Citizens & Northern (CZNC) 8-K Results of Operations and Financial Condition

EXHIBIT 99.3 – Supplemental, Unaudited Financial Information

CONDENSED, CONSOLIDATED FINANCIAL HIGHLIGHTS

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

	AS OF OR FOR THE
	YEARS ENDED						%
	DECEMBER 31,						INCREASE
	2017			2016			(DECREASE)
EARNINGS PERFORMANCE
Net Income	$	13,434		$	15,762			-14.77	%
Return on Average Assets		1.08	%		1.28	%		-15.63	%
Return on Average Equity		7.11	%		8.37	%		-15.05	%
BALANCE SHEET HIGHLIGHTS
Total Assets	$	1,276,959		$	1,242,292			2.79	%
Available-for-Sale Securities		356,908			395,077			-9.66	%
Loans (Net)		806,857			743,362			8.54	%
Allowance for Loan Losses		8,856			8,473			4.52	%
Deposits and Repo Sweep Accounts		1,012,215			989,018			2.35	%
OFF-BALANCE SHEET
Outstanding Balance of Mortgage Loans Sold with Servicing Retained		169,725			163,296			3.94	%
Trust Assets Under Management		916,580			879,844			4.18	%
SHAREHOLDERS' VALUE
(PER COMMON SHARE)
Net Income - Basic	$	1.10		$	1.30			-15.38	%
Net Income - Diluted	$	1.10		$	1.30			-15.38	%
Dividends	$	1.04		$	1.04			0.00	%
Common Book Value	$	15.43		$	15.36			0.46	%
Tangible Common Book Value	$	14.45		$	14.37			0.56	%
Market Value (Last Trade)	$	24.00		$	26.20			-8.40	%
Market Value / Common Book Value		155.54	%		170.57	%		-8.81	%
Market Value / Tangible Common Book Value		166.09	%		182.32	%		-8.90	%
Price Earnings Multiple (Annualized)		21.82			20.15			8.29	%
Dividend Yield (Annualized)		4.33	%		3.97	%		9.07	%
Common Shares Outstanding, End of Period		12,214,525			12,113,228			0.84	%
SAFETY AND SOUNDNESS
Tangible Common Equity / Tangible Assets		13.95	%		14.15	%		-1.41	%
Nonperforming Assets / Total Assets		1.47	%		1.43	%		2.80	%
Allowance for Loan Losses / Total Loans		1.09	%		1.13	%		-3.54	%
Total Risk Based Capital Ratio (a)		23.16	%		23.60	%		-1.86	%
Tier 1 Risk Based Capital Ratio (a)		22.03	%		22.48	%		-2.00	%
Common Equity Tier 1 Risk Based Capital Ratio (a)		22.03	%		22.48	%		-2.00	%
Leverage Ratio (a)		14.25	%		14.27	%		-0.14	%
(a) Capital ratios for the most recent period are estimated.
AVERAGE BALANCES
Average Assets	$	1,247,759		$	1,229,866			1.45	%
Average Equity	$	188,958		$	188,373			0.31	%
EFFICIENCY RATIO
Net Interest Income on a Fully Taxable-Equivalent
Basis	$	44,708		$	43,157			3.59	%
Noninterest Revenue		16,153			15,511			4.14	%
Total (1)	$	60,861		$	58,668			3.74	%
Noninterest Expenses (2)	$	36,967		$	34,744			6.40	%
Efficiency ratio = (2)/(1)		60.74	%		59.22	%		2.56	%

1

QUARTERLY CONDENSED, CONSOLIDATED

INCOME STATEMENT INFORMATION

(In Thousands, Except Per Share Data) (Unaudited)	For the Three Months Ended:
	Dec. 31,		Sept. 30,		June 30,		Mar. 31,		Dec. 31,			Sept. 30,		June 30,		Mar. 31,
	2017		2017		2017		2017		2016			2016		2016		2016
Interest income	$	11,785	$	11,626	$	11,340	$	11,112	$	11,106		$	11,131	$	10,924	$	10,937
Interest expense		999		985		978		953		920			944		925		904
Net interest income		10,786		10,641		10,362		10,159		10,186			10,187		9,999		10,033
Provision (credit) for loan losses		23		322		4		452		(3	)		538		318		368
Net interest income after provision (credit) for loan losses		10,763		10,319		10,358		9,707		10,189			9,649		9,681		9,665
Noninterest revenue		4,117		4,066		4,106		3,864		4,031			3,884		3,906		3,690
Net gains on available-for-sale securities		0		5		107		145		69			584		122		383
Noninterest expenses		9,401		9,192		9,076		9,298		8,558			8,579		8,535		9,072
Income before income tax provision		5,479		5,198		5,495		4,418		5,731			5,538		5,174		4,666
Income tax provision		3,536		1,262		1,374		984		1,500			1,451		1,303		1,093
Net income	$	1,943	$	3,936	$	4,121	$	3,434	$	4,231		$	4,087	$	3,871	$	3,573
Net income attributable to common shares	$	1,933	$	3,916	$	4,100	$	3,416	$	4,209		$	4,065	$	3,850	$	3,553
Basic earnings per common share	$	0.16	$	0.32	$	0.34	$	0.28	$	0.35		$	0.34	$	0.32	$	0.29
Diluted earnings per common share	$	0.16	$	0.32	$	0.34	$	0.28	$	0.35		$	0.34	$	0.32	$	0.29

QUARTERLY CONDENSED, CONSOLIDATED

BALANCE SHEET INFORMATION

(In Thousands) (Unaudited)	As of:
	Dec. 31,			Sept. 30,		June 30,		March 31,			Dec. 31,
	2017			2017		2017		2017			2016
ASSETS
Cash & Due from Banks	$	40,244		$	32,850	$	34,643	$	32,543		$	32,109
Available-for-Sale Securities		356,908			365,086		364,753		376,919			395,077
Loans Held for Sale		765			437		1,708		163			142
Loans, Net		806,857			792,112		771,057		753,277			743,362
Intangible Assets		11,954			11,956		11,957		11,958			11,959
Other Assets		60,231			57,480		59,283		59,064			59,643
TOTAL ASSETS	$	1,276,959		$	1,259,921	$	1,243,401	$	1,233,924		$	1,242,292
LIABILITIES
Deposits	$	1,008,449		$	1,021,625	$	997,262	$	980,251		$	983,843
Repo Sweep Accounts		3,766			4,739		4,875		6,244			5,175
Total Deposits and Repo Sweeps		1,012,215			1,026,364		1,002,137		986,495			989,018
Borrowed Funds		67,189			34,256		42,321		52,888			59,454
Other Liabilities		9,112			8,288		9,084		7,191			7,812
TOTAL LIABILITIES		1,088,516			1,068,908		1,053,542		1,046,574			1,056,284
SHAREHOLDERS' EQUITY
Common Shareholders' Equity, Excluding Accumulated Other Comprehensive Income/ Loss		189,950			190,639		189,339		187,825			186,906
Accumulated Other Comprehensive Income/ Loss:
Net Unrealized Gains/Losses on Available-for-sale Securities		(1,566	)		227		369		(630	)		(949	)
Defined Benefit Plans Adjustment, Net		59			147		151		155			51
TOTAL SHAREHOLDERS' EQUITY		188,443			191,013		189,859		187,350			186,008
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY	$	1,276,959		$	1,259,921	$	1,243,401	$	1,233,924		$	1,242,292

2

AVAILABLE-FOR-SALE SECURITIES	December 31, 2017				September 30, 2017				December 31, 2016
(In Thousands)	Amortized		Fair		Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value		Cost		Value
Obligations of U.S. Government agencies	$	8,026	$	7,873	$	8,028	$	7,946	$	9,671	$	9,541
Obligations of states and political subdivisions:
Tax-exempt		103,673		105,111		108,521		110,557		118,140		119,037
Taxable		25,431		25,573		27,538		27,816		30,073		30,297
Mortgage-backed securities issued or guaranteed  by U.S. Government agencies or sponsored  agencies:
Residential pass-through securities		52,992		52,347		55,247		54,917		58,922		58,404
Residential collateralized mortgage obligations		134,314		131,814		130,375		129,243		147,915		146,608
Commercial mortgage-backed securities		33,881		33,219		34,028		33,629		30,817		30,219
Total debt securities		358,317		355,937		363,737		364,108		395,538		394,106
Marketable equity securities		1,000		971		1,000		978		1,000		971
Total	$	359,317	$	356,908	$	364,737	$	365,086	$	396,538	$	395,077

Summary of Loans by Type
(Excludes Loans Held for Sale)
(In Thousands)	Dec. 31,			Sept. 30,			Dec. 31,
	2017			2017			2016
Residential mortgage:
Residential mortgage loans - first liens	$	359,987		$	355,285		$	334,102
Residential mortgage loans - junior liens		25,325			24,694			23,706
Home equity lines of credit		35,758			36,534			38,057
1-4 Family residential construction		26,216			25,286			24,908
Total residential mortgage		447,286			441,799			420,773
Commercial:
Commercial loans secured by real estate		159,266			158,520			150,468
Commercial and industrial		88,276			83,243			83,854
Political subdivisions		59,287			54,730			38,068
Commercial construction and land		14,527			13,937			14,287
Loans secured by farmland		7,255			7,744			7,294
Multi-family (5 or more) residential		7,713			7,566			7,896
Agricultural loans		6,178			6,137			3,998
Other commercial loans		10,986			12,383			11,475
Total commercial		353,488			344,260			317,340
Consumer		14,939			14,953			13,722
Total		815,713			801,012			751,835
Less: allowance for loan losses		(8,856	)		(8,900	)		(8,473	)
Loans, net	$	806,857		$	792,112		$	743,362

Loans Held for Sale
(In Thousands)	Dec. 31,			Sept. 30,			Dec. 31,
	2017			2017			2016
Residential mortgage loans originated and serviced - outstanding balance	$	170,490		$	170,018		$	163,438
Less: outstanding balance of loans sold		(169,725	)		(169,581	)		(163,296	)
Loans held for sale, net	$	765		$	437		$	142

3

ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES

(In Thousands)

	3 Months			3 Months			Year			Year
	Ended			Ended			Ended			Ended
	Dec. 31,			Sept. 30,			Dec. 31,			Dec. 31,
	2017			2017			2017			2016
Balance, beginning of period	$	8,900		$	8,635		$	8,473		$	7,889
Charge-offs		(77	)		(67	)		(479	)		(757	)
Recoveries		10			10			61			120
Net charge-offs		(67	)		(57	)		(418	)		(637	)
Provision for loan losses		23			322			801			1,221
Balance, end of period	$	8,856		$	8,900		$	8,856		$	8,473

PAST DUE AND IMPAIRED LOANS, NONPERFORMING ASSETS

AND TROUBLED DEBT RESTRUCTURINGS (TDRs)

(Dollars In Thousands)

	Dec 31,			Sept. 30,			Dec 31,
	2017			2017			2016
Impaired loans with a valuation allowance	$	4,100		$	3,581		$	3,372
Impaired loans without a valuation allowance		5,411			5,388			7,488
Total impaired loans	$	9,511		$	8,969		$	10,860
Total loans past due 30-89 days and still accruing	$	9,449		$	5,978		$	7,735
Nonperforming assets:
Total nonaccrual loans	$	13,404		$	12,400		$	8,736
Total loans past due 90 days or more and still accruing		3,724			2,979			6,838
Total nonperforming loans		17,128			15,379			15,574
Foreclosed assets held for sale (real estate)		1,598			1,650			2,180
Total nonperforming assets	$	18,726		$	17,029		$	17,754
Loans subject to troubled debt restructurings (TDRs):
Performing	$	636		$	658		$	5,803
Nonperforming		3,027			3,075			2,874
Total TDRs	$	3,663		$	3,733		$	8,677
Total nonperforming loans as a % of loans		2.10	%		1.92	%		2.07	%
Total nonperforming assets as a % of assets		1.47	%		1.35	%		1.43	%
Allowance for loan losses as a % of total loans		1.09	%		1.11	%		1.13	%
Allowance for loan losses as a % of nonperforming loans		51.70	%		57.87	%		54.40	%

4

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
	12/31/2017			Return/			9/30/2017			Return/			12/31/2016			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	$	257,714			2.14	%	$	251,774			2.11	%	$	279,385			1.96	%
Tax-exempt		106,773			4.23	%		111,721			4.27	%		118,541			4.36	%
Total available-for-sale securities		364,487			2.76	%		363,495			2.78	%		397,926			2.67	%
Interest-bearing due from banks		15,423			1.29	%		21,260			1.25	%		14,424			0.74	%
Loans held for sale		393			5.05	%		781			5.08	%		341			7.00	%
Loans receivable:
Taxable		729,219			4.92	%		717,012			4.92	%		688,123			4.87	%
Tax-exempt		73,683			4.56	%		71,334			4.51	%		57,293			4.53	%
Total loans receivable		802,902			4.88	%		788,346			4.88	%		745,416			4.84	%
Total Earning Assets		1,183,205			4.18	%		1,173,882			4.16	%		1,158,107			4.05	%
Cash		17,645						18,325						16,636
Unrealized gain/loss on securities		(844	)					1,449						4,223
Allowance for loan losses		(9,013	)					(8,769	)					(8,585	)
Bank premises and equipment		15,313						15,431						15,425
Intangible assets		11,954						11,958						11,960
Other assets		42,294						40,944						41,431
Total Assets	$	1,260,554					$	1,253,220					$	1,239,197
INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Interest checking	$	215,300			0.28	%	$	219,633			0.25	%	$	212,463			0.16	%
Money market		188,659			0.19	%		194,947			0.19	%		199,983			0.18	%
Savings		147,382			0.10	%		145,025			0.10	%		135,059			0.10	%
Certificates of deposit		119,936			0.92	%		119,351			0.85	%		113,776			0.78	%
Individual Retirement Accounts		96,148			0.46	%		96,934			0.45	%		101,046			0.43	%
Other time deposits		682			0.00	%		1,472			0.27	%		676			0.00	%
Total interest-bearing deposits		768,107			0.35	%		777,362			0.33	%		763,003			0.28	%
Borrowed funds:
Short-term		25,669			1.28	%		7,139			0.44	%		18,182			0.48	%
Long-term		29,480			3.35	%		36,469			3.67	%		38,497			3.75	%
Total borrowed funds		55,149			2.39	%		43,608			3.14	%		56,679			2.70	%
Total Interest-bearing Liabilities		823,256			0.48	%		820,970			0.48	%		819,682			0.45	%
Demand deposits		237,518						232,839						221,928
Other liabilities		9,308						8,801						9,366
Total Liabilities		1,070,082						1,062,610						1,050,976
Shareholders' equity, excluding other comprehensive income/loss		190,878						189,520						185,437
Accumulated other comprehensive income/loss		(406	)					1,090						2,784
Total Shareholders' Equity		190,472						190,610						188,221
Total Liabilities and Shareholders' Equity	$	1,260,554					$	1,253,220					$	1,239,197
Interest Rate Spread					3.70	%					3.68	%					3.60	%
Net Interest Income/Earning Assets					3.85	%					3.83	%					3.73	%
Total Deposits (Interest-bearing and Demand)	$	1,005,625					$	1,010,201					$	984,931

(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 35%.

(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.

5

Analysis of Average Daily Balances and Rates

(Dollars in Thousands)

	Year						Year
	Ended			Rate of			Ended			Rate of
	12/31/2017			Return/			12/31/2016			Return/
	Average			Cost of			Average			Cost of
	Balance			Funds %			Balance			Funds %
EARNING ASSETS
Available-for-sale securities, at amortized cost:
Taxable	$	259,079			2.12	%	$	293,636			2.01	%
Tax-exempt		112,746			4.34	%		111,343			4.71	%
Total available-for-sale securities		371,825			2.79	%		404,979			2.75	%
Interest-bearing due from banks		16,634			1.14	%		19,022			0.61	%
Loans held for sale		470			5.32	%		472			5.72	%
Loans receivable:
Taxable		711,901			4.90	%		662,769			4.95	%
Tax-exempt		68,739			4.52	%		60,307			4.52	%
Total loans receivable		780,640			4.87	%		723,076			4.92	%
Total Earning Assets		1,169,569			4.16	%		1,147,549			4.08	%
Cash		17,322						16,570
Unrealized gain/loss on securities		88						7,166
Allowance for loan losses		(8,820	)					(8,082	)
Bank premises and equipment		15,541						15,413
Intangible assets		11,957						11,966
Other assets		42,102						39,284
Total Assets	$	1,247,759					$	1,229,866
INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Interest checking	$	209,893			0.23	%	$	201,357			0.15	%
Money market		191,356			0.19	%		199,405			0.17	%
Savings		143,575			0.10	%		132,679			0.10	%
Certificates of deposit		117,366			0.85	%		117,130			0.75	%
Individual Retirement Accounts		97,519			0.45	%		103,467			0.42	%
Other time deposits		1,014			0.10	%		1,036			0.10	%
Total interest-bearing deposits		760,723			0.32	%		755,074			0.28	%
Borrowed funds:
Short-term		23,761			0.90	%		23,906			0.65	%
Long-term		35,658			3.64	%		38,610			3.76	%
Total borrowed funds		59,419			2.54	%		62,516			2.57	%
Total Interest-bearing Liabilities		820,142			0.48	%		817,590			0.45	%
Demand deposits		230,194						215,373
Other liabilities		8,465						8,530
Total Liabilities		1,058,801						1,041,493
Shareholders' equity, excluding other comprehensive income/loss		188,756						183,671
Accumulated other comprehensive income/loss		202						4,702
Total Shareholders' Equity		188,958						188,373
Total Liabilities and Shareholders' Equity	$	1,247,759					$	1,229,866
Interest Rate Spread					3.68	%					3.63	%
Net Interest Income/Earning Assets					3.82	%					3.76	%
Total Deposits (Interest-bearing and Demand)	$	990,917					$	970,447

(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 35%.

(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.

6

COMPARISON OF NONINTEREST REVENUE
(In Thousands)	Three Months Ended						Years Ended
	Dec. 31,		Sept. 30,		Dec. 31,		Dec. 31,		Dec. 31,
	2017		2017		2016		2017		2016
Service charges on deposit accounts	$	1,142	$	1,168	$	1,172	$	4,488	$	4,695
Service charges and fees		101		115		104		417		439
Trust and financial management revenue		1,430		1,292		1,193		5,399		4,760
Brokerage revenue		246		187		187		797		756
Insurance commissions, fees and premiums		17		26		28		115		102
Interchange revenue from debit card transactions		572		561		512		2,221		1,943
Net gains from sales of loans		167		297		330		818		1,029
Loan servicing fees, net		82		35		64		244		103
Increase in cash surrender value of life insurance		98		97		96		379		382
Other operating income		262		288		345		1,275		1,302
Total other operating income, before realized gains on available-for-sale securities, net	$	4,117	$	4,066	$	4,031	$	16,153	$	15,511

COMPARISON OF NONINTEREST EXPENSES
(In Thousands)	Three Months Ended						Years Ended
	Dec. 31,		Sept. 30,		Dec. 31,		Dec. 31,		Dec. 31,
	2017		2017		2016		2017		2016
Salaries and wages	$	3,981	$	3,985	$	3,710	$	15,806	$	15,411
Pensions and other employee benefits		1,484		1,216		1,218		5,374		4,717
Occupancy expense, net		582		580		570		2,340		2,340
Furniture and equipment expense		462		471		429		1,834		1,730
FDIC Assessments		93		93		40		376		488
Pennsylvania shares tax		321		336		342		1,329		1,274
Professional fees		336		269		310		1,086		1,126
Automated teller machine and interchange expense		339		346		330		1,284		1,137
Software subscriptions		320		299		252		1,190		981
Other operating expense		1,483		1,597		1,357		6,348		5,540
Total noninterest expense	$	9,401	$	9,192	$	8,558	$	36,967	$	34,744

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