CITIZENS & NORTHERN CORP - FORM 8-K - EX-99.3 - EXHIBIT 99.3

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8-K - FORM 8-K - CITIZENS & NORTHERN CORP	v237266_8k.htm
EX-99.1 - EXHIBIT 99.1 - CITIZENS & NORTHERN CORP	v237266_ex99-1.htm
EX-99.2 - EXHIBIT 99.2 - CITIZENS & NORTHERN CORP	v237266_ex99-2.htm

EXHIBIT 99.3 – Supplemental, Unaudited Financial Information

AVAILABLE-FOR-SALE SECURITIES	September 30, 2011				June 30, 2011				December 31, 2010
(In Thousands)	Amortized		Fair		Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value		Cost		Value

Obligations of U.S. Government agencies	$	33,459	$	34,250	$	33,530	$	34,076	$	44,005	$	44,247
Obligations of states and political subdivisions:
Tax-exempt		130,537		132,545		127,670		125,326		127,210		119,874
Taxable		13,080		13,354		12,652		12,743		7,808		7,668
Mortgage-backed securities		116,314		121,967		111,140		116,302		113,176		118,386
Collateralized mortgage obligations, Issued by U.S. Government agencies		143,275		146,002		149,946		152,156		131,040		130,826
Corporate bonds		1,000		1,001		1,000		1,010		1,000		1,027
Trust preferred securities issued by individual institutions		7,015		8,181		6,793		8,123		6,535		7,838
Collateralized debt obligations:
Pooled trust preferred securities - senior tranches		7,914		7,103		7,913		7,207		9,957		7,400
Other collateralized debt obligations		660		660		660		660		681		681
Total debt securities		453,254		465,063		451,304		457,603		441,412		437,947
Marketable equity securities		5,548		7,050		4,883		6,611		4,589		6,009
Total	$	458,802	$	472,113	$	456,187	$	464,214	$	446,001	$	443,956

Summary of Loans by Type

(Excludes Loans Held for Sale)

(In Thousands)

	Sept. 30,			June 30,			December 31,
	2011			2011			2010
Consumer mortgage:
Residential mortgage loans - first liens	$	334,551		$	334,300		$	333,012
Residential mortgage loans - junior liens		29,748			30,214			31,590
Home equity lines of credit		29,667			28,544			26,853
1-4 Family residential construction		9,762			8,574			14,379
Total consumer mortgage		403,728			401,632			405,834
Commercial:
Commercial loans secured by real estate		149,853			157,282			167,094
Commercial and industrial		55,792			59,791			59,005
Political subdivisions		36,403			34,675			36,480
Commercial construction		26,552			24,726			24,004
Loans secured by farmland		10,470			10,927			11,353
Multi-family (5 or more) residential		6,782			7,514			7,781
Agricultural loans		2,819			3,182			3,472
Other commercial loans		561			576			392
Total commercial		289,232			298,673			309,581
Consumer		12,919			13,631			14,996
Total		705,879			713,936			730,411
Less: allowance for loan losses		(8,177	)		(8,269	)		(9,107	)
Loans, net	$	697,702		$	705,667		$	721,304

ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES

(In Thousands)

	3 Months			3 Months			9 Months			9 Months
	Ended			Ended			Ended			Ended
	Sept. 30,			June 30,			Sept. 30,			Sept. 30,
	2011			2011			2011			2010

Balance, beginning of period	$	8,269		$	8,846		$	9,107		$	8,265
Charge-offs		(70	)		(800	)		(967	)		(386	)
Recoveries		15			192			235			251
Net charge-offs		(55	)		(608	)		(732	)		(135	)
(Credit) provision for loan losses		(37	)		31			(198	)		472
Balance, end of period	$	8,177		$	8,269		$	8,177		$	8,602

PAST DUE AND NONPERFORMING ASSETS
(In Thousands)
	Sept. 30,			June 30,			Dec. 31,			Sept. 30,
	2011			2011			2010			2010

Total loans past due 30-89 days and still accruing	$	5,142		$	6,611		$	7,125		$	6,323

Nonperforming assets:
Total loans past due 90 days or more and still accruing	$	1,055		$	561		$	727		$	1,404
Total nonaccrual loans		7,890			7,586			10,809			8,786
Foreclosed assets held for sale (real estate)		1,596			1,665			537			530

Total nonperforming assets	$	10,541		$	9,812		$	12,073		$	10,720

Total nonperforming assets as a % of assets		0.80	%		0.75	%		0.92	%		0.82	%

Analysis of Average Daily Balances and Rates

(Dollars in Thousands)

	3 Months						3 Months						3 Months
	Ended			Rate of			Ended			Rate of			Ended			Rate of
	9/30/2011			Return/			6/30/2011			Return/			9/30/2010			Return/
	Average			Cost of			Average			Cost of			Average			Cost of
	Balance			Funds %			Balance			Funds %			Balance			Funds %
EARNING ASSETS
Available-for-sale securities, at amortized cost:
Taxable	$	333,848			3.38	%	$	335,289			3.48	%	$	313,385			3.42	%
Tax-exempt		127,974			5.94	%		128,049			6.02	%		114,139			6.30	%
Total available-for-sale securities		461,822			4.09	%		463,338			4.18	%		427,524			4.19	%
Held-to-maturity securities,
Taxable		0			0.00	%		0			0.00	%		0			0.00	%
Trading securities		0			0.00	%		0			0.00	%		0			0.00	%
Interest-bearing due from banks		27,884			0.18	%		29,385			0.22	%		45,661			0.23	%
Federal funds sold		0			0.00	%		0			0.00	%		36			0.00	%
Loans:
Taxable		679,875			6.30	%		681,675			6.39	%		690,084			6.41	%
Tax-exempt		34,630			6.37	%		34,806			6.38	%		35,324			6.56	%
Total loans		714,505			6.31	%		716,481			6.39	%		725,408			6.42	%
Total Earning Assets		1,204,211			5.31	%		1,209,204			5.39	%		1,198,629			5.39	%
Cash		18,601						17,631						17,788
Unrealized gain/loss on securities		10,312						5,805						4,746
Allowance for loan losses		(8,372	)					(8,938	)					(8,586	)
Bank premises and equipment		21,682						22,114						23,319
Intangible Asset - Core Deposit Intangible		256						287						396
Intangible Asset - Goodwill		11,942						11,942						11,942
Other assets		52,637						56,349						72,735
Total Assets	$	1,311,269					$	1,314,394					$	1,320,969

INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Interest checking	$	158,849			0.22	%	$	166,795			0.28	%	$	153,933			0.51	%
Money market		206,826			0.20	%		207,266			0.27	%		204,470			0.38	%
Savings		98,434			0.13	%		95,821			0.20	%		79,484			0.24	%
Certificates of deposit		207,822			1.85	%		205,346			1.96	%		222,117			2.16	%
Individual Retirement Accounts		151,910			1.51	%		156,611			2.46	%		163,794			3.04	%
Other time deposits		1,813			0.00	%		1,350			0.30	%		1,839			0.43	%
Total interest-bearing deposits		825,654			0.85	%		833,189			1.09	%		825,637			1.40	%
Borrowed funds:
Short-term		19,935			0.12	%		19,407			0.17	%		23,328			0.26	%
Long-term		130,980			4.02	%		135,344			4.01	%		166,887			4.06	%
Total borrowed funds		150,915			3.50	%		154,751			3.53	%		190,215			3.59	%
Total Interest-bearing Liabilities		976,569			1.26	%		987,940			1.47	%		1,015,852			1.81	%
Demand deposits		170,111						169,677						150,299
Other liabilities		7,761						6,998						8,209
Total Liabilities		1,154,441						1,164,615						1,174,360
Stockholders' equity, excluding other comprehensive income/loss		150,332						146,267						143,738
Other comprehensive income/loss		6,496						3,512						2,871
Total Stockholders' Equity		156,828						149,779						146,609
Total Liabilities and Stockholders' Equity	$	1,311,269					$	1,314,394					$	1,320,969
Interest Rate Spread					4.05	%					3.92	%					3.58	%
Net Interest Income/Earning Assets					4.29	%					4.19	%					3.85	%

Total Deposits (Interest-bearing and Demand)	$	995,765					$	1,002,866					$	975,936

(1) Rates of return on tax-exempt securities and loans are presented on a fully taxable-equivalent basis.

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

Analysis of Average Daily Balances and Rates

(Dollars in Thousands)

	9 Months						9 Months
	Ended			Rate of			Ended			Rate of
	9/30/2011			Return/			9/30/2010			Return/
	Average			Cost of			Average			Cost of
	Balance			Funds %			Balance			Funds %
EARNING ASSETS
Available-for-sale securities, at amortized cost:
Taxable	$	332,105			3.43	%	$	314,992			3.66	%
Tax-exempt		127,669			6.01	%		110,385			6.43	%
Total available-for-sale securities		459,774			4.14	%		425,377			4.38	%
Held-to-maturity securities,
Taxable		0			0.00	%		51			5.27	%
Trading securities		0			0.00	%		38			6.99	%
Interest-bearing due from banks		29,659			0.20	%		59,547			0.23	%
Federal funds sold		0			0.00	%		64			0.00	%
Loans:
Taxable		683,475			6.36	%		685,669			6.46	%
Tax-exempt		34,835			6.40	%		35,975			6.56	%
Total loans		718,310			6.36	%		721,644			6.46	%
Total Earning Assets		1,207,743			5.37	%		1,206,721			5.42	%
Cash		17,745						17,509
Unrealized gain/loss on securities		5,216						1,834
Allowance for loan losses		(8,834	)					(8,507	)
Bank premises and equipment		22,087						23,724
Intangible Asset - Core Deposit Intangible		286						439
Intangible Asset - Goodwill		11,942						11,942
Other assets		56,551						76,787
Total Assets	$	1,312,736					$	1,330,449

INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Interest checking	$	163,024			0.28	%	$	141,928			0.60	%
Money market		205,856			0.26	%		201,714			0.45	%
Savings		95,648			0.19	%		75,624			0.25	%
Certificates of deposit		208,418			1.93	%		228,419			2.30	%
Individual Retirement Accounts		156,531			2.33	%		162,702			3.07	%
Other time deposits		1,376			0.19	%		1,406			0.48	%
Total interest-bearing deposits		830,853			1.06	%		811,793			1.50	%
Borrowed funds:
Short-term		18,747			0.14	%		30,281			0.73	%
Long-term		137,321			4.01	%		183,517			4.11	%
Total borrowed funds		156,068			3.55	%		213,798			3.63	%
Total Interest-bearing Liabilities		986,921			1.46	%		1,025,591			1.95	%
Demand deposits		169,340						144,161
Other liabilities		7,078						7,642
Total Liabilities		1,163,339						1,177,394
Stockholders' equity, excluding other comprehensive income/loss		146,248						152,153
Other comprehensive income/loss		3,149						902
Total Stockholders' Equity		149,397						153,055
Total Liabilities and Stockholders' Equity	$	1,312,736					$	1,330,449
Interest Rate Spread					3.91	%					3.47	%
Net Interest Income/Earning Assets					4.18	%					3.76	%

Total Deposits (Interest-bearing and Demand)	$	1,000,193					$	955,954

(1) Rates of return on tax-exempt securities and loans are presented on a fully taxable-equivalent basis.

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

COMPARISON OF NONINTEREST INCOME

(In Thousands)

	Three Months Ended								Nine Months Ended
	Sept. 30,		June 30,			Sept. 30,			Sept. 30,			Sept. 30,
	2011		2011			2010			2011			2010
Service charges on deposit accounts	$	1,230	$	1,225		$	1,166		$	3,586		$	3,449
Service charges and fees		218		207			191			643			594
Trust and financial management revenue		785		946			876			2,608			2,605
Brokerage revenue		199		229			102			551			318
Insurance commissions, fees and premiums		66		58			65			192			186
Interchange revenue from debit card transactions		490		485			427			1,427			1,226
Net gains from sales of loans		263		155			275			677			478
Increase in cash surrender value of life insurance		127		132			121			381			352
Net gain from sale of premises and equipment		324		0			(4	)		324			445
Net gain (loss) from other real estate		51		(24	)		149			8			113
Impairment loss on limited partnership investment		0		0			0			(948	)		0
Other operating income		246		260			194			778			604
Total other operating income, before realized gains on available-for-sale securities, net	$	3,999	$	3,673		$	3,562		$	10,227		$	10,370

COMPARISON OF NONINTEREST EXPENSE

(In Thousands)

	Three Months Ended						Nine Months Ended
	Sept. 30,		June 30,		Sept. 30,		Sept. 30,		Sept. 30,
	2011		2011		2010		2011		2010
Salaries and wages	$	3,451	$	3,469	$	3,354	$	10,321	$	9,631
Pensions and other employee benefits		1,020		1,018		980		3,344		2,902
Occupancy expense, net		641		665		654		2,038		2,004
Furniture and equipment expense		498		453		500		1,435		1,610
FDIC Assessments		174		189		382		688		1,201
Pennsylvania shares tax		345		320		305		984		916
Other operating expense		1,923		1,680		1,907		5,299		5,518
Total Noninterest Expense	$	8,052	$	7,794	$	8,082	$	24,109	$	23,782

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