CITIZENS & NORTHERN CORP [CZNC] Filings

10-Q 1 cznc-20240930x10q.htm 10-Q

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

⌧ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

◻ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _________________________.

Commission file number: 000-16084

CITIZENS & NORTHERN CORPORATION

(Exact name of Registrant as specified in its charter)


PENNSYLVANIA		23-2451943
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

90-92 MAIN STREET, WELLSBORO, PA 16901

(Address of principal executive offices) (Zip code)

570-724-3411

(Registrant’s telephone number including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock Par Value $1.00	CZNC	NASDAQ Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of “large accelerated filer,” accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ◻ Accelerated filer ⌧ Non-accelerated filer ◻ Smaller reporting company ☐ Emerging growth company ◻

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ⌧

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.


Common Stock ($1.00 par value)	15,414,132 Shares Outstanding on October 31, 2024

Table of Contents

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

CITIZENS & NORTHERN CORPORATION

Index


Part I. Financial Information

Item 1. Financial Statements

Consolidated Balance Sheets (Unaudited) – September 30, 2024 and December 31, 2023			Page 3

Consolidated Statements of Income (Unaudited) – Three-month and Nine-month Periods Ended September 30, 2024 and 2023			Page 4

Consolidated Statements of Comprehensive Income (Unaudited) – Three-month and Nine-month Periods Ended September 30, 2024 and 2023			Page 5

Consolidated Statements of Cash Flows (Unaudited) – Nine-month Periods Ended September 30, 2024 and 2023			Page 6

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) – Three-month and Nine-month Periods Ended September 30, 2024 and 2023			Page 7

Notes to Unaudited Consolidated Financial Statements			Pages 8 – 32

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			Pages 33 – 55

Item 3. Quantitative and Qualitative Disclosures About Market Risk			Pages 56 – 58

Item 4. Controls and Procedures			Page 58

Part II. Other Information			Pages 58 – 60

Signatures			Page 61

Table of Contents

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

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


	September 30,		December 31,
(In Thousands, Except Share and Per Share Data)	2024		2023
ASSETS
Cash and due from banks:
Noninterest-bearing	$	25,707	$	24,855
Interest-bearing		158,506		32,023
Total cash and due from banks		184,213		56,878
Available-for-sale debt securities, at fair value		408,422		415,755

Loans receivable		1,892,764		1,848,139
Allowance for credit losses		(20,442)		(19,208)
Loans, net		1,872,322		1,828,931

Bank-owned life insurance		50,757		63,674
Accrued interest receivable		9,419		9,140
Bank premises and equipment, net		21,537		21,632
Foreclosed assets held for sale		181		478
Deferred tax asset, net		17,047		17,441
Goodwill		52,505		52,505
Core deposit intangibles, net		2,177		2,469
Other assets		52,242		46,681
TOTAL ASSETS	$	2,670,822	$	2,515,584

LIABILITIES
Deposits:
Noninterest-bearing	$	513,067	$	490,554
Interest-bearing		1,622,812		1,524,252
Total deposits		2,135,879		2,014,806
Short-term borrowings		11,426		33,874
Long-term borrowings - FHLB advances		174,617		138,337
Senior notes, net		14,882		14,831
Subordinated debt, net		24,802		24,717
Accrued interest and other liabilities		31,911		26,638
TOTAL LIABILITIES		2,393,517		2,253,203

STOCKHOLDERS' EQUITY
Preferred stock, $1,000 par value; authorized 30,000 shares; $1,000 liquidation
preference per share; no shares issued		0		0
Common stock, par value $1.00 per share; authorized 30,000,000 shares;
issued 16,030,172 and outstanding 15,414,132 at September 30, 2024;
issued 16,030,172 and outstanding 15,295,135 at December 31, 2023		16,030		16,030
Paid-in capital		143,206		144,388
Retained earnings		161,920		157,028
Treasury stock, at cost; 616,040 shares at September 30, 2024 and 735,037
shares at December 31, 2023		(13,787)		(16,628)
Accumulated other comprehensive loss		(30,064)		(38,437)
TOTAL STOCKHOLDERS' EQUITY		277,305		262,381
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	$	2,670,822	$	2,515,584

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

Consolidated Statements of Income

(In Thousands Except Per Share Data) (Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,		September 30,		September 30,		September 30,
(In Thousands, Except Per Share Data)	2024		2023		2024		2023
INTEREST INCOME
Interest and fees on loans:
Taxable	$	28,099	$	25,529	$	82,292	$	72,322
Tax-exempt		610		552		1,749		1,687
Income from available-for-sale debt securities:
Taxable		2,136		2,077		6,409		6,440
Tax-exempt		572		597		1,685		1,847
Other interest and dividend income		1,670		363		2,614		972
Total interest and dividend income		33,087		29,118		94,749		83,268
INTEREST EXPENSE
Interest on deposits		10,412		7,264		28,617		15,593
Interest on short-term borrowings		184		677		1,141		2,918
Interest on long-term borrowings - FHLB advances		1,983		1,164		5,294		2,901
Interest on senior notes, net		120		120		360		359
Interest on subordinated debt, net		232		230		695		691
Total interest expense		12,931		9,455		36,107		22,462
Net interest income		20,156		19,663		58,642		60,806
Provision (credit) for credit losses		1,207		(1,225)		2,726		(765)
Net interest income after provision (credit) for credit losses		18,949		20,888		55,916		61,571
NONINTEREST INCOME
Trust revenue		1,946		1,919		5,857		5,500
Brokerage and insurance revenue		523		394		1,589		1,189
Service charges on deposit accounts		1,546		1,443		4,336		4,121
Interchange revenue from debit card transactions		1,103		1,098		3,205		3,115
Net gains from sale of loans		360		237		786		450
Loan servicing fees, net		74		154		434		466
Increase in cash surrender value of life insurance		458		160		1,372		450
Other noninterest income		1,123		1,084		4,083		3,442
Realized gains on available-for-sale debt securities, net		0		0		0		6
Total noninterest income		7,133		6,489		21,662		18,739
NONINTEREST EXPENSE
Salaries and employee benefits		10,875		10,878		33,460		33,082
Net occupancy and equipment expense		1,377		1,268		4,160		3,993
Data processing and telecommunications expense		1,882		1,823		5,877		5,659
Automated teller machine and interchange expense		510		504		1,470		1,374
Pennsylvania shares tax		433		403		1,300		1,210
Professional fees		555		487		1,625		1,988
Other noninterest expense		2,637		2,577		7,936		8,443
Total noninterest expense		18,269		17,940		55,828		55,749
Income before income tax provision		7,813		9,437		21,750		24,561
Income tax provision		1,448		1,846		3,966		4,674
NET INCOME	$	6,365	$	7,591	$	17,784	$	19,887
EARNINGS PER COMMON SHARE - BASIC	$	0.41	$	0.50	$	1.16	$	1.29
EARNINGS PER COMMON SHARE - DILUTED	$	0.41	$	0.50	$	1.16	$	1.29

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

Consolidated Statements of Comprehensive Income

(In Thousands) (Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,		September 30,		September 30,		September 30,
(In Thousands)	2024		2023		2024		2023
Net income	$	6,365	$	7,591	$	17,784	$	19,887

Available-for-sale debt securities:
Unrealized holding gains (losses) on available-for-sale debt securities		13,829		(14,865)		10,243		(12,535)
Reclassification adjustment for gains realized in income		0		0		0		(6)
Other comprehensive income (loss) on available-for-sale debt securities		13,829		(14,865)		10,243		(12,541)

Unfunded pension and postretirement obligations:
Changes from plan amendments and actuarial gains and losses		0		0		394		(8)
Amortization of prior service cost and net actuarial loss and curtailment gain included in net periodic benefit cost		(22)		(14)		(532)		(42)
Other comprehensive loss on pension and postretirement obligations		(22)		(14)		(138)		(50)

Other comprehensive income (loss) before income tax		13,807		(14,879)		10,105		(12,591)
Income tax related to other comprehensive (income) loss		(2,510)		3,126		(1,732)		2,643

Net other comprehensive income (loss)		11,297		(11,753)		8,373		(9,948)

Comprehensive income (loss)	$	17,662	$	(4,162)	$	26,157	$	9,939

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Table of Contents

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands) (Unaudited)


	Nine Months Ended
	September 30,		September 30,
(In Thousands)	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	17,784	$	19,887
Adjustments to reconcile net income to net cash provided by operating activities:
Provision (credit) for credit losses		2,726		(765)
Realized gains on available-for-sale debt securities, net		0		(6)
Net amortization of securities		1,269		1,556
Increase in cash surrender value of life insurance		(1,372)		(450)
Depreciation and amortization of bank premises and equipment		1,632		1,633
Net accretion of purchase accounting adjustments		(197)		(198)
Stock-based compensation		1,099		1,015
Deferred income taxes		(1,338)		235
Decrease in fair value of servicing rights		172		136
Net gains from sale of loans		(786)		(450)
Origination of loans held for sale		(27,070)		(14,568)
Proceeds from sales of loans held for sale		24,773		14,341
Increase in accrued interest receivable and other assets		(3,196)		(1,175)
Increase in accrued interest payable and other liabilities		5,340		4,588
Other		124		22
Net Cash Provided by Operating Activities		20,960		25,801
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of certificates of deposit		1,250		3,000
Proceeds from sales of available-for-sale debt securities		0		18,357
Proceeds from calls and maturities of available-for-sale debt securities		28,734		44,208
Purchase of available-for-sale debt securities		(11,516)		(8,215)
Redemption of Federal Home Loan Bank of Pittsburgh stock		5,991		19,503
Purchase of Federal Home Loan Bank of Pittsburgh stock		(6,748)		(19,905)
Purchase of Federal Reserve Bank stock		(36)		(6,243)
Net increase in loans		(45,752)		(89,998)
Proceeds from bank-owned life insurance		14,289		147
Purchase of premises and equipment		(1,554)		(1,381)
Proceeds from sale of foreclosed assets		293		62
Other		33		109
Net Cash Used in Investing Activities		(15,016)		(40,356)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits		121,077		27,425
Net decrease in short-term borrowings		(22,448)		(56,809)
Proceeds from long-term borrowings - FHLB advances		59,386		70,049
Repayments of long-term borrowings - FHLB advances		(23,083)		(7,078)
Purchases of treasury stock		(655)		(6,719)
Common dividends paid		(11,636)		(11,703)
Net Cash Provided by Financing Activities		122,641		15,165
INCREASE IN CASH AND CASH EQUIVALENTS		128,585		610
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		52,778		47,698
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	181,363	$	48,308
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Increase (decrease) in accrued purchase of available-for-sale debt securities	$	911	$	(454)
Assets acquired through foreclosure of real estate loans	$	0	$	390
Leased assets obtained in exchange for new operating lease liabilities	$	187		0
Interest paid	$	35,134	$	21,392
Income taxes paid	$	4,839	$	4,667

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Table of Contents

CITIZENS & NORTHERN CORPORATION – FORM 10-Q

Consolidated Statements of Changes in Stockholders’ Equity

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

Accumulated

Other

Common

Treasury

Common

Paid-in

Retained

Comprehensive

Treasury

Three Months Ended September 30, 2024

CITIZENS & NORTHERN CORP [CZNC] Filings
10-Q	[2024-11-06]
10-Q	[2024-08-07]
10-Q	[2024-05-07]
10-K	[2024-03-11]
10-Q	[2023-11-06]
10-Q	[2023-08-08]
10-Q	[2023-05-05]
10-K	[2023-03-16]
10-Q	[2022-11-07]
10-Q	[2022-08-05]
10-Q	[2022-05-06]
10-K	[2022-02-22]
10-Q	[2021-11-08]
10-Q	[2021-08-06]
10-Q	[2021-05-07]
10-K	[2021-03-05]
10-Q	[2020-11-06]
10-Q	[2020-08-06]
10-Q	[2020-05-07]
10-K	[2020-02-20]
10-Q	[2019-11-12]
10-Q	[2019-08-06]
10-Q	[2019-05-07]
10-K	[2019-02-21]
10-Q	[2018-11-01]
10-Q	[2018-08-06]
10-Q	[2018-05-03]
10-K	[2018-02-15]
10-Q	[2017-11-02]
10-Q	[2017-08-03]
10-Q	[2017-05-04]
10-K	[2017-02-16]
10-Q	[2016-11-03]
10-Q	[2016-08-04]
10-Q	[2016-05-05]
10-K	[2016-02-18]
10-Q	[2015-11-05]
10-Q	[2015-08-07]
10-Q	[2015-05-08]
10-K	[2015-02-26]
10-Q	[2014-11-07]
10-Q	[2014-08-08]
10-Q	[2014-05-09]
10-K	[2014-02-20]
10-Q	[2013-11-07]
10-Q	[2013-08-08]
10-Q	[2013-05-09]
10-K	[2013-02-21]
10-Q	[2012-11-07]
10-Q	[2012-08-07]
10-Q	[2012-05-08]
10-K	[2012-02-24]