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.com Web Page:http://www.cnbankpa.com
Stock Symbol: CZNC
Chartered 1864
FEDERAL DEPOSIT INSURANCE CORP
| June 30, 2014 | QUARTERLY REPORT |
Dear Shareholder:
Net income of $8,451,000 for the first six months of 2014 remained respectable as evidenced by a Return on Average Assets (ROAA) of 1.38%. First half 2014 net income was 12.70% less than the first half of 2013. There were two major reasons for the decline. First, net interest income after provision for loan losses for the first six months of 2014 declined $1,482,000 compared to the first six months of 2013 due to cash flows being reinvested at considerably lower yields causing margin compression. Secondly, as mortgage refinancing has slowed, net gains from sales of loans decreased $640,000 as compared to the first half of 2013. On a positive note noninterest expenses were reduced by $202,000.
Total assets grew 2.27% as compared to one year ago though loans continued to decline by 5.16% due to soft loan demand. Deposits and Repo Sweep Accounts increased by 3.01% over the last twelve months, and borrowed funds were reduced by $12,271,000. Trust Assets Under Management increased to $824,279,000, a robust increase of 13.28%.
Capital ratios remain strong and dividends of 52 cents per share were paid during the first six months of 2014 which represents a 4.0% increase over the prior year. Based on a quarter ending market share price of $19.49 the dividend payout represents a very attractive 5.34% yield.
As shareholders, we continue to solicit your support and stand willing to address any concern you may have.
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) | ||||||||||||||||||||
| 2ND | 1ST | 2ND | 6 MONTHS ENDED | |||||||||||||||||
| QUARTER | QUARTER | QUARTER | JUNE 30, | |||||||||||||||||
| 2014 | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||
| (Current) | (Prior Qtr) | (Prior Yr) | (Current) | (Prior Yr) | ||||||||||||||||
| Interest and Dividend Income | $ | 11,563 | $ | 11,406 | $ | 12,355 | $ | 22,969 | $ | 25,002 | ||||||||||
| Interest Expense | 1,290 | 1,288 | 1,415 | 2,578 | 3,015 | |||||||||||||||
| Net Interest Income | 10,273 | 10,118 | 10,940 | 20,391 | 21,987 | |||||||||||||||
| Provision (Credit) for Loan Losses | 446 | (311 | ) | 66 | 135 | 249 | ||||||||||||||
| Net Interest Income After Provision (Credit) for Loan Losses | 9,827 | 10,429 | 10,874 | 20,256 | 21,738 | |||||||||||||||
| Other Income | 3,980 | 3,751 | 4,191 | 7,731 | 8,034 | |||||||||||||||
| Net Gains on Available-for-sale Securities | 103 | 31 | 100 | 134 | 1,259 | |||||||||||||||
| Loss on Prepayment of Borrowings | 0 | 0 | 0 | 0 | 1,023 | |||||||||||||||
| Other Noninterest Expenses | 8,347 | 8,524 | 8,520 | 16,871 | 17,073 | |||||||||||||||
| Income Before Income Tax Provision | 5,563 | 5,687 | 6,645 | 11,250 | 12,935 | |||||||||||||||
| Income Tax Provision | 1,400 | 1,399 | 1,671 | 2,799 | 3,255 | |||||||||||||||
| Net Income | $ | 4,163 | $ | 4,288 | $ | 4,974 | $ | 8,451 | $ | 9,680 | ||||||||||
| PER COMMON SHARE DATA: | ||||||||||||||||||||
| Net Income - Basic | $ | 0.33 | $ | 0.35 | $ | 0.40 | $ | 0.68 | $ | 0.78 | ||||||||||
| Net Income - Diluted | $ | 0.33 | $ | 0.34 | $ | 0.40 | $ | 0.68 | $ | 0.78 | ||||||||||
| Dividend Per Share | $ | 0.26 | $ | 0.26 | $ | 0.25 | $ | 0.52 | $ | 0.50 | ||||||||||
| Number Shares Used in Computation - Basic | 12,441,679 | 12,417,627 | 12,342,755 | 12,429,717 | 12,331,943 | |||||||||||||||
| Number Shares Used in Computation - Diluted | 12,459,384 | 12,444,797 | 12,369,311 | 12,451,459 | 12,359,284 | |||||||||||||||
| CONDENSED, CONSOLIDATED BALANCE SHEET DATA | ||||||||||||
| (In Thousands, Except Per Share Data) (Unaudited) | ||||||||||||
| JUNE 30, | MAR. 31, | JUNE 30, | ||||||||||
| 2014 | 2014 | 2013 | ||||||||||
| ASSETS | ||||||||||||
| Cash & Due from Banks | $ | 59,948 | $ | 61,087 | $ | 35,776 | ||||||
| Available-for-sale Securities | 512,748 | 484,014 | 470,068 | |||||||||
| Loans Held for Sale | 0 | 133 | 725 | |||||||||
| Loans, Net | 614,347 | 617,475 | 647,772 | |||||||||
| Intangible Assets | 12,012 | 12,020 | 12,055 | |||||||||
| Other Assets | 57,150 | 60,410 | 61,948 | |||||||||
| TOTAL ASSETS | $ | 1,256,205 | $ | 1,235,139 | $ | 1,228,344 | ||||||
| LIABILITIES | ||||||||||||
| Deposits | $ | 979,239 | $ | 961,833 | $ | 950,769 | ||||||
| Repo Sweep Accounts | 4,637 | 4,730 | 4,387 | |||||||||
| Total Deposits and Repo Sweeps | 983,876 | 966,563 | 955,156 | |||||||||
| Borrowed Funds | 73,201 | 73,270 | 85,472 | |||||||||
| Other Liabilities | 9,955 | 10,544 | 8,355 | |||||||||
| TOTAL LIABILITIES | 1,067,032 | 1,050,377 | 1,048,983 | |||||||||
| SHAREHOLDERS' EQUITY | ||||||||||||
| Common Shareholders' Equity, Excluding Accumulated | ||||||||||||
| Other Comprehensive Income (Loss) | 183,757 | 182,220 | 176,681 | |||||||||
| Accumulated Other Comprehensive Income (Loss): | ||||||||||||
| Net Unrealized Gains/Losses on | ||||||||||||
| Available-for-sale Securities | 5,316 | 2,442 | 2,832 | |||||||||
| Defined Benefit Plans | 100 | 100 | (152 | ) | ||||||||
| TOTAL SHAREHOLDERS' EQUITY | 189,173 | 184,762 | 179,361 | |||||||||
| TOTAL LIABILITIES & SHAREHOLDERS' EQUITY | $ | 1,256,205 | $ | 1,235,139 | $ | 1,228,344 | ||||||
| CONDENSED, CONSOLIDATED FINANCIAL HIGHLIGHTS | ||||||||||||
| (In Thousands, Except Per Share Data) (Unaudited) | ||||||||||||
| 6 MONTHS ENDED | % | |||||||||||
| JUNE 30, | INCREASE | |||||||||||
| 2014 | 2013 | (DECREASE) | ||||||||||
| EARNINGS PERFORMANCE | ||||||||||||
| Net Income | $ | 8,451 | $ | 9,680 | -12.70 | % | ||||||
| Return on Average Assets | 1.38 | % | 1.56 | % | -11.54 | % | ||||||
| Return on Average Equity | 9.16 | % | 10.57 | % | -13.34 | % | ||||||
| BALANCE SHEET HIGHLIGHTS | ||||||||||||
| Total Assets | $ | 1,256,205 | $ | 1,228,344 | 2.27 | % | ||||||
| Available-for-Sale Securities | 512,748 | 470,068 | 9.08 | % | ||||||||
| Loans (Net) | 614,347 | 647,772 | -5.16 | % | ||||||||
| Allowance for Loan Losses | 7,267 | 7,198 | 0.96 | % | ||||||||
| Deposits and Repo Sweep Accounts | 983,876 | 955,156 | 3.01 | % | ||||||||
| OFF-BALANCE SHEET | ||||||||||||
| Outstanding Balance of Mortgage Loans Sold | ||||||||||||
| with Servicing Retained | 150,725 | 126,489 | 19.16 | % | ||||||||
| Trust Assets Under Management | 824,279 | 727,647 | 13.28 | % | ||||||||
| SHAREHOLDERS' VALUE | ||||||||||||
| (PER COMMON SHARE) | ||||||||||||
| Net Income - Basic | $ | 0.68 | $ | 0.78 | -12.82 | % | ||||||
| Net Income - Diluted | $ | 0.68 | $ | 0.78 | -12.82 | % | ||||||
| Dividends | $ | 0.52 | $ | 0.50 | 4.00 | % | ||||||
| Common Book Value | $ | 15.19 | $ | 14.52 | 4.61 | % | ||||||
| Tangible Common Book Value | $ | 14.23 | $ | 13.55 | 5.02 | % | ||||||
| Market Value (Last Trade) | $ | 19.49 | $ | 19.32 | 0.88 | % | ||||||
| Market Value / Common Book Value | 128.31 | % | 133.06 | % | -3.57 | % | ||||||
| Market Value / Tangible Common Book Value | 136.96 | % | 142.58 | % | -3.94 | % | ||||||
| Price Earnings Multiple | 14.33 | 12.38 | 15.75 | % | ||||||||
| Dividend Yield | 5.34 | % | 5.18 | % | 3.09 | % | ||||||
| Common Shares Outstanding, End of Period | 12,450,005 | 12,351,522 | 0.80 | % | ||||||||
| SAFETY AND SOUNDNESS | ||||||||||||
| Tangible Common Equity / Tangible Assets | 14.24 | % | 13.76 | % | 3.49 | % | ||||||
| Nonperforming Assets / Total Assets | 1.44 | % | 0.80 | % | 80.00 | % | ||||||
| Allowance for Loan Losses / Total Loans | 1.17 | % | 1.10 | % | 6.36 | % | ||||||
| Total Risk Based Capital Ratio (a) | 27.59 | % | 25.75 | % | 7.15 | % | ||||||
| Tier 1 Risk Based Capital Ratio (a) | 26.27 | % | 24.49 | % | 7.27 | % | ||||||
| Leverage Ratio (a) | 14.06 | % | 13.51 | % | 4.07 | % | ||||||
| AVERAGE BALANCES | ||||||||||||
| Average Assets | $ | 1,228,111 | $ | 1,243,433 | -1.23 | % | ||||||
| Average Equity | $ | 184,470 | $ | 183,111 | 0.74 | % | ||||||
(a) Capital ratios for the most recent period are estimated.