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

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EX-99.2 - EX-99.2 - CITIZENS & NORTHERN CORP	cznc-20210722xex99d2.htm
EX-99.1 - EX-99.1 - CITIZENS & NORTHERN CORP	cznc-20210722xex99d1.htm
8-K - 8-K - CITIZENS & NORTHERN CORP	cznc-20210722x8k.htm

EXHIBIT 99.3 – Supplemental, Unaudited Financial Information

CONDENSED, CONSOLIDATED FINANCIAL HIGHLIGHTS

(Dollars In Thousands, Except Per Share Data)

(Unaudited)


	AS OF OR FOR THE
	SIX MONTHS ENDED						%
	June 30,						INCREASE
	2021			2020			(DECREASE)
EARNINGS PERFORMANCE
Net Income	$	15,847		$	9,604		65.00	%
Return on Average Assets (Annualized)		1.39	%		1.15	%	20.87	%
Return on Average Equity (Annualized)		10.54	%		7.71	%	36.71	%

BALANCE SHEET HIGHLIGHTS
Total Assets	$	2,339,063		$	1,745,466		34.01	%
Available-for-Sale Debt Securities		391,881			332,188		17.97	%
Loans (Net)		1,585,481			1,230,387		28.86	%
Allowance for Loan Losses		12,375			11,026		12.23	%
Deposits		1,916,809			1,381,178		38.78	%

OFF-BALANCE SHEET
Outstanding Balance of Mortgage Loans Sold with Servicing Retained	$	314,174		$	210,778		49.05	%
Trust Assets Under Management		1,192,928			984,853		21.13	%

STOCKHOLDERS' VALUE (PER COMMON SHARE)
Net Income - Basic	$	0.99		$	0.70		41.43	%
Net Income - Diluted	$	0.99		$	0.70		41.43	%
Dividends	$	0.55		$	0.54		1.85	%
Common Book Value	$	19.06		$	18.53		2.86	%
Tangible Common Book Value (a)	$	15.54		$	16.39		(5.19)	%
Market Value (Last Trade)	$	24.50		$	20.65		18.64	%
Market Value / Common Book Value		128.54	%		111.44	%	15.34	%
Market Value / Tangible Common Book Value		157.66	%		125.99	%	25.14	%
Price Earnings Multiple (Annualized)		12.37			14.75		(16.14)	%
Dividend Yield (Annualized)		4.49	%		5.23	%	(14.15)	%
Common Shares Outstanding, End of Period		15,957,512			13,807,157		15.57	%

CONDENSED, CONSOLIDATED FINANCIAL HIGHLIGHTS (Continued)

(Dollars In Thousands, Except Per Share Data)

(Unaudited)


	AS OF OR FOR THE
	SIX MONTHS ENDED						%
	June 30,						INCREASE
	2021			2020			(DECREASE)
SAFETY AND SOUNDNESS
Tangible Common Equity / Tangible Assets (a)		10.86	%		13.19	%	(17.66)	%
Nonperforming Assets / Total Assets		1.12	%		1.33	%	(15.79)	%
Allowance for Loan Losses / Total Loans		0.77	%		0.89	%	(13.48)	%
Total Risk Based Capital Ratio (b)		19.06	%		21.32	%	(10.60)	%
Tier 1 Risk Based Capital Ratio (b)		15.98	%		19.69	%	(18.84)	%
Common Equity Tier 1 Risk Based Capital Ratio (b)		15.98	%		19.69	%	(18.84)	%
Leverage Ratio (b)		10.53	%		12.82	%	(17.86)	%

AVERAGE BALANCES
Average Assets	$	2,287,465		$	1,676,009		36.48	%
Average Equity	$	300,776		$	249,005		20.79	%

EFFICIENCY RATIO (c)
Net Interest Income on a Fully Taxable-Equivalent
Basis (c)	$	39,305		$	28,989		35.59	%
Noninterest Income		13,082			10,809		21.03	%
Total (1)	$	52,387		$	39,798		31.63	%
Noninterest Expense Excluding Merger Expenses (2)	$	31,108		$	25,186		23.51	%
Efficiency Ratio = (2)/(1)		59.38	%		63.28	%	(6.16)	%

(a)Tangible book value per common share and tangible common equity as a percentage of tangible assets are non-U.S. GAAP ratios. Management believes this non-GAAP information is helpful in evaluating the strength of the Corporation's capital and in providing an alternative, conservative valuation of the Corporation's net worth. The ratios shown above are based on the following calculations of tangible assets and tangible common equity:


Total Assets	$	2,339,063	$	1,745,466
Less: Intangible Assets, Primarily Goodwill		(56,088)		(29,511)
Tangible Assets	$	2,282,975	$	1,715,955
Total Stockholders' Equity	$	304,133	$	255,791
Less: Intangible Assets, Primarily Goodwill		(56,088)		(29,511)
Tangible Common Equity (3)	$	248,045	$	226,280

Common Shares Outstanding, End of Period (4)		15,957,512		13,807,157
Tangible Common Book Value per Share = (3)/(4)	$	15.54	$	16.39

(b)Capital ratios for the most recent period are estimated.

(c)The efficiency ratio is a non-GAAP ratio that is calculated as shown above. For purposes of calculating the efficiency ratio, net interest income on a fully taxable-equivalent basis includes amounts of interest income on tax-exempt securities and loans that have been increased to a fully taxable-equivalent basis, using the Corporation's marginal federal income tax rate of 21%. In the calculation above, management excluded merger-related expenses.

QUARTERLY CONDENSED, CONSOLIDATED

INCOME STATEMENT INFORMATION

(Dollars In Thousands, Except Per Share Data)

(Unaudited)


	For the Three Months Ended :
	June 30,		March 31,		December 31,		September 30,		June 30,		March 31,
	2021		2021		2020		2020		2020		2020
Interest income	$	20,428	$	21,754	$	21,859	$	21,751	$	16,513	$	17,037
Interest expense		1,747		1,671		2,104		2,469		2,267		2,755
Net interest income		18,681		20,083		19,755		19,282		14,246		14,282
Provision (credit) for loan losses		744		259		620		1,941		(176)		1,528
Net interest income after provision (credit) for loan losses		17,937		19,824		19,135		17,341		14,422		12,754
Noninterest income		6,300		6,782		6,565		6,970		5,528		5,281
Net gains on securities		2		0		144		25		0		0
Loss on prepayment of borrowings		0		0		1,636		0		0		0
Merger-related expenses		0		0		182		6,402		983		141
Other noninterest expenses		15,399		15,709		15,775		14,648		12,274		12,912
Income before income tax provision		8,840		10,897		8,251		3,286		6,693		4,982
Income tax provision		1,780		2,110		1,481		438		1,255		816
Net income	$	7,060	$	8,787	$	6,770	$	2,848	$	5,438	$	4,166
Net income attributable to common shares	$	6,999	$	8,722	$	6,727	$	2,830	$	5,405	$	4,146
Basic earnings per common share	$	0.44	$	0.55	$	0.43	$	0.18	$	0.39	$	0.30
Diluted earnings per common share	$	0.44	$	0.55	$	0.43	$	0.18	$	0.39	$	0.30

QUARTERLY CONDENSED, CONSOLIDATED

BALANCE SHEET INFORMATION

(In Thousands) (Unaudited)


	As of:
	June 30,		March 31,		December 31,		September 30,		June 30,		March 31,
	2021		2021		2020		2020		2020		2020
ASSETS
Cash & Due from Banks	$	208,860	$	207,145	$	101,857	$	174,478	$	77,642	$	32,678
Available-for-Sale Debt Securities		391,881		366,376		349,332		340,545		332,188		342,416
Loans, Net		1,585,481		1,602,926		1,632,824		1,680,617		1,230,387		1,156,143
Bank-Owned Life Insurance		30,391		30,247		30,096		29,942		18,843		18,745
Bank Premises and Equipment, net		20,620		20,740		21,526		21,504		18,332		18,023
Intangible Assets		56,088		56,222		56,356		56,585		29,511		29,573
Other Assets		45,742		49,939		47,109		49,122		38,563		31,867
TOTAL ASSETS	$	2,339,063	$	2,333,595	$	2,239,100	$	2,352,793	$	1,745,466	$	1,629,445

LIABILITIES
Deposits	$	1,916,809	$	1,923,925	$	1,820,469	$	1,871,514	$	1,381,178	$	1,249,912
Borrowed Funds - Federal Home Loan Bank and Repurchase Agreements		46,450		60,230		74,630		143,657		87,308		110,551
Senior Notes, Net		14,670		0		0		0		0		0
Subordinated Debt, Net		32,967		16,534		16,553		16,572		6,500		6,500
Other Liabilities		24,034		32,850		27,692		24,734		14,689		11,254
TOTAL LIABILITIES		2,034,930		2,033,539		1,939,344		2,056,477		1,489,675		1,378,217

STOCKHOLDERS' EQUITY
Common Stockholders' Equity, Excluding Accumulated Other Comprehensive Income		294,857		293,097		287,961		284,707		244,080		241,754
Accumulated Other Comprehensive Income:
Net Unrealized Gains on Available-for-sale Securities		9,167		6,847		11,676		11,376		11,472		9,230
Defined Benefit Plans		109		112		119		233		239		244
TOTAL STOCKHOLDERS' EQUITY		304,133		300,056		299,756		296,316		255,791		251,228
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	$	2,339,063	$	2,333,595	$	2,239,100	$	2,352,793	$	1,745,466	$	1,629,445

AVAILABLE-FOR-SALE DEBT SECURITIES

(In Thousands)


	June 30, 2021				March 31, 2021				December 31, 2020
	Amortized		Fair		Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value		Cost		Value
Obligations of the U.S. Treasury	$	22,981	$	23,073	$	15,117	$	15,085	$	12,184	$	12,182
Obligations of U.S. Government agencies		24,764		25,373		24,763		24,992		25,349		26,344
Obligations of states and political subdivisions:
Tax-exempt		127,122		132,310		120,974		125,118		116,427		122,401
Taxable		58,921		60,528		51,823		52,538		45,230		47,452
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities		50,397		51,328		38,790		39,757		36,853		38,176
Residential collateralized mortgage obligations		44,536		45,575		52,715		53,971		56,048		57,467
Commercial mortgage-backed securities		51,555		53,694		53,528		54,915		42,461		45,310
Total Available-for-Sale Debt Securities	$	380,276	$	391,881	$	357,710	$	366,376	$	334,552	$	349,332

SUMMARY OF LOANS BY TYPE

(Excludes Loans Held for Sale)

(In Thousands)


	June 30,		March 31,		December 31,		June 30,
	2021		2021		2020		2020
Commercial:
Commercial loans secured by real estate	$	544,202	$	524,886	$	531,810	$	293,304
Commercial and industrial		158,907		155,828		159,577		120,202
Paycheck Protection Program - 1st Draw		37,902		71,708		132,269		97,103
Paycheck Protection Program - 2nd Draw		72,409		66,127		0		0
Political subdivisions		48,849		49,860		53,221		43,134
Commercial construction and land		43,178		45,307		42,874		40,348
Loans secured by farmland		10,950		10,897		11,736		11,433
Multi-family (5 or more) residential		51,916		54,049		55,811		32,699
Agricultural loans		2,379		2,460		3,164		3,874
Other commercial loans		14,711		16,315		17,289		16,579
Total commercial		985,403		997,437		1,007,751		658,676
Residential mortgage:
Residential mortgage loans - first liens		507,579		518,392		532,947		493,214
Residential mortgage loans - junior liens		25,287		25,402		27,311		25,632
Home equity lines of credit		39,432		39,083		39,301		31,826
1-4 Family residential construction		23,567		18,376		20,613		15,621
Total residential mortgage		595,865		601,253		620,172		566,293
Consumer		16,588		15,897		16,286		16,444
Total		1,597,856		1,614,587		1,644,209		1,241,413
Less: allowance for loan losses		(12,375)		(11,661)		(11,385)		(11,026)
Loans, net	$	1,585,481	$	1,602,926	$	1,632,824	$	1,230,387

ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES

(In Thousands)


	3 Months		3 Months		6 Months		6 Months
	Ended		Ended		Ended		Ended
	June 30,		March 31,		June 30,		June 30,
	2021		2021		2021		2020
Balance, beginning of period	$	11,661	$	11,385	$	11,385	$	9,836
Charge-offs		(47)		(11)		(58)		(194)
Recoveries		17		28		45		32
Net (charge-offs) recoveries		(30)		17		(13)		(162)
Provision for loan losses		744		259		1,003		1,352
Balance, end of period	$	12,375	$	11,661	$	12,375	$	11,026

PAST DUE AND IMPAIRED LOANS, NONPERFORMING ASSETS

AND TROUBLED DEBT RESTRUCTURINGS (TDRs)

(Dollars In Thousands)


	June 30,			March 31,			December 31,			June 30,
	2021			2021			2020			2020
Impaired loans with a valuation allowance	$	10,594		$	9,354		$	8,082		$	12,189
Impaired loans without a valuation allowance		1,819			2,023			2,895			1,786
Purchased credit impaired loans		6,733			6,781			6,841			305
Total impaired loans	$	19,146		$	18,158		$	17,818		$	14,280

Total loans past due 30-89 days and still accruing	$	2,478		$	6,777		$	5,918		$	5,124

Nonperforming assets:
Purchased credit impaired loans	$	6,733		$	6,781		$	6,841		$	305
Other nonaccrual loans		16,238			15,335			14,575			18,458
Total nonaccrual loans		22,971			22,116			21,416			18,763
Total loans past due 90 days or more and still accruing		1,881			1,285			1,975			2,812
Total nonperforming loans		24,852			23,401			23,391			21,575
Foreclosed assets held for sale (real estate)		1,332			1,472			1,338			1,593
Total nonperforming assets	$	26,184		$	24,873		$	24,729		$	23,168

Loans subject to troubled debt restructurings (TDRs):
Performing	$	199		$	302		$	166		$	265
Nonperforming		5,624			6,883			7,285			790
Total TDRs	$	5,823		$	7,185		$	7,451		$	1,055

Total nonperforming loans as a % of loans		1.56	%		1.45	%		1.42	%		1.74	%
Total nonperforming assets as a % of assets		1.12	%		1.07	%		1.10	%		1.33	%
Allowance for loan losses as a % of total loans		0.77	%		0.72	%		0.69	%		0.89	%
Credit adjustment on purchased non-impaired loans and allowance for loan losses as a % of total loans and the credit adjustment (a)		1.05	%		1.04	%		1.05	%		0.96	%
Allowance for loan losses as a % of nonperforming loans		49.79	%		49.83	%		48.67	%		51.11	%

(a) Credit adjustment on purchased non-impaired loans at end of period	$	4,502		$	5,182		$	5,979		$	878
Allowance for loan losses		12,375			11,661			11,385			11,026
Total credit adjustment on purchased non-impaired loans at end of period and allowance for loan losses (1)	$	16,877		$	16,843		$	17,364		$	11,904
Total loans receivable	$	1,597,856		$	1,614,587		$	1,644,209		$	1,241,413
Credit adjustment on purchased non-impaired loans at end of period		4,502			5,182			5,979			878
Total (2)	$	1,602,358		$	1,619,769		$	1,650,188		$	1,242,291
Credit adjustment on purchased non-impaired loans and allowance for loan losses as a % of total loans and the credit adjustment (1)/(2)		1.05	%		1.04	%		1.05	%		0.96	%

ADJUSTMENTS TO GROSS AMORTIZED COST OF LOANS


(In Thousands)
	Three Months Ended						Six Months Ended
	June 30,		March 31,		June 30,		June 30,		June 30,
	2021		2021		2020		2021		2020
Market Rate Adjustment
Adjustments to gross amortized cost of loans at beginning of period	$	352	$	718	$	(1,268)	$	718	$	(1,415)
(Amortization) accretion recognized in interest income		(357)		(366)		165		(723)		312
Adjustments to gross amortized cost of loans at end of period	$	(5)	$	352	$	(1,103)	$	(5)	$	(1,103)
Credit Adjustment on Non-impaired Loans
Adjustments to gross amortized cost of loans at beginning of period	$	(5,182)	$	(5,979)	$	(1,011)	$	(5,979)	$	(1,216)
Accretion recognized in interest income		680		797		133		1,477		338
Adjustments to gross amortized cost of loans at end of period	$	(4,502)	$	(5,182)	$	(878)	$	(4,502)	$	(878)

PURCHASED CREDIT IMPAIRED (PCI) LOANS


(In Thousands)
	June 30,		March 31,		June 30,
	2021		2021		2020
Outstanding balance	$	10,189	$	10,256	$	407
Carrying amount		6,733		6,781		305

COMPARISON OF INTEREST INCOME AND EXPENSE

(In Thousands)


	Three Months Ended						Six Months Ended
	June 30,		March 31,		June 30,		June 30,		June 30,
	2021		2021		2020		2021		2020
INTEREST INCOME
Interest-bearing due from banks	$	74	$	50	$	41	$	124	$	122
Available-for-sale debt securities:
Taxable		1,187		1,113		1,380		2,300		2,968
Tax-exempt		824		801		631		1,625		1,176
Total available-for-sale debt securities		2,011		1,914		2,011		3,925		4,144
Loans receivable:
Taxable		16,826		17,493		13,586		34,319		28,047
Paycheck Protection Program -1st Draw		859		1,812		540		2,671		540
Paycheck Protection Program - 2nd Draw		390		186		0		576		0
Tax-exempt		518		553		552		1,071		1,127
Total loans receivable		18,593		20,044		14,678		38,637		29,714
Other earning assets		18		19		20		37		31
Total Interest Income		20,696		22,027		16,750		42,723		34,011

INTEREST EXPENSE
Interest-bearing deposits:
Interest checking		235		221		202		456		445
Money market		320		306		232		626		495
Savings		57		55		54		112		118
Time deposits		605		696		1,296		1,301		2,881
Total interest-bearing deposits		1,217		1,278		1,784		2,495		3,939
Borrowed funds:
Short-term		7		15		64		22		262
Long-term - FHLB advances		109		134		313		243		608
Senior notes, net		57		0		0		57		0
Subordinated debt, net		357		244		106		601		213
Total borrowed funds		530		393		483		923		1,083
Total Interest Expense		1,747		1,671		2,267		3,418		5,022

Net Interest Income	$	18,949	$	20,356	$	14,483	$	39,305	$	28,989

Note: Interest income from tax-exempt securities and loans has been adjusted to a fully tax-equivalent basis, using the Corporation’s marginal federal income tax rate of 21%.

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
	6/30/2021		Return/		3/31/2021		Return/		6/30/2020		Return/
	Average		Cost of		Average		Cost of		Average		Cost of
	Balance		Funds %		Balance		Funds %		Balance		Funds %
EARNING ASSETS
Interest-bearing due from banks	$	182,586	0.16	%	$	92,619	0.22	%	$	37,799	0.44	%
Available-for-sale debt securities, at amortized cost:
Taxable		243,228	1.96	%		217,733	2.07	%		244,019	2.27	%
Tax-exempt		123,101	2.68	%		117,532	2.76	%		82,050	3.09	%
Total available-for-sale debt securities		366,329	2.20	%		335,265	2.32	%		326,069	2.48	%
Loans receivable:
Taxable		1,418,171	4.76	%		1,428,721	4.97	%		1,094,432	4.99	%
Paycheck Protection Program - 1st Draw		53,639	6.42	%		104,367	7.04	%		77,832	2.79	%
Paycheck Protection Program - 2nd Draw		71,841	2.18	%		34,197	2.21	%		0	0.00	%
Tax-exempt		63,470	3.27	%		67,301	3.33	%		59,177	3.75	%
Total loans receivable		1,607,121	4.64	%		1,634,586	4.97	%		1,231,441	4.79	%
Other earning assets		2,467	2.93	%		2,851	2.70	%		2,206	3.65	%
Total Earning Assets		2,158,503	3.85	%		2,065,321	4.33	%		1,597,515	4.22	%
Cash		25,453				23,796				18,960
Unrealized gain/loss on securities		10,197				12,890				12,574
Allowance for loan losses		(11,992)				(11,739)				(11,471)
Bank-owned life insurance		30,301				30,154				18,779
Bank premises and equipment		20,620				21,348				18,230
Intangible assets		56,153				56,288				29,543
Other assets		42,516				44,628				30,723
Total Assets	$	2,331,751			$	2,242,686			$	1,714,853

INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Interest checking	$	387,942	0.24	%	$	355,993	0.25	%	$	260,177	0.31	%
Money market		433,295	0.30	%		406,841	0.31	%		215,441	0.43	%
Savings		227,426	0.10	%		213,437	0.10	%		183,933	0.12	%
Time deposits		335,773	0.72	%		370,555	0.76	%		343,257	1.52	%
Total interest-bearing deposits		1,384,436	0.35	%		1,346,826	0.38	%		1,002,808	0.72	%
Borrowed funds:
Short-term		6,528	0.43	%		14,365	0.42	%		19,844	1.30	%
Long-term		46,788	0.93	%		52,847	1.03	%		72,917	1.73	%
Senior notes, net		6,930	3.30	%		0	0.00	%		0	0.00	%
Subordinated debt, net		26,916	5.32	%		16,543	5.98	%		6,500	6.56	%
Total borrowed funds		87,162	2.44	%		83,755	1.90	%		99,261	1.96	%
Total Interest-bearing Liabilities		1,471,598	0.48	%		1,430,581	0.47	%		1,102,069	0.83	%
Demand deposits		534,602				484,286				346,285
Other liabilities		23,898				27,930				15,891
Total Liabilities		2,030,098				1,942,797				1,464,245
Stockholders' equity, excluding accumulated other comprehensive income		293,487				289,591				240,434
Accumulated other comprehensive income		8,166				10,298				10,174
Total Stockholders' Equity		301,653				299,889				250,608
Total Liabilities and Stockholders' Equity	$	2,331,751			$	2,242,686			$	1,714,853
Interest Rate Spread			3.37	%			3.86	%			3.39	%
Net Interest Income/Earning Assets			3.52	%			4.00	%			3.65	%

Total Deposits (Interest-bearing and Demand)	$	1,919,038			$	1,831,112			$	1,349,093

(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 have been presented on an annualized basis.

ANALYSIS OF AVERAGE DAILY BALANCES AND RATES

(Dollars in Thousands)


	6 Months				6 Months
	Ended		Rate of		Ended		Rate of
	6/30/2021		Return/		6/30/2020		Return/
	Average		Cost of		Average		Cost of
	Balance		Funds %		Balance		Funds%
EARNING ASSETS
Interest-bearing due from banks	$	137,851	0.18	%	$	28,600	0.86	%
Available-for-sale debt securities, at amortized cost:
Taxable		230,551	2.01	%		254,588	2.34	%
Tax-exempt		120,332	2.72	%		75,950	3.11	%
Total available-for-sale debt securities		350,883	2.26	%		330,538	2.52	%
Loans receivable:
Taxable		1,423,417	4.86	%		1,101,275	5.12	%
Paycheck Protection Program - 1st Draw		78,863	6.83	%		38,916	2.79	%
Paycheck Protection Program - 2nd Draw		53,123	2.19	%		0	0.00	%
Tax-exempt		65,375	3.30	%		59,772	3.79	%
Total loans receivable		1,620,778	4.81	%		1,199,963	4.98	%
Other earning assets		2,658	2.81	%		1,833	3.40	%
Total Earning Assets		2,112,170	4.08	%		1,560,934	4.38	%
Cash		24,629				18,501
Unrealized gain/loss on securities		11,536				10,375
Allowance for loan losses		(11,866)				(10,743)
Bank-owned life insurance		30,228				18,728
Bank premises and equipment		20,982				17,981
Intangible assets		56,220				29,575
Other assets		43,566				30,658
Total Assets	$	2,287,465			$	1,676,009

INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Interest checking	$	372,056	0.25	%	$	243,623	0.37	%
Money market		420,141	0.30	%		208,066	0.48	%
Savings		220,470	0.10	%		176,452	0.13	%
Time deposits		353,068	0.74	%		362,439	1.60	%
Total interest-bearing deposits		1,365,735	0.37	%		990,580	0.80	%
Borrowed funds:
Short-term		10,425	0.43	%		32,363	1.63	%
Long-term		49,801	0.98	%		68,491	1.79	%
Senior notes, net		3,484	3.30	%		0	0.00	%
Subordinated debt, net		21,758	5.57	%		6,500	6.59	%
Total borrowed funds		85,468	2.18	%		107,354	2.03	%
Total Interest-bearing Liabilities		1,451,203	0.47	%		1,097,934	0.92	%
Demand deposits		509,583				314,089
Other liabilities		25,903				14,981
Total Liabilities		1,986,689				1,427,004
Stockholders' equity, excluding accumulated other comprehensive income		291,550				240,576
Accumulated other comprehensive income		9,226				8,429
Total Stockholders' Equity		300,776				249,005
Total Liabilities and Stockholders' Equity	$	2,287,465			$	1,676,009
Interest Rate Spread			3.61	%			3.46	%
Net Interest Income/Earning Assets			3.75	%			3.73	%

Total Deposits (Interest-bearing and Demand)	$	1,875,318			$	1,304,669

(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 have been presented on an annualized basis.

COMPARISON OF NONINTEREST INCOME

(In Thousands)


	Three Months Ended						Six Months Ended
	June 30,		March 31,		June 30,		June 30,		June 30,
	2021		2021		2020		2021		2020
Trust revenue	$	1,807	$	1,626	$	1,565	$	3,433	$	3,044
Brokerage and insurance revenue		506		326		384		832		739
Service charges on deposit accounts		1,073		1,015		831		2,088		2,081
Interchange revenue from debit card transactions		998		881		718		1,879		1,449
Net gains from sales of loans		925		1,064		1,564		1,989		1,879
Loan servicing fees, net		146		248		(158)		394		(172)
Increase in cash surrender value of life insurance		145		150		98		295		202
Other noninterest income		700		1,472		526		2,172		1,587
Total noninterest income, excluding realized gains on securities, net	$	6,300	$	6,782	$	5,528	$	13,082	$	10,809

COMPARISON OF NONINTEREST EXPENSE

(In Thousands)


	Three Months Ended						Six Months Ended
	June 30,		March 31,		June 30,		June 30,		June 30,
	2021		2021		2020		2021		2020
Salaries and employee benefits	$	9,499	$	8,895	$	6,983	$	18,394	$	14,361
Net occupancy and equipment expense		1,219		1,304		975		2,523		2,078
Data processing and telecommunications expenses		1,487		1,380		1,253		2,867		2,477
Automated teller machine and interchange expense		355		337		275		692		572
Pennsylvania shares tax		490		491		423		981		845
Professional fees		598		547		464		1,145		843
Other noninterest expense		1,751		2,755		1,901		4,506		4,010
Total noninterest expense, excluding merger-related expenses		15,399		15,709		12,274		31,108		25,186
Merger-related expenses		0		0		983		0		1,124
Total noninterest expense	$	15,399	$	15,709	$	13,257	$	31,108	$	26,310

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