Citizens & Northern (CZNC) 8-K C&N Declares Dividend and Announces Second Quarter 2022 Unaudited Financial Results

EXHIBIT 99.2 – Supplemental, Unaudited Financial Information

CONDENSED, CONSOLIDATED EARNINGS INFORMATION

(Dollars In Thousands, Except Per Share Data)

(Unaudited)

	2ND		2ND
	QUARTER		QUARTER
	2022		2021
	(Current)		(Prior Year)		$ Incr. (Decr.)		% Incr. (Decr.)
Interest and Dividend Income	$	21,309	$	20,428	$	881	4.31	%
Interest Expense		1,684		1,747		(63)	(3.61)	%
Net Interest Income		19,625		18,681		944	5.05	%
Provision for Loan Losses		308		744		(436)	(58.60)	%
Net Interest Income After Provision for Loan Losses		19,317		17,937		1,380	7.69	%
Noninterest Income		6,830		6,300		530	8.41	%
Net (Losses) Gains on Available-for-sale Debt Securities		(1)		2		(3)	(150.00)	%
Noninterest Expense		17,039		15,399		1,640	10.65	%
Income Before Income Tax Provision		9,107		8,840		267	3.02	%
Income Tax Provision		1,618		1,780		(162)	(9.10)	%
Net Income	$	7,489	$	7,060	$	429	6.08	%
Net Income Attributable to Common Shares (1)	$	7,419	$	6,999	$	420	6.00	%
PER COMMON SHARE DATA:
Net Income - Basic	$	0.48	$	0.44	$	0.04	9.09	%
Net Income - Diluted	$	0.48	$	0.44	$	0.04	9.09	%
Dividends Per Share	$	0.28	$	0.28	$	0.00	0.00	%
Number of Shares Used in Computation - Basic		15,441,564		15,868,150
Number of Shares Used in Computation - Diluted		15,444,573		15,874,983

	SIX MONTHS ENDED
	June 30,
	2022		2021
	(Current)		(Prior Year)		$ Incr. (Decr.)		% Incr. (Decr.)
Interest and Dividend Income	$	43,082	$	42,182	$	900	2.13	%
Interest Expense		3,125		3,418		(293)	(8.57)	%
Net Interest Income		39,957		38,764		1,193	3.08	%
Provision for Loan Losses		1,199		1,003		196	19.54	%
Net Interest Income After Provision for Loan Losses		38,758		37,761		997	2.64	%
Noninterest Income		12,651		13,082		(431)	(3.29)	%
Net Gains on Available-for-sale Debt Securities		1		2		(1)	(50.00)	%
Noninterest Expense		33,925		31,108		2,817	9.06	%
Income Before Income Tax Provision		17,485		19,737		(2,252)	(11.41)	%
Income Tax Provision		3,101		3,890		(789)	(20.28)	%
Net Income	$	14,384	$	15,847	$	(1,463)	(9.23)	%
Net Income Attributable to Common Shares (1)	$	14,254	$	15,721	$	(1,467)	(9.33)	%
PER COMMON SHARE DATA:
Net Income - Basic	$	0.92	$	0.99	$	(0.07)	(7.07)	%
Net Income - Diluted	$	0.92	$	0.99	$	(0.07)	(7.07)	%
Dividends Per Share	$	0.56	$	0.55	$	0.01	1.82	%
Number of Shares Used in Computation - Basic		15,542,959		15,859,236
Number of Shares Used in Computation - Diluted		15,546,319		15,865,158

(1) Basic and diluted net income per common share are determined based on net income less earnings allocated to nonvested restricted shares with nonforfeitable dividends.

1

CONDENSED, CONSOLIDATED BALANCE SHEET DATA

(Dollars In Thousands)

(Unaudited)

	June 30,		June 30,
	2022		2021		$ Incr. (Decr.)		% Incr. (Decr.)
ASSETS
Cash & Due from Banks	$	69,187	$	208,860	$	(139,673)	(66.87)	%
Available-for-sale Debt Securities		526,837		391,881		134,956	34.44	%
Loans, Net		1,643,057		1,585,481		57,576	3.63	%
Bank-Owned Life Insurance		30,941		30,391		550	1.81	%
Bank Premises and Equipment, Net		21,829		20,620		1,209	5.86	%
Intangible Assets		55,602		56,088		(486)	(0.87)	%
Other Assets		63,265		45,742		17,523	38.31	%
TOTAL ASSETS	$	2,410,718	$	2,339,063	$	71,655	3.06	%
LIABILITIES
Deposits	$	1,964,270	$	1,916,809	$	47,461	2.48	%
Borrowed Funds - Federal Home Loan Bank and Repurchase Agreements		126,833		46,450		80,383	173.05	%
Senior Notes, Net		14,733		14,670		63	0.43	%
Subordinated Debt, Net		24,553		32,967		(8,414)	(25.52)	%
Other Liabilities		21,710		24,034		(2,324)	(9.67)	%
TOTAL LIABILITIES		2,152,099		2,034,930		117,169	5.76	%
STOCKHOLDERS' EQUITY
Common Stockholders' Equity, Excluding Accumulated
Other Comprehensive (Loss) Income		294,621		294,857		(236)	(0.08)	%
Accumulated Other Comprehensive (Loss) Income:
Net Unrealized (Losses) Gains on Available-for-sale Debt Securities		(36,307)		9,167		(45,474)	(496.06)	%
Defined Benefit Plans		305		109		196	179.82	%
TOTAL STOCKHOLDERS' EQUITY		258,619		304,133		(45,514)	(14.97)	%
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	$	2,410,718	$	2,339,063	$	71,655	3.06	%

2

CONDENSED, CONSOLIDATED FINANCIAL HIGHLIGHTS

(Dollars In Thousands, Except Per Share Data)

(Unaudited)

	FOR THE
	THREE MONTHS ENDED						%
	June 30,						INCREASE
	2022			2021			(DECREASE)
EARNINGS PERFORMANCE
Net Income	$	7,489		$	7,060		6.08	%
Return on Average Assets (Annualized)		1.28	%		1.21	%	5.79	%
Return on Average Equity (Annualized)		11.29	%		9.36	%	20.62	%

	AS OF OR FOR THE
	SIX MONTHS ENDED						%
	June 30,						INCREASE
	2022			2021			(DECREASE)
EARNINGS PERFORMANCE
Net Income	$	14,384		$	15,847		(9.23)	%
Return on Average Assets (Annualized)		1.23	%		1.39	%	(11.51)	%
Return on Average Equity (Annualized)		10.29	%		10.54	%	(2.37)	%
BALANCE SHEET HIGHLIGHTS
Total Assets	$	2,410,718		$	2,339,063		3.06	%
Available-for-Sale Debt Securities		526,837			391,881		34.44	%
Loans, Net		1,643,057			1,585,481		3.63	%
Allowance for Loan Losses		14,547			12,375		17.55	%
Deposits		1,964,270			1,916,809		2.48	%
OFF-BALANCE SHEET
Outstanding Balance of Mortgage Loans Sold with Servicing Retained	$	336,681		$	314,174		7.16	%
Trust Assets Under Management		1,055,290			1,192,928		(11.54)	%
STOCKHOLDERS' VALUE (PER COMMON SHARE)
Net Income - Basic	$	0.92		$	0.99		(7.07)	%
Net Income - Diluted	$	0.92		$	0.99		(7.07)	%
Dividends	$	0.56		$	0.55		1.82	%
Common Book Value	$	16.69		$	19.06		(12.43)	%
Tangible Common Book Value (a)	$	13.10		$	15.54		(15.70)	%
Market Value (Last Trade)	$	24.17		$	24.50		(1.35)	%
Market Value / Common Book Value		144.82	%		128.54	%	12.67	%
Market Value / Tangible Common Book Value		184.50	%		157.66	%	17.02	%
Price Earnings Multiple (Annualized)		13.14			12.37		6.22	%
Dividend Yield (Annualized)		4.63	%		4.49	%	3.12	%
Common Shares Outstanding, End of Period		15,499,214			15,957,512		(2.87)	%

3

CONDENSED, CONSOLIDATED FINANCIAL HIGHLIGHTS (Continued)

(Dollars In Thousands, Except Per Share Data)

(Unaudited)

	AS OF OR FOR THE
	SIX MONTHS ENDED						%
	June 30,						INCREASE
	2022			2021			(DECREASE)
SAFETY AND SOUNDNESS
Tangible Common Equity / Tangible Assets (a)		8.62	%		10.86	%	(20.63)	%
Nonperforming Assets / Total Assets		0.62	%		1.12	%	(44.64)	%
Allowance for Loan Losses / Total Loans		0.88	%		0.77	%	14.29	%
Total Risk Based Capital Ratio (b)		16.15	%		18.99	%	(14.96)	%
Tier 1 Risk Based Capital Ratio (b)		13.85	%		15.93	%	(13.06)	%
Common Equity Tier 1 Risk Based Capital Ratio (b)		13.85	%		15.93	%	(13.06)	%
Leverage Ratio (b)		10.31	%		10.52	%	(2.00)	%
AVERAGE BALANCES
Average Assets	$	2,335,771		$	2,287,465		2.11	%
Average Equity	$	279,708		$	300,776		(7.00)	%
EFFICIENCY RATIO (c)
Net Interest Income on a Fully Taxable-Equivalent
Basis (c)	$	40,571		$	39,305		3.22	%
Noninterest Income		12,651			13,082		(3.29)	%
Total (1)	$	53,222		$	52,387		1.59	%
Noninterest Expense (2)	$	33,925		$	31,108		9.06	%
Efficiency Ratio = (2)/(1)		63.74	%		59.38	%	7.34	%

(a)Tangible common book value per share and tangible common equity as a percentage of tangible assets are non-U.S. GAAP ratios.  Management believes this non-GAAP information is helpful in evaluating the strength of the Corporation's capital and in providing an alternative, conservative valuation of the Corporation's net worth.  The ratios shown above are based on the following calculations of tangible assets and tangible common equity:

Total Assets	$	2,410,718	$	2,339,063
Less: Intangible Assets, Primarily Goodwill		(55,602)		(56,088)
Tangible Assets	$	2,355,116	$	2,282,975
Total Stockholders' Equity	$	258,619	$	304,133
Less: Intangible Assets, Primarily Goodwill		(55,602)		(56,088)
Tangible Common Equity (3)	$	203,017	$	248,045
Common Shares Outstanding, End of Period (4)		15,499,214		15,957,512
Tangible Common Book Value per Share = (3)/(4)	$	13.10	$	15.54

(b)Capital ratios for the most recent period are estimated.

(c)The efficiency ratio is a non-GAAP ratio that is calculated as shown above.  For purposes of calculating the efficiency ratio, net interest income on a fully taxable-equivalent basis includes amounts of interest income on tax-exempt securities and loans that have been increased to a fully taxable-equivalent basis, using the Corporation's marginal federal income tax rate of 21%. A reconciliation of net interest income under U.S. GAAP as compared to net interest income as adjusted to a fully taxable-equivalent basis is provided in Exhibit 99.2 under the table “COMPARISON OF INTEREST INCOME AND EXPENSE”.

4

QUARTERLY CONDENSED, CONSOLIDATED

INCOME STATEMENT INFORMATION

(Dollars In Thousands, Except Per Share Data)

(Unaudited)

	For the Three Months Ended :
	June 30,		March 31,		December 31,		September 30,		June 30,		March 31,
	2022		2022		2021		2021		2021		2021
Interest income	$	21,309	$	21,773	$	21,246	$	21,073	$	20,428	$	21,754
Interest expense		1,684		1,441		1,530		1,614		1,747		1,671
Net interest income		19,625		20,332		19,716		19,459		18,681		20,083
Provision for loan losses		308		891		1,128		1,530		744		259
Net interest income after provision for loan losses		19,317		19,441		18,588		17,929		17,937		19,824
Noninterest income		6,830		5,821		6,416		6,359		6,300		6,782
Net (losses) gains on securities		(1)		2		(1)		23		2		0
Noninterest expense		17,039		16,886		16,018		15,346		15,399		15,709
Income before income tax provision		9,107		8,378		8,985		8,965		8,840		10,897
Income tax provision		1,618		1,483		1,677		1,566		1,780		2,110
Net income	$	7,489	$	6,895	$	7,308	$	7,399	$	7,060	$	8,787
Net income attributable to common shares	$	7,419	$	6,835	$	7,256	$	7,336	$	6,999	$	8,722
Basic earnings per common share	$	0.48	$	0.44	$	0.46	$	0.47	$	0.44	$	0.55
Diluted earnings per common share	$	0.48	$	0.44	$	0.46	$	0.47	$	0.44	$	0.55

5

QUARTERLY CONDENSED, CONSOLIDATED

BALANCE SHEET INFORMATION

(In Thousands) (Unaudited)

	As of:
	June 30,		March 31,		December 31,		September 30,		June 30,		March 31,
	2022		2022		2021		2021		2021		2021
ASSETS
Cash & Due from Banks	$	69,187	$	114,346	$	104,948	$	198,995	$	208,860	$	207,145
Available-for-Sale Debt Securities		526,837		532,913		517,679		437,857		391,881		366,376
Loans, Net		1,643,057		1,523,919		1,551,312		1,563,008		1,585,481		1,602,926
Bank-Owned Life Insurance		30,941		30,805		30,670		30,530		30,391		30,247
Bank Premises and Equipment, Net		21,829		21,169		20,683		20,526		20,620		20,740
Intangible Assets		55,602		55,711		55,821		55,955		56,088		56,222
Other Assets		63,265		51,508		46,535		48,025		45,742		49,939
TOTAL ASSETS	$	2,410,718	$	2,330,371	$	2,327,648	$	2,354,896	$	2,339,063	$	2,333,595
LIABILITIES
Deposits	$	1,964,270	$	1,960,952	$	1,925,060	$	1,940,141	$	1,916,809	$	1,923,925
Borrowed Funds - Federal Home Loan Bank and Repurchase Agreements		126,833		22,938		29,845		40,555		46,450		60,230
Senior Notes, Net		14,733		14,717		14,701		14,685		14,670		0
Subordinated Debt, Net		24,553		33,031		33,009		32,988		32,967		16,534
Other Liabilities		21,710		22,525		23,628		27,125		24,034		32,850
TOTAL LIABILITIES		2,152,099		2,054,163		2,026,243		2,055,494		2,034,930		2,033,539
STOCKHOLDERS' EQUITY
Common Stockholders' Equity, Excluding Accumulated Other Comprehensive (Loss) Income		294,621		296,386		296,379		292,997		294,857		293,097
Accumulated Other Comprehensive (Loss) Income:
Net Unrealized (Losses) Gains on Available-for-sale Securities		(36,307)		(20,492)		4,809		6,300		9,167		6,847
Defined Benefit Plans		305		314		217		105		109		112
TOTAL STOCKHOLDERS' EQUITY		258,619		276,208		301,405		299,402		304,133		300,056
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	$	2,410,718	$	2,330,371	$	2,327,648	$	2,354,896	$	2,339,063	$	2,333,595

6

AVAILABLE-FOR-SALE DEBT SECURITIES

(In Thousands)

	June 30, 2022				March 31, 2022				December 31, 2021				June 30, 2021
	Amortized		Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value		Cost		Value		Cost		Value
Obligations of the U.S. Treasury	$	38,151	$	35,774	$	38,152	$	36,494	$	25,058	$	24,912	$	22,981	$	23,073
Obligations of U.S. Government agencies		24,454		22,785		24,455		23,408		23,936		24,091		24,764		25,373
Bank holding company debt securities		28,942		27,415		24,942		24,043		18,000		17,987		0		0
Obligations of states and political subdivisions:
Tax-exempt		152,063		139,400		149,140		143,633		143,427		148,028		127,122		132,310
Taxable		72,204		63,898		73,732		69,629		72,182		72,765		58,921		60,528
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities		114,367		106,043		112,122		106,568		98,048		98,181		50,397		51,328
Residential collateralized mortgage obligations		47,295		44,761		45,628		43,868		44,015		44,247		44,536		45,575
Commercial mortgage-backed securities		95,318		86,761		90,682		85,270		86,926		87,468		51,555		53,694
Total Available-for-Sale Debt Securities	$	572,794	$	526,837	$	558,853	$	532,913	$	511,592	$	517,679	$	380,276	$	391,881

SUMMARY OF LOANS BY TYPE

(Excludes Loans Held for Sale)

(In Thousands)

	June 30,		March 31,		December 31,		June 30,
	2022		2022		2021		2021
Commercial:
Commercial loans secured by real estate	$	656,892	$	585,677	$	569,840	$	544,202
Commercial and industrial		171,999	��	159,793		159,073		158,907
Paycheck Protection Program - 1st Draw		44		887		1,356		37,902
Paycheck Protection Program - 2nd Draw		6,208		11,490		25,508		72,409
Political subdivisions		87,512		81,975		81,301		48,849
Commercial construction and land		58,786		37,258		60,579		43,178
Loans secured by farmland		12,967		12,507		11,121		10,950
Multi-family (5 or more) residential		53,753		53,141		50,089		51,916
Agricultural loans		2,628		2,588		2,351		2,379
Other commercial loans		15,767		14,827		17,153		14,711
Total commercial		1,066,556		960,143		978,371		985,403
Residential mortgage:
Residential mortgage loans - first liens		482,505		481,119		483,629		507,579
Residential mortgage loans - junior liens		23,036		22,572		23,314		25,287
Home equity lines of credit		40,887		39,649		39,252		39,432
1-4 Family residential construction		26,071		16,945		23,151		23,567
Total residential mortgage		572,499		560,285		569,346		595,865
Consumer		18,549		17,762		17,132		16,588
Total		1,657,604		1,538,190		1,564,849		1,597,856
Less: allowance for loan losses		(14,547)		(14,271)		(13,537)		(12,375)
Loans, net	$	1,643,057	$	1,523,919	$	1,551,312	$	1,585,481

7

ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES

(In Thousands)

	3 Months		3 Months		6 Months		6 Months
	Ended		Ended		Ended		Ended
	June 30,		March 31,		June 30,		June 30,
	2022		2022		2022		2021
Balance, beginning of period	$	14,271	$	13,537	$	13,537	$	11,385
Charge-offs		(41)		(180)		(221)		(58)
Recoveries		9		23		32		45
Net charge-offs		(32)		(157)		(189)		(13)
Provision for loan losses		308		891		1,199		1,003
Balance, end of period	$	14,547	$	14,271	$	14,547	$	12,375

PAST DUE AND IMPAIRED LOANS, NONPERFORMING ASSETS

AND TROUBLED DEBT RESTRUCTURINGS (TDRs)

(Dollars In Thousands)

	June 30,			March 31,			December 31,			June 30,
	2022			2022			2021			2021
Impaired loans with a valuation allowance	$	3,392		$	6,528		$	6,540		$	10,594
Impaired loans without a valuation allowance		1,376			1,494			2,636			1,819
Purchased credit impaired loans		3,879			3,983			6,558			6,733
Total impaired loans	$	8,647		$	12,005		$	15,734		$	19,146
Total loans past due 30-89 days and still accruing	$	5,082		$	3,868		$	5,106		$	2,478
Nonperforming assets:
Purchased credit impaired loans	$	3,879		$	3,983		$	6,558		$	6,733
Other nonaccrual loans		7,763			10,962			12,441			16,238
Total nonaccrual loans		11,642			14,945			18,999			22,971
Total loans past due 90 days or more and still accruing		2,694			3,429			2,219			1,881
Total nonperforming loans		14,336			18,374			21,218			24,852
Foreclosed assets held for sale (real estate)		505			531			684			1,332
Total nonperforming assets	$	14,841		$	18,905		$	21,902		$	26,184
Loans subject to troubled debt restructurings (TDRs):
Performing	$	239		$	279		$	288		$	199
Nonperforming		3,965			3,954			5,517			5,624
Total TDRs	$	4,204		$	4,233		$	5,805		$	5,823
Total nonperforming loans as a % of total loans		0.86	%		1.19	%		1.36	%		1.56	%
Total nonperforming assets as a % of assets		0.62	%		0.81	%		0.94	%		1.12	%
Allowance for loan losses as a % of total loans		0.88	%		0.93	%		0.87	%		0.77	%
Credit adjustment on purchased non-impaired loans and allowance for loan losses as a % of total loans and the credit adjustment (a)		1.02	%		1.11	%		1.08	%		1.05	%
Allowance for loan losses as a % of nonperforming loans		101.47	%		77.67	%		63.80	%		49.79	%
(a) Credit adjustment on purchased non-impaired loans at end of period	$	2,403		$	2,783		$	3,335		$	4,502
Allowance for loan losses		14,547			14,271			13,537			12,375
Total credit adjustment on purchased non-impaired loans at end of period and allowance for loan losses (1)	$	16,950		$	17,054		$	16,872		$	16,877
Total loans receivable	$	1,657,604		$	1,538,190		$	1,564,849		$	1,597,856
Credit adjustment on purchased non-impaired loans at end of period		2,403			2,783			3,335			4,502
Total (2)	$	1,660,007		$	1,540,973		$	1,568,184		$	1,602,358
Credit adjustment on purchased non-impaired loans and allowance for loan losses as a % of total loans and the credit adjustment (1)/(2)		1.02	%		1.11	%		1.08	%		1.05	%

8

ADJUSTMENTS TO GROSS AMORTIZED COST OF LOANS

(In Thousands)

(In Thousands)
	Three Months Ended						Six Months Ended
	June 30,		March 31,		June 30,		June 30,		June 30,
	2022		2022		2021		2022		2021
Market Rate Adjustment
Adjustments to gross amortized cost of loans at beginning of period	$	(885)	$	(637)	$	352	$	(637)	$	718
Accretion (amortization) recognized in interest income		19		(248)		(357)		(229)		(723)
Adjustments to gross amortized cost of loans at end of period	$	(866)	$	(885)	$	(5)	$	(866)	$	(5)
Credit Adjustment on Non-impaired Loans
Adjustments to gross amortized cost of loans at beginning of period	$	(2,782)	$	(3,335)	$	(5,182)	$	(3,335)	$	(5,979)
Accretion recognized in interest income		379		553		680		932		1,477
Adjustments to gross amortized cost of loans at end of period	$	(2,403)	$	(2,782)	$	(4,502)	$	(2,403)	$	(4,502)

PURCHASED CREDIT IMPAIRED (PCI) LOANS

(In Thousands)

	June 30,		March 31,		June 30,
	2022		2022		2021
Outstanding balance	$	5,766	$	5,966	$	10,189
Carrying amount		3,879		3,983		6,733

9

COMPARISON OF INTEREST INCOME AND EXPENSE

(In Thousands)

	Three Months Ended						Six Months Ended
	June 30,		March 31,		June 30,		June 30,		June 30,
	2022		2022		2021		2022		2021
INTEREST INCOME
Interest-bearing due from banks	$	92	$	67	$	74	$	159	$	124
Available-for-sale debt securities:
Taxable		2,036		1,969		1,187		4,005		2,300
Tax-exempt		959		905		824		1,864		1,625
Total available-for-sale debt securities		2,995		2,874		2,011		5,869		3,925
Loans receivable:
Taxable		17,721		17,974		16,826		35,695		34,319
Paycheck Protection Program -1st Draw		11		38		859		49		2,671
Paycheck Protection Program - 2nd Draw		195		537		390		732		576
Tax-exempt		588		573		518		1,161		1,071
Total loans receivable		18,515		19,122		18,593		37,637		38,637
Other earning assets		19		12		18		31		37
Total Interest Income		21,621		22,075		20,696		43,696		42,723
INTEREST EXPENSE
Interest-bearing deposits:
Interest checking		308		194		235		502		456
Money market		369		262		320		631		626
Savings		64		61		57		125		112
Time deposits		389		393		605		782		1,301
Total interest-bearing deposits		1,130		910		1,217		2,040		2,495
Borrowed funds:
Short-term		122		1		7		123		22
Long-term - FHLB advances		55		49		109		104		243
Senior notes, net		120		118		57		238		57
Subordinated debt, net		257		363		357		620		601
Total borrowed funds		554		531		530		1,085		923
Total Interest Expense		1,684		1,441		1,747		3,125		3,418
Net Interest Income	$	19,937	$	20,634	$	18,949	$	40,571	$	39,305

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

(In Thousands)	Three Months Ended						Six Months Ended
	June 30,		March 31,		June 30,		June 30,		June 30,
	2022		2022		2021		2022		2021
Net Interest Income Under U.S. GAAP	$	19,625	$	20,332	$	18,681	$	39,957	$	38,764
Add: fully taxable-equivalent interest income adjustment from tax-exempt securities		191		183		162		374		321
Add: fully taxable-equivalent interest income adjustment from tax-exempt loans		121		119		106		240		220
Net Interest Income as adjusted to a fully taxable-equivalent basis	$	19,937	$	20,634	$	18,949	$	40,571	$	39,305

10

ANALYSIS OF AVERAGE DAILY BALANCES AND RATES

(Dollars in Thousands)

	3 Months				3 Months				3 Months
	Ended		Rate of		Ended		Rate of		Ended		Rate of
	6/30/2022		Return/		3/31/2022		Return/		6/30/2021		Return/
	Average		Cost of		Average		Cost of		Average		Cost of
	Balance		Funds %		Balance		Funds %		Balance		Funds %
EARNING ASSETS
Interest-bearing due from banks	$	47,428	0.78	%	$	84,115	0.32	%	$	182,586	0.16	%
Available-for-sale debt securities, at amortized cost:
Taxable		419,824	1.95	%		390,301	2.05	%		243,228	1.96	%
Tax-exempt		151,753	2.53	%		144,334	2.54	%		123,101	2.68	%
Total available-for-sale debt securities		571,577	2.10	%		534,635	2.18	%		366,329	2.20	%
Loans receivable:
Taxable		1,494,165	4.76	%		1,445,353	5.04	%		1,418,171	4.76	%
Paycheck Protection Program - 1st Draw		707	6.24	%		1,049	14.69	%		53,639	6.42	%
Paycheck Protection Program - 2nd Draw		8,565	9.13	%		17,800	12.24	%		71,841	2.18	%
Tax-exempt		85,447	2.76	%		83,659	2.78	%		63,470	3.27	%
Total loans receivable		1,588,884	4.67	%		1,547,861	5.01	%		1,607,121	4.64	%
Other earning assets		2,321	3.28	%		1,983	2.45	%		2,467	2.93	%
Total Earning Assets		2,210,210	3.92	%		2,168,594	4.13	%		2,158,503	3.85	%
Cash		23,114				20,703				25,453
Unrealized (loss) gain on securities		(36,675)				(2,508)				10,197
Allowance for loan losses		(14,509)				(13,783)				(11,992)
Bank-owned life insurance		30,857				30,720				30,301
Bank premises and equipment		21,556				21,043				20,620
Intangible assets		55,656				55,765				56,153
Other assets		55,735				44,952				42,516
Total Assets	$	2,345,944			$	2,325,486			$	2,331,751
INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Interest checking	$	431,997	0.29	%	$	419,130	0.19	%	$	387,942	0.24	%
Money market		449,656	0.33	%		456,904	0.23	%		433,295	0.30	%
Savings		255,578	0.10	%		249,165	0.10	%		227,426	0.10	%
Time deposits		268,753	0.58	%		277,405	0.57	%		335,773	0.72	%
Total interest-bearing deposits		1,405,984	0.32	%		1,402,604	0.26	%		1,384,436	0.35	%
Borrowed funds:
Short-term		36,848	1.33	%		1,746	0.23	%		6,528	0.43	%
Long-term - FHLB advances		19,516	1.13	%		26,102	0.76	%		46,788	0.93	%
Senior notes, net		14,725	3.27	%		14,709	3.25	%		6,930	3.30	%
Subordinated debt, net		26,476	3.89	%		32,948	4.47	%		26,916	5.32	%
Total borrowed funds		97,565	2.28	%		75,505	2.85	%		87,162	2.44	%
Total Interest-bearing Liabilities		1,503,549	0.45	%		1,478,109	0.40	%		1,471,598	0.48	%
Demand deposits		557,007				529,077				534,602
Other liabilities		20,066				24,046				23,898
Total Liabilities		2,080,622				2,031,232				2,030,098
Stockholders' equity, excluding accumulated other comprehensive (loss) income		293,985				295,996				293,487
Accumulated other comprehensive (loss) income		(28,663)				(1,742)				8,166
Total Stockholders' Equity		265,322				294,254				301,653
Total Liabilities and Stockholders' Equity	$	2,345,944			$	2,325,486			$	2,331,751
Interest Rate Spread			3.47	%			3.73	%			3.37	%
Net Interest Income/Earning Assets			3.62	%			3.86	%			3.52	%
Total Deposits (Interest-bearing and Demand)	$	1,962,991			$	1,931,681			$	1,919,038

(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 have been presented on an annualized basis.

11

ANALYSIS OF AVERAGE DAILY BALANCES AND RATES

(Dollars in Thousands)

	6 Months				6 Months
	Ended		Rate of		Ended		Rate of
	6/30/2022		Return/		6/30/2021		Return/
	Average		Cost of		Average		Cost of
	Balance		Funds %		Balance		Funds%
EARNING ASSETS
Interest-bearing due from banks	$	65,670	0.49	%	$	137,851	0.18	%
Available-for-sale debt securities, at amortized cost:
Taxable		405,144	1.99	%		230,551	2.01	%
Tax-exempt		148,064	2.54	%		120,332	2.72	%
Total available-for-sale debt securities		553,208	2.14	%		350,883	2.26	%
Loans receivable:
Taxable		1,469,894	4.90	%		1,423,417	4.86	%
Paycheck Protection Program - 1st Draw		877	11.27	%		78,863	6.83	%
Paycheck Protection Program - 2nd Draw		13,157	11.22	%		53,123	2.19	%
Tax-exempt		84,558	2.77	%		65,375	3.30	%
Total loans receivable		1,568,486	4.84	%		1,620,778	4.81	%
Other earning assets		2,153	2.90	%		2,658	2.81	%
Total Earning Assets		2,189,517	4.02	%		2,112,170	4.08	%
Cash		21,915				24,629
Unrealized (loss) gain on securities		(19,686)				11,536
Allowance for loan losses		(14,148)				(11,866)
Bank-owned life insurance		30,789				30,228
Bank premises and equipment		21,301				20,982
Intangible assets		55,710				56,220
Other assets		50,373				43,566
Total Assets	$	2,335,771			$	2,287,465
INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Interest checking	$	425,599	0.24	%	$	372,056	0.25	%
Money market		453,260	0.28	%		420,141	0.30	%
Savings		252,389	0.10	%		220,470	0.10	%
Time deposits		273,055	0.58	%		353,068	0.74	%
Total interest-bearing deposits		1,404,303	0.29	%		1,365,735	0.37	%
Borrowed funds:
Short-term		19,394	1.28	%		10,425	0.43	%
Long-term - FHLB advances		22,791	0.92	%		49,801	0.98	%
Senior notes, net		14,717	3.26	%		3,484	3.30	%
Subordinated debt, net		29,694	4.21	%		21,758	5.57	%
Total borrowed funds		86,596	2.53	%		85,468	2.18	%
Total Interest-bearing Liabilities		1,490,899	0.42	%		1,451,203	0.47	%
Demand deposits		543,119				509,583
Other liabilities		22,045				25,903
Total Liabilities		2,056,063				1,986,689
Stockholders' equity, excluding accumulated other comprehensive (loss) income		294,985				291,550
Accumulated other comprehensive (loss) income		(15,277)				9,226
Total Stockholders' Equity		279,708				300,776
Total Liabilities and Stockholders' Equity	$	2,335,771			$	2,287,465
Interest Rate Spread			3.60	%			3.61	%
Net Interest Income/Earning Assets			3.74	%			3.75	%
Total Deposits (Interest-bearing and Demand)	$	1,947,422			$	1,875,318

(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 have been presented on an annualized basis.

12

COMPARISON OF NONINTEREST INCOME

(In Thousands)

	Three Months Ended						Six Months Ended
	June 30,		March 31,		June 30,		June 30,		June 30,
	2022		2022		2021		2022		2021
Trust revenue	$	1,715	$	1,786	$	1,807	$	3,501	$	3,433
Brokerage and insurance revenue		566		522		506		1,088		832
Service charges on deposit accounts		1,322		1,235		1,073		2,557		2,088
Interchange revenue from debit card transactions		1,056		963		998		2,019		1,879
Net gains from sales of loans		220		382		925		602		1,989
Loan servicing fees, net		358		210		146		568		394
Increase in cash surrender value of life insurance		137		135		145		272		295
Other noninterest income		1,456		588		700		2,044		2,172
Total noninterest income, excluding realized gains on securities, net	$	6,830	$	5,821	$	6,300	$	12,651	$	13,082

COMPARISON OF NONINTEREST EXPENSE

(In Thousands)

	Three Months Ended						Six Months Ended
	June 30,		March 31,		June 30,		June 30,		June 30,
	2022		2021		2021		2022		2021
Salaries and employee benefits	$	10,265	$	10,607	$	9,499	$	20,872	$	18,394
Net occupancy and equipment expense		1,308		1,411		1,219		2,719		2,523
Data processing and telecommunications expenses		1,720		1,623		1,487		3,343		2,867
Automated teller machine and interchange expense		347		384		355		731		692
Pennsylvania shares tax		488		488		490		976		981
Professional fees		480		489		598		969		1,145
Other noninterest expense		2,431		1,884		1,751		4,315		4,506
Total noninterest expense	$	17,039	$	16,886	$	15,399	$	33,925	$	31,108

13