8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

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

Date of Report (Date of earliest event reported) April 14, 2015

CITIZENS & NORTHERN CORPORATION

(Exact name of registrant as specified in its charter)

Pennsylvania	0-16084	23-2451943
(State or other jurisdiction of	(Commission	(I.R.S. Employer
incorporation)	File Number)	Identification No.)
90-92 Main Street, Wellsboro, PA		16901
(Address of Principal Executive Office)		(Zip Code)

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

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

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

¨ Written communications pursuant tor Rule 425 under the Securities Act (17 CFR 230.425)

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

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

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

ITEM 2.02. Results of Operations and Financial Condition

Citizens & Northern Corporation announced unaudited, consolidated financial results for the three-month period ended March 31, 2015. On April 14, 2015, Citizens & Northern Corporation issued a press release titled “C&N Announces First Quarter 2015 Unaudited Financial Results,” a copy of which is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference. Citizens & Northern Corporation’s “Quarterly Report,” a report that includes unaudited financial information, will be mailed to shareholders on or about April 21, 2015. A copy of the Quarterly Report is furnished as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference. Also, supplemental, unaudited financial information is furnished as Exhibit 99.3 to this Current Report on Form 8-K and is incorporated herein by reference.

ITEM 9.01. Financial Statements and Exhibits

(a) Not applicable.

(b) Not applicable.

(c) Not applicable.

(d) Exhibits.

Exhibit 99.1: Press Release issued by Citizens & Northern Corporation dated April 14, 2015, titled “C&N Announces First Quarter 2015 Unaudited Financial Results.”

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

Exhibit 99.3: Supplemental, unaudited financial information.

Signatures

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

	CITIZENS & NORTHERN CORPORATION
Date:  4/14/15	By:	/s/ Mark A. Hughes
	Treasurer and Chief Financial Officer

EX-99.1

Exhibit 99.1

	Contact:  Charity Frantz
April 14, 2015	570-724-0225
	charityf@cnbankpa.com

C&N Announces FIRST QUARTER 2015 UNAUDITED Financial RESULTS

For Immediate Release:

Wellsboro, PA – Citizens & Northern Corporation (C&N) announced its unaudited, consolidated financial results for the three-month period ended March 31, 2015.

First quarter 2015 earnings amounted to $0.31 per basic and diluted share as compared to $0.35 per diluted share in the fourth quarter 2014 and $0.34 per diluted share in the first quarter 2014. The return on average assets for the first quarter 2015 was 1.23%, and the return on average equity was 8.08%.

Highlights related to C&N’s earnings results were as follows:

· Net interest income of $9,950,000 in the first quarter 2015 was $261,000 (2.6%) lower than the fourth quarter 2014 amount of $10,211,000. The net interest margin was 3.74% in the first quarter 2015, up slightly from 3.73% in the fourth quarter 2014; however, the reduction in net interest income resulted mainly from two fewer calendar days in the quarter and a 0.7% reduction in average total earning assets. Net interest income for the first quarter 2015 was $168,000 (1.7%) lower than the first quarter 2014 amount. The net interest margin for the first quarter 2015 was 0.15% lower than in the first quarter 2014, mainly due to lower yields on securities and loans.

· The provision for loan losses was $3,000 in the first quarter 2015, down from $123,000 in the fourth quarter 2014. In the first quarter 2014, C&N recorded a credit for loan losses (reduction in expense) of $311,000. The reduction in the provision for loan losses in the first quarter 2015 as compared to the prior quarter included the effects of a slight reduction in qualitative factors used to determine a portion of the allowance for loan losses at the end of the period. The credit for loan losses in the first quarter 2014 included the effects of a net reduction in specific allowances required on impaired loans and a reduction in the collectively determined portion of the allowance resulting from a decrease in loan balances outstanding.

· Noninterest revenue totaled $3,487,000 in the first quarter 2015, which was $315,000 (8.3%) lower than the fourth quarter 2014 amount and $264,000 (7.0%) lower than the first quarter 2014 amount. Included in noninterest revenue in the first quarter 2015 was an $117,000 decrease in the fair value of servicing rights from residential mortgage loans; in comparison, the fair value of servicing rights decreased $62,000 in the fourth quarter 2014 and increased $105,000 in the first quarter 2014. Service charges on deposit accounts fell $191,000 (15.7%) in the first quarter 2015 as compared to the fourth quarter 2014, and $201,000 (16.4%) as compared to the first quarter 2014, primarily as a result of lower net overdraft fees.

· Realized gains from available-for-sale securities totaled $74,000 in the first quarter 2015, down from $210,000 in the fourth quarter 2014 and up from $31,000 in the first quarter 2014.

· Noninterest expenses amounted to $8,464,000, up $214,000 (2.6%) from the fourth quarter 2014 and down $60,000 (0.7%) from the first quarter 2014. The increase in noninterest expenses in the first quarter 2015 as compared to the prior quarter included an increase in pensions and other employee benefits expense of $170,000, reflecting the timing of payroll taxes and other payroll-related expenses that are typically highest in the first quarter of each year. Professional fees expense decreased $150,000 in the first quarter 2015 as compared to the prior quarter as the fourth quarter 2014 total included fees associated with an executive search. Total other operating expense increased $284,000 in the first quarter 2015 as compared to the fourth quarter 2014, as that category included losses on sales of other real estate owned properties of $13,000 in the first quarter 2015 as compared to gains of $185,000 in the fourth quarter 2014. In comparing noninterest expenses for the first quarter 2015 to the first quarter 2014, salaries and wages expense decreased $78,000, including a reduction in stock-based compensation of $55,000 that reflects a longer vesting period associated with awards to executives. Pennsylvania shares tax expense decreased $92,000 in the first quarter 2015 as compared to the first quarter 2014, mainly as a result of an increase in tax credits associated with charitable contributions. Other operating expense increased $35,000 in the first quarter 2015 as compared to the first quarter 2014, including an increase in charitable contributions expense of $86,000.

Other Information:

Changes in other unaudited financial information are as follows:

· Total assets amounted to $1,251,958,000 at March 31, 2015, up from $1,241,963,000 at December 31, 2014 and $1,235,139,000 at March 31, 2014.

· Net loans outstanding (excluding mortgage loans held for sale) were $621,211,000 at March 31, 2015, down 0.3% from $623,209,000 at December 31, 2014, and up 0.6% from $617,475,000 at March 31, 2014.

· The outstanding balance of residential mortgages originated by C&N and sold to third parties, with servicing retained, totaled $151,272,000 at March 31, 2015, down 0.8% from $152,505,000 at December 31, 2014 and up 2.6% from $147,391,000 at March 31, 2014.

· Total nonperforming assets as a percentage of assets was 1.33% at March 31, 2015 as compared to 1.34% at December 31, 2014 and down from 1.44% at March 31, 2014.

· Deposits and repo sweep accounts totaled $982,474,000 at March 31, 2015, up 0.9% from $973,526,000 at December 31, 2014 and up 1.7% from $966,563,000 at March 31, 2014.

· Total shareholders’ equity was $189,103,000 at March 31, 2015, up from $188,362,000 at December 31, 2014 and $184,762,000 at March 31, 2014. Tangible common equity as a percentage of tangible assets was 14.28% at March 31, 2015, up from 14.12% a year earlier. In July 2014, C&N announced a common stock repurchase plan for the repurchase of up to 622,500 shares, or 5% of the total shares outstanding on July 16, 2014. In the first quarter 2015, 155,800 shares were repurchased for a total cost of $3,022,000, at an average price of $19.40 per share. Cumulatively through March 31, 2015, 364,100 shares had been repurchased for a total cost of $7,024,000, at an average price of $19.29 per share.

· Assets under management by C&N’s Trust and Financial Management Group amounted to $832,550,000 at March 31, 2015, an increase of 4.4% from a year earlier.

Citizens & Northern Corporation is the parent company of Citizens & Northern Bank, a local, independent community bank providing complete financial, investment and insurance services through 26 full service offices throughout Tioga, Bradford, Sullivan, Lycoming, Potter, Cameron and McKean counties in Pennsylvania and in Canisteo and South Hornell, NY. C&N can be found on the worldwide web at www.cnbankpa.com. The Company’s stock is listed on NASDAQ Capital Market Securities under the symbol CZNC.

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

EX-99.2

EXHIBIT 99.2

90-92 Main Street, P.O. Box 58

Wellsboro, PA 16901

Phone: (570) 724-3411 Fax: (570) 723-8097

E-Mail: cnemail@cnbankpa.com Web Page: http://www.cnbankpa.com

Stock Symbol: CZNC

Chartered 1864
		FEDERAL DEPOSIT INSURANCE CORP
March  31, 2015	QUARTERLY REPORT

Dear Shareholder:

It is with great pride that I extend greetings to you as your new CEO with this Quarterly Report. Our first six weeks as part of the C&N Team have been productive and insightful as we have engaged in all aspects of our Company. Your Board and Management Team have been open and welcoming and I am very impressed with our people and the organization. We have a great history and strong foundation to continue building on and, after meeting virtually every member of our team and a number of key customers, I have developed an appreciation for the real commitment to our franchise throughout the communities that we serve. This commitment, combined with our ability to engage the C&N Team in delivering value to our customers and communities, provides the platform for generating profitable growth to our shareholders. While we are operating in a challenging economic and regulatory environment, I am confident in our ability to deliver on this objective in the years ahead.

During the first quarter of 2015, diluted earnings per share were $.31 compared to $.35 for the fourth quarter of 2014, and $.34 for the same period in 2014. Net interest income decreased $261,000 from the fourth quarter, although the net interest margin improved to 3.74% from 3.73% in Q4 2015. A flatter yield curve and lack of loan growth have put pressure on the margin, although it remains well above peer levels. Noninterest income declined $315,000 from the prior quarter primarily due to a reduction in the value of mortgage servicing rights, lower deposit service charges and net overdraft fees, and gains from the sale of mortgage loans. Noninterest expenses increased $214,000 as a result of increased benefits costs, occupancy expenses, and charitable contributions which were partially offset by reductions in expense in a number of other expense categories. It is notable that credit quality remains strong as evidenced by the minimal loan loss provision of $3,000 during the first quarter.

Total assets, loans, and deposits all remained relatively stable as of March 31, 2015 compared to year-end 2014. As we approached the end of the quarter, after very difficult winter weather, we experienced some increase in lending activity and are cautiously optimistic about the local economy and that our business development activities are gaining traction. The Trust and Financial Management business had $833 million in assets under management as of March 31, and growing customer relationships and revenues from this division will be a continued focus moving forward. C&N’s capital position remains very strong. Total shareholders’ equity was $189.1 million at March 31, as compared to $188.4 million at the end of 2014. All capital ratios remain well in excess of regulatory standards. Management is focused on implementing strategies to leverage our capital position through loan growth. We are also committed to maintaining an attractive cash dividend, continuing the stock repurchase program announced in July 2014, and assessing other strategies that will grow the company and support shareholder value.

In closing, it is great to be on board at C&N to pursue our many opportunities. I look forward to engaging with you as we continue to build this outstanding franchise.

J. Bradley Scovill

President and CEO

CITIZENS & NORTHERN CORPORATION

BOARD OF DIRECTORS

Dennis F. Beardslee	Edward H. Owlett, III
Jan E. Fisher	J. Bradley Scovill
R. Bruce Haner	Leonard Simpson
Susan E. Hartley	James E. Towner
Leo F. Lambert, Chairman	Ann M. Tyler

CITIZENS & NORTHERN BANK

1-877-838-2517

OFFICES

428 S. Main Street, ATHENS, PA 18810

3 Main Street, CANISTEO, NY 14823

10 N Main Street, COUDERSPORT, PA 16915

111 Main Street, DUSHORE, PA 18614

563 Main Street, EAST SMITHFIELD, PA 18817

104 Main Street, ELKLAND, PA  16920

135 East Fourth Street, EMPORIUM, PA 15834

6250 County Route 64, HORNELL, NY 14843

230-232 Railroad Street, JERSEY SHORE, PA 17740

102 E. Main Street, KNOXVILLE, PA 16928

514 Main Street, LAPORTE, PA 18626

4534 Williamson Trail LIBERTY, PA 16930

1085 S. Main Street, MANSFIELD, PA 16933

612 James Monroe Avenue, MONROETON, PA 18832

3461 Rte.405 Highway, MUNCY, PA 17756

100 Maple Street, PORT ALLEGANY, PA 16743

24 Thompson Street, RALSTON, PA 17763

1827 Elmira Street, SAYRE, PA 18840

2 E. Mountain Ave., SO. WILLIAMSPORT, PA  17702

41 Main Street, TIOGA, PA 16946

428 Main Street, TOWANDA, PA18848

Court House Square, TROY, PA 16947

90-92 Main Street, WELLSBORO, PA 16901

130 Court Street, WILLIAMSPORT, PA 17701

1510 Dewey Ave., WILLIAMSPORT, PA 17702

Route 6, WYSOX, PA 18854

TRUST & FINANCIAL MANAGEMENT GROUP

3 Main Street, Canisteo, NY 14823	607-698-4295
10 N Main Street, Coudersport, PA 16915	800-921-9150
1827 Elmira Street, Sayre, PA 18840	888-760-8192
428 Main Street, Towanda, PA 18848	888-987-8784
90-92 Main Street, Wellsboro, PA 16901	888-487-8784
130 Court Street, Williamsport, PA  17701	866-732-7213
DEPOSIT OPERATIONS - 90-92 Main St., Wellsboro, PA 16901
BANKCARD SERVICES -90-92 Main St., Wellsboro PA 16901	800-577-8001
ELECTRONIC BANKING – 90-92 Main St., Wellsboro, PA 16901	877-838-2517
www.cnbankpa.com
C&N FINANCIAL SERVICES CORPORATION – 90-92 Main Street, Wellsboro, PA	866-ASK-CNFS
www.cnfinancialservices.com

CONDENSED, CONSOLIDATED EARNINGS INFORMATION
(In Thousands, Except Per Share Data)   (Unaudited)
	1ST		4TH		1ST
	QUARTER		QUARTER		QUARTER
	2015		2014		2014
	(Current)		(Prior Qtr)		(Prior Yr)
Interest and Dividend Income	$	11,163	$	11,468	$	11,406
Interest Expense		1,213		1,257		1,288
Net Interest Income		9,950		10,211		10,118
Provision (Credit) for Loan Losses		3		123		(311	)
Net Interest Income After Provision (Credit) for Loan Losses		9,947		10,088		10,429
Other Income		3,487		3,802		3,751
Net Gains on Available-for-sale Securities		74		210		31
Other Noninterest Expenses		8,464		8,250		8,524
Income Before Income Tax Provision		5,044		5,850		5,687
Income Tax Provision		1,229		1,482		1,399
Net Income	$	3,815	$	4,368	$	4,288
PER COMMON SHARE DATA:
Net Income – Basic	$	0.31	$	0.36	$	0.35
Net Income – Diluted	$	0.31	$	0.35	$	0.34
Dividend Per Share	$	0.26	$	0.26	$	0.26
Number Shares Used in Computation - Basic		12,268,306		12,302,646		12,417,627
Number Shares Used in Computation - Diluted		12,289,139		12,325,409		12,444,797

CONDENSED, CONSOLIDATED BALANCE SHEET DATA
(In Thousands, Except Per Share Data)    (Unaudited)
	MARCH 31,		DEC. 31,		MARCH 31,
	2015		2014		2014
ASSETS
Cash & Due from Banks	$	36,430	$	36,047	$	61,087
Available-for-sale Securities		527,814		516,807		484,014
Loans Held for Sale		214		0		133
Loans, Net		621,211		623,209		617,475
Intangible Assets		11,989		11,994		12,020
Other Assets		54,300		53,906		60,410
TOTAL ASSETS	$	1,251,958	$	1,241,963	$	1,235,139
LIABILITIES
Deposits	$	976,634	$	967,989	$	961,833
Repo Sweep Accounts		5,840		5,537		4,730
Total Deposits and Repo Sweeps		982,474		973,526		966,563
Borrowed Funds		72,988		73,060		73,270
Other Liabilities		7,393		7,015		10,544
TOTAL LIABILITIES		1,062,855		1,053,601		1,050,377
SHAREHOLDERS' EQUITY
Common Shareholders' Equity, Excluding Accumulated
Other Comprehensive Income		181,437		183,002		182,220
Accumulated Other Comprehensive Income:
Net Unrealized Gains/Losses on
Available-for-sale Securities		7,654		5,281		2,442
Defined Benefit Plans		12		79		100
TOTAL SHAREHOLDERS' EQUITY		189,103		188,362		184,762
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY	$	1,251,958	$	1,241,963	$	1,235,139

CONDENSED, CONSOLIDATED FINANCIAL HIGHLIGHTS
(In Thousands, Except Per Share Data)       (Unaudited)
	3 MONTHS ENDED						%
	MARCH 31,						INCREASE
	2015			2014			(DECREASE)
EARNINGS PERFORMANCE
Net Income	$	3,815		$	4,288			-11.03	%
Return on Average Assets		1.23	%		1.41	%		-12.77	%
Return on Average Equity		8.08	%		9.41	%		-14.13	%
BALANCE SHEET HIGHLIGHTS
Total Assets	$	1,251,958		$	1,235,139			1.36	%
Available-for-Sale Securities		527,814			484,014			9.05	%
Loans (Net)		621,211			617,475			0.61	%
Allowance for Loan Losses		7,134			8,343			-14.49	%
Deposits and Repo Sweep Accounts		982,474			966,563			1.65	%
OFF-BALANCE SHEET
Outstanding Balance of Mortgage Loans Sold
with Servicing Retained		151,272			147,391			2.63	%
Trust Assets Under Management		832,550			797,833			4.35	%
SHAREHOLDERS' VALUE
(PER COMMON SHARE)
Net Income - Basic	$	0.31		$	0.35			-11.43	%
Net Income - Diluted	$	0.31		$	0.34			-8.82	%
Dividends	$	0.26		$	0.26			0.00	%
Common Book Value	$	15.51		$	14.87			4.30	%
Tangible Common Book Value	$	14.53		$	13.90			4.53	%
Market Value (Last Trade)	$	20.18		$	19.71			2.38	%
Market Value /  Common Book Value		130.11	%		132.55	%		-1.84	%
Market Value /  Tangible Common Book Value		138.89	%		141.80	%		-2.05	%
Price Earnings Multiple		16.27			14.08			15.55	%
Dividend Yield		5.15	%		5.28	%		-2.46	%
Common Shares Outstanding, End of Period		12,193,184			12,429,000			-1.90	%
SAFETY AND SOUNDNESS
Tangible Common Equity / Tangible Assets		14.28	%		14.12	%		1.13	%
Nonperforming Assets / Total Assets		1.33	%		1.44	%		-7.64	%
Allowance for Loan Losses / Total Loans		1.14	%		1.33	%		-14.29	%
Total Risk Based Capital Ratio (a)		25.86	%		27.71	%		-6.68	%
Tier 1 Risk Based Capital Ratio (a)		24.63	%		26.26	%		-6.21	%
Common Equity Tier 1 Risk Based Capital Ratio (a)		24.63	%
Leverage Ratio (a)		13.86	%		14.11	%		-1.77	%
AVERAGE BALANCES
Average Assets	$	1,242,025		$	1,218,992			1.89	%
Average Equity	$	188,841		$	182,307			3.58	%

(a) Capital ratios for the most recent period are estimated. The Common Equity Tier 1 Risk Based Capital Ratio became applicable to the Corporation in the first quarter 2015.

EX-99.3

EXHIBIT 99.3 – Supplemental, Unaudited Financial Information

AVAILABLE-FOR-SALE SECURITIES	March 31, 2015				December 31, 2014
(In Thousands)	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Obligations of U.S. Government agencies	$	27,205	$	27,025	$	27,221	$	26,676
Obligations of states and political subdivisions:
Tax-exempt		117,378		122,502		120,086		124,839
Taxable		36,861		37,417		33,637		33,878
Mortgage-backed securities		90,130		92,088		82,479		83,903
Collateralized mortgage obligations,
Issued by U.S. Government agencies		238,794		240,077		239,620		238,823
Other collateralized debt obligations		34		34		34		34
Total debt securities		510,402		519,143		503,077		508,153
Marketable equity securities		5,636		8,671		5,605		8,654
Total	$	516,038	$	527,814	$	508,682	$	516,807

Summary of Loans by Type
(Excludes Loans Held for Sale)
(In Thousands)	March 31,			Dec. 31,			March 31,
	2015			2014			2014
Residential mortgage:
Residential mortgage loans - first liens	$	291,612		$	291,882		$	295,869
Residential mortgage loans - junior liens		20,896			21,166			23,048
Home equity lines of credit		37,049			36,629			34,755
1-4 Family residential construction		16,217			16,739			12,635
Total residential mortgage		365,774			366,416			366,307
Commercial:
Commercial loans secured by real estate		140,851			145,878			146,569
Commercial and industrial		51,563			50,157			40,477
Political subdivisions		19,479			17,534			10,436
Commercial construction and land		7,249			6,938			14,692
Loans secured by farmland		7,789			7,916			8,602
Multi-family (5 or more) residential		8,673			8,917			10,906
Agricultural loans		3,158			3,221			3,159
Other commercial loans		13,187			13,334			14,343
Total commercial		251,949			253,895			249,184
Consumer		10,622			10,234			10,327
Total		628,345			630,545			625,818
Less: allowance for loan losses		(7,134	)		(7,336	)		(8,343	)
Loans, net	$	621,211		$	623,209		$	617,475
Loans Held for Sale
(In Thousands)	March 31,			Dec. 31,			March 31,
	2015			2014			2014
Residential mortgage loans originated
and serviced - outstanding balance	$	151,486		$	152,505		$	147,524
Less: outstanding balance of loans sold		(151,272	)		(152,505	)		(147,391	)
Loans held for sale, net	$	214		$	0		$	133

ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
(In Thousands)
	3 Months			3 Months			Year			3 Months
	Ended			Ended			Ended			Ended
	March 31,			Dec. 31,			Dec. 31,			March 31,
	2015			2014			2014			2014
Balance, beginning of period	$	7,336		$	7,449		$	8,663		$	8,663
Charge-offs		(222	)		(258	)		(2,139	)		(274	)
Recoveries		17			22			336			265
Net charge-offs		(205	)		(236	)		(1,803	)		(9	)
Provision (credit) for loan losses		3			123			476			(311	)
Balance, end of period	$	7,134		$	7,336		$	7,336		$	8,343

PAST DUE AND IMPAIRED LOANS, NONPERFORMING ASSETS
AND TROUBLED DEBT RESTRUCTURINGS (TDRs)
(In Thousands)
	March 31,			Dec 31,			March 31,
	2015			2014			2014
Impaired loans with a valuation allowance	$	4,312		$	3,241		$	9,576
Impaired loans without a valuation allowance		8,851			9,075			5,430
Total impaired loans	$	13,163		$	12,316		$	15,006
Total loans past due 30-89 days and still accruing	$	5,722		$	7,121		$	7,650
Nonperforming assets:
Total nonaccrual loans	$	11,944		$	12,610		$	14,257
Total loans past due 90 days or more and still accruing		3,086			2,843			2,160
Total nonperforming loans		15,030			15,453			16,417
Foreclosed assets held for sale (real estate)		1,583			1,189			1,321
Total nonperforming assets	$	16,613		$	16,642		$	17,738
Loans subject to troubled debt restructurings (TDRs):
Performing	$	1,872		$	1,807		$	3,020
Nonperforming		5,252			5,388			112
Total TDRs	$	7,124		$	7,195		$	3,132
Total nonperforming loans as a % of loans		2.39	%		2.45	%		2.62	%
Total nonperforming assets as a % of assets		1.33	%		1.34	%		1.44	%
Allowance for loan losses as a % of total loans		1.14	%		1.16	%		1.33	%
Allowance for loan losses as a % of nonperforming loans		47.47	%		47.47	%		50.82	%

Analysis of Average Daily Balances and Rates
(Dollars in Thousands)
	3 Months						3 Months						3 Months
	Ended			Rate of			Ended			Rate of			Ended			Rate of
	3/31/2015			Return/			12/31/2014			Return/			3/31/2014			Return/
	Average			Cost of			Average			Cost of			Average			Cost of
	Balance			Funds %			Balance			Funds %			Balance			Funds %
EARNING ASSETS
Available-for-sale securities,
at amortized cost:
Taxable	$	388,104			2.15	%	$	383,802			2.10	%	$	345,663			2.22	%
Tax-exempt	$	117,674			5.35	%		121,735			5.22	%		126,030			5.45	%
Total available-for-sale securities		505,778			2.90	%		505,537			2.85	%		471,693			3.08	%
Interest-bearing due from banks		26,994			0.39	%		31,655			0.39	%		30,099			0.40	%
Loans held for sale		89			9.11	%		151			7.88	%		119			10.22	%
Loans receivable:
Taxable		582,498			5.37	%		587,675			5.40	%		595,514			5.45	%
Tax-exempt		41,925			5.15	%		39,909			5.28	%		39,662			5.82	%
Total loans receivable		624,423			5.35	%		627,584			5.40	%		635,176			5.47	%
Total Earning Assets		1,157,284			4.16	%		1,164,927			4.16	%		1,137,087			4.35	%
Cash		16,127						16,310						16,299
Unrealized gain/loss on securities		10,626						8,222						2,752
Allowance for loan losses		(7,391	)					(7,476	)					(8,780	)
Bank premises and equipment		16,252						16,415						17,283
Intangible Asset - Core Deposit Intangible		50						58						83
Intangible Asset - Goodwill		11,942						11,942						11,942
Other assets		37,135						38,442						42,326
Total Assets	$	1,242,025					$	1,248,840					$	1,218,992
INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Interest checking	$	191,705			0.12	%	$	190,681			0.11	%	$	179,617			0.12	%
Money market		194,834			0.15	%		198,999			0.14	%		195,596			0.14	%
Savings		127,853			0.10	%		122,955			0.10	%		118,529			0.10	%
Certificates of deposit		122,007			0.71	%		128,750			0.73	%		134,833			0.87	%
Individual Retirement Accounts		113,806			0.40	%		116,672			0.40	%		122,389			0.38	%
Other time deposits		803			0.00	%		677			0.59	%		812			0.00	%
Total interest-bearing deposits		751,008			0.26	%		758,734			0.27	%		751,776			0.30	%
Borrowed funds:
Short-term		6,017			0.07	%		6,886			0.12	%		10,049			0.20	%
Long-term		73,020			4.03	%		73,092			4.03	%		73,300			4.03	%
Total borrowed funds		79,037			3.73	%		79,978			3.69	%		83,349			3.57	%
Total Interest-bearing Liabilities		830,045			0.59	%		838,712			0.59	%		835,125			0.63	%
Demand deposits		215,019						213,230						193,402
Other liabilities		8,120						9,144						8,158
Total Liabilities		1,053,184						1,061,086						1,036,685
Stockholders' equity, excluding accumulated
other comprehensive income/loss		181,944						182,336						180,440
Accumulated other comprehensive income/loss		6,897						5,418						1,867
Total Stockholders' Equity		188,841						187,754						182,307
Total Liabilities and Stockholders' Equity	$	1,242,025					$	1,248,840					$	1,218,992
Interest Rate Spread					3.57	%					3.57	%					3.72	%
Net Interest Income/Earning Assets					3.74	%					3.73	%					3.89	%
Total Deposits (Interest-bearing
and Demand)	$	966,027					$	971,964					$	945,178

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

COMPARISON OF NONINTEREST INCOME
(In Thousands)	Three Months Ended
	March 31,			Dec. 31,			March 31,
	2015			2014			2014
Service charges on deposit accounts	$	1,022		$	1,213		$	1,223
Service charges and fees		113			133			127
Trust and financial management revenue		1,114			1,165			1,047
Brokerage revenue		219			219			227
Insurance commissions, fees and premiums		40			15			32
Interchange revenue from debit card transactions		474			485			453
Net gains from sales of loans		147			211			151
(Decrease) increase in fair value of servicing rights		(117	)		(62	)		105
Increase in cash surrender value of life insurance		97			98			88
Other operating income		378			325			298
Total noninterest income, before realized gains
on available-for-sale securities, net	$	3,487		$	3,802		$	3,751
COMPARISON OF NONINTEREST EXPENSE
(In Thousands)	Three Months Ended
	March 31,			Dec. 31,			March 31,
	2015			2014			2014
Salaries and wages	$	3,487		$	3,562		$	3,565
Pensions and other employee benefits		1,385			1,206			1,319
Occupancy expense, net		722			626			715
Furniture and equipment expense		454			460			472
FDIC assessments		151			156			147
Pennsylvania shares tax		249			336			341
Professional fees		122			272			148
Automated teller machine and interchange expense		246			256			211
Software subscriptions		197			209			190
Other operating expense		1,451			1,167			1,416
Total noninterest expense	$	8,464		$	8,250		$	8,524