UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2026

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

For the transition period from _______________ to _________________________.

Commission file number: 000-16084

CITIZENS & NORTHERN CORPORATION

(Exact name of Registrant as specified in its charter)


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

90-92 MAIN STREET, WELLSBORO, PA 16901

(Address of principal executive offices) (Zip code)

570-724-3411

(Registrant’s telephone number including area code)

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


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

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

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

Yes ⌧ No ◻

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

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

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

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

Yes ☐ No ⌧

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


Common Stock ($1.00 par value)	17,916,586 Shares Outstanding on May 4, 2026

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

CITIZENS & NORTHERN CORPORATION

Index


Part I. Financial Information

Item 1. Financial Statements

Consolidated Balance Sheets (Unaudited) –March 31, 2026 and December 31, 2025			Page 3

Consolidated Statements of Income (Unaudited) – Three-month Periods Ended March 31, 2026 and 2025			Page 4

Consolidated Statements of Comprehensive (Loss) Income (Unaudited) – Three-month Periods Ended March 31, 2026 and 2025			Page 5

Consolidated Statements of Cash Flows (Unaudited) – Three-month Periods Ended March 31, 2026 and 2025			Page 6

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) – Three-month Periods Ended March 31, 2026 and 2025			Page 7

Notes to Unaudited Consolidated Financial Statements			Pages 8 –31

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			Pages 31 – 52

Item 3. Quantitative and Qualitative Disclosures About Market Risk			Pages 53 – 55

Item 4. Controls and Procedures			Pages 55 – 56

Part II. Other Information

Item 1. Legal Proceedings			Page 56

Item 1A. Risk Factors			Page 56

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			Page 56

Item 3. Default upon Senior Securities			Page 56

Item 4. Mine Safety Disclosures			Page 57

Item 5. Other Information			Page 57

Item 6. Exhibits			Page 57

Signatures			Page 58

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

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


		March 31,			December 31,
(In Thousands, Except Share and Per Share Data)		2026			2025
ASSETS
Cash and due from banks:
Noninterest-bearing		$	30,736		$	22,289
Interest-bearing			24,062			23,767
Total cash and due from banks			54,798			46,056
Available-for-sale debt securities, at fair value			497,367			506,575

Loans receivable			2,384,850			2,354,365
Allowance for credit losses			(33,832)			(31,048)
Loans, net			2,351,018			2,323,317

Bank-owned life insurance			61,609			61,094
Accrued interest receivable			11,901			11,594
Bank premises and equipment, net			27,256			27,755
Foreclosed assets held for sale			181			189
Deferred tax asset, net			18,827			17,615
Goodwill			63,311			63,311
Core deposit intangibles, net			10,758			11,573
Other assets			67,314			63,390
TOTAL ASSETS		$	3,164,340		$	3,132,469

LIABILITIES
Deposits:
Noninterest-bearing		$	568,478		$	531,442
Interest-bearing			2,031,575			2,033,274
Total deposits			2,600,053			2,564,716
Short-term borrowings			13,590			28,618
Long-term borrowings - FHLB advances			139,489			120,935
Senior notes, net			14,988			14,970
Subordinated debt, net			24,979			24,949
Accrued interest and other liabilities			35,677			36,567
TOTAL LIABILITIES			2,828,776			2,790,755

COMMITMENTS AND CONTINGENT LIABILITIES

STOCKHOLDERS' EQUITY
Preferred stock, $1,000 par value; authorized 30,000 shares; $1,000 liquidation
preference per share; no shares issued			0			0
Common stock, par value $1.00 per share; authorized 30,000,000 shares;
issued 18,303,120 and outstanding 17,909,958 at March 31, 2026;
issued 18,303,120 and outstanding 17,823,444 at December 31, 2025			18,303			18,303
Paid-in capital			184,325			185,696
Retained earnings			166,476			171,214
Treasury stock, at cost; 393,162 shares at March 31, 2026 and 479,676
shares at December 31, 2025			(8,778)			(10,704)
Accumulated other comprehensive loss			(24,762)			(22,795)
TOTAL STOCKHOLDERS' EQUITY			335,564			341,714
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY		$	3,164,340		$	3,132,469

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

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

Consolidated Statements of Income

(In Thousands Except Per Share Data) (Unaudited)


	Three Months Ended
	March 31,		March 31,
(In Thousands, Except Per Share Data)	2026		2025
INTEREST INCOME
Interest and fees on loans:
Taxable	$	35,641	$	27,503
Tax-exempt		619		592
Income from available-for-sale debt securities:
Taxable		3,518		2,302
Tax-exempt		562		573
Other interest and dividend income		248		739
Total interest and dividend income		40,588		31,709
INTEREST EXPENSE
Interest on deposits		10,058		9,592
Interest on short-term borrowings		276		0
Interest on long-term borrowings - FHLB advances		1,446		1,789
Interest on senior notes, net		121		121
Interest on subordinated debt, net		233		232
Total interest expense		12,134		11,734
Net interest income		28,454		19,975
Provision for credit losses		13,602		236
Net interest income after provision for credit losses		14,852		19,739
NONINTEREST INCOME
Trust revenue		2,085		2,102
Brokerage and insurance revenue		588		498
Service charges on deposit accounts		1,650		1,440
Interchange revenue from debit card transactions		1,267		1,036
Net gains from sale of loans		370		205
Loan servicing fees, net		108		138
Increase in cash surrender value of life insurance		515		457
Other noninterest income		1,586		1,132
Realized gains on available-for-sale debt securities, net		26		0
Total noninterest income		8,195		7,008
NONINTEREST EXPENSE
Salaries and employee benefits		13,201		11,759
Net occupancy and equipment expense		1,891		1,459
Data processing and telecommunications expense		2,449		2,071
Automated teller machine and interchange expense		583		387
Pennsylvania shares tax		585		496
Professional fees		639		517
Other noninterest expense		3,364		2,354
Total noninterest expense		22,712		19,043
Income before income tax provision		335		7,704
Income tax provision		62		1,411
NET INCOME	$	273	$	6,293
EARNINGS PER COMMON SHARE - BASIC AND DILUTED	$	0.02	$	0.41

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

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

Consolidated Statements of Comprehensive (Loss) Income

(In Thousands) (Unaudited)


	Three Months Ended
	March 31,		March 31,
(In Thousands)	2026		2025
Net income	$	273	$	6,293

Available-for-sale debt securities:
Unrealized holding (losses) gains on available-for-sale debt securities		(2,464)		5,169
Reclassification adjustment for gains realized in income		(26)		0
Other comprehensive (loss) income on available-for-sale debt securities		(2,490)		5,169

Unfunded pension and postretirement obligations:
Changes from plan amendments and actuarial gains and losses		(9)		69
Amortization of prior service cost and net actuarial gain included in net periodic benefit cost		(22)		(22)
Other comprehensive (loss) income on pension and postretirement obligations		(31)		47

Other comprehensive (loss) income before income tax		(2,521)		5,216
Income tax related to other comprehensive loss (income)		554		(1,145)

Other comprehensive (loss) income, net		(1,967)		4,071

Comprehensive (loss) income	$	(1,694)	$	10,364

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

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands) (Unaudited)


		Three Months Ended
		March 31,		March 31,
(In Thousands)		2026		2025
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	273	$	6,293
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses			13,602		236
Realized gains on available-for-sale debt securities, net			(26)		0
Net amortization of securities			331		360
Increase in cash surrender value of life insurance			(515)		(457)
Depreciation and amortization of bank premises and equipment			687		553
Net amortization (accretion) of acquisition accounting adjustments			50		(24)
Stock-based compensation			313		325
Deferred income taxes			(658)		759
Decrease in fair value of servicing rights			172		69
Net gains from sale of loans			(370)		(205)
Origination of loans held for sale			(14,962)		(5,499)
Proceeds from sales of loans held for sale			13,170		6,665
Increase in accrued interest receivable and other assets			(1,073)		(2,871)
Decrease in accrued interest payable and other liabilities			(2,363)		(4,648)
Other			23		27
Net Cash Provided by Operating Activities			8,654		1,583
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from calls and maturities of available-for-sale debt securities			15,943		7,306
Purchase of available-for-sale debt securities			(7,877)		(8,580)
Redemption of Federal Home Loan Bank of Pittsburgh stock			3,854		344
Purchase of Federal Home Loan Bank of Pittsburgh stock			(5,187)		(160)
Purchase of Federal Reserve Bank stock			(48)		(12)
Net increase in loans			(40,565)		(2,563)
Purchase of premises and equipment			(188)		(542)
Other			32		41
Net Cash Used in Investing Activities			(34,036)		(4,166)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits			35,374		8,232
Net decrease in short-term borrowings			(15,028)		(1,917)
Proceeds from long-term borrowings - FHLB advances			27,054		0
Repayments of long-term borrowings - FHLB advances			(8,500)		(11,028)
Purchases of treasury stock			(180)		(208)
Common dividends paid			(4,596)		(3,932)
Net Cash Provided by (Used in) Financing Activities			34,124		(8,853)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			8,742		(11,436)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			44,706		123,574
CASH AND CASH EQUIVALENTS, END OF PERIOD		$	53,448	$	112,138
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Increase in accrued purchase of available-for-sale debt securities		$	1,653	$	0
Assets acquired through foreclosure of real estate loans		$	0	$	18
Leased assets obtained in exchange for new operating lease liabilities		$	0	$	1,126
Interest paid		$	12,076	$	11,282
Income taxes paid		$	51	$	4,262

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

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

Consolidated Statements of Changes in Stockholders’ Equity

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


									Accumulated
									Other
	Common	Treasury	Common		Paid-in		Retained		Comprehensive		Treasury
Three Months Ended March 31, 2026	Shares	Shares	Stock		Capital		Earnings		Loss		Stock		Total
Balance, December 31, 2025	18,303,120	479,676	$	18,303	$	185,696	$	171,214	$	(22,795)	$	(10,704)	$	341,714
Net income								273						273
Other comprehensive loss, net										(1,967)				(1,967)
Cash dividends declared on common stock, $.28 per share								(5,011)						(5,011)
Shares issued for dividend reinvestment plan		(17,886)				23						399		422
Restricted stock granted		(78,864)				(1,761)						1,761		0
Forfeiture of restricted stock		2,278				54						(54)		0
Stock-based compensation expense						313								313
Purchase of restricted stock for tax withholding		7,958										(180)		(180)
Balance, March 31, 2026	18,303,120	393,162	$	18,303	$	184,325	$	166,476	$	(24,762)	$	(8,778)	$	335,564

Three Months Ended March 31, 2025
Balance, December 31, 2024	16,030,172	596,678	$	16,030	$	143,565	$	165,778	$	(36,761)	$	(13,328)	$	275,284
Net income								6,293						6,293
Other comprehensive income, net										4,071				4,071
Cash dividends declared on common stock, $.28 per share								(4,330)						(4,330)
Shares issued for dividend reinvestment plan		(18,391)				(15)						411		396
Restricted stock granted		(42,961)				(959)						959		0
Forfeiture of restricted stock		2,265				52						(52)		0
Stock-based compensation expense						325								325
Purchase of restricted stock for tax withholding		9,733										(208)		(208)
Balance, March 31, 2025	16,030,172	547,324	$	16,030	$	142,968	$	167,741	$	(32,690)	$	(12,218)	$	281,831

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

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

Notes to Unaudited Consolidated Financial Statements

1. BASIS OF INTERIM PRESENTATION AND STATUS OF RECENT ACCOUNTING PRONOUNCEMENTS

The consolidated financial statements include the accounts of Citizens & Northern Corporation and its subsidiaries, Citizens & Northern Bank (“C&N Bank”), Bucktail Life Insurance Company and Citizens & Northern Investment Corporation (collectively, “Corporation”). The consolidated financial statements also include C&N Bank’s wholly-owned subsidiaries, C&N Financial Services, LLC and Northern Tier Holding LLC. C&N Bank is the sole member of C&N Financial Services, LLC and Northern Tier Holding LLC. All material intercompany balances and transactions have been eliminated in consolidation.

The consolidated financial information included herein, except the consolidated balance sheet dated December 31, 2025, 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.

Operating results reported for the three-month period ended March 31, 2026 might not be indicative of the results for the year ending December 31, 2026. The Corporation evaluates subsequent events through the date of filing with the Securities and Exchange Commission.

RECENT ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board (FASB) issues Accounting Standard Updates (ASUs) to communicate changes 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 consolidated financial statements issued in the foreseeable future.

Recently Issued but Not Yet Effective Accounting Pronouncements

In December of 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), which requires disclosure of certain costs and expenses in the notes to the consolidated financial statements. The amendments in this ASU will become effective for fiscal years beginning after December 15, 2026, and will be effective for interim periods with fiscal years beginning after December 15, 2027, with early adoption permitted. The amendments will be applied prospectively with the option for retrospective application. We are currently evaluating the impact of the standard to our consolidated financial statement disclosures.

2. BUSINESS COMBINATION

In connection with the acquisition, the Corporation issued approximately 2.3 million shares of common stock to the former Susquehanna shareholders, resulting in merger consideration valued at $44.6 million and an increase in stockholders’ equity of $44.4 million, net of issuance costs. Intangible assets recorded included goodwill of $10.8 million and a core deposit intangible asset of $10.7 million. Assets acquired included loans valued at $393.6 million, securities valued at $147.6 million, bank-owned life insurance valued at $8.0 million and cash and due from banks of $6.1 million. Liabilities assumed included deposits valued at $501.5 million and short-term borrowings valued at $45.8 million. The assets purchased and liabilities assumed were recorded at their preliminary estimated fair values at the time of closing and may be adjusted for up to one year subsequent to the acquisition. There were no adjustments to the fair value measurements of assets acquired or liabilities assumed in the first quarter of 2026.

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

3. PER SHARE DATA

Earnings per common share are calculated using the two-class method to determine income attributable to common shareholders. Unvested restricted stock awards that contain nonforfeitable rights to dividends are considered participating securities under the two-class method. Distributed dividends and an allocation of undistributed net income to participating securities reduce the amount of income attributable to common shareholders. Income attributable to common shareholders is then divided by weighted-average common shares outstanding for the period to determine basic earnings per common share. The Corporation’s basic and diluted earnings per share are the same because there are no potential dilutive shares of common stock outstanding.


(In Thousands, Except Share and Per Share Data)		Three Months Ended
		March 31,		March 31,
		2026		2025

Net income		$	273	$	6,293
Less: Dividends and undistributed earnings allocated to participating securities			0		(51)
Net income attributable to common shares		$	273	$	6,242
Weighted-average common shares outstanding			17,732,537		15,338,532
Earnings per common share - Basic and Diluted		$	0.02	$	0.41
Weighted-average nonvested restricted shares outstanding			146,089		125,303

4. COMPREHENSIVE (LOSS) 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 (loss). The components of other comprehensive income (loss), and the related tax effects, are as follows:


(In Thousands)		Before-Tax			Income Tax			Net-of-Tax
		Amount			Effect			Amount
Three Months Ended March 31, 2026
Available-for-sale debt securities:
Unrealized holding loss on available-for-sale debt securities		$	(2,464)		$	542		$	(1,922)
Reclassification adjustment for (gains) realized in income			(26)			6			(20)
Other comprehensive loss from available-for-sale debt securities			(2,490)			548			(1,942)
Unfunded pension and postretirement obligations:
Changes from plan amendments and actuarial gains and losses			(9)			2			(7)
Amortization of prior service cost and net actuarial gains included in net periodic benefit cost			(22)			4			(18)
Other comprehensive loss on unfunded retirement obligations			(31)			6			(25)
Total other comprehensive income		$	(2,521)		$	554		$	(1,967)


(In Thousands)		Before-Tax			Income Tax			Net-of-Tax
		Amount			Effect			Amount
Three Months Ended March 31, 2025
Available-for-sale debt securities:
Unrealized holding gains on available-for-sale debt securities		$	5,169		$	(1,135)		$	4,034
Reclassification adjustment for (gains) realized in income			0			0			0
Other comprehensive income from available-for-sale debt securities			5,169			(1,135)			4,034
Unfunded pension and postretirement obligations:
Changes from plan amendments and actuarial gains and losses			69			(15)			54
Amortization of prior service cost and net actuarial gain included in net periodic benefit cost			(22)			5			(17)
Other comprehensive income on unfunded retirement obligations			47			(10)			37
Total other comprehensive income		$	5,216		$	(1,145)		$	4,071

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

The amounts shown in the table immediately above are included in the following line items in the consolidated statements of income:


		Affected Line Item in the
Description		Consolidated Statements of Income
Reclassification adjustment for (gains) realized in income (before-tax)		Realized gains on available-for-sale debt securities, net
Amortization of prior service cost and net actuarial gain included in net periodic benefit cost (before-tax)		Other noninterest expense
Income tax effect		Income tax provision

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


(In Thousands)		Unrealized					Accumulated
		(Losses)			Unfunded		Other
		Gains			Retirement		Comprehensive
		on Securities			Obligations		(Loss) Income
Three Months Ended March 31, 2026
Balance, beginning of period		$	(23,154)		$	359	$	(22,795)
Other comprehensive loss during three months ended March 31, 2026			(1,942)			(25)		(1,967)
Balance, end of period		$	(25,096)		$	334	$	(24,762)

Three Months Ended March 31, 2025
Balance, beginning of period		$	(37,084)		$	323	$	(36,761)
Other comprehensive income during three months ended March 31, 2025			4,034			37		4,071
Balance, end of period		$	(33,050)		$	360	$	(32,690)

5. CASH AND DUE FROM BANKS

Cash and due from banks at March 31, 2026 and December 31, 2025 include the following:


(In Thousands)		March 31,			December 31,
		2026			2025
Cash and cash equivalents		$	53,448		$	44,706
Certificates of deposit			1,350			1,350
Total cash and due from banks		$	54,798		$	46,056

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.

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

6. SECURITIES

Amortized cost and fair value of available-for-sale debt securities at March 31, 2026 and December 31, 2025 are summarized as follows.


(In Thousands)		March 31, 2026
					Gross			Gross
					Unrealized			Unrealized
		Amortized			Holding			Holding			Fair
		Cost			Gains			Losses			Value

Obligations of the U.S. Treasury		$	8,042		$	0		$	(586)		$	7,456
Obligations of U.S. Government agencies			10,936			3			(727)			10,212
Bank holding company debt securities			37,631			11			(1,897)			35,745
Obligations of states and political subdivisions:
Tax-exempt			104,941			243			(8,426)			96,758
Taxable			50,239			0			(6,284)			43,955
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities			148,471			396			(6,003)			142,864
Residential collateralized mortgage obligations			62,511			33			(2,450)			60,094
Commercial mortgage-backed securities			98,771			12			(6,487)			92,296
Asset-backed securities,
Collateralized loan obligations			8,000			0			(13)			7,987
Total available-for-sale debt securities		$	529,542		$	698		$	(32,873)		$	497,367


(In Thousands)		December 31, 2025
					Gross			Gross
					Unrealized			Unrealized
		Amortized			Holding			Holding			Fair
		Cost			Gains			Losses			Value

Obligations of the U.S. Treasury		$	8,047		$	0		$	(565)		$	7,482
Obligations of U.S. Government agencies			11,423			3			(677)			10,749
Bank holding company debt securities			36,103			8			(2,035)			34,076
Obligations of states and political subdivisions:
Tax-exempt			105,149			317			(7,107)			98,359
Taxable			50,306			4			(6,158)			44,152
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities			148,865			679			(5,623)			143,921
Residential collateralized mortgage obligations			65,782			107			(2,182)			63,707
Commercial mortgage-backed securities			99,095			23			(6,487)			92,631
Private label commercial mortgage-backed securities			3,490			0			(1)			3,489
Asset-backed securities,
Collateralized loan obligations			8,000			9			0			8,009
Total available-for-sale debt securities		$	536,260		$	1,150		$	(30,835)		$	506,575

The following table presents gross unrealized losses and fair value of available-for-sale debt securities with unrealized loss positions aggregated by length of time that individual securities have been in a continuous unrealized loss position at March 31, 2026 and December 31, 2025 for which an allowance for credit losses has not been recorded:

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q


March 31, 2026	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 the U.S. Treasury	$	0	$	0	$	7,456	$	(586)	$	7,456	$	(586)
Obligations of U.S. Government agencies		0		0		8,150		(727)		8,150		(727)
Bank holding company debt securities		7,338		(60)		23,163		(1,837)		30,501		(1,897)
Obligations of states and political subdivisions:
Tax-exempt		7,954		(121)		78,402		(8,305)		86,356		(8,426)
Taxable		2,283		(232)		41,602		(6,052)		43,885		(6,284)
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities		54,011		(413)		54,799		(5,590)		108,810		(6,003)
Residential collateralized mortgage obligations		30,706		(195)		19,522		(2,255)		50,228		(2,450)
Commercial mortgage-backed securities		27,518		(289)		62,404		(6,198)		89,922		(6,487)
Asset-backed securities,
Collateralized loan obligations		7,987		(13)		0		0		7,987		(13)
Total	$	137,797	$	(1,323)	$	295,498	$	(31,550)	$	433,295	$	(32,873)


December 31, 2025	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 the U.S. Treasury	$	0	$	0	$	7,482	$	(565)	$	7,482	$	(565)
Obligations of U.S. Government agencies		0		0		8,570		(677)		8,570		(677)
Bank holding company debt securities		2,188		(44)		23,008		(1,991)		25,196		(2,035)
Obligations of states and political subdivisions:
Tax-exempt		0		0		86,724		(7,107)		86,724		(7,107)
Taxable		1,324		(218)		42,027		(5,940)		43,351		(6,158)
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities		20,235		(51)		57,647		(5,572)		77,882		(5,623)
Residential collateralized mortgage obligations		0		0		23,194		(2,182)		23,194		(2,182)
Commercial mortgage-backed securities		27,643		(183)		62,605		(6,304)		90,248		(6,487)
Private label commercial mortgage-backed securities		3,489		(1)		0		0		3,489		(1)
Asset-backed securities,
Collateralized loan obligations		0		0		0		0		0		0
Total	$	54,879	$	(497)	$	311,257	$	(30,338)	$	366,136	$	(30,835)

As reflected in the table above, gross unrealized holding losses on available-for-sale debt securities totaled $32,873,000 at March 31, 2026 and $30,835,000 at December 31, 2025. At March 31, 2026, the Corporation did not have the intent to sell, nor is it more likely than not it will be required to sell, these securities before it is able to recover the amortized cost basis. The unrealized holding losses were consistent with increases in market interest rates that have occurred subsequent to the purchase of most of the securities.

At March 31, 2026 and December 31, 2025, management performed an assessment for possible credit losses 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. At March 31, 2026 and December 31, 2025, all of the Corporation’s holdings of bank holding company debt securities, obligations of states and political subdivisions, private label commercial mortgage-backed securities and collateralized loan obligations were investment grade and there have been no payment defaults.

Based on the results of the assessment, there was no ACL required on available-for-sale debt securities in an unrealized loss position at March 31, 2026 and December 31, 2025.

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

Gross realized gains and losses from the sale of available-for-sale debt securities for the three months ended March 31, 2026 and 2025 were as follows:


(In Thousands)	Three Months Ended
	March 31,		March 31,
	2026		2025
Gross realized gains from sales	$	26	$	0
Gross realized losses from sales		0		0
Net realized gains (losses)	$	26	$	0
Income tax provision related to net realized gains (losses)	$	6	$	0

The amortized cost and fair value of available-for-sale debt securities by contractual maturity are shown in the following table as of March 31, 2026. 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)		March 31, 2026
		Amortized			Fair
		Cost			Value
Due in one year or less		$	5,569		$	5,534
Due from one year through five years			41,003			38,909
Due from five years through ten years			84,657			79,610
Due after ten years			80,560			70,073
Sub-total			211,789			194,126
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities			148,471			142,864
Residential collateralized mortgage obligations			62,511			60,094
Commercial mortgage-backed securities			98,771			92,296
Asset-backed securities,
Collateralized loan obligations			8,000			7,987
Total		$	529,542		$	497,367

The Corporation’s mortgage-backed securities, collateralized mortgage obligations and asset-backed securities 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, collateralized mortgage obligations and asset-backed securities are shown in one period.

Investment securities carried at $203,602,000 at March 31, 2026 and $215,252,000 at December 31, 2025 were pledged as collateral for public deposits, trusts and certain other deposits as provided by law. See Note 9 for information concerning securities pledged to secure borrowing arrangements.

Equity Securities

C&N Bank is a member of the Federal Home Loan Bank of Pittsburgh (FHLB-Pittsburgh), which is one of 11 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 sheets, was $20,057,000 at March 31, 2026 and $18,724,000 at December 31, 2025. The Corporation evaluated its holding of FHLB-Pittsburgh stock for impairment and deemed the stock to not be impaired at March 31, 2026 and December 31, 2025. 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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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

C&N Bank is a member of the Federal Reserve System. As a member, C&N Bank is required to purchase and maintain stock in the Federal Reserve Bank of Philadelphia. There is no active market for Federal Reserve Bank stock, and it must ordinarily be redeemed by the Federal Reserve Bank of Philadelphia in order to be liquidated. C&N Bank’s investment in Federal Reserve Bank stock, included in other assets in the consolidated balance sheets, was $7,685,000 at March 31, 2026 and $7,637,000 at December 31, 2025.

The Corporation has a marketable equity security included in other assets in the consolidated balance sheets with a carrying value of $885,000 at March 31, 2026 and $890,000 at December 31, 2025, consisting exclusively of one mutual fund. There was an unrealized loss on the mutual fund of $115,000 at March 31, 2026 and $110,000 at December 31, 2025. Changes in the unrealized gains or losses on this security, which are included in other noninterest income in the consolidated statements of income, were a loss of $5,000 in the first quarter of 2026 and a gain of $13,000 in the first quarter of 2025.

7. LOANS AND ALLOWANCE FOR CREDIT LOSSES

Loans receivable at March 31, 2026 and December 31, 2025 are summarized as follows:

Summary of Loans by Type

(In Thousands)


		March 31,			December 31,
		2026			2025
Commercial real estate - non-owner occupied		$	925,881		$	927,738
Commercial real estate - owner occupied			326,210			311,792
All other commercial loans			571,916			560,537
Residential mortgage loans			445,911			443,950
Consumer loans			114,932			110,348
Total			2,384,850			2,354,365
Less: allowance for credit losses on loans			(33,832)			(31,048)
Loans, net		$	2,351,018		$	2,323,317

In the table above, outstanding loan balances are presented net of deferred loan origination fees of $4,021,000 at March 31, 2026 and $4,074,000 at December 31, 2025.

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 Northcentral Pennsylvania, the Southern tier of New York State, Southeastern Pennsylvania and Southcentral Pennsylvania. 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.

The following tables present an analysis of past due loans as of March 31, 2026 and December 31, 2025:


(In Thousands)	As of March 31, 2026
	Past Due		Past Due
	30-89		90+ Days		Nonaccrual		Current		Total
	Days		Still Accruing		Loans		Loans		Loans
Commercial real estate - non-owner occupied	$	757	$	0	$	18,376	$	906,748	$	925,881
Commercial real estate - owner occupied		357		0		6,652		319,201		326,210
All other commercial loans		4,120		54		11,203		556,539		571,916
Residential mortgage loans		4,597		0		4,830		436,484		445,911
Consumer loans		386		15		802		113,729		114,932
Total	$	10,217	$	69	$	41,863	$	2,332,701	$	2,384,850

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q


(In Thousands)	As of December 31, 2025
	Past Due		Past Due
	30-89		90+ Days		Nonaccrual		Current		Total
	Days		Still Accruing		Loans		Loans		Loans
Commercial real estate - non-owner occupied	$	2,619	$	0	$	10,766	$	914,353	$	927,738
Commercial real estate - owner occupied		2,453		54		5,955		303,330		311,792
All other commercial loans		6,287		0		11,102		543,148		560,537
Residential mortgage loans		6,365		0		4,324		433,261		443,950
Consumer loans		585		34		689		109,040		110,348
Total	$	18,309	$	88	$	32,836	$	2,303,132	$	2,354,365

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. 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. 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. Risk ratings are updated any time that conditions or the situation warrants. Loans not classified are included in the “Pass” rows in the table that follows.

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

The following table presents the amortized cost of loans by credit quality indicators by year of origination as of March 31, 2026:


(In Thousands)	Term Loans by Year of Origination
	2026		2025		2024		2023		2022		Prior		Revolving		Total
Commercial real estate - non-owner occupied
Pass	$	31,510	$	75,489	$	83,651	$	153,039	$	169,174	$	369,499	$	0	$	882,362
Special Mention		0		325		30		1,388		0		12,717		0		14,460
Substandard		0		0		99		812		16,112		12,036		0		29,059
Doubtful		0		0		0		0		0		0		0		0
Total commercial real estate - non-owner occupied	$	31,510	$	75,814	$	83,780	$	155,239	$	185,286	$	394,252	$	0	$	925,881
Year-to-date gross charge-offs	$	0	$	0	$	0	$	0	$	10,196	$	256	$	0	$	10,452
Commercial real estate - owner occupied
Pass	$	21,451	$	34,336	$	36,397	$	36,727	$	52,569	$	127,719	$	0	$	309,199
Special Mention		0		0		354		272		110		5,877		0		6,613
Substandard		0		0		0		455		840		9,103		0		10,398
Doubtful		0		0		0		0		0		0		0		0
Total commercial real estate - owner occupied	$	21,451	$	34,336	$	36,751	$	37,454	$	53,519	$	142,699	$	0	$	326,210
Year-to-date gross charge-offs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
All other commercial loans
Pass	$	28,396	$	116,460	$	42,706	$	51,018	$	45,422	$	104,821	$	140,232	$	529,055
Special Mention		0		3,089		443		30		84		6,001		4,020		13,667
Substandard		0		470		13,075		0		1,379		10,400		3,870		29,194
Doubtful		0		0		0		0		0		0		0		0
Total all other commercial loans	$	28,396	$	120,019	$	56,224	$	51,048	$	46,885	$	121,222	$	148,122	$	571,916
Year-to-date gross charge-offs	$	0	$	0	$	0	$	0	$	52	$	215	$	0	$	267
Residential mortgage loans
Pass	$	11,604	$	48,057	$	44,482	$	51,680	$	82,776	$	201,925	$	0	$	440,524
Special Mention		0		0		0		0		0		0		0		0
Substandard		0		0		36		923		394		4,034		0		5,387
Doubtful		0		0		0		0		0		0		0		0
Total residential mortgage loans	$	11,604	$	48,057	$	44,518	$	52,603	$	83,170	$	205,959	$	0	$	445,911
Year-to-date gross charge-offs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
Consumer loans
Pass	$	1,091	$	2,332	$	1,747	$	1,474	$	1,662	$	2,703	$	102,909	$	113,918
Special Mention		0		0		0		0		0		0		0		0
Substandard		0		3		3		23		0		151		834		1,014
Doubtful		0		0		0		0		0		0		0		0
Total consumer loans	$	1,091	$	2,335	$	1,750	$	1,497	$	1,662	$	2,854	$	103,743	$	114,932
Year-to-date gross charge-offs	$	0	$	0	$	6	$	3	$	0	$	0	$	105	$	114
Total Loans
Pass	$	94,052	$	276,674	$	208,983	$	293,938	$	351,603	$	806,667	$	243,141	$	2,275,058
Special Mention		0		3,414		827		1,690		194		24,595		4,020		34,740
Substandard		0		473		13,213		2,213		18,725		35,724		4,704		75,052
Doubtful		0		0		0		0		0		0		0		0
Total	$	94,052	$	280,561	$	223,023	$	297,841	$	370,522	$	866,986	$	251,865	$	2,384,850
Year-to-date gross charge-offs	$	0	$	0	$	6	$	3	$	10,248	$	471	$	105	$	10,833

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

The following table presents the amortized cost of loans by credit quality indicators by year of origination as of December 31, 2025:


	Term Loans by Year of Origination
(In Thousands)	2025		2024		2023		2022		2021		Prior		Revolving		Total
Commercial real estate - non-owner occupied
Pass	$	82,832	$	84,330	$	149,720	$	171,419	$	90,420	$	295,369	$	0	$	874,090
Special Mention		77		30		1,942		15,920		2,073		8,045		0		28,087
Substandard		0		102		838		10,459		1,980		12,182		0		25,561
Doubtful		0		0		0		0		0		0		0		0
Total commercial real estate - non-owner occupied	$	82,909	$	84,462	$	152,500	$	197,798	$	94,473	$	315,596	$	0	$	927,738
Year-to-date gross charge-offs	$	0	$	0	$	0	$	0	$	0	$	807	$	0	$	807
Commercial real estate - owner occupied
Pass	$	34,602	$	36,786	$	35,411	$	53,260	$	51,396	$	80,809	$	0	$	292,264
Special Mention		0		357		2,406		1,159		805		5,127		0		9,854
Substandard		0		0		354		131		2,167		7,022		0		9,674
Doubtful		0		0		0		0		0		0		0		0
Total commercial real estate - owner occupied	$	34,602	$	37,143	$	38,171	$	54,550	$	54,368	$	92,958	$	0	$	311,792
Year-to-date gross charge-offs	$	0	$	0	$	0	$	0	$	0	$	0	$	0	$	0
All other commercial loans
Pass	$	123,534	$	45,148	$	64,103	$	46,670	$	44,056	$	64,539	$	134,404	$	522,454
Special Mention		1,380		522		32		100		4,443		732		2,028		9,237
Substandard		470		12,932		0		1,471		6,933		3,748		3,292		28,846
Doubtful		0		0		0		0		0		0		0		0
Total all other commercial loans	$	125,384	$	58,602	$	64,135	$	48,241	$	55,432	$	69,019	$	139,724	$	560,537
Year-to-date gross charge-offs	$	0	$	0	$	0	$	0	$	333	$	0	$	263	$	596
Residential mortgage loans
Pass	$	46,534	$	45,988	$	53,163	$	83,848	$	45,494	$	164,033	$	0	$	439,060
Special Mention		0		0		0		0		0		0		0		0
Substandard		0		22		901		424		200		3,343		0		4,890
Doubtful		0		0		0		0		0		0		0		0
Total residential mortgage loans	$	46,534	$	46,010	$	54,064	$	84,272	$	45,694	$	167,376	$	0	$	443,950
Year-to-date gross charge-offs	$	0	$	0	$	0	$	0	$	0	$	5	$	0	$	5
Consumer loans
Pass	$	2,751	$	2,062	$	1,780	$	1,850	$	506	$	2,460	$	97,976	$	109,385
Special Mention		0		0		0		0		0		0		0		0
Substandard		1		7		6		0		2		170		777		963
Doubtful		0		0		0		0		0		0		0		0
Total consumer loans	$	2,752	$	2,069	$	1,786	$	1,850	$	508	$	2,630	$	98,753	$	110,348
Year-to-date gross charge-offs	$	0	$	0	$	33	$	40	$	3	$	0	$	242	$	318
Total Loans
Pass	$	290,253	$	214,314	$	304,177	$	357,047	$	231,872	$	607,210	$	232,380	$	2,237,253
Special Mention		1,457		909		4,380		17,179		7,321		13,904		2,028		47,178
Substandard		471		13,063		2,099		12,485		11,282		26,465		4,069		69,934
Doubtful		0		0		0		0		0		0		0		0
Total	$	292,181	$	228,286	$	310,656	$	386,711	$	250,475	$	647,579	$	238,477	$	2,354,365
Year-to-date gross charge-offs	$	0	$	0	$	33	$	40	$	336	$	812	$	505	$	1,726

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

The following tables are a summary of the Corporation’s nonaccrual loans by major categories for the periods indicated.


	March 31, 2026
	Nonaccrual Loans with		Nonaccrual Loans		Total Nonaccrual
(In Thousands)	No Allowance		with an Allowance		Loans
Commercial real estate - non-owner occupied	$	16,967	$	1,409	$	18,376
Commercial real estate - owner occupied		6,165		487		6,652
All other commercial loans		7,497		3,706		11,203
Residential mortgage loans		4,830		0		4,830
Consumer loans		802		0		802
Total	$	36,261	$	5,602	$	41,863


		December 31, 2025
		Nonaccrual Loans with		Nonaccrual Loans		Total Nonaccrual
(In Thousands)		No Allowance		with an Allowance		Loans
Commercial real estate - non-owner occupied		$	9,343	$	1,423	$	10,766
Commercial real estate - owner occupied			5,470		485		5,955
All other commercial loans			7,609		3,493		11,102
Residential mortgage loans			4,324		0		4,324
Consumer loans			689		0		689
Total		$	27,435	$	5,401	$	32,836

The Corporation recognized interest income on nonaccrual loans of $299,000 and $230,000 in the three-month periods ended March 31, 2026 and 2025, respectively.

The following table represents the accrued interest receivable written off by reversing interest income during the three-month periods ended March 31, 2026 and 2025:


	Three Months Ended		Three Months Ended
(In Thousands)	March 31, 2026		March 31, 2025
Commercial real estate - non-owner occupied	$	99	$	0
Commercial real estate - owner occupied		5		0
All other commercial loans		8		0
Residential mortgage loans		5		5
Consumer loans		1		0
Total	$	118	$	5

The Corporation has certain loans for which repayment is dependent upon the operation or sale of collateral, as the borrower is experiencing financial difficulty. The underlying collateral can vary based upon the type of loan. The following discussion provides more detail about the types of collateral that secure collateral dependent loans:

●

Commercial real estate loans can be secured by either owner occupied commercial real estate or non-owner occupied investment commercial real estate. Typically, owner occupied commercial real estate loans are secured by office buildings, warehouses, manufacturing facilities and other commercial and industrial properties occupied by operating companies. Non-owner occupied commercial real estate loans are generally secured by office buildings and complexes, retail facilities, multifamily complexes, land under development, industrial properties, as well as other commercial or industrial real estate.

●

All other commercial loans include loans typically secured by business assets, including inventory, equipment and receivables. This category also included commercial construction and land loans and some commercial lines of credit that are secured by real estate.

●

Residential mortgage loans are typically secured by first mortgages, and, in some cases, could be secured by a second mortgage.

●

Consumer loans are generally secured by automobiles, motorcycles, recreational vehicles and other personal property. Some consumer loans are unsecured and have no underlying collateral.

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

The following table details the amortized cost of collateral dependent loans, which are individually evaluated to determine expected credit losses, and the related allowance for credit losses allocated to these loans:


	March 31, 2026				December 31, 2025
	Amortized				Amortized
(In Thousands)	Cost		Allowance		Cost		Allowance
Commercial real estate - non-owner occupied	$	18,485	$	140	$	10,876	$	140
Commercial real estate - owner occupied		7,010		263		6,325		266
All other commercial loans		14,657		2,252		14,551		2,366
Residential mortgage loans		361		0		350		0
Consumer loans		319		0		326		0
Total	$	40,832	$	2,655	$	32,428	$	2,772

Allowance for Credit Losses

The allowance for credit losses (“ACL”) on loans represents management’s estimate of lifetime credit losses inherent in loans as of the consolidated balance sheet date. The ACL on loans includes two primary components: (i) an allowance established on loans which share similar risk characteristics which are collectively evaluated for credit losses, and (ii) an allowance established on loans which do not share similar risk characteristics with any loan segment and which are individually evaluated for credit losses.

Management determines the ACL on loans that are collectively evaluated by considering the following: (a) the weighted-average remaining maturity (WARM) method is used to estimate credit losses, based on the Corporation’s historical loss experience, for pools of loans with similar risk and cash flow characteristics; (b) subjective adjustments are made, generally increasing the ACL, for qualitative risk factors that are deemed likely to cause estimated credit losses to differ from historical experience; and (c) an additional adjustment to expected credit losses is made, based on an economic forecast, and applied for the first 2 years of the weighted-average remaining life of the portfolio.

The following table summarizes the activity related to the allowance for credit losses for the three months ended March 31, 2026 and 2025.


	Commercial		Commercial		All
	real estate -		real estate -		other		Residential
	nonowner		owner		commercial		mortgage		Consumer
(In Thousands)	occupied		occupied		loans		loans		loans		Total
Balance, December 31, 2025	$	19,462	$	4,086	$	5,505	$	1,629	$	366	$	31,048
Charge-offs		(10,452)		0		(267)		0		(114)		(10,833)
Recoveries		0		0		1		0		24		25
Provision (credit) for credit losses on loans		11,759		(487)		1,177		1,028		115		13,592
Balance, March 31, 2026	$	20,769	$	3,599	$	6,416	$	2,657	$	391	$	33,832


	Commercial		Commercial		All
	real estate -		real estate -		other		Residential
	nonowner		owner		commercial		mortgage		Consumer
(In Thousands)	occupied		occupied		loans		loans		loans		Total
Balance, December 31, 2024	$	11,964	$	2,844	$	3,361	$	1,356	$	510	$	20,035
Charge-offs		0		0		0		0		(117)		(117)
Recoveries		0		0		1		1		24		26
Provision (credit) for credit losses on loans		96		(75)		232		(76)		51		228
Balance, March 31, 2025	$	12,060	$	2,769	$	3,594	$	1,281	$	468	$	20,172

The provision for credit losses on loans was $13,592,000 in the first quarter 2026 as compared to $228,000 in the first quarter 2025. The increase in the first quarter 2026 provision was primarily driven by the impact on the ACL of an increase in net charge-offs to $10,808,000 as compared to $91,000 in the first quarter 2025.

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The significant increase in charge-offs in the first quarter of 2026 is due to a non-owner occupied, commercial real estate loan originated in 2022 in the amount of $24 million of which $7,200,000 was participated with another financial institution. The loan is secured by a first lien on the leasehold interests of an approximately 190,000 square foot Class A office property with multiple buildings and tenants, located in Bucks County, PA. The loss of a large tenant as well as cash flow requirements of the borrower’s other properties (which the Corporation has not financed) caused the loan to be downgraded to substandard and placed in nonaccrual status as of March 31, 2026. The Corporation obtained an updated appraisal in April 2026 which was significantly lower than the original appraisal when the loan was originated, resulting in a charge-off of $10,056,000. At March 31, 2026, the amortized cost basis of the loan, net of the partial charge-off, is $5,836,000.

On April 30, 2026, the Corporation entered into a forbearance agreement related to the Class A office property loan referred to in the preceding paragraph with the borrower and the surety (collectively, the “Obligors”). Unless extended, the forbearance period will end no later than July 10, 2026. The forbearance agreement provides that during the forbearance period, the Corporation will forego receipt of principal payments and will advance up to $750,000 to fund tenant improvements on the property and leasing commissions on new tenants, subject to the Corporation’s approval. The forbearance agreement also provides, in addition to other terms and conditions, that the Obligors will make all past due and current interest payments and will deliver $3 million to the Corporation which the Corporation will hold in escrow and apply as reimbursements for any tenant improvements funded by the Corporation with any remaining funds to be used for further improvements to the property or for loan payments should the borrower default.

The ACL on loans individually evaluated decreased to $2,655,000 at March 31, 2026 from $2,772,000 at December 31, 2025, including an ACL of $2,433,000 at March 31, 2026 on acquired PCD loans as part of the Susquehanna acquisition.

The ACL on loans collectively evaluated was $31,177,000 at March 31, 2026, up from $28,276,000 at December 31, 2025. The increase in the collectively evaluated portion of the ACL at March 31, 2026 as compared to December 31, 2025, included an increase in the WARM method estimate based on the Corporation’s net charge-off experience, partially offset by a net decrease related to changes in qualitative adjustments and a decrease related to the economic forecast.

Modifications Made to Borrowers Experiencing Financial Difficulty

The Corporation closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses because of the measurement methodologies used to estimate the allowance, a change to the allowance for credit losses is generally not recorded upon modification. During the three months ended March 31, 2026 and March 31, 2025, the Corporation made no modifications of loans to borrowers experiencing financial difficulty.

The following table presents the performance of such loans that have been modified in the twelve-month period preceding March 31, 2026 and the twelve-month period preceding March 31, 2025:


(In Thousands)		Payment Status (Amortized Cost Basis)
March 31, 2026		Current or Past Due Less than 30 Days			30-89 Days Past Due		90+ Days Past Due			Total
Commercial real estate - non-owner occupied		$	0		$	0	$	1,717		$	1,717


(In Thousands)		Payment Status (Amortized Cost Basis)
March 31, 2025		Current or Past Due Less than 30 Days		30-89 Days Past Due			90+ Days Past Due			Total
Commercial real estate - non-owner occupied		$	2,601	$	0		$	0		$	2,601
Commercial real estate - owner occupied			217		0			0			217
Total		$	2,818	$	0		$	0		$	2,818

The loan secured by non-owner occupied real estate with an amortized cost basis of $1,717,000 at March 31, 2026 was past its contractual maturity date, The Corporation had provided several maturity extensions of this loan, and had recorded partial charge-offs of $640,000 in 2024 and $35,000 in the fourth quarter 2025. At March 31, 2026, the borrower reported they are in process of refinancing the loan

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with a third-party lender. Based on the most recent appraised value of the property collateralizing the loan, there was no specific allowance on this loan at March 31, 2026. At March 31, 2025, this non-owner occupied real estate loan was included in the table above with an amortized cost basis of $1,801,000. The loan was in nonaccrual status at March 31, 2026 and 2025.

The Corporation had no commitments to lend any additional funds on modified loans at March 31, 2026 and 2025. Except for the non-owner occupied real estate loan described above, the Corporation had no loans that defaulted during the three months ended March 31, 2026 and 2025 that had been modified preceding the payment default when the borrower was experiencing financial difficulty at the time of modification.

The carrying amount of foreclosed residential real estate properties held as a result of obtaining physical possession (included in foreclosed assets held for sale in the unaudited consolidated balance sheets) is as follows:


(In Thousands)	March 31,		December 31,
	2026		2025
Foreclosed residential real estate	$	25	$	33

The amortized cost of consumer mortgage loans secured by residential real properties for which formal foreclosure proceedings were in process is as follows:


(In Thousands)	March 31,		December 31,
	2026		2025
Residential real estate in process of foreclosure	$	555	$	433

The Corporation is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. The contract amounts of these financial instruments at March 31, 2026 and December 31, 2025 are as follows:


		March 31,			December 31,
(In Thousands)		2026			2025
Commitments to extend credit		$	489,887		$	506,996
Standby letters of credit			59,161			58,914

The Corporation maintains an allowance for off-balance sheet credit exposures such as unfunded balances for existing lines of credit, commitments to extend future credit, commercial letters of credit and credit enhancement obligations related to residential mortgage loans sold with recourse, when there is a contractual obligation to extend credit and when this extension of credit is not unconditionally cancellable (i.e. commitment cannot be canceled at any time). The allowance for off-balance sheet credit exposures is adjusted through the provision for credit losses. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over their estimated lives. The allowance for credit losses for off-balance sheet exposures of $1,039,000 at March 31, 2026 and $1,029,000 at December 31, 2025, is included in accrued interest and other liabilities in the unaudited consolidated balance sheets.

The following table presents the balance and activity in the allowance for credit losses for off-balance sheet exposures for the three months ended March 31, 2026 and 2025:


		Three Months Ended
(In Thousands)	March 31, 2026		March 31, 2025
Beginning Balance	$	1,029	$	455
Provision for unfunded commitments		10		8
Ending Balance, March 31	$	1,039	$	463

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8. GOODWILL AND CORE DEPOSIT INTANGIBLES, NET

Goodwill represents the excess of the cost of acquisitions over the fair value of the net assets acquired. At March 31, 2026 and December 31, 2025, the net carrying value of goodwill was $63,311,000. There were no changes in the carrying value of goodwill in the three-month periods ended March 31, 2026 and 2025. During the fourth quarter of 2025, $10.8 million of goodwill was added through the merger with Susquehanna.

Information related to core deposit intangibles is as follows:


(In Thousands)		March 31,			December 31,
		2026			2025
Gross amount		$	17,329			17,329
Accumulated amortization			(6,571)			(5,756)
Net		$	10,758		$	11,573

Amortization expense related to core deposit intangibles is included in other noninterest expense in the consolidated statements of income, as follows:


(In Thousands)	Three Months Ended
	March 31,		March 31,
	2026		2025
Amortization expense	$	815	$	106

In the three months ended March 31, 2026, amortization expense included $716,000 related to the Susquehanna acquisition as described in Note 2 and $99,000 related to previous acquisitions. In the three months ended March 31, 2025, amortization expense was related to previous acquisitions.

9. BORROWED FUNDS

SHORT-TERM BORROWINGS

Short-term borrowings (initial maturity within one year) include the following:


(In Thousands)		March 31,			December 31,
		2026			2025
FHLB-Pittsburgh borrowings		$	13,113		$	27,000
Customer repurchase agreements			477			1,618
Total short-term borrowings		$	13,590		$	28,618

At March 31, 2026, the short-term borrowing from FHLB-Pittsburgh was an overnight borrowing of $13,113,000, at an interest rate of 3.97%. At December 31, 2025, the short-term borrowing from FHLB-Pittsburgh was an overnight borrowing of $27,000,000, at an interest rate of 3.93%.

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 both March 31, 2026 and December 31, 2025. The carrying value of the underlying securities was $490,000 at March 31, 2026 and $1,630,000 at December 31, 2025.

The FHLB-Pittsburgh loan facility is collateralized by qualifying loans secured by real estate with a book value totaling $1,646,418,000 at March 31, 2026 and $1,624,412,000 at December 31, 2025. Also, the FHLB-Pittsburgh loan facility requires 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 in the consolidated balance sheets) were $20,057,000 at March 31, 2026 and $18,724,000 at December 31, 2025. The Corporation’s total credit facility with FHLB-Pittsburgh was $1,137,639,000 at March 31, 2026, including an unused

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(available) amount of $948,272,000. At December 31, 2025, the Corporation’s total credit facility with FHLB-Pittsburgh was $971,946,000, including an unused (available) amount of $785,822,000.

The Corporation had available credit with other correspondent banks totaling $75,000,000 at March 31, 2026 and December 31, 2025. These lines of credit are primarily unsecured. No amounts were outstanding at March 31, 2026 or December 31, 2025.

The Corporation has a line of credit with the Federal Reserve Bank of Philadelphia’s Discount Window. At March 31, 2026, the Corporation had available credit in the amount of $24,632,000 on this line with no outstanding advances. At December 31, 2025, the Corporation had available credit in the amount of $25,484,000 on this line with no outstanding advances. As collateral for this line, the Corporation has pledged available-for-sale securities with a carrying value of $26,151,000 at March 31, 2026 and $26,947,000 at December 31, 2025.

LONG-TERM BORROWINGS – FHLB ADVANCES

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


(In Thousands)	March 31,			December 31,
	2026			2025
Loans maturing in 2026 with a weighted-average rate of 4.70%		39,518			48,018
Loans maturing in 2027 with a weighted-average rate of 3.98%		55,583			34,571
Loans maturing in 2028 with a weighted-average rate of 4.15%		32,069			26,027
Loans maturing in 2029 with a weighted-average rate of 4.42%		12,319			12,319
Total long-term FHLB-Pittsburgh borrowings	$	139,489		$	120,935

Note: Weighted-average rates are presented as of March 31, 2026.

SENIOR NOTES

In 2021, the Corporation issued and sold $15.0 million in aggregate principal amount of 2.75% Fixed Rate Senior Unsecured Notes due 2026 (the "Senior Notes"). The Senior Notes mature on June 1, 2026 and bear interest at a fixed annual rate of 2.75%. The Corporation is not entitled to redeem the Senior Notes, in whole or in part, at any time prior to maturity and the Senior Notes are not subject to redemption by the holders. The Senior Notes are unsecured and unsubordinated obligations of the Corporation only and are not obligations of, and are not guaranteed by, any subsidiary of the Corporation.

The Senior Notes were recorded, net of debt issuance costs of $337,000, at an initial carrying amount of $14,663,000. Debt issuance costs are amortized over the term of the Senior Notes as an adjustment of the effective interest rate. Amortization of debt issuance costs associated with the Senior Notes totaling $18,000 in the first quarter 2026 and $18,000 in the first quarter 2025 was included in interest expense on senior notes, net in the unaudited consolidated statements of income.

At March 31, 2026 and December 31, 2025, outstanding Senior Notes are as follows:


(In Thousands)		March 31,			December 31,
		2026			2025
Senior Notes with an aggregate par value of $15,000,000; bearing interest at 2.75% with an effective interest rate of 3.23%; maturing in June 2026		$	14,988		$	14,970
Total carrying value		$	14,988		$	14,970

SUBORDINATED DEBT

In 2021, the Corporation issued and sold $25.0 million in aggregate principal amount of 3.25% Fixed-to-Floating Rate Subordinated Notes due 2031 (the "Subordinated Notes"). The Subordinated Notes mature on June 1, 2031 and bear interest at a fixed annual rate of 3.25%, to June 1, 2026. From June 1, 2026 to maturity or early redemption, the interest rate will reset quarterly to an interest rate per annum equal to the three-month Secured Overnight Financing Rate provided by the Federal Reserve Bank of New York plus 259 basis points. The Corporation is entitled to redeem the Subordinated Notes, in whole or in part, at any time on or after June 1, 2026, and to

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redeem the Subordinated Notes at any time in whole upon certain other events. Any redemption of the Subordinated Notes will be subject to prior regulatory approval to the extent required.

The Subordinated Notes are not subject to redemption at the option of the holders. The Subordinated Notes are unsecured, subordinated obligations of the Corporation only and are not obligations of, and are not guaranteed by, any subsidiary of the Corporation. The Subordinated Notes rank junior in right to payment to the Corporation's current and future senior indebtedness, including the Senior Notes (described above). The Subordinated Notes are intended to qualify as Tier 2 capital for regulatory capital purposes.

The Subordinated Notes were recorded, net of debt issuance costs of $563,000, at an initial carrying amount of $24,437,000. Debt issuance costs are amortized through June 1, 2026 as an adjustment of the effective interest rate. Amortization of debt issuance costs associated with the Subordinated Notes totaling $30,000 in the first quarter 2026 and $29,000 in the first quarter 2025, was included in interest expense on subordinated debt, net in the unaudited consolidated statements of income.

At March 31, 2026 and December 31, 2025, the carrying amounts of subordinated debt agreements are as follows:


(In Thousands)		March 31,			December 31,
		2026			2025
Agreements with a par value of $25,000,000; bearing interest at 3.25% with an effective interest rate of 3.74%; maturing in June 2031 and redeemable at par in June 2026		$	24,979		$	24,949
Total carrying value		$	24,979		$	24,949

10. STOCK-BASED COMPENSATION PLANS

The Corporation has a stock incentive plan for selected officers and the independent directors. The first quarter 2026 restricted stock awards to employees vest ratably over three years. Following is a summary of restricted stock awards granted in the quarter ended March 31, 2026:


(Dollars in Thousands)				Aggregate
				Grant
				Date
		Number of		Fair
		Shares		Value
Three Months Ended March 31, 2026 awards:
Time-based awards to employees		57,618		$	1,260
Performance-based awards to employees		21,246			464
Total		78,864		$	1,724

Compensation cost related to restricted stock is recognized based on the fair value of the stock at the grant date over the vesting period, adjusted for estimated and actual forfeitures. Total stock-based compensation expense attributable to restricted stock awards amounted to $313,000 in the first quarter 2026 and $325,000 in the first quarter 2025.

11. CONTINGENCIES

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

12. DERIVATIVE FINANCIAL INSTRUMENTS

The Corporation is a party to derivative financial instruments. These financial instruments consist of interest rate swap agreements and risk participation agreements (RPAs) which contain master netting and collateral provisions designed to protect the party at risk.

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Interest rate swaps with commercial loan banking customers were executed to facilitate their respective risk management strategies. Under the terms of these arrangements, the commercial banking customers effectively exchanged their floating interest rate exposures on loans into fixed interest rate exposures. Those interest rate swaps have been simultaneously economically hedged by offsetting interest rate swaps with a third party, such that the Corporation has effectively exchanged its fixed interest rate exposures for floating rate exposures. These derivatives are not designated as hedges and are not speculative. Rather, these derivatives result from a service provided to certain customers. As the interest rate swaps associated with this program do not meet the hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings.

The aggregate notional amount of interest rate swaps was $135,598,000 at March 31, 2026 and $136,776,000 at December 31, 2025. There were no interest rate swaps originated in the three-month periods ended March 31, 2026, and 2025. There were no gross amounts of interest rate swap-related assets and liabilities not offset in the consolidated balance sheets at March 31, 2026 and December 31, 2025.

The Corporation has entered into an RPA with another institution as a means to assume a portion of the credit risk associated with a loan structure which includes a derivative instrument, in exchange for fee income commensurate with the risk assumed. This type of derivative is referred to as an “RPA In.” In addition, in an effort to reduce the credit risk associated with an interest rate swap agreement with a borrower for whom the Corporation has provided a loan structured with a derivative, the Corporation purchased an RPA from an institution participating in the facility in exchange for a fee commensurate with the risk shared. This type of derivative is referred to as an “RPA Out.” There was no net impact to the consolidated statement of income from RPAs in the first quarter of 2026 and the first quarter of 2025.

The table below presents the fair value of the Corporation’s derivative financial instruments as well as their classification on the consolidated balance sheets at March 31, 2026 and December 31, 2025:


(In Thousands)	At March 31, 2026								At December 31, 2025
	Asset Derivatives				Liability Derivatives				Asset Derivatives				Liability Derivatives
	Notional		Fair		Notional		Fair		Notional		Fair		Notional		Fair
	Amount		Value (1)		Amount		Value (2)		Amount		Value (1)		Amount		Value (2)
Interest rate swap agreements	$	67,799	$	1,178	$	67,799	$	1,178	$	68,388	$	1,318	$	68,388	$	1,318
RPA Out		6,787		1		0		0		6,823		2		0		0
RPA In		0		0		13,489		4		0		0		13,660		5

(1)	Included in other assets in the consolidated balance sheets.

(2)	Included in accrued interest and other liabilities in the consolidated balance sheets.

The Corporation’s agreements with its derivative counterparties provide that, if the Corporation defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Corporation could also be declared in default on its derivative obligations. Further, if the Corporation were to fail to maintain its status as a well or adequately capitalized institution, then the counterparties could terminate the derivative positions, and the Corporation would be required to settle its obligations under the agreements. There was interest-bearing cash pledged as collateral against the Corporation’s liability related to the interest rate swaps of $1,400,000 at March 31, 2026 and December 31, 2025.

13. FAIR VALUE MEASUREMENTS AND FAIR VALUES OF FINANCIAL INSTRUMENTS

The Corporation measures certain assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FASB 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

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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 or liabilities. 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 or liability through corroboration with observable market data. Level 2 inputs include quoted market prices in active markets for similar assets or liabilities, quoted market prices in markets that are not active for identical or similar assets or liabilities 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 or liability becoming active or inactive, changes in the availability of quoted prices, or changes in the availability of other market data.

At March 31, 2026 and December 31, 2025, assets and liabilities measured at fair value and the valuation methods used are as follows:


	March 31, 2026
	Quoted Prices		Other Observable		Unobservable
	in Active Markets		Inputs		Inputs		Total
(In Thousands)	(Level 1)		(Level 2)		(Level 3)		Fair Value
Recurring fair value measurements, assets:
AVAILABLE-FOR-SALE DEBT SECURITIES:
Obligations of the U.S. Treasury	$	7,456	$	0	$	0	$	7,456
Obligations of U.S. Government agencies		0		10,212		0		10,212
Bank holding company debt securities		0		35,745		0		35,745
Obligations of states and political subdivisions:
Tax-exempt		0		96,758		0		96,758
Taxable		0		43,955		0		43,955
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities		0		142,864		0		142,864
Residential collateralized mortgage obligations		0		60,094		0		60,094
Commercial mortgage-backed securities		0		92,296		0		92,296
Asset-backed securities,
Collateralized loan obligations		0		7,987		0		7,987
Total available-for-sale debt securities		7,456		489,911		0		497,367
Marketable equity security		885		0		0		885
Servicing rights		0		0		3,813		3,813
RPA Out		0		1		0		1
Interest rate swap agreements, assets		0		1,178		0		1,178
Total recurring fair value measurements, assets	$	8,341	$	491,090	$	3,813	$	503,244

Recurring fair value measurements, liabilities:
RPA In	$	0	$	4	$	0	$	4
Interest rate swap agreements, liabilities		0		1,178		0		1,178
Total recurring fair value measurements, liabilities	$	0	$	1,182	$	0	$	1,182

Nonrecurring fair value measurements, assets:
Loans individually evaluated for credit loss, net	$	0	$	0	$	2,947	$	2,947
Foreclosed assets held for sale		0		0		181		181
Total nonrecurring fair value measurements, assets	$	0	$	0	$	3,128	$	3,128

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	December 31, 2025
	Quoted Prices		Other Observable		Unobservable
	in Active Markets		Inputs		Inputs		Total
(In Thousands)	(Level 1)		(Level 2)		(Level 3)		Fair Value
Recurring fair value measurements, assets:
AVAILABLE-FOR-SALE DEBT SECURITIES:
Obligations of the U.S. Treasury	$	7,482	$	0	$	0	$	7,482
Obligations of U.S. Government agencies		0		10,749		0		10,749
Bank holding company debt securities		0		34,076		0		34,076
Obligations of states and political subdivisions:
Tax-exempt		0		98,359		0		98,359
Taxable		0		44,152		0		44,152
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities		0		143,921		0		143,921
Residential collateralized mortgage obligations		0		63,707		0		63,707
Commercial mortgage-backed securities		0		92,631		0		92,631
Private label commercial mortgage-backed securities		0		3,489		0		3,489
Asset-backed securities,
Collateralized loan obligations		0		8,009		0		8,009
Total available-for-sale debt securities		7,482		499,093		0		506,575
Marketable equity security		890		0		0		890
Servicing rights		0		0		3,893		3,893
RPA Out		0		2		0		2
Interest rate swap agreements, assets		0		1,318		0		1,318
Total recurring fair value measurements, assets	$	8,372	$	500,413	$	3,893	$	512,678

Recurring fair value measurements, liabilities,
RPA In	$	0	$	5	$	0	$	5
Interest rate swap agreements, liabilities		0		1,318		0		1,318
Total recurring fair value measurements, liabilities	$	0	$	1,323	$	0	$	1,323

Nonrecurring fair value measurements, assets:
Loans individually evaluated for credit loss, net	$	0	$	0	$	2,629	$	2,629
Foreclosed assets held for sale		0		0		189		189
Total nonrecurring fair value measurements, assets	$	0	$	0	$	2,818	$	2,818

Level 2 valuation techniques used to measure fair value for the financial instruments in the preceding tables are as follows:

Available-for-sale debt securities - Level 2 debt securities are valued by a third-party pricing service. The pricing service uses pricing models that vary based on asset class and incorporate available market information, including quoted prices of investment securities with similar characteristics. Because many fixed income securities do not trade on a daily basis, pricing models use available information, as applicable, through processes such as benchmark yield curves, benchmarking of like securities, sector groupings and matrix pricing.

Derivative instruments - Interest rate SWAP agreements, RPA Out and RPA In- The fair value of derivatives are based on valuation models using observable market data as of the measurement date, valued by a third-party pricing service using quantitative models that utilize multiple market inputs. The inputs include prices and indices to generate continuous yield or pricing curves, estimates of current and potential future credit exposure and calculated discounted cash flow factors to value the position. The majority of market inputs are actively quoted and can be validated through external sources, including brokers, market transactions and third-party pricing services.

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.

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At March 31, 2026 and December 31, 2025, quantitative information regarding valuation techniques and the significant unobservable inputs used for assets measured on a recurring basis using unobservable inputs (Level 3 methodologies) are as follows:

 

Fair Value at

3/31/2026

Valuation

Unobservable

Method or Value As of

Asset

(In Thousands)

Technique

Input(s)

3/31/2026

Servicing rights

3,813

Discounted cash flow

Discount rate

13.00

Rate used through modeling period

Loan prepayment speeds

133.00

Weighted-average PSA

 

Fair Value at

12/31/2025

Valuation

Unobservable

Method or Value As of

Asset

(In Thousands)

Technique

Input(s)

12/31/2025

Servicing rights

3,893

Discounted cash flow

Discount rate

13.00

Rate used through modeling period

Loan prepayment speeds

124.00

Weighted-average PSA

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:


(In Thousands)		Three Months Ended
		March 31, 2026			March 31, 2025
Servicing rights balance, beginning of period		$	3,893		$	2,782
Originations of servicing rights			92			54
Unrealized loss included in earnings			(172)			(69)
Servicing rights balance, end of period		$	3,813		$	2,767

Loans are individually evaluated for credit loss when they do not share similar risk characteristics as similar loans within its loan pool. Foreclosed assets held for sale consist of real estate acquired by foreclosure. For individually evaluated loans secured by real estate and foreclosed assets held for sale, estimated fair values are determined primarily using values from third-party appraisals. Appraised values are discounted to arrive at the estimated selling price of the collateral, which is considered to be the estimated fair value. The discounts also include estimated costs to sell the property. The estimated fair value determined for individually evaluated loans secured by real estate and foreclosed assets held for sale used unobservable inputs (Level 3 methodologies).

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At March 31, 2026 and December 31, 2025, quantitative information regarding valuation techniques and the significant unobservable inputs used for nonrecurring fair value measurements using Level 3 methodologies are as follows:


(Dollars In Thousands)										Range (Weighted
				Valuation						Average)
		Balance at		Allowance at		Fair Value at		Valuation	Unobservable	Discount at
Asset		3/31/2026		3/31/2026		3/31/2026		Technique	Inputs	3/31/2026

Loans individually evaluated for credit loss:
Commercial real estate - nonowner occupied		$	1,409	$	140	$	1,269	Sales comparison	Discount to appraised value	18%-77% (66)	%
Commercial real estate - owner occupied			487		263		224	Sales comparison	Discount to appraised value	32% (32)	%
All other commercial Loans			3,706		2,252		1,454	Sales comparison	Discount to appraised value	0%-100% (82)	%
Total loans individually evaluated for credit loss		$	5,602	$	2,655	$	2,947
Foreclosed assets held for sale - real estate:
Residential (1-4 family)		$	25	$	0	$	25	Sales comparison	Discount to appraised value	62% (62)	%
Commercial real estate			156		0		156	Sales comparison	Discount to appraised value	34% (34)	%
Total foreclosed assets held for sale		$	181	$	0	$	181


(Dollars In Thousands)										Range (Weighted
				Valuation						Average)
		Balance at		Allowance at		Fair Value at		Valuation	Unobservable	Discount at
Asset		12/31/2025		12/31/2025		12/31/2025		Technique	Inputs	12/31/2025

Loans individually evaluated for credit loss:
Commercial real estate - nonowner occupied		$	1,423	$	140	$	1,283	Sales comparison	Discount to appraised value	18%-77% (66)	%
Commercial real estate - owner occupied			485		266		219	Sales comparison	Discount to appraised value	34% (34)	%
All other commercial Loans			3,493		2,366		1,127	Sales comparison	Discount to appraised value	0%-100% (82)	%
Total loans individually evaluated for credit loss		$	5,401	$	2,772	$	2,629
Foreclosed assets held for sale - real estate:
Residential (1-4 family)		$	33	$	0	$	33	Sales comparison	Discount to appraised value	62%-84% (72)	%
Commercial real estate			156		0		156	Sales comparison	Discount to appraised value	18%-77% (34)	%
Total foreclosed assets held for sale		$	189	$	0	$	189

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.

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The estimated fair values, and related carrying amounts, of the Corporation’s financial instruments that are not recorded at fair value are as follows:


(In Thousands)		Fair Value		March 31, 2026						December 31, 2025
		Hierarchy		Carrying			Fair			Carrying			Fair
		Level		Amount			Value			Amount			Value
Financial assets:
Cash and cash equivalents		Level 1		$	53,448		$	53,448		$	44,706		$	44,706
Certificates of deposit		Level 2			1,350			1,338			1,350			1,331
Restricted equity securities (included in other assets)		N/A			28,004			28,004			26,623			26,623
Loans, net		Level 3			2,351,018			2,291,402			2,323,317			2,261,934
Accrued interest receivable		Level 2			11,901			11,901			11,594			11,594

Financial liabilities:
Deposits with no stated maturity		Level 2			2,008,209			2,008,209			1,958,011			1,958,011
Time deposits		Level 2			591,142			588,668			606,705			603,494
Short-term borrowings		Level 2			13,590			13,590			28,618			28,618
Long-term borrowings - FHLB advances		Level 2			139,489			139,970			120,935			122,211
Senior notes, net		Level 2			14,988			14,913			14,970			14,751
Subordinated debt, net		Level 2			24,979			22,880			24,949			23,361
Accrued interest payable		Level 2			1,791			1,791			1,744			1,744

14. SEGMENT REPORTING

The Corporation’s one reportable segment is determined by the President and Chief Executive Officer, who is the designated chief operating decision maker, based upon information provided about the Corporation’s products and services offered, primarily community banking operations. The chief operating decision maker uses consolidated net income to assess performance by comparing it to and monitoring it against budget and prior year results. In addition, the chief operating decision maker uses the consolidated net income to benchmark the Corporation against its competitors. This information is used to manage resources to drive business and net earnings growth, including investment in key strategic priorities, as well as determine the Corporation's ability to return capital to shareholders. Loans, investments, deposits and assets held in a fiduciary or custodial capacity provide the revenues in the banking operation. Interest expense, provisions for credit losses, and payroll provide the significant expenses in the banking operation. All operations are domestic.

Segment performance is evaluated using consolidated net income.


	Three Months Ended
(In Thousands)		March 31, 2026		March 31, 2025
Interest income	$	40,588	$	31,709
Interest expense		12,134		11,734
Net interest income		28,454		19,975
Provision for credit losses		13,602		236
Net interest income after provision for credit losses		14,852		19,739
Other income:
Other noninterest income		8,169		7,008
Realized gains on available-for-sale debt securities, net		26		0
Total other income		8,195		7,008
Other noninterest expense:
Salaries and employee benefits		13,201		11,759
Other segment expenses (1)		9,511		7,284
Total noninterest expense		22,712		19,043
Income before income tax provision		335		7,704
Income tax provision		62		1,411
NET INCOME	$	273	$	6,293

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(1 ) Other segment expenses included expenses for professional fees, data processing and telecommunications, net occupancy and equipment, automated teller machine and interchange, Pennsylvania shares tax and other noninterest expenses.

The Corporation’s segment assets represent the total assets as presented in the consolidated balance sheets at March 31, 2026 and December 31, 2025.

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 for purposes of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. Such forward-looking statements may include financial and other projections as well as statements regarding the Corporation that may include future plans, objectives, performance, revenues, growth, profits, operating expenses or the Corporation’s underlying assumptions. 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 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, “may”, “would”, “will”, "should", “likely”, “possibly”, "expect", "anticipate", “intend”, “pro forma”, “estimate”, “target”, “potentially”, “probably”, “outlook”, “predict”, “contemplate”, “continue”, “strategic”, “objective”, “plan”, “forecast”, “project”, “believe” and “goal” or other similar words, phrases or concepts. Persons reading this document are cautioned that such statements are only predictions, and that the Corporation’s actual future results or performance may be materially different. A number of factors could cause our actual results, events or developments, or industry results, to be materially different from any future results, events or developments expressed, implied or anticipated by such forward-looking statements. In addition to factors previously disclosed in the reports filed by the Corporation with the SEC, including our most recent annual report on Form 10-K and subsequent filings, and those identified elsewhere in this document, the following factors, among others, could cause actual results to differ materially from forward looking statements:

●	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, including unfavorable conditions and trends related to costs of living, unemployment levels, inflation, tariffs and economic growth

●	military conflicts including the conflict in the Middle East and the possible expansion of such conflict and the potential geopolitical and economic consequences

●	the potential for adverse developments in the banking industry that could have a negative impact on customer confidence

●	the possibility that the Corporation’s credit standards and its on-going credit assessment processes might not protect it from significant credit losses

●	difficulties in integrating the operations of the former Susquehanna (acquired by the Corporation October 1, 2025)

●	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

●	information security breaches or other technology difficulties or failures

●	changes in, or the application of, generally accepted accounting principles with respect to the presentation of the Corporation’s financial statements

●	fraud and cyber malfunction risks as usage of artificial intelligence continues to expand

●	integration efforts between the Corporation and Susquehanna may divert the attention of the management teams of the Corporation and Susquehanna and cause a loss in the momentum of their ongoing businesses

●	success of the Corporation in Susquehanna’s geographic market area will require the Corporation to attract and retain key personnel in the market and to differentiate the Corporation from its competitors in the market

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These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. All forward-looking statements and information made herein are based on management’s current beliefs and assumptions as of the date of filing of this document. The Corporation does not undertake to update forward-looking statements.

BUSINESS COMBINATION

On October 1, 2025, the Corporation completed its acquisition of Susquehanna Community Financial, Inc. (“Susquehanna”). Susquehanna was the parent company of Susquehanna Community Bank, with seven banking offices located in Lycoming, Northumberland, Snyder and Union Counties in Pennsylvania. In connection with the acquisition, the Corporation issued approximately 2.3 million shares of common stock to the former Susquehanna shareholders, resulting in merger consideration valued at $44.6 million and an increase in stockholders’ equity of $44.4 million, net of issuance costs. Intangible assets recorded included goodwill of $10.8 million and a core deposit intangible asset of $10.7 million. Assets acquired included loans valued at $393.6 million, securities valued at $147.6 million, bank-owned life insurance valued at $8.0 million and cash and due from banks of $6.1 million. Liabilities assumed included deposits valued at $501.5 million and short-term borrowings valued at $45.8 million. The assets purchased and liabilities assumed were recorded at their preliminary estimated fair values at the time of closing and may be adjusted for up to one year subsequent to the acquisition. There were no adjustments to the fair value measurements of assets acquired or liabilities assumed in the first quarter of 2026.

EARNINGS OVERVIEW

First Quarter 2026 as Compared to First Quarter 2025

First quarter 2026 net income was $273,000, or $0.02 per diluted share, as compared to $6,293,000, or $0.41 per diluted share, in the first quarter 2025. First quarter 2026 earnings were impacted by an elevated provision for credit losses discussed below. Significant variances were as follows:

●

Net interest income of $28,454,000 in the first quarter 2026 was $8,479,000 higher than in the first quarter 2025, including the benefit of income from growth in net earning assets resulting from the Susquehanna merger. The net interest margin increased to 3.98% in the first quarter 2026 from 3.38% in the first quarter 2025. The interest rate spread increased 0.76%, as the average yield on earning assets increased 0.31% while the average rate on interest-bearing liabilities decreased 0.45%. Average total earning assets increased $505,810,000 from the first quarter 2025, as average total loans receivable increased $465,531,000, including the impact of loans acquired from Susquehanna, and average available-for-sale debt securities increased $81,543,000 while average interest-bearing due from banks decreased $42,380,000. Average total deposits increased $499,043,000, including the impact of deposits assumed from Susquehanna, while average brokered deposits decreased $24,333,000.

●

The provision for credit losses was $13,602,000 in the first quarter 2026 as compared to $236,000 in the first quarter 2025. The increase in the first quarter 2026 provision was primarily driven by the impact on the allowance for credit losses (“ACL”) of an increase in net charge-offs to $10,808,000 as compared to $91,000 in the first quarter of 2025. The significant increase in charge-offs in the first quarter of 2026 is due to a non-owner occupied; commercial real estate loan originated in 2022 in the amount of $24 million of which $7,200,000 was participated with another financial institution. The loan is secured by a first lien on the leasehold interests of an approximately 190,000 square foot Class A office property with multiple buildings and tenants, located in Bucks County, PA. The loss of a large tenant as well as cash flow requirements of the borrower’s other properties (which the Corporation has not financed) caused the loan to be downgraded to substandard and placed on nonaccrual status as of March 31, 2026. The Corporation obtained an updated appraisal in April 2026 which was significantly lower than the original appraisal when the loan was originated, resulting in a charge-off of $10,056,000. At March 31, 2026, the amortized cost basis of the loan, net of the partial charge-off, is $5,836,000. Management believes the property’s location and condition provide an opportunity for recovery of value in the future. The ACL was 1.42% of gross loans receivable at March 31, 2026, up from 1.32% at December 31, 2025

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and 1.06% at March 31, 2025, as the higher level of net charge-offs in the first quarter 2026 impacted the portion of the Corporation’s ACL determined based on historical loss experience.

●

Noninterest income of $8,195,000 in the first quarter 2026 increased $1,187,000 from the first quarter 2025 result. Significant variances included the following:

Other noninterest income of $1,586,000 increased $454,000, including a conversion assistance payment of $241,000 received related to the merger integration of the wealth management platform, an increase of $94,000 in tax credit income and an increase of $78,000 in dividends on Federal Home Loan Bank of Pittsburgh stock.

Interchange revenue from debit card transactions of $1,267,000 increased $231,000, including an increase in volume-related incentive income.

Service charges on deposit accounts of $1,650,000 increased $210,000, reflecting an increase in volume of fees.

Net gains from sale of loans of $370,000 increased $165,000, reflecting an increase in volume of residential mortgage loans sold and includes the impact of $133,000 in net gains from sale of loans resulting from the Susquehanna acquisition.

●

Noninterest expense of $22,712,000 in the first quarter 2026 increased $3,669,000 from the first quarter 2025 result, reflecting the impact of the Susquehanna acquisition. Other significant variances included the following:

Salaries and employee benefits expense of $13,201,000 increased $1,442,000, including the impact of the Susquehanna acquisition, while cash and stock-based incentive compensation decreased $219,000.

Other noninterest expense of $3,364,000 increased $1,010,000 from the first quarter 2025. Within this category, significant variances included the following:

◾Core deposit intangible amortization expense increased $708,000, related to core deposits assumed from Susquehanna.

◾

FDIC insurance expense increased $243,000 from the first quarter of 2025, reflecting the impact of the Susquehanna acquisition.

◾

Legal fees unrelated to merger activity decreased $104,000 from the first quarter of 2025.

Net occupancy and equipment expense was $432,000 higher than in first quarter 2025, including $337,000 related to the Susquehanna acquisition and increases in snow removal, light and power and repairs and maintenance expenses.

Data processing and telecommunications expenses were $378,000 higher than in the first quarter 2025, reflecting higher software license expense of $179,000 and higher internet banking expenses of $170,000, related to the Susquehanna acquisition.

●

The income tax provision of $62,000, or 18.5% of pre-tax income, for the first quarter 2026 decreased $1,349,000 from $1,411,000, or 18.3% of pre-tax income, for the first quarter 2025 reflecting a decrease in pre-tax income for the quarter.

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TABLE I – QUARTERLY FINANCIAL DATA


(Dollars In Thousands,	For the Three Months Ended :
Except Per Share Data)	March 31,		December 31,		September 30,		June 30,		March 31,
(Unaudited)	2026		2025		2025		2025		2025
Interest and dividend income	$	40,588	$	41,404	$	33,650	$	32,454	$	31,709
Interest expense		12,134		12,931		11,387		11,312		11,734
Net interest income		28,454		28,473		22,263		21,142		19,975
Provision (credit) for credit losses		13,602		1,320		2,163		2,354		236
Net interest income after provision (credit) for credit losses		14,852		27,153		20,100		18,788		19,739
Noninterest income		8,195		8,398		7,304		8,142		7,008
Merger-related expenses		0		6,891		882		167		0
Other noninterest expenses		22,712		23,268		18,507		19,231		19,043
Income before income tax provision		335		5,392		8,015		7,532		7,704
Income tax provision		62		926		1,464		1,415		1,411
Net income	$	273	$	4,466	$	6,551	$	6,117	$	6,293
Net income attributable to common shares	$	273	$	4,437	$	6,498	$	6,068	$	6,242
Basic and diluted earnings per common share	$	0.02	$	0.25	$	0.42	$	0.40	$	0.41

NONINTEREST INCOME

TABLE II – COMPARISON OF NONINTEREST INCOME


(Dollars in Thousands)	Three Months Ended
	March 31,					$	%
	2026		2025			Change	Change
Trust revenue	$	2,085	$	2,102	$	(17)	(0.8)	%
Brokerage and insurance revenue		588		498		90	18.1	%
Service charges on deposit accounts		1,650		1,440		210	14.6	%
Interchange revenue from debit card transactions		1,267		1,036		231	22.3	%
Net gains from sales of loans		370		205		165	80.5	%
Loan servicing fees, net		108		138		(30)	(21.7)	%
Increase in cash surrender value of life insurance		515		457		58	12.7	%
Other noninterest income		1,586		1,132		454	40.1	%
Realized gains on available-for-sale debt securities, net		26		0		26	N/M
Total noninterest income	$	8,195	$	7,008	$	1,187	16.9	%

NONINTEREST EXPENSE

TABLE III - COMPARISON OF NONINTEREST EXPENSE


(Dollars in Thousands)	Three Months Ended
	March 31,				$		%
	2026		2025		Change		Change
Salaries and employee benefits	$	13,201	$	11,759	$	1,442	12.3	%
Net occupancy and equipment expense		1,891		1,459		432	29.6	%
Data processing and telecommunications expense		2,449		2,071		378	18.3	%
Automated teller machine and interchange expense		583		387		196	50.6	%
Pennsylvania shares tax		585		496		89	17.9	%
Professional fees		639		517		122	23.6	%
Other noninterest expense		3,364		2,354		1,010	42.9	%
Total noninterest expense	$	22,712	$	19,043	$	3,669	19.3	%

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

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CRITICAL ACCOUNTING POLICIES

The presentation of consolidated 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.

Business Combinations – The Corporation accounts for its mergers and acquisitions using the acquisition method of accounting under the provisions of FASB ASC Topic 805 ("ASC 805"), Business Combinations. Under ASC 805, the assets acquired, including identified intangible assets such as core deposit intangibles and liabilities assumed in a business combination are recognized at their acquisition-date fair value, while transaction costs and restructuring costs associated with the business combination are expensed as incurred. The excess of the merger consideration over the fair value of assets acquired and liabilities assumed, if any, is allocated to goodwill.

The valuations are based upon management’s assumptions of future growth rates, future attrition, discount rates and other relevant factors, which involves a significant level of estimation and uncertainty. In addition, management engaged independent third-party specialists to assist in the development of the fair values of the acquired assets and assumed liabilities. The preliminary estimates of fair values may be adjusted for a period of time subsequent to the acquisition date if new information is obtained about facts and circumstances that existed as of the merger date that, if known, would have affected the measurement of the amounts recognized as of that date. Adjustments would be recorded to goodwill during the current reporting period.

Examples of the impacted acquired assets and assumed liabilities include loans, deposits, identifiable intangible assets and certain other assets and liabilities.

For acquired loans at the merger date, management evaluated and classified loans based upon whether the loans had experienced a more-than-insignificant amount of credit deteriorating since origination. To determine the fair value of the loans, significant estimates and assumptions were applied, including projected cash flows, discount rates, repayment speeds, credit loss severity rates, default rates and realizable collateral values. In November 2025, the Financial Accounting Standards Board issued Accounting Standards Update 2025-08, Financial Instruments – Credit Losses (ASU 2025-08). The Corporation adopted ASU 2025-08 in accounting for the Susquehanna acquisition. Consistent with ASU 2025-08, the Corporation recorded loans receivable at fair value plus an allowance for credit losses of $7.1 million, including allowances totaling $2.6 million on loans with more than insignificant deterioration in credit quality subsequent to origination (“PCD”) loans and an allowance of $4.5 million on non-PCD loans at acquisition.

Allowance for Credit Losses on Loans – A material estimate that is particularly susceptible to significant change is the determination of the allowance for credit losses (ACL) on loans. The Corporation maintains an ACL on loans which represents management’s estimate of expected net charge-offs over the life of the loans. The ACL includes two primary components: (i) an allowance established on loans which share similar risk characteristics collectively evaluated for credit losses (collective basis), and (ii) an allowance established on loans which do not share similar risk characteristics with any loan segment and which are individually evaluated for credit losses (individual basis). Management considers the determination of the ACL on loans to be critical because it requires significant judgment regarding estimates of expected credit losses based on the Corporation’s historical loss experience, current conditions and economic forecasts. Management’s evaluation is based upon a continuous review of the Corporation’s loans, with consideration given to evaluations resulting from examinations performed by regulatory authorities. Note 7 to the unaudited consolidated financial statements provides an overview of the process management uses for determining the ACL, and additional discussion of the ACL is provided in a separate section below of Management’s Discussion and Analysis.

The ACL may increase or decrease due to changes in economic conditions affecting borrowers and macroeconomic variables, including new information regarding existing problem loans, identification of additional problem loans, changes in the fair value of underlying collateral, unforeseen events such as natural disasters and pandemics, and other factors. Because current economic conditions and forecasts can change and future events are inherently difficult to predict, the anticipated amount of estimated credit losses on loans, and therefore the appropriateness of the ACL, could change significantly.

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 IV, V and VI include information regarding the Corporation’s net interest income for the

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three-month periods ended March 31, 2026 and 2025. 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. Management believes presentation of net interest income on a fully taxable-equivalent basis, which is a non-GAAP financial measure, provides investors with meaningful information for purposes of comparing returns on tax-exempt securities and loans with returns on taxable securities and loans. Accordingly, the amount of net interest income on a fully taxable-equivalent basis reflected in these tables exceed the net interest income amounts presented in the consolidated financial statements. A reconciliation of net interest income on a fully taxable-equivalent basis to the closest GAAP financial measure is included with Table IV. The discussion that follows is based on amounts in the related tables.

Three-Month Periods Ended March 31, 2026 and 2025

Fully taxable equivalent net interest income (a non-GAAP measure) was $28,685,000 in the first quarter of 2026, $8,499,000 (42.1%) higher than in the first quarter of 2025, including the benefit of income from growth in net earning assets resulting from the Susquehanna merger. Table VI shows the net impact of changes in the volume increased net interest income by $5,949,000 in the first quarter 2026 as compared to first quarter 2025 and changes in interest rates increased net interest income by $2,550,000 in the first quarter 2026 as compared to first quarter 2025. The increase in net interest income reflected an increase in interest income of $8,899,000 and an increase in interest expense of $400,000. As presented in Table V, the Net Interest Margin was 3.98% in the first quarter 2026 as compared to 3.38% in the first quarter 2025, and the “Interest Rate Spread” (excess of average rate of return on earning assets over average cost of funds on interest-bearing liabilities) increased to 3.45% in 2026 from 2.69% in 2025. The average yield on earning assets of 5.66% was 0.31% higher in 2026 compared to 2025, and the average rate on interest-bearing liabilities of 2.21% in 2026 was 0.45% lower. Accretion of acquisition accounting valuation adjustments related to the Susquehanna merger had a positive impact of $765,000 including accretion on loans of $728,000 and $37,000 on time deposits.

INTEREST INCOME AND EARNING ASSETS

Interest income totaled $40,819,000 in 2026, an increase of $8,899,000, or 27.9%, from 2025.

Interest and fees from loans receivable increased $8,175,000 in 2026 as compared to 2025. In 2026, the fully taxable equivalent yield on loans was 6.24%, up from 6.03% in 2025, reflecting the effects of loans acquired from Susquehanna and valued based on current market yields as of October 1, 2025 as well as gradual paydowns on loans originated prior to interest rates rising in 2022 and 2023 with more recent loans originated at higher market rates. Average outstanding loans receivable increased $465,531,000 (24.5%) to $2,364,964,000 in 2026 from $1,899,433,000 in 2025 including the impact of the Susquehanna acquisition as well as organic growth.

Interest income from available-for-sale debt securities, on a fully taxable-equivalent basis, totaled $4,165,000 in 2026, up $1,215,000 from 2025. The average balance (at amortized cost) increased $81,543,000 from 2025 and the average yield on the portfolio increased to 3.17% in 2026 from 2.65% in 2025. The Susquehanna merger resulted in an initial increase in available-for-sale debt securities of $147,617,000. The majority of these securities were sold, and a significant portion of the proceeds were reinvested in securities contributing to the increase in average balance and yield.

Income from interest-bearing due from banks totaled $218,000 in 2026, a decrease of $503,000 from 2025. Within this category, the largest asset balance in 2026 and 2025 has been interest-bearing deposits held with the Federal Reserve. The average yield on interest-bearing due from banks decreased to 3.46% in 2026 from 4.31% in 2025. The average balance of interest-bearing due from banks was $25,516,000 in 2026, down from $67,896,000 in 2025.

INTEREST EXPENSE AND INTEREST-BEARING LIABILITIES

Interest expense increased $400,000 to $12,134,000 in 2026 from $11,734,000 in 2025.

Interest expense on deposits increased $466,000, as the average balance of interest-bearing deposits increased $435,482,000 while the average rate decreased to 2.02% in 2026 from 2.45% in 2025. The increase in average deposit balances included the impact of the Susquehanna acquisition as well as organic growth. Within average deposits, average brokered deposits were $2,247,000 at an average rate of 3.79% in 2026 as compared to $26,580,000 at an average rate of 4.76% in 2025. In comparing 2026 to 2025, average savings deposits increased $166,089,000, average interest checking deposits increased $130,728,000, average time deposits increased

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

$108,224,000, average noninterest-bearing demand deposits increased $63,561,000 and average total money market accounts increased $30,441,000.

Interest expense on borrowed funds decreased $66,000 in 2026 as compared to 2025. Interest expense on short-term borrowings was $276,000 in 2026 compared to less than $1,000 in 2025 as the average balance of short-term borrowings increased to $28,203,000 in 2026 from $1,400,000 in 2025. Interest expense on long-term borrowings (FHLB advances) decreased $343,000 to $1,446,000 in 2026 from $1,789,000 in 2025. The average balance of long-term borrowings was $134,034,000 in 2026, down from an average balance of $162,392,000 in 2025. Borrowings are classified as long-term within the Tables based on their term at origination or assumption in business combinations. The average rate on long-term borrowings was 4.38% in 2026 compared to 4.47% in 2025.

More information regarding borrowed funds is provided in Note 9 to the unaudited consolidated financial statements.

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TABLE IV - ANALYSIS OF INTEREST INCOME AND EXPENSE


	Three Months Ended
	March 31,				Increase/
(In Thousands)	2026		2025		(Decrease)
INTEREST INCOME
Interest-bearing due from banks	$	218	$	721	$	(503)
Available-for-sale debt securities:
Taxable		3,518		2,302		1,216
Tax-exempt		647		648		(1)
Total available-for-sale debt securities		4,165		2,950		1,215
Loans receivable:
Taxable		35,641		27,503		8,138
Tax-exempt		765		728		37
Total loans receivable		36,406		28,231		8,175
Other earning assets		30		18		12
Total Interest Income		40,819		31,920		8,899

INTEREST EXPENSE
Interest-bearing deposits:
Interest checking		2,328		2,727		(399)
Money market		1,850		1,981		(131)
Savings		848		49		799
Time deposits		5,032		4,835		197
Total interest-bearing deposits		10,058		9,592		466
Borrowed funds:
Short-term		276		0		276
Long-term - FHLB advances		1,446		1,789		(343)
Senior notes, net		121		121		0
Subordinated debt, net		233		232		1
Total borrowed funds		2,076		2,142		(66)
Total Interest Expense		12,134		11,734		400

Net Interest Income	$	28,685	$	20,186	$	8,499

Note: Interest income from tax-exempt securities and loans has been adjusted to a fully taxable-equivalent basis (a non-GAAP measure), using the Corporation’s marginal federal income tax rate of 21%. The following table reconciles net interest income under U.S. GAAP as compared to net interest income as adjusted to a fully taxable-equivalent basis.


(In Thousands)	Three Months Ended
	March 31,				Increase/
	2026		2025		(Decrease)
Net Interest Income Under U.S. GAAP	$	28,454	$	19,975	$	8,479
Add: fully taxable-equivalent interest income adjustment from tax-exempt securities		85		75		10
Add: fully taxable-equivalent interest income adjustment from tax-exempt loans		146		136		10
Net Interest Income as adjusted to a fully taxable-equivalent basis - Non-GAAP	$	28,685	$	20,186	$	8,499

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TABLE V - Analysis of Average Daily Balances and Rates


(Dollars in Thousands)	Three Months				Three Months
	Ended		Rate of		Ended		Rate of
	3/31/2026		Return/		3/31/2025		Return/
	Average		Cost of		Average		Cost of
	Balance		Funds %		Balance		Funds %
EARNING ASSETS
Interest-bearing due from banks	$	25,516	3.46	%	$	67,896	4.31	%
Available-for-sale debt securities, at amortized cost:
Taxable		427,531	3.34	%		339,557	2.75	%
Tax-exempt		104,712	2.51	%		111,143	2.36	%
Total available-for-sale debt securities		532,243	3.17	%		450,700	2.65	%
Loans receivable:
Taxable		2,271,112	6.36	%		1,809,045	6.17	%
Tax-exempt		93,852	3.31	%		90,388	3.27	%
Total loans receivable		2,364,964	6.24	%		1,899,433	6.03	%
Other earning assets		2,893	4.21	%		1,777	4.11	%
Total Earning Assets		2,925,616	5.66	%		2,419,806	5.35	%
Cash		25,498				20,920
Unrealized loss on securities		(27,003)				(44,405)
Allowance for credit losses		(31,520)				(20,341)
Bank-owned life insurance		61,275				51,383
Bank premises and equipment		27,551				21,329
Intangible assets		74,530				54,530
Other assets		90,741				71,928
Total Assets	$	3,146,688			$	2,575,150

INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Interest checking	$	669,972	1.41	%	$	539,244	2.05	%
Money market		385,585	1.95	%		355,144	2.26	%
Savings		362,060	0.95	%		195,971	0.10	%
Time deposits		602,443	3.39	%		494,219	3.97	%
Total interest-bearing deposits		2,020,060	2.02	%		1,584,578	2.45	%
Borrowed funds:
Short-term		28,203	3.97	%		1,400	0.00	%
Long-term - FHLB advances		134,034	4.38	%		162,392	4.47	%
Senior notes, net		14,979	3.28	%		14,908	3.29	%
Subordinated debt, net		24,965	3.79	%		24,846	3.79	%
Total borrowed funds		202,181	4.16	%		203,546	4.27	%
Total Interest-bearing Liabilities		2,222,241	2.21	%		1,788,124	2.66	%
Demand deposits (noninterest bearing)		540,165				476,604
Other liabilities		38,145				32,279
Total Liabilities		2,800,551				2,297,007
Stockholders' equity, excluding accumulated other comprehensive loss		366,848				312,427
Accumulated other comprehensive loss		(20,711)				(34,284)
Total Stockholders' Equity		346,137				278,143
Total Liabilities and Stockholders' Equity	$	3,146,688			$	2,575,150
Interest Rate Spread			3.45	%			2.69	%
Net Interest Income/Earning Assets (Net Interest Margin)			3.98	%			3.38	%

Total Deposits (Interest-bearing and Demand)	$	2,560,225			$	2,061,182
Brokered Deposits	$	2,247	3.79	%	$	26,580	4.76.	%

(1)	Annualized rates of return on tax-exempt securities and loans are presented on a fully taxable-equivalent basis, using the Corporation’s marginal federal income tax rate of 21%.

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

(3)	Rates of return on earning assets and costs of funds are presented on an annualized basis.

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

TABLE VI - ANALYSIS OF VOLUME AND RATE CHANGES


(In Thousands)	.	Three Months Ended 3/31/2026 vs. 3/31/2025
		Change in		Change in		Total
		Volume		Rate		Change
EARNING ASSETS
Interest-bearing due from banks		$	(383)	$	(120)	$	(503)
Available-for-sale debt securities:
Taxable			666		550		1,216
Tax-exempt			(38)		37		(1)
Total available-for-sale debt securities			628		587		1,215
Loans receivable:
Taxable			7,226		912		8,138
Tax-exempt			28		9		37
Total loans receivable			7,254		921		8,175
Other earning assets			12		0		12
Total Interest Income			7,511		1,388		8,899

INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Interest checking			571		(970)		(399)
Money market			161		(292)		(131)
Savings			72		727		799
Time deposits			966		(769)		197
Total interest-bearing deposits			1,770		(1,304)		466
Borrowed funds:
Short-term			97		179		276
Long-term - FHLB advances			(307)		(36)		(343)
Senior notes, net			1		(1)		0
Subordinated debt, net			1		0		1
Total borrowed funds			(208)		142		(66)
Total Interest Expense			1,562		(1,162)		400

Net Interest Income		$	5,949	$	2,550	$	8,499

(1)	Changes in income on tax-exempt securities and loans are presented on a fully taxable-equivalent basis, using the Corporation’s marginal federal income tax rate of 21%.

(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.

INCOME TAXES

The income tax provision in interim periods is based on the Corporation’s estimate of the effective tax rate expected to be applicable for the full year. The income tax provision for the first quarter 2026 of $62,000 was $1,349,000 lower than the provision for the first quarter 2025. The effective tax rate (tax provision as a percentage of pre-tax income) was 18.5% in the first quarter 2026 compared to 18.3% in the first quarter 2025. The Corporation’s effective tax rates differ from the statutory federal rate of 21% principally because of the effects of tax-exempt interest income, nondeductible interest expense, state income taxes and other permanent differences.

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The Corporation recognizes deferred tax assets and liabilities based on differences between the consolidated financial statement carrying amounts and the tax basis of assets and liabilities. The net deferred tax asset at March 31, 2026 and December 31, 2025 represents the following temporary difference components:


		March 31,			December 31,
(In Thousands)		2026			2025
Deferred tax assets:
Unrealized holding losses on securities		$	7,079		$	6,531
Allowance for credit losses on loans			7,372			6,765
Acquisition accounting adjustment on loans			1,560			1,727
Deferred compensation			2,072			2,008
Deferred loan origination fees			746			712
Operating leases liability			745			780
Net operating loss carryforward			301			305
Accrued incentive compensation			142			735
Bank premises and equipment			54			56
Other deferred tax assets			2,225			1,708
Total deferred tax assets			22,296			21,327

Deferred tax liabilities:
Core deposit intangibles			2,344			2,522
Right-of-use assets from operating leases			745			780
Mortgage servicing rights			188			210
Defined benefit plans - ASC 835			91			97
Other deferred tax liabilities			101			103
Total deferred tax liabilities			3,469			3,712
Deferred tax asset, net		$	18,827		$	17,615

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.

Management believes the recorded net deferred tax asset at March 31, 2026 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.

SECURITIES

Management continually evaluates several objectives in determining the size, securities mix and other characteristics of the available-for-sale debt securities (investment) portfolio. Key objectives include supporting liquidity needs and maximizing return on earning assets within reasonable risk parameters.

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The composition of the available-for-sale debt securities portfolio at March 31, 2026 and December 31, 2025, 2024 and 2023 is as follows:


(Dollars In Thousands)	March 31, 2026					December 31, 2025					December 31, 2024					December 31, 2023
	Amortized		Fair			Amortized		Fair			Amortized		Fair			Amortized		Fair
	Cost		Value			Cost		Value			Cost		Value			Cost		Value
Obligations of the U.S. Treasury	$	8,042		7,456		$	8,047		7,482		$	8,067		7,118		$	12,325		11,290
Obligations of U.S. Government agencies		10,936		10,212			11,423		10,749			10,154		9,025			11,119		9,946
Bank holding company debt securities		37,631		35,745			36,103		34,076			28,958		25,246			28,952		23,500
Obligations of states and political subdivisions:
Tax-exempt		104,941		96,758			105,149		98,359			111,995		101,302			113,464		104,199
Taxable		50,239		43,955			50,306		44,152			51,147		42,506			58,720		50,111
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities		148,471		142,864			148,865		143,921			104,378		94,414			105,549		95,405
Residential collateralized mortgage obligations		62,511		60,094			65,782		63,707			53,389		49,894			50,212		46,462
Commercial mortgage-backed securities		98,771		92,296			99,095		92,631			73,470		64,501			76,412		66,682
Private label commercial mortgage-backed securities		0		0			3,490		3,489			8,365		8,374			8,215		8,160
Asset-backed securities,
Collateralized loan obligations		8,000		7,987			8,000		8,009			0		0			0		0
Total Available-for-Sale Debt Securities	$	529,542	$	497,367		$	536,260	$	506,575		$	449,923	$	402,380		$	464,968	$	415,755

Aggregate Unrealized Loss			$	(32,175)				$	(29,685)				$	(47,543)				$	(49,213)
Aggregate Unrealized Loss as a % of Amortized Cost				(6.1)	%				(5.5)	%				(10.6)	%				(10.6)	%

As reflected in the table above, the fair value of available-for-sale securities was lower than the amortized cost basis by $32,175,000, or 6.1%, at March 31, 2026, $29,685,000, or 5.5%, at December 31, 2025, $47,543,000, or 10.6%, at December 31, 2024 and $49,213,000, or 10.6%, at December 31, 2023. The volatility in the fair value of the portfolio, including the significant reduction in fair value, resulted from changes in interest rates.

Additional information regarding the potential impact of interest rate changes on all of the Corporation’s financial instruments is provided in Item 3, Quantitative and Qualitative Disclosures about Market Risk.

As described in Note 6 to the consolidated financial statements, management determined the Corporation does not have the intent to sell, nor is it more likely than not that it will be required to sell, available-for-sale debt securities in an unrealized loss position at March 31, 2026 before it is able to recover the amortized cost basis. Further, management reviewed the Corporation’s holdings as of March 31, 2026 and concluded there were no credit-related declines in fair value. Additional information related to the types of securities held at March 31, 2026, other than securities issued or guaranteed by U.S. Government entities or agencies, was as follows:

●

Bank holding company debt securities – The Corporation’s holdings of bank holding company debt securities included one senior and eleven subordinated securities with face amounts ranging from $250,000 to $5 million. There have been no payment defaults on the securities. Eleven of the issuers have publicly traded common stock. At March 31, 2026, one of the securities with a face amount of $400,000 is unrated, and the rest of securities have external ratings ranging from BBB-/Baa3 to A-.

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●

Obligations of states and political subdivisions (municipal bonds) – All of the Corporation’s holdings of municipal bonds were investment grade and there have been no payment defaults. Summary ratings information at March 31, 2026, based on the amortized cost basis and reflecting the lowest enhanced or underlying rating by Moody’s, Standard & Poors or Fitch, is as follows: AAA or pre-refunded – 20% of the portfolio; AA – 72%; A – 8%.

●

Collateralized loan obligations (CLOs) – There were three CLOs securities, all of which were from the most senior payment (subordination) classes of their respective issuances. These securities were investment grade (rated Aaa), and there have been no payment defaults on these securities.

Based on the results of management’s assessment, there was no ACL required on available-for-sale debt securities in an unrealized loss position at March 31, 2026.

FINANCIAL CONDITION

This section includes information regarding the Corporation’s lending activities or other significant changes or exposures that are not otherwise addressed in Management’s Discussion and Analysis. 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 securities, the allowance for credit losses and stockholders’ equity, are discussed in separate sections of Management’s Discussion and Analysis. There are no significant concerns that have arisen related to the Corporation’s off-balance sheet loan commitments or outstanding letters of credit at March 31, 2026.

Table VII shows the composition of the loan portfolio at March 31, 2026 and at year-end from 2021 through 2025. Throughout this time period, the portfolio was primarily commercial in nature. At March 31, 2026, commercial loans represented 76% of the portfolio while residential loans totaled 19% of the portfolio. As shown in Table VII, total loans receivable were higher by $458,517,000 at December 31, 2025 as compared to December 31, 2024. On October 1, 2025, $393,587,000 of gross loans receivable, net of purchase accounting adjustments, were recorded pursuant to the acquisition of Susquehanna.

Also included in Table VII is additional detail regarding the composition of the non-owner occupied commercial real estate loan portfolio at March 31, 2026. As shown in Table VII, the amortized cost of non-owner occupied commercial real estate loans for which the primary purpose is utilization of office space by third parties was $109,404,000, or 4.6% of gross loans receivable. At March 31, 2026, within this segment there were three loans with a total recorded investment of $8,600,000 in nonaccrual status with no individual allowances, including the loan discussed in the Earnings Overview and Provision and Allowance for Credit Losses section with a partial charge-off of $10,056,000 in the first quarter 2026 and an amortized cost basis at March 31, 2026 of $5,836,000. The remainder of the non-owner occupied commercial real estate loans with a primary purpose of office space utilization were in accrual status with no individual allowance at March 31, 2026.

While the Corporation’s lending activities are primarily concentrated in its market areas, a portion of the Corporation’s commercial loan segment consists of participation loans. Participation loans represent portions of larger commercial transactions for which other institutions are the “lead banks”. Although not the lead bank, the Corporation conducts detailed underwriting and monitoring of participation loan opportunities. Total participation loans outstanding amounted to $105,610,000 at March 31, 2026, down from $107,351,000 at December 31, 2025.

The Corporation is a party to financial instruments with off-balance sheet risk, including commitments to extend credit and standby letters of credit. At March 31, 2026, the total contract amount of commitments to extend credit was $489,887,000 as compared to $506,996,000 at December 31, 2025, and the contract amount of standby letters of credit was $59,161,000 at March 31, 2026 as compared to $58,914,000 at December 31, 2025.

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expected credit losses on commitments expected to be funded over their estimated lives. The allowance for credit losses for off-balance sheet exposures of $1,039,000 at March 31, 2026 and $1,029,000 at December 31, 2025, is included in accrued interest and other liabilities in the unaudited consolidated balance sheets.

The Corporation originates and sells residential mortgage loans to the secondary market through the MPF Xtra program administered by the Federal Home Loan Banks of Pittsburgh and Chicago. Residential mortgages originated and sold through the MPF Xtra program consist primarily of conforming, prime loans sold to the Federal National Mortgage Association (Fannie Mae), a quasi-government entity. The Corporation also originates and sells residential mortgage loans to the secondary market through the MPF Original program, administered by the Federal Home Loan Banks of Pittsburgh and Chicago. Residential mortgages originated and sold through the MPF Original program consist primarily of conforming, prime loans sold to the Federal Home Loan Bank of Pittsburgh. The Corporation also originates and sells mortgages under the Pennsylvania Housing Finance Agency and other programs though the volume of sales has been small in comparison to the volume under the MPF programs.

For loan sales originated under the MPF programs, the Corporation provides customary representations and warranties to investors that specify, among other things, that the loans have been underwritten to the standards established by the investor. The Corporation may be required to repurchase a loan and reimburse a portion of fees received or reimburse the investor for a credit loss incurred on a loan, if it is determined that the representations and warranties have not been met. Such repurchases or reimbursements generally result from an underwriting or documentation deficiency. At March 31, 2026, the total outstanding balance of loans the Corporation has repurchased as a result of identified instances of noncompliance amounted to $2,562,000, and the corresponding total outstanding balance of repurchased loans at December 31, 2025 was $2,598,000.

At March 31, 2026, outstanding balances of loans sold and serviced through the MPF Xtra and Original programs totaled $451,162,000, including loans sold through the MPF Xtra program of $176,497,000 and loans sold through the Original program of $274,665,000. At December 31, 2025, outstanding balances of loans sold and serviced through the MPF Xtra and Original programs totaled $450,120,000, including loans sold through the MPF Xtra program of $177,464,000 and loans sold through the Original program of $272,656,000. Based on the fairly limited volume of required repurchases to date, no allowance has been established for representation and warranty exposures as of March 31, 2026 and December 31, 2025.

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TABLE VII - SUMMARY OF LOANS BY TYPE

Summary of Loans by Type


(In Thousands)			March 31,		December 31,
		2026			2025			2024			2023			2022			2021
Commercial real estate - non-owner occupied:
Non-owner occupied		$	556,787		$	569,974		$	471,171		$	499,104		$	454,386		$	358,352
Multi-family (5 or more) residential			170,891			160,284			105,174			64,076			55,406			49,054
1-4 Family - commercial purpose			198,203			197,480			163,220			174,162			165,805			175,027
Total commercial real estate - non-owner occupied			925,881			927,738			739,565			737,342			675,597			582,433
Commercial real estate - owner occupied			326,210			311,792			261,071			237,246			205,910			196,083
All other commercial loans:
Commercial and industrial			127,100			128,679			96,665			78,832			95,368			118,488
Commercial lines of credit			148,118			139,727			120,078			117,236			141,444			106,338
Political subdivisions			103,097			96,349			94,009			79,031			86,663			75,401
Commercial construction and land			123,170			123,887			92,741			104,123			60,892			59,505
Other commercial loans			70,431			71,895			19,784			20,471			25,710			26,498
Total all other commercial loans			571,916			560,537			423,277			399,693			410,077			386,230
Residential mortgage loans:
1-4 Family - residential			411,451			411,827			383,797			389,262			363,005			327,593
1-4 Family residential construction			34,460			32,123			24,212			24,452			30,577			23,151
Total residential mortgage			445,911			443,950			408,009			413,714			393,582			350,744
Consumer loans:
Consumer lines of credit (including HELOCs)			98,961			94,060			47,196			41,503			36,650			33,522
All other consumer			15,971			16,288			16,730			18,641			18,224			15,837
Total consumer			114,932			110,348			63,926			60,144			54,874			49,359
Total			2,384,850			2,354,365			1,895,848			1,848,139			1,740,040			1,564,849
Less: allowance for credit losses on loans			(33,832)			(31,048)			(20,035)			(19,208)			(16,615)			(13,537)
Loans, net		$	2,351,018		$	2,323,317		$	1,875,813		$	1,828,931		$	1,723,425		$	1,551,312

Additional details regarding the composition of the non-owner occupied commercial real estate loan portfolio, excluding multi-family (5 or more) residential and 1-4 Family-commercial purpose loans, at March 31, 2026 is as follows:

NON-OWNER OCCUPIED COMMERCIAL REAL ESTATE


(In Thousands)	March 31,		% of Non-owner		% of
	2026		Occupied CRE		Total Loans
Retail	$	116,507	20.9	%	4.9	%
Office		109,404	19.6	%	4.6	%
Industrial		98,985	17.8	%	4.2	%
Hotels		81,638	14.7	%	3.4	%
Mixed Use		57,897	10.4	%	2.4	%
Self Storage Facilities		55,083	9.9	%	2.3	%
Other		37,273	6.7	%	1.6	%
Total Non-owner Occupied CRE Loans	$	556,787
Total Gross Loans	$	2,384,850

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

PROVISION AND ALLOWANCE FOR CREDIT LOSSES

A summary of the provision for credit losses for the three-month periods ended March 31, 2026 and 2025 is as follows:


(In Thousands)	3 Months		3 Months
	Ended		Ended
	March 31,		March 31,
	2026		2025
Provision for credit losses:
Loans receivable	$	13,592	$	228
Off-balance sheet exposures		10		8
Total provision for credit losses	$	13,602	$	236

As shown in Table IX, the ACL on loans individually evaluated decreased to $2,655,000 at March 31, 2026 from $2,772,000 at December 31, 2025, including an ACL of $2,433,000 at March 31, 2026 on acquired PCD loans as part of the Susquehanna acquisition.

Table IX also shows that, at March 31, 2026 as compared to December 31, 2025, the ACL related to collectively evaluated commercial loans increased by a total of $1,848,000 and the ACL on collectively evaluated residential mortgage loans increased $1,028,000. The increase for commercial loans includes the impact of growth in the portfolio partially offset by a net decrease in qualitative adjustments resulting mainly from changes in external indexes and a decrease in loan concentrations. The increase for residential mortgage loans includes the impact of an increase in qualitative adjustments resulting mainly from changes in external indexes.

In the first quarter of 2026, net charge-offs totaled $10,808,000, or 1.83% (annualized) of average outstanding loans. Table VIII shows annual average net charge-off rates over the prior five calendar years ranging from a high of 0.26% in 2022 to a low of 0.01% in 2023.

Total nonperforming assets were $42,113,000 at March 31, 2026, up $9,000,000 from December 31, 2025. Nonperforming loans increased $9,008,000 from December 31, 2025. The increase in nonperforming assets and nonperforming loans in the first quarter 2026 included the impact of classifying the nonowner occupied commercial real estate loan referenced above as nonaccrual at March 31, 2026. Table X shows that total nonperforming assets as a percentage of total assets was 1.33% at March 31, 2026, up from 1.06% at December 31, 2025. Table X also shows that total nonperforming assets as a percentage of assets as of year-end 2021 through 2024, ranged from a high of 1.04% at December 31, 2021 to a low of 0.75% at December 31, 2023.

Over the period 2021-2025 and the first 3 months of 2026, each period 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 individual loans and may significantly impact the provision for credit losses and the amount of total charge-offs reported in any one period.

Management believes it has been prudent in its decisions concerning identification of loans requiring individual evaluation for credit loss, estimates of loss, and nonaccrual status; however, the actual losses realized from these relationships could vary materially from the ACL calculated as of March 31, 2026. Management continues to closely monitor its commercial loan relationships for credit losses and will adjust its estimates of loss and decisions concerning nonaccrual status, if appropriate.

Tables VIII through X present historical data related to loans and the allowance for credit losses.

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

TABLE VIII - ANALYSIS OF THE ALLOWANCE FOR CREDIT LOSSES ON LOANS


(Dollars In Thousands)
	Three Months Ended
	March 31,						Years Ended December 31
	2026			2025			2025			2024			2023			2022			2021
Balance, beginning of year	$	31,048		$	20,035		$	20,035		$	19,208		$	16,615		$	13,537		$	11,385
Adoption of ASU 2016-13 (CECL)		0			0			0			0			2,104			0			0
Allowance recorded in business combination- PCD loans		0			0			2,637			0			0			0			0
Allowance recorded in business combination- Non PCD loans		0			0			4,437			0			0			0			0
Charge-offs		(10,833)			(117)			(1,726)			(1,716)			(356)			(4,245)			(1,575)
Recoveries		25			26			109			113			92			68			66
Net charge-offs		(10,808)			(91)			(1,617)			(1,603)			(264)			(4,177)			(1,509)
Provision for credit losses on loans		13,592			228			5,556			2,430			753			7,255			3,661
Balance, end of period	$	33,832		$	20,172		$	31,048		$	20,035		$	19,208		$	16,615		$	13,537
Net charge-offs as a % of average loans (annualized)		1.83	%		0.02	%		0.08	%		0.09	%		0.01	%		0.26	%		0.09	%

TABLE IX - COMPONENTS OF THE ALLOWANCE FOR CREDIT LOSSES ON LOANS


(In Thousands)	March 31,		December 31,		December 31,		December 31,		January 1,
	2026		2025		2024		2023		2023
Loans individually evaluated	$	2,655	$	2,772	$	122	$	743	$	751
Loans collectively evaluated:
Commercial real estate - nonowner occupied		20,629		17,171		11,964		10,379		9,641
Commercial real estate - owner occupied		3,336		3,820		2,722		2,111		1,765
All other commercial loans		4,164		5,290		3,361		3,811		3,914
Residential mortgage		2,657		1,629		1,356		1,764		2,407
Consumer		391		366		510		400		241
Total Allowance	$	33,832	$	31,048	$	20,035	$	19,208	$	18,719

PRIOR TO CECL ADOPTION


(In Thousands)		As of December 31,
		2022			2021
ASC 310 - Impaired loans - individually evaluated		$	453		$	740
ASC 450 - Collectively evaluated:
Commercial			10,845			7,553
Residential mortgage			4,073			4,338
Consumer			244			235
Unallocated			1,000			671
Total Allowance		$	16,615		$	13,537

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

TABLE X - PAST DUE LOANS AND NONPERFORMING ASSETS


(Dollars In Thousands)		March 31,			As of December 31,
		2026			2025			2024			2023			2022			2021
Collateral dependent loans with a valuation allowance		$	5,602		$	5,401		$	258		$	7,786		$	3,460		$	6,540
Collateral dependent loans without a valuation allowance			35,230			27,027			29,867			3,478			14,871			2,636
Purchased credit impaired loans			0			0			0			0			1,027			6,558
Total collateral dependent loans		$	40,832		$	32,428		$	30,125		$	11,264		$	19,358		$	15,734
Total loans past due 30-89 days and still accruing		$	10,217		$	18,309		$	5,658		$	9,275		$	7,079		$	5,106
Nonperforming assets:
Purchased credit impaired loans		$	0		$	0		$	0		$	0		$	1,027		$	6,558
Other nonaccrual loans			41,863			32,836			23,842			15,177			22,058			12,441
Total nonaccrual loans			41,863			32,836			23,842			15,177			23,085			18,999
Total loans past due 90 days or more and still accruing			69			88			119			3,190			2,237			2,219
Total nonperforming loans			41,932			32,924			23,961			18,367			25,322			21,218
Foreclosed assets held for sale (real estate)			181			189			181			478			275			684
Total nonperforming assets		$	42,113		$	33,113		$	24,142		$	18,845		$	25,597		$	21,902

Total nonperforming loans as a % of loans			1.76	%		1.40	%		1.26	%		0.99	%		1.46	%		1.36	%
Total nonperforming assets as a % of assets			1.33	%		1.06	%		0.92	%		0.75	%		1.04	%		0.94	%
Nonaccrual loans as a % of loans			1.76	%		1.39	%		1.26	%		0.82	%		1.33	%		1.21	%
Allowance for credit losses as a % of nonaccrual loans			80.82	%		94.55	%		84.03	%		79.01	%		71.97	%		71.25	%
Allowance for credit losses as a % of total loans			1.42	%		1.32	%		1.06	%		1.04	%		0.95	%		0.87	%

Included in the table above at March 31, 2026 and December 31, 2025 were loans acquired from Susquehanna with credit deterioration (“PCD loans”) totaled as follows :


(Dollars In Thousands)		March 31,			December 31,
		2026			2025
		PCD Loans			PCD Loans
Collateral dependent loans with a valuation allowance		$	4,970		$	5,138
Collateral dependent loans without a valuation allowance			7,518			5,553
Total collateral dependent loans		$	12,488		$	10,691
Total loans past due 30-89 days and still accruing		$	2,193		$	5,810
Nonperforming assets,
Total nonaccrual loans		$	8,566		$	6,762

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

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.

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

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 debt securities with a carrying value of $26,151,000 at March 31, 2026.

The Corporation’s outstanding, available, and total credit facilities at March 31, 2026 and December 31, 2025 are as follows:


		Outstanding						Available						Total Credit
(In Thousands)		March 31,			December 31,			March 31,			December 31,			March 31,			December 31,
		2026			2025			2026			2025			2026			2025
Federal Home Loan Bank of Pittsburgh		$	174,202		$	170,922		$	948,272		$	785,822		$	1,137,639		$	971,946
Federal Reserve Bank Discount Window			0			0			24,632			25,484			24,632			25,484
Other correspondent banks			0			0			75,000			75,000			75,000			75,000
Total credit facilities		$	174,202		$	170,922		$	1,047,904		$	886,306		$	1,237,271		$	1,072,430

At March 31, 2026, the Corporation’s outstanding credit facilities with the Federal Home Loan Bank of consisted of overnight borrowing of $13,113,000, long-term borrowings with par values totaling $139,489,000 and letters of credit totaling $21,600,000. At December 31, 2025, the Corporation’s outstanding credit facilities with the Federal Home Loan Bank of Pittsburgh consisted of overnight borrowing of $27,000,000, long-term borrowings with par values totaling $120,935,000 and letters of credit totaling $22,987,000. Availability on the facility is also reduced by accrued interest payable on the borrowings and by the total of the Corporation’s credit enhancement obligations on residential mortgage loans sold under the MPF Original Program. Additional information regarding borrowed funds is included in Note 9 to the unaudited consolidated financial statements.

Additionally, the Corporation uses “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 or use repurchase agreements placed with brokers to borrow funds secured by investment assets. At March 31, 2026, the carrying value of available-for-sale securities in excess of amounts required to meet pledging or repurchase agreement obligations was $315,391,000.

Deposits totaled $2,600,053,000 at March 31, 2026, up $35,337,000 from December 31, 2025. Deposits of $501,488,000 were assumed from Susquehanna, effective October 1, 2025. Average total deposits were 24.2% higher for the first quarter 2026 as compared to the first quarter 2025. Brokered deposits totaled $702,000 at March 31, 2026, a decrease of $3,148,000 from December 31, 2025.

As shown in the table below, at March 31, 2026, estimated uninsured deposits totaled $856.0 million, or 32.7%, of total deposits, as compared to $811.2 million, or 31.4% of total deposits at December 31, 2025. Included in uninsured deposits are deposits collateralized by securities (almost exclusively municipal deposits) totaling $171.3 million at March 31, 2026. As shown in the table below, total uninsured and uncollateralized deposits amounted to 26.1% of total deposits at March 31, 2026, as compared to 24.7% of total deposits at December 31, 2025.

As summarized in the table that immediately follows, the Corporation’s highly liquid sources of available funds described above, including unused borrowing capacity with the Federal Home Loan Bank of Pittsburgh, unused availability on the Federal Reserve Bank of Philadelphia’s discount window, available federal funds lines with other banks and unencumbered available-for-sale debt securities, totaled $1.4 billion at March 31, 2026. Available funding from these sources totaled 159.3% of uninsured deposits and 199.1% of total uninsured and uncollateralized deposits at March 31, 2026.

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q


Uninsured Deposits Information	March 31,			December 31,
	2026			2025
Total Deposits - C&N Bank	$	2,620,675		$	2,584,952

Estimated Total Uninsured Deposits	$	856,022		$	811,209
Portion of Uninsured Deposits that are
Collateralized		171,335			172,585
Uninsured and Uncollateralized Deposits	$	684,687		$	638,624

Uninsured and Uncollateralized Deposits as
a % of Total Deposits		26.1	%		24.7	%

Available Funding from Credit Facilities	$	1,047,904		$	886,306
Fair Value of Available-for-sale Debt
Securities in Excess of Pledging Obligations		315,391			319,624
Highly Liquid Available Funding	$	1,363,295		$	1,205,930

Highly Liquid Available Funding as a % of
Uninsured Deposits		159.3	%		148.7	%

Highly Liquid Available Funding as a % of
Uninsured and Uncollateralized Deposits		199.1	%		188.8	%

Based on the ample sources of highly liquid funds as described above, management believes the Corporation is well-positioned to meet its short-term and long-term funding obligations.

STOCKHOLDERS’ EQUITY AND CAPITAL ADEQUACY

Details concerning capital ratios at March 31, 2026 and December 31, 2025 are presented below. Management believes, as of March 31, 2026, that the Corporation and C&N Bank meet all capital adequacy requirements to which they are subject and maintain a capital conservation buffer (described in more detail below) that allows the Corporation and Bank to avoid limitations on capital distributions, including dividend payments and certain discretionary bonus payments to executive officers. Further, as reflected in the table below, the Corporation’s and C&N Bank’s capital ratios at March 31, 2026 and December 31, 2025 exceed the Corporation’s Board policy threshold levels. 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.

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q


(Dollars in Thousands)															Minimum To Be
											Minimum To Maintain				Well
							Minimum				Capital Conservation				Capitalized Under				Minimum To Meet
							Capital				Buffer at Reporting				Prompt Corrective				the Corporation's
		Actual					Requirement				Date				Action Provisions				Policy Thresholds
		Amount			Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount			Ratio
March 31, 2026:
Total capital to risk-weighted assets:
Consolidated		$	343,649		14.12	%	194,756		≥8	%	255,617		≥10.5	%	243,445		≥10	%	$	267,790		≥11	%
C&N Bank			328,028		13.49	%	194,526		≥8	%	255,316		≥10.5	%	243,158		≥10	%		267,474		≥11	%
Tier 1 capital to risk-weighted assets:
Consolidated			288,210		11.84	%	146,067		≥6	%	206,928		≥8.5	%	194,756		≥8	%		219,101		≥9	%
C&N Bank			297,609		12.24	%	145,895		≥6	%	206,684		≥8.5	%	194,526		≥8	%		218,842		≥9	%
Common equity tier 1 capital to risk-weighted assets:
Consolidated			288,210		11.84	%	109,550		≥4.5	%	170,412		≥7.0	%	158,239		≥6.5	%		182,584		≥7.5	%
C&N Bank			297,609		12.24	%	109,421		≥4.5	%	170,211		≥7.0	%	158,053		≥6.5	%		182,368		≥7.5	%
Tier 1 capital to average assets:
Consolidated			288,210		9.31	%	123,859		≥4	%	N/A		N/A		154,824		≥5	%		247,719		≥8	%
C&N Bank			297,609		9.65	%	123,404		≥4	%	N/A		N/A		154,255		≥5	%		246,809		≥8	%

December 31, 2025:
Total capital to risk-weighted assets:
Consolidated		$	346,139		14.45	%	191,582		≥8	%	251,452		≥10.5	%	239,478		≥10	%	$	263,425		≥11	%
C&N Bank			330,427		13.82	%	191,318		≥8	%	251,105		≥10.5	%	239,148		≥10	%		263,062		≥11	%
Tier 1 capital to risk-weighted assets:
Consolidated			291,746		12.18	%	143,687		≥6	%	203,556		≥8.5	%	191,582		≥8	%		215,530		≥9	%
C&N Bank			300,983		12.59	%	143,489		≥6	%	203,275		≥8.5	%	191,318		≥8	%		215,233		≥9	%
Common equity tier 1 capital to risk-weighted assets:
Consolidated			291,746		12.18	%	107,765		≥4.5	%	167,634		≥7.0	%	155,661		≥6.5	%		179,608		≥7.5	%
C&N Bank			300,983		12.59	%	107,616		≥4.5	%	167,403		≥7.0	%	155,446		≥6.5	%		179,361		≥7.5	%
Tier 1 capital to average assets:
Consolidated			291,746		9.32	%	125,149		≥4	%	N/A		N/A		156,437		≥5	%		250,299		≥8	%
C&N Bank			300,983		9.66	%	124,597		≥4	%	N/A		N/A		155,747		≥5	%		249,195		≥8	%

To avoid limitations on capital distributions, including dividend payments and certain discretionary bonus payments to executive officers, a banking organization subject to the rule 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. At March 31, 2026, the minimum risk-based capital ratios, and the capital ratios including the capital conservation buffer, are as follows:


Minimum common equity tier 1 capital ratio	4.5	%
Minimum common equity tier 1 capital ratio plus capital conservation buffer	7.0	%
Minimum tier 1 capital ratio	6.0	%
Minimum tier 1 capital ratio plus capital conservation buffer	8.5	%
Minimum total capital ratio	8.0	%
Minimum total capital ratio plus capital conservation buffer	10.5	%

A banking organization with a buffer greater than 2.5% over the minimum risk-based capital ratios 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. Also, a banking organization is prohibited 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:

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q


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	%

At March 31, 2026, the Corporation’s Capital Conservation Buffer was 5.84% and C&N Bank’s Capital Conservation Buffer was 5.49%.

On September 25, 2023, the Corporation announced a treasury stock repurchase program with no expiration that can be suspended or terminated by the Board of Directors, in its sole discretion. Under this program, the Corporation is authorized to repurchase up to 750,000 shares of its common stock. For the three ended March 31, 2026, there were no shares repurchased. At March 31, 2026, there were 723,465 shares available to be repurchased under the program.

Future dividend payments and repurchases of common stock will depend upon maintenance of a strong financial condition, future earnings and capital and regulatory requirements. In addition, 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. Further, although the Corporation is not currently subject to the specific consolidated capital requirements described herein, the Corporation’s ability to pay dividends, repurchase stock or engage in other activities may be limited by the Federal Reserve if the Corporation fails to hold capital commensurate with its overall risk profile.

The Corporation’s total stockholders’ equity is affected by fluctuations in the fair values of available-for-sale debt securities. The difference between amortized cost and fair value of available-for-sale debt securities, net of deferred income tax, is included in accumulated other comprehensive (loss) income within stockholders’ equity. Accumulated other comprehensive (loss) income is excluded from the Bank’s and the Corporation’s regulatory capital ratios. The balance in accumulated other comprehensive loss related to unrealized losses on available-for-sale debt securities, net of deferred income tax, amounted to $25,096,000 at March 31, 2026 and $23,154,000 at December 31, 2025. Changes in accumulated other comprehensive loss are excluded from earnings and directly increase or decrease stockholders’ equity. To the extent unrealized losses on available-for-sale debt securities result from credit losses, unrealized losses are recorded as a charge against earnings. The securities section of Management’s Discussion and Analysis and Note 6 to the unaudited consolidated financial statements provide additional information concerning management’s evaluation of available-for-sale debt securities for credit losses at March 31, 2026.

Tangible common equity is a non-GAAP measure, and tangible common book value per share and tangible common equity as a percentage of tangible assets are non-GAAP ratios. Management believes this non-GAAP information is helpful in evaluating the strength of the Corporation’s capital and in providing an alternative valuation of the Corporation’s net worth. Information at March 31, 2026 and December 31, 2025 is as follows:


(Dollars In Thousands, Except Per Share Data)	March 31,			December 31,
	2026			2025
Total Assets	$	3,164,340		$	3,132,469
Less: Intangible Asset, Goodwill		(63,311)			(63,311)
Less: Intangible Asset, Core Deposit Intangibles, net		(10,758)			(11,573)
Related Tax Effect on Core Deposit Intangibles, net		2,367			2,546
Tangible Assets (1)	$	3,092,638		$	3,060,131
Total Stockholders' Equity	$	335,564		$	341,714
Less: Intangible Asset, Goodwill		(63,311)			(63,311)
Less: Intangible Asset, Core Deposit Intangibles, net		(10,758)			(11,573)
Related Tax Effect on Core Deposit Intangibles, net		2,367			2,546
Tangible Common Equity (2)	$	263,862		$	269,376

Common Shares Outstanding, End of Period (3)		17,909,958			17,823,444
Tangible Common Book Value per Share = (2)/(3)	$	14.73		$	15.11
Tangible Common Equity (2) / Tangible Assets (1)		8.53	%		8.80	%

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

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 available-for-sale debt securities are affected by fluctuations in the risk premiums (amounts of spread over risk-free rates) demanded by investors. 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 major category of market risk, interest rate risk, is discussed in the following section.

INTEREST RATE RISK

The Corporation uses a simulation model to calculate the potential effects of interest rate fluctuations on net interest income and the economic value of equity (“EVE”). For purposes of these calculations, EVE includes the discounted present 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 the amount of 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 100-400 basis points of current rates.

The projected results based on the model include the impact of 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. Further, the projected results are impacted by assumptions regarding the run-off and the extent of sensitivity to interest rate changes of deposits with no stated maturity (checking, savings and money market accounts). 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 EVE. 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 EVE from the baseline values based on current rates.

Table XI, which follows this discussion, is based on the results of calculations performed using the simulation model as of March 31, 2026 and December 31, 2025. The Table shows that as of the respective dates, the changes in net interest income and changes in economic value of equity were within the policy limits in all scenarios.

Based on March 31, 2026 and December 31, 2025 data, the amounts of net interest income decrease, as compared to the amounts based on current interest rates, in both the upward and downward rate scenarios. Similarly, at March 31, 2026 and December 31, 2025, EVE is modeled to decrease compared to the 0 basis point scenario in all of the rising and falling rate scenarios The modeling results reflect the impact of management’s assumptions that the Corporation’s deposit rates would rise in the increasing rate scenarios to a greater extent than they would fall in the decreasing rate scenarios. Further, results in the downward rate scenarios reflect limitations on the benefit of falling rates on some deposit types due to a 0% assumed floor.

Under U.S. generally accepted accounting principles, available-for-sale debt securities are carried at fair value as of each balance sheet date. The difference between amortized cost and fair value of available-for-sale debt securities, net of deferred income tax, is included in accumulated other comprehensive income (loss) within stockholders’ equity. Increases in interest rates have caused the fair value of the Corporation’s available-for-sale debt securities to decrease, resulting in an accumulated other comprehensive loss related to securities of $25.1 million at March 31, 2026. In contrast, most of the Corporation’s other financial instruments, including loans receivable (held for investment), deposits and borrowed funds are carried on the balance sheet at historical cost without adjustment for the impact of changes in interest rates.

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

TABLE XI – THE EFFECT OF HYPOTHETICAL CHANGES IN INTEREST RATES


March 31, 2026 Data
(In Thousands)	Period Ending March 31, 2027

Basis Point		Interest		Interest			Net Interest		NII		NII
Change in Rates		Income		Expense			Income (NII)		% Change		Risk Limit
+400	$	194,374	$	99,684		$	94,690		(20.4)	%	25.0	%
+300		187,442		84,219			103,223		(13.2)	%	20.0	%
+200		180,446		70,300			110,146		(7.4)	%	15.0	%
+100		173,329		57,932			115,397		(3.0)	%	10.0	%
0		166,074		47,113			118,961		0.0	%	0.0	%
-100		158,354		40,461			117,893		(0.9)	%	10.0	%
-200		149,326		33,839			115,487		(2.9)	%	15.0	%
-300		139,597		27,822			111,775		(6.0)	%	20.0	%
-400		128,818		22,580			106,238		(10.7)	%	25.0	%

	Economic Value of Equity at March 31, 2026

		Present		Present			Present
Basis Point		Value		Value			Value
Change in Rates		Equity		% Change			Risk Limit
+400	$	614,980		(15.1)	%		40.0	%
+300		655,946		(9.5)	%		30.0	%
+200		689,868		(4.8)	%		25.0	%
+100		713,490		(1.5)	%		15.0	%
0		724,494		0.0	%		0.0	%
-100		697,866		(3.7)	%		15.0	%
-200		647,136		(10.7)	%		25.0	%
-300		579,295		(20.0)	%		30.0	%
-400		496,021		(31.5)	%		40.0	%

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q


December 31, 2025 Data
(In Thousands)	Period Ending December 31, 2026

Basis Point		Interest		Interest			Net Interest		NII		NII
Change in Rates		Income		Expense			Income (NII)		% Change		Risk Limit
+400	$	190,241	$	101,840		$	88,401		(22.4)	%	25.0	%
+300		183,502		86,341			97,161		(14.7)	%	20.0	%
+200		176,675		72,323			104,352		(8.4)	%	15.0	%
+100		169,739		59,787			109,952		(3.5)	%	10.0	%
0		162,684		48,733			113,951		0.0	%	0.0	%
-100		155,164		41,661			113,503		(0.4)	%	10.0	%
-200		146,491		34,657			111,834		(1.9)	%	15.0	%
-300		136,961		28,400			108,561		(4.7)	%	20.0	%
-400		126,625		23,288			103,337		(9.3)	%	25.0	%

	Economic Value of Equity at December 31, 2025

		Present		Present			Present
Basis Point		Value		Value			Value
Change in Rates		Equity		% Change			Risk Limit
+400	$	572,841		(16.8)	%		40.0	%
+300		614,522		(10.7)	%		30.0	%
+200		649,738		(5.6)	%		25.0	%
+100		675,284		(1.9)	%		15.0	%
0		688,389		0.0	%		0.0	%
-100		665,037		(3.4)	%		15.0	%
-200		617,865		(10.2)	%		25.0	%
-300		553,948		(19.5)	%		30.0	%
-400		474,663		(31.0)	%		40.0	%

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. This evaluation did not include an assessment of those disclosure controls and procedures that are involved in, and did not include an assessment of, internal control over financial reporting as it relates to Susquehanna Community Financial Inc. (“Susquehanna”). 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.

The Susquehanna acquisition was completed October 1, 2025, and during the fourth quarter of 2025 and the first quarter of 2026 the Corporation began the process of integrating processes and internal control over financial reporting for the former Susquehanna locations into those of the Corporation. Though significant progress has been made, at March 31, 2026, the Corporation’s management has not yet completed changes to processes, information technology systems and other components of internal control over financial reporting as part of the integration activities.

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

There were no significant changes made to 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 materially affect, our internal control over financial reporting.

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 Annual Report on Form 10-K filed March 6, 2026.

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

Issuer Purchases of Equity Securities

On September 25, 2023, the Corporation announced a treasury stock repurchase program. Under the approved program, the Corporation is authorized to repurchase up to 750,000 shares of the Corporation’s common stock, or slightly less than 5% of the Corporation’s issued and outstanding shares at August 4, 2023. The program was effective when publicly announced and will continue thereafter until suspended or terminated by the Board of Directors, in its sole discretion. All shares of common stock repurchased pursuant to the program 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 and Sale Plan and its equity compensation program. There were no shares repurchased under the repurchase program during the first quarter 2026. At March 31, 2026, there were 723,465 shares available to be repurchased under the program.

The following table sets forth a summary of purchases by the Corporation, in the open market, of its equity securities during the first quarter 2026:


							Total Number of		Maximum
							Shares		Number of
							Purchased		Shares that May
							as Part of		Yet
							Publicly		be Purchased
		Total Number		Average			Announced		Under
		of Shares		Price Paid			Plans		the Plans or
Period		Purchased		per Share			or Programs		Programs
January 1 - 31, 2026		0		$	0		0		723,465
February 1 - 28, 2026		0		$	0		0		723,465
March 1 - 31, 2026		0		$	0		0		723,465
Total		0		$	0		0

Item 3. Defaults Upon Senior Securities

None

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

During the three months ended March 31, 2026, no director or officer of the Corporation adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement”, as each term is defined in Item 408(a) of Regulation S-K.

Item 6. Exhibits

Agreement and Plan of Merger dated April 23, 2025 between Susquehanna Community Financial, Inc. and Citizens & Northern Corporation
2.1	Agreement and Plan of Merger dated April 23, 2025 between Susquehanna Community Financial, Inc. and Citizens & Northern Corporation	Incorporated by reference to Exhibit 2.1 of the Corporation’s Form 8-K filed April 23, 2025

3.1	Articles of Incorporation	Incorporated by reference to Exhibit 3.1 of the Corporation’s Form 10-Q filed May 6, 2022

3.2	By-laws	Incorporated by reference to Exhibit 3.1 of the Corporation’s Form 8-K filed February 18, 2022

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

101.INS	Inline XBRL Instance Document.	Filed herewith

101.SCH	Inline XBRL Schema Document.	Filed herewith

101.CAL	Inline XBRL Calculation Linkbase Document.	Filed herewith

101.DEF	Inline XBRL Definition Linkbase Document.	Filed herewith

101.LAB	Inline XBRL Label Linkbase Document.	Filed herewith

101.PRE	Inline XBRL Presentation Linkbase Document.	Filed herewith

104	The cover page of the Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, formatted in Inline XBRL (contained in Exhibit 101).	Filed herewith

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CITIZENS & NORTHERN CORPORATION – FORM 10-Q

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


May 8, 2026		By: /s/ J. Bradley Scovill
Date		President and Chief Executive Officer



May 8, 2026		By: /s/ Mark A. Hughes
Date		Treasurer and Chief Financial Officer