Citizens & Northern (CZNC) 8-K C&N Announces SECOND QUARTER 2012 UNAUDITED Financial RESULTS

EXHIBIT 99.3 – Supplemental, Unaudited Financial Information

 

AVAILABLE-FOR-SALE SECURITIES	June 30, 2012				March 31, 2012				December 31, 2011
(In Thousands)	Amortized		Fair		Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value		Cost		Value
Obligations of U.S. Government agencies	$	23,244	$	23,916	$	24,810	$	25,488	$	24,877	$	25,587
Obligations of states and political subdivisions:
Tax-exempt		135,736		141,140		128,628		133,337		129,401		132,962
Taxable		19,524		19,924		16,846		17,206		14,004		14,334
Mortgage-backed securities		103,801		108,426		117,251		121,943		116,602		121,769
Collateralized mortgage obligations,
Issued by U.S. Government agencies		162,780		165,923		162,846		165,764		161,818		165,131
Trust preferred securities issued by individual institutions		6,179		6,221		7,783		8,147		7,334		8,146
Collateralized debt obligations:
Pooled trust preferred securities - senior tranches		2,516		2,386		4,993		4,638		4,996		4,638
Pooled trust preferred securities - mezzanine tranches		0		1,146		0		782		0		730
Other collateralized debt obligations		660		660		660		660		660		660
Total debt securities		454,440		469,742		463,817		477,965		459,692		473,957
Marketable equity securities		6,208		8,626		6,151		8,699		5,643		7,728
Total	$	460,648	$	478,368	$	469,968	$	486,664	$	465,335	$	481,685

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Summary of Loans by Type
(Excludes Loans Held for Sale)
(In Thousands)	June 30,			Mar. 31,			Dec. 31,			June 30,
	2012			2012			2011			2011
Residential mortgage:
Residential mortgage loans - first liens	$	321,163		$	326,343		$	331,015		$	334,300
Residential mortgage loans - junior liens		27,404			27,590			28,851			30,214
Home equity lines of credit		31,858			30,534			30,037			28,544
1-4 Family residential construction		10,699			8,409			9,959			8,574
Total residential mortgage		391,124			392,876			399,862			401,632
Commercial:
Commercial loans secured by real estate		164,771			158,323			156,388			157,282
Commercial and industrial		52,704			54,370			57,191			59,791
Political subdivisions		36,858			36,517			37,620			34,675
Commercial construction and land		26,517			23,577			23,518			24,726
Loans secured by farmland		10,079			10,334			10,949			10,927
Multi-family (5 or more) residential		6,409			6,326			6,583			7,514
Agricultural loans		3,263			2,982			2,987			3,182
Other commercial loans		563			323			552			576
Total commercial		301,164			292,752			295,788			298,673
Consumer		12,146			11,960			12,665			13,631
Total		704,434			697,588			708,315			713,936
Less: allowance for loan losses		(7,657	)		(7,370	)		(7,705	)		(8,269	)
Loans, net	$	696,777		$	690,218		$	700,610		$	705,667
Loans Held for Sale
(In Thousands)		June 30,			Mar. 31,			Dec. 31,			June 30,
		2012			2012			2011			2011
Residential mortgage loans originated    and serviced - outstanding balance	$	74,070		$	64,569		$	57,577		$	39,416
Less: outstanding balance of loans sold		(70,880	)		(62,346	)		(56,638	)		(39,249	)
Loans held for sale, net	$	3,190		$	2,223		$	939		$	167

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ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
(In Thousands)
	3 Months			3 Months			6 Months			6 Months
	Ended			Ended			Ended			Ended
	June 30,			Mar. 31,			June 30,			June 30,
	2012			2012			2012			2011
Balance, beginning of period	$	7,370		$	7,705		$	7,705		$	9,107
Charge-offs		(115	)		(176	)		(291	)		(897	)
Recoveries		35			23			58			220
Net charge-offs		(80	)		(153	)		(233	)		(677	)
Provision (credit) for loan losses		367			(182	)		185			(161	)
Balance, end of period	$	7,657		$	7,370		$	7,657		$	8,269

PAST DUE AND NONPERFORMING ASSETS
(In Thousands)
	June 30,			Mar. 31,			Dec. 31,			June 30,
	2012			2012			2011			2011
Total loans past due 30-89 days and still accruing	$	5,191		$	5,827		$	7,898		$	6,611
Nonperforming assets:
Total loans past due 90 days or more and still accruing	$	1,144		$	1,252		$	1,267		$	561
Total nonaccrual loans		7,447			6,961			7,197			7,586
Foreclosed assets held for sale (real estate)		904			977			1,235			1,665
Total nonperforming assets	$	9,495		$	9,190		$	9,699		$	9,812
Total nonperforming assets as a % of assets		0.72	%		0.70	%		0.73	%		0.75	%

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Table III - 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
	6/30/2012			Return/			3/31/2012			Return/			6/30/2011			Return/
	Average			Cost of			Average			Cost of			Average			Cost of
		Balance			Funds %			Balance			Funds %			Balance			Funds %
EARNING ASSETS
Available-for-sale securities,
at amortized cost:
Taxable	$	333,255			3.13	%	$	331,007			3.32	%	$	335,289			3.48	%
Tax-exempt		130,111			5.94	%		127,729			6.03	%		128,049			6.02	%
Total available-for-sale securities		463,366			3.92	%		458,736			4.08	%		463,338			4.18	%
Interest-bearing due from banks		37,300			0.33	%		34,334			0.33	%		29,385			0.22	%
Loans held for sale		1,865			4.96	%		1,057			3.42	%		342			7.04	%
Loans receivable:
Taxable		666,752			6.18	%		665,936			6.26	%		681,333			6.39	%
Tax-exempt		36,344			6.31	%		36,218			6.36	%		34,806			6.38	%
Total loans receivable		703,096			6.18	%		702,154			6.27	%		716,481			6.39	%
Total Earning Assets		1,205,627			5.13	%		1,196,281			5.25	%		1,209,204			5.39	%
Cash		17,791						16,891						17,631
Unrealized gain/loss on securities		17,545						17,923						5,805
Allowance for loan losses		(7,435	)					(7,739	)					(8,938	)
Bank premises and equipment		18,908						18,898						22,114
Intangible Asset - Core Deposit Intangible		186						204						287
Intangible Asset - Goodwill		11,942						11,942						11,942
Other assets		47,046						48,282						56,349
Total Assets	$	1,311,610					$	1,302,682					$	1,314,394
INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Interest checking	$	156,994			0.13	%	$	161,524			0.13	%	$	166,795			0.28	%
Money market		210,646			0.19	%		205,866			0.19	%		207,266			0.27	%
Savings		107,514			0.10	%		104,532			0.10	%		95,821			0.20	%
Certificates of deposit		199,320			1.55	%		191,924			1.73	%		205,346			1.96	%
Individual Retirement Accounts		144,095			0.91	%		146,241			0.96	%		156,611			2.46	%
Other time deposits		1,314			0.31	%		942			0.00	%		1,350			0.30	%
Total interest-bearing deposits		819,883			0.62	%		811,029			0.67	%		833,189			1.09	%
Borrowed funds:
Short-term		5,650			0.07	%		7,422			0.16	%		19,407			0.17	%
Long-term		113,301			4.01	%		115,607			4.00	%		135,344			4.01	%
Total borrowed funds		118,951			3.82	%		123,029			3.77	%		154,751			3.53	%
Total Interest-bearing Liabilities		938,834			1.03	%		934,058			1.08	%		987,940			1.47	%
Demand deposits		191,349						189,275						169,677
Other liabilities		7,774						9,452						6,998
Total Liabilities		1,137,957						1,132,785						1,164,615
Stockholders' equity, excluding
other comprehensive income/loss		162,721						158,801						146,267
Other comprehensive income/loss		10,932						11,096						3,512
Total Stockholders' Equity		173,653						169,897						149,779
Total Liabilities and Stockholders' Equity	$	1,311,610					$	1,302,682					$	1,314,394
Interest Rate Spread					4.10	%					4.17	%					3.92	%
Net Interest Income/Earning Assets					4.33	%					4.41	%					4.19	%
Total Deposits (Interest-bearing
and Demand)	$	1,011,232					$	1,000,304					$	1,002,866

(1) Changes in income on tax-exempt securities and loans are presented on a fully tax-equivalent basis, using the Corporation’s marginal federal income tax rate of 35% in 2012 and 34% in 2011.

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

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Table III - Analysis of Average Daily Balances and Rates
(Dollars in Thousands)
	6 Months						6 Months
	Ended			Rate of			Ended			Rate of
	6/30/2012			Return/			6/30/2011			Return/
	Average			Cost of			Average			Cost of
	Balance			Funds %			Balance			Funds %
EARNING ASSETS	��
Available-for-sale securities,
at amortized cost:
Taxable	$	332,131			3.22	%	$	331,219			3.45	%
Tax-exempt		128,920			5.99	%		127,514			6.05	%
Total available-for-sale securities		461,051			4.00	%		458,733			4.17	%
Interest-bearing due from banks		35,817			0.33	%		30,561			0.21	%
Loans held for sale		1,461			4.40	%		1,028			5.30	%
Loans receivable:
Taxable		666,344			6.22	%		684,277			6.39	%
Tax-exempt		36,281			6.34	%		34,939			6.41	%
Total loans receivable		702,625			6.23	%		720,244			6.39	%
Total Earning Assets		1,200,954			5.19	%		1,209,538			5.39	%
Cash		17,341						17,310
Unrealized gain/loss on securities		17,734						2,626
Allowance for loan losses		(7,587	)					(9,069	)
Bank premises and equipment		18,903						22,293
Intangible Asset - Core Deposit Intangible		195						301
Intangible Asset - Goodwill		11,942						11,942
Other assets		47,664						58,541
Total Assets	$	1,307,146					$	1,313,482
INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Interest checking	$	159,259			0.13	%	$	165,146			0.30	%
Money market		208,256			0.19	%		205,363			0.29	%
Savings		106,023			0.10	%		94,232			0.22	%
Certificates of deposit		195,622			1.64	%		208,721			1.97	%
Individual Retirement Accounts		145,168			0.94	%		158,880			2.73	%
Other time deposits		1,128			0.18	%		1,154			0.35	%
Total interest-bearing deposits		815,456			0.65	%		833,496			1.17	%
Borrowed funds:
Short-term		6,536			0.12	%		18,143			0.16	%
Long-term		114,454			4.00	%		140,544			4.01	%
Total borrowed funds		120,990			3.79	%		158,687			3.57	%
Total Interest-bearing Liabilities		936,446			1.05	%		992,183			1.55	%
Demand deposits		190,312						168,948
Other liabilities		8,613						6,731
Total Liabilities		1,135,371						1,167,862
Stockholders' equity, excluding
other comprehensive income/loss		160,761						144,172
Other comprehensive income/loss		11,014						1,448
Total Stockholders' Equity		171,775						145,620
Total Liabilities and Stockholders' Equity	$	1,307,146					$	1,313,482
Interest Rate Spread					4.14	%					3.84	%
Net Interest Income/Earning Assets					4.37	%					4.12	%
Total Deposits (Interest-bearing
and Demand)	$	1,005,768					$	1,002,444

(1) Changes in income on tax-exempt securities and loans are presented on a fully tax-equivalent basis, using the Corporation’s marginal federal income tax rate of 35% in 2012 and 34% in 2011.

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

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COMPARISON OF NONINTEREST INCOME
(In Thousands)	Three Months Ended								Six Months Ended
	June 30,			Mar. 31,		June 30,			June 30,			June 30,
	2012			2012		2011			2012			2011
Service charges on deposit accounts	$	1,256		$	1,161	$	1,225		$	2,417		$	2,356
Service charges and fees		235			220		207			455			425
Trust and financial management revenue		960			929		946			1,889			1,823
Brokerage revenue		288			168		229			456			352
Insurance commissions, fees and premiums		73			34		58			107			126
Interchange revenue from debit card transactions		488			495		485			983			937
Net gains from sales of loans		373			265		155			638			414
Increase in cash surrender value of life insurance		117			119		132			236			254
Net (loss) gain from other real estate		(184	)		104		(24	)		(80	)		(43	)
Net gain from premises and equipment		270			0		0			270			0
Impairment loss on limited partnership investment		0			0		0			0			(948	)
Other operating income		219			264		260			483			532
Total other operating income, before realized
gains on available-for-sale securities, net	$	4,095		$	3,759	$	3,673		$	7,854		$	6,228

COMPARISON OF NONINTEREST EXPENSE
(In Thousands)	Three Months Ended						Six Months Ended
	June 30,		Mar. 31,		June 30,		June 30,		June 30,
	2012		2012		2011		2012		2011
Salaries and wages	$	3,586	$	3,575	$	3,469	$	7,161	$	6,870
Pensions and other employee benefits		1,090		1,366		1,018		2,456		2,324
Occupancy expense, net		628		636		665		1,264		1,397
Furniture and equipment expense		461		482		453		943		937
FDIC Assessments		157		146		189		303		514
Pennsylvania shares tax		340		332		320		672		639
Other operating expense		2,018		1,980		1,680		3,998		3,376
Total Noninterest Expense	$	8,280	$	8,517	$	7,794	$	16,797	$	16,057

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