/A		N/A	N/A			142,349	≥7.5	%
C&N Bank		267,231	14.10	%	85,256	≥4.5	%	132,621	≥7.0	%	123,148	≥6.5	%		142,094	≥7.5	%
Tier 1 capital to average assets:
Consolidated		257,462	9.80	%	N/A	N/A		N/A	N/A		N/A	N/A			210,160	≥8	%
C&N Bank		267,231	10.23	%	104,514	≥4	%	N/A	N/A		130,642	≥5	%		209,027	≥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 September 30, 2025, the minimum risk-based capital ratios, and the capital ratios including the capital conservation buffer, are 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

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

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:


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 September 30, 2025, C&N Bank’s Capital Conservation Buffer, determined based on the minimum total capital ratio, was 7.23%.

On September 25, 2023, the Corporation announced a treasury stock repurchase program. Under the 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 has no stated expiration date; it will continue until suspended or terminated by the Board of Directors, in its sole discretion. All shares of common stock repurchased pursuant to the program will 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. For the three and nine months ended September 30, 2025, there were no shares repurchased. At September 30, 2025, there were 723,966 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. Further, although the Corporation is not currently subject to the specific consolidated capital requirements described herein, 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 $26,352,000 at September 30, 2025 and $37,084,000 at December 31, 2024. 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 5 to the unaudited consolidated financial statements provide additional information concerning management’s evaluation of available-for-sale debt securities for credit losses at September 30, 2025.

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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 September 30, 2025 and December 31, 2024. 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 September 30, 2025 and December 31, 2024 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 September 30, 2025 and December 31, 2024, 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 $26.0 million at September 30, 2025. 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


September 30, 2025 Data
(In Thousands)	Period Ending September 30, 2026

Basis Point		Interest		Interest			Net Interest		NII		NII
Change in Rates		Income		Expense			Income (NII)		% Change		Risk Limit
+400	$	164,305	$	86,064		$	78,241		(16.4)	%	25.0	%
+300		157,838		73,841			83,997		(10.3)	%	20.0	%
+200		151,318		62,827			88,491		(5.5)	%	15.0	%
+100		144,725		53,021			91,704		(2.1)	%	10.0	%
0		138,066		44,423			93,643		0.0	%	0.0	%
-100		131,387		39,625			91,762		(2.0)	%	10.0	%
-200		123,474		34,868			88,606		(5.4)	%	15.0	%
-300		115,303		30,120			85,183		(9.0)	%	20.0	%
-400		106,320		25,577			80,743		(13.8)	%	25.0	%

	Economic Value of Equity at September 30, 2025

		Present		Present			Present
Basis Point		Value		Value			Value
Change in Rates		Equity		% Change			Risk Limit
+400	$	493,628		(11.7)	%		40.0	%
+300		520,713		(6.8)	%		30.0	%
+200		542,358		(2.9)	%		25.0	%
+100		556,139		(0.5)	%		15.0	%
0		558,794		0.0	%		0.0	%
-100		532,775		(4.7)	%		15.0	%
-200		491,578		(12.0)	%		25.0	%
-300		432,985		(22.5)	%		30.0	%
-400		363,893		(34.9)	%		40.0	%

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q


December 31, 2024 Data
(In Thousands)	Period Ending December 31, 2025

Basis Point		Interest		Interest			Net Interest		NII		NII
Change in Rates		Income		Expense			Income (NII)		% Change		Risk Limit
+400	$	157,710	$	87,489		$	70,221		(17.4)	%	25.0	%
+300		151,610		75,796			75,814		(10.8)	%	20.0	%
+200		145,458		65,308			80,150		(5.7)	%	15.0	%
+100		139,233		56,023			83,210		(2.1)	%	10.0	%
0		132,939		47,942			84,997		0.0	%	0.0	%
-100		126,757		42,671			84,086		(1.1)	%	10.0	%
-200		119,814		37,450			82,364		(3.1)	%	15.0	%
-300		111,964		32,229			79,735		(6.2)	%	20.0	%
-400		103,390		27,650			75,740		(10.9)	%	25.0	%

	Economic Value of Equity at December 31, 2024

		Present		Present			Present
Basis Point		Value		Value			Value
Change in Rates		Equity		% Change			Risk Limit
+400	$	475,112		(16.1)	%		40.0	%
+300		507,221		(10.4)	%		30.0	%
+200		534,636		(5.6)	%		25.0	%
+100		555,058		(2.0)	%		15.0	%
0		566,339		0.0	%		0.0	%
-100		552,813		(2.4)	%		15.0	%
-200		520,196		(8.1)	%		25.0	%
-300		470,155		(17.0)	%		30.0	%
-400		403,255		(28.8)	%		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 information provided in Note 10 of the Consolidated Unaudited Financial Statements is hereby incorporated into this Part II, Item 1 by reference.

Item 1A. Risk Factors

Except for the risk factor described immediately below, 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, 2025.

Risk Related to Recent Acquisition of Susquehanna - The success of the acquisition will depend, in part, on the Corporation’s ability to realize the anticipated benefits and cost savings from successfully combining the businesses of the Corporation and Susquehanna within the Corporation’s projected timeframe. If the Corporation is not able to achieve these objectives, the anticipated benefits and cost savings of the acquisition may not be realized fully or at all, or may take longer to realize than expected. It is possible that the integration process could result in the loss of key employees, the disruption of ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect the Corporation’s ability to maintain relationships with clients, customers, depositors and employees or to achieve the anticipated benefits of the acquisition. Integration efforts between the two companies will also divert management attention and resources. These integration matters could have an adverse effect on the Corporation during the transition period. Additionally, the Corporation’s business may be adversely impacted by the failure to pursue other beneficial opportunities due to the focus of management on the acquisition, without realizing any of the anticipated benefits of completing the acquisition.

The acquisition may not be accretive, and may be dilutive, to the Corporation’s earnings per share, which may negatively affect the market price of the Corporation’s common stock.

The Corporation currently expects the acquisition to be accretive to earnings per share beginning in the first year after closing (excluding one-time charges). This expectation, however, is based on preliminary estimates which may materially change. The Corporation may encounter additional transaction and integration related costs or other factors, such as failure to realize all of the benefits anticipated in the acquisition or other factors that affect preliminary estimates or the Corporation’s ability to realize operational efficiencies. Any of these factors could cause a decrease in the Corporation’s earnings per share or decrease or delay the expected accretive effect of the acquisition and contribute to a decrease in the price of the Corporation’s common stock.

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 third quarter 2025. At September 30, 2025, there were 723,966 shares available to be repurchased under the program.

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

The following table sets forth a summary of purchases by the Corporation, in the open market, of its equity securities during the third quarter 2025:


				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
July 1 - 31, 2025	0	$	0	0	723,966
August 1 - 31, 2025	0	$	0	0	723,966
September 1 - 30, 2025	0	$	0	0	723,966
Total	0	$	0	0

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

During the three months ended September 30, 2025, 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.

Item 6. Exhibits

Agreement and Plan of Merger dated April 23, 2025 between Susquehanna Community Financial, Inc. and Citizens & Northern Corporation
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

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

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q


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 September 30, 2025, 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


November 7, 2025		By: /s/ J. Bradley Scovill
Date		President and Chief Executive Officer



November 7, 2025		By: /s/ Mark A. Hughes
Date		Treasurer and Chief Financial Officer

Source: View Original Filing on SEC EDGAR

FAQ

How did CZNC perform in Q3 2025?

Net income was $6.551 million and EPS was $0.42, up from $6.365 million and $0.41 in Q3 2024.

What was CZNC’s net interest income in Q3 2025?

Net interest income was $22.263 million, compared with $20.156 million a year earlier.

What were CZNC’s key noninterest items in Q3 2025?

Noninterest income was $7.304 million. Noninterest expense was $19.389 million, including $0.882 million of merger-related expenses.

How did credit costs trend for CZNC?

The provision for credit losses was $2.163 million in Q3 2025, up from $1.207 million in Q3 2024.

What is CZNC’s balance sheet size and deposit base?

Total assets were $2.664 billion and deposits were $2.166 billion as of September 30, 2025.

How did accumulated other comprehensive income change?

AOCI improved to $(26.026) million from $(36.761) million at December 31, 2024, driven by higher unrealized gains on securities.

What were CZNC’s nine-month 2025 results?

Year-to-date net income totaled $18.961 million with EPS of $1.22, up from $17.784 million and $1.16 in 2024.

[10-Q] CITIZENS & NORTHERN CORP Quarterly Earnings Report

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How did accumulated other comprehensive income change?

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[10-Q] CITIZENS & NORTHERN CORP Quarterly Earnings Report

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Banking equity analyst neutral

FAQ

How did CZNC perform in Q3 2025?

What was CZNC’s net interest income in Q3 2025?

What were CZNC’s key noninterest items in Q3 2025?

How did credit costs trend for CZNC?

What is CZNC’s balance sheet size and deposit base?

How did accumulated other comprehensive income change?

What were CZNC’s nine-month 2025 results?

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