Citizens & Northern (CZNC) 8-K C&N Announces SECOND QUARTER 2014 UNAUDITED Financial RESULTS

EXHIBIT 99.3 – Supplemental, Unaudited Financial Information

 

AVAILABLE-FOR-SALE SECURITIES	June 30, 2014				March 31, 2014				December 31, 2013
(In Thousands)	Amortized		Fair		Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value		Cost		Value
Obligations of U.S. Government agencies	$	29,162	$	28,452	$	29,667	$	28,523	$	47,382	$	45,877
Obligations of states and political subdivisions:
Tax-exempt		123,140		127,593		124,282		127,179		127,748		128,426
Taxable		34,577		34,717		33,833		33,624		35,154		34,471
Mortgage-backed securities		91,051		93,613		91,178		92,930		84,849		86,208
Collateralized mortgage obligations,
Issued by U.S. Government agencies		219,858		218,506		194,508		192,066		182,372		178,092
Other collateralized debt obligations		660		660		660		660		660		660
Total debt securities		498,448		503,541		474,128		474,982		478,165		473,734
Marketable equity securities		6,122		9,207		6,128		9,032		6,038		8,924
Total	$	504,570	$	512,748	$	480,256	$	484,014	$	484,203	$	482,658

Summary of Loans by Type
(Excludes Loans Held for Sale)
(In Thousands)	June 30,			Mar. 31,			Dec. 31,			June 30,
	2014			2014			2013			2013
Residential mortgage:
Residential mortgage loans - first liens	$	291,690		$	295,869		$	299,831		$	304,806
Residential mortgage loans - junior liens		22,401			23,048			23,040			24,797
Home equity lines of credit		34,633			34,755			34,530			33,076
1-4 Family residential construction		13,948			12,635			13,909			14,895
Total residential mortgage		362,672			366,307			371,310			377,574
Commercial:
Commercial loans secured by real estate		145,934			146,569			147,215			155,168
Commercial and industrial		46,778			40,477			42,387			45,812
Political subdivisions		11,617			10,436			16,291			24,033
Commercial construction and land		8,550			14,692			17,003			20,189
Loans secured by farmland		8,380			8,602			10,468			11,134
Multi-family (5 or more) residential		10,548			10,906			10,985			6,397
Agricultural loans		3,116			3,159			3,251			3,061
Other commercial loans		13,816			14,343			14,631			543
Total commercial		248,739			249,184			262,231			266,337
Consumer		10,203			10,327			10,762			11,059
Total		621,614			625,818			644,303			654,970
Less: allowance for loan losses		(7,267	)		(8,343	)		(8,663	)		(7,198	)
Loans, net	$	614,347		$	617,475		$	635,640		$	647,772

Loans Held for Sale
(In Thousands)	June 30,			Mar. 31,			Dec. 31,			June 30,
	2014			2014			2013			2013
Residential mortgage loans originated
and serviced - outstanding balance	$	150,725		$	147,524		$	146,008		$	127,214
Less: outstanding balance of loans sold		(150,725	)		(147,391	)		(145,954	)		(126,489	)
Loans held for sale, net	$	0		$	133		$	54		$	725

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,
	2014			2014			2014			2013
Balance, beginning of period	$	8,343		$	8,663		$	8,663		$	6,857
Charge-offs		(1,546	)		(274	)		(1,820	)		(245	)
Recoveries		24			265			289			337
Net (charge-offs) recoveries		(1,522	)		(9	)		(1,531	)		92
Provision (credit)  for loan losses		446			(311	)		135			249
Balance, end of period	$	7,267		$	8,343		$	7,267		$	7,198

PAST DUE AND IMPAIRED LOANS, NONPERFORMING ASSETS
AND TROUBLED DEBT RESTRUCTURINGS (TDRs)
(In Thousands)
	June 30,			Mar. 31,			Dec 31,			June 30,
	2014			2014			2013			2013
Impaired loans with a valuation allowance	$	3,804		$	9,576		$	9,889		$	1,874
Impaired loans without a valuation allowance		10,258			5,430			6,432			5,097
Total impaired loans	$	14,062		$	15,006		$	16,321		$	6,971
Total loans past due 30-89 days and still accruing	$	4,837		$	7,650		$	8,305		$	6,114
Nonperforming assets:
Total nonaccrual loans	$	13,598		$	14,257		$	14,934		$	6,697
Total loans past due 90 days or more and still accruing		3,050			2,160			3,131			2,202
Total nonperforming loans		16,648			16,417			18,065			8,899
Foreclosed assets held for sale (real estate)		1,419			1,321			892			890
Total nonperforming assets	$	18,067		$	17,738		$	18,957		$	9,789
Loans subject to troubled debt restructurings (TDRs):
Performing	$	2,069		$	3,020		$	3,267		$	2,187
Nonperforming		6,038			112			908			1,154
Total TDRs	$	8,107		$	3,132		$	4,175		$	3,341
Total nonperforming loans as a % of loans		2.68	%		2.62	%		2.80	%		1.36	%
Total nonperforming assets as a % of assets		1.44	%		1.44	%		1.53	%		0.80	%
Allowance for loan losses as a % of total loans		1.17	%		1.33	%		1.34	%		1.10	%
Allowance for loan losses as a % of nonperforming loans		43.65	%		50.82	%		47.95	%		80.89	%

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
	6/30/2014			Return/			3/31/2014			Return/			6/30/2013			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	$	372,666			2.18	%	$	345,663			2.22	%	$	323,248			2.14	%
Tax-exempt		123,568			5.35	%		126,030			5.45	%		132,198			5.76	%
Total available-for-sale securities		496,234			2.97	%		471,693			3.08	%		455,446			3.19	%
Interest-bearing due from banks		33,106			0.39	%		30,099			0.40	%		23,044			0.40	%
Federal funds sold		0			0.00	%		0			0.00	%		3			0.00	%
Loans held for sale		282			7.11	%		119			10.22	%		787			6.12	%
Loans receivable:
Taxable		585,593			5.54	%		595,514			5.45	%		625,215			5.79	%
Tax-exempt		36,422			5.62	%		39,662			5.82	%		33,690			5.88	%
Total loans receivable		622,015			5.54	%		635,176			5.47	%		658,905			5.80	%
Total Earning Assets		1,151,637			4.29	%		1,137,087			4.35	%		1,138,185			4.64	%
Cash		17,484						16,299						16,961
Unrealized gain/loss on securities		6,539						2,752						13,820
Allowance for loan losses		(8,402	)					(8,780	)					(7,229	)
Bank premises and equipment		16,889						17,283						18,351
Intangible Asset - Core Deposit Intangible		75						83						120
Intangible Asset - Goodwill		11,942						11,942						11,942
Other assets		40,965						42,326						43,127
Total Assets	$	1,237,129					$	1,218,992					$	1,235,277
INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Interest checking	$	179,018			0.12	%	$	179,617			0.12	%	$	167,404			0.12	%
Money market		198,753			0.15	%		195,596			0.14	%		204,444			0.15	%
Savings		121,741			0.10	%		118,529			0.10	%		117,224			0.10	%
Certificates of deposit		138,250			0.81	%		134,833			0.87	%		150,358			1.00	%
Individual Retirement Accounts		120,987			0.39	%		122,389			0.38	%		130,368			0.44	%
Other time deposits		1,138			0.00	%		812			0.00	%		1,161			0.00	%
Total interest-bearing deposits		759,887			0.29	%		751,776			0.30	%		770,959			0.35	%
Borrowed funds:
Short-term		4,766			0.08	%		10,049			0.20	%		5,684			0.14	%
Long-term		73,232			4.03	%		73,300			4.03	%		73,615			4.03	%
Total borrowed funds		77,998			3.79	%		83,349			3.57	%		79,299			3.75	%
Total Interest-bearing Liabilities		837,885			0.62	%		835,125			0.63	%		850,258			0.67	%
Demand deposits		204,664						193,402						193,115
Other liabilities		7,971						8,158						8,292
Total Liabilities		1,050,520						1,036,685						1,051,665
Stockholders' equity, excluding
other comprehensive income/loss		182,258						180,440						174,782
Other comprehensive income/loss		4,351						1,867						8,830
Total Stockholders' Equity		186,609						182,307						183,612
Total Liabilities and Stockholders' Equity	$	1,237,129					$	1,218,992					$	1,235,277
Interest Rate Spread					3.67	%					3.72	%					3.97	%
Net Interest Income/Earning Assets					3.84	%					3.89	%					4.15	%
Total Deposits (Interest-bearing
and Demand)	$	964,551					$	945,178					$	964,074

(1) 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 35%.

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

Analysis of Average Daily Balances and Rates
(Dollars in Thousands)
	6 Months						6 Months
	Ended			Rate of			Ended			Rate of
	6/30/2014			Return/			6/30/2013			Return/
	Average			Cost of			Average			Cost of
	Balance			Funds %			Balance			Funds %
EARNING ASSETS
Available-for-sale securities,
at amortized cost:
Taxable	$	359,239			2.20	%	$	319,451			2.23	%
Tax-exempt		124,792			5.40	%		131,166			5.75	%
Total available-for-sale securities		484,031			3.03	%		450,617			3.25	%
Interest-bearing due from banks		31,611			0.40	%		26,323			0.39	%
Federal funds sold		0			0.00	%		9			0.00	%
Loans held for sale		201			8.03	%		1,486			4.48	%
Loans receivable:
Taxable		590,526			5.49	%		630,716			5.84	%
Tax-exempt		38,033			5.72	%		36,077			5.84	%
Total loans receivable		628,559			5.51	%		666,793			5.84	%
Total Earning Assets		1,144,402			4.32	%		1,145,228			4.69	%
Cash		16,895						16,523
Unrealized gain/loss on securities		4,656						15,038
Allowance for loan losses		(8,590	)					(7,178	)
Bank premises and equipment		17,085						18,502
Intangible Asset - Core Deposit Intangible		79						126
Intangible Asset - Goodwill		11,942						11,942
Other assets		41,642						43,252
Total Assets	$	1,228,111					$	1,243,433
INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Interest checking	$	179,316			0.12	%	$	170,758			0.12	%
Money market		197,183			0.14	%		203,293			0.14	%
Savings		120,144			0.10	%		116,883			0.10	%
Certificates of deposit		136,551			0.84	%		155,158			1.09	%
Individual Retirement Accounts		121,684			0.38	%		132,212			0.47	%
Other time deposits		976			0.00	%		1,004			0.00	%
Total interest-bearing deposits		755,854			0.30	%		779,308			0.38	%
Borrowed funds:
Short-term		7,393			0.16	%		4,956			0.12	%
Long-term		73,266			4.03	%		78,451			4.01	%
Total borrowed funds		80,659			3.68	%		83,407			3.78	%
Total Interest-bearing Liabilities		836,513			0.62	%		862,715			0.70	%
Demand deposits		199,064						189,025
Other liabilities		8,064						8,582
Total Liabilities		1,043,641						1,060,322
Stockholders' equity, excluding
other comprehensive income/loss		181,354						173,686
Other comprehensive income/loss		3,116						9,425
Total Stockholders' Equity		184,470						183,111
Total Liabilities and Stockholders' Equity	$	1,228,111					$	1,243,433
Interest Rate Spread					3.70	%					3.99	%
Net Interest Income/Earning Assets					3.86	%					4.16	%
Total Deposits (Interest-bearing
and Demand)	$	954,918					$	968,333

(1) 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 35%.

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

COMPARISON OF NONINTEREST INCOME
(In Thousands)	Three Months Ended								Six Months Ended
	June 30,			Mar. 31,		June 30,			June 30,			June 30,
	2014			2014		2013			2014			2013
Service charges on deposit accounts	$	1,314		$	1,223	$	1,242		$	2,537		$	2,468
Service charges and fees		134			127		145			261			279
Trust and financial management revenue		1,138			1,047		1,045			2,185			1,989
Brokerage revenue		242			227		237			469			381
Insurance commissions, fees and premiums		27			32		59			59			104
Interchange revenue from debit card transactions		517			453		505			970			969
Net gains from sales of loans		265			151		552			416			1,056
(Decrease) increase in fair value of servicing rights		(53	)		105		(3	)		52			5
Increase in cash surrender value of life insurance		91			88		99			179			192
Net (loss) gain from premises and equipment		(1	)		0		0			(1	)		0
Other operating income		306			298		310			604			591
Total other operating income, before realized
gains on available-for-sale securities, net	$	3,980		$	3,751	$	4,191		$	7,731		$	8,034

COMPARISON OF NONINTEREST EXPENSE
(In Thousands)	Three Months Ended						Six Months Ended
	June 30,		Mar. 31,		June 30,		June 30,		June 30,
	2014		2014		2013		2014		2013
Salaries and wages	$	3,646	$	3,565	$	3,635	$	7,211	$	7,235
Pensions and other employee benefits		1,153		1,319		1,034		2,472		2,289
Occupancy expense, net		641		715		599		1,356		1,233
Furniture and equipment expense		466		472		483		938		977
FDIC Assessments		146		147		147		293		299
Pennsylvania shares tax		337		341		351		678		701
Professional fees		144		148		461		292		618
Automated teller machine and interchange expense		218		211		312		429		584
Software subscriptions		201		190		209		391		432
Other operating expense		1,395		1,416		1,289		2,811		2,705
Total noninterest expense, before loss on
prepayment of borrowings		8,347		8,524		8,520		16,871		17,073
Loss on prepayment of borrowings		0		0		0		0		1,023
Total noninterest expense	$	8,347	$	8,524	$	8,520	$	16,871	$	18,096