10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2013

or

¨ 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)

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 x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).

Yes x No ¨

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

Large accelerated filer ¨ Accelerated filer x Non-accelerated filer ¨ Smaller reporting company ¨

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

Yes ¨ No x

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) 12,354,505 Shares Outstanding on August 1, 2013

CITIZENS & NORTHERN CORPORATION

Index

Part I.  Financial Information
Item 1.  Financial Statements
Consolidated Balance Sheets (Unaudited) – June 30, 2013 and December 31, 2012	Page 3
Consolidated Statements of Income (Unaudited) – Three-Month and
Six-Month Periods Ended June 30, 2013 and 2012	Page 4
Consolidated Statements of Comprehensive Income (Unaudited) -
Three-Month and Six-Month Periods Ended June 30, 2013 and 2012	Page 5
Consolidated Statements of Cash Flows (Unaudited) – Six Months
Ended June 30, 2013 and 2012	Page 6
Consolidated Statements of Changes in Stockholders’ Equity
(Unaudited) - Six Months Ended June 30, 2013 and 2012	Page 7
Notes to Unaudited Consolidated Financial Statements	Pages 8 – 36
Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations	Pages 37 – 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 59 – 60
Signatures	Page 61

2

ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share and Per Share Data) (Unaudited)	June 30,	December 31,
	2013	2012
ASSETS
Cash and due from banks:
Noninterest-bearing	$19,085	$21,356
Interest-bearing	16,691	38,480
Total cash and due from banks	35,776	59,836
Available-for-sale securities, at fair value	470,068	472,577
Loans held for sale	725	2,545
Loans receivable	654,970	683,910
Allowance for loan losses	(7,198)	(6,857)
Loans, net	647,772	677,053
Bank-owned life insurance	21,536	21,344
Accrued interest receivable	4,180	4,281
Bank premises and equipment, net	18,109	18,707
Foreclosed assets held for sale	890	879
Deferred tax asset, net	4,631	1,725
Intangible asset - Core deposit intangibles	113	138
Intangible asset - Goodwill	11,942	11,942
Other assets	12,602	15,880
TOTAL ASSETS	$1,228,344	$1,286,907
LIABILITIES
Deposits:
Noninterest-bearing	$196,449	$189,941
Interest-bearing	754,320	816,165
Total deposits	950,769	1,006,106
Short-term borrowings	16,387	5,567
Long-term borrowings	73,472	83,812
Accrued interest and other liabilities	8,355	8,636
TOTAL LIABILITIES	1,048,983	1,104,121
STOCKHOLDERS' EQUITY
Preferred stock, $1,000 par value; authorized 30,000 shares; $1,000 liquidation preference
per share; no shares issued at June 30, 2013 and December 31, 2012	0	0
Common stock, par value $1.00 per share; authorized 20,000,000 shares in 2013 and
2012; issued 12,561,677 at June 30, 2013 and 12,525,411 at December 31, 2012	12,561	12,525
Paid-in capital	69,214	68,622
Retained earnings	98,419	94,839
Treasury stock, at cost; 210,155 shares at June 30, 2013
and 251,376 shares at December 31, 2012	(3,513)	(4,203)
Sub-total	176,681	171,783
Accumulated other comprehensive income:
Unrealized gains on available-for-sale securities	2,832	11,568
Defined benefit plans	(152)	(565)
Total accumulated other comprehensive income	2,680	11,003
TOTAL STOCKHOLDERS' EQUITY	179,361	182,786
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	$1,228,344	$1,286,907

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

3

CONSOLIDATED STATEMENTS OF INCOME	3 Months Ended		Fiscal Year To Date
(In Thousands, Except Per Share Data) (Unaudited)	June 30,	June 30,	6 Months Ended June 30,
	2013	2012	2013	2012
INTEREST INCOME
Interest and fees on loans	$9,028	$10,242	$18,253	$20,608
Interest on balances with depository institutions	23	31	51	59
Interest on loans to political subdivisions	323	375	685	752
Interest on loans held for sale	12	23	33	32
Income from available-for-sale securities:
Taxable	1,663	2,520	3,380	5,178
Tax-exempt	1,243	1,265	2,455	2,528
Dividends	63	73	145	148
Total interest and dividend income	12,355	14,529	25,002	29,305
INTEREST EXPENSE
Interest on deposits	673	1,271	1,451	2,621
Interest on short-term borrowings	2	1	3	4
Interest on long-term borrowings	740	1,129	1,561	2,278
Total interest expense	1,415	2,401	3,015	4,903
Net interest income	10,940	12,128	21,987	24,402
Provision for loan losses	66	367	249	185
Net interest income after provision for loan losses	10,874	11,761	21,738	24,217
OTHER INCOME
Service charges on deposit accounts	1,171	1,256	2,330	2,417
Service charges and fees	216	235	417	455
Trust and financial management revenue	1,045	960	1,989	1,889
Interchange revenue from debit card transactions	505	488	969	983
Net gains from sale of loans	587	373	1,132	638
Increase in cash surrender value of life insurance	99	117	192	236
Insurance commissions, fees and premiums	59	73	104	107
Other operating income	509	777	901	1,209
Sub-total	4,191	4,279	8,034	7,934
Total other-than-temporary impairment losses on available-for-sale securities	0	0	(25)	(67)
Portion of (gain) loss recognized in other comprehensive loss (before taxes)	0	0	0	0
Net impairment losses recognized in earnings	0	0	(25)	(67)
Realized gains on available-for-sale securities, net	100	203	1,284	268
Net realized gains on available-for-sale securities	100	203	1,259	201
Total other income	4,291	4,482	9,293	8,135
OTHER EXPENSES
Salaries and wages	3,635	3,586	7,235	7,161
Pensions and other employee benefits	1,034	1,090	2,289	2,456
Occupancy expense, net	599	628	1,233	1,264
Furniture and equipment expense	483	461	977	943
FDIC Assessments	147	157	299	303
Pennsylvania shares tax	351	340	701	672
Loss on prepayment of debt	0	143	1,023	143
Other operating expense	2,271	2,059	4,339	3,935
Total other expenses	8,520	8,464	18,096	16,877
Income before income tax provision	6,645	7,779	12,935	15,475
Income tax provision	1,671	2,094	3,255	4,203
NET INCOME	$4,974	$5,685	$9,680	$11,272
NET INCOME PER SHARE - BASIC	$0.40	$0.46	$0.78	$0.92
NET INCOME PER SHARE - DILUTED	$0.40	$0.46	$0.78	$0.92

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

4

Consolidated Statements of Comprehensive Income
(In Thousands) (Unaudited)	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2013	2012	2013	2012
Net income	$4,974	$5,685	$9,680	$11,272
Unrealized (losses) gains on available-for-sale securities:
Unrealized holding (losses) gains on available-for-sale securities	(9,732)	1,227	(12,179)	1,571
Reclassification adjustment for gains realized in income	(100)	(203)	(1,259)	(201)
Other comprehensive (loss) gain on available-for-sale securities	(9,832)	1,024	(13,438)	1,370
Unfunded pension and postretirement obligations:
Changes from plan amendments and actuarial gains and losses included in
accumulated other comprehensive gain	0	0	636	200
Amortization of net transition obligation, prior service cost and net
actuarial loss included in net periodic benefit cost	0	20	0	40
Other comprehensive gain on unfunded retirement obligations	0	20	636	240
Other comprehensive (loss) income before income tax	(9,832)	1,044	(12,802)	1,610
Income tax related to other comprehensive loss (income)	3,441	(364)	4,479	(716)
Net other comprehensive (loss) income	(6,391)	680	(8,323)	894
Comprehensive (loss) income	($1,417)	$6,365	$1,357	$12,166

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

5

CONSOLIDATED STATEMENTS OF CASH FLOWS	Six Months Ended June 30,
(In Thousands) (Unaudited)	2013	2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$9,680	$11,272
Adjustments to reconcile net income to net cash provided by operating activities:
Provision (credit) for loan losses	249	185
Realized gains on available-for-sale securities, net	(1,259)	(201)
Gain on disposition of premises and equipment	0	(270)
Loss on prepayment of debt	1,023	143
Loss on sale of foreclosed assets, net	53	80
Depreciation expense	1,021	964
Accretion and amortization on securities, net	952	416
Accretion and amortization on loans and deposits, net	(16)	(26)
Amortization of mortgage servicing rights	71	44
Increase in cash surrender value of life insurance	(192)	(236)
Stock-based compensation	492	411
Amortization of core deposit intangibles	25	37
Deferred income taxes	1,573	1,495
Gains on sales of loans, net	(1,132)	(638)
Origination of loans for sale	(32,709)	(22,121)
Proceeds from sales of loans	35,345	20,379
Decrease (increase) in accrued interest receivable and other assets	2,705	(2,517)
Increase (decrease) in accrued interest payable and other liabilities	398	(308)
Net Cash Provided by Operating Activities	18,279	9,109
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of certificates of deposit	0	(960)
Proceeds from sales of available-for-sale securities	23,402	11,781
Proceeds from calls and maturities of available-for-sale securities	51,651	56,423
Purchase of available-for-sale securities	(85,675)	(63,502)
Redemption of Federal Home Loan Bank of Pittsburgh stock	1,773	648
Purchase of Federal Home Loan Bank of Pittsburgh stock	(825)	0
Net decrease in loans	28,970	3,159
Purchase of premises and equipment	(423)	(1,028)
Proceeds from disposition of equipment	0	454
Purchase of investment in limited liability entity	(147)	(534)
Return of principal on limited liability entity investments	75	47
Proceeds from sale of foreclosed assets	14	858
Net Cash Provided by Investing Activities	18,815	7,346
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase in deposits	(55,337)	11,244
Net increase (decrease) in short-term borrowings	10,820	(708)
Repayments of long-term borrowings	(11,363)	(15,468)
Sale of treasury stock	119	155
Tax benefit from compensation plans	55	30
Common dividends paid	(5,448)	(4,085)
Net Cash Used in Financing Activities	(61,154)	(8,832)
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(24,060)	7,623
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR	55,016	56,815
CASH AND CASH EQUIVALENTS, END OF PERIOD	$30,956	$64,438
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Assets acquired through foreclosure of real estate loans	$78	$521
Accrued purchase of available-for-sale securities	$0	$230
Interest paid	$3,040	$5,117
Income taxes paid	$986	$3,050

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

6

Consolidated Statements of Changes in Stockholders' Equity
Six Months Ended June 30, 2013 and 2012
(In Thousands Except Share and Per Share Data)						Accum. Other
(Unaudited)	Common	Treasury	Common	Paid-in	Retained	Comprehensive	Treasury
	Shares	Shares	Stock	Capital	Earnings	Income	Stock	Total
Six Months Ended June 30, 2013:
Balance, December 31, 2012	12,525,411	251,376	$12,525	$68,622	$94,839	$11,003	($4,203)	$182,786
Net income					9,680			9,680
Other comprehensive loss, net						(8,323)		(8,323)
Cash dividends declared on common
stock, $.50 per share					(6,161)			(6,161)
Shares issued for dividend reinvestment
plan	36,266		36	677				713
Shares issued from treasury related to
exercise of stock options		(6,568)		8			111	119
Restricted stock granted		(37,886)		(633)			633	0
Forfeiture of restricted stock		3,233		54			(54)	0
Stock-based compensation expense				492				492
Tax effect of stock option exercises				(6)				(6)
Tax benefit from employee benefit plan					61			61
Balance, June 30, 2013	12,561,677	210,155	$12,561	$69,214	$98,419	$2,680	($3,513)	$179,361
Six Months Ended June 30, 2012:
Balance, December 31, 2011	12,460,920	305,391	$12,461	$67,568	$82,302	$10,160	($5,106)	$167,385
Net income					11,272			11,272
Other comprehensive income, net						894		894
Cash dividends declared on common
stock, $.38 per share					(4,640)			(4,640)
Shares issued for dividend
reinvestment plan	28,916		29	526				555
Shares issued from treasury related to
exercise of stock options		(10,352)		(19)			174	155
Restricted stock granted		(42,552)		(711)			711	0
Forfeiture of restricted stock		2,032		34			(34)	0
Stock-based compensation expense				411				411
Tax effect of stock option exercises				8				8
Tax benefit from employee benefit plan					22			22
Balance, June 30, 2012	12,489,836	254,519	$12,490	$67,817	$88,956	$11,054	($4,255)	$176,062

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

7

Notes to Unaudited Consolidated Financial Statements

1. BASIS OF INTERIM PRESENTATION

The consolidated financial information included herein, with the exception of the consolidated balance sheet dated December 31, 2012, is unaudited. Such information reflects all adjustments (consisting solely of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations, comprehensive income, cash flows and changes in stockholders’ equity for the interim periods; however, the information does not include all disclosures required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for a complete set of financial statements. Certain 2012 information has been reclassified for consistency with the 2013 presentation.

Operating results reported for the three-month and six-month periods ended June 30, 2013 might not be indicative of the results for the year ending December 31, 2013. The Corporation evaluates subsequent events through the date of filing with the Securities and Exchange Commission.

2. PER SHARE DATA

Net income per share is based on the weighted-average number of shares of common stock outstanding. The following data show the amounts used in computing basic and diluted net income per share. As shown in the table that follows, diluted earnings per share is computed using weighted average common shares outstanding, plus weighted-average common shares available from the exercise of all dilutive stock options, less the number of shares that could be repurchased with the proceeds of stock option exercises based on the average share price of the Corporation's common stock during the period.

		Weighted-
		Average	Earnings
	Net	Common	Per
	Income	Shares	Share
Six Months Ended June 30, 2013
Earnings per share – basic	$9,680,000	12,331,943	$0.78
Dilutive effect of potential common stock
arising from stock options:
Exercise of outstanding stock options		254,900
Hypothetical share repurchase at $19.53		(227,559)
Earnings per share – diluted	$9,680,000	12,359,284	$0.78
Six Months Ended June 30, 2012
Earnings per share – basic	$11,272,000	12,216,339	$0.92
Dilutive effect of potential common stock
arising from stock options:
Exercise of outstanding stock options		204,836
Hypothetical share repurchase at $19.35		(177,872)
Earnings per share – diluted	$11,272,000	12,243,303	$0.92

8

		Weighted-
		Average	Earnings
	Net	Common	Per
	Income	Shares	Share
Quarter Ended June 30, 2013
Earnings per share – basic	$4,974,000	12,342,755	$0.40
Dilutive effect of potential common stock
arising from stock options:
Exercise of outstanding stock options		252,380
Hypothetical share repurchase at $ 19.49		(225,824)
Earnings per share – diluted	$4,974,000	12,369,311	$0.40
Quarter Ended June 30, 2012
Earnings per share – basic	$5,685,000	12,225,808	$0.46
Dilutive effect of potential common stock
arising from stock options:
Exercise of outstanding stock options		137,591
Hypothetical share repurchase at $18.26		(120,566)
Earnings per share – diluted	$5,685,000	12,242,833	$0.46

Stock options that were anti-dilutive were excluded from net income per share calculations. Weighted-average common shares available from anti-dilutive instruments totaled 119,385 shares in the six-month period ended June 30, 2013, 147,509 shares in the six-month period ended June 30, 2012, 116,891 shares in the second quarter 2013 and 210,875 shares in the second quarter 2012.

3. COMPREHENSIVE INCOME

Comprehensive income is the total of (1) net income, and (2) all other changes in equity from non-stockholder sources, which are referred to as other comprehensive income. The components of other comprehensive income, and the related tax effects, are as follows:

(In Thousands)	Before-Tax	Income Tax	Net-of-Tax
	Amount	Effect	Amount
Six Months Ended June 30, 2013:
Unrealized gains on available-for-sale securities:
Unrealized holding losses on available-for-sale securities	($12,179)	$4,261	($7,918)
Reclassification adjustment for (gains) realized in income	(1,259)	441	(818)
Other comprehensive loss on available-for-sale securities	(13,438)	4,702	(8,736)
Unfunded pension and postretirement obligations:
Changes from plan amendments and actuarial gains and losses
included in other comprehensive income	636	(223)	413
Amortization of net transition obligation, prior service cost and net
actuarial loss included in net periodic benefit cost	0	0	0
Other comprehensive gain on unfunded retirement obligations	636	(223)	413
Total other comprehensive loss	($12,802)	$4,479	($8,323)

9

(In Thousands)	Before-Tax	Income Tax	Net-of-Tax
	Amount	Effect	Amount
Six Months Ended June 30, 2012:
Unrealized gains on available-for-sale securities:
Unrealized holding gains on available-for-sale securities	$1,571	($712)	$859
Reclassification adjustment for (gains) realized in income	(201)	70	(131)
Other comprehensive gain on available-for-sale securities	1,370	(642)	728
Unfunded pension and postretirement obligations:
Changes from plan amendments and actuarial gains and losses
included in other comprehensive income	200	(61)	139
Amortization of net transition obligation, prior service cost and net
actuarial loss included in net periodic benefit cost	40	(13)	27
Other comprehensive gain on unfunded retirement obligations	240	(74)	166
Total other comprehensive income	$1,610	($716)	$894
Three Months Ended June 30, 2013:
Unrealized gains on available-for-sale securities:
Unrealized holding losses on available-for-sale securities	($9,732)	$3,406	($6,326)
Reclassification adjustment for (gains) realized in income	(100)	35	(65)
Other comprehensive loss on available-for-sale securities	(9,832)	3,441	(6,391)
Unfunded pension and postretirement obligations:
Changes from plan amendments and actuarial gains and losses
included in other comprehensive income	0	0	0
Amortization of net transition obligation, prior service cost and net
actuarial loss included in net periodic benefit cost	0	0	0
Other comprehensive gain on unfunded retirement obligations	0	0	0
Total other comprehensive loss	($9,832)	$3,441	($6,391)
Three Months Ended June 30, 2012:
Unrealized gains on available-for-sale securities:
Unrealized holding gains on available-for-sale securities	$1,227	($428)	$799
Reclassification adjustment for (gains) realized in income	(203)	71	(132)
Other comprehensive gain on available-for-sale securities	1,024	(357)	667
Unfunded pension and postretirement obligations:
Changes from plan amendments and actuarial gains and losses
included in other comprehensive income	0	0	0
Amortization of net transition obligation, prior service cost and net
actuarial loss included in net periodic benefit cost	20	(7)	13
Other comprehensive gain on unfunded retirement obligations	20	(7)	13
Total other comprehensive income	$1,044	($364)	$680

10

Changes in the components of accumulated other comprehensive income are as follows and are presented net of tax:

(In Thousands)	Unrealized	Unfunded	Accumulated
	Holding Gains	Pension and	Other
	(Losses)	Postretirement	Comprehensive
	on Securities	Obligations	Income
Six Months Ended June 30, 2013
Balance, beginning of period	$11,568	($565)	$11,003
Other comprehensive (loss) income before reclassifications	(7,918)	413	(7,505)
Amounts reclassified from accumulated other
comprehensive income	(818)	0	(818)
Other comprehensive (loss) income	(8,736)	413	(8,323)
Balance, end of period	$2,832	($152)	$2,680
Six Months Ended June 30, 2012
Balance, beginning of period	$10,791	($631)	$10,160
Other comprehensive income before reclassifications	859	139	998
Amounts reclassified from accumulated other
comprehensive income	(131)	27	(104)
Other comprehensive income	728	166	894
Balance, end of period	$11,519	($465)	$11,054
Three Months Ended June 30, 2013
Balance, beginning of period	$9,223	($152)	$9,071
Other comprehensive loss before reclassifications	(6,326)	0	(6,326)
Amounts reclassified from accumulated other
comprehensive income	(65)	0	(65)
Other comprehensive loss	(6,391)	0	(6,391)
Balance, end of period	$2,832	($152)	$2,680
Three Months Ended June 30, 2012
Balance, beginning of period	$10,852	($478)	$10,374
Other comprehensive income before reclassifications	799	0	799
Amounts reclassified from accumulated other
comprehensive income	(132)	13	(119)
Other comprehensive income	667	13	680
Balance, end of period	$11,519	($465)	$11,054

11

Items reclassified out of each component of other comprehensive income are as follows:

For the Six Months Ended June 30, 2013
(In Thousands)
	Reclassified from
Details about Accumulated Other	Accumulated Other	Affected Line Item in the Consolidated
Comprehensive Income Components	Comprehensive Income	Statements of Income
Unrealized gains and losses on available-for-sale
securities	$25	Total other-than-temporary impairment losses on
		available-for-sale securities
	(1,284)	Realized gains on available-for-sale securities, net
	(1,259)	Total before tax
	441	Income tax provision
	(818)	Net of tax
Amortization of defined benefit pension and postretirement items
Prior service cost	(16)	Pensions and other employee benefits
Actuarial loss	16	Pensions and other employee benefits
	0	Total before tax
	0	Income tax provision
	0	Net of tax
Total reclassifications for the period	($818)
For the Three Months Ended June 30, 2013
(In Thousands)
	Reclassified from
Details about Accumulated Other	Accumulated Other	Affected Line Item in the Consolidated
Comprehensive Income Components	Comprehensive Income	Statements of Income
Unrealized gains and losses on available-for-sale
securities	$0	Total other-than-temporary impairment losses on
		available-for-sale securities
	(100)	Realized gains on available-for-sale securities, net
	(100)	Total before tax
	35	Income tax provision
	(65)	Net of tax
Amortization of defined benefit pension and postretirement items
Prior service cost	(8)	Pensions and other employee benefits
Actuarial loss	8	Pensions and other employee benefits
	0	Total before tax
	0	Income tax provision
	0	Net of tax
Total reclassifications for the period	($65)

12

4. CASH AND DUE FROM BANKS

Cash and due from banks at June 30, 2013 and December 31, 2012 include the following:

(In thousands)	June 30,	Dec. 31,
	2013	2012
Cash and cash equivalents	$30,956	$55,016
Certificates of deposit	4,820	4,820
Total cash and due from banks	$35,776	$59,836

Certificates of deposit are issues by U.S. banks with original maturities greater than three months. Each certificate of deposit is fully FDIC-insured. The Corporation maintains cash and cash equivalents with certain financial institutions in excess of the FDIC insurance limit.

The Corporation is required to maintain reserves against deposit liabilities in the form of cash and balances with the Federal Reserve Bank of Philadelphia. Required reserves fluctuate based on deposit levels and are adjusted biweekly. Required reserves were $14,204,000 at June 30, 2013 and $14,128,000 at December 31, 2012.

5. FAIR VALUE MEASUREMENTS AND FAIR VALUES OF FINANCIAL INSTRUMENTS

The Corporation measures certain assets at fair value. Fair value is defined as the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. FASB ASC topic 820, “Fair Value Measurements and Disclosures” establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The hierarchy prioritizes the inputs used in determining valuations into three levels. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows:

Level 1 – Fair value is based on unadjusted quoted prices in active markets that are accessible to the Corporation for identical assets. These generally provide the most reliable evidence and are used to measure fair value whenever available.

Level 2 – Fair value is based on significant inputs, other than Level 1 inputs, that are observable either directly or indirectly for substantially the full term of the asset through corroboration with observable market data. Level 2 inputs include quoted market prices in active markets for similar assets, quoted market prices in markets that are not active for identical or similar assets and other observable inputs.

Level 3 – Fair value is based on significant unobservable inputs. Examples of valuation methodologies that would result in Level 3 classification include option pricing models, discounted cash flows and other similar techniques.

The Corporation monitors and evaluates available data relating to fair value measurements on an ongoing basis and recognizes transfers among the levels of the fair value hierarchy as of the date of an event or change in circumstances that affects the valuation method chosen. Examples of such changes may include the market for a particular asset becoming active or inactive, changes in the availability of quoted prices, or changes in the availability of other market data.

13

At June 30, 2013 and December 31, 2012, assets measured at fair value and the valuation methods used are as follows:

		June 30, 2013
	Quoted Prices	Other
	in Active	Observable	Unobservable	Total
	Markets	Inputs	Inputs	Fair
(In Thousands)	(Level 1)	(Level 2)	(Level 3)	Value
Recurring fair value measurements
AVAILABLE-FOR-SALE SECURITIES:
Obligations of U.S. Government agencies	$0	$47,970	$0	$47,970
Obligations of states and political subdivisions:
Tax-exempt	0	134,483	0	134,483
Taxable	0	29,689	0	29,689
Mortgage-backed securities	0	65,625	0	65,625
Collateralized mortgage obligations,
Issued by U.S. Government agencies	0	182,924	0	182,924
Collateralized debt obligations	0	660	0	660
Total debt securities	0	461,351	0	461,351
Marketable equity securities	8,717	0	0	8,717
Total available-for-sale securities	8,717	461,351	0	470,068
Servicing rights	0	0	850	850
Total recurring fair value measurements	$8,717	$461,351	$850	$470,918
Nonrecurring fair value measurements
Impaired loans with a valuation allowance	$0	$0	$1,874	$1,874
Valuation allowance	0	0	(762)	(762)
Impaired loans, net	0	0	1,112	1,112
Foreclosed assets held for sale	0	0	890	890
Total nonrecurring fair value measurements	$0	$0	$2,002	$2,002

		December 31, 2012
	Quoted Prices	Other
	in Active	Observable	Unobservable	Total
	Markets	Inputs	Inputs	Fair
(In Thousands)	(Level 1)	(Level 2)	(Level 3)	Value
Recurring fair value measurements
AVAILABLE-FOR-SALE SECURITIES:
Obligations of U.S. Government agencies	$0	$31,217	$0	$31,217
Obligations of states and political subdivisions:
Tax-exempt	0	137,020	0	137,020
Taxable	0	24,817	0	24,817
Mortgage-backed securities	0	80,196	0	80,196
Collateralized mortgage obligations,
Issued by U.S. Government agencies	0	183,510	0	183,510
Trust preferred securities issued by individual institutions	0	5,171	0	5,171
Collateralized debt obligations:
Pooled trust preferred securities - senior tranches	0	0	1,613	1,613
Other collateralized debt obligations	0	660	0	660
Total debt securities	0	462,591	1,613	464,204
Marketable equity securities	8,373	0	0	8,373
Total available-for-sale securities	8,373	462,591	1,613	472,577
Servicing rights	0	0	605	605
Total recurring fair value measurements	$8,373	$462,591	$2,218	$473,182
Nonrecurring fair value measurements
Impaired loans with a valuation allowance	$0	$0	$2,710	$2,710
Valuation allowance	0	0	(623)	(623)
Impaired loans, net	0	0	2,087	2,087
Foreclosed assets held for sale	0	0	879	879
Total nonrecurring fair value measurements	$0	$0	$2,966	$2,966

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Loans are classified as impaired when, based on current information and events, it is probable that the Corporation will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Foreclosed assets held for sale consist of real estate acquired by foreclosure. For impaired commercial loans secured by real estate and foreclosed assets held for sale, the nonrecurring estimates of fair value are determined primarily using values from third-party appraisals less discounts based on the Corporation’s experience in selling similar properties and estimated selling costs.

Management’s evaluation and selection of valuation techniques and the unobservable inputs used in determining the fair values of assets valued using Level 3 methodologies include sensitive assumptions. Other market participants might use substantially different assumptions, which could result in calculations of fair values that would be substantially different than the amount calculated by management. At June 30, 2013 and December 31, 2012, quantitative information regarding significant techniques and inputs used for assets measured on a recurring basis using unobservable inputs (Level 3 methodologies) are as follows:

	Fair Value at
	6/30/13	Valuation	Unobservable	Method or Value As of
Asset	(In Thousands)	Technique	Input(s)	6/30/13
Servicing rights	$850	Discounted cash flow	Discount rate	12.00%	Rate used through modeling period
			Loan prepayment speeds	245.00%	Weighted-average PSA
			Servicing fees	0.25%	of loan balances
				5.00%	of payments are late
				5.00%	late fees assessed
				$1.94	Miscellaneous fees per account per month
			Servicing costs	$6.00	Monthly servicing cost per account
				$24.00	Additional monthly servicing cost per loan on loans more than 30 days delinquent
				1.50%	of loans more than 30 days delinquent
				3.00%	annual increase in servicing costs

	Fair Value at
	12/31/12	Valuation	Unobservable	Method or Value As of
Asset	(In Thousands)	Technique	Input(s)	12/31/12
Pooled trust preferred securities - senior tranches	$1,613	Discounted cash flow	Issuer defaults	50.26%	Actual deferrals and defaults as % of outstanding collateral
				19.73%	Expected additional net deferrals and defaults as % of performing collateral
			Issuer prepayments	41.24%	Expected issuer prepayments as % of performing collateral
			Discount rate	11.70%	Implied 7.57% discount rate at 12/31/07 plus 4.13% spread for credit and liquidity risk
Servicing rights	605	Discounted cash flow	Discount rate	12.00%	Rate used through modeling period
			Loan prepayment speeds	288.00%	Weighted-average PSA
			Servicing fees	0.25%	of loan balances
				5.00%	of payments are late
				5.00%	late fees assessed
				$1.94	Miscellaneous fees per account per month
			Servicing costs	$6.00	Monthly servicing cost per account
				$24.00	Additional monthly servicing cost per loan on loans more than 30 days delinquent
				1.50%	of loans more than 30 days delinquent
				3.00%	annual increase in servicing costs

The fair value of servicing rights is affected by expected future interest rates. Increases (decreases) in future expected interest rates tend to increase (decrease) the fair value of the Corporation’s servicing rights because of changes in expected prepayment behavior by the borrowers on the underlying loans.

15

Following is a reconciliation of activity for Level 3 assets measured at fair value on a recurring basis:

	Three Months Ended June 30, 2013				Six Months Ended June 30, 2013
	Pooled Trust	Pooled Trust			Pooled Trust	Pooled Trust
	Preferred	Preferred			Preferred	Preferred
	Securities -	Securities -			Securities -	Securities -
(In Thousands)	Senior	Mezzanine	Servicing		Senior	Mezzanine	Servicing
	Tranches	Tranches	Rights	Total	Tranches	Tranches	Rights	Total
Balance, beginning of period	$1,659	$0	$738	$2,397	$1,613	$0	$605	$2,218
Issuances of servicing rights	0	0	150	150	0	0	316	316
Accretion and amortization, net	(1)	0	0	(1)	(2)	0	0	(2)
Proceeds from sales and calls	(1,636)	0	0	(1,636)	(1,636)	(571)	0	(2,207)
Realized gains, net	23	0	0	23	23	571	0	594
Unrealized losses included in earnings	0	0	(38)	(38)	0	0	(71)	(71)
Unrealized (losses) gains included in
other comprehensive income	(45)	0	0	(45)	2	0	0	2
Balance, end of period	$0	$0	$850	$850	$0	$0	$850	$850

	Three Months Ended June 30, 2012				Six Months Ended June 30, 2012
	Pooled Trust	Pooled Trust			Pooled Trust	Pooled Trust
	Preferred	Preferred			Preferred	Preferred
	Securities -	Securities -			Securities -	Securities -
	Senior	Mezzanine	Servicing		Senior	Mezzanine	Servicing
	Tranches	Tranches	Rights	Total	Tranches	Tranches	Rights	Total
Balance, beginning of period	$4,638	$782	$409	$5,829	$4,638	$730	$375	$5,743
Issuances of servicing rights	0	0	74	74	0	0	129	129
Accretion and amortization, net	(2)	0	0	(2)	(5)	0	0	(5)
Proceeds from sales and calls	(2,515)	(27)	0	(2,542)	(2,515)	(54)	0	(2,569)
Realized gains, net	40	27	0	67	40	54	0	94
Unrealized losses included in earnings	0	0	(23)	(23)	0	0	(44)	(44)
Unrealized gains included in
other comprehensive income	225	364	0	589	228	416	0	644
Balance, end of period	$2,386	$1,146	$460	$3,992	$2,386	$1,146	$460	$3,992

No other-than-temporary impairment losses on securities valued using Level 3 methodologies were recorded in 2013 or 2012.

Certain of the Corporation’s financial instruments are not measured at fair value in the consolidated financial statements. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. Certain financial instruments and all nonfinancial instruments are excluded from disclosure requirements. Therefore, the aggregate fair value amounts presented may not represent the underlying fair value of the Corporation.

The Corporation used the following methods and assumptions in estimating fair value disclosures for financial instruments:

CASH AND CASH EQUIVALENTS - The carrying amounts of cash and short-term instruments approximate fair values.

CERTIFICATES OF DEPOSIT - Fair values for certificates of deposit, included in cash and due from banks in the consolidated balance sheet, are based on quoted market prices for certificates of similar remaining maturities.

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SECURITIES - Fair values for securities, excluding restricted equity securities, are based on quoted market prices or other methods as described above. The carrying value of restricted equity securities approximates fair value based on applicable redemption provisions.

LOANS HELD FOR SALE - Fair values of loans held for sale are determined based on applicable sale prices available under the Federal Home Loan Banks’ MPF Xtra program.

LOANS - Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as commercial, commercial real estate, residential mortgage and other consumer. Each loan category is further segmented into fixed and adjustable rate interest terms and by performing and nonperforming categories. The fair value of performing loans is calculated by discounting contractual cash flows, adjusted for estimated prepayments based on historical experience, using estimated market discount rates that reflect the credit and interest rate risk inherent in the loans. Fair value of nonperforming loans is based on recent appraisals or estimates prepared by the Corporation’s lending officers.

SERVICING RIGHTS - The fair value of servicing rights, included in other assets in the consolidated balance sheet, is determined through a discounted cash flow valuation. Significant inputs include expected net servicing income, the discount rate and the expected prepayment speeds of the underlying loans.

DEPOSITS - The fair value of deposits with no stated maturity, such as noninterest-bearing demand deposits, savings, money market and interest checking accounts, is (by definition) equal to the amount payable at June 30, 2013 and December 31, 2012. The fair value of time deposits, such as certificates of deposit and Individual Retirement Accounts, is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar remaining maturities. The fair value estimates of deposits do not include the benefit that results from the low-cost funding provided by the deposit liabilities compared to the cost of borrowing funds in the market, commonly referred to as the core deposit intangible.

BORROWED FUNDS - The fair value of borrowings is estimated using discounted cash flow analyses based on rates currently available to the Corporation for similar types of borrowing arrangements.

ACCRUED INTEREST - The carrying amounts of accrued interest receivable and payable approximate fair values.

OFF-BALANCE SHEET COMMITMENTS - The Corporation has commitments to extend credit and has issued standby letters of credit. Standby letters of credit are conditional guarantees of performance by a customer to a third party. Estimates of the fair value of these off-balance sheet items were not made because of the short-term nature of these arrangements and the credit standing of the counterparties.

The estimated fair values, and related carrying amounts, of the Corporation’s financial instruments are as follows:

(In Thousands)	Valuation	June 30, 2013		December 31, 2012
	Method(s)	Carrying	Fair	Carrying	Fair
	Used	Amount	Value	Amount	Value
Financial assets:
Cash and cash equivalents	Level 1	$30,956	$30,956	$55,016	$55,016
Certificates of deposit	Level 2	4,820	4,875	4,820	4,860
Available-for-sale securities	See Above	470,068	470,068	472,577	472,577
Restricted equity securities (included in Other Assets)	Level 2	3,894	3,894	4,842	4,842
Loans held for sale	Level 1	725	725	2,545	2,545
Loans, net	Level 3	647,772	650,503	677,053	693,047
Accrued interest receivable	Level 1	4,180	4,180	4,281	4,281
Servicing rights	Level 3	850	850	605	605
Financial liabilities:
Deposits with no stated maturity	Level 1	672,916	672,916	693,687	693,687
Time deposits	Level 3	277,853	279,595	312,419	315,005
Short-term borrowings	Level 3	16,387	16,344	5,567	5,527
Long-term borrowings	Level 3	73,472	82,004	83,812	96,032
Accrued interest payable	Level 1	112	112	137	137

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6. SECURITIES

Amortized cost and fair value of available-for-sale securities at June 30, 2013 and December 31, 2012 are summarized as follows:

		June 30, 2013
		Gross	Gross
		Unrealized	Unrealized
	Amortized	Holding	Holding	Fair
(In Thousands)	Cost	Gains	Losses	Value
Obligations of U.S. Government agencies	$49,016	$412	($1,458)	$47,970
Obligations of states and political subdivisions:
Tax-exempt	132,525	3,644	(1,686)	134,483
Taxable	29,976	273	(560)	29,689
Mortgage-backed securities	63,776	2,108	(259)	65,625
Collateralized mortgage obligations,
Issued by U.S. Government agencies	183,792	1,599	(2,467)	182,924
Collateralized debt obligations	660	0	0	660
Total debt securities	459,745	8,036	(6,430)	461,351
Marketable equity securities	5,965	2,752	0	8,717
Total	$465,710	$10,788	($6,430)	$470,068

		December 31, 2012
		Gross	Gross
		Unrealized	Unrealized
	Amortized	Holding	Holding	Fair
(In Thousands)	Cost	Gains	Losses	Value
Obligations of U.S. Government agencies	$30,695	$572	($50)	$31,217
Obligations of states and political subdivisions:
Tax-exempt	130,168	7,030	(178)	137,020
Taxable	24,426	462	(71)	24,817
Mortgage-backed securities	76,368	3,828	0	80,196
Collateralized mortgage obligations,
Issued by U.S. Government agencies	179,770	3,887	(147)	183,510
Trust preferred securities issued by individual institutions	5,167	4	0	5,171
Collateralized debt obligations:
Pooled trust preferred securities - senior tranches	1,615	0	(2)	1,613
Other collateralized debt obligations	660	0	0	660
Total debt securities	448,869	15,783	(448)	464,204
Marketable equity securities	5,912	2,500	(39)	8,373
Total	$454,781	$18,283	($487)	$472,577

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The following table presents gross unrealized losses and fair value of available-for-sale securities with unrealized loss positions that are not deemed to be other-than-temporarily impaired, aggregated by length of time that individual securities have been in a continuous unrealized loss position at June 30, 2013 and December 31, 2012:

June 30, 2013	Less Than 12 Months		12 Months or More		Total
(In Thousands)	Fair	Unrealized	Fair	Unrealized	Fair	Unrealized
	Value	Losses	Value	Losses	Value	Losses
Obligations of U.S. Government agencies	$27,497	($1,458)	$0	$0	$27,497	($1,458)
Obligations of states and political subdivisions:
Tax-exempt	41,057	(1,529)	2,455	(157)	43,512	(1,686)
Taxable	15,455	(560)	0	0	15,455	(560)
Mortgage-backed securities	9,737	(259)	0	0	9,737	(259)
Collateralized mortgage obligations,
Issued by U.S. Government agencies	88,633	(2,466)	352	(1)	88,985	(2,467)
Total temporarily impaired available-for-sale securities	$182,379	($6,272)	$2,807	($158)	$185,186	($6,430)

December 31, 2012	Less Than 12 Months		12 Months or More		Total
(In Thousands)	Fair	Unrealized	Fair	Unrealized	Fair	Unrealized
	Value	Losses	Value	Losses	Value	Losses
Obligations of U.S. Government agencies	$10,006	($50)	$0	$0	$10,006	($50)
Obligations of states and political subdivisions:
Tax-exempt	7,082	(92)	3,285	(86)	10,367	(178)
Taxable	4,149	(71)	0	0	4,149	(71)
Collateralized mortgage obligations,
Issued by U.S. Government agencies	16,755	(146)	454	(1)	17,209	(147)
Collateralized debt obligations,
Pooled trust preferred securities - senior tranches	0	0	1,613	(2)	1,613	(2)
Total debt securities	37,992	(359)	5,352	(89)	43,344	(448)
Marketable equity securities	95	(6)	67	(33)	162	(39)
Total temporarily impaired available-for-sale securities	$38,087	($365)	$5,419	($122)	$43,506	($487)

Gains and losses from available-for-sale securities were as follows:

(In Thousands)	3 Months Ended		6 Months Ended
	June 30,	June 30,	June 30,	June 30,
	2013	2012	2013	2012
Gross realized gains from sales	$100	$252	$1,402	$317
Gross realized losses from sales	0	(49)	(118)	(49)
Losses from OTTI impairment	0	0	(25)	(67)
Net realized gains	$100	$203	$1,259	$201

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The amortized cost and fair value of available-for-sale debt securities by contractual maturity are shown in the following table as of June 30, 2013. Actual maturities may differ from contractual maturities because counterparties may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized	Fair
(In Thousands)	Cost	Value
Due in one year or less	$28,536	$28,874
Due from one year through five years	42,777	43,532
Due from five years through ten years	76,916	75,043
Due after ten years	63,948	65,353
Subtotal	212,177	212,802
Mortgage-backed securities	63,776	65,625
Collateralized mortgage obligations,
Issued by U.S. Government agencies	183,792	182,924
Total	$459,745	$461,351

The Corporation’s mortgage-backed securities and collateralized mortgage obligations have stated maturities that may differ from actual maturities due to borrowers’ ability to prepay obligations. Cash flows from such investments are dependent upon the performance of the underlying mortgage loans and are generally influenced by the level of interest rates. In the table above, mortgage-backed securities and collateralized mortgage obligations are shown in one period.

Investment securities carried at $310,121,000 at June 30, 2013 and $293,310,000 at December 31, 2012 were pledged as collateral for public deposits, trusts and certain other deposits as provided by law. See Note 8 for information concerning securities pledged to secure borrowing arrangements.

Management evaluates securities for other-than-temporary impairment (OTTI) at least on a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) whether the Corporation intends to sell the security or more likely than not will be required to sell the security before its anticipated recovery.

A summary of information management considered in evaluating debt and equity securities for OTTI at June 30, 2013 is provided below.

Debt Securities

At June 30, 2013, management performed an assessment for possible OTTI of the Corporation’s debt securities on an issue-by-issue basis, relying on information obtained from various sources, including publicly available financial data, ratings by external agencies, brokers and other sources. The extent of individual analysis applied to each security depended on the size of the Corporation’s investment, as well as management’s perception of the credit risk associated with each security. Based on the results of the assessment, management believes impairment of debt securities, including municipal bonds with no external ratings, at June 30, 2013 to be temporary.

The credit rating agencies have withdrawn their ratings on numerous municipal bonds held by the Corporation. At June 30, 2013, the total amortized cost basis of municipal bonds with no external credit ratings was $20,861,000, with an aggregate unrealized loss of $562,000. At the time of purchase, each of these bonds was considered investment grade and had been rated by at least one credit rating agency. The bonds for which the ratings were removed were almost all insured by an entity that has reported significant financial problems and declines in its regulatory capital ratios, and most of the ratings were removed in the fourth quarter 2009. However, the insurance remains in effect on the bonds, and none of the affected municipal bonds has failed to make a scheduled payment.

The Corporation recognized OTTI charges in 2009 and 2010 related to its holding of a trust preferred security issued by Carolina First Mortgage Loan Trust, a subsidiary of The South Financial Group, Inc. In the fourth quarter 2010, The Toronto-Dominion Bank acquired The South Financial Group, Inc. After the acquisition, The Toronto-Dominion Bank made a payment for the full amount of previously deferred interest and resumed quarterly payments on the security. The Corporation recognized a material change in the expected cash flows in the fourth quarter 2010 and began recording accretion income (included in interest income) to offset the previous OTTI charges as an adjustment to the security’s yield over its remaining life. The security had a face amount of $2,000,000 and matured in May 2012. Because the security matured, the Corporation recorded no accretion income in the three-month and six-month periods ended June 30, 2013. The Corporation recorded accretion income (included in interest income) totaling $398,000 in the three-month period ended June 30, 2012 and $855,000 in the six-month period ended June 30, 2012. For the year ended December 31, 2012, the Corporation recorded accretion income totaling $855,000.

20

During the first quarter 2013, management sold the Corporation’s holding of the mezzanine tranche of ALESCO Preferred Funding IX, Ltd. for aggregate pretax proceeds of $571,000, which was recorded as a gain on the sale of securities. This security had an original face amount of $3,000,000. In 2009, the Corporation recognized other-than-temporary impairment on this security and wrote the carrying value down to zero.

During the second quarter 2013, the Corporation’s holding of the senior tranche of MMCAPS Funding I, Ltd., a pooled trust preferred security, was fully redeemed primarily due to prepayments of debt by the underlying issuers in the pool. The Corporation received aggregate pretax proceeds of $1,636,000, which included a realized gain of $23,000. Also during the second quarter 2013, Astoria Financial Corporation redeemed (called) the trust preferred security held by the Corporation. The Corporation received aggregate pretax proceeds of $5,171,000, which included a realized gain of $13,000.

Equity Securities

The Corporation’s marketable equity securities at June 30, 2013 and December 31, 2012 consisted exclusively of stocks of banking companies. In the first quarter 2013, the Corporation recognized an other-than-temporary impairment loss related to a bank stock of $25,000. In the first quarter 2012, the Corporation recognized an other-than-temporary impairment loss related to a bank stock of $67,000. Management’s decisions followed evaluations of the issuers’ published financial results in which management determined that the recovery of the Corporation’s cost basis within the foreseeable future was uncertain. As a result of this determination, the Corporation recognized impairment losses to write each stock down to the most recent trade price at the end of the quarter in which each loss was recognized. At June 30, 2013, none of the Corporation’s bank stock holdings were impaired.

Realized gains from sales of bank stocks totaled $57,000 in the three-month period ended June 30, 2013 and $578,000 in the six-month period ended June 30, 2013. The Corporation did not sell any bank stocks or realize any gains or losses from sales of bank stocks during the first six months of 2012.

C&N Bank is a member of the Federal Home Loan Bank of Pittsburgh (FHLB-Pittsburgh), which is one of 12 regional Federal Home Loan Banks. As a member, C&N Bank is required to purchase and maintain stock in FHLB-Pittsburgh. There is no active market for FHLB-Pittsburgh stock, and it must ordinarily be redeemed by FHLB-Pittsburgh in order to be liquidated. C&N Bank’s investment in FHLB-Pittsburgh stock, included in Other Assets in the consolidated balance sheet, was $3,764,000 at June 30, 2013 and $4,712,000 at December 31, 2012. The Corporation evaluated its holding of FHLB-Pittsburgh stock for impairment and deemed the stock to not be impaired at June 30, 2013 and December 31, 2012. In making this determination, management concluded that recovery of total outstanding par value, which equals the carrying value, is expected. The decision was based on review of financial information that FHLB-Pittsburgh has made publicly available.

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7. LOANS

The loans receivable portfolio is segmented into residential mortgage, commercial and consumer loans. The residential mortgage segment includes the following classes: first and junior lien residential mortgages, home equity lines of credit and residential construction loans. The most significant classes of commercial loans are commercial loans secured by real estate, non-real estate secured commercial and industrial loans, loans to political subdivisions, commercial construction and land loans, and loans secured by farmland.

Loans outstanding at June 30, 2013 and December 31, 2012 are summarized as follows:

Summary of Loans by Type
(In Thousands)	June 30,	Dec. 31,
	2013	2012
Residential mortgage:
Residential mortgage loans - first liens	$304,806	$311,627
Residential mortgage loans - junior liens	24,797	26,748
Home equity lines of credit	33,076	33,017
1-4 Family residential construction	14,895	12,842
Total residential mortgage	377,574	384,234
Commercial:
Commercial loans secured by real estate	155,168	158,413
Commercial and industrial	45,812	48,442
Political subdivisions	24,033	31,789
Commercial construction and land	20,189	28,200
Loans secured by farmland	11,134	11,403
Multi-family (5 or more) residential	6,397	6,745
Agricultural loans	3,061	3,053
Other commercial loans	543	362
Total commercial	266,337	288,407
Consumer	11,059	11,269
Total	654,970	683,910
Less: allowance for loan losses	(7,198)	(6,857)
Loans, net	$647,772	$677,053

The Corporation grants loans to individuals as well as commercial and tax-exempt entities. Commercial, residential and personal loans are made to customers geographically concentrated in the Pennsylvania and New York counties that comprise the market serviced by Citizens & Northern Bank. Although the Corporation has a diversified loan portfolio, a significant portion of its debtors’ ability to honor their contracts is dependent on the local economic conditions within the region. There is no concentration of loans to borrowers engaged in similar businesses or activities that exceed 10% of total loans at either June 30, 2013 or December 31, 2012.

The Corporation maintains an allowance for loan losses that represents management’s estimate of the losses inherent in the loan portfolio as of the balance sheet date and recorded as a reduction of the investment in loans. The allowance for loan losses is maintained at a level considered adequate to provide for losses that can be reasonably anticipated. Management performs a quarterly evaluation of the adequacy of the allowance. The allowance is based on the Corporation’s past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision as more information becomes available. In the process of evaluating the loan portfolio, management also considers the Corporation’s exposure to losses from unfunded loan commitments. As of June 30, 2013 and December 31, 2012, management determined that no allowance for credit losses related to unfunded loan commitments was required.

22

Transactions within the allowance for loan losses, summarized by segment and class, for the three-month and six-month periods ended June 30, 2013 and 2012 were as follows:

Six Months Ended June 30, 2013
(In Thousands)	Dec. 31,				June 30,
	2012			Provision	2013
	Balance	Charge-offs	Recoveries	(Credit)	Balance
Allowance for Loan Losses:
Residential mortgage:
Residential mortgage loans - first liens	$2,619	($65)	$11	$306	$2,871
Residential mortgage loans - junior liens	247	0	0	(18)	229
Home equity lines of credit	255	0	0	3	258
1-4 Family residential construction	96	(11)	0	94	179
Total residential mortgage	3,217	(76)	11	385	3,537
Commercial:
Commercial loans secured by real estate	1,930	0	293	(279)	1,944
Commercial and industrial	581	(110)	2	155	628
Political subdivisions	0	0	0	0	0
Commercial construction and land	234	(4)	0	28	258
Loans secured by farmland	129	0	0	(8)	121
Multi-family (5 or more) residential	67	0	0	(3)	64
Agricultural loans	27	0	0	1	28
Other commercial loans	3	0	0	2	5
Total commercial	2,971	(114)	295	(104)	3,048
Consumer	228	(55)	31	11	215
Unallocated	441	0	0	(43)	398
Total Allowance for Loan Losses	$6,857	($245)	$337	$249	$7,198

Six Months Ended June 30, 2012
(In Thousands)	Dec. 31,				June 30,
	2011			Provision	2012
	Balance	Charge-offs	Recoveries	(Credit)	Balance
Allowance for Loan Losses:
Residential mortgage:
Residential mortgage loans - first liens	$3,026	($188)	$18	$32	$2,888
Residential mortgage loans - junior liens	266	0	0	(12)	254
Home equity lines of credit	231	0	0	14	245
1-4 Family residential construction	79	0	0	1	80
Total residential mortgage	3,602	(188)	18	35	3,467
Commercial:
Commercial loans secured by real estate	2,004	0	0	(28)	1,976
Commercial and industrial	946	(35)	5	(204)	712
Political subdivisions	0	0	0	0	0
Commercial construction and land	267	0	0	339	606
Loans secured by farmland	126	0	0	(9)	117
Multi-family (5 or more) residential	66	0	0	(2)	64
Agricultural loans	27	0	0	2	29
Other commercial loans	5	0	0	0	5
Total commercial	3,441	(35)	5	98	3,509
Consumer	228	(68)	35	50	245
Unallocated	434	0	0	2	436
Total Allowance for Loan Losses	$7,705	($291)	$58	$185	$7,657

23

Three Months Ended June 30, 2013	Mar. 31,				June 30,
(In Thousands)	2013			Provision	2013
	Balance	Charge-offs	Recoveries	(Credit)	Balance
Allowance for Loan Losses:
Residential mortgage:
Residential mortgage loans - first liens	$2,786	($13)	$11	$87	$2,871
Residential mortgage loans - junior liens	236	0	0	(7)	229
Home equity lines of credit	251	0	0	7	258
1-4 Family residential construction	145	(11)	0	45	179
Total residential mortgage	3,418	(24)	11	132	3,537
Commercial:
Commercial loans secured by real estate	1,906	0	43	(5)	1,944
Commercial and industrial	597	(2)	1	32	628
Political subdivisions	0	0	0	0	0
Commercial construction and land	368	(4)	0	(106)	258
Loans secured by farmland	127	0	0	(6)	121
Multi-family (5 or more) residential	65	0	0	(1)	64
Agricultural loans	26	0	0	2	28
Other commercial loans	2	0	0	3	5
Total commercial	3,091	(6)	44	(81)	3,048
Consumer	211	(22)	11	15	215
Unallocated	398	0	0	0	398
Total Allowance for Loan Losses	$7,118	($52)	$66	$66	$7,198

Three Months Ended June 30, 2012
(In Thousands)	Mar. 31,				June 30,
	2012			Provision	2012
	Balance	Charge-offs	Recoveries	(Credit)	Balance
Allowance for Loan Losses:
Residential mortgage:
Residential mortgage loans - first liens	$2,953	($50)	$18	($33)	$2,888
Residential mortgage loans - junior liens	260	0	0	(6)	254
Home equity lines of credit	232	0	0	13	245
1-4 Family residential construction	62	0	0	18	80
Total residential mortgage	3,507	(50)	18	(8)	3,467
Commercial:
Commercial loans secured by real estate	1,920	0	0	56	1,976
Commercial and industrial	762	(35)	4	(19)	712
Political subdivisions	0	0	0	0	0
Commercial construction and land	325	0	0	281	606
Loans secured by farmland	121	0	0	(4)	117
Multi-family (5 or more) residential	63	0	0	1	64
Agricultural loans	27	0	0	2	29
Other commercial loans	3	0	0	2	5
Total commercial	3,221	(35)	4	319	3,509
Consumer	206	(30)	13	56	245
Unallocated	436	0	0	0	436
Total Allowance for Loan Losses	$7,370	($115)	$35	$367	$7,657

24

In the evaluation of the loan portfolio, management determines two major components for the allowance for loan losses – (1) a specific component based on an assessment of certain larger relationships, mainly commercial purpose loans, on a loan-by-loan basis; and (2) a general component for the remainder of the portfolio based on a collective evaluation of pools of loans with similar risk characteristics. The general component is assigned to each pool of loans based on both historical net charge-off experience, and an evaluation of certain qualitative factors. An unallocated component is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the above methodologies for estimating specific and general losses in the portfolio.

In determining the larger loan relationships for detailed assessment under the specific allowance component, the Corporation uses an internal risk rating system. Under the risk rating system, the Corporation classifies problem or potential problem loans as “Special Mention,” “Substandard,” or “Doubtful” on the basis of currently existing facts, conditions and values. Substandard loans include those characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected. Loans classified as Doubtful have all the weaknesses inherent in those classified as Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Loans that do not currently expose the Corporation to sufficient risk to warrant classification as Substandard or Doubtful, but possess weaknesses that deserve management’s close attention, are deemed to be Special Mention. Risk ratings are updated any time that conditions or the situation warrants. Loans not classified are included in the “Pass” column in the table below.

The following tables summarize the aggregate credit quality classification of outstanding loans by risk rating as of June 30, 2013 and December 31, 2012:

June 30, 2013:		Special
(In Thousands)	Pass	Mention	Substandard	Doubtful	Total
Residential Mortgage:
Residential mortgage loans - first liens	$289,357	$2,440	$12,821	$188	$304,806
Residential mortgage loans - junior liens	23,608	406	783	0	24,797
Home equity lines of credit	32,623	96	357	0	33,076
1-4 Family residential construction	14,823	0	72	0	14,895
Total residential mortgage	360,411	2,942	14,033	188	377,574
Commercial:
Commercial loans secured by real estate	143,139	7,109	4,603	317	155,168
Commercial and Industrial	38,739	3,683	3,025	365	45,812
Political subdivisions	23,928	105	0	0	24,033
Commercial construction and land	18,744	225	472	748	20,189
Loans secured by farmland	8,845	767	1,490	32	11,134
Multi-family (5 or more) residential	6,020	329	48	0	6,397
Agricultural loans	2,969	36	56	0	3,061
Other commercial loans	543	0	0	0	543
Total commercial	242,927	12,254	9,694	1,462	266,337
Consumer	10,836	11	212	0	11,059
Totals	$614,174	$15,207	$23,939	$1,650	$654,970

25

December 31, 2012:		Special
(In Thousands)	Pass	Mention	Substandard	Doubtful	Total
Residential Mortgage:
Residential mortgage loans - first liens	$295,929	$3,633	$11,872	$193	$311,627
Residential mortgage loans - junior liens	25,394	420	934	0	26,748
Home equity lines of credit	32,374	130	513	0	33,017
1-4 Family residential construction	12,759	0	83	0	12,842
Total residential mortgage	366,456	4,183	13,402	193	384,234
Commercial:
Commercial loans secured by real estate	146,381	6,994	5,038	0	158,413
Commercial and Industrial	41,237	3,030	3,810	365	48,442
Political subdivisions	31,679	110	0	0	31,789
Commercial construction and land	26,744	231	477	748	28,200
Loans secured by farmland	9,102	751	1,517	33	11,403
Multi-family (5 or more) residential	6,394	342	9	0	6,745
Agricultural loans	2,963	28	62	0	3,053
Other commercial loans	362	0	0	0	362
Total commercial	264,862	11,486	10,913	1,146	288,407
Consumer	11,053	12	203	1	11,269
Totals	$642,371	$15,681	$24,518	$1,340	$683,910

The general component of the allowance for loan losses covers pools of loans including commercial loans not considered individually impaired, as well as smaller balance homogeneous classes of loans, such as residential real estate, home equity lines of credit and other consumer loans. Accordingly, the Corporation generally does not separately identify individual consumer and residential loans for impairment disclosures, unless such loans are subject to a restructuring agreement. The pools of loans are evaluated for loss exposure based upon three-year average historical net charge-off rates for each loan class, adjusted for qualitative factors. Qualitative risk factors (described in the following paragraph) are evaluated for the impact on each of the three segments (residential mortgage, commercial and consumer) within the loan portfolio. Each qualitative factor is assigned a value to reflect improving, stable or declining conditions based on management’s judgment using relevant information available at the time of the evaluation. The adjustment for qualitative factors is applied as an increase or decrease to the three-year average net charge-off rate to each loan class within each segment.

The qualitative factors used in the general component calculations are designed to address credit risk characteristics associated with each segment. The Corporation’s credit risk associated with all of the segments is significantly impacted by these factors, which include economic conditions within its market area, the Corporation’s lending policies, changes or trends in the portfolio, risk profile, competition, regulatory requirements and other factors. Further, the residential mortgage segment is significantly affected by the values of residential real estate that provide collateral for the loans. The majority of the Corporation’s commercial segment loans (approximately 72% at June 30, 2013) is secured by real estate, and accordingly, the Corporation’s risk for the commercial segment is significantly affected by commercial real estate values. The consumer segment includes a wide mix of loans for different purposes, primarily secured loans, including loans secured by motor vehicles, manufactured housing and other types of collateral.

Loans are classified as impaired, when, based on current information and events, it is probable that the Corporation will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for commercial loans, by the fair value of the collateral (if the loan is collateral dependent), by future cash flows discounted at the loan’s effective rate or by the loan’s observable market price.

26

The scope of loans evaluated individually for impairment include all loan relationships greater than $200,000 for which there is at least one extension of credit graded Special Mention, Substandard or Doubtful. Also, all loans classified as troubled debt restructurings (discussed in more detail below) and all loan relationships less than $200,000 in the aggregate, but with an estimated loss of $100,000 or more, are individually evaluated for impairment. Loans that are individually evaluated for impairment, but which are not determined to be impaired, are combined with all remaining loans that are not reviewed on a specific basis, and such loans are included within larger pools of loans based on similar risk and loss characteristics for purposes of determining the general component of the allowance. The loans that have been individually evaluated, but which have not been determined to be impaired, are included in the “Collectively Evaluated” column in the tables summarizing the allowance and associated loan balances as of June 30, 2013 and December 31, 2012.

The following tables present a summary of loan balances and the related allowance for loan losses summarized by portfolio segment and class for each impairment method used as of June 30, 2013 and December 31, 2012:

June 30, 2013	Loans:			Allowance for Loan Losses:
(In Thousands)
	Individually	Collectively		Individually	Collectively
	Evaluated	Evaluated	Totals	Evaluated	Evaluated	Totals
Residential mortgage:
Residential mortgage loans - first liens	$2,102	$302,704	$304,806	$268	$2,603	$2,871
Residential mortgage loans - junior liens	227	24,570	24,797	0	229	229
Home equity lines of credit	0	33,076	33,076	0	258	258
1-4 Family residential construction	0	14,895	14,895	0	179	179
Total residential mortgage	2,329	375,245	377,574	268	3,269	3,537
Commercial:
Commercial loans secured by real estate	1,397	153,771	155,168	206	1,738	1,944
Commercial and industrial	736	45,076	45,812	231	397	628
Political subdivisions	0	24,033	24,033	0	0	0
Commercial construction and land	1,004	19,185	20,189	0	258	258
Loans secured by farmland	1,358	9,776	11,134	31	90	121
Multi-family (5 or more) residential	48	6,349	6,397	0	64	64
Agricultural loans	53	3,008	3,061	0	28	28
Other commercial loans	0	543	543	0	5	5
Total commercial	4,596	261,741	266,337	468	2,580	3,048
Consumer	46	11,013	11,059	26	189	215
Unallocated						398
Total	$6,971	$647,999	$654,970	$762	$6,038	$7,198

27

December 31, 2012	Loans:			Allowance for Loan Losses:
(In Thousands)
	Individually	Collectively		Individually	Collectively
	Evaluated	Evaluated	Totals	Evaluated	Evaluated	Totals
Residential mortgage:
Residential mortgage loans - first liens	$2,341	$309,286	$311,627	$206	$2,413	$2,619
Residential mortgage loans - junior liens	158	26,590	26,748	0	247	247
Home equity lines of credit	0	33,017	33,017	0	255	255
1-4 Family residential construction	0	12,842	12,842	0	96	96
Total residential mortgage	2,499	381,735	384,234	206	3,011	3,217
Commercial:
Commercial loans secured by real estate	1,938	156,475	158,413	146	1,784	1,930
Commercial and industrial	939	47,503	48,442	197	384	581
Political subdivisions	0	31,789	31,789	0	0	0
Commercial construction and land	1,034	27,166	28,200	0	234	234
Loans secured by farmland	923	10,480	11,403	34	95	129
Multi-family (5 or more) residential	9	6,736	6,745	0	67	67
Agricultural loans	40	3,013	3,053	0	27	27
Other commercial loans	0	362	362	0	3	3
Total commercial	4,883	283,524	288,407	377	2,594	2,971
Consumer	47	11,222	11,269	40	188	228
Unallocated						441
Total	$7,429	$676,481	$683,910	$623	$5,793	$6,857

The average balance of impaired loans and interest income recognized on impaired loans is as follows:

(In Thousands)	3 Months Ended		6 Months Ended
	June 30,		June 30,
	2013	2012	2013	2012
Average investment in impaired loans	$7,131	$6,930	$7,291	$7,025
Interest income recognized on impaired loans	58	55	128	138
Interest income recognized on a cash basis
on impaired loans	58	55	128	138

Loans are placed on nonaccrual status for all classes of loans when, in the opinion of management, collection of interest is doubtful. Any unpaid interest previously accrued on those loans is reversed from income. Interest income is not recognized on specific impaired loans unless the likelihood of further loss is remote. Interest payments received on loans for which the risk of further loss is greater than remote are applied as a reduction of the loan principal balance. Interest income on other nonaccrual loans is recognized only to the extent of interest payments received. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time (generally six months) and the ultimate collectability of the total contractual principal and interest is no longer in doubt. The past due status of all classes of loans receivable is determined based on contractual due dates for loan payments. Also, the amortization of deferred loan fees is discontinued when a loan is placed on nonaccrual status.

28

The breakdown by portfolio segment and class of nonaccrual loans and loans past due ninety days or more and still accruing is as follows:

(In Thousands)	June 30, 2013		December 31, 2012
	Past Due		Past Due
	90+ Days and		90+ Days and
	Accruing	Nonaccrual	Accruing	Nonaccrual
Residential mortgage:
Residential mortgage loans - first liens	$1,510	$2,929	$1,900	$3,064
Residential mortgage loans - junior liens	58	111	29	111
Home equity lines of credit	39	62	40	200
1-4 Family residential construction	0	72	0	0
Total residential mortgage	1,607	3,174	1,969	3,375
Commercial:
Commercial loans secured by real estate	278	926	120	1,338
Commercial and industrial	3	576	68	761
Commercial construction and land	0	1,033	149	887
Loans secured by farmland	236	921	0	923
Agricultural loans	0	39	0	40
Total commercial	517	3,495	337	3,949
Consumer	78	28	5	29
Totals	$2,202	$6,697	$2,311	$7,353

The amounts shown in the table immediately above include loans classified as troubled debt restructurings (described in more detail below), if such loans are past due ninety days or more or nonaccrual.

The table below presents a summary of the contractual aging of loans as of June 30, 2013 and December 31, 2012:

	As of June 30, 2013				As of December 31, 2012
	Current &				Current &
(In Thousands)	Past Due	Past Due	Past Due		Past Due	Past Due	Past Due
	Less than	30-89	90+		Less than	30-89	90+
	30 Days	Days	Days	Total	30 Days	Days	Days	Total
Residential mortgage:
Residential mortgage loans - first liens	$298,731	$3,769	$2,306	$304,806	$302,373	$6,228	$3,026	$311,627
Residential mortgage loans - junior liens	24,517	121	159	24,797	26,247	371	130	26,748
Home equity lines of credit	32,879	96	101	33,076	32,593	184	240	33,017
1-4 Family residential construction	14,823	0	72	14,895	12,627	215	0	12,842
Total residential mortgage	370,950	3,986	2,638	377,574	373,840	6,998	3,396	384,234
Commercial:
Commercial loans secured by real estate	152,495	1,727	946	155,168	156,834	704	875	158,413
Commercial and industrial	44,864	438	510	45,812	47,569	317	556	48,442
Political subdivisions	24,033	0	0	24,033	31,789	0	0	31,789
Commercial construction and land	18,974	210	1,005	20,189	26,944	248	1,008	28,200
Loans secured by farmland	9,904	105	1,125	11,134	10,438	75	890	11,403
Multi-family (5 or more) residential	6,268	129	0	6,397	6,743	2	0	6,745
Agricultural loans	3,022	0	39	3,061	3,003	10	40	3,053
Other commercial loans	543	0	0	543	362	0	0	362
Total commercial	260,103	2,609	3,625	266,337	283,682	1,356	3,369	288,407
Consumer	10,929	52	78	11,059	11,135	129	5	11,269
Totals	$641,982	$6,647	$6,341	$654,970	$668,657	$8,483	$6,770	$683,910

29

Nonaccrual loans are included in the contractual aging in the immediately preceding table. A summary of the contractual aging of nonaccrual loans at June 30, 2013 and December 31, 2012 is as follows:

	Current &
(In Thousands)	Past Due	Past Due	Past Due
	Less than	30-89	90+
	30 Days	Days	Days	Total
June 30, 2013 Nonaccrual Totals	$2,024	$534	$4,139	$6,697
December 31, 2012 Nonaccrual Totals	$2,167	$727	$4,459	$7,353

Loans whose terms are modified are classified as Troubled Debt Restructurings (TDRs) if the Corporation grants such borrowers concessions, and it is deemed that those borrowers are experiencing financial difficulty. Loans classified as TDRs are designated as impaired. The outstanding balance of loans subject to TDRs, as well as contractual aging information at June 30, 2013 and December 31, 2012 is as follows:

Troubled Debt Restructurings (TDRs):
	Current &
(In Thousands)	Past Due	Past Due	Past Due
	Less than	30-89	90+
	30 Days	Days	Days	Nonaccrual	Total
June 30, 2013 Totals	$1,630	$557	$0	$1,154	$3,341
December 31, 2012 Totals	$785	$121	$0	$1,155	$2,061

There were no TDRs that occurred during the second quarter 2012. TDRs that occurred during the second quarter 2013 are as follows:

Quarter Ended June 30, 2013		Pre-	Post-
(Balances in Thousands)		Modification	Modification
	Number	Outstanding	Outstanding
	of	Recorded	Recorded
	Contracts	Investment	Investment
Residential mortgage:
Residential mortgage loans - first liens	1	$143	$143
Residential mortgage loans - junior liens	1	65	65
Commercial:
Commercial loans secured by real estate	1	440	440
Loans secured by farmland	4	512	512
Agricultural loans	1	13	13
Consumer	1	6	6

All of the TDRs in the second quarter 2013 were situations in which the Corporation agreed to permit the borrowers to pay interest only for an extended period of time. All of the second quarter 2013 TDRs, except for the commercial loan secured by real estate, were for one relationship.

30

TDRs that occurred during the six-month periods ended June 30, 2013 and 2012 were as follows:

Six Months Ended June 30, 2013		Pre-	Post-
(Balances in Thousands)		Modification	Modification
	Number	Outstanding	Outstanding
	of	Recorded	Recorded
	Contracts	Investment	Investment
Residential mortgage:
Residential mortgage loans - first liens	6	$677	$677
Residential mortgage loans - junior liens	3	102	102
Commercial:
Commercial loans secured by real estate	1	440	440
Loans secured by farmland	4	512	512
Agricultural loans	1	13	13
Consumer	1	6	6

Six Months Ended June 30, 2012		Pre-	Post-
(Balances in Thousands)		Modification	Modification
	Number	Outstanding	Outstanding
	of	Recorded	Recorded
	Contracts	Investment	Investment
Commercial:
Commercial and industrial	1	$65	$65

The TDRs in the six-month period ended June 30, 2013 included interest only payments for an extended period of time (10 contracts), extensions of the final maturity date (3 contracts), reduction in interest rate (2 contracts) and reduction in payment amount for one year (1 contract). There was no allowance for loan losses on these loans at June 30, 2013 and no change in the allowance for loan losses resulting from these TDRs during the second quarter 2013 or the six-month period ended June 30, 2013.

The TDR in the six-month period ended June 30, 2012 was an extension of the final maturity and lowering of monthly payments required on a commercial loan. There was no allowance for loan losses on this loan at June 30, 2013, and no change in the allowance for loan losses has occurred for this loan since it was restructured.

Defaults on loans for which modifications considered to be TDRs were entered into within the previous 12 months were as follows:

	Number
(Balances in Thousands)	of	Recorded
	Contracts	Investment
Quarter and Six Months Ended June 30, 2013
(Balances in Thousands)
Commercial,
Commercial loans secured by real estate	1	$440

In 2012, there were no defaults on loans for which modifications considered to be TDRs were entered into within the previous 12 months.

The event of default in the table above resulted from the borrowers’ failure to make contractual payments of interest only subsequent to the restructuring in the second quarter 2013. Based on the estimated value of the underlying collateral, net of estimated costs to sell the collateral, the Corporation determined that no allowance for loan losses was required at June 30, 2013.

31

8. BORROWED FUNDS

SHORT-TERM BORROWINGS

Short-term borrowings include the following:

(In Thousands)	June 30,	Dec. 31,
	2013	2012
FHLB-Pittsburgh borrowings	$12,000	$0
Customer repurchase agreements	4,387	5,567
Total short-term borrowings	$16,387	$5,567

The FHLB-Pittsburgh loan facilities are collateralized by qualifying loans secured by real estate with a book value totaling $467,018,000 at June 30, 2013 and $471,731,000 at December 31, 2012. Also, the FHLB-Pittsburgh loan facilities require the Corporation to invest in established amounts of FHLB-Pittsburgh stock. The carrying values of the Corporation’s holdings of FHLB-Pittsburgh stock (included in Other Assets) were $3,764,000 at June 30, 2013 and $4,712,000 at December 31, 2012.

The short-term borrowings from the FHLB-Pittsburgh include two advances of $6,000,000, each of which matures in July 2013 and has an interest rate of 0.22%.

The Corporation engages in repurchase agreements with certain commercial customers. These agreements provide that the Corporation sells specified investment securities to the customers on an overnight basis and repurchases them on the following business day. The weighted average rate paid by the Corporation on customer repurchase agreements was 0.10% at June 30, 2013 and December 31, 2012. The carrying value of the underlying securities was $10,841,000 at June 30, 2013 and $11,179,000 at December 31, 2012.

LONG-TERM BORROWINGS

Long-term borrowings are as follows:

(In Thousands)	June 30,	Dec. 31,
	2013	2012
FHLB-Pittsburgh borrowings	$12,472	$15,812
Repurchase agreements	61,000	68,000
Total long-term borrowings	$73,472	$83,812

Long-term borrowings from FHLB-Pittsburgh are as follows:

(In Thousands)	June 30,	Dec. 31,
	2013	2012
Loans matured in 2013 with rates ranging from 2.86% to 3.62%	$0	$3,211
Loan maturing in 2016 with a rate of 6.86%	175	196
Loan maturing in 2017 with a rate of 6.83%	25	27
Loan maturing in 2017 with a rate of 3.81%	10,000	10,000
Loan maturing in 2020 with a rate of 4.79%	1,222	1,297
Loan maturing in 2025 with a rate of 4.91%	1,050	1,081
Total long-term FHLB-Pittsburgh borrowings	$12,472	$15,812

Repurchase agreements included in long-term borrowings are as follows:

(In Thousands)	June 30,	Dec. 31,
	2013	2012
Agreement maturing in 2017 with a rate of 3.595%	$27,000	$34,000
Agreement maturing in 2017 with a rate of 4.265%	34,000	34,000
Total long-term repurchase agreements	$61,000	$68,000

The Corporation incurred a loss of $1,023,000 in the first quarter 2013 on prepayment of $7,000,000 of the agreement with an interest rate of 3.595% that is contractually scheduled to mature in 2017.

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In December 2007, the Corporation entered into two repurchase agreements of $40,000,000 each with embedded caps. These repurchase agreements mature in 2017. In the third quarter 2012, the Corporation paid off principal totaling $6,000,000 on each of these agreements, incurring a loss from prepayment of $2,190,000 and leaving a balance of $34,000,000 outstanding for each agreement at December 31, 2012. The borrowing with an interest rate of 3.595% became putable by the issuer at quarterly intervals starting in December 2010. The other borrowing has an interest rate of 4.265% and became putable by the issuer at quarterly intervals starting in December 2012. Each of these borrowings contained an embedded cap, providing that on the quarterly anniversary of the transaction settlement date, if three-month LIBOR were higher than 5.15%, the Corporation’s interest rate payable would decrease by twice the amount of the excess, down to a minimum rate of 0%. The embedded cap on one of the agreements expired in December 2010, and the embedded cap on the other agreement expired in December 2012.

Securities sold under repurchase agreements were delivered to the broker-dealer who is the counter-party to the transactions. The broker-dealer may have sold, loaned or otherwise disposed of such securities to other parties in the normal course of their operations, and has agreed to resell to the Corporation substantially identical securities at the maturities of the agreements. The Master Repurchase Agreement between the Corporation and the broker-dealer provides that the Agreement constitutes a “netting contract,” as defined; however, the Corporation and the broker-dealer have no other obligations to one another and accordingly, no netting has occurred. The carrying value of the underlying securities was $78,834,000 at June 30, 2013 and $89,428,000 at December 31, 2012.

9. DEFINED BENEFIT PLANS

The Corporation sponsors a defined benefit health care plan that provides postretirement medical benefits and life insurance to employees who meet certain age and length of service requirements. Effective January 1, 2013, this plan was amended so that full-time employees no longer accrue service time toward the Corporation-subsidized portion of the medical benefits. The plan was also amended effective January 1, 2013 to change some of the age and length-of-service requirements for participants to receive some of the benefits provided under the plan. This plan contains a cost-sharing feature, which causes participants to pay for all future increases in costs related to benefit coverage. Accordingly, actuarial assumptions related to health care cost trend rates do not significantly affect the liability balance at June 30, 2013 and December 31, 2012, and are not expected to significantly affect the Corporation's future expenses. The Corporation uses a December 31 measurement date for the postretirement plan.

In an acquisition in 2007, the Corporation assumed the Citizens Trust Company Retirement Plan, a defined benefit pension plan. This plan covers certain employees who were employed by Citizens Trust Company on December 31, 2002, when the plan was amended to discontinue admittance of any future participant and to freeze benefit accruals. Information related to the Citizens Trust Company Retirement Plan has been included in the tables that follow. The Corporation uses a December 31 measurement date for this plan.

The components of net periodic benefit costs from these defined benefit plans are as follows:

(In Thousands)	Pension		Postretirement
	Six Months Ended		Six Months Ended
	June 30,		June 30,
	2013	2012	2013	2012
Service cost	$0	$0	$21	$46
Interest cost	36	36	28	41
Expected return on plan assets	(45)	(36)	0	0
Amortization of transition (asset) obligation	0	0	0	18
Amortization of prior service cost	0	0	(16)	7
Recognized net actuarial loss	16	14	0	0
Net periodic benefit cost	$7	$14	$33	$112

(In Thousands)	Pension		Postretirement
	Three Months Ended		Three Months Ended
	June 30,		June 30,
	2013	2012	2013	2012
Service cost	$0	$0	$11	$23
Interest cost	18	18	14	21
Expected return on plan assets	(22)	(18)	0	0
Amortization of transition (asset) obligation	0	0	0	9
Amortization of prior service cost	0	0	(8)	3
Recognized net actuarial loss	8	7	0	0
Net periodic benefit cost	$4	$7	$17	$56

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In the first six months of 2013, the Corporation funded postretirement contributions totaling $30,000, with estimated annual postretirement contributions of $60,000 expected in 2013 for the full year. The Corporation made no contribution to the defined benefit pension plan in the first six months of 2013. Based upon the related actuarial reports, no defined benefit pension contributions are required in 2013, though the Corporation may make discretionary contributions.

10. STOCK-BASED COMPENSATION PLANS

In January 2013, the Corporation granted options to purchase a total of 64,050 shares of common stock through its Stock Incentive and Independent Directors Stock Incentive Plans. In January 2012, the Corporation granted options to purchase a total of 64,757 shares of common stock. The exercise price for the 2013 awards is $19.21 per share, and the exercise price for the 2012 awards is $18.54 per share, based on the market price as of the date of grant. Stock option expense is recognized over the vesting period of each option. The Corporation expects total stock option expense for the year ending December 31, 2013 will be $262,000, and total stock option expense for the year ended December 31, 2012 was $247,000.

The Corporation records stock option expense based on estimated fair value calculated using an option valuation model. In calculating the 2013 and 2012 fair values, the Corporation utilized the Black-Scholes-Merton option-pricing model. The calculated fair value of each option granted, and significant assumptions used in the calculations, are as follows:

	2013	2012
Fair value of each option granted	$5.56	$5.15
Volatility	41%	41%
Expected option lives	8 Years	7 Years
Risk-free interest rate	1.60%	1.53%
Dividend yield	3.69%	3.97%

In calculating the estimated fair value of stock option awards, management based its estimates of volatility and dividend yield on the Corporation’s experience over the immediately prior period of time consistent with the estimated lives of the options. The risk-free interest rate was based on the published yield of zero-coupon U.S. Treasury strips with an applicable maturity as of the grant dates. The expected option lives were based on management’s estimates of the average term for all options issued under both plans. In 2013 and 2012, management assumed a 33% forfeiture rate for options granted under the Stock Incentive Plan, and a 0% forfeiture rate for the Independent Directors Stock Incentive Plan. These estimated forfeiture rates were determined based on the Corporation’s historical experience.

In January 2013, the Corporation awarded a total of 37,886 shares of restricted stock under the Stock Incentive and Independent Directors Stock Incentive Plans. In January 2012, a total of 42,552 shares of restricted stock were awarded under the Plans. Compensation cost related to restricted stock is recognized based on the market price of the stock at the grant date over the vesting period. For restricted stock awards granted under the Stock Incentive Plan, the Corporation must meet an annual targeted return on average equity (“ROAE”) performance ratio, as defined, in order for participants to vest. Management has estimated restricted stock expense in the first six months and second quarter 2013 based on an assumption that the ROAE target for 2013 will be met.

Total stock-based compensation expense is as follows:

(In Thousands)	3 Months Ended		6 Months Ended
	June 30,	June 30,	June 30,	June 30,
	2013	2012	2013	2012
Stock options	$96	$88	$262	$247
Restricted stock	109	82	230	164
Total	$205	$170	$492	$411

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11. INCOME TAXES

The net deferred tax asset at June 30, 2013 and December 31, 2012 represents the following temporary difference components:

	June 30,	Dec. 31,
(In Thousands)	2013	2012
Deferred tax assets:
Defined benefit plans - ASC 835	$82	$305
Net realized losses on securities	149	1,254
Allowance for loan losses	2,519	2,400
Credit for alternative minimum tax paid	3,115	3,609
Other deferred tax assets	2,029	2,019
Total deferred tax assets	7,894	9,587
Deferred tax liabilities:
Unrealized holding gains on securities	1,526	6,228
Bank premises and equipment	1,442	1,337
Core deposit intangibles	39	48
Other deferred tax liabilities	256	249
Total deferred tax liabilities	3,263	7,862
Deferred tax asset, net	$4,631	$1,725

The deferred tax asset from net realized losses on securities resulted primarily from OTTI charges for financial statement purposes that are not deductible for income tax reporting purposes through June 30, 2013. The deferred tax asset from net realized losses on securities of $149,000 at June 30, 2013 is from securities that, if the Corporation were to sell them, would be classified as capital losses for income tax reporting purposes.

The provision for income tax for the three-month and six-month periods ended June 30, 2013 and 2012 is based on the Corporation’s estimate of the effective tax rate expected to be applicable for the full year. The effective tax rates for the Corporation are as follows:

	Three Months Ended		Six Months Ended
(In thousands)	June 30,		June 30,
	2013	2012	2013	2012
	(Current)	(Prior Year)	(Current)	(Prior Year)
Income before income tax provision	$6,645	$7,779	$12,935	$15,475
Income tax provision	1,671	2,094	3,255	4,203
Effective tax rate	25.15%	26.92%	25.16%	27.16%

The effective tax rate for each period presented differs from the statutory rate of 35% principally because of the effects of tax-exempt interest income.

The Corporation has no unrecognized tax benefits, nor pending examination issues related to tax positions taken in preparation of its income tax returns. With limited exceptions, the Corporation is no longer subject to examination by the Internal Revenue Service for years prior to 2009.

12. CONTINGENCIES

In the normal course of business, the Corporation may be subject to pending and threatened lawsuits in which claims for monetary damages could be asserted. In management’s opinion, the Corporation’s financial position and results of operations would not be materially affected by the outcome of such pending legal proceedings.

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13. RECENT ACCOUNTING PRONOUNCEMENTS

The FASB issues Accounting Standards Updates (ASUs) to the FASB Accounting Standards Codification (ASC). This section provides a summary description of recent ASUs that have significant implications (elected or required) within the consolidated financial statements, or that management expects may have a significant impact on financial statements issued in the near future.

In January 2013, the FASB issued ASU 2013-01, Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. The amendments in this standard clarify that the scope of ASU 2011-11 applies to (among other types of instruments) repurchase agreements that are either offset or subject to an enforceable master netting arrangement or similar agreement. The amendments in ASU 2011-11 require an entity to disclose information about offsetting and related arrangements to enable users of financial statements to understand the effect of those arrangements on the entity’s financial position. The Corporation has two types of repurchase agreements that have been recognized as borrowings in the unaudited consolidated financial statements: (1) overnight repurchase agreements with customers, and (2) repurchase agreements with a broker-dealer. The Corporation does not offset assets and liabilities related to either of these types of repurchase agreement. The overnight repurchase agreements with customers are not subject to a master netting arrangement or similar arrangement, and accordingly, the disclosure requirements of ASU 2011-11 do not apply. As disclosed in Note 8 to these unaudited consolidated financial statements, the Master Repurchase Agreement between the Corporation and the broker-dealer provides that the Agreement constitutes a “netting contract,” as defined; however, the Corporation and the broker-dealer have no other obligations to one another and therefore, no netting has occurred.

In February 2013, the FASB issued ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. The amendments in this standard require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, this standard requires an entity to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required by U.S. GAAP to be reclassified in their entirety to net income, an entity will be required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts. As required, the Corporation has implemented the amendments in this ASU prospectively in Note 3 to these unaudited consolidated financial statements.

14. SUBSEQUENT EVENT

In the third quarter 2013, the Corporation incurred professional fees expense of approximately $708,000 related to a consulting engagement in which the consulting firm identified recommendations for potential increases in revenues with an estimated annual total pre-tax benefit of approximately $1.3 million. Management expects to realize ongoing benefits from implementing the recommendations starting in the fourth quarter 2013 and thereafter, though the actual amount of benefits to be derived is difficult to estimate and is dependent on many variables, including customer behavior, market conditions and the Corporation’s effectiveness in implementing the recommendations.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Certain statements in this section and elsewhere in this quarterly report on Form 10-Q are forward-looking statements. Citizens & Northern Corporation and its wholly-owned subsidiaries (collectively, the Corporation) intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Reform Act of 1995. Forward-looking statements, which are not historical facts, are based on certain assumptions and describe future plans, business objectives and expectations, and are generally identifiable by the use of words such as, "should", “likely”, "expect", “plan”, "anticipate", “target”, “forecast”, and “goal”. These forward-looking statements are subject to risks and uncertainties that are difficult to predict, may be beyond management’s control and could cause results to differ materially from those expressed or implied by such forward-looking statements. Factors which could have a material, adverse impact on the operations and future prospects of the Corporation include, but are not limited to, 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 accounting principles, or the application of generally accepted accounting principles.

These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

EARNINGS OVERVIEW

Second quarter 2013 net income was $4,974,000, or $0.40 per basic and diluted share, up from $0.38 per share in the first quarter 2013 and down from $0.46 per share in the second quarter 2012. Net income for the six months ended June 30, 2013 totaled $9,680,000, or $0.78 per share, representing an annualized return on average assets of 1.56% and an annualized return on average equity of 10.57%. Net income for the first six months of 2013 was down from $0.92 per share for the first six months of 2012.

Highlights related to the Corporation’s earnings results were as follows:

· Net interest income of $10,940,000 in the second quarter 2013 was down from $11,047,000 in the first quarter 2013 and $12,128,000 in the second quarter 2012. For the first six months of 2013, net interest income of $21,987,000 was down $2,415,000 (9.9%) from the first six months of 2012. Declining and very low interest rates has led to margin compression over the course of 2012 and the first half of 2013, as yields earned on securities and loans have fallen by more than interest rates paid on deposits and borrowings. Average total loans outstanding was down $35,832,000 (5.1%) in the first six months of 2013 as compared to the first six months of 2012, contributing to the overall reduction in net interest income, including a reduction in average residential mortgage loans outstanding of $15,566,000 resulting from management’s decision to sell a significant portion of residential mortgage loans in the secondary market. Also, net interest income in 2012 was enhanced by the recovery of a security that had been written down in prior years, resulting in income (accretion) of $855,000 in the first six months of 2012 including $398,000 in the second quarter 2012.

· In the second quarter 2013, the provision for loan losses was $66,000, down from $183,000 in the first quarter 2013 and $367,000 in the second quarter 2012. The reduction in the provision in the most recent quarter was mainly the result of lower outstanding loans. For the first six months of 2013, the provision for loan losses was $249,000, up $64,000 from the first six months of 2012.

· Noninterest revenue totaled $4,191,000 in the second quarter 2013, an increase of $348,000 over the first quarter 2013, and down $88,000 from the second quarter 2012. Total trust and brokerage revenues increased $194,000 in the second quarter over the first quarter 2013. Included in second quarter 2012 noninterest revenue was a net gain from premises and equipment of $270,000, with no corresponding net gain or loss in the most recent quarter. Excluding the net gain from premises and equipment, total noninterest revenue was $182,000 (4.5%) higher in the second quarter 2013 as compared to the second quarter 2012, including an increase in gains from sales of mortgage loans of $214,000. Similarly, total noninterest revenue, excluding the gain from premises and equipment, was $370,000 (4.8%) higher for the first six months of 2013 as compared to the first six months of 2012, including an increase of $494,000 in gains from sales of mortgage loans.

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· Realized gains from securities totaled $100,000 in the second quarter 2013, as compared to $1,159,000 in the first quarter 2013 and $203,000 in the second quarter 2012. In the first quarter 2013, the Corporation generated gains from sales of securities totaling $1,159,000, and also incurred a loss from prepayment of a borrowing of $1,023,000. Realized gains from securities totaled $1,259,000 in the first six months of 2013 as compared to $201,000 in the first six months of 2012, while losses from prepayment of borrowings amounted to $1,023,000 in the first six months of 2013 as compared to $143,000 in the same period of 2012.

· Noninterest expenses, excluding losses from prepayment of borrowings, totaled $8,520,000 in the second quarter 2013, down slightly from $8,553,000 in the first quarter 2013 and up $199,000 (2.4%) over the second quarter 2012. For the six months ended June 30, 2013, total noninterest expenses, excluding losses from prepayment of borrowings, of $17,073,000 were $339,000 (2.0%) higher than the corresponding total for the first six months of 2012. Pensions and other employee benefit costs were $221,000 lower in the second quarter 2013 than in the first quarter, reflecting normal timing of payroll taxes and similar expenses which are typically highest in the first quarter of each year. For the six months ended June 30, 2013, pensions and other employee benefit costs were $167,000 lower than the total for the first six months of 2012, as health insurance expense associated with the Corporation’s partially self-insured plan was lower due to a lower amount of claims. In the second quarter 2013, the Corporation incurred professional fees expense (included in other operating expense) of $315,000 from a consulting project related to debit card operations and electronic funds processing, for which management expects the consultants’ services to result in increases in noninterest revenue and reductions in noninterest expense going forward, most significantly from an estimated total reduction in expense of $1.9 million for electronic funds processing over the next 5 ½ years.

More detailed information concerning fluctuations in the Corporation’s earnings results are provided in other sections of Management’s Discussion and Analysis.

Subsequent Event

In the third quarter 2013, the Corporation incurred professional fees expense of approximately $708,000 related to a consulting engagement in which the consulting firm identified recommendations for potential increases in revenues with an estimated annual total pre-tax benefit of approximately $1.3 million. Management expects to realize ongoing benefits from implementing the recommendations starting in the fourth quarter 2013 and thereafter, though the actual amount of benefits to be derived is difficult to estimate and is dependent on many variables, including customer behavior, market conditions and the Corporation’s effectiveness in implementing the recommendations.

TABLE I - QUARTERLY FINANCIAL DATA
(In Thousands)
	June 30,	Mar. 31,	Dec. 31,	Sept. 30,	June 30,	Mar. 31,
	2013	2013	2012	2012	2012	2012
Interest income	$12,355	$12,647	$13,491	$13,836	$14,529	$14,776
Interest expense	1,415	1,600	1,900	2,228	2,401	2,502
Net interest income	10,940	11,047	11,591	11,608	12,128	12,274
Provision (credit) for loan losses	66	183	(133)	236	367	(182)
Net Interest income after provision (credit)
for loan losses	10,874	10,864	11,724	11,372	11,761	12,456
Other income	4,191	3,843	4,327	4,122	4,279	3,655
Net gains (losses) on available-for-sale securities	100	1,159	51	2,430	203	(2)
Loss on prepayment of debt	0	1,023	0	2,190	143	0
Other expenses	8,520	8,553	7,954	8,226	8,321	8,413
Income before income tax provision	6,645	6,290	8,148	7,508	7,779	7,696
Income tax provision	1,671	1,584	2,209	2,014	2,094	2,109
Net income	$4,974	$4,706	$5,939	$5,494	$5,685	$5,587
Net income per share – basic	$0.40	$0.38	$0.48	$0.45	$0.46	$0.46
Net income per share – diluted	$0.40	$0.38	$0.48	$0.45	$0.46	$0.46

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CRITICAL ACCOUNTING POLICIES

The presentation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect many of the reported amounts and disclosures. Actual results could differ from these estimates.

A material estimate that is particularly susceptible to significant change is the determination of the allowance for loan losses. Management believes the allowance for loan losses is adequate and reasonable. Analytical information related to the Corporation’s aggregate loans and the related allowance for loan losses is summarized by loan segment and classes of loans in Note 7 to the consolidated financial statements. Additional discussion of the Corporation’s allowance for loan losses is provided in a separate section later in Management’s Discussion and Analysis. Given the very subjective nature of identifying and valuing loan losses, it is likely that well-informed individuals could make materially different assumptions, and could, therefore calculate a materially different allowance value. While management uses available information to recognize losses on loans, changes in economic conditions may necessitate revisions in future years. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Corporation’s allowance for loan losses. Such agencies may require the Corporation to recognize adjustments to the allowance based on their judgments of information available to them at the time of their examination.

Another material estimate is the calculation of fair values of the Corporation’s debt securities. For most of the Corporation’s debt securities, the Corporation receives estimated fair values of debt securities from an independent valuation service, or from brokers. In developing fair values, the valuation service and the brokers use estimates of cash flows, based on historical performance of similar instruments in similar interest rate environments. Based on experience, management is aware that estimated fair values of debt securities tend to vary among brokers and other valuation services.

As described in Note 6 to the consolidated financial statements, management evaluates securities for other-than-temporary impairment (OTTI). In making that evaluation, consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) whether the Corporation intends to sell the security or more likely than not will be required to sell the security before its anticipated recovery. Management’s assessments of the likelihood and potential for recovery in value of securities are subjective and based on sensitive assumptions.

NET INTEREST INCOME

The Corporation’s primary source of operating income is net interest income, which is equal to the difference between the amounts of interest income and interest expense. Tables II, III and IV include information regarding the Corporation’s net interest income for the three-month and six-month periods ended June 30, 2013 and June 30, 2012. In each of these tables, the amounts of interest income earned on tax-exempt securities and loans have been adjusted to a fully taxable-equivalent basis. Accordingly, the net interest income amounts reflected in these tables exceed the amounts presented in the consolidated financial statements. The discussion that follows is based on amounts in the related Tables.

Six-Month Periods Ended June 30, 2013 and 2012

For the six-month periods, fully taxable equivalent net interest income was $23,635,000 in 2013, $2,467,000 (9.5%) lower than in 2012. As shown in Table IV, in 2013 compared to 2012, interest rate changes had the effect of decreasing net interest income $2,276,000 and net changes in volume had the effect of decreasing net interest income $191,000. The most significant components of the rate change in net interest income in 2013 were a decrease in interest income of $1,760,000 attributable to lower rates earned on available-for-sale securities and a decrease in interest income of $1,353,000 attributable to lower rates earned on loans receivable, partially offset by a decrease in interest expense of $833,000 due to lower rates paid on interest-bearing deposits. The most significant components of the volume change in net interest income in 2013 were a decrease in interest income of $1,100,000 attributable to a decline in the balance of loans receivable, a decrease in interest expense of $724,000 attributable to a reduction in the balance of borrowed funds, and a decrease in interest expense of $337,000 attributable to a reduction in the balance of interest-bearing deposits (primarily certificates of deposit and Individual Retirement Accounts). As presented in Table III, the “Interest Rate Spread” (excess of average rate of return on earning assets over average cost of funds on interest-bearing liabilities) was 3.99% in 2013, as compared to 4.14% in 2012.

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In 2012, the Corporation recognized interest income on a trust preferred security issued by Carolina First Mortgage Loan Trust, a subsidiary of The South Financial Group, Inc., which had been written down as OTTI in 2009 and early 2010. The security resumed payment after The South Financial Group, Inc. was acquired by The Toronto-Dominion Bank in late 2010. The security had a face amount of $2,000,000 and matured in May 2012. The yield to maturity recognized by the Corporation was 147.03%. Excluding interest income (including accretion) and the average balance of this security from the calculations used to determine Tables II, III and IV, the interest rate spread and interest margin (fully taxable equivalent net interest income divided by average total earning assets) would be as follows:

	3 Months Ended		6 Months Ended
	June 30,	June 30,	June 30,	June 30,
	2013	2012	2013	2012
Interest rate spread:
Actual from Table III	3.97%	4.10%	3.99%	4.14%
Excluding Carolina First security	3.97%	3.97%	3.99%	4.00%
Interest margin:
Actual from Table III	4.15%	4.33%	4.16%	4.37%
Excluding Carolina First security	4.15%	4.20%	4.16%	4.23%

INTEREST INCOME AND EARNING ASSETS

Interest income totaled $26,650,000 in 2013, a decrease of 14.0% from 2012. Interest and fees on loans receivable decreased $2,453,000, or 11.3%. As indicated in Table III, average available-for-sale securities (at amortized cost) totaled $450,617,000 in 2013, a decrease of $10,434,000 (2.3%) from 2012. Net contraction in the Corporation’s available-for-sale securities portfolio was primarily made up of U.S. Government agency mortgage-backed securities and trust preferred securities. This contraction was partially offset by increases in the balances of U.S. Government agency bonds, U.S. Government agency collateralized mortgage obligations, and municipal securities. The Corporation’s yield on securities fell in 2012 and 2013 because of low market interest rates, the maturity of the Carolina First security noted above, calls on municipal bonds and trust preferred securities, and prepayments on mortgage-backed securities and collateralized mortgage obligations. The average rate of return on available-for-sale securities was 3.25% for 2013 and 4.00% in 2012.

The average balance of gross loans receivable decreased 5.1% to $666,793,000 in 2013 from $702,625,000 in 2012. The Corporation experienced contraction in the balance of loans receivable due to borrowers prepaying or refinancing existing loans combined with modest demand for new loans. The decline in the balance of the residential mortgage portfolio was also affected by management’s decision to sell a significant portion of newly originated residential mortgages on the secondary market. The Corporation’s average rate of return on loans receivable declined to 5.84% in 2013 from 6.23% in 2012 as rates on new loans as well as existing, variable-rate loans have decreased.

The average balance of interest-bearing due from banks decreased to $26,323,000 in 2013 from $35,817,000 in 2012. This has consisted primarily of balances held by the Federal Reserve but also includes other overnight deposits and FDIC-insured certificates of deposit issued by other financial institutions. Although the rates of return on these balances are low, the Corporation has maintained relatively high levels of liquid assets in 2012 and 2013 (as opposed to increasing long-term, available-for-sale securities at higher yields) in order to maximize flexibility for dealing with possible fluctuations in cash requirements, and due to management’s concern about the possibility of substantial increases in interest rates in the future.

INTEREST EXPENSE AND INTEREST-BEARING LIABILITIES

Interest expense fell $1,888,000, or 38.5%, to $3,015,000 in 2013 from $4,903,000 in 2012. Table III shows that the overall cost of funds on interest-bearing liabilities fell to 0.70% in 2013 from 1.05% in 2012.

Total average deposits (interest-bearing and noninterest-bearing) decreased 3.7%, to $968,333,000 in 2013 from $1,005,768,000 in 2012. Decreases in the average balances of certificates of deposit, Individual Retirement Accounts, and money market accounts were partially offset by increases in average balances of interest checking and savings accounts. Consistent with continuing low short-term market interest rates, the average rates incurred on certificates of deposit and Individual Retirement Accounts have decreased significantly in 2013 as compared to 2012.

40

Total average borrowed funds decreased $37,583,000 to $83,407,000 in 2013 from $120,990,000 in 2012. During 2012 and 2013, the Corporation has paid off long-term borrowings as they matured using the cash flow received from loans and investment securities. In May and September 2012, the Corporation prepaid principal totaling $17,000,000 on long-term borrowings (repurchase agreements); the Corporation incurred losses from the prepayments totaling $2,333,000. In March 2013, the Corporation prepaid principal of $7,000,000 on a long-term borrowing (repurchase agreement) with a rate of 3.60%; the Corporation incurred a loss from the prepayment totaling $1,023,000, which is reported in Other Expenses in the Consolidated Statements of Income. Management expects that the prepayments will have a favorable effect on the net interest margin in the future. After the effect of the prepayments, the remaining balance of long-term borrowings under repurchase agreements was $61,000,000 at June 30, 2013. The average rate on borrowed funds was 3.78% in 2013, compared to 3.79% in 2012.

Three-Month Periods Ended June 30, 2013 and 2012

Except as noted below, significant changes in the three-month results are consistent with the discussion of the six-month results provided in the previous section.

For the three-month periods, fully taxable equivalent net interest income was $11,765,000 in 2013, $1,214,000 (9.4%) lower than in 2012. As shown in Table IV, interest rate changes had the effect of decreasing net interest income $1,085,000 and net changes in volume had the effect of decreasing net interest income $129,000 in 2013 compared to 2012. As presented in Table III, the “Interest Rate Spread” was 3.97% in 2013, as compared to 4.10% in 2012.

Interest income totaled $13,180,000 in 2013, a decrease of 14.3% from 2012. Income from available-for-sale securities decreased $891,000 (19.7%), while interest and fees from loans receivable decreased $1,290,000, or 11.9%. As indicated in Table III, total average available-for-sale securities (at amortized cost) in 2013 decreased to $455,446,000 from $463,366,000 in 2012. The average rate of return on available-for-sale securities was 3.19% for 2013 and 3.92% in 2012. For the three-month period, the average balance of gross loans receivable decreased 6.3% to $658,905,000 in 2013 from $703,096,000 in 2012. The average rate of return on loans was 5.80% in 2013 and 6.18% in 2012.

For the three-month period, interest expense fell $986,000, or 41.1%, to $1,415,000 in 2013 from $2,401,000 in 2012. Total average deposits (interest-bearing and noninterest-bearing) decreased 4.7%, to $964,074,000 in 2013 from $1,011,232,000 in 2012. Total average borrowed funds decreased $39,652,000 to $79,299,000 in 2013 from $118,951,000 in 2012.

41

TABLE II - ANALYSIS OF INTEREST INCOME AND EXPENSE

	Three Months Ended			Six Months Ended
	June 30,		Increase/	June 30,		Increase/
(In Thousands)	2013	2012	(Decrease)	2013	2012	(Decrease)
INTEREST INCOME
Available-for-sale securities:
Taxable	$1,726	$2,593	($867)	$3,525	$5,326	($1,801)
Tax-exempt	1,897	1,921	(24)	3,743	3,837	(94)
Total available-for-sale securities	3,623	4,514	(891)	7,268	9,163	(1,895)
Interest-bearing due from banks	23	31	(8)	51	59	(8)
Loans held for sale	12	23	(11)	33	32	1
Loans receivable:
Taxable	9,028	10,242	(1,214)	18,253	20,608	(2,355)
Tax-exempt	494	570	(76)	1,045	1,143	(98)
Total loans receivable	9,522	10,812	(1,290)	19,298	21,751	(2,453)
Total Interest Income	13,180	15,380	(2,200)	26,650	31,005	(4,355)
INTEREST EXPENSE
Interest-bearing deposits:
Interest checking	51	50	1	103	101	2
Money market	74	97	(23)	146	194	(48)
Savings	29	27	2	58	53	5
Certificates of deposit	375	770	(395)	836	1,596	(760)
Individual Retirement Accounts	144	326	(182)	308	676	(368)
Other time deposits	0	1	(1)	0	1	(1)
Total interest-bearing deposits	673	1,271	(598)	1,451	2,621	(1,170)
Borrowed funds:
Short-term	2	1	1	3	4	(1)
Long-term	740	1,129	(389)	1,561	2,278	(717)
Total borrowed funds	742	1,130	(388)	1,564	2,282	(718)
Total Interest Expense	1,415	2,401	(986)	3,015	4,903	(1,888)
Net Interest Income	$11,765	$12,979	($1,214)	$23,635	$26,102	($2,467)

Note: Interest income from tax-exempt securities and loans has been adjusted to a fully tax-equivalent basis, using the Corporation’s marginal federal income tax rate of 35%.

42

TABLE III - ANALYSIS OF AVERAGE DAILY BALANCES AND RATES

(Dollars in Thousands)

	3 Months		3 Months		6 Months		6 Months
	Ended	Rate of	Ended	Rate of	Ended	Rate of	Ended	Rate of
	6/30/2013	Return/	6/30/2012	Return/	6/30/2013	Return/	6/30/2012	Return/
	Average	Cost of	Average	Cost of	Average	Cost of	Average	Cost of
	Balance	Funds %	Balance	Funds %	Balance	Funds %	Balance	Funds %
EARNING ASSETS
Available-for-sale securities,
at amortized cost:
Taxable	$323,248	2.14%	$333,255	3.13%	$319,451	2.23%	$332,131	3.22%
Tax-exempt	132,198	5.76%	130,111	5.94%	131,166	5.75%	128,920	5.99%
Total available-for-sale securities	455,446	3.19%	463,366	3.92%	450,617	3.25%	461,051	4.00%
Interest-bearing due from banks	23,044	0.40%	37,300	0.33%	26,323	0.39%	35,817	0.33%
Federal funds sold	3	0.00%	0	0.00%	9	0.00%	0	0.00%
Loans held for sale	787	6.12%	1,865	4.96%	1,486	4.48%	1,461	4.40%
Loans receivable:
Taxable	625,215	5.79%	666,752	6.18%	630,716	5.84%	666,344	6.22%
Tax-exempt	33,690	5.88%	36,344	6.31%	36,077	5.84%	36,281	6.34%
Total loans receivable	658,905	5.80%	703,096	6.18%	666,793	5.84%	702,625	6.23%
Total Earning Assets	1,138,185	4.64%	1,205,627	5.13%	1,145,228	4.69%	1,200,954	5.19%
Cash	16,961		17,791		16,523		17,341
Unrealized gain/loss on securities	13,820		17,545		15,038		17,734
Allowance for loan losses	(7,229)		(7,435)		(7,178)		(7,587)
Bank premises and equipment	18,351		18,908		18,502		18,903
Intangible Asset - Core Deposit Intangible	120		186		126		195
Intangible Asset - Goodwill	11,942		11,942		11,942		11,942
Other assets	43,127		47,046		43,252		47,664
Total Assets	$1,235,277		$1,311,610		$1,243,433		$1,307,146
INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Interest checking	$167,404	0.12%	$156,994	0.13%	$170,758	0.12%	$159,259	0.13%
Money market	204,444	0.15%	210,646	0.19%	203,293	0.14%	208,256	0.19%
Savings	117,224	0.10%	107,514	0.10%	116,883	0.10%	106,023	0.10%
Certificates of deposit	150,358	1.00%	199,320	1.55%	155,158	1.09%	195,622	1.64%
Individual Retirement Accounts	130,368	0.44%	144,095	0.91%	132,212	0.47%	145,168	0.94%
Other time deposits	1,161	0.00%	1,314	0.31%	1,004	0.00%	1,128	0.18%
Total interest-bearing deposits	770,959	0.35%	819,883	0.62%	779,308	0.38%	815,456	0.65%
Borrowed funds:
Short-term	5,684	0.14%	5,650	0.07%	4,956	0.12%	6,536	0.12%
Long-term	73,615	4.03%	113,301	4.01%	78,451	4.01%	114,454	4.00%
Total borrowed funds	79,299	3.75%	118,951	3.82%	83,407	3.78%	120,990	3.79%
Total Interest-bearing Liabilities	850,258	0.67%	938,834	1.03%	862,715	0.70%	936,446	1.05%
Demand deposits	193,115		191,349		189,025		190,312
Other liabilities	8,292		7,774		8,582		8,613
Total Liabilities	1,051,665		1,137,957		1,060,322		1,135,371
Stockholders' equity, excluding
other comprehensive income/loss	174,782		162,721		173,686		160,761
Other comprehensive income/loss	8,830		10,932		9,425		11,014
Total Stockholders' Equity	183,612		173,653		183,111		171,775
Total Liabilities and Stockholders' Equity	$1,235,277		$1,311,610		$1,243,433		$1,307,146
Interest Rate Spread		3.97%		4.10%		3.99%		4.14%
Net Interest Income/Earning Assets		4.15%		4.33%		4.16%		4.37%
Total Deposits (Interest-bearing
and Demand)	$964,074		$1,011,232		$968,333		$1,005,768

(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.

43

TABLE IV - ANALYSIS OF VOLUME AND RATE CHANGES

(In Thousands)	3 Months Ended 6/30/13 vs. 6/30/12			6 Months Ended 6/30/13 vs. 6/30/12
	Change in	Change in	Total	Change in	Change in	Total
	Volume	Rate	Change	Volume	Rate	Change
EARNING ASSETS
Available-for-sale securities:
Taxable	($74)	($793)	($867)	($198)	($1,603)	($1,801)
Tax-exempt	32	(56)	(24)	63	(157)	(94)
Total available-for-sale securities	(42)	(849)	(891)	(135)	(1,760)	(1,895)
Interest-bearing due from banks	(14)	6	(8)	(18)	10	(8)
Loans held for sale	(10)	(1)	(11)	1	0	1
Loans receivable:
Taxable	(611)	(603)	(1,214)	(1,094)	(1,261)	(2,355)
Tax-exempt	(39)	(37)	(76)	(6)	(92)	(98)
Total loans receivable	(650)	(640)	(1,290)	(1,100)	(1,353)	(2,453)
Total Interest Income	(716)	(1,484)	(2,200)	(1,252)	(3,103)	(4,355)
INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Interest checking	4	(3)	1	7	(5)	2
Money market	(3)	(20)	(23)	(5)	(43)	(48)
Savings	2	0	2	5	0	5
Certificates of deposit	(165)	(230)	(395)	(288)	(472)	(760)
Individual Retirement Accounts	(29)	(153)	(182)	(56)	(312)	(368)
Other time deposits	0	(1)	(1)	0	(1)	(1)
Total interest-bearing deposits	(191)	(407)	(598)	(337)	(833)	(1,170)
Borrowed funds:
Short-term	0	1	1	(1)	0	(1)
Long-term	(396)	7	(389)	(723)	6	(717)
Total borrowed funds	(396)	8	(388)	(724)	6	(718)
Total Interest Expense	(587)	(399)	(986)	(1,061)	(827)	(1,888)
Net Interest Income	($129)	($1,085)	($1,214)	($191)	($2,276)	($2,467)

(1) Changes in income on tax-exempt securities and loans are presented on a fully tax-equivalent basis, using the Corporation’s marginal federal income tax rate of 35%.

(2) The change in interest due to both volume and rates has been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amount of the change in each.

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TABLE V - COMPARISON OF NONINTEREST INCOME

 (In Thousands)

	6 Months Ended
	June 30,		$	%
	2013	2012	Change	Change
Service charges on deposit accounts	$2,330	$2,417	($87)	(3.6)
Service charges and fees	417	455	(38)	(8.4)
Trust and financial management revenue	1,989	1,889	100	5.3
Brokerage revenue	381	456	(75)	(16.4)
Insurance commissions, fees and premiums	104	107	(3)	(2.8)
Interchange revenue from debit card transactions	969	983	(14)	(1.4)
Net gains from sales of loans	1,132	638	494	77.4
Increase in cash surrender value of life insurance	192	236	(44)	(18.6)
Net gain from premises and equipment	0	270	(270)	(100.0)
Other operating income	520	483	37	7.7
Total other operating income before realized gains
(losses) on available-for-sale securities, net	$8,034	$7,934	$100	1.3

Table V excludes realized gains on available-for-sale securities, which are discussed in the “Earnings Overview” section of Management’s Discussion and Analysis. Total noninterest income shown in Table V increased $100,000 or 1.3%, in the first six months of 2013 as compared to the first six months of 2012. The most significant variances are as follows:

· Net gains from sales of loans increased $494,000. Since December 2009, the Corporation has sold a significant amount of residential mortgage loans into the secondary market through the MPF Xtra program administered by the Federal Home Loan Banks of Pittsburgh and Chicago. The increase in revenue in 2013 reflects increases in volume, including the impact of ongoing refinancing activity.

· The net gain from premises and equipment of $270,000 in 2012 included a gain of $272,000 from the excess of insurance proceeds received over the historical book value of assets replaced or reconstructed at the Athens, PA branch, which was damaged by a flood in September 2011 and remained closed until it was re-opened in April 2012. Total insurance proceeds associated with the reconstruction project amounted to $608,000, including $154,000 for reimbursement of clean-up and other expenses, with the gain determined based on the excess of insurance proceeds for reconstruction and replacement of equipment totaling $454,000 over the net book value of items replaced totaling $182,000.

TABLE VI - COMPARISON OF NONINTEREST INCOME

 (In Thousands)

	3 Months Ended
	June 30,		$	%
	2013	2012	Change	Change
Service charges on deposit accounts	$1,171	$1,256	($85)	(6.8)
Service charges and fees	216	235	(19)	(8.1)
Trust and financial management revenue	1,045	960	85	8.9
Brokerage revenue	237	288	(51)	(17.7)
Insurance commissions, fees and premiums	59	73	(14)	(19.2)
Interchange revenue from debit card transactions	505	488	17	3.5
Net gains from sales of loans	587	373	214	57.4
Increase in cash surrender value of life insurance	99	117	(18)	(15.4)
Net gain from premises and equipment	0	270	(270)	(100.0)
Other operating income	272	219	53	24.2
Total other operating income before realized gains
(losses) on available-for-sale securities, net	$4,191	$4,279	($88)	(2.1)

45

Table VI excludes realized gains on available-for-sale securities, which are discussed in the “Earnings Overview” section of Management’s Discussion and Analysis. Total noninterest income shown in Table VI decreased $88,000 or 2.1%, in the three months ended June 30, 2013 as compared to the three months ended June 30, 2012. The most significant variances are as follows:

· As described above, gains from sales of loans increased $214,000, with all of the gains resulting from sales of residential mortgage loans under the MPF Xtra program.

· As noted previously, the net gain from premises and equipment of $270,000 in 2012 included a gain of $272,000 from the excess of insurance proceeds received over the historical book value of assets replaced or reconstructed at the Athens, PA branch, which was damaged by a flood in September 2011 and remained closed until it was re-opened in April 2012.

TABLE VII - COMPARISON OF NONINTEREST EXPENSE

 (In Thousands)

	6 Months Ended
	June 30,		$	%
	2013	2012	Change	Change
Salaries and wages	$7,235	$7,161	$74	1.0
Pensions and other employee benefits	2,289	2,456	(167)	(6.8)
Occupancy expense, net	1,233	1,264	(31)	(2.5)
Furniture and equipment expense	977	943	34	3.6
FDIC Assessments	299	303	(4)	(1.3)
Pennsylvania shares tax	701	672	29	4.3
Loss on prepayment of debt	1,023	143	880	615.4
Other operating expense	4,339	3,935	404	10.3
Total Other Expense	$18,096	$16,877	$1,219	7.2

As shown in Table VII, total noninterest expense increased $1,219,000 or 7.2% in the first six months of 2013 as compared to the first six months of 2012. The increase in expense included the loss on prepayment of debt of $1,023,000 in 2013 and a loss on prepayment of debt of $143,000 in 2012, which is discussed in the Earnings Overview section of Management’s Discussion and Analysis. Excluding the loss on prepayment of debt, total noninterest expense increased $339,000, or 2.0%. Other significant variances include the following:

· Pensions and other employee benefits decreased $167,000, or 6.8%. Health care expense decreased $140,000 as the amount of claims incurred during the first six months of 2013 was lower than in the first six months of 2012. The Corporation is self-insured for health insurance, up to a cap for catastrophic levels of losses, which are insured by a third party. Postretirement health care expense decreased $79,000, reflecting amendments to the plan that include elimination of the accrual of service time by full-time employees as well as changes to some of the age and length-of-service requirements for participants to receive some of the benefits provided under the plan. Unemployment compensation decreased $46,000 as a result of a decrease in the Corporation’s experience-based Pennsylvania rate in 2013.

· Other operating expense increased $404,000, or 10.3%. This category includes many different types of expenses, with the most significant differences in amounts between the first six months of 2013 and 2012 as follows:

Ø Professional fees increased $377,000, or 156.7%, in the first six months of 2013 over the same period in 2012. As noted in the Earnings Overview section, the Corporation incurred professional fee expense of $315,000 in 2013 for a consulting project related to debit card operations and electronic funds processing, for which management expects the consultants’ services to result in increases in noninterest revenue and reductions in noninterest expense going forward, most significantly from an estimated total reduction in expense of $1.9 million for electronic funds processing over the next 5 ½ years.

Ø Expense related to a change in third-party merchant processing was $117,000 in the first six months of 2013 with no corresponding expense in the first six months of 2012.

46

TABLE VIII - COMPARISON OF NONINTEREST EXPENSE

 (In Thousands)

	3 Months Ended
	June 30,		$	%
	2013	2012	Change	Change
Salaries and wages	$3,635	$3,586	$49	1.4
Pensions and other employee benefits	1,034	1,090	(56)	(5.1)
Occupancy expense, net	599	628	(29)	(4.6)
Furniture and equipment expense	483	461	22	4.8
FDIC Assessments	147	157	(10)	(6.4)
Pennsylvania shares tax	351	340	11	3.2
Loss on prepayment of debt	0	143	(143)	(100.0)
Other operating expense	2,271	2,059	212	10.3
Total Other Expense	$8,520	$8,464	$56	0.7

As shown in Table VIII, total noninterest expense increased $56,000 or 0.7% in the three months ended June 30, 2013 as compared to the three months ended June 30, 2012. The 2012 expenses include the loss on prepayment of debt of $143,000 with no corresponding loss in the three months ended June 30, 2013. Excluding the loss on prepayment of debt in 2012, total noninterest expense increased $199,000, or 2.4%. Significant variances include the following:

· Pensions and other employee benefits decreased $56,000, or 5.1%. As a result of lower claims, healthcare expense decreased in the three months ended June 30, 2013 compared to the same period in 2012. Postretirement health care expense decreased reflecting amendments to the plan as previously noted.

· Other operating expense increased $212,000, or 10.3%. This category includes many different types of expenses, with the most significant differences in amounts between the three months ended June 30, 2013 and 2012 as follows:

Ø Professional fees increased $331,000, or 255.3%, in the three months ended June 30, 2013 over the same period in 2012. As noted previously, the Corporation incurred professional fee expense of $315,000 in the second quarter 2013 for a consulting project related to related to debit card operations and electronic funds processing.

Ø Expense related to a change in third-party merchant processing was $56,000 in the three months ended June 30, 2013 with no corresponding expense in the same period of 2012.

Ø Realized losses from other real estate properties acquired via foreclosures amounted to $50,000 in the second quarter 2013 as compared to $184,000 in the second quarter 2012.

FINANCIAL CONDITION

Significant changes in the average balances of the Corporation’s earning assets and interest-bearing liabilities are described in the “Net Interest Income” section of Management’s Discussion and Analysis. Other significant balance sheet items, including the allowance for loan losses and stockholders’ equity, are discussed in separate sections of Management’s Discussion and Analysis.

Management does not expect capital expenditures to have a material, detrimental effect on the Corporation’s financial condition in 2013.

PROVISION AND ALLOWANCE FOR LOAN LOSSES

The Corporation maintains an allowance for loan losses that represents management’s estimate of the losses inherent in the loan portfolio as of the balance sheet date and recorded as a reduction of the investment in loans. Note 7 to the consolidated financial statements provides an overview of the process management uses for evaluating and determining the allowance for loan losses.

47

While management uses available information to recognize losses on loans, changes in economic conditions may necessitate revisions in future years. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Corporation’s allowance for loan losses. Such agencies may require the Corporation to recognize adjustments to the allowance based on their judgments of information available to them at the time of their examination.

The allowance for loan losses was $7,198,000 at June 30, 2013, up from $6,857,000 at December 31, 2012. As shown in Table X, the specific allowance on impaired loans totaled $762,000 at June 30, 2013, which was $139,000 higher than the total specific allowance at December 31, 2012. Table X also shows the collectively determined component of the allowance for residential mortgages was $258,000 higher at June 30, 2013 than at December 31, 2012. The allowance for the residential mortgage segment was affected by the net charge-off percentage used to determine a portion of the collectively determined allowance, which was higher in the first six months of 2013 as compared to the percentage used throughout 2012. (The Corporation used net charge-offs as a percentage of average outstanding loans for the previous three calendar years to estimate a portion of the collectively determined allowance at both June 30, 2013 and December 31, 2012.) The collectively evaluated components of the allowance for the residential and commercial segments also increased due to slight increases in qualitative factors at June 30, 2013 as compared to December 31, 2012, while lower loan balances had the effect of decreasing the collectively evaluated components of the allowance for both segments.

The provision for loan losses by segment for the three-month and six-month periods ended June 30, 2013 and 2012 is as follows:

(In Thousands)	3 Months Ended		6 Months Ended
	June 30,	June 30,	June 30,	June 30,
	2013	2012	2013	2012
Residential mortgage	$132	($8)	$385	$35
Commercial	(81)	319	(104)	98
Consumer	15	56	11	50
Unallocated	0	0	(43)	2
Total	$66	$367	$249	$185

The provision for loan losses in the second quarter 2013 included a net increase in the allowance for loan losses on impaired loans of $171,000, including an increase in the allowance on impaired residential mortgage loans of $97,000 and an increase in the allowance on impaired commercial loans of $77,000. The net credit for loan losses from the commercial segment in the second quarter 2013 included a reduction in the collectively evaluated portion of the allowance of $120,000, mainly due to a reduction in outstanding commercial loans. In the second quarter 2012, the provision for loan losses included a $237,000 increase in the allowance on one commercial relationship.

For the first six months of 2013, the provision for loan losses included a net increase in the allowance on impaired loans of $139,000, including net increases in allowances on impaired residential mortgage loans of $62,000 and on commercial loans of $91,000. The increase in the provision for loan losses for the residential mortgage segment in 2013 over 2012 included an increase in the collectively evaluated portion of the allowance of $258,000, reflecting an increase in the net charge-off percentage used in the calculations as described above. The credit for the commercial segment in 2013 included the effect of net recoveries of $181,000 (recoveries on previously charged-off loans in excess of current period charge-offs). The provision for loan losses of $185,000 in the first six months of 2012 included an increase of $320,000 in the allowance on impaired loans for one commercial loan relationship, partially offset by reductions in the portions of the collectively evaluated allowances based on changes in the net charge-off factors for the residential mortgage and commercial segments.

Table XI presents information related to past due and impaired loans, and loans that have been modified under terms that are considered troubled debt restructurings (TDRs). Table XI shows total impaired loans of $6,971,000 at June 30, 2013, down from the corresponding amount at December 31, 2012 of $7,429,000. Table XI reflects a lower amount of total loans past due 30-89 days and still accruing interest at June 30, 2013 of $6,114,000 as compared to the December 31, 2012 total of $7,756,000, mainly due to a lower amount of past due residential mortgage loans. Also, total loans past due 90 days or more and still accruing interest was down slightly at June 30, 2013 to $2,202,000 from $2,311,000 at December 31, 2012. As part of its normal quarterly procedures, management reviewed loans past due 90 days or more at June 30, 2013, and determined the loans remaining in accrual status to be well secured and in the process of collection. Mainly as a result of the decrease in nonaccrual loans, total nonperforming loans of $8,899,000 at June 30, 2013 were $765,000 lower than nonperforming loans at December 31, 2012. Also, nonperforming loans as a percentage of total loans decreased slightly, to 1.36% at June 30, 2013 compared to 1.41% at December 31, 2012. Total nonperforming assets at June 30, 2013 were $9,789,000 compared to $10,543,000 at December 31, 2012. Total nonperforming assets as a percentage of total assets decreased slightly to 0.80% from 0.82% at December 31, 2012. The allowance for loan losses was 1.10% of total loans outstanding at June 30, 2013, up from 1.00% at December 31, 2012, and the allowance as a percentage of nonperforming loans was 80.89% at June 30, 2013, up from 70.95% at December 31, 2012. Each period presented in Table XI includes a few large commercial relationships that have required significant monitoring and workout efforts. As a result, a limited number of relationships may significantly impact the total amount of allowance required on impaired loans, and may significantly impact the amount of total charge-offs reported in any one period.

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Management believes it has been conservative in its decisions concerning identification of impaired loans, estimates of loss, and nonaccrual status; however, the actual losses realized from these relationships could vary materially from the allowances calculated as of June 30, 2013. Management continues to closely monitor its commercial loan relationships for possible credit losses, and will adjust its estimates of loss and decisions concerning nonaccrual status, if appropriate.

Tables IX through XII present historical data related to loans and the allowance for loan losses.

TABLE IX- ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES

(In Thousands)

	June 30,	June 30,	Years Ended December 31,
	2013	2012	2012	2011	2010	2009	2008
Balance, beginning of year	$6,857	$7,705	$7,705	$9,107	$8,265	$7,857	$8,859
Charge-offs:
Residential mortgage	(76)	(188)	(552)	(100)	(340)	(146)	(173)
Commercial	(114)	(35)	(498)	(1,189)	(91)	(39)	(1,607)
Consumer	(55)	(68)	(171)	(157)	(188)	(293)	(259)
Total charge-offs	(245)	(291)	(1,221)	(1,446)	(619)	(478)	(2,039)
Recoveries:
Residential mortgage	11	18	18	3	55	8	19
Commercial	295	5	8	255	113	77	22
Consumer	31	35	59	71	102	121	87
Total recoveries	337	58	85	329	270	206	128
Net recoveries (charge-offs)	92	(233)	(1,136)	(1,117)	(349)	(272)	(1,911)
Provision (credit) for loan losses	249	185	288	(285)	1,191	680	909
Balance, end of period	$7,198	$7,657	$6,857	$7,705	$9,107	$8,265	$7,857
Net (recoveries) charge-offs as a % of
average loans	-0.01%	0.03%	0.16%	0.16%	0.05%	0.04%	0.26%

TABLE X - COMPONENTS OF THE ALLOWANCE FOR LOAN LOSSES

(In Thousands)

	As of
	June 30,	As of December 31,
	2013	2012	2011	2010	2009	2008
ASC 310 - Impaired loans	$762	$623	$1,126	$2,288	$1,126	$456
ASC 450 - Collective segments:
Commercial	2,580	2,594	2,811	3,047	2,677	2,654
Residential mortgage	3,269	3,011	3,130	3,227	3,859	3,920
Consumer	189	188	204	232	281	399
Unallocated	398	441	434	313	322	428
Total Allowance	$7,198	$6,857	$7,705	$9,107	$8,265	$7,857

The above allocation is based on estimates and subjective judgments and is not necessarily indicative of the

specific amounts or loan categories in which losses may occur.

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TABLE XI - PAST DUE AND IMPAIRED LOANS, NONPERFORMING ASSETS

AND TROUBLED DEBT RESTRUCTURINGS (TDRs)

(In Thousands)	As of
	June 30,	As of December 31,
	2013	2012	2011	2010	2009	2008
Impaired loans with a valuation allowance	$1,874	$2,710	$3,433	$5,457	$2,690	$2,230
Impaired loans without a valuation allowance	5,097	4,719	4,431	3,191	3,257	3,435
Total impaired loans	$6,971	$7,429	$7,864	$8,648	$5,947	$5,665
Total loans past due 30-89 days and still accruing	$6,114	$7,756	$7,898	$7,125	$9,445	$9,875
Nonperforming assets:
Total nonaccrual loans	$6,697	$7,353	$7,197	$10,809	$9,092	$7,200
Total loans past due 90 days or more and still accruing	2,202	2,311	1,267	727	31	1,305
Total nonperforming loans	8,899	9,664	8,464	11,536	9,123	8,505
Foreclosed assets held for sale (real estate)	890	879	1,235	537	873	298
Total nonperforming assets	$9,789	$10,543	$9,699	$12,073	$9,996	$8,803
Loans subject to troubled debt restructurings (TDRs):
Performing	$2,187	$906	$1,064	$645	$326	$0
Nonperforming	1,154	1,155	2,413	0	0	0
Total TDRs	$3,341	$2,061	$3,477	$645	$326	$0
Total nonperforming loans as a % of loans	1.36%	1.41%	1.19%	1.58%	1.27%	1.14%
Total nonperforming assets as a % of assets	0.80%	0.82%	0.73%	0.92%	0.76%	0.69%
Allowance for loan losses as a % of total loans	1.10%	1.00%	1.09%	1.25%	1.15%	1.06%
Allowance for loan losses as a % of nonperforming loans	80.89%	70.95%	91.03%	78.94%	90.60%	92.38%

TABLE XII - SUMMARY OF LOANS BY TYPE

(In Thousands)	June 30,	As of December 31,
	2013	2012	2011	2010	2009	2008
Residential mortgage:
Residential mortgage loans - first liens	$304,806	$311,627	$331,015	$333,012	$340,268	$353,909
Residential mortgage loans - junior liens	24,797	26,748	28,851	31,590	35,734	40,657
Home equity lines of credit	33,076	33,017	30,037	26,853	23,577	21,304
1-4 Family residential construction	14,895	12,842	9,959	14,379	11,452	11,262
Total residential mortgage	377,574	384,234	399,862	405,834	411,031	427,132
Commercial:
Commercial loans secured by real estate	155,168	158,413	156,388	167,094	163,483	165,979
Commercial and industrial	45,812	48,442	57,191	59,005	49,753	48,295
Political subdivisions	24,033	31,789	37,620	36,480	37,598	38,790
Commercial construction and land	20,189	28,200	23,518	24,004	15,264	13,730
Loans secured by farmland	11,134	11,403	10,949	11,353	11,856	9,140
Multi-family (5 or more) residential	6,397	6,745	6,583	7,781	8,338	8,367
Agricultural loans	3,061	3,053	2,987	3,472	3,848	4,495
Other commercial loans	543	362	552	392	638	884
Total commercial	266,337	288,407	295,788	309,581	290,778	289,680
Consumer	11,059	11,269	12,665	14,996	19,202	26,732
Total	654,970	683,910	708,315	730,411	721,011	743,544
Less: allowance for loan losses	(7,198)	(6,857)	(7,705)	(9,107)	(8,265)	(7,857)
Loans, net	$647,772	$677,053	$700,610	$721,304	$712,746	$735,687

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LIQUIDITY

Liquidity is the ability to quickly raise cash at a reasonable cost. An adequate liquidity position permits the Corporation to pay creditors, compensate for unforeseen deposit fluctuations and fund unexpected loan demand. At June 30, 2013, the Corporation maintained overnight interest-bearing deposits with the Federal Reserve Bank of Philadelphia and other correspondent banks totaling $11,871,000.

The Corporation maintains overnight borrowing facilities with several correspondent banks that provide a source of day-to-day liquidity. Also, the Corporation maintains borrowing facilities with the Federal Home Loan Bank of Pittsburgh, secured by various mortgage loans.

The Corporation has a line of credit with the Federal Reserve Bank of Philadelphia’s Discount Window. Management intends to use this line of credit as a contingency funding source. As collateral for the line, the Corporation has pledged available-for-sale securities with a carrying value of $26,699,000 at June 30, 2013.

The Corporation’s outstanding, available, and total credit facilities at June 30, 2013 and December 31, 2012 are as follows:

	Outstanding		Available		Total Credit
(In Thousands)	June 30,	Dec. 31,	June 30,	Dec. 31,	June 30,	Dec. 31,
	2013	2012	2013	2012	2013	2012
Federal Home Loan Bank of Pittsburgh	$26,469	$17,809	$295,086	$328,023	$321,555	$345,832
Federal Reserve Bank Discount Window	0	0	25,668	27,367	25,668	27,367
Other correspondent banks	0	0	45,000	45,000	45,000	45,000
Total credit facilities	$26,469	$17,809	$365,754	$400,390	$392,223	$418,199

At June 30, 2013, the Corporation’s outstanding credit facilities with the Federal Home Loan Bank of Pittsburgh consisted of long-term borrowings with a total amount of $12,472,000, short-term borrowings with a total amount of $12,000,000, and a letter of credit in the amount of $1,997,000. At December 31, 2012, the Corporation’s outstanding credit facilities with the Federal Home Loan Bank of Pittsburgh consisted of long-term borrowings with a total amount of $15,812,000 as well as a letter of credit in the amount of $1,997,000. Additional information regarding borrowed funds is included in Note 8 of the consolidated financial statements.

Additionally, the Corporation uses repurchase agreements placed with brokers to borrow funds secured by investment assets and “RepoSweep” arrangements to borrow funds from commercial banking customers on an overnight basis. If required to raise cash in an emergency situation, the Corporation could sell available-for-sale securities to meet its obligations. At June 30, 2013, the carrying value of available-for-sale securities in excess of amounts required to meet pledging or repurchase agreement obligations was $256,006,000.

Management believes the Corporation is well-positioned to meet its short-term and long-term obligations.

STOCKHOLDERS’ EQUITY AND CAPITAL ADEQUACY

The Corporation and C&N Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Details concerning capital ratios at June 30, 2013 and December 31, 2012 are presented below. Management believes, as of June 30, 2013 and December 31, 2012, that the Corporation and C&N Bank meet all capital adequacy requirements to which they are subject.

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					Minimum To Be Well
(Dollars in Thousands)			Minimum		Capitalized Under
			Capital		Prompt Corrective
	Actual		Requirement		Action Provisions
	Amount	Ratio	Amount	Ratio	Amount	Ratio
June 30, 2013:
Total capital to risk-weighted assets:
Consolidated	$172,544	25.75%	$53,609	³8%	n/a	n/a
C&N Bank	158,204	23.90%	52,953	³8%	$66,192	³10%
Tier 1 capital to risk-weighted assets:
Consolidated	164,108	24.49%	26,805	³4%	n/a	n/a
C&N Bank	150,983	22.81%	26,477	³4%	39,715	³6%
Tier 1 capital to average assets:
Consolidated	164,108	13.51%	48,588	³4%	n/a	n/a
C&N Bank	150,983	12.54%	48,159	³4%	60,199	³5%
December 31, 2012:
Total capital to risk-weighted assets:
Consolidated	$165,972	24.01%	$55,299	³8%	n/a	n/a
C&N Bank	152,462	22.31%	54,665	³8%	$68,331	³10%
Tier 1 capital to risk-weighted assets:
Consolidated	158,008	22.86%	27,650	³4%	n/a	n/a
C&N Bank	145,596	21.31%	27,332	³4%	40,998	³6%
Tier 1 capital to average assets:
Consolidated	158,008	12.53%	50,459	³4%	n/a	n/a
C&N Bank	145,596	11.64%	50,053	³4%	62,567	³5%

Management expects the Corporation and C&N Bank to maintain capital levels that exceed the regulatory standards for well-capitalized institutions for the next 12 months and for the foreseeable future. Planned capital expenditures are not expected to have a significantly detrimental effect on capital ratios. See the discussion of future changes in regulatory capital requirements in the “New Capital Rule” section below.

Future dividend payments will depend upon maintenance of a strong financial condition, future earnings and capital and regulatory requirements. The Corporation and C&N Bank are subject to restrictions on the amount of dividends that may be paid without approval of banking regulatory authorities.

The Corporation’s total stockholders’ equity is affected by fluctuations in the fair values of available-for-sale securities. The difference between amortized cost and fair value of available-for-sale securities, net of deferred income tax, is included in Accumulated Other Comprehensive Income within stockholders’ equity. The balance in Accumulated Other Comprehensive Income related to unrealized gains on available-for-sale securities, net of deferred income tax, amounted to $2,832,000 at June 30, 2013 and $11,568,000 at December 31, 2012. Changes in accumulated other comprehensive income are excluded from earnings and directly increase or decrease stockholders’ equity. If available-for-sale securities are deemed to be other-than-temporarily impaired, unrealized losses are recorded as a charge against earnings, and amortized cost for the affected securities is reduced. Note 6 to the consolidated financial statements provides additional information concerning management’s evaluation of available-for-sale securities for other-than-temporary impairment at June 30, 2013.

Stockholders’ equity is also affected by the underfunded or overfunded status of defined benefit pension and postretirement plans. The balance in Accumulated Other Comprehensive Income related to defined benefit plans, net of deferred income tax, was ($152,000) at June 30, 2013 and ($565,000) at December 31, 2012.

New Capital Rule

In July 2013, the federal regulatory authorities issued a new capital rule based, in part, on revisions developed by the Basel Committee on Banking Supervision to the Basel capital framework (Basel III). The Corporation and C&N Bank are subject to the new rule on January 1, 2015. Generally, the new rule implements higher minimum capital requirements, revises the definition of regulatory capital components and related calculations, adds a new common equity tier 1 capital ratio, implements a new capital conservation buffer, increases the risk weighting for residential mortgages and past due loans and provides a transition period for several aspects of the new rule.

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A summarized comparison of the existing capital requirements with requirements under the new rule is as follows:

	Current General
	Risk-Based
	Capital Rule	New Capital Rule
Minimum regulatory capital ratios:
Common equity tier 1 capital/
risk-weighted assets (RWA)	N/A	4.5%
Tier 1 capital / RWA	4%	6%
Total capital / RWA	8%	8%
Tier 1 capital / Average assets
(Leverage ratio)	4%	4%
Capital buffers:
Capital conservation buffer	N/A	2.5% of RWA; composed of
		common equity tier 1 capital
Prompt correction action levels -
Common equity tier 1 capital ratio:
Well capitalized	N/A	³6.5%
Adequately capitalized	N/A	³4.5%
Undercapitalized	N/A	<4.5%
Significantly undercapitalized	N/A	<3%
Prompt correction action levels -
Tier 1 capital ratio:
Well capitalized	³6%	³8%
Adequately capitalized	³4%	³6%
Undercapitalized	<4%	<6%
Significantly undercapitalized	<3%	<4%
Prompt correction action levels -
Total capital ratio:
Well capitalized	³10%	³10%
Adequately capitalized	³8%	³8%
Undercapitalized	<8%	<8%
Significantly undercapitalized	<6%	<6%
Prompt correction action levels -
Leverage ratio:
Well capitalized	³5%	³5%
Adequately capitalized	³4%	³4%
Undercapitalized	<4%	<4%
Significantly undercapitalized	<3%	<3%
Prompt correction action levels -
Critically undercapitalized:
Tangible equity to total assets	≤2%	≤2%

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The new capital rule provides that, in order to avoid limitations on capital distributions, including dividend payments and certain discretionary bonus payments to executive officers, a banking organization must hold a capital conservation buffer composed of common equity tier 1 capital above its minimum risk-based capital requirements. The buffer is measured relative to risk-weighted assets. Phase-in of the capital conservation buffer requirements will begin January 1, 2016. The transition schedule for new ratios, including the capital conservation buffer, is as follows:

	As of January 1:
	2015	2016	2017	2018	2019
Minimum common equity tier 1 capital ratio	4.5%	4.5%	4.5%	4.5%	4.5%
Common equity tier 1 capital conservation buffer	N/A	0.625%	1.25%	1.875%	2.5%
Minimum common equity tier 1 capital ratio plus
capital conservation buffer	4.5%	5.125%	5.75%	6.375%	7.0%
Phase-in of most deductions from common equity
tier 1 capital	40%	60%	80%	100%	100%
Minimum tier 1 capital ratio	6.0%	6.0%	6.0%	6.0%	6.0%
Minimum tier 1 capital ratio plus capital
conservation buffer	N/A	6.625%	7.25%	7.875%	8.5%
Minimum total capital ratio	8.0%	8.0%	8.0%	8.0%	8.0%
Minimum total capital ratio plus capital
conservation buffer	N/A	8.625%	9.25%	9.875%	10.5%

As fully phased in, a banking organization with a buffer greater than 2.5% would not be subject to additional limits on dividend payments or discretionary bonus payments; however, a banking organization with a buffer less than 2.5% would be subject to increasingly stringent limitations as the buffer approaches zero. The new rule also prohibits a banking organization from making dividend payments or discretionary bonus payments if its eligible retained income is negative in that quarter and its capital conservation buffer ratio was less than 2.5% as of the beginning of that quarter. Eligible net income is defined as net income for the four calendar quarters preceding the current calendar quarter, net of any distributions and associated tax effects not already reflected in net income. A summary of payout restrictions based on the capital conservation buffer is as follows:

Capital Conservation Buffer	Maximum Payout
(as a % of risk-weighted assets)	(as a % of eligible retained income)
Greater than 2.5%	No payout limitation applies
≤2.5% and >1.875%	60%
≤1.875% and >1.25%	40%
≤1.25% and >0.625%	20%
≤0.625%	0%

COMPREHENSIVE INCOME

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220) – Presentation of Comprehensive Income. The intent of this standard is to increase the prominence of comprehensive income in the financial statements. Accordingly, the Corporation has included Statements of Comprehensive Income in the unaudited consolidated financial statements for the three-month and six month periods ended June 30, 2013 and 2012.

Comprehensive Income is the total of (1) net income, and (2) all other changes in equity from non-stockholder sources, which are referred to as Other Comprehensive Income. Changes in the components of Accumulated Other Comprehensive Income (Loss) are included in Other Comprehensive Income, and for the Corporation, consist of changes in unrealized gains or losses on available-for-sale securities and changes in underfunded defined benefit plans.

Comprehensive Income totaled $1,357,000 for the six months ended June 30, 2013 as compared to $12,166,000 in the first six months of 2012. In the first six months of 2013, Comprehensive Income included: (1) Net Income of $9,680,000, which was $1,592,000 lower than in the first six months of 2012; (2) Other Comprehensive Loss from unrealized gains on available-for-sale securities, net of deferred income tax, of $8,736,000 as compared to Other Comprehensive Income of $728,000 in the first six months of 2012; and (3) Other Comprehensive Income from defined benefit plans of $413,000 in the first six months of 2013 as compared to $166,000 in the first six months of 2012.

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Comprehensive loss totaled $1,417,000 for the second quarter 2013 as compared to comprehensive income of $6,365,000 in the second quarter of 2012. In the second quarter 2013, Comprehensive Loss included: (1) Net Income of $4,974,000, which was $711,000 lower than in the second quarter 2012; (2) Other Comprehensive Loss on unrealized gains on available-for-sale securities, net of deferred income tax, of $6,391,000 as compared to Other Comprehensive Income of $667,000 in the second quarter 2012; and (3) no Other Comprehensive Income or Loss from defined benefit plans compared to a Other Comprehensive Income of $13,000 for the second quarter of 2012.

INCOME TAXES

The effective income tax rate was approximately 25% of pre-tax income in the first six months and second quarter 2013, down from 27% in the first six months and second quarter 2012. The provision for income tax for the interim periods is based on the Corporation’s estimate of the effective tax rate expected to be applicable for the full year. The lower effective tax rate in 2013 is mainly attributable to lower pre-tax income in the first six months and second quarter 2013 in comparison to the corresponding periods of 2012. The Corporation’s effective tax rates differ from the statutory rate of 35% principally because of the effects of tax-exempt interest income.

The Corporation recognizes deferred tax assets and liabilities based on differences between the financial statement carrying amounts and the tax basis of assets and liabilities. At June 30, 2013, the net deferred tax asset was $4,631,000, up $2,906,000 from the balance at December 31, 2012. The largest changes in temporary difference components were as follows:

· The deferred tax liability associated with unrealized gains on available-for-sale securities fell to $1,526,000 at June 30, 2013, a reduction of $4,702,000 from December 31, 2012, because of a reduction in unrealized gains on available-for-sale securities caused primarily by increases in long-term interest rates in the second quarter 2013.

· In 2013, the deferred tax asset from net realized losses on securities fell to $149,000, a reduction of $1,105,000 from December 31, 2012, mainly due to the first quarter 2013 sale of a pooled trust-preferred security for which OTTI had been recorded for financial reporting purposes in previous years.

The Corporation regularly reviews deferred tax assets for recoverability based on history of earnings, expectations for future earnings and expected timing of reversals of temporary differences. Realization of deferred tax assets ultimately depends on the existence of sufficient taxable income, including taxable income in prior carryback years, as well as future taxable income. Management believes the recorded net deferred tax asset at June 30, 2013 is fully realizable; however, if management determines the Corporation will be unable to realize all or part of the net deferred tax asset, the Corporation would adjust the deferred tax asset, which would negatively impact earnings.

Additional information related to income taxes is presented in Note 11 to the unaudited, consolidated financial statements.

INFLATION

The Corporation is significantly affected by the Federal Reserve Board’s efforts to control inflation through changes in short-term interest rates. Beginning in September 2007, in response to concerns about weakness in the U.S. economy, the Federal Reserve lowered the fed funds target rate numerous times; in December 2008, it established a target range of 0% to 0.25%, which it has maintained through the first half of 2013. Also, the Federal Reserve has injected massive amounts of liquidity into the nation’s monetary system through a variety of programs. The Federal Reserve has purchased large amounts of securities in an effort to keep interest rates low and stimulate economic growth. Further, Federal Reserve Chairman Ben Bernanke recently stated that he expects the Federal Reserve to continue “[h]ighly accommodative monetary policy for the foreseeable future.”

Despite the current low short-term rate environment, liquidity injections, and commodity price increases, inflation statistics indicate that the overall rate of inflation is unlikely to significantly affect the Corporation’s operations within the near future. Although management cannot predict future changes in the rates of inflation, management monitors the impact of economic trends, including any indicators of inflationary pressures, in managing interest rate and other financial risks.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

MARKET RISK

Market risk is the risk of loss arising from adverse changes in market rates and prices of the Corporation’s financial instruments. In addition to the effects of interest rates, the market prices of the Corporation’s debt securities within the available-for-sale securities portfolio are affected by fluctuations in the risk premiums (amounts of spread over risk-free rates) demanded by investors.

Management cannot control changes in market prices of securities based on fluctuations in the risk premiums demanded by investors, nor can management control the volume of deferrals or defaults by the issuers of debt securities owned by the Corporation. However, management attempts to limit the risk that economic conditions would force the Corporation to sell securities for realized losses by maintaining a strong capital position (discussed in the “Stockholders’ Equity and Capital Adequacy” section of Management’s Discussion and Analysis) and ample sources of liquidity (discussed in the “Liquidity” section of Management’s Discussion and Analysis).

The Corporation’s two major categories of market risk are interest rate risk and equity securities risk, which are discussed in the following sections.

INTEREST RATE RISK

Business risk arising from changes in interest rates is an inherent factor in operating a bank. The Corporation’s assets are predominantly long-term, fixed-rate loans and debt securities. Funding for these assets comes principally from shorter-term deposits and borrowed funds. Accordingly, there is an inherent risk of lower future earnings or decline in fair value of the Corporation’s financial instruments when interest rates change.

The Corporation uses a simulation model to calculate the potential effects of interest rate fluctuations on net interest income and the market value of portfolio equity. For purposes of these calculations, the market value of portfolio equity includes the fair values of financial instruments, such as securities, loans, deposits and borrowed funds, and the book values of nonfinancial assets and liabilities, such as premises and equipment and accrued expenses. The model measures and projects potential changes in net interest income, and calculates the discounted present value of anticipated cash flows of financial instruments, assuming an immediate increase or decrease in interest rates. Management ordinarily runs a variety of scenarios within a range of plus or minus 50-400 basis points of current rates.

The model makes estimates, at each level of interest rate change, regarding cash flows from principal repayments on loans and mortgage-backed securities and call activity on other investment securities. Actual results could vary significantly from these estimates, which could result in significant differences in the calculations of projected changes in net interest income and market value of portfolio equity. Also, the model does not make estimates related to changes in the composition of the deposit portfolio that could occur due to rate competition, and the table does not necessarily reflect changes that management would make to realign the portfolio as a result of changes in interest rates.

The Corporation’s Board of Directors has established policy guidelines for acceptable levels of interest rate risk, based on an immediate increase or decrease in interest rates. The policy limits acceptable fluctuations in net interest income from the baseline (flat rates) one-year scenario and variances in the market value of portfolio equity from the baseline values based on current rates.

Table XIII, which follows this discussion, is based on the results of calculations performed using the simulation model as of June 30, 2013 and October 31, 2012. The table shows that as of the respective dates, the changes in net interest income and changes in market value were within the policy limits in all scenarios.

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TABLE XIII - THE EFFECT OF HYPOTHETICAL CHANGES IN INTEREST RATES

June 30, 2013 Data
(In Thousands)		Period Ending June 30, 2014
Basis Point	Interest	Interest	Net Interest	NII	NII
Change in Rates	Income	Expense	Income (NII)	% Change	Risk Limit
+400	$54,725	$22,791	$31,934	-21.4%	25.0%
+300	52,524	18,058	34,466	-15.1%	20.0%
+200	50,320	13,660	36,660	-9.7%	15.0%
+100	48,056	9,485	38,571	-5.0%	10.0%
0	45,925	5,309	40,616	0.0%	0.0%
-100	43,601	5,141	38,460	-5.3%	10.0%
-200	42,188	5,140	37,048	-8.8%	15.0%
-300	41,746	5,140	36,606	-9.9%	20.0%
-400	41,639	5,140	36,499	-10.1%	25.0%
	Market Value of Portfolio Equity at June 30, 2013
	Present	Present	Present
Basis Point	Value	Value	Value
Change in Rates	Equity	% Change	Risk Limit
+400	$160,218	-27.4%	50.0%
+300	173,660	-21.4%	45.0%
+200	189,873	-14.0%	35.0%
+100	205,418	-7.0%	25.0%
0	220,809	0.0%	0.0%
-100	223,969	1.4%	25.0%
-200	232,553	5.3%	35.0%
-300	256,856	16.3%	45.0%
-400	297,347	34.7%	50.0%
October 31, 2012 Data
(In Thousands)		Period Ending October 31, 2013
Basis Point	Interest	Interest	Net Interest	NII	NII
Change in Rates	Income	Expense	Income (NII)	% Change	Risk Limit
+400	$60,813	$26,050	$34,763	-18.9%	25.0%
+300	58,329	20,789	37,540	-12.4%	20.0%
+200	55,398	16,004	39,394	-8.1%	15.0%
+100	52,592	11,338	41,254	-3.7%	10.0%
0	49,534	6,673	42,861	0.0%	0.0%
-100	46,881	6,236	40,645	-5.2%	10.0%
-200	46,178	6,233	39,945	-6.8%	15.0%
-300	45,925	6,233	39,692	-7.4%	20.0%
-400	45,800	6,233	39,567	-7.7%	25.0%
	Market Value of Portfolio Equity at October 31, 2012
	Present	Present	Present
Basis Point	Value	Value	Value
Change in Rates	Equity	% Change	Risk Limit
+400	$165,826	-21.7%	50.0%
+300	179,904	-15.1%	45.0%
+200	193,117	-8.8%	35.0%
+100	204,290	-3.6%	25.0%
0	211,846	0.0%	0.0%
-100	207,561	-2.0%	25.0%
-200	230,184	8.7%	35.0%
-300	268,229	26.6%	45.0%
-400	309,611	46.1%	50.0%

57

EQUITY SECURITIES RISK

The Corporation’s equity securities portfolio consists of investments in stocks of banks and bank holding companies. Investments in bank stocks are subject to risk factors that affect the banking industry in general, including credit risk, competition from non-bank entities, interest rate risk and other factors, which could result in a decline in market prices. Also, losses could occur in individual stocks held by the Corporation because of specific circumstances related to each bank. As discussed further in Note 6 of the consolidated financial statements, the Corporation recognized other-than-temporary impairment losses related to bank stocks of $25,000 in the first quarter 2013 and $67,000 in the first quarter 2012.

Equity securities held as of June 30, 2013 and December 31, 2012 are presented in Table XIV. Table XIV presents quantitative data concerning the effects of a decline in fair value of the Corporation’s equity securities of 10% or 20%. The data in Table XIV does not reflect the effects of any appreciation in value that may occur, nor does it present the Corporation’s maximum exposure to loss on equity securities, which would be 100% of their fair value as of June 30, 2013.

TABLE XIV - EQUITY SECURITIES RISK

(In Thousands)

	June 30,	Dec. 31,
	2013	2012
Cost	$5,965	$5,912
Fair Value	8,717	8,373
Hypothetical 10% Decline In Market Value	(872)	(837)
Hypothetical 20% Decline In Market Value	(1,743)	(1,675)

ITEM 4. CONTROLS AND PROCEDURES

The Corporation’s management, under the supervision of and with the participation of the Corporation’s Chief Executive Officer and Chief Financial Officer, has carried out an evaluation of the design and effectiveness of the Corporation’s disclosure controls and procedures as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Securities Exchange Act of 1934 as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Corporation’s disclosure controls and procedures are effective to ensure that all material information required to be disclosed in reports the Corporation files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms.

There were no significant changes in the Corporation’s internal control over financial reporting that occurred during the period covered by this report that have materially affected, or that are reasonably likely to affect, our internal control over financial reporting.

58

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

The Corporation and C&N Bank are involved in various legal proceedings incidental to their business. Management believes the aggregate liability, if any, resulting from such pending and threatened legal proceedings will not have a material, adverse effect on the Corporation’s financial condition or results of operations.

Item 1A. Risk Factors

There have been no material changes from the risk factors previously disclosed in Item 1A of the Corporation’s Form 10-K filed February 21, 2013.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

On May 19, 2011, the Corporation announced the Corporation’s Board of Directors authorized repurchases of outstanding common stock, up to a total of $1 million, in open market or privately negotiated transactions. At its September 22, 2011 meeting, the Corporation’s Board of Directors authorized repurchases of outstanding common stock in open market or privately negotiated transactions, up to a total of $1 million, as an addition to the stock repurchase program previously announced on May 19, 2011. The Board of Directors’ authorizations provide that: (1) the treasury stock repurchase programs became effective when publicly announced and shall continue thereafter until suspended or terminated by the Board of Directors, in its sole discretion; and (2) all shares of common stock repurchased pursuant to the programs shall be held as treasury shares and be available for use and reissuance for purposes as and when determined by the Board of Directors including, without limitation, pursuant to the Corporation’s Dividend Reinvestment and Stock Purchase Plan and its equity compensation program. As of June 30, 2013, the maximum additional value available for purchases under this program was $980,694.

In the second quarter 2013, the Corporation made no purchases of its equity securities.

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

None

59

Item 6. Exhibits

2. Plan of acquisition, reorganization, arrangement,	Not applicable
liquidation or succession
3. (i) Articles of Incorporation	Incorporated by reference to Exhibit 3.1 of
	the Corporation's Form 8-K filed
	September 21, 2009
3. (ii) By-laws	Incorporated by reference to Exhibit 3.1 of the
	Corporation's Form 8-K filed April 19, 2013
4. Instruments defining the rights of Security holders, including
Indentures	Not applicable
10. Material contracts	Not applicable
11. Statement re: computation of per share earnings	Information concerning the computation of
	earnings per share is provided in Note 2
	to the unaudited consolidated financial
	statements, which is included in Part I,
	Item 1 of Form 10-Q
15. Letter re: unaudited interim information	Not applicable
18. Letter re: change in accounting principles	Not applicable
19. Report furnished to security holders	Not applicable
22. Published report regarding matters submitted to	Not applicable
vote of security holders
23. Consents of experts and counsel	Not applicable
24. Power of attorney	Not applicable
31. Rule 13a-14(a)/15d-14(a) certifications:
31.1 Certification of Chief Executive Officer	Filed herewith
31.2 Certification of Chief Financial Officer	Filed herewith
32. Section 1350 certifications	Filed herewith
99. Additional exhibits	Not applicable
100. XBRL-related documents	Not applicable
101. Interactive data file	Filed herewith

60

Signatures

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CITIZENS & NORTHERN CORPORATION
August 8, 2013	By:	/s/ Charles H. Updegraff, Jr.
Date		President and Chief Executive Officer
August 8, 2013	By:	/s/ Mark A. Hughes
Date		Treasurer and Chief Financial Officer

61

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Charles H. Updegraff, Jr., President and Chief Executive Officer of Citizens & Northern Corporation, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Citizens & Northern Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

August 8, 2013	By:  /s/  Charles H. Updegraff, Jr.
Date	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Mark A. Hughes, Treasurer and Chief Financial Officer of Citizens & Northern Corporation, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Citizens & Northern Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

August 8, 2013	By: /s/  Mark A. Hughes
Date	Treasurer and Chief Financial Officer

EX-32

Exhibit 32

SECTION 1350 CERTIFICATIONS

In connection with the Quarterly Report of Citizens & Northern Corporation (the “Corporation”) on Form 10-Q for the quarterly period ended June 30, 2013, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned hereby certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to each of the undersigned’s best knowledge and belief:

(a) the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 as amended; and

(b) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

August 8, 2013	By:	/s/  Charles H. Updegraff, Jr.
Date		President and Chief Executive Officer
August 8, 2013	By:	/s/ Mark A. Hughes
Date		Treasurer and Chief Financial Officer

These certifications accompany this report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Corporation for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certifications will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Corporation specifically incorporates them by reference.

A signed original of this written statement required by Section 906 has been provided to the Corporation and will be retained by the Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Note 9 - Defined Benefit Plans

6 Months Ended

Jun. 30, 2013

Compensation and Retirement Disclosure [Abstract]

Pension and Other Postretirement Benefits Disclosure [Text Block]

9. DEFINED BENEFIT PLANS

The Corporation sponsors a defined benefit health care plan that provides postretirement medical benefits and life insurance to employees who meet certain age and length of service requirements. Effective January 1, 2013, this plan was amended so that full-time employees no longer accrue service time toward the Corporation-subsidized portion of the medical benefits. The plan was also amended effective January 1, 2013 to change some of the age and length-of-service requirements for participants to receive some of the benefits provided under the plan. This plan contains a cost-sharing feature, which causes participants to pay for all future increases in costs related to benefit coverage. Accordingly, actuarial assumptions related to health care cost trend rates do not significantly affect the liability balance at June 30, 2013 and December 31, 2012, and are not expected to significantly affect the Corporation's future expenses. The Corporation uses a December 31 measurement date for the postretirement plan.

In an acquisition in 2007, the Corporation assumed the Citizens Trust Company Retirement Plan, a defined benefit pension plan. This plan covers certain employees who were employed by Citizens Trust Company on December 31, 2002, when the plan was amended to discontinue admittance of any future participant and to freeze benefit accruals. Information related to the Citizens Trust Company Retirement Plan has been included in the tables that follow. The Corporation uses a December 31 measurement date for this plan.

The components of net periodic benefit costs from these defined benefit plans are as follows:

(In Thousands)	Pension Six Months Ended June 30,						Postretirement Six Months Ended June 30,
	2013			2012			2013			2012
Service cost	$	0		$	0		$	21		$	46
Interest cost		36			36			28			41
Expected return on plan assets		(45	)		(36	)		0			0
Amortization of transition (asset) obligation		0			0			0			18
Amortization of prior service cost		0			0			(16	)		7
Recognized net actuarial loss		16			14			0			0
Net periodic benefit cost	$	7		$	14		$	33		$	112

(In Thousands)	Pension Three Months Ended June 30,						Postretirement Three Months Ended June 30,
	2013			2012			2013			2012
Service cost	$	0		$	0		$	11		$	23
Interest cost		18			18			14			21
Expected return on plan assets		(22	)		(18	)		0			0
Amortization of transition (asset) obligation		0			0			0			9
Amortization of prior service cost		0			0			(8	)		3
Recognized net actuarial loss		8			7			0			0
Net periodic benefit cost	$	4		$	7		$	17		$	56

In the first six months of 2013, the Corporation funded postretirement contributions totaling $30,000, with estimated annual postretirement contributions of $60,000 expected in 2013 for the full year. The Corporation made no contribution to the defined benefit pension plan in the first six months of 2013. Based upon the related actuarial reports, no defined benefit pension contributions are required in 2013, though the Corporation may make discretionary contributions.

XML

Note 7 - Loans (Details) - Aggregate Credit Quality Classification of Outstanding Loans by Risk Rating (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	$ 654,970	$ 683,910
Residential Mortgage Loans - First Liens [Member] | Pass [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	289,357	295,929
Residential Mortgage Loans - First Liens [Member] | Special Mention [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	2,440	3,633
Residential Mortgage Loans - First Liens [Member] | Substandard [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	12,821	11,872
Residential Mortgage Loans - First Liens [Member] | Doubtful [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	188	193
Residential Mortgage Loans - First Liens [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	304,806	311,627
Residential Mortgage Loans - Junior Liens [Member] | Pass [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	23,608	25,394
Residential Mortgage Loans - Junior Liens [Member] | Special Mention [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	406	420
Residential Mortgage Loans - Junior Liens [Member] | Substandard [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	783	934
Residential Mortgage Loans - Junior Liens [Member] | Doubtful [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	0	0
Residential Mortgage Loans - Junior Liens [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	24,797	26,748
Home Equity Line of Credit [Member] | Pass [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	32,623	32,374
Home Equity Line of Credit [Member] | Special Mention [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	96	130
Home Equity Line of Credit [Member] | Substandard [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	357	513
Home Equity Line of Credit [Member] | Doubtful [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	0	0
Home Equity Line of Credit [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	33,076	33,017
1-4 Family Residential Construction [Member] | Pass [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	14,823	12,759
1-4 Family Residential Construction [Member] | Special Mention [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	0	0
1-4 Family Residential Construction [Member] | Substandard [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	72	83
1-4 Family Residential Construction [Member] | Doubtful [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	0	0
1-4 Family Residential Construction [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	14,895	12,842
Total Residential Mortgage [Member] | Pass [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	360,411	366,456
Total Residential Mortgage [Member] | Special Mention [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	2,942	4,183
Total Residential Mortgage [Member] | Substandard [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	14,033	13,402
Total Residential Mortgage [Member] | Doubtful [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	188	193
Total Residential Mortgage [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	377,574	384,234
Commercial Loans Secured by Real Estate [Member] | Pass [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	143,139	146,381
Commercial Loans Secured by Real Estate [Member] | Special Mention [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	7,109	6,994
Commercial Loans Secured by Real Estate [Member] | Substandard [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	4,603	5,038
Commercial Loans Secured by Real Estate [Member] | Doubtful [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	317	0
Commercial Loans Secured by Real Estate [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	155,168	158,413
Commercial and Industrial [Member] | Pass [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	38,739	41,237
Commercial and Industrial [Member] | Special Mention [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	3,683	3,030
Commercial and Industrial [Member] | Substandard [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	3,025	3,810
Commercial and Industrial [Member] | Doubtful [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	365	365
Commercial and Industrial [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	45,812	48,442
Political Subdivisions [Member] | Pass [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	23,928	31,679
Political Subdivisions [Member] | Special Mention [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	105	110
Political Subdivisions [Member] | Substandard [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	0	0
Political Subdivisions [Member] | Doubtful [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	0	0
Political Subdivisions [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	24,033	31,789
Commercial Construction and Land [Member] | Pass [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	18,744	26,744
Commercial Construction and Land [Member] | Special Mention [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	225	231
Commercial Construction and Land [Member] | Substandard [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	472	477
Commercial Construction and Land [Member] | Doubtful [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	748	748
Commercial Construction and Land [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	20,189	28,200
Loans Secured by Farmland [Member] | Pass [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	8,845	9,102
Loans Secured by Farmland [Member] | Special Mention [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	767	751
Loans Secured by Farmland [Member] | Substandard [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	1,490	1,517
Loans Secured by Farmland [Member] | Doubtful [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	32	33
Loans Secured by Farmland [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	11,134	11,403
Multi-family (5 or more) Residential [Member] | Pass [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	6,020	6,394
Multi-family (5 or more) Residential [Member] | Special Mention [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	329	342
Multi-family (5 or more) Residential [Member] | Substandard [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	48	9
Multi-family (5 or more) Residential [Member] | Doubtful [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	0	0
Multi-family (5 or more) Residential [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	6,397	6,745
Agricultural Loans [Member] | Pass [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	2,969	2,963
Agricultural Loans [Member] | Special Mention [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	36	28
Agricultural Loans [Member] | Substandard [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	56	62
Agricultural Loans [Member] | Doubtful [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	0	0
Agricultural Loans [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	3,061	3,053
Other Commercial Loans [Member] | Pass [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	543	362
Other Commercial Loans [Member] | Special Mention [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	0	0
Other Commercial Loans [Member] | Substandard [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	0	0
Other Commercial Loans [Member] | Doubtful [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	0	0
Other Commercial Loans [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	543	362
Total Commercial [Member] | Pass [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	242,927	264,862
Total Commercial [Member] | Special Mention [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	12,254	11,486
Total Commercial [Member] | Substandard [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	9,694	10,913
Total Commercial [Member] | Doubtful [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	1,462	1,146
Total Commercial [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	266,337	288,407
Consumer [Member] | Pass [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	10,836	11,053
Consumer [Member] | Special Mention [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	11	12
Consumer [Member] | Substandard [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	212	203
Consumer [Member] | Doubtful [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	0	1
Consumer [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	11,059	11,269
Pass [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	614,174	642,371
Special Mention [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	15,207	15,681
Substandard [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	23,939	24,518
Doubtful [Member]
Residential Mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	$ 1,650	$ 1,340

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Consolidated Statements of Income (Unaudited) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
INTEREST INCOME
Interest and fees on loans	$ 9,028,000	$ 10,242,000	$ 18,253,000	$ 20,608,000
Interest on balances with depository institutions	23,000	31,000	51,000	59,000
Interest on loans to political subdivisions	323,000	375,000	685,000	752,000
Interest on loans held for sale	12,000	23,000	33,000	32,000
Income from available-for-sale securities:
Taxable	1,663,000	2,520,000	3,380,000	5,178,000
Tax-exempt	1,243,000	1,265,000	2,455,000	2,528,000
Dividends	63,000	73,000	145,000	148,000
Total interest and dividend income	12,355,000	14,529,000	25,002,000	29,305,000
INTEREST EXPENSE
Interest on deposits	673,000	1,271,000	1,451,000	2,621,000
Interest on short-term borrowings	2,000	1,000	3,000	4,000
Interest on long-term borrowings	740,000	1,129,000	1,561,000	2,278,000
Total interest expense	1,415,000	2,401,000	3,015,000	4,903,000
Net interest income	10,940,000	12,128,000	21,987,000	24,402,000
Provision for loan losses	66,000	367,000	249,000	185,000
Net interest income after provision for loan losses	10,874,000	11,761,000	21,738,000	24,217,000
OTHER INCOME
Service charges on deposit accounts	1,171,000	1,256,000	2,330,000	2,417,000
Service charges and fees	216,000	235,000	417,000	455,000
Trust and financial management revenue	1,045,000	960,000	1,989,000	1,889,000
Interchange revenue from debit card transactions	505,000	488,000	969,000	983,000
Net gains from sale of loans	587,000	373,000	1,132,000	638,000
Increase in cash surrender value of life insurance	99,000	117,000	192,000	236,000
Insurance commissions, fees and premiums	59,000	73,000	104,000	107,000
Other operating income	509,000	777,000	901,000	1,209,000
Sub-total	4,191,000	4,279,000	8,034,000	7,934,000
Total other-than-temporary impairment losses on available-for-sale securities	0	0	(25,000)	(67,000)
Portion of (gain) loss recognized in other comprehensive loss (before taxes)	0	0	0	0
Net impairment losses recognized in earnings	0	0	(25,000)	(67,000)
Realized gains on available-for-sale securities, net	100,000	203,000	1,284,000	268,000
Net realized gains on available-for-sale securities	100,000	203,000	1,259,000	201,000
Total other income	4,291,000	4,482,000	9,293,000	8,135,000
OTHER EXPENSES
Salaries and wages	3,635,000	3,586,000	7,235,000	7,161,000
Pensions and other employee benefits	1,034,000	1,090,000	2,289,000	2,456,000
Occupancy expense, net	599,000	628,000	1,233,000	1,264,000
Furniture and equipment expense	483,000	461,000	977,000	943,000
FDIC Assessments	147,000	157,000	299,000	303,000
Pennsylvania shares tax	351,000	340,000	701,000	672,000
Loss on prepayment of debt	0	143,000	1,023,000	143,000
Other operating expense	2,271,000	2,059,000	4,339,000	3,935,000
Total other expenses	8,520,000	8,464,000	18,096,000	16,877,000
Income before income tax provision	6,645,000	7,779,000	12,935,000	15,475,000
Income tax provision	1,671,000	2,094,000	3,255,000	4,203,000
NET INCOME	$ 4,974,000	$ 5,685,000	$ 9,680,000	$ 11,272,000
NET INCOME PER SHARE - BASIC (in Dollars per share)	$ 0.40	$ 0.46	$ 0.78	$ 0.92
NET INCOME PER SHARE - DILUTED (in Dollars per share)	$ 0.40	$ 0.46	$ 0.78	$ 0.92

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Note 2 - Per Share Data

6 Months Ended

Jun. 30, 2013

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

2. PER SHARE DATA

Net income per share is based on the weighted-average number of shares of common stock outstanding. The following data show the amounts used in computing basic and diluted net income per share. As shown in the table that follows, diluted earnings per share is computed using weighted average common shares outstanding, plus weighted-average common shares available from the exercise of all dilutive stock options, less the number of shares that could be repurchased with the proceeds of stock option exercises based on the average share price of the Corporation's common stock during the period.

	Net Income		Weighted- Average Common Shares			Earnings Per Share
Six Months Ended June 30, 2013
Earnings per share – basic	$	9,680,000		12,331,943		$	0.78
Dilutive effect of potential common stock arising from stock options:
Exercise of outstanding stock options				254,900
Hypothetical share repurchase at $19.53				(227,559	)
Earnings per share – diluted	$	9,680,000		12,359,284		$	0.78
Six Months Ended June 30, 2012
Earnings per share – basic	$	11,272,000		12,216,339		$	0.92
Dilutive effect of potential common stock arising from stock options:
Exercise of outstanding stock options				204,836
Hypothetical share repurchase at $19.35				(177,872	)
Earnings per share – diluted	$	11,272,000		12,243,303		$	0.92

	Net Income		Weighted- Average Common Shares			Earnings Per Share
Quarter Ended June 30, 2013
Earnings per share – basic	$	4,974,000		12,342,755		$	0.40
Dilutive effect of potential common stock arising from stock options:
Exercise of outstanding stock options				252,380
Hypothetical share repurchase at $ 19.49				(225,824	)
Earnings per share – diluted	$	4,974,000		12,369,311		$	0.40
Quarter Ended June 30, 2012
Earnings per share – basic	$	5,685,000		12,225,808		$	0.46
Dilutive effect of potential common stock arising from stock options:
Exercise of outstanding stock options				137,591
Hypothetical share repurchase at $18.26				(120,566	)
Earnings per share – diluted	$	5,685,000		12,242,833		$	0.46

Stock options that were anti-dilutive were excluded from net income per share calculations. Weighted-average common shares available from anti-dilutive instruments totaled 119,385 shares in the six-month period ended June 30, 2013, 147,509 shares in the six-month period ended June 30, 2012, 116,891 shares in the second quarter 2013 and 210,875 shares in the second quarter 2012.

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Note 2 - Per Share Data (Tables)

6 Months Ended

Jun. 30, 2013

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Net Income		Weighted- Average Common Shares			Earnings Per Share
Six Months Ended June 30, 2013
Earnings per share – basic	$	9,680,000		12,331,943		$	0.78
Dilutive effect of potential common stock arising from stock options:
Exercise of outstanding stock options				254,900
Hypothetical share repurchase at $19.53				(227,559	)
Earnings per share – diluted	$	9,680,000		12,359,284		$	0.78
Six Months Ended June 30, 2012
Earnings per share – basic	$	11,272,000		12,216,339		$	0.92
Dilutive effect of potential common stock arising from stock options:
Exercise of outstanding stock options				204,836
Hypothetical share repurchase at $19.35				(177,872	)
Earnings per share – diluted	$	11,272,000		12,243,303		$	0.92

	Net Income		Weighted- Average Common Shares			Earnings Per Share
Quarter Ended June 30, 2013
Earnings per share – basic	$	4,974,000		12,342,755		$	0.40
Dilutive effect of potential common stock arising from stock options:
Exercise of outstanding stock options				252,380
Hypothetical share repurchase at $ 19.49				(225,824	)
Earnings per share – diluted	$	4,974,000		12,369,311		$	0.40
Quarter Ended June 30, 2012
Earnings per share – basic	$	5,685,000		12,225,808		$	0.46
Dilutive effect of potential common stock arising from stock options:
Exercise of outstanding stock options				137,591
Hypothetical share repurchase at $18.26				(120,566	)
Earnings per share – diluted	$	5,685,000		12,242,833		$	0.46

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Note 9 - Defined Benefit Plans (Details) (USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Compensation and Retirement Disclosure [Abstract]
Defined Benefit Plan, Description of Plan Amendment	This plan covers certain employees who were employed by Citizens Trust Company on December 31, 2002, when the plan was amended to discontinue admittance of any future participant and to freeze benefit accruals
Pension and Other Postretirement Benefit Contributions	$ 30,000	$ 60,000

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Note 7 - Loans (Details) - Nonaccrual Loans and Loans Past Due Ninety Days or More (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Residential mortgage:
Past Due 90+ Days and Accruing	$ 2,202	$ 2,311
Nonaccrual	6,697	7,353
Residential Mortgage Loans - First Liens [Member]
Residential mortgage:
Past Due 90+ Days and Accruing	1,510	1,900
Nonaccrual	2,929	3,064
Residential Mortgage Loans - Junior Liens [Member]
Residential mortgage:
Past Due 90+ Days and Accruing	58	29
Nonaccrual	111	111
Home Equity Line of Credit [Member]
Residential mortgage:
Past Due 90+ Days and Accruing	39	40
Nonaccrual	62	200
1-4 Family Residential Construction [Member]
Residential mortgage:
Past Due 90+ Days and Accruing	0	0
Nonaccrual	72	0
Total Residential Mortgage [Member]
Residential mortgage:
Past Due 90+ Days and Accruing	1,607	1,969
Nonaccrual	3,174	3,375
Commercial Loans Secured by Real Estate [Member]
Residential mortgage:
Past Due 90+ Days and Accruing	278	120
Nonaccrual	926	1,338
Commercial and Industrial [Member]
Residential mortgage:
Past Due 90+ Days and Accruing	3	68
Nonaccrual	576	761
Commercial Construction and Land [Member]
Residential mortgage:
Past Due 90+ Days and Accruing	0	149
Nonaccrual	1,033	887
Loans Secured by Farmland [Member]
Residential mortgage:
Past Due 90+ Days and Accruing	236	0
Nonaccrual	921	923
Agricultural Loans [Member]
Residential mortgage:
Past Due 90+ Days and Accruing	0	0
Nonaccrual	39	40
Total Commercial [Member]
Residential mortgage:
Past Due 90+ Days and Accruing	517	337
Nonaccrual	3,495	3,949
Consumer [Member]
Residential mortgage:
Past Due 90+ Days and Accruing	78	5
Nonaccrual	$ 28	$ 29

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Note 10 - Stock-Based Compensation Plans

6 Months Ended

Jun. 30, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

10. STOCK-BASED COMPENSATION PLANS

In January 2013, the Corporation granted options to purchase a total of 64,050 shares of common stock through its Stock Incentive and Independent Directors Stock Incentive Plans. In January 2012, the Corporation granted options to purchase a total of 64,757 shares of common stock. The exercise price for the 2013 awards is $19.21 per share, and the exercise price for the 2012 awards is $18.54 per share, based on the market price as of the date of grant. Stock option expense is recognized over the vesting period of each option. The Corporation expects total stock option expense for the year ending December 31, 2013 will be $262,000, and total stock option expense for the year ended December 31, 2012 was $247,000.

The Corporation records stock option expense based on estimated fair value calculated using an option valuation model. In calculating the 2013 and 2012 fair values, the Corporation utilized the Black-Scholes-Merton option-pricing model. The calculated fair value of each option granted, and significant assumptions used in the calculations, are as follows:

	2013			2012
Fair value of each option granted	$	5.56		$	5.15
Volatility		41	%		41	%
Expected option lives (years)	8			7
Risk-free interest rate		1.60	%		1.53	%
Dividend yield		3.69	%		3.97	%

In calculating the estimated fair value of stock option awards, management based its estimates of volatility and dividend yield on the Corporation’s experience over the immediately prior period of time consistent with the estimated lives of the options. The risk-free interest rate was based on the published yield of zero-coupon U.S. Treasury strips with an applicable maturity as of the grant dates. The expected option lives were based on management’s estimates of the average term for all options issued under both plans. In 2013 and 2012, management assumed a 33% forfeiture rate for options granted under the Stock Incentive Plan, and a 0% forfeiture rate for the Independent Directors Stock Incentive Plan. These estimated forfeiture rates were determined based on the Corporation’s historical experience.

In January 2013, the Corporation awarded a total of 37,886 shares of restricted stock under the Stock Incentive and Independent Directors Stock Incentive Plans. In January 2012, a total of 42,552 shares of restricted stock were awarded under the Plans. Compensation cost related to restricted stock is recognized based on the market price of the stock at the grant date over the vesting period. For restricted stock awards granted under the Stock Incentive Plan, the Corporation must meet an annual targeted return on average equity (“ROAE”) performance ratio, as defined, in order for participants to vest. Management has estimated restricted stock expense in the first six months and second quarter 2013 based on an assumption that the ROAE target for 2013 will be met.

Total stock-based compensation expense is as follows:

(In Thousands)	3 Months Ended				6 Months Ended
	June 30, 2013		June 30, 2012		June 30, 2013		June 30, 2012
Stock options	$	96	$	88	$	262	$	247
Restricted stock		109		82		230		164
Total	$	205	$	170	$	492	$	411

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Note 6 - Securities (Details) - Gross Realized Gains and Losses from Available-for-Sale Securities (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Gross Realized Gains and Losses from Available-for-Sale Securities [Abstract]
Gross realized gains from sales	$ 100	$ 252	$ 1,402	$ 317
Gross realized losses from sales	0	(49)	(118)	(49)
Losses from OTTI impairment	0	0	(25)	(67)
Net realized gains	$ 100	$ 203	$ 1,259	$ 201

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Note 7 - Loans (Details) - Contractual Aging of Loans (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Residential mortgage:
Current & Past Due Less than 30 Days	$ 641,982	$ 668,657
Past Due 30-89 Days	6,647	8,483
Past Due 90+ Days	6,341	6,770
Loans and Leases Receivable, Gross, Carrying Amount	654,970	683,910
Residential Portfolio Segment Residential Mortgage First Liens [Member]
Residential mortgage:
Current & Past Due Less than 30 Days	298,731	302,373
Past Due 30-89 Days	3,769	6,228
Past Due 90+ Days	2,306	3,026
Loans and Leases Receivable, Gross, Carrying Amount	304,806	311,627
Residential Mortgage Loans - Junior Liens [Member]
Residential mortgage:
Current & Past Due Less than 30 Days	24,517	26,247
Past Due 30-89 Days	121	371
Past Due 90+ Days	159	130
Loans and Leases Receivable, Gross, Carrying Amount	24,797	26,748
Home Equity Line of Credit [Member]
Residential mortgage:
Current & Past Due Less than 30 Days	32,879	32,593
Past Due 30-89 Days	96	184
Past Due 90+ Days	101	240
Loans and Leases Receivable, Gross, Carrying Amount	33,076	33,017
1-4 Family Residential Construction [Member]
Residential mortgage:
Current & Past Due Less than 30 Days	14,823	12,627
Past Due 30-89 Days	0	215
Past Due 90+ Days	72	0
Loans and Leases Receivable, Gross, Carrying Amount	14,895	12,842
Total Residential Mortgage [Member]
Residential mortgage:
Current & Past Due Less than 30 Days	370,950	373,840
Past Due 30-89 Days	3,986	6,998
Past Due 90+ Days	2,638	3,396
Loans and Leases Receivable, Gross, Carrying Amount	377,574	384,234
Commercial Loans Secured by Real Estate [Member]
Residential mortgage:
Current & Past Due Less than 30 Days	152,495	156,834
Past Due 30-89 Days	1,727	704
Past Due 90+ Days	946	875
Loans and Leases Receivable, Gross, Carrying Amount	155,168	158,413
Commercial and Industrial [Member]
Residential mortgage:
Current & Past Due Less than 30 Days	44,864	47,569
Past Due 30-89 Days	438	317
Past Due 90+ Days	510	556
Loans and Leases Receivable, Gross, Carrying Amount	45,812	48,442
Political Subdivisions [Member]
Residential mortgage:
Current & Past Due Less than 30 Days	24,033	31,789
Past Due 30-89 Days	0	0
Past Due 90+ Days	0	0
Loans and Leases Receivable, Gross, Carrying Amount	24,033	31,789
Commercial Construction and Land [Member]
Residential mortgage:
Current & Past Due Less than 30 Days	18,974	26,944
Past Due 30-89 Days	210	248
Past Due 90+ Days	1,005	1,008
Loans and Leases Receivable, Gross, Carrying Amount	20,189	28,200
Loans Secured by Farmland [Member]
Residential mortgage:
Current & Past Due Less than 30 Days	9,904	10,438
Past Due 30-89 Days	105	75
Past Due 90+ Days	1,125	890
Loans and Leases Receivable, Gross, Carrying Amount	11,134	11,403
Multi-family (5 or more) Residential [Member]
Residential mortgage:
Current & Past Due Less than 30 Days	6,268	6,743
Past Due 30-89 Days	129	2
Past Due 90+ Days	0	0
Loans and Leases Receivable, Gross, Carrying Amount	6,397	6,745
Agricultural Loans [Member]
Residential mortgage:
Current & Past Due Less than 30 Days	3,022	3,003
Past Due 30-89 Days	0	10
Past Due 90+ Days	39	40
Loans and Leases Receivable, Gross, Carrying Amount	3,061	3,053
Other Commercial Loans [Member]
Residential mortgage:
Current & Past Due Less than 30 Days	543	362
Past Due 30-89 Days	0	0
Past Due 90+ Days	0	0
Loans and Leases Receivable, Gross, Carrying Amount	543	362
Total Commercial [Member]
Residential mortgage:
Current & Past Due Less than 30 Days	260,103	283,682
Past Due 30-89 Days	2,609	1,356
Past Due 90+ Days	3,625	3,369
Loans and Leases Receivable, Gross, Carrying Amount	266,337	288,407
Consumer Loan [Member]
Residential mortgage:
Current & Past Due Less than 30 Days	10,929	11,135
Past Due 30-89 Days	52	129
Past Due 90+ Days	78	5
Loans and Leases Receivable, Gross, Carrying Amount	$ 11,059	$ 11,269

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Note 3 - Comprehensive Income (Details) - Amounts Reclassified Out of Each Component of OCI (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Note 3 - Comprehensive Income (Details) - Amounts Reclassified Out of Each Component of OCI [Line Items]
Total other-than-temporary impairment losses on available-for-sale securities	$ 0	$ 0	$ 25,000	$ 67,000
Total Before Tax	6,645,000	7,779,000	12,935,000	15,475,000
Income Tax Provision	1,671,000	2,094,000	3,255,000	4,203,000
Net Income	4,974,000	5,685,000	9,680,000	11,272,000
Amounts Reclassified To From Accumulated Other Comprehensive Income [Member] | Unrealized Gains and Losses on Available-for-sale Securities [Member]
Note 3 - Comprehensive Income (Details) - Amounts Reclassified Out of Each Component of OCI [Line Items]
Total other-than-temporary impairment losses on available-for-sale securities	0		25,000
Total Before Tax	(100,000)		(1,259,000)
Income Tax Provision	35,000		441,000
Net Income	(65,000)		(818,000)
Amounts Reclassified To From Accumulated Other Comprehensive Income [Member] | Realized Gains and Losses on Available-for-sale Securities [Member]
Note 3 - Comprehensive Income (Details) - Amounts Reclassified Out of Each Component of OCI [Line Items]
Realized Gains on Available-for-sale securities, net	(100,000)		(1,284,000)
Amounts Reclassified To From Accumulated Other Comprehensive Income [Member] | Amortization of Defined Benefit Pension and Postretirement Items [Member]
Note 3 - Comprehensive Income (Details) - Amounts Reclassified Out of Each Component of OCI [Line Items]
Total Before Tax	0		0
Income Tax Provision	0		0
Net Income	0		0
Pensions and Other Employee Benefits, Prior Service Cost	(8,000)		(16,000)
Pensions and Other Employee Benefits, Actuarial loss	8,000		16,000
Amounts Reclassified To From Accumulated Other Comprehensive Income [Member]
Note 3 - Comprehensive Income (Details) - Amounts Reclassified Out of Each Component of OCI [Line Items]
Net Income	$ (65,000)		$ (818,000)

XML

Note 5 - Fair Value Measurements and Fair Values of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

Fair Value, by Balance Sheet Grouping [Table Text Block]

			June 30, 2013
(In Thousands)	Quoted Prices in Active Markets (Level 1)		Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)			Total Fair Value
Recurring fair value measurements
AVAILABLE-FOR-SALE SECURITIES:
Obligations of U.S. Government agencies	$	0	$	47,970	$	0		$	47,970
Obligations of states and political subdivisions:
Tax-exempt		0		134,483		0			134,483
Taxable		0		29,689		0			29,689
Mortgage-backed securities		0		65,625		0			65,625
Collateralized mortgage obligations, Issued by U.S. Government agencies		0		182,924		0			182,924
Collateralized debt obligations		0		660		0			660
Total debt securities		0		461,351		0			461,351
Marketable equity securities		8,717		0		0			8,717
Total available-for-sale securities		8,717		461,351		0			470,068
Servicing rights		0		0		850			850
Total recurring fair value measurements	$	8,717	$	461,351	$	850		$	470,918
Nonrecurring fair value measurements
Impaired loans with a valuation allowance	$	0	$	0	$	1,874		$	1,874
Valuation allowance		0		0		(762	)		(762	)
Impaired loans, net		0		0		1,112			1,112
Foreclosed assets held for sale		0		0		890			890
Total nonrecurring fair value measurements	$	0	$	0	$	2,002		$	2,002

			December 31, 2012
(In Thousands)	Quoted Prices in Active Markets (Level 1)		Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)			Total Fair Value
Recurring fair value measurements
AVAILABLE-FOR-SALE SECURITIES:
Obligations of U.S. Government agencies	$	0	$	31,217	$	0		$	31,217
Obligations of states and political subdivisions:
Tax-exempt		0		137,020		0			137,020
Taxable		0		24,817		0			24,817
Mortgage-backed securities		0		80,196		0			80,196
Collateralized mortgage obligations,
Issued by U.S. Government agencies		0		183,510		0			183,510
Trust preferred securities issued by individual institutions		0		5,171		0			5,171
Collateralized debt obligations:
Pooled trust preferred securities - senior tranches		0		0		1,613			1,613
Other collateralized debt obligations		0		660		0			660
Total debt securities		0		462,591		1,613			464,204
Marketable equity securities		8,373		0		0			8,373
Total available-for-sale securities		8,373		462,591		1,613			472,577
Servicing rights		0		0		605			605
Total recurring fair value measurements	$	8,373	$	462,591	$	2,218		$	473,182
Nonrecurring fair value measurements
Impaired loans with a valuation allowance	$	0	$	0	$	2,710		$	2,710
Valuation allowance		0		0		(623	)		(623	)
Impaired loans, net		0		0		2,087			2,087
Foreclosed assets held for sale		0		0		879			879
Total nonrecurring fair value measurements	$	0	$	0	$	2,966		$	2,966

Fair Value Inputs, Assets, Quantitative Information [Table Text Block]

Asset	Fair Value at 6/30/13 (In Thousands)		Valuation Technique	Unobservable Input(s)	Method or Value As of 6/30/13
Servicing rights	$	850	Discounted cash flow	Discount rate		12.00	%	Rate used through modeling period
				Loan prepayment speeds		245.00	%	Weighted-average PSA
				Servicing fees		0.25	%	of loan balances
						5.00	%	of payments are late
						5.00	%	late fees assessed
					$	1.94		Miscellaneous fees per account per month
				Servicing costs	$	6.00		Monthly servicing cost per account
					$	24.00		Additional monthly servicing cost per loan on loans more than 30 days delinquent
						1.50	%	of loans more than 30 days delinquent
						3.00	%	annual increase in servicing costs

Asset	Fair Value at 12/31/12 (In Thousands)		Valuation Technique	Unobservable Input(s)	Method or Value As of 12/31/12
Pooled trust preferred securities - senior tranches	$	1,613	Discounted cash flow	Issuer defaults		50.26	%	Actual deferrals and defaults as % of outstanding collateral
						19.73	%	Expected additional net deferrals and defaults as % of performing collateral
				Issuer prepayments		41.24	%	Expected issuer prepayments as % of performing collateral
				Discount rate		11.70	%	Implied 7.57% discount rate at 12/31/07 plus 4.13% spread for credit and liquidity risk
Servicing rights		605	Discounted cash flow	Discount rate		12.00	%	Rate used through modeling period
				Loan prepayment speeds		288.00	%	Weighted-average PSA
				Servicing fees		0.25	%	of loan balances
						5.00	%	of payments are late
						5.00	%	late fees assessed
					$	1.94		Miscellaneous fees per account per month
				Servicing costs	$	6.00		Monthly servicing cost per account
					$	24.00		Additional monthly servicing cost per loan on loans more than 30 days delinquent
						1.50	%	of loans more than 30 days delinquent
						3.00	%	annual increase in servicing costs

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

	Three Months Ended June 30, 2013											Six Months Ended June 30, 2013
(In Thousands)	Pooled Trust Preferred Securities - Senior Tranches			Pooled Trust Preferred Securities - Mezzanine Tranches		Servicing Rights			Total			Pooled Trust Preferred Securities - Senior Tranches			Pooled Trust Preferred Securities - Mezzanine Tranches			Servicing Rights			Total
Balance, beginning of period	$	1,659		$	0	$	738		$	2,397		$	1,613		$	0		$	605		$	2,218
Issuances of servicing rights		0			0		150			150			0			0			316			316
Accretion and amortization, net		(1	)		0		0			(1	)		(2	)		0			0			(2	)
Proceeds from sales and calls		(1,636	)		0		0			(1,636	)		(1,636	)		(571	)		0			(2,207	)
Realized gains, net		23			0		0			23			23			571			0			594
Unrealized losses included in earnings		0			0		(38	)		(38	)		0			0			(71	)		(71	)
Unrealized (losses) gains included in other comprehensive income		(45	)		0		0			(45	)		2			0			0			2
Balance, end of period	$	0		$	0	$	850		$	850		$	0		$	0		$	850		$	850

	Three Months Ended June 30, 2012												Six Months Ended June 30, 2012
	Pooled Trust Preferred Securities - Senior Tranches			Pooled Trust Preferred Securities - Mezzanine Tranches			Servicing Rights			Total			Pooled Trust Preferred Securities - Senior Tranches			Pooled Trust Preferred Securities - Mezzanine Tranches			Servicing Rights			Total
Balance, beginning of period	$	4,638		$	782		$	409		$	5,829		$	4,638		$	730		$	375		$	5,743
Issuances of servicing rights		0			0			74			74			0			0			129			129
Accretion and amortization, net		(2	)		0			0			(2	)		(5	)		0			0			(5	)
Proceeds from sales and calls		(2,515	)		(27	)		0			(2,542	)		(2,515	)		(54	)		0			(2,569	)
Realized gains, net		40			27			0			67			40			54			0			94
Unrealized losses included in earnings		0			0			(23	)		(23	)		0			0			(44	)		(44	)
Unrealized gains included in other comprehensive income		225			364			0			589			228			416			0			644
Balance, end of period	$	2,386		$	1,146		$	460		$	3,992		$	2,386		$	1,146		$	460		$	3,992

Fair Value Measurements, Recurring and Nonrecurring [Table Text Block]

(In Thousands)	Valuation	June 30, 2013				December 31, 2012
	Method(s) Used	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Cash and cash equivalents	Level 1	$	30,956	$	30,956	$	55,016	$	55,016
Certificates of deposit	Level 2		4,820		4,875		4,820		4,860
Available-for-sale securities	See Above		470,068		470,068		472,577		472,577
Restricted equity securities (included in Other Assets)	Level 2		3,894		3,894		4,842		4,842
Loans held for sale	Level 1		725		725		2,545		2,545
Loans, net	Level 3		647,772		650,503		677,053		693,047
Accrued interest receivable	Level 1		4,180		4,180		4,281		4,281
Servicing rights	Level 3		850		850		605		605
Financial liabilities:
Deposits with no stated maturity	Level 1		672,916		672,916		693,687		693,687
Time deposits	Level 3		277,853		279,595		312,419		315,005
Short-term borrowings	Level 3		16,387		16,344		5,567		5,527
Long-term borrowings	Level 3		73,472		82,004		83,812		96,032
Accrued interest payable	Level 1		112		112		137		137

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Note 4 - Cash And Due From Banks (Tables)

6 Months Ended

Jun. 30, 2013

Cash and Cash Equivalents [Abstract]

Schedule of Cash and Cash Equivalents [Table Text Block]

(In thousands)	June 30, 2013		Dec. 31, 2012
Cash and cash equivalents	$	30,956	$	55,016
Certificates of deposit		4,820		4,820
Total cash and due from banks	$	35,776	$	59,836

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Note 6 - Securities (Details) - Amortized Cost and Fair Value of Available-for-Sale Securities (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended	6 Months Ended	12 Months Ended	6 Months Ended	12 Months Ended	6 Months Ended	12 Months Ended	6 Months Ended	12 Months Ended	6 Months Ended	12 Months Ended	6 Months Ended		12 Months Ended	6 Months Ended	12 Months Ended			3 Months Ended
	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2013 Obligations of U.S. Government Agencies [Member]	Dec. 31, 2012 Obligations of U.S. Government Agencies [Member]	Jun. 30, 2013 Obligations of States and Political Subdivisions, Tax-exempt [Member]	Dec. 31, 2012 Obligations of States and Political Subdivisions, Tax-exempt [Member]	Jun. 30, 2013 Obligations of States and Political Subdivisions, Taxable [Member]	Dec. 31, 2012 Obligations of States and Political Subdivisions, Taxable [Member]	Jun. 30, 2013 Mortgage-backed Securities [Member]	Dec. 31, 2012 Mortgage-backed Securities [Member]	Jun. 30, 2013 Collateralized Mortgage Obligations, Issued by U.S. Government Agencies [Member]	Dec. 31, 2012 Collateralized Mortgage Obligations, Issued by U.S. Government Agencies [Member]	Jun. 30, 2013 Collateralized Debt Obligations [Member]	Jun. 30, 2013 Debt Securities [Member]	Dec. 31, 2012 Debt Securities [Member]	Jun. 30, 2013 Marketable Equity Securities [Member]	Dec. 31, 2012 Marketable Equity Securities [Member]	Dec. 31, 2012 Trust Preferred Securities Issued by Individual Institutions [Member]	Dec. 31, 2012 Collateralized Debt Obligations, Pooled Trust Preferred Securities - Senior Tranches [Member]	Mar. 31, 2013 Other Collateralized Debt Obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 465,710	$ 454,781	$ 49,016	$ 30,695	$ 132,525	$ 130,168	$ 29,976	$ 24,426	$ 63,776	$ 76,368	$ 183,792	$ 179,770	$ 660	$ 459,745	$ 448,869	$ 5,965	$ 5,912	$ 5,167	$ 1,615	$ 660
Gross Unrealized Holding Gains	10,788	18,283	412	572	3,644	7,030	273	462	2,108	3,828	1,599	3,887	0	8,036	15,783	2,752	2,500	4	0	0
Gross Unrealized Holding Losses	(6,430)	(487)	(1,458)	(50)	(1,686)	(178)	(560)	(71)	(259)	0	(2,467)	(147)	0	(6,430)	(448)	0	(39)	0	(2)	0
Fair Value	$ 470,068	$ 472,577	$ 47,970	$ 31,217	$ 134,483	$ 137,020	$ 29,689	$ 24,817	$ 65,625	$ 80,196	$ 182,924	$ 183,510	$ 660	$ 461,351	$ 464,204	$ 8,717	$ 8,373	$ 5,171	$ 1,613	$ 660

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Note 2 - Per Share Data (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Earnings Per Share [Abstract]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	116,891	210,875	119,385	147,509

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Note 4 - Cash And Due From Banks (Details) - Cash and Due From Banks (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Cash and Due From Banks [Abstract]
Cash and cash equivalents	$ 30,956	$ 55,016
Certificates of deposit	4,820	4,820
Total cash and due from banks	$ 35,776	$ 59,836

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Note 6 - Securities (Details) - Amortized Cost and Fair Value of Available-for-Sale Debt Securities by Contractual Maturity (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013
Note 6 - Securities (Details) - Amortized Cost and Fair Value of Available-for-Sale Debt Securities by Contractual Maturity [Line Items]
Due in one year or less	$ 28,536
Due in one year or less	28,874
Due from one year through five years	42,777
Due from one year through five years	43,532
Due from five years through ten years	76,916
Due from five years through ten years	75,043
Due after ten years	63,948
Due after ten years	65,353
Subtotal	212,177
Subtotal	212,802
Total	459,745
Total	461,351
Mortgage-backed Securities [Member]
Note 6 - Securities (Details) - Amortized Cost and Fair Value of Available-for-Sale Debt Securities by Contractual Maturity [Line Items]
Without Single Maturity Date, Amortized Cost	63,776
Without Single Maturity Date, Fair Value	65,625
Collateralized Mortgage Obligations, Issued by U.S. Government Agencies [Member]
Note 6 - Securities (Details) - Amortized Cost and Fair Value of Available-for-Sale Debt Securities by Contractual Maturity [Line Items]
Without Single Maturity Date, Amortized Cost	183,792
Without Single Maturity Date, Fair Value	$ 182,924

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Note 9 - Defined Benefit Plans (Tables)

6 Months Ended

Jun. 30, 2013

Compensation and Retirement Disclosure [Abstract]

Schedule of Defined Benefit Plans Disclosures [Table Text Block]

(In Thousands)	Pension Six Months Ended June 30,						Postretirement Six Months Ended June 30,
	2013			2012			2013			2012
Service cost	$	0		$	0		$	21		$	46
Interest cost		36			36			28			41
Expected return on plan assets		(45	)		(36	)		0			0
Amortization of transition (asset) obligation		0			0			0			18
Amortization of prior service cost		0			0			(16	)		7
Recognized net actuarial loss		16			14			0			0
Net periodic benefit cost	$	7		$	14		$	33		$	112

(In Thousands)	Pension Three Months Ended June 30,						Postretirement Three Months Ended June 30,
	2013			2012			2013			2012
Service cost	$	0		$	0		$	11		$	23
Interest cost		18			18			14			21
Expected return on plan assets		(22	)		(18	)		0			0
Amortization of transition (asset) obligation		0			0			0			9
Amortization of prior service cost		0			0			(8	)		3
Recognized net actuarial loss		8			7			0			0
Net periodic benefit cost	$	4		$	7		$	17		$	56

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Note 8 - Borrowed Funds (Details) - Long Term Debt (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Debt Instrument [Line Items]
Long-term Debt	$ 73,472	$ 83,812
Federal Home Loan Bank - Pittsburgh Borrowings [Member]
Debt Instrument [Line Items]
Long-term Debt	12,472	15,812
Repurchase Agreements [Member]
Debt Instrument [Line Items]
Long-term Debt	$ 61,000	$ 68,000

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Note 11 - Income Taxes (Details) (USD $)	6 Months Ended
	Jun. 30, 2013
Income Tax Disclosure [Abstract]
Potential Capital Loss In Deferred Tax Assets	$ 149,000

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Note 8 - Borrowed Funds (Details) - Short Term Borrowings (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Short-term Debt [Line Items]
Short-term Borrowings	$ 16,387	$ 5,567
Federal Home Loan Bank - Pittsburgh Borrowings [Member]
Short-term Debt [Line Items]
Short-term Borrowings	12,000	0
Customer Repurchase Agreements [Member]
Short-term Debt [Line Items]
Short-term Borrowings	$ 4,387	$ 5,567

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Note 5 - Fair Value Measurements and Fair Values of Financial Instruments (Details) - Reconciliation of Activity for Level 3 Assets Measured at Fair Value on a Recurring Basis (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Accretion and amortization, net			$ (952)	$ (416)
Realized gains, net	100	203	1,259	201
Unrealized (losses) gains included in other comprehensive income	(6,326)	799	(7,918)	859
Fair Value, Inputs, Level 3 [Member] | Pooled Trust Preferred Securities Senior Tranches [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance, beginning of period	1,659	4,638	1,613	4,638
Issuances of servicing rights	0	0	0	0
Accretion and amortization, net	(1)	(2)	(2)	(5)
Proceeds from sales and calls	(1,636)	(2,515)	(1,636)	(2,515)
Realized gains, net	23	40	23	40
Unrealized losses included in earnings	0	0	0	0
Unrealized (losses) gains included in other comprehensive income	(45)	225	2	228
Balance, end of period	0	2,386	0	2,386
Fair Value, Inputs, Level 3 [Member] | Pooled Trust Preferred Securities Mezzanine Tranches [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance, beginning of period	0	782	0	730
Issuances of servicing rights	0	0	0	0
Accretion and amortization, net	0	0	0	0
Proceeds from sales and calls	0	(27)	(571)	(54)
Realized gains, net	0	27	571	54
Unrealized losses included in earnings	0	0	0	0
Unrealized (losses) gains included in other comprehensive income	0	364	0	416
Balance, end of period	0	1,146	0	1,146
Fair Value, Inputs, Level 3 [Member] | Servicing Rights Asset [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance, beginning of period	738	409	605	375
Issuances of servicing rights	150	74	316	129
Accretion and amortization, net	0	0	0	0
Proceeds from sales and calls	0	0	0	0
Realized gains, net	0	0	0	0
Unrealized losses included in earnings	(38)	(23)	(71)	(44)
Unrealized (losses) gains included in other comprehensive income	0	0	0	0
Balance, end of period	850	460	850	460
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance, beginning of period	2,397	5,829	2,218	5,743
Issuances of servicing rights	150	74	316	129
Accretion and amortization, net	(1)	(2)	(2)	(5)
Proceeds from sales and calls	(1,636)	(2,542)	(2,207)	(2,569)
Realized gains, net	23	67	594	94
Unrealized losses included in earnings	(38)	(23)	(71)	(44)
Unrealized (losses) gains included in other comprehensive income	(45)	589	2	644
Balance, end of period	$ 850	$ 3,992	$ 850	$ 3,992

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Note 10 - Stock-Based Compensation Plans (Details) (USD $)	1 Months Ended		12 Months Ended
	Jan. 31, 2013	Jan. 31, 2012	Dec. 31, 2012	Jun. 30, 2013	Jun. 30, 2012
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in Shares)	64,050
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized (in Shares)		64,757
OptionsExercisePrice				$ 19.21	$ 18.54
Stock or Unit Option Plan Expense	$ 262,000		$ 247,000
Estimated Options Stock Incentive Forfeiture Rate			0.00%	33.00%
Restricted Stock Shares Issued	37,886	42,552

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Note 3 - Comprehensive Income (Tables)

6 Months Ended

Jun. 30, 2013

Disclosure Text Block [Abstract]

Comprehensive Income (Loss) [Table Text Block]

(In Thousands)	Before-Tax Amount			Income Tax Effect			Net-of-Tax Amount
Six Months Ended June 30, 2013:
Unrealized gains on available-for-sale securities:
Unrealized holding losses on available-for-sale securities	$	(12,179	)	$	4,261		$	(7,918	)
Reclassification adjustment for (gains) realized in income		(1,259	)		441			(818	)
Other comprehensive loss on available-for-sale securities		(13,438	)		4,702			(8,736	)
Unfunded pension and postretirement obligations:
Changes from plan amendments and actuarial gains and losses included in other comprehensive income		636			(223	)		413
Amortization of net transition obligation, prior service cost and net actuarial loss included in net periodic benefit cost		0			0			0
Other comprehensive gain on unfunded retirement obligations		636			(223	)		413
Total other comprehensive loss	$	(12,802	)	$	4,479		$	(8,323	)

(In Thousands)	Before-Tax Amount			Income Tax Effect			Net-of-Tax Amount
Six Months Ended June 30, 2012:
Unrealized gains on available-for-sale securities:
Unrealized holding gains on available-for-sale securities	$	1,571		$	(712	)	$	859
Reclassification adjustment for (gains) realized in income		(201	)		70			(131	)
Other comprehensive gain on available-for-sale securities		1,370			(642	)		728
Unfunded pension and postretirement obligations:
Changes from plan amendments and actuarial gains and losses included in other comprehensive income		200			(61	)		139
Amortization of net transition obligation, prior service cost and net actuarial loss included in net periodic benefit cost		40			(13	)		27
Other comprehensive gain on unfunded retirement obligations		240			(74	)		166
Total other comprehensive income	$	1,610		$	(716	)	$	894
Three Months Ended June 30, 2013:
Unrealized gains on available-for-sale securities:
Unrealized holding losses on available-for-sale securities	$	(9,732	)	$	3,406		$	(6,326	)
Reclassification adjustment for (gains) realized in income		(100	)		35			(65	)
Other comprehensive loss on available-for-sale securities		(9,832	)		3,441			(6,391	)
Unfunded pension and postretirement obligations:
Changes from plan amendments and actuarial gains and losses included in other comprehensive income		0			0			0
Amortization of net transition obligation, prior service cost and net actuarial loss included in net periodic benefit cost		0			0			0
Other comprehensive gain on unfunded retirement obligations		0			0			0
Total other comprehensive loss	$	(9,832	)	$	3,441		$	(6,391	)
Three Months Ended June 30, 2012:
Unrealized gains on available-for-sale securities:
Unrealized holding gains on available-for-sale securities	$	1,227		$	(428	)	$	799
Reclassification adjustment for (gains) realized in income		(203	)		71			(132	)
Other comprehensive gain on available-for-sale securities		1,024			(357	)		667
Unfunded pension and postretirement obligations:
Changes from plan amendments and actuarial gains and losses included in other comprehensive income		0			0			0
Amortization of net transition obligation, prior service cost and net actuarial loss included in net periodic benefit cost		20			(7	)		13
Other comprehensive gain on unfunded retirement obligations		20			(7	)		13
Total other comprehensive income	$	1,044		$	(364	)	$	680

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

(In Thousands)	Unrealized Holding Gains (Losses) on Securities			Unfunded Pension and Postretirement Obligations			Accumulated Other Comprehensive Income
Six Months Ended June 30, 2013
Balance, beginning of period	$	11,568		$	(565	)	$	11,003
Other comprehensive (loss) income before reclassifications		(7,918	)		413			(7,505	)
Amounts reclassified from accumulated other comprehensive income		(818	)		0			(818	)
Other comprehensive (loss) income		(8,736	)		413			(8,323	)
Balance, end of period	$	2,832		$	(152	)	$	2,680
Six Months Ended June 30, 2012
Balance, beginning of period	$	10,791		$	(631	)	$	10,160
Other comprehensive income before reclassifications		859			139			998
Amounts reclassified from accumulated other
comprehensive income		(131	)		27			(104	)
Other comprehensive income		728			166			894
Balance, end of period	$	11,519		$	(465	)	$	11,054
Three Months Ended June 30, 2013
Balance, beginning of period	$	9,223		$	(152	)	$	9,071
Other comprehensive loss before reclassifications		(6,326	)		0			(6,326	)
Amounts reclassified from accumulated other comprehensive income		(65	)		0			(65	)
Other comprehensive loss		(6,391	)		0			(6,391	)
Balance, end of period	$	2,832		$	(152	)	$	2,680
Three Months Ended June 30, 2012
Balance, beginning of period	$	10,852		$	(478	)	$	10,374
Other comprehensive income before reclassifications		799			0			799
Amounts reclassified from accumulated other comprehensive income		(132	)		13			(119	)
Other comprehensive income		667			13			680
Balance, end of period	$	11,519		$	(465	)	$	11,054

For the Six Months Ended June 30, 2013
(In Thousands)
	Reclassified from
Details about Accumulated Other	Accumulated Other			Affected Line Item in the Consolidated
Comprehensive Income Components	Comprehensive Income			Statements of Income
Unrealized gains and losses on available-for-sale securities	$	25		Total other-than-temporary impairment losses on
				available-for-sale securities
		(1,284	)	Realized gains on available-for-sale securities, net
		(1,259	)	Total before tax
		441		Income tax provision
		(818	)	Net of tax
Amortization of defined benefit pension and postretirement items
Prior service cost		(16	)	Pensions and other employee benefits
Actuarial loss		16		Pensions and other employee benefits
		0		Total before tax
		0		Income tax provision
		0		Net of tax
Total reclassifications for the period	$	(818	)

For the Three Months Ended June 30, 2013
(In Thousands)
	Reclassified from
Details about Accumulated Other	Accumulated Other			Affected Line Item in the Consolidated
Comprehensive Income Components	Comprehensive Income			Statements of Income
Unrealized gains and losses on available-for-sale securities	$	0		Total other-than-temporary impairment losses on
				available-for-sale securities
		(100	)	Realized gains on available-for-sale securities, net
		(100	)	Total before tax
		35		Income tax provision
		(65	)	Net of tax
Amortization of defined benefit pension and postretirement items
Prior service cost		(8	)	Pensions and other employee benefits
Actuarial loss		8		Pensions and other employee benefits
		0		Total before tax
		0		Income tax provision
		0		Net of tax
Total reclassifications for the period	$	(65	)

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Consolidated Statements of Cash Flows (Unaudited) (USD $)	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 9,680,000	$ 11,272,000
Adjustments to reconcile net income to net cash provided by operating activities:
Provision (credit) for loan losses	249,000	185,000
Realized gains on available-for-sale securities, net	(1,259,000)	(201,000)
Gain on disposition of premises and equipment	0	(270,000)
Loss on prepayment of debt	1,023,000	143,000
Loss on sale of foreclosed assets, net	53,000	80,000
Depreciation expense	1,021,000	964,000
Accretion and amortization on securities, net	952,000	416,000
Accretion and amortization on loans and deposits, net	(16,000)	(26,000)
Amortization of mortgage servicing rights	71,000	44,000
Increase in cash surrender value of life insurance	(192,000)	(236,000)
Stock-based compensation	492,000	411,000
Amortization of core deposit intangibles	25,000	37,000
Deferred income taxes	1,573,000	1,495,000
Gains on sales of loans, net	(1,132,000)	(638,000)
Origination of loans for sale	(32,709,000)	(22,121,000)
Proceeds from sales of loans	35,345,000	20,379,000
Decrease (increase) in accrued interest receivable and other assets	2,705,000	(2,517,000)
Increase (decrease) in accrued interest payable and other liabilities	398,000	(308,000)
Net Cash Provided by Operating Activities	18,279,000	9,109,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of certificates of deposit	0	(960,000)
Proceeds from sales of available-for-sale securities	23,402,000	11,781,000
Proceeds from calls and maturities of available-for-sale securities	51,651,000	56,423,000
Purchase of available-for-sale securities	(85,675,000)	(63,502,000)
Redemption of Federal Home Loan Bank of Pittsburgh stock	1,773,000	648,000
Purchase of Federal Home Loan Bank of Pittsburgh stock	(825,000)	0
Net decrease in loans	28,970,000	3,159,000
Purchase of premises and equipment	(423,000)	(1,028,000)
Proceeds from disposition of equipment	0	454,000
Purchase of investment in limited liability entity	(147,000)	(534,000)
Return of principal on limited liability entity investments	75,000	47,000
Proceeds from sale of foreclosed assets	14,000	858,000
Net Cash Provided by Investing Activities	18,815,000	7,346,000
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase in deposits	(55,337,000)	11,244,000
Net increase (decrease) in short-term borrowings	10,820,000	(708,000)
Repayments of long-term borrowings	(11,363,000)	(15,468,000)
Sale of treasury stock	119,000	155,000
Tax benefit from compensation plans	55,000	30,000
Common dividends paid	(5,448,000)	(4,085,000)
Net Cash Used in Financing Activities	(61,154,000)	(8,832,000)
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(24,060,000)	7,623,000
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR	55,016,000	56,815,000
CASH AND CASH EQUIVALENTS, END OF PERIOD	30,956,000	64,438,000
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Assets acquired through foreclosure of real estate loans	78,000	521,000
Accrued purchase of available-for-sale securities	0	230,000
Interest paid	3,040,000	5,117,000
Income taxes paid	$ 986,000	$ 3,050,000

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Consolidated Statements of Changes in Stockholders' Equity (Unaudited) (Parentheticals) (USD $)	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Common stock, dividends, per share (in Dollars per share)	$ 0.50	$ 0.38

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Note 3 - Comprehensive Income

6 Months Ended

Jun. 30, 2013

Disclosure Text Block [Abstract]

Comprehensive Income (Loss) Note [Text Block]

3. COMPREHENSIVE INCOME

Comprehensive income is the total of (1) net income, and (2) all other changes in equity from non-stockholder sources, which are referred to as other comprehensive income. The components of other comprehensive income, and the related tax effects, are as follows:

(In Thousands)	Before-Tax Amount			Income Tax Effect			Net-of-Tax Amount
Six Months Ended June 30, 2013:
Unrealized gains on available-for-sale securities:
Unrealized holding losses on available-for-sale securities	$	(12,179	)	$	4,261		$	(7,918	)
Reclassification adjustment for (gains) realized in income		(1,259	)		441			(818	)
Other comprehensive loss on available-for-sale securities		(13,438	)		4,702			(8,736	)
Unfunded pension and postretirement obligations:
Changes from plan amendments and actuarial gains and losses included in other comprehensive income		636			(223	)		413
Amortization of net transition obligation, prior service cost and net actuarial loss included in net periodic benefit cost		0			0			0
Other comprehensive gain on unfunded retirement obligations		636			(223	)		413
Total other comprehensive loss	$	(12,802	)	$	4,479		$	(8,323	)

(In Thousands)	Before-Tax Amount			Income Tax Effect			Net-of-Tax Amount
Six Months Ended June 30, 2012:
Unrealized gains on available-for-sale securities:
Unrealized holding gains on available-for-sale securities	$	1,571		$	(712	)	$	859
Reclassification adjustment for (gains) realized in income		(201	)		70			(131	)
Other comprehensive gain on available-for-sale securities		1,370			(642	)		728
Unfunded pension and postretirement obligations:
Changes from plan amendments and actuarial gains and losses included in other comprehensive income		200			(61	)		139
Amortization of net transition obligation, prior service cost and net actuarial loss included in net periodic benefit cost		40			(13	)		27
Other comprehensive gain on unfunded retirement obligations		240			(74	)		166
Total other comprehensive income	$	1,610		$	(716	)	$	894
Three Months Ended June 30, 2013:
Unrealized gains on available-for-sale securities:
Unrealized holding losses on available-for-sale securities	$	(9,732	)	$	3,406		$	(6,326	)
Reclassification adjustment for (gains) realized in income		(100	)		35			(65	)
Other comprehensive loss on available-for-sale securities		(9,832	)		3,441			(6,391	)
Unfunded pension and postretirement obligations:
Changes from plan amendments and actuarial gains and losses included in other comprehensive income		0			0			0
Amortization of net transition obligation, prior service cost and net actuarial loss included in net periodic benefit cost		0			0			0
Other comprehensive gain on unfunded retirement obligations		0			0			0
Total other comprehensive loss	$	(9,832	)	$	3,441		$	(6,391	)
Three Months Ended June 30, 2012:
Unrealized gains on available-for-sale securities:
Unrealized holding gains on available-for-sale securities	$	1,227		$	(428	)	$	799
Reclassification adjustment for (gains) realized in income		(203	)		71			(132	)
Other comprehensive gain on available-for-sale securities		1,024			(357	)		667
Unfunded pension and postretirement obligations:
Changes from plan amendments and actuarial gains and losses included in other comprehensive income		0			0			0
Amortization of net transition obligation, prior service cost and net actuarial loss included in net periodic benefit cost		20			(7	)		13
Other comprehensive gain on unfunded retirement obligations		20			(7	)		13
Total other comprehensive income	$	1,044		$	(364	)	$	680

Changes in the components of accumulated other comprehensive income are as follows and are presented net of tax:

(In Thousands)	Unrealized Holding Gains (Losses) on Securities			Unfunded Pension and Postretirement Obligations			Accumulated Other Comprehensive Income
Six Months Ended June 30, 2013
Balance, beginning of period	$	11,568		$	(565	)	$	11,003
Other comprehensive (loss) income before reclassifications		(7,918	)		413			(7,505	)
Amounts reclassified from accumulated other comprehensive income		(818	)		0			(818	)
Other comprehensive (loss) income		(8,736	)		413			(8,323	)
Balance, end of period	$	2,832		$	(152	)	$	2,680
Six Months Ended June 30, 2012
Balance, beginning of period	$	10,791		$	(631	)	$	10,160
Other comprehensive income before reclassifications		859			139			998
Amounts reclassified from accumulated other
comprehensive income		(131	)		27			(104	)
Other comprehensive income		728			166			894
Balance, end of period	$	11,519		$	(465	)	$	11,054
Three Months Ended June 30, 2013
Balance, beginning of period	$	9,223		$	(152	)	$	9,071
Other comprehensive loss before reclassifications		(6,326	)		0			(6,326	)
Amounts reclassified from accumulated other comprehensive income		(65	)		0			(65	)
Other comprehensive loss		(6,391	)		0			(6,391	)
Balance, end of period	$	2,832		$	(152	)	$	2,680
Three Months Ended June 30, 2012
Balance, beginning of period	$	10,852		$	(478	)	$	10,374
Other comprehensive income before reclassifications		799			0			799
Amounts reclassified from accumulated other comprehensive income		(132	)		13			(119	)
Other comprehensive income		667			13			680
Balance, end of period	$	11,519		$	(465	)	$	11,054

Items reclassified out of each component of other comprehensive income are as follows:

For the Six Months Ended June 30, 2013
(In Thousands)
	Reclassified from
Details about Accumulated Other	Accumulated Other			Affected Line Item in the Consolidated
Comprehensive Income Components	Comprehensive Income			Statements of Income
Unrealized gains and losses on available-for-sale securities	$	25		Total other-than-temporary impairment losses on
				available-for-sale securities
		(1,284	)	Realized gains on available-for-sale securities, net
		(1,259	)	Total before tax
		441		Income tax provision
		(818	)	Net of tax
Amortization of defined benefit pension and postretirement items
Prior service cost		(16	)	Pensions and other employee benefits
Actuarial loss		16		Pensions and other employee benefits
		0		Total before tax
		0		Income tax provision
		0		Net of tax
Total reclassifications for the period	$	(818	)

For the Three Months Ended June 30, 2013
(In Thousands)
	Reclassified from
Details about Accumulated Other	Accumulated Other			Affected Line Item in the Consolidated
Comprehensive Income Components	Comprehensive Income			Statements of Income
Unrealized gains and losses on available-for-sale securities	$	0		Total other-than-temporary impairment losses on
				available-for-sale securities
		(100	)	Realized gains on available-for-sale securities, net
		(100	)	Total before tax
		35		Income tax provision
		(65	)	Net of tax
Amortization of defined benefit pension and postretirement items
Prior service cost		(8	)	Pensions and other employee benefits
Actuarial loss		8		Pensions and other employee benefits
		0		Total before tax
		0		Income tax provision
		0		Net of tax
Total reclassifications for the period	$	(65	)

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Note 11 - Income Taxes (Details) - Net Deffered Tax Assets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Deferred tax assets:
Defined benefit plans - ASC 835	$ 82	$ 305
Net realized losses on securities	149	1,254
Allowance for loan losses	2,519	2,400
Credit for alternative minimum tax paid	3,115	3,609
Other deferred tax assets	2,029	2,019
Total deferred tax assets	7,894	9,587
Deferred tax liabilities:
Unrealized holding gains on securities	1,526	6,228
Bank premises and equipment	1,442	1,337
Core deposit intangibles	39	48
Other deferred tax liabilities	256	249
Total deferred tax liabilities	3,263	7,862
Deferred tax asset, net	$ 4,631	$ 1,725

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Note 1 - Basis of Interim Presentation

6 Months Ended

Jun. 30, 2013

Disclosure Text Block [Abstract]

Basis of Accounting [Text Block]

1. BASIS OF INTERIM PRESENTATION

The consolidated financial information included herein, with the exception of the consolidated balance sheet dated December 31, 2012, is unaudited. Such information reflects all adjustments (consisting solely of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations, comprehensive income, cash flows and changes in stockholders’ equity for the interim periods; however, the information does not include all disclosures required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for a complete set of financial statements. Certain 2012 information has been reclassified for consistency with the 2013 presentation.

Operating results reported for the three-month and six-month periods ended June 30, 2013 might not be indicative of the results for the year ending December 31, 2013. The Corporation evaluates subsequent events through the date of filing with the Securities and Exchange Commission.

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Note 5 - Fair Value Measurements and Fair Values of Financial Instruments (Details) - Assets Measured at Fair Value (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	$ 470,068		$ 472,577
Nonrecurring fair value measurements
Foreclosed assets held for sale	890		879
US Government Corporations and Agencies Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	0		0
US Government Corporations and Agencies Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	47,970		31,217
US Government Corporations and Agencies Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	0		0
US Government Corporations and Agencies Securities [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	47,970		31,217
Obligations of States and Political Subdivisions, Tax-exempt [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	0		0
Obligations of States and Political Subdivisions, Tax-exempt [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	134,483		137,020
Obligations of States and Political Subdivisions, Tax-exempt [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	0		0
Obligations of States and Political Subdivisions, Tax-exempt [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	134,483		137,020
Obligations of States and Political Subdivisions, Tax-exempt [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	134,483		137,020
Obligations of States and Political Subdivisions, Taxable [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	0		0
Obligations of States and Political Subdivisions, Taxable [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	29,689		24,817
Obligations of States and Political Subdivisions, Taxable [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	0		0
Obligations of States and Political Subdivisions, Taxable [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	29,689		24,817
Obligations of States and Political Subdivisions, Taxable [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	29,689		24,817
Mortgage-backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	0		0
Mortgage-backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	65,625		80,196
Mortgage-backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	0		0
Mortgage-backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	65,625		80,196
Mortgage-backed Securities [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	65,625		80,196
Collateralized Mortgage Obligations, Issued by U.S. Government Agencies [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	0		0
Collateralized Mortgage Obligations, Issued by U.S. Government Agencies [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	182,924		183,510
Collateralized Mortgage Obligations, Issued by U.S. Government Agencies [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	0		0
Collateralized Mortgage Obligations, Issued by U.S. Government Agencies [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	182,924		183,510
Collateralized Mortgage Obligations, Issued by U.S. Government Agencies [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	182,924		183,510
Collateralized Debt Obligations [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	0
Collateralized Debt Obligations [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	660
Collateralized Debt Obligations [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	0
Collateralized Debt Obligations [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	660
Collateralized Debt Obligations [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	660
Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	0		0
Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	461,351		462,591
Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	0		1,613
Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	461,351		464,204
Debt Securities [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	461,351		464,204
Marketable Equity Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	8,717		8,373
Marketable Equity Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	0		0
Marketable Equity Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	0		0
Marketable Equity Securities [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	8,717		8,373
Marketable Equity Securities [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	8,717		8,373
Trust Preferred Securities Issued by Individual Institutions [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities			0
Trust Preferred Securities Issued by Individual Institutions [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities			5,171
Trust Preferred Securities Issued by Individual Institutions [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities			0
Trust Preferred Securities Issued by Individual Institutions [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities			5,171
Trust Preferred Securities Issued by Individual Institutions [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities			5,171
Collateralized Debt Obligations, Pooled Trust Preferred Securities - Senior Tranches [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities			0
Collateralized Debt Obligations, Pooled Trust Preferred Securities - Senior Tranches [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities			0
Collateralized Debt Obligations, Pooled Trust Preferred Securities - Senior Tranches [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities			1,613
Collateralized Debt Obligations, Pooled Trust Preferred Securities - Senior Tranches [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities			1,613
Collateralized Debt Obligations, Pooled Trust Preferred Securities - Senior Tranches [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities			1,613
Other Collateralized Debt Obligations [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities			0
Other Collateralized Debt Obligations [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities			660
Other Collateralized Debt Obligations [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities			0
Other Collateralized Debt Obligations [Member] | Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities			660
Other Collateralized Debt Obligations [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities		660
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	8,717		8,373
Servicing rights	0		0
Total recurring fair value measurements	8,717		8,373
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	461,351		462,591
Servicing rights	0		0
Total recurring fair value measurements	461,351		462,591
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	0		1,613
Servicing rights	850		605
Total recurring fair value measurements	850		2,218
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	470,068		472,577
Servicing rights	850		605
Total recurring fair value measurements	470,918		473,182
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 1 [Member]
Nonrecurring fair value measurements
Impaired loans with a valuation allowance	0		0
Valuation allowance	0		0
Impaired loans, net	0		0
Foreclosed assets held for sale	0		0
Total nonrecurring fair value measurements	0		0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 2 [Member]
Nonrecurring fair value measurements
Impaired loans with a valuation allowance	0		0
Valuation allowance	0		0
Impaired loans, net	0		0
Foreclosed assets held for sale	0		0
Total nonrecurring fair value measurements	0		0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member]
Nonrecurring fair value measurements
Impaired loans with a valuation allowance	1,874		2,710
Valuation allowance	(762)		(623)
Impaired loans, net	1,112		2,087
Foreclosed assets held for sale	890		879
Total nonrecurring fair value measurements	2,002		2,966
Fair Value, Measurements, Nonrecurring [Member] | Estimate of Fair Value Measurement [Member]
Nonrecurring fair value measurements
Impaired loans with a valuation allowance	1,874		2,710
Valuation allowance	(762)		(623)
Impaired loans, net	1,112		2,087
Foreclosed assets held for sale	890		879
Total nonrecurring fair value measurements	2,002		2,966
Fair Value, Inputs, Level 3 [Member]
AVAILABLE-FOR-SALE SECURITIES:
Total recurring fair value measurements	$ 850	$ 2,397	$ 2,218	$ 3,992	$ 5,829	$ 5,743

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Note 6 - Securities (Tables)

6 Months Ended

Jun. 30, 2013

Investments, Debt and Equity Securities [Abstract]

Available-for-sale Securities [Table Text Block]

			June 30, 2013
(In Thousands)	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Fair Value
Obligations of U.S. Government agencies	$	49,016	$	412	$	(1,458	)	$	47,970
Obligations of states and political subdivisions:
Tax-exempt		132,525		3,644		(1,686	)		134,483
Taxable		29,976		273		(560	)		29,689
Mortgage-backed securities		63,776		2,108		(259	)		65,625
Collateralized mortgage obligations, Issued by U.S. Government agencies		183,792		1,599		(2,467	)		182,924
Collateralized debt obligations		660		0		0			660
Total debt securities		459,745		8,036		(6,430	)		461,351
Marketable equity securities		5,965		2,752		0			8,717
Total	$	465,710	$	10,788	$	(6,430	)	$	470,068

			December 31, 2012
(In Thousands)	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Fair Value
Obligations of U.S. Government agencies	$	30,695	$	572	$	(50	)	$	31,217
Obligations of states and political subdivisions:
Tax-exempt		130,168		7,030		(178	)		137,020
Taxable		24,426		462		(71	)		24,817
Mortgage-backed securities		76,368		3,828		0			80,196
Collateralized mortgage obligations, Issued by U.S. Government agencies		179,770		3,887		(147	)		183,510
Trust preferred securities issued by individual institutions		5,167		4		0			5,171
Collateralized debt obligations:
Pooled trust preferred securities - senior tranches		1,615		0		(2	)		1,613
Other collateralized debt obligations		660		0		0			660
Total debt securities		448,869		15,783		(448	)		464,204
Marketable equity securities		5,912		2,500		(39	)		8,373
Total	$	454,781	$	18,283	$	(487	)	$	472,577

Schedule of Unrealized Loss on Investments [Table Text Block]

June 30, 2013	Less Than 12 Months					12 Months or More					Total
(In Thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Obligations of U.S. Government agencies	$	27,497	$	(1,458	)	$	0	$	0		$	27,497	$	(1,458	)
Obligations of states and political subdivisions:
Tax-exempt		41,057		(1,529	)		2,455		(157	)		43,512		(1,686	)
Taxable		15,455		(560	)		0		0			15,455		(560	)
Mortgage-backed securities		9,737		(259	)		0		0			9,737		(259	)
Collateralized mortgage obligations, Issued by U.S. Government agencies		88,633		(2,466	)		352		(1	)		88,985		(2,467	)
Total temporarily impaired available-for-sale securities	$	182,379	$	(6,272	)	$	2,807	$	(158	)	$	185,186	$	(6,430	)

December 31, 2012	Less Than 12 Months					12 Months or More					Total
(In Thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Obligations of U.S. Government agencies	$	10,006	$	(50	)	$	0	$	0		$	10,006	$	(50	)
Obligations of states and political subdivisions:
Tax-exempt		7,082		(92	)		3,285		(86	)		10,367		(178	)
Taxable		4,149		(71	)		0		0			4,149		(71	)
Collateralized mortgage obligations, Issued by U.S. Government agencies		16,755		(146	)		454		(1	)		17,209		(147	)
Collateralized debt obligations, Pooled trust preferred securities - senior tranches		0		0			1,613		(2	)		1,613		(2	)
Total debt securities		37,992		(359	)		5,352		(89	)		43,344		(448	)
Marketable equity securities		95		(6	)		67		(33	)		162		(39	)
Total temporarily impaired available-for-sale securities	$	38,087	$	(365	)	$	5,419	$	(122	)	$	43,506	$	(487	)

Realized Gain (Loss) on Investments [Table Text Block]

(In Thousands)	3 Months Ended					6 Months Ended
	June 30, 2013		June 30, 2012			June 30, 2013			June 30, 2012
Gross realized gains from sales	$	100	$	252		$	1,402		$	317
Gross realized losses from sales		0		(49	)		(118	)		(49	)
Losses from OTTI impairment		0		0			(25	)		(67	)
Net realized gains	$	100	$	203		$	1,259		$	201

Investments Classified by Contractual Maturity Date [Table Text Block]

(In Thousands)	Amortized Cost		Fair Value
Due in one year or less	$	28,536	$	28,874
Due from one year through five years		42,777		43,532
Due from five years through ten years		76,916		75,043
Due after ten years		63,948		65,353
Subtotal		212,177		212,802
Mortgage-backed securities		63,776		65,625
Collateralized mortgage obligations, Issued by U.S. Government agencies		183,792		182,924
Total	$	459,745	$	461,351

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Note 10 - Stock-Based Compensation Plans (Tables)

6 Months Ended

Jun. 30, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Share-based Compensation Arrangements by Share-based Payment Award [Table Text Block]

	2013			2012
Fair value of each option granted	$	5.56		$	5.15
Volatility		41	%		41	%
Expected option lives (years)	8			7
Risk-free interest rate		1.60	%		1.53	%
Dividend yield		3.69	%		3.97	%

Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Table Text Block]

(In Thousands)	3 Months Ended				6 Months Ended
	June 30, 2013		June 30, 2012		June 30, 2013		June 30, 2012
Stock options	$	96	$	88	$	262	$	247
Restricted stock		109		82		230		164
Total	$	205	$	170	$	492	$	411

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Note 10 - Stock-Based Compensation Plans (Details) - Stock Based Compensation Expense (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated Share-based Compensation Expense	$ 205	$ 170	$ 492	$ 411
Employee Stock Option [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated Share-based Compensation Expense	96	88	262	247
Restricted Stock [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocated Share-based Compensation Expense	$ 109	$ 82	$ 230	$ 164

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Note 3 - Comprehensive Income (Details) - Changes in the Components of Accumulated Other Comprehensive Income (USD $) In Thousands, unless otherwise specified							3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended
	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Jun. 30, 2013 Other Comprehensive Income Before Reclassifications [Member]	Jun. 30, 2012 Other Comprehensive Income Before Reclassifications [Member]	Jun. 30, 2013 Other Comprehensive Income Before Reclassifications [Member]	Jun. 30, 2012 Other Comprehensive Income Before Reclassifications [Member]	Jun. 30, 2013 Amounts Reclassified To From Accumulated Other Comprehensive Income [Member]	Jun. 30, 2012 Amounts Reclassified To From Accumulated Other Comprehensive Income [Member]	Jun. 30, 2013 Amounts Reclassified To From Accumulated Other Comprehensive Income [Member]	Jun. 30, 2012 Amounts Reclassified To From Accumulated Other Comprehensive Income [Member]	Jun. 30, 2013 Other Comprehensive Income (Loss) [Member]	Jun. 30, 2012 Other Comprehensive Income (Loss) [Member]	Jun. 30, 2013 Other Comprehensive Income (Loss) [Member]	Jun. 30, 2012 Other Comprehensive Income (Loss) [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Unrealized Holding Gains (Losses) on Securities, Balance, beginning of period	$ 2,832	$ 9,223	$ 11,568	$ 11,519	$ 10,852	$ 10,791
Unfunded Pension and Postretirement Obligations, Balance, beginning of period	(152)	(152)	(565)	(465)	(478)	(631)
Accumulated Other Comprehensive Income, Balance, beginning of period	2,680	9,071	11,003	11,054	10,374	10,160
Unrealized Holding Gains (Losses) on Securities, Change in Period							(6,326)	799	(7,918)	859	(65)	(132)	(818)	(131)	(6,391)	667	(8,736)	728
Unfunded Pension and Postretirement Obligations, Change in Period							0	0	413	139	0	13	0	27	0	13	413	166
Accumulated Other Comprehensive Income, Change in Period							(6,326)	799	(7,505)	998	(65)	(119)	(818)	(104)	(6,391)	680	(8,323)	894
Unrealized Holding Gains (Losses) on Securities, Balance, end of period	2,832	9,223	11,568	11,519	10,852	10,791
Unfunded Pension and Postretirement Obligations, Balance, end of period	(152)	(152)	(565)	(465)	(478)	(631)
Accumulated Other Comprehensive Income, Balance, end of period	$ 2,680	$ 9,071	$ 11,003	$ 11,054	$ 10,374	$ 10,160

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Note 10 - Stock-Based Compensation Plans (Details) - Fair Value of Each Option Granted and Significant Assumptions (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Fair Value of Each Option Granted and Significant Assumptions [Abstract]
Fair value of each option granted (in Dollars per share)	$ 5.56	$ 5.15
Volatility	41.00%	41.00%
Expected option lives (years)	8 years	7 years
Risk-free interest rate	1.60%	1.53%
Dividend yield	3.69%	3.97%

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Note 7 - Loans (Details) - Average Balance of Impaired Loans and Income Recognized on Impaired Loans (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Average Balance of Impaired Loans and Income Recognized on Impaired Loans [Abstract]
Average investment in impaired loans	$ 7,131	$ 6,930	$ 7,291	$ 7,025
Interest income recognized on impaired loans	58	55	128	138
Interest income recognized on a cash basis on impaired loans	$ 58	$ 55	$ 128	$ 138

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Note 7 - Loans (Details)	6 Months Ended
	Jun. 30, 2013
Receivables [Abstract]
Financing Receivable, Modifications, Number of Contracts	1

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Note 6 - Securities (Details) (USD $)	3 Months Ended		6 Months Ended			6 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended		3 Months Ended						6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012	Jun. 30, 2013 Debt Securities [Member]	Jun. 30, 2013 Carolina First Mortgage Loan Trust [Member]	Jun. 30, 2012 Carolina First Mortgage Loan Trust [Member]	Jun. 30, 2013 Carolina First Mortgage Loan Trust [Member]	Jun. 30, 2012 Carolina First Mortgage Loan Trust [Member]	Dec. 31, 2012 Carolina First Mortgage Loan Trust [Member]	Dec. 31, 2010 Carolina First Mortgage Loan Trust [Member]	Mar. 31, 2013 Alesco Preferred Funding Ix [Member]	Jun. 30, 2013 Mmcaps Funding I Senior [Member]	Jun. 30, 2013 Astoria Capital Trust I [Member]	Jun. 30, 2013 Marketable Equity Securities [Member]	Mar. 31, 2013 Marketable Equity Securities [Member]	Mar. 31, 2012 Marketable Equity Securities [Member]	Jun. 30, 2013 Marketable Equity Securities [Member]
Note 6 - Securities (Details) [Line Items]
Deposit Liabilities, Collateral Issued, Financial Instruments	$ 310,121,000		$ 310,121,000		$ 293,310,000
Municipal Debt Securities, at Carrying Value						20,861,000
Available-for-sale Securities, Gross Unrealized Gain (Loss)						(562,000)
Debt Instrument, Face Amount												2,000,000
Interest Income, Securities, Operating, Taxable	1,663,000	2,520,000	3,380,000	5,178,000			0		0
Interest Income, Other								398,000		855,000	855,000
Gain (Loss) on Sale of Securities, Net													571,000	1,636,000	13,000
Investment Owned, at Cost													3,000,000
Available-for-sale Securities, Gross Realized Gains	100,000	252,000	1,402,000	317,000										23,000		57,000			578,000
Other than Temporary Impairment Losses, Investments, Available-for-sale Securities	0	0	25,000	67,000													25,000	67,000
Federal Home Loan Bank Stock	$ 3,764,000		$ 3,764,000		$ 4,712,000

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Consolidated Balance Sheets (Unaudited) (Parentheticals) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Preferred stock, par value (in Dollars per share)	$ 1,000	$ 1,000
Preferred stock, authorized shares (in Shares)	30,000	30,000
Preferred stock, liquidation preference per share (in Dollars per share)	$ 1,000	$ 1,000
Preferred stock, shares issued (in Dollars)	$ 0	$ 0
Common stock, par value (in Dollars per share)	$ 1.00	$ 1.00
Common stock, authorized shares (in Shares)	20,000,000	20,000,000
Common stock, issued shares (in Shares)	12,561,677	12,525,411
Treasury stock, shares (in Shares)	210,155	251,376

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Note 6 - Securities

6 Months Ended

Jun. 30, 2013

Investments, Debt and Equity Securities [Abstract]

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

6. SECURITIES

Amortized cost and fair value of available-for-sale securities at June 30, 2013 and December 31, 2012 are summarized as follows:

			June 30, 2013
(In Thousands)	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Fair Value
Obligations of U.S. Government agencies	$	49,016	$	412	$	(1,458	)	$	47,970
Obligations of states and political subdivisions:
Tax-exempt		132,525		3,644		(1,686	)		134,483
Taxable		29,976		273		(560	)		29,689
Mortgage-backed securities		63,776		2,108		(259	)		65,625
Collateralized mortgage obligations, Issued by U.S. Government agencies		183,792		1,599		(2,467	)		182,924
Collateralized debt obligations		660		0		0			660
Total debt securities		459,745		8,036		(6,430	)		461,351
Marketable equity securities		5,965		2,752		0			8,717
Total	$	465,710	$	10,788	$	(6,430	)	$	470,068

			December 31, 2012
(In Thousands)	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Fair Value
Obligations of U.S. Government agencies	$	30,695	$	572	$	(50	)	$	31,217
Obligations of states and political subdivisions:
Tax-exempt		130,168		7,030		(178	)		137,020
Taxable		24,426		462		(71	)		24,817
Mortgage-backed securities		76,368		3,828		0			80,196
Collateralized mortgage obligations, Issued by U.S. Government agencies		179,770		3,887		(147	)		183,510
Trust preferred securities issued by individual institutions		5,167		4		0			5,171
Collateralized debt obligations:
Pooled trust preferred securities - senior tranches		1,615		0		(2	)		1,613
Other collateralized debt obligations		660		0		0			660
Total debt securities		448,869		15,783		(448	)		464,204
Marketable equity securities		5,912		2,500		(39	)		8,373
Total	$	454,781	$	18,283	$	(487	)	$	472,577

The following table presents gross unrealized losses and fair value of available-for-sale securities with unrealized loss positions that are not deemed to be other-than-temporarily impaired, aggregated by length of time that individual securities have been in a continuous unrealized loss position at June 30, 2013 and December 31, 2012:

June 30, 2013	Less Than 12 Months					12 Months or More					Total
(In Thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Obligations of U.S. Government agencies	$	27,497	$	(1,458	)	$	0	$	0		$	27,497	$	(1,458	)
Obligations of states and political subdivisions:
Tax-exempt		41,057		(1,529	)		2,455		(157	)		43,512		(1,686	)
Taxable		15,455		(560	)		0		0			15,455		(560	)
Mortgage-backed securities		9,737		(259	)		0		0			9,737		(259	)
Collateralized mortgage obligations, Issued by U.S. Government agencies		88,633		(2,466	)		352		(1	)		88,985		(2,467	)
Total temporarily impaired available-for-sale securities	$	182,379	$	(6,272	)	$	2,807	$	(158	)	$	185,186	$	(6,430	)

December 31, 2012	Less Than 12 Months					12 Months or More					Total
(In Thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Obligations of U.S. Government agencies	$	10,006	$	(50	)	$	0	$	0		$	10,006	$	(50	)
Obligations of states and political subdivisions:
Tax-exempt		7,082		(92	)		3,285		(86	)		10,367		(178	)
Taxable		4,149		(71	)		0		0			4,149		(71	)
Collateralized mortgage obligations, Issued by U.S. Government agencies		16,755		(146	)		454		(1	)		17,209		(147	)
Collateralized debt obligations, Pooled trust preferred securities - senior tranches		0		0			1,613		(2	)		1,613		(2	)
Total debt securities		37,992		(359	)		5,352		(89	)		43,344		(448	)
Marketable equity securities		95		(6	)		67		(33	)		162		(39	)
Total temporarily impaired available-for-sale securities	$	38,087	$	(365	)	$	5,419	$	(122	)	$	43,506	$	(487	)

Gains and losses from available-for-sale securities were as follows:

(In Thousands)	3 Months Ended					6 Months Ended
	June 30, 2013		June 30, 2012			June 30, 2013			June 30, 2012
Gross realized gains from sales	$	100	$	252		$	1,402		$	317
Gross realized losses from sales		0		(49	)		(118	)		(49	)
Losses from OTTI impairment		0		0			(25	)		(67	)
Net realized gains	$	100	$	203		$	1,259		$	201

The amortized cost and fair value of available-for-sale debt securities by contractual maturity are shown in the following table as of June 30, 2013. Actual maturities may differ from contractual maturities because counterparties may have the right to call or prepay obligations with or without call or prepayment penalties.

(In Thousands)	Amortized Cost		Fair Value
Due in one year or less	$	28,536	$	28,874
Due from one year through five years		42,777		43,532
Due from five years through ten years		76,916		75,043
Due after ten years		63,948		65,353
Subtotal		212,177		212,802
Mortgage-backed securities		63,776		65,625
Collateralized mortgage obligations, Issued by U.S. Government agencies		183,792		182,924
Total	$	459,745	$	461,351

The Corporation’s mortgage-backed securities and collateralized mortgage obligations have stated maturities that may differ from actual maturities due to borrowers’ ability to prepay obligations. Cash flows from such investments are dependent upon the performance of the underlying mortgage loans and are generally influenced by the level of interest rates. In the table above, mortgage-backed securities and collateralized mortgage obligations are shown in one period.

Investment securities carried at $310,121,000 at June 30, 2013 and $293,310,000 at December 31, 2012 were pledged as collateral for public deposits, trusts and certain other deposits as provided by law. See Note 8 for information concerning securities pledged to secure borrowing arrangements.

Management evaluates securities for other-than-temporary impairment (OTTI) at least on a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) whether the Corporation intends to sell the security or more likely than not will be required to sell the security before its anticipated recovery.

A summary of information management considered in evaluating debt and equity securities for OTTI at June 30, 2013 is provided below.

Debt Securities

At June 30, 2013, management performed an assessment for possible OTTI of the Corporation’s debt securities on an issue-by-issue basis, relying on information obtained from various sources, including publicly available financial data, ratings by external agencies, brokers and other sources. The extent of individual analysis applied to each security depended on the size of the Corporation’s investment, as well as management’s perception of the credit risk associated with each security. Based on the results of the assessment, management believes impairment of debt securities, including municipal bonds with no external ratings, at June 30, 2013 to be temporary.

The credit rating agencies have withdrawn their ratings on numerous municipal bonds held by the Corporation. At June 30, 2013, the total amortized cost basis of municipal bonds with no external credit ratings was $20,861,000, with an aggregate unrealized loss of $562,000. At the time of purchase, each of these bonds was considered investment grade and had been rated by at least one credit rating agency. The bonds for which the ratings were removed were almost all insured by an entity that has reported significant financial problems and declines in its regulatory capital ratios, and most of the ratings were removed in the fourth quarter 2009. However, the insurance remains in effect on the bonds, and none of the affected municipal bonds has failed to make a scheduled payment.

The Corporation recognized OTTI charges in 2009 and 2010 related to its holding of a trust preferred security issued by Carolina First Mortgage Loan Trust, a subsidiary of The South Financial Group, Inc. In the fourth quarter 2010, The Toronto-Dominion Bank acquired The South Financial Group, Inc. After the acquisition, The Toronto-Dominion Bank made a payment for the full amount of previously deferred interest and resumed quarterly payments on the security. The Corporation recognized a material change in the expected cash flows in the fourth quarter 2010 and began recording accretion income (included in interest income) to offset the previous OTTI charges as an adjustment to the security’s yield over its remaining life. The security had a face amount of $2,000,000 and matured in May 2012. Because the security matured, the Corporation recorded no accretion income in the three-month and six-month periods ended June 30, 2013. The Corporation recorded accretion income (included in interest income) totaling $398,000 in the three-month period ended June 30, 2012 and $855,000 in the six-month period ended June 30, 2012. For the year ended December 31, 2012, the Corporation recorded accretion income totaling $855,000.

During the first quarter 2013, management sold the Corporation’s holding of the mezzanine tranche of ALESCO Preferred Funding IX, Ltd. for aggregate pretax proceeds of $571,000, which was recorded as a gain on the sale of securities. This security had an original face amount of $3,000,000. In 2009, the Corporation recognized other-than-temporary impairment on this security and wrote the carrying value down to zero.

During the second quarter 2013, the Corporation’s holding of the senior tranche of MMCAPS Funding I, Ltd., a pooled trust preferred security, was fully redeemed primarily due to prepayments of debt by the underlying issuers in the pool. The Corporation received aggregate pretax proceeds of $1,636,000, which included a realized gain of $23,000. Also during the second quarter 2013, Astoria Financial Corporation redeemed (called) the trust preferred security held by the Corporation. The Corporation received aggregate pretax proceeds of $5,171,000, which included a realized gain of $13,000.

Equity Securities

The Corporation’s marketable equity securities at June 30, 2013 and December 31, 2012 consisted exclusively of stocks of banking companies. In the first quarter 2013, the Corporation recognized an other-than-temporary impairment loss related to a bank stock of $25,000. In the first quarter 2012, the Corporation recognized an other-than-temporary impairment loss related to a bank stock of $67,000. Management’s decisions followed evaluations of the issuers’ published financial results in which management determined that the recovery of the Corporation’s cost basis within the foreseeable future was uncertain. As a result of this determination, the Corporation recognized impairment losses to write each stock down to the most recent trade price at the end of the quarter in which each loss was recognized. At June 30, 2013, none of the Corporation’s bank stock holdings were impaired.

Realized gains from sales of bank stocks totaled $57,000 in the three-month period ended June 30, 2013 and $578,000 in the six-month period ended June 30, 2013. The Corporation did not sell any bank stocks or realize any gains or losses from sales of bank stocks during the first six months of 2012.

C&N Bank is a member of the Federal Home Loan Bank of Pittsburgh (FHLB-Pittsburgh), which is one of 12 regional Federal Home Loan Banks. As a member, C&N Bank is required to purchase and maintain stock in FHLB-Pittsburgh. There is no active market for FHLB-Pittsburgh stock, and it must ordinarily be redeemed by FHLB-Pittsburgh in order to be liquidated. C&N Bank’s investment in FHLB-Pittsburgh stock, included in Other Assets in the consolidated balance sheet, was $3,764,000 at June 30, 2013 and $4,712,000 at December 31, 2012. The Corporation evaluated its holding of FHLB-Pittsburgh stock for impairment and deemed the stock to not be impaired at June 30, 2013 and December 31, 2012. In making this determination, management concluded that recovery of total outstanding par value, which equals the carrying value, is expected. The decision was based on review of financial information that FHLB-Pittsburgh has made publicly available.

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Consolidated Statements of Comprehensive Income (Unaudited) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Net income	$ 4,974,000	$ 5,685,000	$ 9,680,000	$ 11,272,000
Unrealized (losses) gains on available-for-sale securities:
Unrealized holding (losses) gains on available-for-sale securities	(9,732,000)	1,227,000	(12,179,000)	1,571,000
Reclassification adjustment for gains realized in income	(100,000)	(203,000)	(1,259,000)	(201,000)
Other comprehensive (loss) gain on available-for-sale securities	(9,832,000)	1,024,000	(13,438,000)	1,370,000
Unfunded pension and postretirement obligations:
Changes from plan amendments and actuarial gains and losses included in accumulated other comprehensive gain	0	0	636,000	200,000
Amortization of net transition obligation, prior service cost and net actuarial loss included in net periodic benefit cost	0	20,000	0	40,000
Other comprehensive gain on unfunded retirement obligations	0	20,000	636,000	240,000
Other comprehensive (loss) income before income tax	(9,832,000)	1,044,000	(12,802,000)	1,610,000
Income tax related to other comprehensive loss (income)	3,441,000	(364,000)	4,479,000	(716,000)
Net other comprehensive (loss) income	(6,391,000)	680,000	(8,323,000)	894,000
Comprehensive (loss) income	$ (1,417,000)	$ 6,365,000	$ 1,357,000	$ 12,166,000

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Note 7 - Loans (Details) - Contractual Aging of Nonaccrual Loans (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Note 7 - Loans (Details) - Contractual Aging of Nonaccrual Loans [Line Items]
Current & Past Due Less than 30 Days	$ 641,982	$ 668,657
Past Due 30-89 Days	6,647	8,483
Past Due 90+ Days	6,341	6,770
Total	6,697	7,353
Nonaccrual Loans [Member]
Note 7 - Loans (Details) - Contractual Aging of Nonaccrual Loans [Line Items]
Current & Past Due Less than 30 Days	2,024	2,167
Past Due 30-89 Days	534	727
Past Due 90+ Days	4,139	4,459
Total	$ 6,697	$ 7,353

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Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Cash and due from banks:
Noninterest-bearing	$ 19,085	$ 21,356
Interest-bearing	16,691	38,480
Total cash and due from banks	35,776	59,836
Available-for-sale securities, at fair value	470,068	472,577
Loans held for sale	725	2,545
Loans receivable	654,970	683,910
Allowance for loan losses	(7,198)	(6,857)
Loans, net	647,772	677,053
Bank-owned life insurance	21,536	21,344
Accrued interest receivable	4,180	4,281
Bank premises and equipment, net	18,109	18,707
Foreclosed assets held for sale	890	879
Deferred tax asset, net	4,631	1,725
Intangible asset - Core deposit intangibles	113	138
Intangible asset - Goodwill	11,942	11,942
Other assets	12,602	15,880
TOTAL ASSETS	1,228,344	1,286,907
Deposits:
Noninterest-bearing	196,449	189,941
Interest-bearing	754,320	816,165
Total deposits	950,769	1,006,106
Short-term borrowings	16,387	5,567
Long-term borrowings	73,472	83,812
Accrued interest and other liabilities	8,355	8,636
TOTAL LIABILITIES	1,048,983	1,104,121
STOCKHOLDERS' EQUITY
Preferred stock, $1,000 par value; authorized 30,000 shares; $1,000 liquidation preference per share; no shares issued at June 30, 2013 and December 31, 2012	0	0
Common stock, par value $1.00 per share; authorized 20,000,000 shares in 2013 and 2012; issued 12,561,677 at June 30, 2013 and 12,525,411 at December 31, 2012	12,561	12,525
Paid-in capital	69,214	68,622
Retained earnings	98,419	94,839
Treasury stock, at cost; 210,155 shares at June 30, 2013 and 251,376 shares at December 31, 2012	(3,513)	(4,203)
Sub-total	176,681	171,783
Accumulated other comprehensive income:
Unrealized gains on available-for-sale securities	2,832	11,568
Defined benefit plans	(152)	(565)
Total accumulated other comprehensive income	2,680	11,003
TOTAL STOCKHOLDERS' EQUITY	179,361	182,786
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	$ 1,228,344	$ 1,286,907

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Note 7 - Loans (Details) - Loans by Type (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011
Residential mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	$ 654,970		$ 683,910
Less: allowance for loan losses	(7,198)	(7,118)	(6,857)	(7,657)	(7,370)	(7,705)
Loans, net	647,772		677,053
Residential Mortgage Loans - First Liens [Member]
Residential mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	304,806		311,627
Less: allowance for loan losses	(2,871)	(2,786)	(2,619)	(2,888)	(2,953)	(3,026)
Residential Mortgage Loans - Junior Liens [Member]
Residential mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	24,797		26,748
Less: allowance for loan losses	(229)	(236)	(247)	(254)	(260)	(266)
Home Equity Line of Credit [Member]
Residential mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	33,076		33,017
Less: allowance for loan losses	(258)	(251)	(255)	(245)	(232)	(231)
1-4 Family Residential Construction [Member]
Residential mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	14,895		12,842
Less: allowance for loan losses	(179)	(145)	(96)	(80)	(62)	(79)
Total Residential Mortgage [Member]
Residential mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	377,574		384,234
Less: allowance for loan losses	(3,537)	(3,418)	(3,217)	(3,467)	(3,507)	(3,602)
Commercial Loans Secured by Real Estate [Member]
Residential mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	155,168		158,413
Less: allowance for loan losses	(1,944)	(1,906)	(1,930)	(1,976)	(1,920)	(2,004)
Commercial and Industrial [Member]
Residential mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	45,812		48,442
Less: allowance for loan losses	(628)	(597)	(581)	(712)	(762)	(946)
Political Subdivisions [Member]
Residential mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	24,033		31,789
Less: allowance for loan losses	0	0	0	0	0	0
Commercial Construction and Land [Member]
Residential mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	20,189		28,200
Less: allowance for loan losses	(258)	(368)	(234)	(606)	(325)	(267)
Loans Secured by Farmland [Member]
Residential mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	11,134		11,403
Less: allowance for loan losses	(121)	(127)	(129)	(117)	(121)	(126)
Multi-family (5 or more) Residential [Member]
Residential mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	6,397		6,745
Less: allowance for loan losses	(64)	(65)	(67)	(64)	(63)	(66)
Agricultural Loans [Member]
Residential mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	3,061		3,053
Less: allowance for loan losses	(28)	(26)	(27)	(29)	(27)	(27)
Other Commercial Loans [Member]
Residential mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	543		362
Less: allowance for loan losses	(5)	(2)	(3)	(5)	(3)	(5)
Total Commercial [Member]
Residential mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	266,337		288,407
Less: allowance for loan losses	(3,048)	(3,091)	(2,971)	(3,509)	(3,221)	(3,441)
Consumer [Member]
Residential mortgage:
Loans and Leases Receivable, Gross, Carrying Amount	11,059		11,269
Less: allowance for loan losses	$ (215)	$ (211)	$ (228)	$ (245)	$ (206)	$ (228)

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Note 14 - Subsequent Event (Details) (Subsequent Event [Member], USD $)	1 Months Ended
	Jul. 31, 2013
Subsequent Event [Member]
Note 14 - Subsequent Event (Details) [Line Items]
Professional Fees	$ 708,000
Estimated Pre-Tax Benefit	$ 1,300,000

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Note 7 - Loans (Tables)

6 Months Ended

Jun. 30, 2013

Note 7 - Loans (Tables) [Line Items]

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

Summary of Loans by Type
(In Thousands)	June 30, 2013			Dec. 31, 2012
Residential mortgage:
Residential mortgage loans - first liens	$	304,806		$	311,627
Residential mortgage loans - junior liens		24,797			26,748
Home equity lines of credit		33,076			33,017
1-4 Family residential construction		14,895			12,842
Total residential mortgage		377,574			384,234
Commercial:
Commercial loans secured by real estate		155,168			158,413
Commercial and industrial		45,812			48,442
Political subdivisions		24,033			31,789
Commercial construction and land		20,189			28,200
Loans secured by farmland		11,134			11,403
Multi-family (5 or more) residential		6,397			6,745
Agricultural loans		3,061			3,053
Other commercial loans		543			362
Total commercial		266,337			288,407
Consumer		11,059			11,269
Total		654,970			683,910
Less: allowance for loan losses		(7,198	)		(6,857	)
Loans, net	$	647,772		$	677,053

Allowance for Credit Losses on Financing Receivables [Table Text Block]

Six Months Ended June 30, 2013
(In Thousands)	Dec. 31, 2012 Balance		Charge-offs			Recoveries		Provision (Credit)			June 30, 2013 Balance
Allowance for Loan Losses:
Residential mortgage:
Residential mortgage loans - first liens	$	2,619	$	(65	)	$	11	$	306		$	2,871
Residential mortgage loans - junior liens		247		0			0		(18	)		229
Home equity lines of credit		255		0			0		3			258
1-4 Family residential construction		96		(11	)		0		94			179
Total residential mortgage		3,217		(76	)		11		385			3,537
Commercial:
Commercial loans secured by real estate		1,930		0			293		(279	)		1,944
Commercial and industrial		581		(110	)		2		155			628
Political subdivisions		0		0			0		0			0
Commercial construction and land		234		(4	)		0		28			258
Loans secured by farmland		129		0			0		(8	)		121
Multi-family (5 or more) residential		67		0			0		(3	)		64
Agricultural loans		27		0			0		1			28
Other commercial loans		3		0			0		2			5
Total commercial		2,971		(114	)		295		(104	)		3,048
Consumer		228		(55	)		31		11			215
Unallocated		441		0			0		(43	)		398
Total Allowance for Loan Losses	$	6,857	$	(245	)	$	337	$	249		$	7,198

Six Months Ended June 30, 2012
(In Thousands)	Dec. 31, 2011 Balance		Charge-offs			Recoveries		Provision (Credit)			June 30, 2012 Balance
Allowance for Loan Losses:
Residential mortgage:
Residential mortgage loans - first liens	$	3,026	$	(188	)	$	18	$	32		$	2,888
Residential mortgage loans - junior liens		266		0			0		(12	)		254
Home equity lines of credit		231		0			0		14			245
1-4 Family residential construction		79		0			0		1			80
Total residential mortgage		3,602		(188	)		18		35			3,467
Commercial:
Commercial loans secured by real estate		2,004		0			0		(28	)		1,976
Commercial and industrial		946		(35	)		5		(204	)		712
Political subdivisions		0		0			0		0			0
Commercial construction and land		267		0			0		339			606
Loans secured by farmland		126		0			0		(9	)		117
Multi-family (5 or more) residential		66		0			0		(2	)		64
Agricultural loans		27		0			0		2			29
Other commercial loans		5		0			0		0			5
Total commercial		3,441		(35	)		5		98			3,509
Consumer		228		(68	)		35		50			245
Unallocated		434		0			0		2			436
Total Allowance for Loan Losses	$	7,705	$	(291	)	$	58	$	185		$	7,657

Three Months Ended June 30, 2013
(In Thousands)	Mar. 31, 2013 Balance		Charge-offs			Recoveries		Provision (Credit)			June 30, 2013 Balance
Allowance for Loan Losses:
Residential mortgage:
Residential mortgage loans - first liens	$	2,786	$	(13	)	$	11	$	87		$	2,871
Residential mortgage loans - junior liens		236		0			0		(7	)		229
Home equity lines of credit		251		0			0		7			258
1-4 Family residential construction		145		(11	)		0		45			179
Total residential mortgage		3,418		(24	)		11		132			3,537
Commercial:
Commercial loans secured by real estate		1,906		0			43		(5	)		1,944
Commercial and industrial		597		(2	)		1		32			628
Political subdivisions		0		0			0		0			0
Commercial construction and land		368		(4	)		0		(106	)		258
Loans secured by farmland		127		0			0		(6	)		121
Multi-family (5 or more) residential		65		0			0		(1	)		64
Agricultural loans		26		0			0		2			28
Other commercial loans		2		0			0		3			5
Total commercial		3,091		(6	)		44		(81	)		3,048
Consumer		211		(22	)		11		15			215
Unallocated		398		0			0		0			398
Total Allowance for Loan Losses	$	7,118	$	(52	)	$	66	$	66		$	7,198

Three Months Ended June 30, 2012
(In Thousands)	Mar. 31, 2012 Balance		Charge-offs			Recoveries		Provision (Credit)			June 30, 2012 Balance
Allowance for Loan Losses:
Residential mortgage:
Residential mortgage loans - first liens	$	2,953	$	(50	)	$	18	$	(33	)	$	2,888
Residential mortgage loans - junior liens		260		0			0		(6	)		254
Home equity lines of credit		232		0			0		13			245
1-4 Family residential construction		62		0			0		18			80
Total residential mortgage		3,507		(50	)		18		(8	)		3,467
Commercial:
Commercial loans secured by real estate		1,920		0			0		56			1,976
Commercial and industrial		762		(35	)		4		(19	)		712
Political subdivisions		0		0			0		0			0
Commercial construction and land		325		0			0		281			606
Loans secured by farmland		121		0			0		(4	)		117
Multi-family (5 or more) residential		63		0			0		1			64
Agricultural loans		27		0			0		2			29
Other commercial loans		3		0			0		2			5
Total commercial		3,221		(35	)		4		319			3,509
Consumer		206		(30	)		13		56			245
Unallocated		436		0			0		0			436
Total Allowance for Loan Losses	$	7,370	$	(115	)	$	35	$	367		$	7,657

Financing Receivable Credit Quality Indicators [Table Text Block]

June 30, 2013:			Special
(In Thousands)	Pass		Mention		Substandard		Doubtful		Total
Residential Mortgage:
Residential mortgage loans - first liens	$	289,357	$	2,440	$	12,821	$	188	$	304,806
Residential mortgage loans - junior liens		23,608		406		783		0		24,797
Home equity lines of credit		32,623		96		357		0		33,076
1-4 Family residential construction		14,823		0		72		0		14,895
Total residential mortgage		360,411		2,942		14,033		188		377,574
Commercial:
Commercial loans secured by real estate		143,139		7,109		4,603		317		155,168
Commercial and Industrial		38,739		3,683		3,025		365		45,812
Political subdivisions		23,928		105		0		0		24,033
Commercial construction and land		18,744		225		472		748		20,189
Loans secured by farmland		8,845		767		1,490		32		11,134
Multi-family (5 or more) residential		6,020		329		48		0		6,397
Agricultural loans		2,969		36		56		0		3,061
Other commercial loans		543		0		0		0		543
Total commercial		242,927		12,254		9,694		1,462		266,337
Consumer		10,836		11		212		0		11,059
Totals	$	614,174	$	15,207	$	23,939	$	1,650	$	654,970

December 31, 2012:			Special
(In Thousands)	Pass		Mention		Substandard		Doubtful		Total
Residential Mortgage:
Residential mortgage loans - first liens	$	295,929	$	3,633	$	11,872	$	193	$	311,627
Residential mortgage loans - junior liens		25,394		420		934		0		26,748
Home equity lines of credit		32,374		130		513		0		33,017
1-4 Family residential construction		12,759		0		83		0		12,842
Total residential mortgage		366,456		4,183		13,402		193		384,234
Commercial:
Commercial loans secured by real estate		146,381		6,994		5,038		0		158,413
Commercial and Industrial		41,237		3,030		3,810		365		48,442
Political subdivisions		31,679		110		0		0		31,789
Commercial construction and land		26,744		231		477		748		28,200
Loans secured by farmland		9,102		751		1,517		33		11,403
Multi-family (5 or more) residential		6,394		342		9		0		6,745
Agricultural loans		2,963		28		62		0		3,053
Other commercial loans		362		0		0		0		362
Total commercial		264,862		11,486		10,913		1,146		288,407
Consumer		11,053		12		203		1		11,269
Totals	$	642,371	$	15,681	$	24,518	$	1,340	$	683,910

Impaired Financing Receivables [Table Text Block]

June 30, 2013	Loans:						Allowance for Loan Losses:
(In Thousands)
	Individually Evaluated		Collectively Evaluated		Totals		Individually Evaluated		Collectively Evaluated		Totals
Residential mortgage:
Residential mortgage loans - first liens	$	2,102	$	302,704	$	304,806	$	268	$	2,603	$	2,871
Residential mortgage loans - junior liens		227		24,570		24,797		0		229		229
Home equity lines of credit		0		33,076		33,076		0		258		258
1-4 Family residential construction		0		14,895		14,895		0		179		179
Total residential mortgage		2,329		375,245		377,574		268		3,269		3,537
Commercial:
Commercial loans secured by real estate		1,397		153,771		155,168		206		1,738		1,944
Commercial and industrial		736		45,076		45,812		231		397		628
Political subdivisions		0		24,033		24,033		0		0		0
Commercial construction and land		1,004		19,185		20,189		0		258		258
Loans secured by farmland		1,358		9,776		11,134		31		90		121
Multi-family (5 or more) residential		48		6,349		6,397		0		64		64
Agricultural loans		53		3,008		3,061		0		28		28
Other commercial loans		0		543		543		0		5		5
Total commercial		4,596		261,741		266,337		468		2,580		3,048
Consumer		46		11,013		11,059		26		189		215
Unallocated												398
Total	$	6,971	$	647,999	$	654,970	$	762	$	6,038	$	7,198

December 31, 2012	Loans:						Allowance for Loan Losses:
(In Thousands)
	Individually Evaluated		Collectively Evaluated		Totals		Individually Evaluated		Collectively Evaluated		Totals
Residential mortgage:
Residential mortgage loans - first liens	$	2,341	$	309,286	$	311,627	$	206	$	2,413	$	2,619
Residential mortgage loans - junior liens		158		26,590		26,748		0		247		247
Home equity lines of credit		0		33,017		33,017		0		255		255
1-4 Family residential construction		0		12,842		12,842		0		96		96
Total residential mortgage		2,499		381,735		384,234		206		3,011		3,217
Commercial:
Commercial loans secured by real estate		1,938		156,475		158,413		146		1,784		1,930
Commercial and industrial		939		47,503		48,442		197		384		581
Political subdivisions		0		31,789		31,789		0		0		0
Commercial construction and land		1,034		27,166		28,200		0		234		234
Loans secured by farmland		923		10,480		11,403		34		95		129
Multi-family (5 or more) residential		9		6,736		6,745		0		67		67
Agricultural loans		40		3,013		3,053		0		27		27
Other commercial loans		0		362		362		0		3		3
Total commercial		4,883		283,524		288,407		377		2,594		2,971
Consumer		47		11,222		11,269		40		188		228
Unallocated												441
Total	$	7,429	$	676,481	$	683,910	$	623	$	5,793	$	6,857

Schedule of Additional Information on Impaired Loans [Table Text Block]

(In Thousands)	3 Months Ended June 30,				6 Months Ended June 30,
	2013		2012		2013		2012
Average investment in impaired loans	$	7,131	$	6,930	$	7,291	$	7,025
Interest income recognized on impaired loans		58		55		128		138
Interest income recognized on a cash basis on impaired loans		58		55		128		138

Past Due Financing Receivables [Table Text Block]

(In Thousands)	As of June 30, 2013								As of December 31, 2012
	Current & Past Due Less than 30 Days		Past Due 30-89 Days		Past Due 90+ Days		Total		Current & Past Due Less than 30 Days		Past Due 30-89 Days		Past Due 90+ Days		Total
Residential mortgage:
Residential mortgage loans - first liens	$	298,731	$	3,769	$	2,306	$	304,806	$	302,373	$	6,228	$	3,026	$	311,627
Residential mortgage loans - junior liens		24,517		121		159		24,797		26,247		371		130		26,748
Home equity lines of credit		32,879		96		101		33,076		32,593		184		240		33,017
1-4 Family residential construction		14,823		0		72		14,895		12,627		215		0		12,842
Total residential mortgage		370,950		3,986		2,638		377,574		373,840		6,998		3,396		384,234
Commercial:
Commercial loans secured by real estate		152,495		1,727		946		155,168		156,834		704		875		158,413
Commercial and industrial		44,864		438		510		45,812		47,569		317		556		48,442
Political subdivisions		24,033		0		0		24,033		31,789		0		0		31,789
Commercial construction and land		18,974		210		1,005		20,189		26,944		248		1,008		28,200
Loans secured by farmland		9,904		105		1,125		11,134		10,438		75		890		11,403
Multi-family (5 or more) residential		6,268		129		0		6,397		6,743		2		0		6,745
Agricultural loans		3,022		0		39		3,061		3,003		10		40		3,053
Other commercial loans		543		0		0		543		362		0		0		362
Total commercial		260,103		2,609		3,625		266,337		283,682		1,356		3,369		288,407
Consumer		10,929		52		78		11,059		11,135		129		5		11,269
Totals	$	641,982	$	6,647	$	6,341	$	654,970	$	668,657	$	8,483	$	6,770	$	683,910

Schedule of Financing Receivables, Non Accrual Status [Table Text Block]

(In Thousands)	Current & Past Due Less than 30 Days		Past Due 30-89 Days		Past Due 90+ Days		Total
June 30, 2013 Nonaccrual Totals	$	2,024	$	534	$	4,139	$	6,697
December 31, 2012 Nonaccrual Totals	$	2,167	$	727	$	4,459	$	7,353

Troubled Debt Restructurings on Financing Receivables [Table Text Block]

Troubled Debt Restructurings (TDRs):
(In Thousands)	Current & Past Due Less than 30 Days		Past Due 30-89  Days		Past Due 90+ Days		Nonaccrual		Total
June 30, 2013 Totals	$	1,630	$	557	$	0	$	1,154	$	3,341
December 31, 2012 Totals	$	785	$	121	$	0	$	1,155	$	2,061

Schedule of Troubled Debt Restructurings With Subsequent Default [Table Text Block]

(Balances in Thousands)	Number of Contracts		Recorded Investment
Quarter and Six Months Ended June 30, 2013
(Balances in Thousands)
Commercial,
Commercial loans secured by real estate		1	$	440

90+ Days Past Due Accruing and Nonaccrual [Member]

Note 7 - Loans (Tables) [Line Items]

Past Due Financing Receivables [Table Text Block]

(In Thousands)	June 30, 2013				December 31, 2012
	Past Due 90+ Days and Accruing		Nonaccrual		Past Due 90+ Days and Accruing		Nonaccrual
Residential mortgage:
Residential mortgage loans - first liens	$	1,510	$	2,929	$	1,900	$	3,064
Residential mortgage loans - junior liens		58		111		29		111
Home equity lines of credit		39		62		40		200
1-4 Family residential construction		0		72		0		0
Total residential mortgage		1,607		3,174		1,969		3,375
Commercial:
Commercial loans secured by real estate		278		926		120		1,338
Commercial and industrial		3		576		68		761
Commercial construction and land		0		1,033		149		887
Loans secured by farmland		236		921		0		923
Agricultural loans		0		39		0		40
Total commercial		517		3,495		337		3,949
Consumer		78		28		5		29
Totals	$	2,202	$	6,697	$	2,311	$	7,353

Troubled Debt Restructuring [Member]

Note 7 - Loans (Tables) [Line Items]

Troubled Debt Restructurings on Financing Receivables [Table Text Block]

Quarter Ended June 30, 2013 (Balances in Thousands)	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Residential mortgage:
Residential mortgage loans - first liens		1	$	143	$	143
Residential mortgage loans - junior liens		1		65		65
Commercial:
Commercial loans secured by real estate		1		440		440
Loans secured by farmland		4		512		512
Agricultural loans		1		13		13
Consumer		1		6		6

Six Months Ended June 30, 2013 (Balances in Thousands)	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Residential mortgage:
Residential mortgage loans - first liens		6	$	677	$	677
Residential mortgage loans - junior liens		3		102		102
Commercial:
Commercial loans secured by real estate		1		440		440
Loans secured by farmland		4		512		512
Agricultural loans		1		13		13
Consumer		1		6		6

Six Months Ended June 30, 2012 (Balances in Thousands)	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Commercial:
Commercial and industrial		1	$	65	$	65

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Accounting Policies, by Policy (Policies)

6 Months Ended

Jun. 30, 2013

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

The consolidated financial information included herein, with the exception of the consolidated balance sheet dated December 31, 2012, is unaudited. Such information reflects all adjustments (consisting solely of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations, comprehensive income, cash flows and changes in stockholders’ equity for the interim periods; however, the information does not include all disclosures required by accounting principles generally accepted in the United States of America (“U.S. GAAP”) for a complete set of financial statements. Certain 2012 information has been reclassified for consistency with the 2013 presentation.

Earnings Per Share, Policy [Policy Text Block]

Net income per share is based on the weighted-average number of shares of common stock outstanding. The following data show the amounts used in computing basic and diluted net income per share. As shown in the table that follows, diluted earnings per share is computed using weighted average common shares outstanding, plus weighted-average common shares available from the exercise of all dilutive stock options, less the number of shares that could be repurchased with the proceeds of stock option exercises based on the average share price of the Corporation's common stock during the period

Comprehensive Income, Policy [Policy Text Block]

Comprehensive income is the total of (1) net income, and (2) all other changes in equity from non-stockholder sources, which are referred to as other comprehensive income. The components of other comprehensive income, and the related tax effects, are as follows:

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Note 5 - Fair Value Measurements and Fair Values of Financial Instruments (Details) - Estimated Fair Values, and Related Carrying Amounts, of the Financial Instruments (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2012	Dec. 31, 2011
Financial assets:
Cash and cash equivalents	$ 30,956	$ 55,016	$ 64,438	$ 56,815
Certificates of deposit	4,820	4,820
Available-for-sale securities	470,068	472,577
Loans, net	647,772	677,053
Accrued interest receivable	4,180	4,281
Financial liabilities:
Short-term borrowings	16,387	5,567
Long-term borrowings	73,472	83,812
Reported Value Measurement [Member] | Fair Value, Inputs, Level 1 [Member]
Financial assets:
Cash and cash equivalents	30,956	55,016
Loans held for sale	725	2,545
Accrued interest receivable	4,180	4,281
Financial liabilities:
Deposits with no stated maturity	672,916	693,687
Accrued interest payable	112	137
Reported Value Measurement [Member] | Fair Value, Inputs, Level 2 [Member]
Financial assets:
Certificates of deposit	4,820	4,820
Available-for-sale securities	470,068	472,577
Restricted equity securities (included in Other Assets)	3,894	4,842
Reported Value Measurement [Member] | Fair Value, Inputs, Level 3 [Member]
Financial assets:
Loans, net	647,772	677,053
Servicing rights	850	605
Financial liabilities:
Time deposits	277,853	312,419
Short-term borrowings	16,387	5,567
Long-term borrowings	73,472	83,812
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 1 [Member]
Financial assets:
Cash and cash equivalents	30,956	55,016
Loans held for sale	725	2,545
Accrued interest receivable	4,180	4,281
Financial liabilities:
Deposits with no stated maturity	672,916	693,687
Accrued interest payable	112	137
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 2 [Member]
Financial assets:
Certificates of deposit	4,875	4,860
Available-for-sale securities	470,068	472,577
Restricted equity securities (included in Other Assets)	3,894	4,842
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 3 [Member]
Financial assets:
Loans, net	650,503	693,047
Servicing rights	850	605
Financial liabilities:
Time deposits	279,595	315,005
Short-term borrowings	16,344	5,527
Long-term borrowings	$ 82,004	$ 96,032

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Note 7 - Loans (Details) - Loan Balances and the Related Allowance for Loan Losses Summarized by Portfolio Segment (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011
Residential mortgage:
Loans: Individually Evaluated	$ 6,971		$ 7,429
Loans: Collectively Evaluated	647,999		676,481
Loans: Totals	654,970		683,910
Allowance for Loan Losses: Individually Evaluated	762		623
Allowance for Loan Losses: Collectively Evaluated	6,038		5,793
Allowance for Loan Losses: Totals	7,198	7,118	6,857	7,657	7,370	7,705
Residential Mortgage Loans - First Liens [Member]
Residential mortgage:
Loans: Individually Evaluated	2,102		2,341
Loans: Collectively Evaluated	302,704		309,286
Loans: Totals	304,806		311,627
Allowance for Loan Losses: Individually Evaluated	268		206
Allowance for Loan Losses: Collectively Evaluated	2,603		2,413
Allowance for Loan Losses: Totals	2,871	2,786	2,619	2,888	2,953	3,026
Residential Mortgage Loans - Junior Liens [Member]
Residential mortgage:
Loans: Individually Evaluated	227		158
Loans: Collectively Evaluated	24,570		26,590
Loans: Totals	24,797		26,748
Allowance for Loan Losses: Individually Evaluated	0		0
Allowance for Loan Losses: Collectively Evaluated	229		247
Allowance for Loan Losses: Totals	229	236	247	254	260	266
Home Equity Line of Credit [Member]
Residential mortgage:
Loans: Individually Evaluated	0		0
Loans: Collectively Evaluated	33,076		33,017
Loans: Totals	33,076		33,017
Allowance for Loan Losses: Individually Evaluated	0		0
Allowance for Loan Losses: Collectively Evaluated	258		255
Allowance for Loan Losses: Totals	258	251	255	245	232	231
1-4 Family Residential Construction [Member]
Residential mortgage:
Loans: Individually Evaluated	0		0
Loans: Collectively Evaluated	14,895		12,842
Loans: Totals	14,895		12,842
Allowance for Loan Losses: Individually Evaluated	0		0
Allowance for Loan Losses: Collectively Evaluated	179		96
Allowance for Loan Losses: Totals	179	145	96	80	62	79
Total Residential Mortgage [Member]
Residential mortgage:
Loans: Individually Evaluated	2,329		2,499
Loans: Collectively Evaluated	375,245		381,735
Loans: Totals	377,574		384,234
Allowance for Loan Losses: Individually Evaluated	268		206
Allowance for Loan Losses: Collectively Evaluated	3,269		3,011
Allowance for Loan Losses: Totals	3,537	3,418	3,217	3,467	3,507	3,602
Commercial Loans Secured by Real Estate [Member]
Residential mortgage:
Loans: Individually Evaluated	1,397		1,938
Loans: Collectively Evaluated	153,771		156,475
Loans: Totals	155,168		158,413
Allowance for Loan Losses: Individually Evaluated	206		146
Allowance for Loan Losses: Collectively Evaluated	1,738		1,784
Allowance for Loan Losses: Totals	1,944	1,906	1,930	1,976	1,920	2,004
Commercial and Industrial [Member]
Residential mortgage:
Loans: Individually Evaluated	736		939
Loans: Collectively Evaluated	45,076		47,503
Loans: Totals	45,812		48,442
Allowance for Loan Losses: Individually Evaluated	231		197
Allowance for Loan Losses: Collectively Evaluated	397		384
Allowance for Loan Losses: Totals	628	597	581	712	762	946
Political Subdivisions [Member]
Residential mortgage:
Loans: Individually Evaluated	0		0
Loans: Collectively Evaluated	24,033		31,789
Loans: Totals	24,033		31,789
Allowance for Loan Losses: Individually Evaluated	0		0
Allowance for Loan Losses: Collectively Evaluated	0		0
Allowance for Loan Losses: Totals	0	0	0	0	0	0
Commercial Construction and Land [Member]
Residential mortgage:
Loans: Individually Evaluated	1,004		1,034
Loans: Collectively Evaluated	19,185		27,166
Loans: Totals	20,189		28,200
Allowance for Loan Losses: Individually Evaluated	0		0
Allowance for Loan Losses: Collectively Evaluated	258		234
Allowance for Loan Losses: Totals	258	368	234	606	325	267
Loans Secured by Farmland [Member]
Residential mortgage:
Loans: Individually Evaluated	1,358		923
Loans: Collectively Evaluated	9,776		10,480
Loans: Totals	11,134		11,403
Allowance for Loan Losses: Individually Evaluated	31		34
Allowance for Loan Losses: Collectively Evaluated	90		95
Allowance for Loan Losses: Totals	121	127	129	117	121	126
Multi-family (5 or more) Residential [Member]
Residential mortgage:
Loans: Individually Evaluated	48		9
Loans: Collectively Evaluated	6,349		6,736
Loans: Totals	6,397		6,745
Allowance for Loan Losses: Individually Evaluated	0		0
Allowance for Loan Losses: Collectively Evaluated	64		67
Allowance for Loan Losses: Totals	64	65	67	64	63	66
Agricultural Loans [Member]
Residential mortgage:
Loans: Individually Evaluated	53		40
Loans: Collectively Evaluated	3,008		3,013
Loans: Totals	3,061		3,053
Allowance for Loan Losses: Individually Evaluated	0		0
Allowance for Loan Losses: Collectively Evaluated	28		27
Allowance for Loan Losses: Totals	28	26	27	29	27	27
Other Commercial Loans [Member]
Residential mortgage:
Loans: Individually Evaluated	0		0
Loans: Collectively Evaluated	543		362
Loans: Totals	543		362
Allowance for Loan Losses: Individually Evaluated	0		0
Allowance for Loan Losses: Collectively Evaluated	5		3
Allowance for Loan Losses: Totals	5	2	3	5	3	5
Total Commercial [Member]
Residential mortgage:
Loans: Individually Evaluated	4,596		4,883
Loans: Collectively Evaluated	261,741		283,524
Loans: Totals	266,337		288,407
Allowance for Loan Losses: Individually Evaluated	468		377
Allowance for Loan Losses: Collectively Evaluated	2,580		2,594
Allowance for Loan Losses: Totals	3,048	3,091	2,971	3,509	3,221	3,441
Consumer [Member]
Residential mortgage:
Loans: Individually Evaluated	46		47
Loans: Collectively Evaluated	11,013		11,222
Loans: Totals	11,059		11,269
Allowance for Loan Losses: Individually Evaluated	26		40
Allowance for Loan Losses: Collectively Evaluated	189		188
Allowance for Loan Losses: Totals	215	211	228	245	206	228
Unallocated [Member]
Residential mortgage:
Allowance for Loan Losses: Totals	$ 398	$ 398	$ 441	$ 436	$ 436	$ 434

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Note 8 - Borrowed Funds (Details) - Long Term Debt Maturities (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Note 8 - Borrowed Funds (Details) - Long Term Debt Maturities [Line Items]
Long-term Debt	$ 73,472	$ 83,812
FHLB-Pittsburgh [Member] | Federal Home Loan Bank Borrowings Loan Maturing In2013 With Rates Ranging From286 To362 [Member]
Note 8 - Borrowed Funds (Details) - Long Term Debt Maturities [Line Items]
Long-term Federal Home Loan Bank Borrowings	0	3,211
FHLB-Pittsburgh [Member] | Federal Home Loan Bank Borrowings Loan Maturing In2016 With Rate Of686 [Member]
Note 8 - Borrowed Funds (Details) - Long Term Debt Maturities [Line Items]
Long-term Federal Home Loan Bank Borrowings	175	196
FHLB-Pittsburgh [Member] | Federal Home Loan Bank Borrowings Loan Maturing In2017 With Rate Of683 [Member]
Note 8 - Borrowed Funds (Details) - Long Term Debt Maturities [Line Items]
Long-term Federal Home Loan Bank Borrowings	25	27
FHLB-Pittsburgh [Member] | Federal Home Loan Bank Borrowings Loan Maturing In2017 With Rate Of381 [Member]
Note 8 - Borrowed Funds (Details) - Long Term Debt Maturities [Line Items]
Long-term Federal Home Loan Bank Borrowings	10,000	10,000
FHLB-Pittsburgh [Member] | Federal Home Loan Bank Borrowings Loan Maturing In2020 With Rate Of479 [Member]
Note 8 - Borrowed Funds (Details) - Long Term Debt Maturities [Line Items]
Long-term Federal Home Loan Bank Borrowings	1,222	1,297
FHLB-Pittsburgh [Member] | Federal Home Loan Bank Borrowings Loan Maturing In2025 With Rate Of491 [Member]
Note 8 - Borrowed Funds (Details) - Long Term Debt Maturities [Line Items]
Long-term Federal Home Loan Bank Borrowings	1,050	1,081
FHLB-Pittsburgh [Member]
Note 8 - Borrowed Funds (Details) - Long Term Debt Maturities [Line Items]
Long-term Federal Home Loan Bank Borrowings	12,472	15,812
Repurchase Agreement Maturing in 2017 with a Rate of 3.595% [Member]
Note 8 - Borrowed Funds (Details) - Long Term Debt Maturities [Line Items]
Long-term Debt	27,000	34,000
Repurchase Agreement Maturing in 2017 with a Rate of 4.265% [Member]
Note 8 - Borrowed Funds (Details) - Long Term Debt Maturities [Line Items]
Long-term Debt	34,000	34,000
Repurchase Agreements [Member]
Note 8 - Borrowed Funds (Details) - Long Term Debt Maturities [Line Items]
Long-term Debt	$ 61,000	$ 68,000

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Note 4 - Cash And Due From Banks (Details) (USD $)	Jun. 30, 2013	Dec. 31, 2012
Cash and Cash Equivalents [Abstract]
Restricted Cash and Cash Equivalents, Current	$ 14,204,000	$ 14,128,000

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Note 2 - Per Share Data (Details) - Net Income Per Share (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Net Income Per Share [Abstract]
Net Income (in Dollars)	$ 4,974,000	$ 5,685,000	$ 9,680,000	$ 11,272,000
Weighted Average Number of Shares Outstanding, Basic	12,342,755	12,225,808	12,331,943	12,216,339
Earnings per share – basic (in Dollars per share)	$ 0.40	$ 0.46	$ 0.78	$ 0.92
Dilutive effect of potential common stock arising from stock options:
Weighted Average Number of Shares Outstanding	252,380	137,591	254,900	204,836
Weighted Average Number of Shares Outstanding	(225,824)	(120,566)	(227,559)	(177,872)
Weighted Average Number of Shares Outstanding, Diluted	12,369,311	12,242,833	12,359,284	12,243,303
Earnings per share – diluted (in Dollars per share)	$ 0.40	$ 0.46	$ 0.78	$ 0.92

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Note 3 - Comprehensive Income (Details) - Comprehensive Income Related Tax Effects (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Unrealized gains on available-for-sale securities:
Unrealized Holding Losses on Available-for-sale Securities Before Tax	$ (9,732)	$ 1,227	$ (12,179)	$ 1,571
Unrealized Holding Losses on Available-for-sale Securities Tax	3,406	(428)	4,261	(712)
Unrealized Holding Losses on Available-for-sale Securities Tax Net	(6,326)	799	(7,918)	859
Reclassification Adjustment for (gains) Realized in Income Before Tax	(100)	(203)	(1,259)	(201)
Reclassification Adjustment for (gains) Realized in Income Tax	35	71	441	70
Reclassification Adjustment for (gains) Realized in Income Tax Net	(65)	(132)	(818)	(131)
Other Comprehensive Loss on Available-for-sale Securities Before Tax	(9,832)	1,024	(13,438)	1,370
Other Comprehensive Loss on Available-for-sale Securities Tax	3,441	(357)	4,702	(642)
Other Comprehensive Loss on Available-for-sale Securities Tax Net	(6,391)	667	(8,736)	728
Unfunded pension and postretirement obligations:
Changes From Plan Amendments and Actuarial Gains and Losses Included in Other Comprehensive Income Before Tax	0	0	636	200
Changes From Plan Amendments and Actuarial Gains and Losses Included in Other Comprehensive Income Tax	0	0	(223)	(61)
Changes From Plan Amendments and Actuarial Gains and Losses Included in Other Comprehensive Income Tax Net	0	0	413	139
Amortization of Net Transition Obligation, Prior Service Cost and Net Actuarial Loss Included in Net Periodic Benefit Cost Before Tax	0	20	0	40
Amortization of Net Transition Obligation, Prior Service Cost and Net Actuarial Loss Included in Net Periodic Benefit Cost Tax	0	(7)	0	(13)
Amortization of Net Transition Obligation, Prior Service Cost and Net Actuarial Loss Included in Net Periodic Benefit Cost Tax Net	0	13	0	27
Other Comprehensive Gain on Unfunded Retirement Obligations Before Tax	0	20	636	240
Other Comprehensive Gain on Unfunded Retirement Obligations Tax	0	(7)	(223)	(74)
Other Comprehensive Gain on Unfunded Retirement Obligations Tax Net	0	13	413	166
Total Other Comprehensive Loss Before Tax	(9,832)	1,044	(12,802)	1,610
Total Other Comprehensive Loss Tax	3,441	(364)	4,479	(716)
Total Other Comprehensive Loss Tax Net	$ (6,391)	$ 680	$ (8,323)	$ 894

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Note 5 - Fair Value Measurements and Fair Values of Financial Instruments

6 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

5. FAIR VALUE MEASUREMENTS AND FAIR VALUES OF FINANCIAL INSTRUMENTS

The Corporation measures certain assets at fair value. Fair value is defined as the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. FASB ASC topic 820, “Fair Value Measurements and Disclosures” establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The hierarchy prioritizes the inputs used in determining valuations into three levels. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows:

Level 1 – Fair value is based on unadjusted quoted prices in active markets that are accessible to the Corporation for identical assets. These generally provide the most reliable evidence and are used to measure fair value whenever available.

Level 2 – Fair value is based on significant inputs, other than Level 1 inputs, that are observable either directly or indirectly for substantially the full term of the asset through corroboration with observable market data. Level 2 inputs include quoted market prices in active markets for similar assets, quoted market prices in markets that are not active for identical or similar assets and other observable inputs.

Level 3 – Fair value is based on significant unobservable inputs. Examples of valuation methodologies that would result in Level 3 classification include option pricing models, discounted cash flows and other similar techniques.

The Corporation monitors and evaluates available data relating to fair value measurements on an ongoing basis and recognizes transfers among the levels of the fair value hierarchy as of the date of an event or change in circumstances that affects the valuation method chosen. Examples of such changes may include the market for a particular asset becoming active or inactive, changes in the availability of quoted prices, or changes in the availability of other market data.

At June 30, 2013 and December 31, 2012, assets measured at fair value and the valuation methods used are as follows:

			June 30, 2013
(In Thousands)	Quoted Prices in Active Markets (Level 1)		Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)			Total Fair Value
Recurring fair value measurements
AVAILABLE-FOR-SALE SECURITIES:
Obligations of U.S. Government agencies	$	0	$	47,970	$	0		$	47,970
Obligations of states and political subdivisions:
Tax-exempt		0		134,483		0			134,483
Taxable		0		29,689		0			29,689
Mortgage-backed securities		0		65,625		0			65,625
Collateralized mortgage obligations, Issued by U.S. Government agencies		0		182,924		0			182,924
Collateralized debt obligations		0		660		0			660
Total debt securities		0		461,351		0			461,351
Marketable equity securities		8,717		0		0			8,717
Total available-for-sale securities		8,717		461,351		0			470,068
Servicing rights		0		0		850			850
Total recurring fair value measurements	$	8,717	$	461,351	$	850		$	470,918
Nonrecurring fair value measurements
Impaired loans with a valuation allowance	$	0	$	0	$	1,874		$	1,874
Valuation allowance		0		0		(762	)		(762	)
Impaired loans, net		0		0		1,112			1,112
Foreclosed assets held for sale		0		0		890			890
Total nonrecurring fair value measurements	$	0	$	0	$	2,002		$	2,002

			December 31, 2012
(In Thousands)	Quoted Prices in Active Markets (Level 1)		Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)			Total Fair Value
Recurring fair value measurements
AVAILABLE-FOR-SALE SECURITIES:
Obligations of U.S. Government agencies	$	0	$	31,217	$	0		$	31,217
Obligations of states and political subdivisions:
Tax-exempt		0		137,020		0			137,020
Taxable		0		24,817		0			24,817
Mortgage-backed securities		0		80,196		0			80,196
Collateralized mortgage obligations,
Issued by U.S. Government agencies		0		183,510		0			183,510
Trust preferred securities issued by individual institutions		0		5,171		0			5,171
Collateralized debt obligations:
Pooled trust preferred securities - senior tranches		0		0		1,613			1,613
Other collateralized debt obligations		0		660		0			660
Total debt securities		0		462,591		1,613			464,204
Marketable equity securities		8,373		0		0			8,373
Total available-for-sale securities		8,373		462,591		1,613			472,577
Servicing rights		0		0		605			605
Total recurring fair value measurements	$	8,373	$	462,591	$	2,218		$	473,182
Nonrecurring fair value measurements
Impaired loans with a valuation allowance	$	0	$	0	$	2,710		$	2,710
Valuation allowance		0		0		(623	)		(623	)
Impaired loans, net		0		0		2,087			2,087
Foreclosed assets held for sale		0		0		879			879
Total nonrecurring fair value measurements	$	0	$	0	$	2,966		$	2,966

Loans are classified as impaired when, based on current information and events, it is probable that the Corporation will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Foreclosed assets held for sale consist of real estate acquired by foreclosure. For impaired commercial loans secured by real estate and foreclosed assets held for sale, the nonrecurring estimates of fair value are determined primarily using values from third-party appraisals less discounts based on the Corporation’s experience in selling similar properties and estimated selling costs.

Management’s evaluation and selection of valuation techniques and the unobservable inputs used in determining the fair values of assets valued using Level 3 methodologies include sensitive assumptions. Other market participants might use substantially different assumptions, which could result in calculations of fair values that would be substantially different than the amount calculated by management. At June 30, 2013 and December 31, 2012, quantitative information regarding significant techniques and inputs used for assets measured on a recurring basis using unobservable inputs (Level 3 methodologies) are as follows:

Asset	Fair Value at 6/30/13 (In Thousands)		Valuation Technique	Unobservable Input(s)	Method or Value As of 6/30/13
Servicing rights	$	850	Discounted cash flow	Discount rate		12.00	%	Rate used through modeling period
				Loan prepayment speeds		245.00	%	Weighted-average PSA
				Servicing fees		0.25	%	of loan balances
						5.00	%	of payments are late
						5.00	%	late fees assessed
					$	1.94		Miscellaneous fees per account per month
				Servicing costs	$	6.00		Monthly servicing cost per account
					$	24.00		Additional monthly servicing cost per loan on loans more than 30 days delinquent
						1.50	%	of loans more than 30 days delinquent
						3.00	%	annual increase in servicing costs

Asset	Fair Value at 12/31/12 (In Thousands)		Valuation Technique	Unobservable Input(s)	Method or Value As of 12/31/12
Pooled trust preferred securities - senior tranches	$	1,613	Discounted cash flow	Issuer defaults		50.26	%	Actual deferrals and defaults as % of outstanding collateral
						19.73	%	Expected additional net deferrals and defaults as % of performing collateral
				Issuer prepayments		41.24	%	Expected issuer prepayments as % of performing collateral
				Discount rate		11.70	%	Implied 7.57% discount rate at 12/31/07 plus 4.13% spread for credit and liquidity risk
Servicing rights		605	Discounted cash flow	Discount rate		12.00	%	Rate used through modeling period
				Loan prepayment speeds		288.00	%	Weighted-average PSA
				Servicing fees		0.25	%	of loan balances
						5.00	%	of payments are late
						5.00	%	late fees assessed
					$	1.94		Miscellaneous fees per account per month
				Servicing costs	$	6.00		Monthly servicing cost per account
					$	24.00		Additional monthly servicing cost per loan on loans more than 30 days delinquent
						1.50	%	of loans more than 30 days delinquent
						3.00	%	annual increase in servicing costs

The fair value of servicing rights is affected by expected future interest rates. Increases (decreases) in future expected interest rates tend to increase (decrease) the fair value of the Corporation’s servicing rights because of changes in expected prepayment behavior by the borrowers on the underlying loans.

Following is a reconciliation of activity for Level 3 assets measured at fair value on a recurring basis:

	Three Months Ended June 30, 2013											Six Months Ended June 30, 2013
(In Thousands)	Pooled Trust Preferred Securities - Senior Tranches			Pooled Trust Preferred Securities - Mezzanine Tranches		Servicing Rights			Total			Pooled Trust Preferred Securities - Senior Tranches			Pooled Trust Preferred Securities - Mezzanine Tranches			Servicing Rights			Total
Balance, beginning of period	$	1,659		$	0	$	738		$	2,397		$	1,613		$	0		$	605		$	2,218
Issuances of servicing rights		0			0		150			150			0			0			316			316
Accretion and amortization, net		(1	)		0		0			(1	)		(2	)		0			0			(2	)
Proceeds from sales and calls		(1,636	)		0		0			(1,636	)		(1,636	)		(571	)		0			(2,207	)
Realized gains, net		23			0		0			23			23			571			0			594
Unrealized losses included in earnings		0			0		(38	)		(38	)		0			0			(71	)		(71	)
Unrealized (losses) gains included in other comprehensive income		(45	)		0		0			(45	)		2			0			0			2
Balance, end of period	$	0		$	0	$	850		$	850		$	0		$	0		$	850		$	850

	Three Months Ended June 30, 2012												Six Months Ended June 30, 2012
	Pooled Trust Preferred Securities - Senior Tranches			Pooled Trust Preferred Securities - Mezzanine Tranches			Servicing Rights			Total			Pooled Trust Preferred Securities - Senior Tranches			Pooled Trust Preferred Securities - Mezzanine Tranches			Servicing Rights			Total
Balance, beginning of period	$	4,638		$	782		$	409		$	5,829		$	4,638		$	730		$	375		$	5,743
Issuances of servicing rights		0			0			74			74			0			0			129			129
Accretion and amortization, net		(2	)		0			0			(2	)		(5	)		0			0			(5	)
Proceeds from sales and calls		(2,515	)		(27	)		0			(2,542	)		(2,515	)		(54	)		0			(2,569	)
Realized gains, net		40			27			0			67			40			54			0			94
Unrealized losses included in earnings		0			0			(23	)		(23	)		0			0			(44	)		(44	)
Unrealized gains included in other comprehensive income		225			364			0			589			228			416			0			644
Balance, end of period	$	2,386		$	1,146		$	460		$	3,992		$	2,386		$	1,146		$	460		$	3,992

No other-than-temporary impairment losses on securities valued using Level 3 methodologies were recorded in 2013 or 2012.

Certain of the Corporation’s financial instruments are not measured at fair value in the consolidated financial statements. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. Certain financial instruments and all nonfinancial instruments are excluded from disclosure requirements. Therefore, the aggregate fair value amounts presented may not represent the underlying fair value of the Corporation.

The Corporation used the following methods and assumptions in estimating fair value disclosures for financial instruments:

CASH AND CASH EQUIVALENTS - The carrying amounts of cash and short-term instruments approximate fair values.

CERTIFICATES OF DEPOSIT - Fair values for certificates of deposit, included in cash and due from banks in the consolidated balance sheet, are based on quoted market prices for certificates of similar remaining maturities.

SECURITIES - Fair values for securities, excluding restricted equity securities, are based on quoted market prices or other methods as described above. The carrying value of restricted equity securities approximates fair value based on applicable redemption provisions.

LOANS HELD FOR SALE - Fair values of loans held for sale are determined based on applicable sale prices available under the Federal Home Loan Banks’ MPF Xtra program.

LOANS - Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as commercial, commercial real estate, residential mortgage and other consumer. Each loan category is further segmented into fixed and adjustable rate interest terms and by performing and nonperforming categories. The fair value of performing loans is calculated by discounting contractual cash flows, adjusted for estimated prepayments based on historical experience, using estimated market discount rates that reflect the credit and interest rate risk inherent in the loans. Fair value of nonperforming loans is based on recent appraisals or estimates prepared by the Corporation’s lending officers.

SERVICING RIGHTS - The fair value of servicing rights, included in other assets in the consolidated balance sheet, is determined through a discounted cash flow valuation. Significant inputs include expected net servicing income, the discount rate and the expected prepayment speeds of the underlying loans.

DEPOSITS - The fair value of deposits with no stated maturity, such as noninterest-bearing demand deposits, savings, money market and interest checking accounts, is (by definition) equal to the amount payable at June 30, 2013 and December 31, 2012. The fair value of time deposits, such as certificates of deposit and Individual Retirement Accounts, is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar remaining maturities. The fair value estimates of deposits do not include the benefit that results from the low-cost funding provided by the deposit liabilities compared to the cost of borrowing funds in the market, commonly referred to as the core deposit intangible.

BORROWED FUNDS - The fair value of borrowings is estimated using discounted cash flow analyses based on rates currently available to the Corporation for similar types of borrowing arrangements.

ACCRUED INTEREST - The carrying amounts of accrued interest receivable and payable approximate fair values.

OFF-BALANCE SHEET COMMITMENTS - The Corporation has commitments to extend credit and has issued standby letters of credit. Standby letters of credit are conditional guarantees of performance by a customer to a third party. Estimates of the fair value of these off-balance sheet items were not made because of the short-term nature of these arrangements and the credit standing of the counterparties.

The estimated fair values, and related carrying amounts, of the Corporation’s financial instruments are as follows:

(In Thousands)	Valuation	June 30, 2013				December 31, 2012
	Method(s) Used	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Cash and cash equivalents	Level 1	$	30,956	$	30,956	$	55,016	$	55,016
Certificates of deposit	Level 2		4,820		4,875		4,820		4,860
Available-for-sale securities	See Above		470,068		470,068		472,577		472,577
Restricted equity securities (included in Other Assets)	Level 2		3,894		3,894		4,842		4,842
Loans held for sale	Level 1		725		725		2,545		2,545
Loans, net	Level 3		647,772		650,503		677,053		693,047
Accrued interest receivable	Level 1		4,180		4,180		4,281		4,281
Servicing rights	Level 3		850		850		605		605
Financial liabilities:
Deposits with no stated maturity	Level 1		672,916		672,916		693,687		693,687
Time deposits	Level 3		277,853		279,595		312,419		315,005
Short-term borrowings	Level 3		16,387		16,344		5,567		5,527
Long-term borrowings	Level 3		73,472		82,004		83,812		96,032
Accrued interest payable	Level 1		112		112		137		137

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Note 8 - Borrowed Funds (Details) (USD $)	3 Months Ended			6 Months Ended						3 Months Ended
	Jun. 30, 2013	Mar. 31, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012	Jun. 30, 2013 FHLB-Pittsburgh [Member]	Jun. 30, 2013 FHLB-Pittsburgh [Member]	Dec. 31, 2012 FHLB-Pittsburgh [Member]	Sep. 30, 2012 Repurchase Agreement Maturing in 2017 with a Rate of 3.595% [Member]	Dec. 31, 2012 Repurchase Agreement Maturing in 2017 with a Rate of 3.595% [Member]	Dec. 31, 2007 Repurchase Agreement Maturing in 2017 with a Rate of 3.595% [Member]	Dec. 31, 2012 Repurchase Agreement Maturing in 2017 with a Rate of 4.265% [Member]	Jun. 30, 2013 Repurchase Agreements [Member]
Note 8 - Borrowed Funds (Details) [Line Items]
Line of Credit Facility, Collateral				The FHLB-Pittsburgh loan facilities are collateralized by qualifying loans secured by real estate
Loans Pledged as Collateral								$ 467,018,000	$ 471,731,000
Federal Home Loan Bank Stock	3,764,000			3,764,000		4,712,000		3,764,000	4,712,000
Federal Home Loan Bank Advances	6,000,000			6,000,000
Debt Instrument, Interest Rate, Stated Percentage							0.22%						4.265%
Debt, Weighted Average Interest Rate		3.595%												0.10%
Carrying Value of Securities Sold under Repurchase Agreements and Deposits Received for Securities Loaned	10,841,000			10,841,000		11,179,000
Payments of Debt Extinguishment Costs	0	(1,023,000)	(143,000)	(1,023,000)	(143,000)
Debt Instrument, Repurchase Amount		7,000,000									34,000,000	40,000,000
Repayments of Debt										6,000,000
Derivative, Cap Price (in Dollars per Item)						0.0515
Securities Sold under Agreements to Repurchase	$ 78,834,000			$ 78,834,000		$ 89,428,000

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Note 8 - Borrowed Funds (Tables)

6 Months Ended

Jun. 30, 2013

Note 8 - Borrowed Funds (Tables) [Line Items]

Schedule of Short-term Debt [Table Text Block]

(In Thousands)	June 30, 2013		Dec. 31, 2012
FHLB-Pittsburgh borrowings	$	12,000	$	0
Customer repurchase agreements		4,387		5,567
Total short-term borrowings	$	16,387	$	5,567

Schedule of Long-term Debt Instruments [Table Text Block]

(In Thousands)	June 30, 2013		Dec. 31, 2012
FHLB-Pittsburgh borrowings	$	12,472	$	15,812
Repurchase agreements		61,000		68,000
Total long-term borrowings	$	73,472	$	83,812

Federal Home Loan Bank Advances [Member]

Note 8 - Borrowed Funds (Tables) [Line Items]

Schedule of Maturities of Long-term Debt [Table Text Block]

(In Thousands)	June 30, 2013		Dec. 31, 2012
Loans matured in 2013 with rates ranging from 2.86% to 3.62%	$	0	$	3,211
Loan maturing in 2016 with a rate of 6.86%		175		196
Loan maturing in 2017 with a rate of 6.83%		25		27
Loan maturing in 2017 with a rate of 3.81%		10,000		10,000
Loan maturing in 2020 with a rate of 4.79%		1,222		1,297
Loan maturing in 2025 with a rate of 4.91%		1,050		1,081
Total long-term FHLB-Pittsburgh borrowings	$	12,472	$	15,812

(In Thousands)	June 30, 2013		Dec. 31, 2012
Agreement maturing in 2017 with a rate of 3.595%	$	27,000	$	34,000
Agreement maturing in 2017 with a rate of 4.265%		34,000		34,000
Total long-term repurchase agreements	$	61,000	$	68,000

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Note 5 - Fair Value Measurements and Fair Values of Financial Instruments (Details) - Valuation Techniques and the Unobservable Inputs Used in Determining Fair Value (USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Servicing Rights Asset [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Level 3 Asset Fair Value (in Dollars)	$ 850,000	$ 605,000
Modeling Period Rate	12.00%	12.00%
Weighted-average PSA	245.00%	288.00%
Servicing Fees Percent of Loan Balances	0.25%	0.25%
Servicing Fees Percent of Late Payments	5.00%	5.00%
Servicing Rights Percent of Late Fees Assessed	5.00%	5.00%
Miscellaneous Fees Per Account Per Month (in Dollars)	1.94	1.94
Monthly Servicing Cost Per Account Per Month (in Dollars)	6.00	6.00
Additional Monthly Servicing Cost Per Loan, More Than 30 Days Delinquent (in Dollars)	24.00	24.00
Percent of Loans More Than 30 Days Delinquent	1.50%	1.50%
Annual Increase In Servicing Costs	3.00%	3.00%
Pooled trust preferred securities - senior tranches (in Dollars)	850,000	605,000
Pooled trust preferred securities - senior tranches	12.00%	12.00%
Pooled Trust Preferred Securities Senior Tranches [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Level 3 Asset Fair Value (in Dollars)	1,613,000
Modeling Period Rate	50.26%
Pooled trust preferred securities - senior tranches (in Dollars)	$ 1,613,000
Pooled trust preferred securities - senior tranches	50.26%
	19.73%
	41.24%
	11.70%

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Note 8 - Borrowed Funds

6 Months Ended

Jun. 30, 2013

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

8. BORROWED FUNDS

SHORT-TERM BORROWINGS

Short-term borrowings include the following:

(In Thousands)	June 30, 2013		Dec. 31, 2012
FHLB-Pittsburgh borrowings	$	12,000	$	0
Customer repurchase agreements		4,387		5,567
Total short-term borrowings	$	16,387	$	5,567

The FHLB-Pittsburgh loan facilities are collateralized by qualifying loans secured by real estate with a book value totaling $467,018,000 at June 30, 2013 and $471,731,000 at December 31, 2012. Also, the FHLB-Pittsburgh loan facilities require the Corporation to invest in established amounts of FHLB-Pittsburgh stock. The carrying values of the Corporation’s holdings of FHLB-Pittsburgh stock (included in Other Assets) were $3,764,000 at June 30, 2013 and $4,712,000 at December 31, 2012.

The short-term borrowings from the FHLB-Pittsburgh include two advances of $6,000,000, each of which matures in July 2013 and has an interest rate of 0.22%.

The Corporation engages in repurchase agreements with certain commercial customers. These agreements provide that the Corporation sells specified investment securities to the customers on an overnight basis and repurchases them on the following business day. The weighted average rate paid by the Corporation on customer repurchase agreements was 0.10% at June 30, 2013 and December 31, 2012. The carrying value of the underlying securities was $10,841,000 at June 30, 2013 and $11,179,000 at December 31, 2012.

LONG-TERM BORROWINGS

Long-term borrowings are as follows:

(In Thousands)	June 30, 2013		Dec. 31, 2012
FHLB-Pittsburgh borrowings	$	12,472	$	15,812
Repurchase agreements		61,000		68,000
Total long-term borrowings	$	73,472	$	83,812

Long-term borrowings from FHLB-Pittsburgh are as follows:

(In Thousands)	June 30, 2013		Dec. 31, 2012
Loans matured in 2013 with rates ranging from 2.86% to 3.62%	$	0	$	3,211
Loan maturing in 2016 with a rate of 6.86%		175		196
Loan maturing in 2017 with a rate of 6.83%		25		27
Loan maturing in 2017 with a rate of 3.81%		10,000		10,000
Loan maturing in 2020 with a rate of 4.79%		1,222		1,297
Loan maturing in 2025 with a rate of 4.91%		1,050		1,081
Total long-term FHLB-Pittsburgh borrowings	$	12,472	$	15,812

Repurchase agreements included in long-term borrowings are as follows:

(In Thousands)	June 30, 2013		Dec. 31, 2012
Agreement maturing in 2017 with a rate of 3.595%	$	27,000	$	34,000
Agreement maturing in 2017 with a rate of 4.265%		34,000		34,000
Total long-term repurchase agreements	$	61,000	$	68,000

The Corporation incurred a loss of $1,023,000 in the first quarter 2013 on prepayment of $7,000,000 of the agreement with an interest rate of 3.595% that is contractually scheduled to mature in 2017.

In December 2007, the Corporation entered into two repurchase agreements of $40,000,000 each with embedded caps. These repurchase agreements mature in 2017. In the third quarter 2012, the Corporation paid off principal totaling $6,000,000 on each of these agreements, incurring a loss from prepayment of $2,190,000 and leaving a balance of $34,000,000 outstanding for each agreement at December 31, 2012. The borrowing with an interest rate of 3.595% became putable by the issuer at quarterly intervals starting in December 2010. The other borrowing has an interest rate of 4.265% and became putable by the issuer at quarterly intervals starting in December 2012. Each of these borrowings contained an embedded cap, providing that on the quarterly anniversary of the transaction settlement date, if three-month LIBOR were higher than 5.15%, the Corporation’s interest rate payable would decrease by twice the amount of the excess, down to a minimum rate of 0%. The embedded cap on one of the agreements expired in December 2010, and the embedded cap on the other agreement expired in December 2012.

Securities sold under repurchase agreements were delivered to the broker-dealer who is the counter-party to the transactions. The broker-dealer may have sold, loaned or otherwise disposed of such securities to other parties in the normal course of their operations, and has agreed to resell to the Corporation substantially identical securities at the maturities of the agreements. The Master Repurchase Agreement between the Corporation and the broker-dealer provides that the Agreement constitutes a “netting contract,” as defined; however, the Corporation and the broker-dealer have no other obligations to one another and accordingly, no netting has occurred. The carrying value of the underlying securities was $78,834,000 at June 30, 2013 and $89,428,000 at December 31, 2012.

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Note 11 - Income Taxes (Details) - Effective Tax Rate Table (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Effective Tax Rate Table [Abstract]
Income before income tax provision	$ 6,645	$ 7,779	$ 12,935	$ 15,475
Income tax provision	$ 1,671	$ 2,094	$ 3,255	$ 4,203
Effective tax rate	25.15%	26.92%	25.16%	27.16%

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Note 4 - Cash And Due From Banks

6 Months Ended

Jun. 30, 2013

Cash and Cash Equivalents [Abstract]

Cash and Cash Equivalents Disclosure [Text Block]

4. CASH AND DUE FROM BANKS

Cash and due from banks at June 30, 2013 and December 31, 2012 include the following:

(In thousands)	June 30, 2013		Dec. 31, 2012
Cash and cash equivalents	$	30,956	$	55,016
Certificates of deposit		4,820		4,820
Total cash and due from banks	$	35,776	$	59,836

Certificates of deposit are issues by U.S. banks with original maturities greater than three months. Each certificate of deposit is fully FDIC-insured. The Corporation maintains cash and cash equivalents with certain financial institutions in excess of the FDIC insurance limit.

The Corporation is required to maintain reserves against deposit liabilities in the form of cash and balances with the Federal Reserve Bank of Philadelphia. Required reserves fluctuate based on deposit levels and are adjusted biweekly. Required reserves were $14,204,000 at June 30, 2013 and $14,128,000 at December 31, 2012.

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Consolidated Statements of Changes in Stockholders' Equity (Unaudited) (USD $)	Common Stock [Member]	Treasury Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Total
Balance at Dec. 31, 2011	$ 12,461,000	$ (5,106,000)	$ 67,568,000	$ 82,302,000	$ 10,160,000	$ 167,385,000
Shares Balance (in Shares) at Dec. 31, 2011	12,460,920	305,391
Net income				11,272,000		11,272,000
Other comprehensive					894,000	894,000
Cash dividends declared on common stock				(4,640,000)		(4,640,000)
Shares issued for dividend reinvestment plan	29,000		526,000			555,000
Shares issued for dividend reinvestment plan (in Shares)	28,916
Shares issued from treasury related to exercise of stock options		174,000	(19,000)			155,000
Shares issued from treasury related to exercise of stock options (in Shares)		(10,352)
Restricted stock granted		711,000	(711,000)			0
Restricted stock granted (in Shares)		(42,552)
Forfeiture of restricted stock		(34,000)	34,000			0
Forfeiture of restricted stock (in Shares)		2,032
Stock-based compensation expense			411,000			411,000
Tax effect of stock option exercises			8,000			8,000
Tax benefit from employee benefit plan				22,000		22,000
Balance at Jun. 30, 2012	12,490,000	(4,255,000)	67,817,000	88,956,000	11,054,000	176,062,000
Shares Balance (in Shares) at Jun. 30, 2012	12,489,836	254,519
Balance at Dec. 31, 2012	12,525,000	(4,203,000)	68,622,000	94,839,000	11,003,000	182,786,000
Shares Balance (in Shares) at Dec. 31, 2012	12,525,411	251,376
Net income				9,680,000		9,680,000
Other comprehensive					(8,323,000)	(8,323,000)
Cash dividends declared on common stock				(6,161,000)		(6,161,000)
Shares issued for dividend reinvestment plan	36,000		677,000			713,000
Shares issued for dividend reinvestment plan (in Shares)	36,266
Shares issued from treasury related to exercise of stock options		111,000	8,000			119,000
Shares issued from treasury related to exercise of stock options (in Shares)		(6,568)
Restricted stock granted		633,000	(633,000)			0
Restricted stock granted (in Shares)		(37,886)
Forfeiture of restricted stock		(54,000)	54,000			0
Forfeiture of restricted stock (in Shares)		3,233
Stock-based compensation expense			492,000			492,000
Tax effect of stock option exercises			(6,000)			(6,000)
Tax benefit from employee benefit plan				61,000		61,000
Balance at Jun. 30, 2013	$ 12,561,000	$ (3,513,000)	$ 69,214,000	$ 98,419,000	$ 2,680,000	$ 179,361,000
Shares Balance (in Shares) at Jun. 30, 2013	12,561,677	210,155

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Note 7 - Loans (Details) - Allowance for Loan Losses (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Residential mortgage:
Beginning Balance	$ 7,118	$ 7,370	$ 6,857	$ 7,705
Charge-offs	(52)	(115)	(245)	(291)
Recoveries	66	35	337	58
Provision (Credit)	66	367	249	185
Ending Balance	7,198	7,657	7,198	7,657
Residential Mortgage Loans - First Liens [Member]
Residential mortgage:
Beginning Balance	2,786	2,953	2,619	3,026
Charge-offs	(13)	(50)	(65)	(188)
Recoveries	11	18	11	18
Provision (Credit)	87	(33)	306	32
Ending Balance	2,871	2,888	2,871	2,888
Residential Mortgage Loans - Junior Liens [Member]
Residential mortgage:
Beginning Balance	236	260	247	266
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provision (Credit)	(7)	(6)	(18)	(12)
Ending Balance	229	254	229	254
Home Equity Line of Credit [Member]
Residential mortgage:
Beginning Balance	251	232	255	231
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provision (Credit)	7	13	3	14
Ending Balance	258	245	258	245
1-4 Family Residential Construction [Member]
Residential mortgage:
Beginning Balance	145	62	96	79
Charge-offs	(11)	0	(11)	0
Recoveries	0	0	0	0
Provision (Credit)	45	18	94	1
Ending Balance	179	80	179	80
Total Residential Mortgage [Member]
Residential mortgage:
Beginning Balance	3,418	3,507	3,217	3,602
Charge-offs	(24)	(50)	(76)	(188)
Recoveries	11	18	11	18
Provision (Credit)	132	(8)	385	35
Ending Balance	3,537	3,467	3,537	3,467
Commercial Loans Secured by Real Estate [Member]
Residential mortgage:
Beginning Balance	1,906	1,920	1,930	2,004
Charge-offs	0	0	0	0
Recoveries	43	0	293	0
Provision (Credit)	(5)	56	(279)	(28)
Ending Balance	1,944	1,976	1,944	1,976
Commercial and Industrial [Member]
Residential mortgage:
Beginning Balance	597	762	581	946
Charge-offs	(2)	(35)	(110)	(35)
Recoveries	1	4	2	5
Provision (Credit)	32	(19)	155	(204)
Ending Balance	628	712	628	712
Political Subdivisions [Member]
Residential mortgage:
Beginning Balance	0	0	0	0
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provision (Credit)	0	0	0	0
Ending Balance	0	0	0	0
Commercial Construction and Land [Member]
Residential mortgage:
Beginning Balance	368	325	234	267
Charge-offs	(4)	0	(4)	0
Recoveries	0	0	0	0
Provision (Credit)	(106)	281	28	339
Ending Balance	258	606	258	606
Loans Secured by Farmland [Member]
Residential mortgage:
Beginning Balance	127	121	129	126
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provision (Credit)	(6)	(4)	(8)	(9)
Ending Balance	121	117	121	117
Multi-family (5 or more) Residential [Member]
Residential mortgage:
Beginning Balance	65	63	67	66
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provision (Credit)	(1)	1	(3)	(2)
Ending Balance	64	64	64	64
Agricultural Loans [Member]
Residential mortgage:
Beginning Balance	26	27	27	27
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provision (Credit)	2	2	1	2
Ending Balance	28	29	28	29
Other Commercial Loans [Member]
Residential mortgage:
Beginning Balance	2	3	3	5
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provision (Credit)	3	2	2	0
Ending Balance	5	5	5	5
Total Commercial [Member]
Residential mortgage:
Beginning Balance	3,091	3,221	2,971	3,441
Charge-offs	(6)	(35)	(114)	(35)
Recoveries	44	4	295	5
Provision (Credit)	(81)	319	(104)	98
Ending Balance	3,048	3,509	3,048	3,509
Consumer [Member]
Residential mortgage:
Beginning Balance	211	206	228	228
Charge-offs	(22)	(30)	(55)	(68)
Recoveries	11	13	31	35
Provision (Credit)	15	56	11	50
Ending Balance	215	245	215	245
Unallocated [Member]
Residential mortgage:
Beginning Balance	398	436	441	434
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provision (Credit)	0	0	(43)	2
Ending Balance	$ 398	$ 436	$ 398	$ 436

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Note 6 - Securities (Details) - Gross Unrealized Losses and Fair Value of Available-for-Sale Securities (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Note 6 - Securities (Details) - Gross Unrealized Losses and Fair Value of Available-for-Sale Securities [Line Items]
Less Than 12 Months, Fair Value	$ 182,379	$ 38,087
Less Than 12 Months, Unrealized Losses	(6,272)	(365)
12 Months or More, Fair Value	2,807	5,419
12 Months or More, Unrealized Losses	(158)	(122)
Total Fair Value	185,186	43,506
Total Unrealized Losses	(6,430)	(487)
Obligations of U.S. Government Agencies [Member]
Note 6 - Securities (Details) - Gross Unrealized Losses and Fair Value of Available-for-Sale Securities [Line Items]
Less Than 12 Months, Fair Value	27,497	10,006
Less Than 12 Months, Unrealized Losses	(1,458)	(50)
12 Months or More, Fair Value	0	0
12 Months or More, Unrealized Losses	0	0
Total Fair Value	27,497	10,006
Total Unrealized Losses	(1,458)	(50)
Obligations of States and Political Subdivisions, Tax-exempt [Member]
Note 6 - Securities (Details) - Gross Unrealized Losses and Fair Value of Available-for-Sale Securities [Line Items]
Less Than 12 Months, Fair Value	41,057	7,082
Less Than 12 Months, Unrealized Losses	(1,529)	(92)
12 Months or More, Fair Value	2,455	3,285
12 Months or More, Unrealized Losses	(157)	(86)
Total Fair Value	43,512	10,367
Total Unrealized Losses	(1,686)	(178)
Obligations of States and Political Subdivisions, Taxable [Member]
Note 6 - Securities (Details) - Gross Unrealized Losses and Fair Value of Available-for-Sale Securities [Line Items]
Less Than 12 Months, Fair Value	15,455	4,149
Less Than 12 Months, Unrealized Losses	(560)	(71)
12 Months or More, Fair Value	0	0
12 Months or More, Unrealized Losses	0	0
Total Fair Value	15,455	4,149
Total Unrealized Losses	(560)	(71)
Marketable Equity Securities [Member]
Note 6 - Securities (Details) - Gross Unrealized Losses and Fair Value of Available-for-Sale Securities [Line Items]
Less Than 12 Months, Fair Value	9,737	95
Less Than 12 Months, Unrealized Losses	(259)	(6)
12 Months or More, Fair Value	0	67
12 Months or More, Unrealized Losses	0	(33)
Total Fair Value	9,737	162
Total Unrealized Losses	(259)	(39)
Collateralized Mortgage Obligations, Issued by U.S. Government Agencies [Member]
Note 6 - Securities (Details) - Gross Unrealized Losses and Fair Value of Available-for-Sale Securities [Line Items]
Less Than 12 Months, Fair Value	88,633	16,755
Less Than 12 Months, Unrealized Losses	(2,466)	(146)
12 Months or More, Fair Value	352	454
12 Months or More, Unrealized Losses	(1)	(1)
Total Fair Value	88,985	17,209
Total Unrealized Losses	(2,467)	(147)
Collateralized Debt Obligations, Pooled Trust Preferred Securities - Senior Tranches [Member]
Note 6 - Securities (Details) - Gross Unrealized Losses and Fair Value of Available-for-Sale Securities [Line Items]
Less Than 12 Months, Fair Value		0
Less Than 12 Months, Unrealized Losses		0
12 Months or More, Fair Value		1,613
12 Months or More, Unrealized Losses		(2)
Total Fair Value		1,613
Total Unrealized Losses		(2)
Debt Securities [Member]
Note 6 - Securities (Details) - Gross Unrealized Losses and Fair Value of Available-for-Sale Securities [Line Items]
Less Than 12 Months, Fair Value		37,992
Less Than 12 Months, Unrealized Losses		(359)
12 Months or More, Fair Value		5,352
12 Months or More, Unrealized Losses		(89)
Total Fair Value		43,344
Total Unrealized Losses		$ (448)

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Note 11 - Income Taxes (Tables)

6 Months Ended

Jun. 30, 2013

Income Tax Disclosure [Abstract]

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

(In Thousands)	June 30, 2013		Dec. 31, 2012
Deferred tax assets:
Defined benefit plans - ASC 835	$	82	$	305
Net realized losses on securities		149		1,254
Allowance for loan losses		2,519		2,400
Credit for alternative minimum tax paid		3,115		3,609
Other deferred tax assets		2,029		2,019
Total deferred tax assets		7,894		9,587
Deferred tax liabilities:
Unrealized holding gains on securities		1,526		6,228
Bank premises and equipment		1,442		1,337
Core deposit intangibles		39		48
Other deferred tax liabilities		256		249
Total deferred tax liabilities		3,263		7,862
Deferred tax asset, net	$	4,631	$	1,725

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

(In thousands)	Three Months Ended June 30,						Six Months Ended June 30,
	2013 (Current)			2012 (Prior Year)			2013 (Current)			2012 (Prior Year)
Income before income tax provision	$	6,645		$	7,779		$	12,935		$	15,475
Income tax provision		1,671			2,094			3,255			4,203
Effective tax rate		25.15	%		26.92	%		25.16	%		27.16	%

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Note 8 - Borrowed Funds (Details) - Long Term Debt Maturities (Parentheticals)	Jun. 30, 2013 FHLB-Pittsburgh [Member] Federal Home Loan Bank Borrowings Loan Maturing In2016 With Rate Of686 [Member]	Jun. 30, 2013 FHLB-Pittsburgh [Member] Federal Home Loan Bank Borrowings Loan Maturing In2017 With Rate Of683 [Member]	Jun. 30, 2013 FHLB-Pittsburgh [Member] Federal Home Loan Bank Borrowings Loan Maturing In2017 With Rate Of381 [Member]	Jun. 30, 2013 FHLB-Pittsburgh [Member] Federal Home Loan Bank Borrowings Loan Maturing In2020 With Rate Of479 [Member]	Jun. 30, 2013 FHLB-Pittsburgh [Member] Federal Home Loan Bank Borrowings Loan Maturing In2025 With Rate Of491 [Member]	Jun. 30, 2013 FHLB-Pittsburgh [Member] Minimum [Member] Federal Home Loan Bank Borrowings Loan Maturing In2013 With Rates Ranging From286 To362 [Member]	Jun. 30, 2013 FHLB-Pittsburgh [Member] Maximum [Member] Federal Home Loan Bank Borrowings Loan Maturing In2013 With Rates Ranging From286 To362 [Member]	Dec. 31, 2012 Repurchase Agreement Maturing in 2017 with a Rate of 3.595% [Member]	Dec. 31, 2012 Repurchase Agreement Maturing in 2017 with a Rate of 4.265% [Member]
Note 8 - Borrowed Funds (Details) - Long Term Debt Maturities (Parentheticals) [Line Items]
Long-term Borrowings, Interest Rate	6.86%	6.83%	3.81%	4.79%	4.91%	2.86%	3.62%	3.595%	4.265%

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Note 7 - Loans (Details) - Aging of Troubled Debt Restructings (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Financing Receivable, Modifications [Line Items]
Curent & Past Due Less than 30 Days	$ 641,982	$ 668,657
Past Due 30-89 Days	6,647	8,483
Past Due 90+ Days	6,341	6,770
Nonaccrual	6,697	7,353
Troubled Debt Restructuring [Member]
Financing Receivable, Modifications [Line Items]
Curent & Past Due Less than 30 Days	1,630	785
Past Due 30-89 Days	557	121
Past Due 90+ Days	0	0
Nonaccrual	1,154	1,155
Loans and Leases Receivable Subject to Troubled Debt Restrucuring	$ 3,341	$ 2,061

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Note 11 - Income Taxes

6 Months Ended

Jun. 30, 2013

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

11. INCOME TAXES

The net deferred tax asset at June 30, 2013 and December 31, 2012 represents the following temporary difference components:

(In Thousands)	June 30, 2013		Dec. 31, 2012
Deferred tax assets:
Defined benefit plans - ASC 835	$	82	$	305
Net realized losses on securities		149		1,254
Allowance for loan losses		2,519		2,400
Credit for alternative minimum tax paid		3,115		3,609
Other deferred tax assets		2,029		2,019
Total deferred tax assets		7,894		9,587
Deferred tax liabilities:
Unrealized holding gains on securities		1,526		6,228
Bank premises and equipment		1,442		1,337
Core deposit intangibles		39		48
Other deferred tax liabilities		256		249
Total deferred tax liabilities		3,263		7,862
Deferred tax asset, net	$	4,631	$	1,725

The deferred tax asset from net realized losses on securities resulted primarily from OTTI charges for financial statement purposes that are not deductible for income tax reporting purposes through June 30, 2013. The deferred tax asset from net realized losses on securities of $149,000 at June 30, 2013 is from securities that, if the Corporation were to sell them, would be classified as capital losses for income tax reporting purposes.

The provision for income tax for the three-month and six-month periods ended June 30, 2013 and 2012 is based on the Corporation’s estimate of the effective tax rate expected to be applicable for the full year. The effective tax rates for the Corporation are as follows:

(In thousands)	Three Months Ended June 30,						Six Months Ended June 30,
	2013 (Current)			2012 (Prior Year)			2013 (Current)			2012 (Prior Year)
Income before income tax provision	$	6,645		$	7,779		$	12,935		$	15,475
Income tax provision		1,671			2,094			3,255			4,203
Effective tax rate		25.15	%		26.92	%		25.16	%		27.16	%

The effective tax rate for each period presented differs from the statutory rate of 35% principally because of the effects of tax-exempt interest income.

The Corporation has no unrecognized tax benefits, nor pending examination issues related to tax positions taken in preparation of its income tax returns. With limited exceptions, the Corporation is no longer subject to examination by the Internal Revenue Service for years prior to 2009.

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Note 7 - Loans

6 Months Ended

Jun. 30, 2013

Receivables [Abstract]

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

7. LOANS

The loans receivable portfolio is segmented into residential mortgage, commercial and consumer loans. The residential mortgage segment includes the following classes: first and junior lien residential mortgages, home equity lines of credit and residential construction loans. The most significant classes of commercial loans are commercial loans secured by real estate, non-real estate secured commercial and industrial loans, loans to political subdivisions, commercial construction and land loans, and loans secured by farmland.

Loans outstanding at June 30, 2013 and December 31, 2012 are summarized as follows:

Summary of Loans by Type
(In Thousands)	June 30, 2013			Dec. 31, 2012
Residential mortgage:
Residential mortgage loans - first liens	$	304,806		$	311,627
Residential mortgage loans - junior liens		24,797			26,748
Home equity lines of credit		33,076			33,017
1-4 Family residential construction		14,895			12,842
Total residential mortgage		377,574			384,234
Commercial:
Commercial loans secured by real estate		155,168			158,413
Commercial and industrial		45,812			48,442
Political subdivisions		24,033			31,789
Commercial construction and land		20,189			28,200
Loans secured by farmland		11,134			11,403
Multi-family (5 or more) residential		6,397			6,745
Agricultural loans		3,061			3,053
Other commercial loans		543			362
Total commercial		266,337			288,407
Consumer		11,059			11,269
Total		654,970			683,910
Less: allowance for loan losses		(7,198	)		(6,857	)
Loans, net	$	647,772		$	677,053

The Corporation grants loans to individuals as well as commercial and tax-exempt entities. Commercial, residential and personal loans are made to customers geographically concentrated in the Pennsylvania and New York counties that comprise the market serviced by Citizens & Northern Bank. Although the Corporation has a diversified loan portfolio, a significant portion of its debtors’ ability to honor their contracts is dependent on the local economic conditions within the region. There is no concentration of loans to borrowers engaged in similar businesses or activities that exceed 10% of total loans at either June 30, 2013 or December 31, 2012.

The Corporation maintains an allowance for loan losses that represents management’s estimate of the losses inherent in the loan portfolio as of the balance sheet date and recorded as a reduction of the investment in loans. The allowance for loan losses is maintained at a level considered adequate to provide for losses that can be reasonably anticipated. Management performs a quarterly evaluation of the adequacy of the allowance. The allowance is based on the Corporation’s past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision as more information becomes available. In the process of evaluating the loan portfolio, management also considers the Corporation’s exposure to losses from unfunded loan commitments. As of June 30, 2013 and December 31, 2012, management determined that no allowance for credit losses related to unfunded loan commitments was required.

Transactions within the allowance for loan losses, summarized by segment and class, for the three-month and six-month periods ended June 30, 2013 and 2012 were as follows:

Six Months Ended June 30, 2013
(In Thousands)	Dec. 31, 2012 Balance		Charge-offs			Recoveries		Provision (Credit)			June 30, 2013 Balance
Allowance for Loan Losses:
Residential mortgage:
Residential mortgage loans - first liens	$	2,619	$	(65	)	$	11	$	306		$	2,871
Residential mortgage loans - junior liens		247		0			0		(18	)		229
Home equity lines of credit		255		0			0		3			258
1-4 Family residential construction		96		(11	)		0		94			179
Total residential mortgage		3,217		(76	)		11		385			3,537
Commercial:
Commercial loans secured by real estate		1,930		0			293		(279	)		1,944
Commercial and industrial		581		(110	)		2		155			628
Political subdivisions		0		0			0		0			0
Commercial construction and land		234		(4	)		0		28			258
Loans secured by farmland		129		0			0		(8	)		121
Multi-family (5 or more) residential		67		0			0		(3	)		64
Agricultural loans		27		0			0		1			28
Other commercial loans		3		0			0		2			5
Total commercial		2,971		(114	)		295		(104	)		3,048
Consumer		228		(55	)		31		11			215
Unallocated		441		0			0		(43	)		398
Total Allowance for Loan Losses	$	6,857	$	(245	)	$	337	$	249		$	7,198

Six Months Ended June 30, 2012
(In Thousands)	Dec. 31, 2011 Balance		Charge-offs			Recoveries		Provision (Credit)			June 30, 2012 Balance
Allowance for Loan Losses:
Residential mortgage:
Residential mortgage loans - first liens	$	3,026	$	(188	)	$	18	$	32		$	2,888
Residential mortgage loans - junior liens		266		0			0		(12	)		254
Home equity lines of credit		231		0			0		14			245
1-4 Family residential construction		79		0			0		1			80
Total residential mortgage		3,602		(188	)		18		35			3,467
Commercial:
Commercial loans secured by real estate		2,004		0			0		(28	)		1,976
Commercial and industrial		946		(35	)		5		(204	)		712
Political subdivisions		0		0			0		0			0
Commercial construction and land		267		0			0		339			606
Loans secured by farmland		126		0			0		(9	)		117
Multi-family (5 or more) residential		66		0			0		(2	)		64
Agricultural loans		27		0			0		2			29
Other commercial loans		5		0			0		0			5
Total commercial		3,441		(35	)		5		98			3,509
Consumer		228		(68	)		35		50			245
Unallocated		434		0			0		2			436
Total Allowance for Loan Losses	$	7,705	$	(291	)	$	58	$	185		$	7,657

Three Months Ended June 30, 2013
(In Thousands)	Mar. 31, 2013 Balance		Charge-offs			Recoveries		Provision (Credit)			June 30, 2013 Balance
Allowance for Loan Losses:
Residential mortgage:
Residential mortgage loans - first liens	$	2,786	$	(13	)	$	11	$	87		$	2,871
Residential mortgage loans - junior liens		236		0			0		(7	)		229
Home equity lines of credit		251		0			0		7			258
1-4 Family residential construction		145		(11	)		0		45			179
Total residential mortgage		3,418		(24	)		11		132			3,537
Commercial:
Commercial loans secured by real estate		1,906		0			43		(5	)		1,944
Commercial and industrial		597		(2	)		1		32			628
Political subdivisions		0		0			0		0			0
Commercial construction and land		368		(4	)		0		(106	)		258
Loans secured by farmland		127		0			0		(6	)		121
Multi-family (5 or more) residential		65		0			0		(1	)		64
Agricultural loans		26		0			0		2			28
Other commercial loans		2		0			0		3			5
Total commercial		3,091		(6	)		44		(81	)		3,048
Consumer		211		(22	)		11		15			215
Unallocated		398		0			0		0			398
Total Allowance for Loan Losses	$	7,118	$	(52	)	$	66	$	66		$	7,198

Three Months Ended June 30, 2012
(In Thousands)	Mar. 31, 2012 Balance		Charge-offs			Recoveries		Provision (Credit)			June 30, 2012 Balance
Allowance for Loan Losses:
Residential mortgage:
Residential mortgage loans - first liens	$	2,953	$	(50	)	$	18	$	(33	)	$	2,888
Residential mortgage loans - junior liens		260		0			0		(6	)		254
Home equity lines of credit		232		0			0		13			245
1-4 Family residential construction		62		0			0		18			80
Total residential mortgage		3,507		(50	)		18		(8	)		3,467
Commercial:
Commercial loans secured by real estate		1,920		0			0		56			1,976
Commercial and industrial		762		(35	)		4		(19	)		712
Political subdivisions		0		0			0		0			0
Commercial construction and land		325		0			0		281			606
Loans secured by farmland		121		0			0		(4	)		117
Multi-family (5 or more) residential		63		0			0		1			64
Agricultural loans		27		0			0		2			29
Other commercial loans		3		0			0		2			5
Total commercial		3,221		(35	)		4		319			3,509
Consumer		206		(30	)		13		56			245
Unallocated		436		0			0		0			436
Total Allowance for Loan Losses	$	7,370	$	(115	)	$	35	$	367		$	7,657

In the evaluation of the loan portfolio, management determines two major components for the allowance for loan losses – (1) a specific component based on an assessment of certain larger relationships, mainly commercial purpose loans, on a loan-by-loan basis; and (2) a general component for the remainder of the portfolio based on a collective evaluation of pools of loans with similar risk characteristics. The general component is assigned to each pool of loans based on both historical net charge-off experience, and an evaluation of certain qualitative factors. An unallocated component is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the above methodologies for estimating specific and general losses in the portfolio.

In determining the larger loan relationships for detailed assessment under the specific allowance component, the Corporation uses an internal risk rating system. Under the risk rating system, the Corporation classifies problem or potential problem loans as “Special Mention,” “Substandard,” or “Doubtful” on the basis of currently existing facts, conditions and values. Substandard loans include those characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected. Loans classified as Doubtful have all the weaknesses inherent in those classified as Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Loans that do not currently expose the Corporation to sufficient risk to warrant classification as Substandard or Doubtful, but possess weaknesses that deserve management’s close attention, are deemed to be Special Mention. Risk ratings are updated any time that conditions or the situation warrants. Loans not classified are included in the “Pass” column in the table below.

The following tables summarize the aggregate credit quality classification of outstanding loans by risk rating as of June 30, 2013 and December 31, 2012:

June 30, 2013:			Special
(In Thousands)	Pass		Mention		Substandard		Doubtful		Total
Residential Mortgage:
Residential mortgage loans - first liens	$	289,357	$	2,440	$	12,821	$	188	$	304,806
Residential mortgage loans - junior liens		23,608		406		783		0		24,797
Home equity lines of credit		32,623		96		357		0		33,076
1-4 Family residential construction		14,823		0		72		0		14,895
Total residential mortgage		360,411		2,942		14,033		188		377,574
Commercial:
Commercial loans secured by real estate		143,139		7,109		4,603		317		155,168
Commercial and Industrial		38,739		3,683		3,025		365		45,812
Political subdivisions		23,928		105		0		0		24,033
Commercial construction and land		18,744		225		472		748		20,189
Loans secured by farmland		8,845		767		1,490		32		11,134
Multi-family (5 or more) residential		6,020		329		48		0		6,397
Agricultural loans		2,969		36		56		0		3,061
Other commercial loans		543		0		0		0		543
Total commercial		242,927		12,254		9,694		1,462		266,337
Consumer		10,836		11		212		0		11,059
Totals	$	614,174	$	15,207	$	23,939	$	1,650	$	654,970

December 31, 2012:			Special
(In Thousands)	Pass		Mention		Substandard		Doubtful		Total
Residential Mortgage:
Residential mortgage loans - first liens	$	295,929	$	3,633	$	11,872	$	193	$	311,627
Residential mortgage loans - junior liens		25,394		420		934		0		26,748
Home equity lines of credit		32,374		130		513		0		33,017
1-4 Family residential construction		12,759		0		83		0		12,842
Total residential mortgage		366,456		4,183		13,402		193		384,234
Commercial:
Commercial loans secured by real estate		146,381		6,994		5,038		0		158,413
Commercial and Industrial		41,237		3,030		3,810		365		48,442
Political subdivisions		31,679		110		0		0		31,789
Commercial construction and land		26,744		231		477		748		28,200
Loans secured by farmland		9,102		751		1,517		33		11,403
Multi-family (5 or more) residential		6,394		342		9		0		6,745
Agricultural loans		2,963		28		62		0		3,053
Other commercial loans		362		0		0		0		362
Total commercial		264,862		11,486		10,913		1,146		288,407
Consumer		11,053		12		203		1		11,269
Totals	$	642,371	$	15,681	$	24,518	$	1,340	$	683,910

The general component of the allowance for loan losses covers pools of loans including commercial loans not considered individually impaired, as well as smaller balance homogeneous classes of loans, such as residential real estate, home equity lines of credit and other consumer loans. Accordingly, the Corporation generally does not separately identify individual consumer and residential loans for impairment disclosures, unless such loans are subject to a restructuring agreement. The pools of loans are evaluated for loss exposure based upon three-year average historical net charge-off rates for each loan class, adjusted for qualitative factors. Qualitative risk factors (described in the following paragraph) are evaluated for the impact on each of the three segments (residential mortgage, commercial and consumer) within the loan portfolio. Each qualitative factor is assigned a value to reflect improving, stable or declining conditions based on management’s judgment using relevant information available at the time of the evaluation. The adjustment for qualitative factors is applied as an increase or decrease to the three-year average net charge-off rate to each loan class within each segment.

The qualitative factors used in the general component calculations are designed to address credit risk characteristics associated with each segment. The Corporation’s credit risk associated with all of the segments is significantly impacted by these factors, which include economic conditions within its market area, the Corporation’s lending policies, changes or trends in the portfolio, risk profile, competition, regulatory requirements and other factors. Further, the residential mortgage segment is significantly affected by the values of residential real estate that provide collateral for the loans. The majority of the Corporation’s commercial segment loans (approximately 72% at June 30, 2013) is secured by real estate, and accordingly, the Corporation’s risk for the commercial segment is significantly affected by commercial real estate values. The consumer segment includes a wide mix of loans for different purposes, primarily secured loans, including loans secured by motor vehicles, manufactured housing and other types of collateral.

Loans are classified as impaired, when, based on current information and events, it is probable that the Corporation will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for commercial loans, by the fair value of the collateral (if the loan is collateral dependent), by future cash flows discounted at the loan’s effective rate or by the loan’s observable market price.

The scope of loans evaluated individually for impairment include all loan relationships greater than $200,000 for which there is at least one extension of credit graded Special Mention, Substandard or Doubtful. Also, all loans classified as troubled debt restructurings (discussed in more detail below) and all loan relationships less than $200,000 in the aggregate, but with an estimated loss of $100,000 or more, are individually evaluated for impairment. Loans that are individually evaluated for impairment, but which are not determined to be impaired, are combined with all remaining loans that are not reviewed on a specific basis, and such loans are included within larger pools of loans based on similar risk and loss characteristics for purposes of determining the general component of the allowance. The loans that have been individually evaluated, but which have not been determined to be impaired, are included in the “Collectively Evaluated” column in the tables summarizing the allowance and associated loan balances as of June 30, 2013 and December 31, 2012.

The following tables present a summary of loan balances and the related allowance for loan losses summarized by portfolio segment and class for each impairment method used as of June 30, 2013 and December 31, 2012:

June 30, 2013	Loans:						Allowance for Loan Losses:
(In Thousands)
	Individually Evaluated		Collectively Evaluated		Totals		Individually Evaluated		Collectively Evaluated		Totals
Residential mortgage:
Residential mortgage loans - first liens	$	2,102	$	302,704	$	304,806	$	268	$	2,603	$	2,871
Residential mortgage loans - junior liens		227		24,570		24,797		0		229		229
Home equity lines of credit		0		33,076		33,076		0		258		258
1-4 Family residential construction		0		14,895		14,895		0		179		179
Total residential mortgage		2,329		375,245		377,574		268		3,269		3,537
Commercial:
Commercial loans secured by real estate		1,397		153,771		155,168		206		1,738		1,944
Commercial and industrial		736		45,076		45,812		231		397		628
Political subdivisions		0		24,033		24,033		0		0		0
Commercial construction and land		1,004		19,185		20,189		0		258		258
Loans secured by farmland		1,358		9,776		11,134		31		90		121
Multi-family (5 or more) residential		48		6,349		6,397		0		64		64
Agricultural loans		53		3,008		3,061		0		28		28
Other commercial loans		0		543		543		0		5		5
Total commercial		4,596		261,741		266,337		468		2,580		3,048
Consumer		46		11,013		11,059		26		189		215
Unallocated												398
Total	$	6,971	$	647,999	$	654,970	$	762	$	6,038	$	7,198

December 31, 2012	Loans:						Allowance for Loan Losses:
(In Thousands)
	Individually Evaluated		Collectively Evaluated		Totals		Individually Evaluated		Collectively Evaluated		Totals
Residential mortgage:
Residential mortgage loans - first liens	$	2,341	$	309,286	$	311,627	$	206	$	2,413	$	2,619
Residential mortgage loans - junior liens		158		26,590		26,748		0		247		247
Home equity lines of credit		0		33,017		33,017		0		255		255
1-4 Family residential construction		0		12,842		12,842		0		96		96
Total residential mortgage		2,499		381,735		384,234		206		3,011		3,217
Commercial:
Commercial loans secured by real estate		1,938		156,475		158,413		146		1,784		1,930
Commercial and industrial		939		47,503		48,442		197		384		581
Political subdivisions		0		31,789		31,789		0		0		0
Commercial construction and land		1,034		27,166		28,200		0		234		234
Loans secured by farmland		923		10,480		11,403		34		95		129
Multi-family (5 or more) residential		9		6,736		6,745		0		67		67
Agricultural loans		40		3,013		3,053		0		27		27
Other commercial loans		0		362		362		0		3		3
Total commercial		4,883		283,524		288,407		377		2,594		2,971
Consumer		47		11,222		11,269		40		188		228
Unallocated												441
Total	$	7,429	$	676,481	$	683,910	$	623	$	5,793	$	6,857

The average balance of impaired loans and interest income recognized on impaired loans is as follows:

(In Thousands)	3 Months Ended June 30,				6 Months Ended June 30,
	2013		2012		2013		2012
Average investment in impaired loans	$	7,131	$	6,930	$	7,291	$	7,025
Interest income recognized on impaired loans		58		55		128		138
Interest income recognized on a cash basis on impaired loans		58		55		128		138

Loans are placed on nonaccrual status for all classes of loans when, in the opinion of management, collection of interest is doubtful. Any unpaid interest previously accrued on those loans is reversed from income. Interest income is not recognized on specific impaired loans unless the likelihood of further loss is remote. Interest payments received on loans for which the risk of further loss is greater than remote are applied as a reduction of the loan principal balance. Interest income on other nonaccrual loans is recognized only to the extent of interest payments received. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time (generally six months) and the ultimate collectability of the total contractual principal and interest is no longer in doubt. The past due status of all classes of loans receivable is determined based on contractual due dates for loan payments. Also, the amortization of deferred loan fees is discontinued when a loan is placed on nonaccrual status.

The breakdown by portfolio segment and class of nonaccrual loans and loans past due ninety days or more and still accruing is as follows:

(In Thousands)	June 30, 2013				December 31, 2012
	Past Due 90+ Days and Accruing		Nonaccrual		Past Due 90+ Days and Accruing		Nonaccrual
Residential mortgage:
Residential mortgage loans - first liens	$	1,510	$	2,929	$	1,900	$	3,064
Residential mortgage loans - junior liens		58		111		29		111
Home equity lines of credit		39		62		40		200
1-4 Family residential construction		0		72		0		0
Total residential mortgage		1,607		3,174		1,969		3,375
Commercial:
Commercial loans secured by real estate		278		926		120		1,338
Commercial and industrial		3		576		68		761
Commercial construction and land		0		1,033		149		887
Loans secured by farmland		236		921		0		923
Agricultural loans		0		39		0		40
Total commercial		517		3,495		337		3,949
Consumer		78		28		5		29
Totals	$	2,202	$	6,697	$	2,311	$	7,353

The amounts shown in the table immediately above include loans classified as troubled debt restructurings (described in more detail below), if such loans are past due ninety days or more or nonaccrual.

The table below presents a summary of the contractual aging of loans as of June 30, 2013 and December 31, 2012:

(In Thousands)	As of June 30, 2013								As of December 31, 2012
	Current & Past Due Less than 30 Days		Past Due 30-89 Days		Past Due 90+ Days		Total		Current & Past Due Less than 30 Days		Past Due 30-89 Days		Past Due 90+ Days		Total
Residential mortgage:
Residential mortgage loans - first liens	$	298,731	$	3,769	$	2,306	$	304,806	$	302,373	$	6,228	$	3,026	$	311,627
Residential mortgage loans - junior liens		24,517		121		159		24,797		26,247		371		130		26,748
Home equity lines of credit		32,879		96		101		33,076		32,593		184		240		33,017
1-4 Family residential construction		14,823		0		72		14,895		12,627		215		0		12,842
Total residential mortgage		370,950		3,986		2,638		377,574		373,840		6,998		3,396		384,234
Commercial:
Commercial loans secured by real estate		152,495		1,727		946		155,168		156,834		704		875		158,413
Commercial and industrial		44,864		438		510		45,812		47,569		317		556		48,442
Political subdivisions		24,033		0		0		24,033		31,789		0		0		31,789
Commercial construction and land		18,974		210		1,005		20,189		26,944		248		1,008		28,200
Loans secured by farmland		9,904		105		1,125		11,134		10,438		75		890		11,403
Multi-family (5 or more) residential		6,268		129		0		6,397		6,743		2		0		6,745
Agricultural loans		3,022		0		39		3,061		3,003		10		40		3,053
Other commercial loans		543		0		0		543		362		0		0		362
Total commercial		260,103		2,609		3,625		266,337		283,682		1,356		3,369		288,407
Consumer		10,929		52		78		11,059		11,135		129		5		11,269
Totals	$	641,982	$	6,647	$	6,341	$	654,970	$	668,657	$	8,483	$	6,770	$	683,910

Nonaccrual loans are included in the contractual aging in the immediately preceding table. A summary of the contractual aging of nonaccrual loans at June 30, 2013 and December 31, 2012 is as follows:

(In Thousands)	Current & Past Due Less than 30 Days		Past Due 30-89 Days		Past Due 90+ Days		Total
June 30, 2013 Nonaccrual Totals	$	2,024	$	534	$	4,139	$	6,697
December 31, 2012 Nonaccrual Totals	$	2,167	$	727	$	4,459	$	7,353

Loans whose terms are modified are classified as Troubled Debt Restructurings (TDRs) if the Corporation grants such borrowers concessions, and it is deemed that those borrowers are experiencing financial difficulty. Loans classified as TDRs are designated as impaired. The outstanding balance of loans subject to TDRs, as well as contractual aging information at June 30, 2013 and December 31, 2012 is as follows:

Troubled Debt Restructurings (TDRs):
(In Thousands)	Current & Past Due Less than 30 Days		Past Due 30-89  Days		Past Due 90+ Days		Nonaccrual		Total
June 30, 2013 Totals	$	1,630	$	557	$	0	$	1,154	$	3,341
December 31, 2012 Totals	$	785	$	121	$	0	$	1,155	$	2,061

There were no TDRs that occurred during the second quarter 2012. TDRs that occurred during the second quarter 2013 are as follows:

Quarter Ended June 30, 2013 (Balances in Thousands)	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Residential mortgage:
Residential mortgage loans - first liens		1	$	143	$	143
Residential mortgage loans - junior liens		1		65		65
Commercial:
Commercial loans secured by real estate		1		440		440
Loans secured by farmland		4		512		512
Agricultural loans		1		13		13
Consumer		1		6		6

All of the TDRs in the second quarter 2013 were situations in which the Corporation agreed to permit the borrowers to pay interest only for an extended period of time. All of the second quarter 2013 TDRs, except for the commercial loan secured by real estate, were for one relationship.

TDRs that occurred during the six-month periods ended June 30, 2013 and 2012 were as follows:

Six Months Ended June 30, 2013 (Balances in Thousands)	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Residential mortgage:
Residential mortgage loans - first liens		6	$	677	$	677
Residential mortgage loans - junior liens		3		102		102
Commercial:
Commercial loans secured by real estate		1		440		440
Loans secured by farmland		4		512		512
Agricultural loans		1		13		13
Consumer		1		6		6

Six Months Ended June 30, 2012 (Balances in Thousands)	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Commercial:
Commercial and industrial		1	$	65	$	65

The TDRs in the six-month period ended June 30, 2013 included interest only payments for an extended period of time (10 contracts), extensions of the final maturity date (3 contracts), reduction in interest rate (2 contracts) and reduction in payment amount for one year (1 contract). There was no allowance for loan losses on these loans at June 30, 2013 and no change in the allowance for loan losses resulting from these TDRs during the second quarter 2013 or the six-month period ended June 30, 2013.

The TDR in the six-month period ended June 30, 2012 was an extension of the final maturity and lowering of monthly payments required on a commercial loan. There was no allowance for loan losses on this loan at June 30, 2013, and no change in the allowance for loan losses has occurred for this loan since it was restructured.

Defaults on loans for which modifications considered to be TDRs were entered into within the previous 12 months were as follows:

(Balances in Thousands)	Number of Contracts		Recorded Investment
Quarter and Six Months Ended June 30, 2013
(Balances in Thousands)
Commercial,
Commercial loans secured by real estate		1	$	440

In 2012, there were no defaults on loans for which modifications considered to be TDRs were entered into within the previous 12 months.

The event of default in the table above resulted from the borrowers’ failure to make contractual payments of interest only subsequent to the restructuring in the second quarter 2013. Based on the estimated value of the underlying collateral, net of estimated costs to sell the collateral, the Corporation determined that no allowance for loan losses was required at June 30, 2013.

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Note 9 - Defined Benefit Plans (Details) - Net Periodic Benefit Costs (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Pension Plan, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Service cost	$ 0	$ 0	$ 0	$ 0
Interest cost	18	18	36	36
Expected return on plan assets	(22)	(18)	(45)	(36)
Amortization of transition (asset) obligation	0	0	0	0
Amortization of prior service cost	0	0	0	0
Recognized net actuarial loss	8	7	16	14
Net periodic benefit cost	4	7	7	14
Other Postretirement Benefit Plan, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Service cost	11	23	21	46
Interest cost	14	21	28	41
Expected return on plan assets	0	0	0	0
Amortization of transition (asset) obligation	0	9	0	18
Amortization of prior service cost	(8)	3	(16)	7
Recognized net actuarial loss	0	0	0	0
Net periodic benefit cost	$ 17	$ 56	$ 33	$ 112

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Note 14 - Subsequent Event

6 Months Ended

Jun. 30, 2013

Subsequent Events [Abstract]

Subsequent Events [Text Block]

14. SUBSEQUENT EVENT

In the third quarter 2013, the Corporation incurred professional fees expense of approximately $708,000 related to a consulting engagement in which the consulting firm identified recommendations for potential increases in revenues with an estimated annual total pre-tax benefit of approximately $1.3 million. Management expects to realize ongoing benefits from implementing the recommendations starting in the fourth quarter 2013 and thereafter, though the actual amount of benefits to be derived is difficult to estimate and is dependent on many variables, including customer behavior, market conditions and the Corporation’s effectiveness in implementing the recommendations.

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Note 12 - Contingencies

6 Months Ended

Jun. 30, 2013

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

12. CONTINGENCIES

In the normal course of business, the Corporation may be subject to pending and threatened lawsuits in which claims for monetary damages could be asserted. In management’s opinion, the Corporation’s financial position and results of operations would not be materially affected by the outcome of such pending legal proceedings.

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Document And Entity Information	6 Months Ended
	Jun. 30, 2013	Aug. 01, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	CITIZENS & NORTHERN CORP
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		12,354,505
Amendment Flag	false
Entity Central Index Key	0000810958
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Accelerated Filer
Entity Well-known Seasoned Issuer	No
Document Period End Date	Jun. 30, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2

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Note 13 - Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2013

Accounting Changes and Error Corrections [Abstract]

Accounting Changes and Error Corrections [Text Block]

13. RECENT ACCOUNTING PRONOUNCEMENTS

The FASB issues Accounting Standards Updates (ASUs) to the FASB Accounting Standards Codification (ASC). This section provides a summary description of recent ASUs that have significant implications (elected or required) within the consolidated financial statements, or that management expects may have a significant impact on financial statements issued in the near future.

In January 2013, the FASB issued ASU 2013-01, Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. The amendments in this standard clarify that the scope of ASU 2011-11 applies to (among other types of instruments) repurchase agreements that are either offset or subject to an enforceable master netting arrangement or similar agreement. The amendments in ASU 2011-11 require an entity to disclose information about offsetting and related arrangements to enable users of financial statements to understand the effect of those arrangements on the entity’s financial position. The Corporation has two types of repurchase agreements that have been recognized as borrowings in the unaudited consolidated financial statements: (1) overnight repurchase agreements with customers, and (2) repurchase agreements with a broker-dealer. The Corporation does not offset assets and liabilities related to either of these types of repurchase agreement. The overnight repurchase agreements with customers are not subject to a master netting arrangement or similar arrangement, and accordingly, the disclosure requirements of ASU 2011-11 do not apply. As disclosed in Note 8 to these unaudited consolidated financial statements, the Master Repurchase Agreement between the Corporation and the broker-dealer provides that the Agreement constitutes a “netting contract,” as defined; however, the Corporation and the broker-dealer have no other obligations to one another and therefore, no netting has occurred.

In February 2013, the FASB issued ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. The amendments in this standard require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, this standard requires an entity to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required by U.S. GAAP to be reclassified in their entirety to net income, an entity will be required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts. As required, the Corporation has implemented the amendments in this ASU prospectively in Note 3 to these unaudited consolidated financial statements.

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Note 7 - Loans (Details) - Defaults on Loans With Previous Modifications (Commercial Loans Secured by Real Estate [Member], Quarter and Six Month Ended [Member], USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013
Commercial Loans Secured by Real Estate [Member] | Quarter and Six Month Ended [Member]
Commercial,
Commercial loans secured by real estate	1
Commercial loans secured by real estate (in Dollars)	$ 440

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Note 7 - Loans (Details) - Troubled Debt Restructurings (USD $) In Thousands, unless otherwise specified	6 Months Ended	3 Months Ended	6 Months Ended	3 Months Ended	6 Months Ended	3 Months Ended	6 Months Ended	3 Months Ended	6 Months Ended	3 Months Ended	6 Months Ended	3 Months Ended	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2013 Residential Mortgage Loans - First Liens [Member]	Jun. 30, 2013 Residential Mortgage Loans - First Liens [Member]	Jun. 30, 2013 Residential Mortgage Loans - Junior Liens [Member]	Jun. 30, 2013 Residential Mortgage Loans - Junior Liens [Member]	Jun. 30, 2013 Commercial Loans Secured by Real Estate [Member]	Jun. 30, 2013 Commercial Loans Secured by Real Estate [Member]	Jun. 30, 2013 Loans Secured by Farmland [Member]	Jun. 30, 2013 Loans Secured by Farmland [Member]	Jun. 30, 2013 Agricultural Loans [Member]	Jun. 30, 2013 Agricultural Loans [Member]	Jun. 30, 2013 Consumer Loan [Member]	Jun. 30, 2013 Consumer Loan [Member]	Jun. 30, 2012 Commercial and Industrial [Member]
Residential mortgage:
Number of Contracts	1	1	6	1	3	1	1	4	4	1	1	1	1	1
Pre-Modification Outstanding Recorded Investment		$ 143	$ 677	$ 65	$ 102	$ 440	$ 440	$ 512	$ 512	$ 13	$ 13	$ 6	$ 6	$ 65
Post-Modification Outstanding Recorded Investment		$ 143	$ 677	$ 65	$ 102	$ 440	$ 440	$ 512	$ 512	$ 13	$ 13	$ 6	$ 6	$ 65