Citizens & Northern (CZNC) 8-K C&N Announces THIRD QUARTER 2013 UNAUDITED Financial RESULTS

EXHIBIT 99.2

90-92 Main Street, P.O. Box 58

Wellsboro, PA 16901

Phone: (570) 724-3411 Fax: (570) 723-8097

E-Mail:cnemail@cnbankpa.comWeb Page:http://www.cnbankpa.com

Stock Symbol: CZNC

Chartered 1864
	FEDERAL DEPOSIT INSURANCE CORP

September 30, 2013	QUARTERLY REPORT
Dear Shareholder:

Net income for the third quarter of 2013 continues to be strong at $4,689,000, albeit 14.65% less than the third quarter of 2012. Our Return on Average Assets (ROAA) of 1.55% remains near the top of our peer group. As I have previously reported, the Federal Reserve Bank’s desire to hold interest rates at historic lows has resulted in continued margin compression. Margin compression is the major factor in our lower net income. Third quarter 2013 non-interest income was $171,000 higher than third quarter 2012. While non-interest expenses were $384,000 higher during the third quarter 2013 compared to third quarter 2012, that amount included $694,000 additional professional fees as the result of a consulting engagement in which the consulting firm identified recommendations for potential increases in revenues with an estimated annual total pre-tax benefit of approximately $1.3 million.

The balance sheet remains relatively unchanged as the current interest rate environment provides little opportunity to leverage our capital to increase net interest income without accepting undue credit and interest rate risk.

Dividends year-to-date have been 75 cents per share, an increase of 25.0% over the prior year. The current dividend provides a very attractive yield of 5.02% based on the last trade of the quarter.

As we enter the final quarter of 2013, we see many of the challenges that we have experienced during the first nine months of the year, including continued margin compression, increased regulatory costs as the result of Dodd-Frank and weak loan demand. We remain confident that Citizens & Northern is well positioned to continue to produce solid financial results.

I solicit your continued support and welcome your questions and comments.

Charles H. Updegraff, Jr.

Chairman, President & CEO

CITIZENS & NORTHERN CORPORATION

BOARD OF DIRECTORS

Charles H. Updegraff, Jr. - Chairman

Dennis F. Beardslee	Raymond R. Mattie
Jan E. Fisher	Edward H. Owlett, III
R. Bruce Haner	Leonard Simpson
Susan E. Hartley	James E. Towner
Leo F. Lambert	Ann M. Tyler

CITIZENS & NORTHERN BANK

1-877-838-2517

OFFICES

428 S. Main Street,ATHENS, PA 18810

3 Main Street,CANISTEO, NY 14823

10 N Main Street,COUDERSPORT,PA 16915

111 Main Street,DUSHORE, PA 18614

563 Main Street,EAST SMITHFIELD, PA 18817

104 Main Street,ELKLAND, PA  16920

135 East Fourth Street,EMPORIUM, PA 15834

6250 County Route 64,HORNELL, NY 14843

230-232 Railroad Street, JERSEY SHORE, PA 17740

102 E. Main Street,KNOXVILLE, PA 16928

514 Main Street,LAPORTE, PA 18626

4534 Williamson TrailLIBERTY, PA 16930

1085 S. Main Street,MANSFIELD, PA 16933

612 James Monroe Avenue,MONROETON, PA 18832

3461 Rte.405 Highway,MUNCY, PA 17756

100 Maple Street,PORT ALLEGANY,PA 16743

24 Thompson Street,RALSTON, PA 17763

1827 Elmira Street,SAYRE, PA 18840

2 E. Mountain Ave.,SO. WILLIAMSPORT, PA  17702

41 Main Street,TIOGA, PA 16946

428 Main Street,TOWANDA, PA18848

Court House Square,TROY, PA 16947

90-92 Main Street,WELLSBORO, PA 16901

130 Court Street,WILLIAMSPORT, PA 17701

1510 Dewey Ave.,WILLIAMSPORT, PA 17702

Route 6,WYSOX, PA 18854

TRUST & FINANCIAL MANAGEMENT GROUP

3 Main Street,Canisteo, NY 14823	607-698-4295
10 N Main Street,Coudersport,PA 16915	800-921-9150
1827 Elmira Street,Sayre, PA 18840	888-760-8192
428 Main Street,Towanda, PA 18848	888-987-8784
90-92 Main Street,Wellsboro, PA 16901	888-487-8784
130 Court Street,Williamsport,PA  17701	866-732-7213
ACCOUNT SERVICES - 90-92 Main St., Wellsboro, PA 16901
BANKCARD SERVICES - 90-92 Main St., Wellsboro PA 16901	800-577-8001
ELECTRONIC BANKING – 10 Nichols St., Wellsboro, PA 16901	877-838-2517
www.cnbankpa.com
C&N FINANCIAL SERVICES CORPORATION – 90-92 Main Street, Wellsboro, PA	866-ASK-CNFS
www.cnfinancialservices.com

CONDENSED, CONSOLIDATED EARNINGS INFORMATION

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

	3RD		2ND		3RD		9 MONTHS ENDED
	QUARTER		QUARTER		QUARTER		SEPTEMBER 30,
	2013		2013		2012		2013		2012
	(Current)		(Prior Qtr)		(Prior Yr)		(Current)		(Prior Yr)
Interest and Dividend Income	$	12,027	$	12,355	$	13,836	$	37,029	$	43,141
Interest Expense		1,396		1,415		2,228		4,411		7,131
Net Interest Income		10,631		10,940		11,608		32,618		36,010
Provision for Loan Losses		239		66		236		488		421
Net Interest Income After Provision for Loan Losses		10,392		10,874		11,372		32,130		35,589
Other Income		4,293		4,191		4,122		12,327		12,056
Net Gains on Available-for-sale Securities		193		100		2,430		1,452		2,631
Loss on Prepayment of Borrowings		0		0		2,190		1,023		2,333
Other Noninterest Expenses		8,610		8,520		8,226		25,683		24,960
Income Before Income Tax Provision		6,268		6,645		7,508		19,203		22,983
Income Tax Provision		1,579		1,671		2,014		4,834		6,217
Net Income	$	4,689	$	4,974	$	5,494	$	14,369	$	16,766
PER COMMON SHARE DATA:
Net Income – Basic	$	0.38	$	0.40	$	0.45	$	1.16	$	1.37
Net Income – Diluted	$	0.38	$	0.40	$	0.45	$	1.16	$	1.37
Dividend Per Share	$	0.25	$	0.25	$	0.22	$	0.75	$	0.60
Number Shares Used in Computation - Basic		12,363,887		12,342,755		12,244,797		12,342,706		12,225,895
Number Shares Used in Computation - Diluted		12,396,902		12,369,311		12,270,685		12,371,927		12,252,357

CONDENSED, CONSOLIDATED BALANCE SHEET DATA

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

	SEPT. 30,			JUNE 30,			SEPT. 30,
	2013			2013			2012
ASSETS
Cash & Due from Banks	$	43,247		$	35,776		$	42,496
Available-for-sale Securities		475,650			470,068			487,314
Loans Held for Sale		801			725			3,846
Loans, Net		641,345			647,772			690,357
Intangible Assets		12,042			12,055			12,098
Other Assets		59,867			61,948			73,898
TOTAL ASSETS	$	1,232,952		$	1,228,344		$	1,310,009
LIABILITIES
Deposits	$	963,465		$	950,769		$	1,013,010
Repo Sweep Accounts		4,833			4,387			4,657
Total Deposits and Repo Sweeps		968,298			955,156			1,017,667
Borrowed Funds		73,405			85,472			104,954
Other Liabilities		10,043			8,355			7,242
TOTAL LIABILITIES		1,051,746			1,048,983			1,129,863
SHAREHOLDERS' EQUITY
Common Shareholders' Equity, Excluding Accumulated
Other Comprehensive Income (Loss)		178,838			176,681			168,320
Accumulated Other Comprehensive Income (Loss):
Net Unrealized Gains/Losses on
Available-for-sale Securities		2,520			2,832			12,278
Defined Benefit Plans		(152	)		(152	)		(452	)
TOTAL SHAREHOLDERS' EQUITY		181,206			179,361			180,146
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY	$	1,232,952		$	1,228,344		$	1,310,009

CONDENSED, CONSOLIDATED FINANCIAL HIGHLIGHTS

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

	9 MONTHS ENDED						%
	SEPTEMBER 30,						INCREASE
	2013			2012			(DECREASE)
EARNINGS PERFORMANCE
Net Income	$	14,369		$	16,766			-14.30	%
Return on Average Assets		1.55	%		1.70	%		-8.82	%
Return on Average Equity		10.57	%		12.85	%		-17.74	%
BALANCE SHEET HIGHLIGHTS
Total Assets	$	1,232,952		$	1,310,009			-5.88	%
Available-for-Sale Securities		475,650			487,314			-2.39	%
Loans (Net)		641,345			690,357			-7.10	%
Allowance for Loan Losses		7,130			7,792			-8.50	%
Deposits and Repo Sweep Accounts		968,298			1,017,667			-4.85	%
OFF-BALANCE SHEET
Outstanding Balance of Mortgage Loans Sold with Servicing Retained		138,074			83,205			65.94	%
Trust Assets Under Management		760,964			707,571			7.55	%
SHAREHOLDERS' VALUE
(PER COMMON SHARE)
Net Income - Basic	$	1.16		$	1.37			-15.33	%
Net Income - Diluted	$	1.16		$	1.37			-15.33	%
Dividends	$	0.75		$	0.60			25.00	%
Common Book Value	$	14.65		$	14.70			-0.34	%
Tangible Common Book Value	$	13.67		$	13.71			-0.29	%
Market Value (Last Trade)	$	19.94		$	19.61			1.68	%
Market Value /  Common Book Value		136.11	%		133.40	%		2.03	%
Market Value /  Tangible Common Book Value		145.87	%		143.03	%		1.98	%
Price Earnings Multiple		12.89			10.74			20.02	%
Dividend Yield		5.02	%		4.08	%		23.04	%
Common Shares Outstanding, End of Period		12,372,133			12,254,759			0.96	%
SAFETY AND SOUNDNESS
Tangible Common Equity / Tangible Assets		13.86	%		12.95	%		7.03	%
Nonperforming Assets / Total Assets		0.83	%		0.79	%		5.06	%
Allowance for Loan Losses / Total Loans		1.10	%		1.12	%		-1.79	%
Total Risk Based Capital Ratio (a)		26.17	%		22.98	%		13.88	%
Tier 1 Risk Based Capital Ratio (a)		24.90	%		21.74	%		14.54	%
Leverage Ratio (a)		13.71	%		12.03	%		13.97	%
AVERAGE BALANCES
Average Assets	$	1,238,213		$	1,311,347			-5.58	%
Average Equity	$	181,293		$	174,002		��	4.19	%

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