8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) December 31, 2008

CITIZENS & NORTHERN CORPORATION

(Exact name of registrant as specified in its charter)

Pennsylvania	0-16084	23-2451943
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

90-92 Main Street, Wellsboro, PA	16901
(Address of Principal Executive Office)	(Zip Code)

Registrant’s telephone number, including area code (570) 724-3411

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02. Results of Operations and Financial Condition

Citizens & Northern Corporation announced the unaudited, consolidated financial results for Citizens & Northern Corporation and subsidiaries for the three-month and annual periods ended December 31, 2008. On February 2, 2009, Citizens & Northern Corporation issued a press release titled “C&N Announces 2008 Unaudited Financial Results,” a copy of which is filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference. Also, Citizens & Northern Corporation’s “Quarterly Report,” a report that includes unaudited financial information, will be mailed to shareholders on or about February 6, 2009. A copy of the Quarterly Report is filed as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference.

ITEM 9.01. Financial Statements and Exhibits

(a) Not applicable.

(b) Not applicable.

(c) Not applicable.

(d) Exhibits.

Exhibit 99.1: Press Release issued by Citizens & Northern Corporation dated February 2, 2009, titled “C&N Announces 2008 Unaudited Financial Results.”

Exhibit 99.2: Quarterly Report, which includes unaudited financial information.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned, thereunto duly authorized.

	CITIZENS & NORTHERN CORPORATION
Date: 2/2/09	By:	/s/ Craig G. Litchfield
		Chairman, President and Chief Executive Officer

EX-99.1

Exhibit 99.1

February 2, 2009 Contact: Yvonne Gill           570-724-0247 yvonneg@cnbankpa.com

C&N ANNOUNCES 2008 UNAUDITED FINANCIAL RESULTS

FOR IMMEDIATE RELEASE:

          Wellsboro, PA — Citizens & Northern Corporation announced its unaudited, consolidated financial results for the fourth quarter 2008 and year ended December 31, 2008.

          Net income for the year ended December 31, 2008 was $10,059,000, or $1.12 per diluted share, as compared to net income of $10,424,000, or $1.19 per diluted share, in 2007. Net income per diluted share, excluding the after-tax impact of impairment losses on securities, was $1.84 in 2008 or 54.6% higher than the corresponding amount in 2007.

          Pre-tax losses from available-for-sale securities totaled $9,338,000 in 2008, including impairment charges of $9,872,000. In contrast, pre-tax gains from available-for-sale securities totaled $127,000 in 2007. Securities losses in 2008 included the effects of impairment charges on pooled trust-preferred securities totaling $8,210,000 and bank stocks totaling $1,662,000. Pooled trust-preferred securities are long-term instruments, mainly issued by banks, with 30 or more companies included in each pool. The impairment charges on pooled trust-preferred securities resulted from management’s assessment that it is unlikely some of the previously anticipated principal and interest will be received on four of the securities. Accordingly, management wrote down the cost basis of these securities to their estimated fair values as of December 31, 2008. After the impact of the impairment charges, C&N’s cost basis in pooled trust-preferred securities totaled $82.8 million, and the estimated fair value at December 31, 2008 was $58.9 million.

          Other significant changes in the components of earnings for 2008, as compared to 2007, were as follows:

• The interest margin was $6,876,000, or 18.9%, higher in 2008. The improved interest margin includes the impact of the Citizens Bancorp, Inc. acquisition, which was effective May 1, 2007.

The interest margin has also been positively impacted by lower market interest rates, which have reduced interest rates paid on deposits and borrowings, and by higher earnings on the investment portfolio resulting from higher average total holdings of securities.

•

Noninterest income increased $2,443,000, or 23.4%. Service charges on deposit accounts increased $1,888,000, or 73.8%, as a result of growth in deposit volumes from the Citizens Bancorp acquisition, as well as higher fees associated with a new overdraft privilege program. Also, in 2008, noninterest income included a gain of $533,000 from redemption of restricted shares of Visa, resulting from Visa’s initial public offering.

FOURTH QUARTER 2008:

          Fourth quarter 2008 earnings were significantly impacted by losses from impaired securities, as discussed above, including pre-tax losses from impaired pooled trust-preferred securities of $3,921,000. Net income per diluted share for the fourth quarter 2008 was $0.24. Excluding the impact of impairment losses on available-for-sale securities, net income per diluted share for the fourth quarter 2008 was $0.53, as compared to $0.35 in the fourth quarter 2007. The net interest margin was $1,845,000 (19.3%) higher in the fourth quarter 2008 than in the fourth quarter 2007.

          Fourth quarter 2008 earnings were higher than the immediately prior quarter’s results. Third quarter 2008 net income per diluted share was $0.11, or $0.46 excluding impairment losses from available-for-sale securities. Pre-tax losses from impaired securities totaled $4,723,000 in the third quarter 2008. Total noninterest expenses were $747,000 lower in the fourth quarter 2008 than in the third quarter, reflecting the impact of a reduction in payroll and benefits expenses of $842,000. The reduction in payroll-related costs reflects the impact of fewer full-time equivalent employees resulting from organizational restructuring activities designed to improve efficiency, and includes the effect of higher severance costs incurred in the third quarter.

               Changes in other unaudited financial information are as follows:

• Total assets amounted to $1,281,637,000 at December 31, 2008, down slightly from $1,288,897,000 as of September 30, 2008 and $1,283,746,000 at December 31, 2007.

• Net loans fell to $735,687,000 at December 31, 2008 from $748,909,000 at September 30, 2008. Net loans were up $8,605,000, or 1.2% from the balance at December 31, 2007.

• Total deposits and repo sweep accounts increased to $902,104,000 at December 31, 2008 from $896,726,000 at September 30, 2008. Total deposits and repo sweeps were up $27,923,000, or 3.2% from the balance at December 31, 2007.

• Total shareholders’ equity was $122,026,000 at December 31, 2008, as compared to $122,074,000 at September 30, 2008 and $137,781,000 at December 31, 2007. Shareholders’ equity included total accumulated other comprehensive loss of $23,214,000 at December 31, 2008, $23,262,000 at September 30, 2008 and $7,057,000 at December 31, 2007. Accumulated other comprehensive income or loss is a component of shareholders’ equity, with changes excluded from earnings and reported as an increase or decrease in equity. The accumulated other comprehensive loss balances are mainly from unrealized losses on available-for-sale securities. Management monitors the securities portfolio for factors that could trigger an impairment charge, and as of December 31, 2008, management believes the losses that have not been charged to earnings to be temporary.

• Assets under management by C&N’s Trust and Financial Management Group amounted to $550,496,000 at December 31, 2008, 16.5% lower than one year earlier. In 2008, falling stock market values have negatively affected the value of Trust assets under management.

               Citizens & Northern Corporation is the parent company of Citizens & Northern Bank and First State Bank. Citizens & Northern Bank is a local, independent community bank providing complete financial, investment and insurance services through 24 full service offices throughout Tioga, Bradford, Sullivan, Lycoming, Potter, Cameron and McKean counties in Pennsylvania. First State Bank provides banking services through its offices in Canisteo and South Hornell, NY. C&N can be found on the worldwide web at www.cnbankpa.com. First State Bank can be found on the web at www.fsbcanisteo.com. The Company’s stock is listed on NASDAQ Capital Market Securities under the symbol CZNC.

Safe Harbor Statement: Except for historical information contained herein, the matters discussed in this release are forward-looking statements. Investors are cautioned that all forward-looking statements involve risks and uncertainty, including without limitation, the following: changes in monetary and fiscal policies of the Federal Reserve Board and the U.S. Government, particularly related to changes in interest rates; changes in general economic conditions; legislative or regulatory changes; downturn in demand for loan, deposit and other financial services in the Corporation’s market area; increased competition from other banks and non-bank providers of financial services; technological changes and increased technology-related costs; changes in management’s assessment of realization of securities and other assets; and changes in accounting principles, or the application of generally accepted accounting principles. Citizens & Northern disclaims any intention or obligation to publicly update or revise any forward-looking statements, whether as a result of events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

EX-99.2

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 Member FEDERAL DEPOSIT INSURANCE CORP

December 31, 2008 QUARTERLY REPORT

Dear Shareholder:

     The negative economic climate continues to adversely affect some of C&N’s investments. For the fourth quarter, we realized securities losses of $3.878 million including other-than-temporary-impairment (OTTI) of $3.921 million. As a result, the fourth quarter net income was $1 million less than that of the fourth quarter of 2007. For the 2008, the total securities losses that appear on the line titled Net (Losses) Gains on Available-for-Sale Securities, were $9.338 million. In 2007, we had a small securities gain of $127 thousand. Despite the large total securities losses and OTTI charges, on a year to year comparison, net income was down only $365 thousand, or 3.5%.

     For 2008 as compared to 2007, due to pricing improvements and lower interest rates driven by Federal Reserve actions, our interest margin increased $6.876 million (18.9%). Due to organizational restructuring, new service offerings and pricing, other income increased $2.443 million (23.4%). Other expenses increased only $163 thousand (0.5%). Excluding securities gains and losses, pre-tax core earnings increased $8.776 million (67.8%).

     Total assets are virtually unchanged year over year. Loans are up $8.6 million (1.2%) and available-for-sale-securities are down $13 million (3%). Deposits and Repo Sweeps increased $27.9 million (3.2%). As the current economic recession continues, we expect loan demand will be less than we would prefer and deposits will continue to grow as individuals and businesses conserve and delay business expansion or purchases.

     Our Trust & Financial Management Group has grown the number of relationships they manage, even though the general equity market price collapse has reduced the total assets under management by 16.5%.

     As an act of fiscal prudence, we decided to participate in the Capital Purchase Plan by issuing senior preferred stock to the U.S. Treasury. The $26.44 million capital investment will insure our continued well-capitalized position during these troubling economic times. A separate writing is enclosed with more information about our participation in the program.

Craig G. Litchfield
Chairman, President, & CEO

CITIZENS & NORTHERN CORPORATION
BOARD OF DIRECTORS

Craig G. Litchfield            Chairman of the Board

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

DIRECTOR EMERITUS

Karl W. Kroeck

CITIZENS & NORTHERN BANK
OFFICES

428 S. Main Street, ATHENS, PA 18810	570-888-2291
10 N Main Street, COUDERSPORT, PA 16915	814-274-9150
111 Main Street, DUSHORE, PA 18614	570-928-8124
Main Street, EAST SMITHFIELD, PA 18817	570-596-3131
104 Main Street, ELKLAND, PA 16920	814-258-5111
135 East Fourth Street, EMPORIUM, PA 15834	814-486-1112
230-232 Railroad Street, JERSEY SHORE, PA 17740	570-398-4555
102 E. Main Street, KNOXVILLE, PA 16928	814-326-4151
Main Street, LAPORTE, PA 18626	570-946-4011
Main Street, LIBERTY, PA 16930	570-324-2331
1085 S. Main Street, MANSFIELD, PA 16933	570-662-1111
RR 2 Box 3036, MONROETON, PA 18832	570-265-2157
3461 Rte.405 Highway, MUNCY, PA 17756	570-546-6666
100 Maple Street, PORT ALLEGANY, PA 16743	814-642-2571
Thompson Street, RALSTON, PA 17763	570-995-5421
1827 Elmira Street, SAYRE, PA 18840	570-888-2220
2 E. Mountain Ave., SO. WILLIAMSPORT, PA 17702	570-601-3016
41 Main Street, TIOGA, PA 16946	570-835-5236
428 Main Street, TOWANDA, PA18848	570-265-6171
Court House Square, TROY, PA 16947	570-297-2159
90-92 Main Street, WELLSBORO, PA 16901	570-724-3411
130 Court Street, WILLIAMSPORT, PA 17701	570-320-0100
1510 Dewey Ave., WILLIAMSPORT, PA 17702	570-323-9305
Route 6, WYSOX, PA 18854	570-265-9148

TRUST & FINANCIAL MANAGEMENT GROUP

90-92 Main Street, Wellsboro, PA 16901	800-487-8784
428 Main Street, Towanda, PA 18848	888-987-8784
1827 Elmira Street, Sayre, PA 18840	888-760-8192
130 Court Street, Williamsport, PA 17701	570-601-6000
ACCOUNT SERVICES - 90-92 Main St., Wellsboro, PA 16901	800-726-2265
BANKCARD SERVICES - 10 Nichols St., Wellsboro PA 16901	800-676-6639
CASH MANAGEMENT / INTERNET BANKING — 10 Nichols St., Wellsboro, PA 16901	570-724-0266
www.cnbankpa.com
FUNDS MANAGEMENT — 10 Nichols St., Wellsboro, PA 16901	800-577-9397
www.fmt@cnbankpa.com
C&N FINANCIAL SERVICES CORPORATION — 90-92 Main Street, Wellsboro, PA	866-ASK-CNFS
www.cnfinancialservices.com

FIRST STATE BANK
OFFICES

3 Main Street, CANISTEO, NY 14823	607-698-4295
6250 County Route 64, HORNELL, NY 14843	607-324-4081
www.fsbcanisteo.com

C&N Insures Its Future

On January 16^th, 2009, Citizens & Northern Corporation (C&N) received a $26.44 million government investment (from the United States Department of the Treasury) in senior preferred stock as part of the TARP Capital Purchase Program (CPP). C&N’s board and management believe that this is a prudent thing to do given the scope of the current national and global economic uncertainties. As a result of the incredible national and world-wide economic and financial crisis, the CPP was developed and designed to provide capital directly to healthy U.S. financial services companies, like C&N, as well as some of the more troubled big banks.

Although the program has been popularly and inaccurately described as a “bailout,” the funds received are an investment by the U.S. government that C&N expects to repay in full with dividends. Until the investment is repaid, C&N will pay the government dividends of 5%, or more than $1.3 million per year for up to the first five years, or 9% per year after the first 5 years. Currently, the U.S. government is borrowing money for five years at a rate of about 1.63%, which results in a profit for the government of nearly 3.4%. In other words, unless we are able to redeem the preferred stock sooner, the government will net sizeable profit each year on its investment in C&N. Additionally, as a condition of the investment, the government was issued a right to purchase (Warrant) 194,794 shares of C&N stock. This Warrant has a 10-year life and provides the government with the ability to further profit from the CPP investment by purchasing C&N stock at a fixed price anytime during that period.

C&N is participating in the CPP to insure that we are able to absorb and withstand any unexpected, negative impacts during this period of economic crisis and uncertainty. In this difficult economic environment, management is concerned that our capital position could be negatively impacted by loan or securities losses. The government’s preferred stock investment will be treated as Tier 1 capital, and will further strengthen C&N’s consolidated total risk-based capital ratio from its estimated level of 15.0% at December 31, 2008 to approximately 17.8%, both of which exceed the 10% regulatory requirement for banks to be deemed “well-capitalized.” We will use the funds to insure C&N’s continued financial strength and well-capitalized position. Among other things, our strong capital position will assure our ability to continue to make prudent loans to consumers and businesses in our market. With the additional capital, as the economic climate stabilizes and improves, we will be in a position to expand by extending more loans and making more investments. We expect these additional assets will add to the bottom line even as we pay the government a good return on its investment.

While there has been much misinformation spread by the media and by some in Congress about the CPP, the program will provide C&N, and other community banks, with the capital to assure our ability to do what we do best: lend and invest in the people and communities we serve.

Safe Harbor Statement: Except for historical information contained herein, the matters discussed in this release are forward-looking statements. Investors are cautioned that all forward-looking statements involve risks and uncertainty, including without limitation, the following: changes in monetary and fiscal policies of the Federal Reserve Board and the U.S. Government, particularly related to changes in interest rates; changes in general economic conditions; legislative or regulatory changes; downturn in demand for loan, deposit and other financial services in the Corporation’s market area; increased competition from other banks and non-bank providers of financial services; technological changes and increased technology-related costs; changes in management’s assessment of realization of securities and other assets; and changes in accounting principles, or the application of generally accepted accounting principles. The Company disclaims any intention or obligation to publicly update or revise any forward-looking statements, whether as a result of events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

CONSOLIDATED STATEMENT OF INCOME
(In Thousands, Except Per Share Data) (Unaudited)

	4TH			3RD			4TH		YEAR ENDED
	QUARTER			QUARTER			QUARTER		DECEMBER 31,
	2008			2008			2007		2008			2007
	(Current)			(Prior Qtr)			(Prior Yr)		(Current)			(Prior Yr)
Interest and Dividend Income	$	18,589		$	18,575		$	18,228	$	74,237		$	70,221
Interest Expense		7,195			7,474			8,679		31,049			33,909
Interest Margin		11,394			11,101			9,549		43,188			36,312
Provision (Credit) for Loan Losses		240			141			300		909			529
Interest Margin After Provision for Loan Losses		11,154			10,960			9,249		42,279			35,783
Other Income		3,179			3,062			2,831		12,883			10,440
Net (Losses) on Available-for-sale Securities		(3,878	)		(4,483	)		206		(9,338	)		127
Other Expenses		7,989			8,736			8,156		33,446			33,283
Income Before Income Tax Provision (Credit)		2,466			803			4,130		12,378			13,067
Income Tax Provision (Credit)		288			(209	)		948		2,319			2,643
NET INCOME	$	2,178		$	1,012		$	3,182	$	10,059		$	10,424
PER SHARE DATA:
Net Income — Basic	$	0.24		$	0.11		$	0.35	$	1.12		$	1.19
Net Income — Diluted	$	0.24		$	0.11		$	0.35	$	1.12		$	1.19
Dividend Per Share	$	0.24		$	0.24		$	0.24	$	0.96		$	0.96
Number Shares Used in Computation — Basic		8,951,596			8,957,774			8,979,035		8,961,805			8,784,134
Number Shares Used in Computation — Diluted		8,977,432			8,986,253			8,986,248		8,983,300			8,795,366

CONSOLIDATED BALANCE SHEET
(In Thousands, Except Per Share Data) (Unaudited)

	DEC. 31,			SEPT. 30,			DEC. 31,
	2008			2008			2007
ASSETS
Cash & Due from Banks	$	24,028		$	23,160		$	31,661
Trading Securities		2,306			1,630			2,980
Available-for-Sale Securities		419,688			417,761			432,755
Loans, Net		735,687			748,909			727,082
Intangible Assets		12,840			12,978			13,410
Other Assets		87,088			84,459			75,858
TOTAL ASSETS	$	1,281,637		$	1,288,897		$	1,283,746
LIABILITIES
Deposits	$	864,057		$	856,576		$	838,503
Repo Sweep Accounts		38,047			40,150			35,678
Total Deposits and Repo Sweeps		902,104			896,726			874,181
Borrowed Funds		247,426			261,895			264,454
Other Liabilities		10,081			8,202			7,330
TOTAL LIABILITIES		1,159,611			1,166,823			1,145,965
SHAREHOLDERS’ EQUITY
Shareholders’ Equity, Excluding Accumulated Other Comprehensive Income/Loss		145,240			145,336			144,838
Accumulated Other Comprehensive Income/ Loss:
Net Unrealized Gains/Losses on Available-for-sale Securities		(23,120	)		(23,149	)		(6,654	)
Defined Benefit Plans Adjustment, Net		(94	)		(113	)		(403	)
TOTAL SHAREHOLDERS’ EQUITY		122,026			122,074			137,781
TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY	$	1,281,637		$	1,288,897		$	1,283,746

CONSOLIDATED FINANCIAL HIGHLIGHTS
(In Thousands, Except Per Share Data) (Unaudited)

	YEAR ENDED							%
	DECEMBER 31,							INCREASE
	2008			2007				(DECREASE)
EARNINGS PERFORMANCE
Net Income	$	10,059		$	10,424				-3.50	%
Return on Average Assets		0.79	%		0.88	%			-10.23	%
Return on Average Equity		7.70	%		7.52	%			2.39	%
BALANCE SHEET HIGHLIGHTS
Total Assets	$	1,281,637		$	1,283,746				-0.16	%
Available-for-sale Securities		419,688			432,755				-3.02	%
Loans (Net)		735,687			727,082				1.18	%
Allowance for Loan Losses		7,857			8,859				-11.31	%
Deposits and Repo Sweep Accounts		902,104			874,181				3.19	%
Trust Assets Under Management		550,496			659,193				-16.49	%
SHAREHOLDERS’ VALUE (PER SHARE) (*)
Net Income — Basic	$	1.12		$	1.19				-5.88	%
Net Income — Diluted		1.12			1.19				-5.88	%
Dividends		0.96			0.96				0.00	%
Book Value		13.66			15.34				-10.95	%
Tangible Book Value		12.22			13.85				-11.77	%
Market Value (Last Trade)		19.75			17.63				12.02	%
Market Value / Book Value		144.58	%		114.93	%			25.80	%
Market Value / Tangible Book Value		161.62	%		127.29	%			26.97	%
Price Earnings Multiple		17.63		X	14.82		X		18.96	%
Dividend Yield		4.86	%		5.45	%			-10.83	%
SAFETY AND SOUNDNESS
Tangible Equity / Tangible Assets		8.61	%		9.79	%			-12.05	%
Nonperforming Assets / Total Assets		0.69	%		0.66	%			5.29	%
Allowance for Loan Losses / Total Loans		1.06	%		1.20	%			-11.67	%
Risk Based Capital Ratio		15.00	%		16.52	%			-9.20	%
AVERAGE BALANCES
Average Assets		1,281,307			1,178,904				8.69	%
Average Equity		130,556			138,669				-5.85	%

(*) For purposes of per share calculations, the market value and number of outstanding shares have been retroactively adjusted for the effects of 1% stock dividends issued in January of each year presented.