EXHIBIT 99.2

UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED FINANCIAL DATA

(In thousands of dollars, except per share data)

In December 2019, Citizens & Northern Corporation (C&N), along with Covenant Financial, Inc. (Covenant) announced the signing of an Agreement and Plan of Merger. In July 2020, the Corporation and Covenant announced the completion of the merger as of July 1, 2020. Covenant was the parent company of Covenant Bank, a commercial bank with offices in Bucks County, Pennsylvania, and Chester County, Pennsylvania. Under the terms of the Agreement and Plan of Merger, Covenant merged into C&N, and Covenant Bank merged into C&N’s wholly-owned subsidiary, Citizens & Northern Bank.

The unaudited pro forma combined condensed consolidated financial information has been prepared using the acquisition method of accounting, giving effect to the merger. The unaudited pro forma combined condensed consolidated balance sheet combines the historical information of C&N and Covenant as of June 30, 2020 and assumes the merger was completed on that date. The unaudited pro forma combined condensed consolidated income statement combines the historical financial information of C&N and Covenant and gives effect to the merger as if it had been completed as of January 1, 2019 and carried forward through the interim period presented. The unaudited pro forma combined condensed consolidated financial information is presented for illustrative purposes only and is not necessarily indicative of the results of operations or financial condition had the merger been completed on the date described above, nor is it necessarily indicative of the results of operations in future periods or the future financial condition and results of operations of the combined entities. The financial information should be read in conjunction with the accompanying notes to the unaudited pro forma combined condensed consolidated financial information. Certain reclassifications have been made to Covenant historical financial information to conform to C&N’s presentation of financial information.

The actual value of C&N’s common stock recorded as consideration in the merger is based on the average of the high and low trading price of C&N’s common stock on July 1, 2020, which is the merger completion date. For purposes of the pro forma financial information, the fair value of C&N’s common stock issued in connection with the merger was $20.32 per share.

The pro forma financial information includes estimated adjustments, including adjustments to record Covenant’s assets and liabilities at their respective fair values, and represents C&N’s pro forma estimates based on available fair value information as of the date of the merger agreement.

The pro forma adjustments are subject to change as additional information becomes available. The final allocation of the purchase price will be determined after a more thorough analysis has been completed to determine the fair value of Covenant’s assets and liabilities. Changes in the estimated fair values of the net assets as compared with the information presented in the unaudited pro forma combined condensed consolidated financial information may change the amount of the purchase price allocated to goodwill and other assets and liabilities and may impact C&N’s statements of income due to adjustments in amortization of the adjusted assets and liabilities. Also, any adjustments to Covenant’s stockholders’ equity will change the purchase price allocation, which may result in an adjustment to the amount of goodwill recorded. The final adjustments may vary materially from the adjustments reflected in the unaudited pro forma financial information herein.

C&N’s management estimates $8.0 million of pre-tax merger-related expenses will be incurred, including $287,000 in 2019, $1.1 million in the first six months of 2020 and the rest over the final two quarters of 2020. Estimated and historical merger-related expenses include severance and employee retention expenses, system conversion costs, professional fees and other expenses. Estimated merger-related expenses are excluded from the unaudited pro forma combined condensed consolidated statements of income presented herein except for historical expenses incurred in 2019 and the six-month period ended June 30, 2020. C&N’s management expects the merger will provide the combined company with financial benefits that include reduced operating expenses. The unaudited pro forma combined condensed consolidated financial information, while helpful in illustrating the financial characteristics of the combined company under one set of assumptions, does not reflect the benefits of expected cost savings or opportunities to earn additional revenue, and accordingly does not attempt to predict or suggest future results. Also, the unaudited pro forma combined condensed consolidated statements of income presented herein do not necessarily reflect what the historical results of the combined company would have been had the companies been combined during these periods.

The unaudited pro forma combined condensed consolidated financial information has been derived from and should be read in conjunction with C&N’s historical consolidated financial information and related notes, which are contained in C&N’s 10-Q for the three-month and six-month periods ended June 30, 2020, Covenant’s audited financial statements for the year ended December 31, 2019 which were included in C&N’s Form S-4 filed on April 7, 2020, and Covenant’s unaudited financial statements for the six-month period ended June 30, 2020 which appear elsewhere in this document.

Unaudited Pro Forma Condensed Consolidated Balance Sheets

As of June 30, 2020  

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

Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheets

(1) The pro forma reduction in noninterest-bearing cash and due from banks includes funds required for the cash portion of the merger consideration ($21.9 million) and estimated net additional Covenant expenses of $0.5 million including severance and similar expenses, costs associated with technology integration, professional fees based on successful completion of the merger and income tax benefits associated with stock options triggered by the merger.

(2) The pro forma estimate of the fair value of Covenant’s loans is based on a preliminary analysis by C&N’s management including a market rate adjustment, a credit fair value adjustment on loans not identified as specifically impaired and an adjustment on loans purchased with identified credit impairment (purchased credit impaired, or PCI). The market rate adjustment represents the impact of movement in interest rates, irrespective of credit adjustments, compared to the contractual rates of the acquired loans. The credit adjustment on non-impaired loans represents changes in credit quality of the underlying borrowers from loan inception to the acquisition date. The credit adjustment on PCI loans is non-accretable and represents the portion of the loan balances that have been identified as uncollectible for each loan. The following table presents the preliminary fair value adjustment to the amortized cost of loans acquired at July 1, 2020:

C&N is in the process of updating this analysis of the fair value of loans as of the merger completion date, including updated assessments of credit quality and the impact of changes in interest rates.

(3) C&N’s estimate of the fair value of the core deposit intangible was determined based on financial, economic, market and other conditions as of the merger date.

(4) The pro forma amount of goodwill recorded from the merger is calculated as the fair value of consideration paid by C&N, less amounts allocated to fair value of assets acquired and liabilities assumed, summarized as follows (in thousands):

(5) The pro forma adjustment to other assets represents an adjustment to the carrying value of the net deferred tax asset resulting from the fair value adjustments to the carrying values of loans, core deposit intangible assets, deposits, borrowed funds and subordinated debt, as described herein, assuming a tax rate of 21%.

(6) The pro forma adjustment to deposits reflects differences in interest rates, based on comparison of rates on Covenant’s time deposits to recent market rates as of the merger date for terms corresponding with the maturity dates of Covenant’s time deposits.

(7) The pro forma adjustment to borrowed funds reflects differences in interest rates, based on comparison of rates on Covenant’s advances from the Federal Home Loan Bank of Pittsburgh (FHLB) to current FHLB rates as of the merger date for terms corresponding with the maturity dates of Covenant’s advances.

(8) The pro forma adjustment to subordinated debt reflects differences in interest rates, based on comparison of rates on Covenant’s subordinated debt issuances with the rates on recent issuances of subordinated debt of comparable size by other similar-sized banking companies.

(9) The pro forma adjustment to stockholders’ equity includes the estimated value of equity-based merger consideration issued by C&N ($41.4 million), reduced by the elimination of Covenant’s stockholders’ equity ($44.2 million).

Unaudited Pro Forma Condensed Consolidated Statements of Income

For the Year Ended December 31, 2019  

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

Unaudited Pro Forma Condensed Consolidated Statements of Income

For the Six Months Ended June 30, 2020  

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

Notes to Unaudited Pro Forma Condensed Consolidated Statements of Income