8-K

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 8-K

CURRENT REPORT

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

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June 16, 2022

Date of Report (Date of earliest event reported)

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Citizens & Northern Corporation ****

(Exact name of registrant as specified in its charter)

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Pennsylvania		0-16084		23-2451943
(State or other jurisdiction of incorporation)		(Commission <br>File Number)		(IRS Employer <br>Ident. No.)
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90-92 Main Street , Wellsboro , Pennsylvania	​	​	​	16901
(Address of principal executive offices)	​	​	​	(Zip Code)

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( 570 ) 724-3411

Registrant’s telephone number, including area code

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N/A

(Former name or former address, if changed since last report.)

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

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☐    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

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

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

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

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

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Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $1.00 per share	CZNC	Nasdaq Capital Market

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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

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Emerging growth company ☐

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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. ☐

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Item 7.01   Regulation FD

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On June 16, 2022, J. Bradley Scovill, President and CEO, and Mark A. Hughes, Treasurer and Chief Financial Officer, of Citizens & Northern Corporation (Corporation) are scheduled to present an overview of the Corporation to various institutional analysts and investors at the Piper Sandler & Co. Philly Bank Bonanza event in Philadelphia, PA.

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The Investor Presentation to be used in discussions with the analysts and investors is attached as Exhibit 99.1 to this Current Report and is incorporated herein by reference. This Current Report is being furnished pursuant to Regulation FD and no part shall be deemed "filed" for any purpose.

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Item 9.01   Financial Statements and Exhibits.

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99.1	Citizens & Northern Corporation Investor Presentation
104	Cover Page Interactive Data File (embedded in the cover page formatted in Inline XBRL)

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SIGNATURES

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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 hereunto duly authorized.

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6
	CITIZENS & NORTHERN CORPORATION
Dated:  June 16, 2022	By:	/s/ Mark A. Hughes
​	​	Mark A. Hughes
		Treasurer and Chief Financial Officer

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Exhibit 99.1

Piper Sandler & Co.<br>Philly Bank Bonanza<br>June 16, 2022
CAUTION REGARDING FORWARD LOOKING STATEMENTS<br>This presentation contains forward<br>-<br>looking statements within the meaning of the Private Securities Litigation<br>Reform Act of 1995 that relate to future events or the future performance of the Company. Forward<br>-<br>looking statements are not gua<br>rantees of performance or results. These<br>forward<br>-<br>looking statements are based on the current beliefs and expectations of the respective management of the Company and are<br>inherently subject to significant<br>business, economic and competitive uncertainties and contingencies, many of which are beyond their respective control and whi<br>ch<br>may be heightened by the novel<br>coronavirus, or COVID<br>-<br>19 pandemic. In addition, these forward<br>-<br>looking statements are subject to assumptions with respect to futu<br>re business strategies and decisions that are<br>subject to change. Actual results may differ materially from the anticipated results discussed or implied in these forward<br>-<br>looki<br>ng statements because of numerous possible<br>uncertainties. Words like "may," "plan," "contemplate," "anticipate," "believe," "intend," "continue," "expect," "project," "<br>pre<br>dict," "estimate," "could," "should," "would," "will," and<br>similar expressions, should be considered as identifying forward<br>-<br>looking statements, although other phrasing may be used. Such f<br>orward<br>-<br>looking statements involve risks and<br>uncertainties and may not be realized due to a variety of factors. Additional factors that could cause actual results to diff<br>er<br>materially from those expressed in the forward<br>-<br>looking statements are discussed in the reports (such as Annual Reports on Form 10<br>-<br>K and Quarterly Reports on Form 10<br>-<br>Q) filed b<br>y the Company with the Securities and<br>Exchange Commission. You should consider such factors and not place undue reliance on such forward<br>-<br>looking statements. No obliga<br>tion is undertaken by the Company to<br>update such forward<br>-<br>looking statements to reflect events or circumstances occurring after the issuance of this presentation.<br>NON<br>-<br>GAAP FINANCIAL MEASURES<br>Statements included in this presentation include non<br>-<br>GAAP financial measures and should be read along with the accompanying tabl<br>es<br>under the section titled “Non<br>-<br>GAAP Reconciliations.” The Company uses non<br>-<br>GAAP financial measures to analyze its performance. Ma<br>nagement believes that non<br>-<br>GAAP<br>financial measures provide additional useful information that allows readers to evaluate the ongoing performance of the Compa<br>ny<br>and provide meaningful comparison to its<br>peers. Non<br>-<br>GAAP financial measures should not be considered as an alternative to any measure of performance or financial conditi<br>on as promulgated under GAAP, and<br>investors should consider the Company’s performance and financial condition as reported under GAAP and all other relevant inf<br>orm<br>ation when assessing the performance or<br>financial condition of the Company. Non<br>-<br>GAAP financial measures have limitations as analytical tools, and investors should not c<br>onsider them in isolation or as a substitute for<br>analysis of the results or financial condition as reported under GAAP.<br>Legal Disclaimer<br>2
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•<br>Citizens & Northern Corporation (“C&N”) is a bank holding company with assets of approximately $2.3 billion at March 31,<br>2022. It was founded in 1987 and has been listed on the NASDAQ since 2005. C&N’s principal subsidiary is Citizens &<br>Northern Bank (“C&N Bank”).<br>•<br>Headquartered in Wellsboro, PA, C&N Bank has 31 full<br>-<br>service branches and 1 limited production office (LPO). C&N Bank<br>was founded in 1864.<br>•<br>25 branches in the Northern Tier of PA and Steuben County NY and an LPO dedicated to commercial and other<br>lending services in Elmira, NY<br>•<br>4 branches in Southeastern PA<br>•<br>In 2019, the Company acquired Monument Bancorp, Inc. ($376m assets)<br>•<br>In 2020, the Company acquired Covenant Financial, Inc. ($608m assets)<br>•<br>2 branches in Southcentral PA<br>•<br>Trust services and investment and insurance products are offered through C&N’s Wealth Management Group. At March<br>31, 2022, trust assets under management totaled approximately $1.2 billion.<br>•<br>C&N has a track record of consistently strong earnings performance with diverse revenue sources.<br>•<br>C&N has historically exceeded both regulatory well capitalized minimums and higher internal capital requirements, and<br>the capital plan is projected to continue this trend.<br>•<br>C&N’s common stock trades on the NASDAQ Capital Market Securities under the symbol CZNC. At June 7, 2022, the<br>market capitalization was $379 million.<br>•<br>The closing market price on June 7, 2022 was $24.42, or 13.9X annualized first quarter 2022 earnings and 174% of<br>tangible common book value per share at March 31, 2022. Based on the most recent quarterly dividend of $0.28 per<br>share and the closing market price on June 7, 2022, the annualized dividend yield was 4.59%.<br>C&N Franchise Overview<br>3
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4<br>Current Strategic Focus<br>Source: Company documents<br>•<br>Target business segments we know and understand<br>•<br>Significant progress establishing relationship model in newer markets<br>•<br>Blending digital with personal/physical access<br>Relationship Banking Model<br>•<br>Beginning to harvest results of recent investments<br>•<br>Continue to implement products and services that complement<br>Fiserv/DNA core and Q2 internet banking platform<br>Digital Transformation<br>•<br>Ongoing Board refreshment, including 2 new members added in 2021<br>and 1 retirement in 2022; Terry Lehman appointed Chairman in 2021<br>•<br>Recent hirings of executives in critical positions, Chief Information<br>Officer (2021) and Chief Wealth Management Officer (2022)<br>•<br>Continue focus on development and succession across company lines<br>Leadership, Management and<br>Board Development<br>•<br>Further deployment of strong capital base<br>•<br>Organic growth<br>•<br>Multiple business lines<br>•<br>Opportunistic M&A<br>–<br>Banks and Wealth<br>Growth Strategy<br>•<br>Strategic investing in people, new markets and technology<br>•<br>Sustain solid earnings performance and risk profile<br>•<br>Continue to position the stock to be fairly valued through dividends and<br>share repurchases<br>Shareholder Value
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•<br>Cloud Migration<br>•<br>In process of eliminating Bank<br>-<br>operated data centers to de<br>-<br>risk operations and add agility<br>•<br>Consolidation of computing and storage in cloud with Amazon Web Services, Inc. (AWS) is approximately 50%<br>complete<br>•<br>Data & Analytics<br>•<br>Establishing central data warehouse with enhanced data governance practices to transform data into insight<br>-<br>producing asset<br>•<br>Data build<br>-<br>out utilizing Snowflake is essentially complete<br>•<br>Ready to implement analytics tool (Qlik Sense)<br>•<br>Implementing Salesforce CRM with initial focus on enhancing internal (workflow) efficiency followed by roll<br>-<br>out<br>for customer<br>-<br>facing marketing efforts<br>•<br>Integration (Application Programming Interfaces, or APIs)<br>•<br>Focus on integration of applications and making more services available to customers through the<br>mobile/online app<br>•<br>Examples include<br>SmartMoney<br>,<br>Autobooks<br>,<br>Carefull<br>•<br>Organizational Structure Evolving<br>•<br>Technology, Operations and Digital departments are transforming to support agility, customer focus and speed<br>of execution<br>5<br>Strategic Technology Initiatives & Digital Transformation
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6<br>Current Branch Footprint<br>CZNC (31)<br>CZNC LPO (1)<br>County of Operation<br>Adjacent County<br>Elk<br>Tioga<br>York<br>Potter<br>Steuben<br>Berks<br>Bradford<br>Lycoming<br>Clinton<br>Warren<br>Allegany<br>Clearfield<br>McKean<br>Luzerne<br>Cattaraugus<br>Bucks<br>Lancaster<br>Tioga<br>Chester<br>Ontario<br>Adams<br>Yates<br>Burlington<br>Dauphin<br>Livingston<br>Susquehanna<br>Sullivan<br>Union<br>Tompkins<br>Lehigh<br>Cumberland<br>Wyoming<br>Chemung<br>Lebanon<br>Schuyler<br>Columbia<br>Cameron<br>Hunterdon<br>Montgomery<br>Mercer<br>Northumberland<br>Northampton<br>Delaware<br>Montour
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Source: FDIC Summary of Deposits; data as of June 30, 2021<br>7<br>Strong Presence in Legacy Markets Support<br>Our Continued Expansion into Newer, Higher<br>Growth Markets<br>Total Deposits ($000)<br>As of June 30, 2021<br>Region<br> C&N<br>Deposits<br> % of Total<br>C&N Deposits<br> Total Market<br>Deposits<br>C&N<br>Market<br>Share<br>Northern Tier<br>1,392,255<br><br><br>71.19%<br>8,315,878<br><br><br>16.74%<br>Southeastern PA<br>563,428<br><br><br>28.81%<br>45,048,550<br><br><br>1.25%<br>Southcentral PA<br>-<br><br><br>0.00%<br>26,367,525<br><br><br>0.00%<br>1,955,683<br><br><br>100.00%<br>79,731,953<br><br><br>2.45%<br>Northern Tier<br>Stueben County, NY<br>51,262<br><br><br>2.62%<br>1,349,353<br><br><br>3.80%<br>Bradford County, PA<br>470,390<br><br><br>24.05%<br>1,400,937<br><br><br>33.58%<br>Cameron County, PA<br>33,373<br><br><br>1.71%<br>91,847<br><br><br>36.34%<br>Lycoming County, PA<br>220,477<br><br><br>11.27%<br>3,025,628<br><br><br>7.29%<br>McKean County, PA<br>11,722<br><br><br>0.60%<br>913,810<br><br><br>1.28%<br>Potter County, PA<br>71,629<br><br><br>3.66%<br>329,037<br><br><br>21.77%<br>Sullivan County, PA<br>105,102<br><br><br>5.37%<br>151,896<br><br><br>69.19%<br>Tioga County, PA<br>428,300<br><br><br>21.90%<br>1,053,370<br><br><br>40.66%<br>1,392,255<br><br><br>71.19%<br>8,315,878<br><br><br>16.74%<br>Southeastern PA<br>Bucks County<br>552,382<br><br><br>28.24%<br>25,678,286<br><br><br>2.15%<br>Chester County<br>11,046<br><br><br>0.56%<br>19,370,264<br><br><br>0.06%<br>563,428<br><br><br>28.81%<br>45,048,550<br><br><br>1.25%<br>Southcentral PA<br>Lancaster County<br>-<br><br><br>-<br><br><br>15,993,009<br><br><br>0.00%<br>York County<br>-<br><br><br>-<br><br><br>10,374,516<br><br><br>0.00%<br>-<br><br><br>-<br><br><br>26,367,525<br><br><br>0.00%<br>Northern<br>Tier<br>71%<br>Southeast PA<br>29%
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8<br>Experienced Management Team<br>Name<br>Position<br>Years of<br>Banking<br>Experience<br>Years with<br>Citizens &<br>Northern<br>J. Bradley<br>Scovill<br>President and CEO<br>31<br>7<br>Mark Hughes<br>Chief Financial Officer<br>22<br>22<br>Matthew Bower<br>1<br>Chief Wealth Management Officer<br>32<br>0<br>Alexander Balagour<br>Chief Information Officer<br>9<br>1<br>Shelley D’Haene<br>Chief Digital & Payments Officer<br>23<br>23<br>Stan<br>Dunsmore<br>Chief Credit Officer<br>38<br>15<br>Harold (Hal) Hoose<br>Chief Revenue Officer<br>32<br>25<br>John<br>Reber<br>Chief Risk Officer<br>30<br>18<br>Thomas L. Rudy, Jr.<br>Chief Delivery Officer & Northern Tier Region<br>President<br>23<br>23<br>Blair Rush<br>Southeastern PA Region President<br>41<br>2<br>Tracy Watkins<br>Chief Human Resources Officer<br>19<br>19<br>Total<br>268<br>155<br>•<br>Total Board and Management Ownership of C&N is approximately 3.5%.<br>¹<br>Matthew Bower joined C&N in February 2022
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9<br>Summary Statistics<br>March 31, 2022<br>Total Assets<br>$2,330 Million<br>Net Loans<br>$1,524 Million<br>PPP Loans<br>$12.4 Million<br>Total Deposits<br>$1,961 Million<br>Tangible Common Equity<br>1<br>$220.5 Million<br>Tang. Common Equity / Tang. Assets<br>1<br>9.69%<br>Tier 1 Ratio<br>15.20%<br>Total Risk Based Capital<br>18.23%<br>Allowance for Loan Losses / Total Loans<br>0.93%<br>Allowance for Loan Losses + Credit Adjustment on Purchased Non<br>-<br>impaired<br>Loans / Total Loans + Credit Adjustment<br>1.11%<br>NPAs<br>2<br>/ Assets<br>0.81%<br>NPAs Excluding PCI Loans / Total Assets<br>0.64%<br>Annualized Return on Average Assets<br>1.19%<br>Efficiency Ratio<br>1<br>63.83%<br>Earnings Per Share<br>$0.44<br>Tangible Book Value Per Share<br>1<br>$14.03<br>¹ See reconciliation of certain GAAP to Non<br>-<br>GAAP reconciliations<br>² Defined as non<br>-<br>accrual loans + all loans that are 90 days past due + OREO
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•<br>First quarter 2022 net income totaled $6.9 million, compared to $7.3 million in<br>the preceding quarter and $8.8 million in the same quarter a year ago. Diluted<br>earnings per share for the first quarter 2022 was $0.44, down from $0.46 per<br>share in the preceding quarter and down from $0.55 in the same quarter a year<br>ago. For the first quarter 2022, the annualized return on average assets was<br>1.19% and the annualized return on average equity was 9.37%.<br>•<br>Net interest income totaled $20.3 million in the first quarter 2022, up $616,000<br>over the fourth quarter 2021 and $249,000 over the first quarter 2021. Interest<br>and fees on loans included $1.4 million in the first quarter 2022 from<br>repayments received on purchased credit impaired (PCI) loans in excess of<br>previous carrying amounts. In comparison, income from PCI loan repayments<br>in excess of previous carrying amounts totaled $196,000 in the fourth quarter<br>2021 with no comparable income in the first quarter 2021. Interest and fees on<br>Paycheck Protection Program (PPP) loans totaled $575,000 in the first quarter<br>2022, down from $1.6 million in the fourth quarter 2021 and $2.0 million in the<br>first quarter 2021.<br>•<br>The Provision for Loan Losses for the first quarter 2022 was $891k, compared<br>to $1.1 million in the fourth quarter of 2021 and $259k the same quarter a year<br>ago. Net charge<br>-<br>offs totaled $157k in the first quarter 2022 and $291k in the<br>fourth quarter 2021, with net recoveries of $17k in the first quarter 2021.<br>•<br>Total noninterest income of $5.8 million in the first quarter 2022 was down<br>$592k from the fourth quarter 2021 as gains from sales of residential mortgage<br>loans fell $260k and trust revenue dropped $194K. Noninterest income for the<br>first quarter 2022 was down $959k from the first quarter 2021 as revenue from<br>tax credits decreased $756k due to a timing issue and gains from sales of<br>residential mortgage loans dropped $682k.<br>•<br>Total noninterest expense of $16.9 million in the first quarter of 2022 was higher<br>by $860k (5.4%) over the fourth quarter 2021 and $1.2 million (7.5%) over the<br>first quarter 2021. Expense increases include the impact on compensation<br>costs of merit increases and staffing additions related to opening an office in<br>Lancaster, PA as well as additions in IT, human resources and other functions.<br>10<br>Q1 2022 Financial Highlights<br>•<br>Total loans receivable decreased to $1.54 billion<br>at<br>March 31, 2022, compared<br>to $1.56 billion<br>at<br>December 31, 2021, and compared to $1.61 billion a year<br>ago. Total loans ex PPP loans decreased slightly to $1.53 billion, compared to<br>$1.54 billion<br>at<br>December 31, 2021, and were up 3.3% from $1.48 billion<br>at<br>March 31, 2021.<br>•<br>Deposits totaled $1.96 billion<br>at<br>March 31, 2022, up from $1.93 billion<br>at<br>December 31,<br>2021<br>and up from $1.92 billion<br>at<br>March 31, 2021.<br>•<br>Stockholders’ equity was $276.2 million<br>at<br>March 31, 2022, down from $301.4<br>million<br>at<br>December 31, 2021. Within stockholders’ equity, the portion of<br>accumulated other comprehensive loss related to available<br>-<br>for<br>-<br>sale debt<br>securities was $20.5 million<br>at<br>March 31, 2022, as compared to accumulated<br>other comprehensive income of $4.9 million<br>at<br>December 31, 2021. The<br>decrease in stockholders’ equity<br>at<br>March 31,<br>2022<br>related to accumulated<br>other comprehensive (loss) income from available<br>-<br>for<br>-<br>sale debt securities has<br>been caused by recent, significant increases in interest rates. Accumulated<br>other comprehensive (loss) income is excluded from C&N’s regulatory capital<br>ratios.<br>At<br>March 31, 2022, there were no securities identified with credit<br>-<br>related,<br>other<br>-<br>than<br>-<br>temporary impairment losses.<br>•<br>Consistent with the reduction in stockholders’ equity, tangible book value per<br>common share dropped to $14.03<br>at<br>March 31,<br>2022<br>from $15.58<br>at<br>December<br>31,<br>2021<br>and tangible common equity/tangible assets fell to 9.69%<br>at<br>March 31,<br>2022<br>from 10.81%<br>at<br>December 31, 2021.<br>•<br>In the quarter, C&N paid a cash dividend of $0.28 per share. In April, C&N<br>similarly announced a cash dividend of $0.28 per share, payable May 13,<br>2022<br>to shareholders of record on May 2, 2022.<br>•<br>In February 2021, C&N amended its treasury stock repurchase program to<br>authorize repurchase of up to 1 million shares. In the first quarter 2022,<br>129,867 shares were repurchased. Cumulatively through March 31, 2022,<br>428,926, or 42.9% of shares authorized have been repurchased for a total cost<br>of $10.6 million at an average price of $24.80 per share.<br>•<br>Trust assets under management by C&N’s Wealth Management Group<br>amounted to $1.19 billion<br>at<br>March 31, 2022, down 3.4% from $1.23 billion<br>at<br>December 31,<br>2021<br>and up 4.3% from $1.14 billion<br>at<br>March 31, 2021.<br>Fluctuations in values of assets under management reflect the impact of recent<br>high market volatility.<br>Source: Company documents; Financial data as of March 31, 2022
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11<br>Targeted Balance<br>Sheet Growth<br>Total Assets ($M)<br>Total Deposits ($M)<br>Total Loans and Leases ($M)<br>Total Equity ($M)<br>CAGR¹:<br>19.9%<br>CAGR¹:<br>21.8%<br>Actual (Ex. PPP)<br>PPP Loans<br>1)<br>CAGR calculated from 2018Y to 2022Q1<br>2)<br>Reference GAAP to<br>Non GAAP<br>reconciliation pages in appendix<br>Source: S&P Global Market Intelligence; Financial data as of March 31, 2022<br>90%<br>94%<br>80%<br>CAGR¹:<br>21.0%<br>83%<br>CAGR¹:<br>10.9%<br>$197<br>$244<br>$300<br>$301<br>$276<br>2018Y<br>2019Y<br>2020Y<br>2021Y<br>2022Q1<br>$828<br>$1,182<br>$1,644<br>$1,565<br>$1,538<br>$1,538<br>$1,512<br>$132<br>$27<br>$12<br>$1,526<br>2018Y<br>2019Y<br>2020Y<br>2021Y<br>2022Q1<br>$1,291<br>$1,654<br>$2,239<br>2,330<br>$2,328<br>2018Y<br>2019Y<br>2020Y<br>2021Y<br>2022Q1
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12<br>Strong Historical Profitability<br>Net Income ($M)<br>Efficiency Ratio (%)<br>ROAA (%)<br>Net Interest Margin (%)<br>1)<br>Annualized<br>2)<br>Reference GAAP to<br>Non GAAP<br>reconciliation pages in appendix<br>Source: S&P Global Market Intelligence; Financial data as of March 31, 2022<br>GAAP<br>Non<br>-<br>GAAP<br>Adjusted<br>2<br>GAAP<br>Non<br>-<br>GAAP<br>Adjusted<br>2<br>$22.0<br>$19.5<br>$19.2<br>$30.6<br>$27.6<br>$20.4<br>$22.8<br>$26.5<br>2018Y<br>2019Y<br>2020Y<br>2021Y<br>2022Q1¹<br>1.72<br>1.27<br>0.96<br>1.32<br>1.19<br>1.60<br>1.48<br>1.32<br>2018Y<br>2019Y<br>2020Y<br>2021Y<br>2022Q1¹
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13<br>Diversified Revenue: Meaningful<br>Contribution of Fee Income<br>1) Financial Data shown on an annualized basis<br>Source: Company documents; Financial data as of March 31, 2022<br>2018Y<br>2019Y<br>2020Y<br>2021Y<br>2022Q1<br>Trust Revenue<br>$5,838<br>$6,106<br>$6,321<br>$7,234<br>$1,786<br>Brokerage and Insurance Revenue<br>1,123<br>1,433<br>1,486<br>1,860<br>522<br>Service Charges on Deposit Accounts<br>5,171<br>5,358<br>4,231<br>4,633<br>1,235<br>Interchange Revenue from Debit Card Transactions<br>2,546<br>2,754<br>3,094<br>3,855<br>963<br>Net Gains from Sales of Loans<br>682<br>924<br>5,403<br>3,428<br>382<br>Loan Servicing Fees, Net<br>347<br>100<br>(61)<br>694<br>210<br>Increase in Cash Surrender Value of Life Insurance<br>394<br>402<br>515<br>573<br>135<br>Other Noninterest Income<br>2,496<br>2,207<br>3,355<br>3,580<br>588<br>Total Noninterest Income, Excluding Realized Gains<br>$18,597<br>$19,284<br>$24,344<br>$25,857<br>$5,821<br>Total Noninterest Income / Net Revenue (%)<br>28.35%<br>25.78%<br>26.21%<br>24.64%<br>22.00%<br>1<br>Total Noninterest Income / Average Assets (%)<br>1.46%<br>1.25%<br>1.21%<br>1.11%<br>1.00%<br>1<br>Dollars in Thousands
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•<br>Diversified strategy across lending products<br>and geographies<br>•<br>Relationship based lending strategy with<br>strong credit culture<br>•<br>MRQ yield on loans of 5.01%, or 4.47%<br>excluding PPP and purchase accounting<br>related income<br>•<br>Nonowner<br>-<br>occupied CRE / Tier 1 Capital plus<br>the Allowance is 187% as of March 31, 2022<br>14<br>Diversified Lending Strategy &<br>Portfolio Composition<br>2022Q1<br>Gross Loans:<br>$1,538M<br>Source: Company documents; Financial data as of March 31, 2022<br>Breakdown<br>By<br>Geography<br>2022Q1<br>Commercial<br>Loans:<br>$960.1M<br>Nonowner<br>-<br>Occupied RE<br>24%<br>C&I<br>10%<br>Owner<br>-<br>Occupied RE<br>14%<br>PPP<br>1%<br>Residential<br>36%<br>Other<br>13%<br>C&D<br>2%<br>Northern<br>Tier<br>45%<br>Southeast<br>PA<br>47%<br>South<br>Central PA<br>4%<br>Other<br>4%<br>Nonowner<br>-<br>Occupied RE<br>38%<br>Owner<br>-<br>Occupied RE<br>22%<br>Commercial<br>and Industrial<br>18%<br>Multi<br>-<br>Family<br>Residential<br>6%<br>Political<br>Subdivisions<br>9%<br>Commercial Construction<br>4%<br>Other<br>Commercial<br>3%
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15<br>Consistent and Well Covered<br>Asset Quality Metrics<br>1)<br>Reference GAAP to Non<br>-<br>GAAP reconciliation pages in appendix<br>2)<br>Net charge<br>-<br>offs in 2022Q1 have been annualized for purposes of this ratio.<br>Source: S&P Global Market Intelligence and company documents; Financial data as of March 31, 2022<br>NPAs / Assets (%)<br>Loan Loss Reserve / Total Loans (%)<br>NCOs<br>2<br>/ Avg. Loans (%)<br>Loan Loss Provision / NCOs (%)<br>1.37<br>0.80<br>1.10<br>0.94<br>0.81<br>0.78<br>(Excluding PCIs)<br>1<br>0.80<br>(Excluding PCIs)<br>1<br>0.66<br>(Excluding PCIs)<br>1<br>0.64<br>(Excluding<br>PCIs)<br>1<br>2018Y<br>2019Y<br>2020Y<br>2021Y<br>2022Q1<br>0.02<br>0.03<br>0.17<br>0.09<br>0.04<br>2018Y<br>2019Y<br>2020Y<br>2021Y<br>2022Q1<br>1.12<br>0.83<br>0.69<br>0.87<br>0.93<br>1.15<br>(Credit Discount & ex. PPP)<br>1<br>1.10<br>(Credit Discount & ex. PPP<br>)<br>1<br>1.12<br>(Credit Discount & ex.<br>PPP)<br>1<br>2018Y<br>2019Y<br>2020Y<br>2021Y<br>2022Q1<br>446<br>264<br>166<br>243<br>568<br>2018Y<br>2019Y<br>2020Y<br>2021Y<br>2022Q1
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16<br>Strong Core Deposit Base<br>Source: Company documents; Financial data as of March 31, 2022<br>•<br>Non<br>-<br>time deposits of $1.7B, which represents<br>86% of total deposits<br>•<br>0.19% cost of total deposits in first quarter 2022<br>•<br>Noninterest<br>-<br>bearing deposits were $552M, and<br>represents 28.2% of total deposits<br>2022Q1<br>Total Deposits:<br>$1,961M<br>Deposits Type<br>3/31/2022<br>Balance<br>% Total<br>MMDA & Savings<br>$685,064<br>34.9%<br>Noninterest<br>-<br>Bearing Demand<br>$552,255<br>28.2%<br>Interest<br>-<br>Bearing Demand<br>$423,339<br>21.6%<br>Time <$250k<br>$202,910<br>10.3%<br>Jumbo Time<br>$63,636<br>3.2%<br>Brokered<br>$33,748<br>1.7%<br>Total<br>$1,960,952<br>100.0%<br>Dollars in Thousands<br>MMDA & Savings<br>34.9%<br>Noninterest<br>-<br>Bearing Demand<br>28.2%<br>Interest<br>-<br>Bearing<br>Demand<br>21.6%<br>Time < $250k<br>10.3%<br>Jumbo Time<br>3.2%<br>Brokered<br>1.7%
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17<br>Holding Company<br>Capital Ratios<br>TCE / TA (%)<br>Tier 1 Capital Ratio (%)<br>Leverage Ratio (%)<br>Total RBC Ratio (%)<br>Source: Company Documents<br>14.5<br>13.2<br>11.2<br>10.8<br>9.7<br>2018Y<br>2019Y<br>2020Y<br>2021Y<br>2022Q1<br>14.8<br>13.1<br>10.3<br>10.5<br>10.6<br>2018Y<br>2019Y<br>2020Y<br>2021Y<br>2022Q1<br>23.2<br>19.2<br>15.6<br>15.2<br>15.2<br>2018Y<br>2019Y<br>2020Y<br>2021Y<br>2022Q1<br>24.4<br>20.7<br>17.5<br>18.2<br>18.2<br>2018Y<br>2019Y<br>2020Y<br>2021Y<br>2022Q1
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18<br>Bank Level<br>Capital Ratios<br>Tier 1 Capital Ratio (%)<br>Leverage Ratio (%)<br>Total RBC Ratio (%)<br>Source: Company Documents<br>20.6<br>17.8<br>15.2<br>15.1<br>15.3<br>2018Y<br>2019Y<br>2020Y<br>2021Y<br>2022Q1<br>13.2<br>12.2<br>10.1<br>10.5<br>10.7<br>2018Y<br>2019Y<br>2020Y<br>2021Y<br>2022Q1<br>21.8<br>18.8<br>16.0<br>16.0<br>16.2<br>2018Y<br>2019Y<br>2020Y<br>2021Y<br>2022Q1
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19<br>Conclusion<br>158<br>-<br>year<br>-<br>old institution with a strong market position<br>Consistently strong profitability with diversified revenue streams<br>Balanced loan portfolio with sound asset quality<br>Stable, low<br>-<br>cost core deposit franchise<br>Strong capital position to support growth strategy<br>1<br>2<br>3<br>4<br>5<br>Experienced management team with a proven track record of M&A<br>6
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Thank You<br>20
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Appendix<br>21
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22<br>Consolidated Historical<br>Balance Sheet<br>Source: Company Documents; Financial data as of March 31, 2022<br>At Year Ended<br>At Quarter Ended<br>2019Y<br>2020Y<br>2021Y<br>2021Q2<br>2021Q3<br>2021Q4<br>2022Q1<br><br>Assets ($000)<br>Total Cash and Cash Due from Banks<br> 35,202<br> 101,857<br> 104,948<br> 208,860<br> 198,995<br> 104,948<br> 114,346<br>Available for Sale Securities<br> 346,723<br> 349,332<br> 517,679<br> 391,881<br> 437,857<br> 517,679<br> 532,913<br>Total Cash & Securities<br> 381,925<br> 451,189<br> 622,627<br> 600,741<br> 636,852<br> 622,627<br> 647,259<br><br>Gross Loans Held for Investment<br> 1,182,222<br> 1,644,209<br> 1,564,849<br> 1,597,856<br> 1,575,708<br> 1,564,849<br> 1,538,190<br>Loan Loss Reserve<br> (9,836)<br> (11,385)<br> (13,537)<br> (12,375)<br> (12,700)<br> (13,537)<br> (14,271)<br>Total Net Loans<br> 1,172,386<br> 1,632,824<br> 1,551,312<br> 1,585,481<br> 1,563,008<br> 1,551,312<br> 1,523,919<br>OREO<br> 2,886<br> 1,338<br> 684<br> 1,332<br> 1,374<br> 684<br> 531<br>Total Servicing Rights<br> 1,277<br> 1,689<br> 2,329<br> 2,116<br> 2,247<br> 2,329<br> 2,429<br>Bank Premises and Equipment, Net<br> 17,170<br> 21,526<br> 20,683<br> 20,620<br> 20,526<br> 20,683<br> 21,169<br>Bank-owned Life Insurance<br> 18,641<br> 30,096<br> 30,669<br> 30,391<br> 30,530<br> 30,669<br> 30,804<br>Goodwill and Core Deposit Intangible, Net<br> 28,388<br> 56,356<br> 55,821<br> 56,088<br> 55,955<br> 55,821<br> 55,711<br>Total Other Assets<br> 31,472<br> 44,082<br> 43,523<br> 42,294<br> 44,404<br> 43,523<br> 48,549<br>Total Assets<br> 1,654,145<br> 2,239,100<br> 2,327,648<br> 2,339,063<br> 2,354,896<br> 2,327,648<br> 2,330,371<br> 3<br><br>Liabilities ($000)<br>Non-Interest Bearing<br> 285,904<br> 465,332<br> 521,206<br> 525,592<br> 521,561<br> 521,206<br> 552,255<br>Interest Bearing<br> 966,756<br> 1,355,137<br> 1,403,854<br> 1,391,217<br> 1,418,580<br> 1,403,854<br> 1,408,697<br>Total Deposits<br> 1,252,660<br> 1,820,469<br> 1,925,060<br> 1,916,809<br> 1,940,141<br> 1,925,060<br> 1,960,952<br>FHLB Borrowings<br> 136,419<br> 72,674<br> 28,042<br> 44,325<br> 38,680<br> 28,042<br> 20,581<br>Senior and Subordinated Debt<br> 6,500<br> 16,553<br> 47,710<br> 47,637<br> 47,673<br> 47,710<br> 47,748<br>Total Other Liabilities<br> 14,114<br> 29,648<br> 25,431<br> 26,159<br> 29,000<br> 25,431<br> 24,882<br>Total Liabilities<br> 1,409,693<br> 1,939,344<br> 2,026,243<br> 2,034,930<br> 2,055,494<br> 2,026,243<br> 2,054,163<br><br>Equity ($000)<br>Equity, Excluding AOCI<br>(1)<br> 240,761<br> 287,961<br> 296,379<br> 294,857<br> 292,997<br> 296,379<br> 296,386<br>AOCI<br>(1)<br> 3,691<br> 11,795<br> 5,026<br> 9,276<br> 6,405<br> 5,026<br> (20,178)<br>Total Equity<br> 244,452<br> 299,756<br> 301,405<br> 304,133<br> 299,402<br> 301,405<br> 276,208<br><br>Total Liabilities and Equity<br> 1,654,145<br> 2,239,100<br> 2,327,648<br> 2,339,063<br> 2,354,896<br> 2,327,648<br> 2,330,371<br>(1) Accumulated Other Comprehensive Income (Loss)
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23<br>Consolidated Historical<br>Income Statement<br>Source: Company documents; Financial data as of March 31, 2022<br>For the Year Ending,<br>3/31/2022<br>2019Y<br>2020Y<br>2021Y<br>2022Q1<br><br>Net Interest Income<br>54,488<br>67,565<br>77,939<br>20,332<br><br>Provision for Loan Losses<br>849<br>3,913<br>3,661<br>891<br><br>Trust Revenue<br>6,106<br>6,321<br>7,234<br>1,786<br>Brokerage and Insurance Revenue<br>1,433<br>1,486<br>1,860<br>522<br>Service Charge on Deposit Accounts<br>5,690<br>4,231<br>4,633<br>1,235<br>Interchange Revenue from Debit Card Transactions<br>2,754<br>3,094<br> 3,855<br>963<br>Net Gains from Sales of Loans<br>924<br>5,403<br>3,428<br>382<br>Loan Servicing Fees, Net<br>100<br>(61)<br>694<br>210<br>Increase in Cash Surrender Value of Life Insurance<br>402<br>515<br>573<br>135<br>Other Noninterest Income<br>1,875<br>3,355<br>3,580<br>588<br>Total Noninterest Income<br>19,284<br>24,344<br>25,857<br>5,821<br><br>Compensation & Benefits<br>26,481<br>33,062<br>37,603<br>10,607<br>Total Noninterest Expense, Excluding Loss on Prepayment of<br>Borrowings and Merger-Related Expenses<br>45,438<br>55,609<br>62,472<br>16,886<br>Realized Gain on Securities<br> 23<br> 169<br> 24<br> 2<br>Loss on Prepayment of Borrowings<br> -<br> 1,636<br> -<br> -<br>Merger-Related Expenses<br> 4,099<br> 7,708<br> -<br> -<br><br>Net Income before Taxes<br>23,409<br>23,212<br>37,687<br>8,378<br>Provision for Taxes<br>3,905<br>3,990<br>7,133<br>1,483<br>Net Income<br>19,504<br>19,222<br>30,554<br>6,895
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Investment Portfolio Characteristics as of<br>March 31, 2022<br>24<br>Securities Portfolio<br>1)<br>Municipal portfolio credit quality information is summarized based on amortized cost values.<br>Ratings are assigned to each security based on the lowest enhanced or underlying rating<br>from Moody’s, S&P or Fitch.<br>Source: Company documents; Financial data as of March 31, 2022<br>•<br>Book Value: $558.9 Million<br>•<br>Market Value $532.9 Million<br>•<br>100% of portfolio is investment grade<br>•<br>Debt securities issued by bank holding companies are<br>summarized as follows:<br>•<br>6 securities held with face amounts ranging from $3 million<br>to $5 million<br>•<br>All issuers are publicly traded<br>•<br>All have fixed rates for 5 years, callable after 5 years<br>(2025<br>-<br>2027), floating rates thereafter and maturing in 10<br>years (2030<br>-<br>2032)<br>•<br>1 senior security with KBRA rating of A<br>-<br>•<br>2 subordinated securities with Egan<br>-<br>Jones ratings of A<br>-<br>•<br>1 subordinated security with KBRA rating of BBB<br>•<br>2 subordinated securities with KBRA ratings of BBB<br>-<br>Composite Quality (%)<br>Current<br>AAA<br>19%<br>Prerefunded<br>5%<br>AA<br>68%<br>A<br>8%<br>NR<br>Municipal Portfolio Characteristics as of<br>March 31, 2022<br>1<br>Municipal<br>40%<br>Agency<br>MBS<br>44%<br>US<br>Treasuries<br>7%<br>US<br>Government<br>Agencies<br>4%<br>Bank Holding<br>Company<br>Debt<br>Securities<br>5%
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25<br>Securities Portfolio, continued<br>The composition of the available<br>-<br>for<br>-<br>sale debt securities portfolio at March 31, 2022, December 31, 2021 and December<br>31, 2020 is as follows:<br>(In Thousands)<br>March 31, 2022<br>December 31, 2021<br>December 31, 2020<br>Amortized<br>Fair<br>Amortized<br>Fair<br>Amortized<br>Fair<br>Cost<br>Value<br>Cost<br>Value<br>Cost<br>Value<br>Obligations of the U.S. Treasury<br>$38,152<br>$36,494<br>$25,058<br>$24,912<br>$12,184<br>$12,182<br>Obligations of U.S. Government agencies<br>24,455<br>23,408<br>23,936<br>24,091<br>25,349<br>26,344<br>Bank holding company debt securities<br>24,942<br>24,043<br>18,000<br>17,987<br>0<br>0<br>Obligations of states and political subdivisions:<br> Tax-exempt<br>149,140<br>143,633<br>143,427<br>148,028<br>116,427<br>122,401<br> Taxable<br>73,732<br>69,629<br>72,182<br>72,765<br>45,230<br>47,452<br>Mortgage-backed securities issued or guaranteed<br> by U.S. Government agencies or sponsored<br> agencies:<br> Residential pass-through securities<br>112,122<br>106,568<br>98,048<br>98,181<br>36,853<br>38,176<br> Residential collateralized mortgage obligations<br>45,628<br>43,868<br>44,015<br>44,247<br>56,048<br>57,467<br> Commercial mortgage-backed securities<br>90,682<br>85,270<br>86,926<br>87,468<br>42,461<br>45,310<br>Total Available-for-Sale Debt Securities<br>$558,853<br>$532,913<br>$511,592<br>$517,679<br>$334,552<br>$349,332<br>Aggregate Unrealized (Loss) Gain<br>($25,940)<br>$6,087<br>$14,780<br>Aggregate Unrealized (Loss) Gain as a % of<br> Amortized Cost<br>-4.6%<br>1.2%<br>4.4%<br> Market Yield on 5-Year U.S. Treasury Obligations (a)<br>2.42%<br>1.26%<br>0.36%<br>(a) Source: Treasury.gov (Daily Treasury Par Yield Curve Rates)<br>The<br>unrealized<br>decrease<br>in<br>fair<br>value<br>of<br>the<br>portfolio<br>in<br>the<br>first<br>quarter<br>2022<br>was<br>consistent<br>with<br>the<br>significant<br>increase<br>in<br>interest<br>rates<br>..<br>Management<br>reviewed<br>the<br>Corporation’s<br>holdings<br>as<br>of<br>March<br>31<br>,<br>2022<br>and<br>concluded<br>there<br>were<br>no<br>credit<br>-<br>related<br>declines<br>in<br>fair<br>value<br>and<br>that<br>the<br>unrealized<br>losses<br>on<br>all<br>of<br>the<br>securities<br>in<br>an<br>unrealized<br>loss<br>position<br>are<br>considered<br>temporary<br>..
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26<br>Asset<br>-<br>sensitive Interest Rate Risk Profile<br>Citizens & Northern<br>uses a simulation model to calculate the potential effects of interest rate fluctuations on net interest<br>income and the market value of portfolio equity. The model makes estimates, at each level of interest rate change,<br>regarding cash flows from principal repayments on loans and mortgage<br>-<br>backed securities and call activity on other<br>investment securities. Actual results could vary significantly from these estimates, which could result in significant<br>differences in the calculations of projected changes in net interest income and market value of portfolio equity.<br>As shown in the table below, C&N models as asset<br>-<br>sensitive.<br>March 31, 2022 Data<br>(In Thousands)<br>Period Ending March 31, 2023<br>Basis Point<br>Interest<br>Interest<br>Net Interest<br>NII<br>NII<br>Change in Rates<br>Income<br>Expense<br>Income (NII)<br> % Change<br>Risk Limit<br>+400<br>$101,995<br>$17,804<br>$84,191<br>19.5%<br>25.0%<br>+300<br>95,469<br>14,798<br>80,671<br>14.5%<br>20.0%<br>+200<br>89,022<br>11,793<br>77,229<br>9.6%<br>15.0%<br>+100<br>82,584<br>8,788<br>73,796<br>4.7%<br>10.0%<br>0<br>76,265<br>5,783<br>70,482<br>0.0%<br>0.0%<br>-100<br>72,037<br>4,664<br>67,373<br>-4.4%<br>10.0%<br>-200<br>69,795<br>4,238<br>65,557<br>-7.0%<br>15.0%<br>Market Value of Portfolio Equity at March 31, 2022<br>Present<br>Present<br>Present<br>Basis Point<br>Value<br>Value<br>Value<br>Change in Rates<br>Equity<br> % Change<br>Risk Limit<br>+400<br>$498,635<br>10.0%<br>50.0%<br>+300<br>488,691<br>7.8%<br>45.0%<br>+200<br>478,667<br>5.6%<br>35.0%<br>+100<br>466,970<br>3.0%<br>25.0%<br>0<br>453,227<br>0.0%<br>0.0%<br>-100<br>435,057<br>-4.0%<br>25.0%<br>-200<br>409,709<br>-9.6%<br>35.0%
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27<br>Reconciliation of GAAP to<br>Non<br>-<br>GAAP Measure<br>(1)<br>Income tax has been allocated based on a marginal income tax rate of 21%. The effect on the income tax provision is adjusted<br>fo<br>r the estimated nondeductible<br>portion of merger expenses.<br>(2)<br>Annualized returns on tax<br>-<br>exempt securities and loans are presented on a fully taxable<br>-<br>equivalent basis using a 21% marginal inc<br>ome tax rate.<br>Note: Core ROAA and Core ROAE shown on an annualized basis<br>Source: Company documents; Financial data as of March 31, 2022<br>For the Year Ended December 31,<br>Three Months Ended<br>($000s)<br>2018<br>2019<br>2020<br>2021<br>6/30/2021<br>9/30/2021<br>12/31/2021<br>3/31/2022<br>Income Before Taxes (GAAP)<br>$26,263<br>$23,409<br>$23,212<br>$37,687<br>$8,840<br>$8,965<br>$8,985<br>$8,378<br>Less: Income Tax Provision<br>($4,250)<br>($3,905)<br>($3,990)<br>($7,133)<br>($1,780)<br>($1,566)<br>($1,677)<br>($1,483)<br>Net Income (GAAP)<br>$22,013<br>$19,504<br>$19,222<br>$30,554<br>$7,060<br>$7,399<br>$7,308<br>$6,895<br>GAAP diluted earnings per share<br>$1.79<br>$1.46<br>$1.30<br>$1.92<br>$0.44<br>$0.47<br>$0.46<br>$0.44<br>Plus: Merger Related Expenses<br>(1)<br>$0<br>$3,270<br>$6,134<br>$0<br>$0<br>$0<br>$0<br>$0<br>Plus: Loss on Prepayment of Borrowings<br>(1)<br>$0<br>$0<br>$1,292<br>$0<br>$0<br>$0<br>$0<br>$0<br>Less: Gain on Restricted Equity Security<br>(1)<br>($1,834)<br>$0<br>$0<br>$0<br>$0<br>$0<br>$0<br>$0<br>Net Loss (Gain) on Available-for-Sale Debt Securities<br>(1)<br>$228<br>($18)<br>($134)<br>($19)<br>($2)<br>($18)<br>$1<br>($2)<br>Core Net Income (Non-GAAP)<br>$20,407<br>$22,756<br>$26,514<br>$30,535<br>$7,058<br>$7,381<br>$7,309<br>$6,893<br>Core diluted earnings per common share<br>$1.66<br>$1.70<br>$1.79<br>$1.92<br>$0.44<br>$0.47<br>$0.46<br>$0.44<br>Core net income, as calculated above<br>$20,407<br>$22,756<br>$26,514<br>$30,535<br>$7,058<br>$7,381<br>$7,309<br>$6,893<br>Average Assets<br>1,276,140<br>1,540,469<br>2,009,825<br>2,319,234<br>2,331,751<br>2,355,911<br>2,345,060<br>2,325,486<br>Average Equity<br>187,895<br>229,446<br>273,351<br>301,226<br>301,653<br>302,847<br>300,490<br>294,254<br>Core ROAA<br>1.60%<br>1.48%<br>1.32%<br>1.32%<br>1.21%<br>1.25%<br>1.25%<br>1.19%<br>Core ROAE<br>10.86%<br>9.92%<br>9.70%<br>10.14%<br>9.36%<br>9.75%<br>9.73%<br>9.37%<br>For the Year Ended December 31,<br>Three Months Ended<br>($000s)<br>2018<br>2019<br>2020<br>2021<br>6/30/2021<br>9/30/2021<br>12/31/2021<br>3/31/2022<br>Total Noninterest Expense<br>$39,486<br>$49,537<br>$64,953<br>$62,472<br>$15,399<br>$15,346<br>$16,018<br>$16,886<br>Less: Merger-Related Expenses<br>$328<br>$4,099<br>$7,708<br>$0<br>$0<br>$0<br>$0<br>$0<br>Less: Loss on Prepayment of Borrowings<br>$0<br>$0<br>$1,636<br>$0<br>$0<br>$0<br>$0<br>$0<br>Operating Expense<br>$39,158<br>$45,438<br>$55,609<br>$62,472<br>$15,399<br>$15,346<br>$16,018<br>$16,886<br>Total Net Interest Income<br>(2)<br>$47,004<br>$55,532<br>$68,545<br>$79,074<br>$18,949<br>$19,751<br>$20,018<br>$20,634<br>Plus: Noninterest Income<br>$18,597<br>$19,284<br>$24,344<br>$25,857<br>$6,300<br>$6,359<br>$6,416<br>$5,821<br>Operating Revenue<br>$65,601<br>$74,816<br>$92,889<br>$104,931<br>$25,249<br>$26,110<br>$26,434<br>$26,455<br>Efficiency Ratio<br>59.69%<br>60.73%<br>59.87%<br>59.54%<br>60.99%<br>58.77%<br>60.60%<br>63.83%
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28<br>Reconciliation of GAAP to<br>Non<br>-<br>GAAP Measure<br>Source: Company documents; Financial data as of March 31, 2022<br>At Year Ended December 31,<br>At Quarter Ended<br>($000s)<br>2018<br>2019<br>2020<br>2021<br>3/31/2022<br>Nonperforming Assets:<br> Purchased Credit Impaired Loans<br>$0<br>$441<br>$6,841<br>$6,558<br>$3,983<br> Other Nonaccrual Loans<br>13,113<br>8,777<br>14,575<br>12,441<br>10,962<br> Total Nonaccrual Loans<br>13,113<br>9,218<br>21,416<br>18,999<br>14,945<br> Total Loans Past due 90 days or More and Still Accruing<br>2,906<br>1,207<br>1,975<br>2,219<br>3,429<br> Total Nonperforming Loans<br>16,019<br>10,425<br>23,391<br>21,218<br>18,374<br> Foreclosed Assets Held for Sale (real estate)<br>1,703<br>2,886<br>1,338<br>684<br>531<br>Total Nonperforming Assets<br>$17,722<br>$13,311<br>$24,729<br>$21,902<br>$18,905<br>Total Nonperforming Assets, Excluding Purchased Credit Impaired Loans<br>$17,722<br>$12,870<br>$17,888<br>$15,344<br>$14,922<br>Total Nonperforming Loans as a % of Loans<br>1.94%<br>0.88%<br>1.42%<br>1.36%<br>1.19%<br>Total Nonperforming Assets as a % of Assets<br>1.37%<br>0.80%<br>1.10%<br>0.94%<br>0.81%<br>Total NPAs Excluding Purchased Credit Impaired Loans as a % of Assets<br>1.37%<br>0.78%<br>0.80%<br>0.66%<br>0.64%
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29<br>Reconciliation of GAAP to<br>Non<br>-<br>GAAP Measure<br>Source: Company documents; Financial data as of March 31, 2022<br>At Year Ended December 31,<br>Three Months Ended<br>($000s)<br>2018<br>2019<br>2020<br>2021<br>6/30/2021<br>9/30/2021<br>12/31/2021<br>3/31/2022<br>Total Gross Loans<br>$827,563<br>$1,182,222<br>$1,644,209<br>$1,564,849<br>$1,597,856<br>$1,575,708<br>$1,564,849<br>$1,538,190<br>Less: Pay Check Protection Loans (PPP)<br>$0<br>$0<br>$132,269<br>$26,864<br>$110,311<br>$62,728<br>$26,864<br>$12,377<br>Total Loans ex. PPP<br>$827,563<br>$1,182,222<br>$1,511,940<br>$1,537,985<br>$1,487,545<br>$1,512,980<br>$1,537,985<br>$1,525,813<br>Loan Loss Reserves<br>$9,309<br>$9,836<br>$11,385<br>$13,537<br>$12,375<br>$12,700<br>$13,537<br>$14,271<br>Loan Loss Reserves / Total Gross Loans<br>1.12%<br>0.83%<br>0.69%<br>0.87%<br>0.77%<br>0.81%<br>0.87%<br>0.93%<br>Loan Loss Reserves / Total Gross Loans ex. PPP<br>1.12%<br>0.83%<br>0.75%<br>0.88%<br>0.83%<br>0.84%<br>0.88%<br>0.94%<br>Total Credit Discount<br>$0<br>$1,216<br>$5,979<br>$3,335<br>$4,502<br>$3,836<br>$3,335<br>$2,783<br>Loan Loss Reserves, as shown above<br>$9,309<br>$9,836<br>$11,385<br>$13,537<br>$12,375<br>$12,700<br>$13,537<br>$14,271<br>Plus: Total Credit Discount<br>$0<br>$1,216<br>$5,979<br>$3,335<br>$4,502<br>$3,836<br>$3,335<br>$2,783<br>Loan Loss Reserves (incl. Credit Discount)<br>$9,309<br>$11,052<br>$17,364<br>$16,872<br>$16,877<br>$16,536<br>$16,872<br>$17,054<br>Loan Loss Reserves (incl. Credit Discount) / Total Gross Loans<br>1.12%<br>0.93%<br>1.06%<br>1.08%<br>1.06%<br>1.05%<br>1.08%<br>1.11%<br>Loan Loss Reserves (incl. Credit Discount) / Total Gross Loans ex. PPP<br>1.12%<br>0.93%<br>1.15%<br>1.10%<br>1.13%<br>1.09%<br>1.10%<br>1.12%
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30<br>Reconciliation of GAAP to<br>Non<br>-<br>GAAP Measure<br>Source: Company documents; Financial data as of March 31, 2022<br>Holding Company Tangible Common Equity<br>At Year Ended<br>At Quarter Ended<br>($000)<br>12/31/2018<br>12/31/2019<br>12/31/2020<br>12/31/2021<br>6/30/2021<br>9/30/2021<br>12/31/2021<br>3/31/2022<br>Stockholders' Equity (GAAP)<br>$197,368<br>$244,452<br>$299,756<br>$301,405<br>$304,133<br>$299,402<br>$301,405<br>$276,208<br>Less: Intangible Assets<br>11,951<br>29,635<br>56,356<br>55,821<br>56,088<br>55,955<br>55,821<br>55,711<br>Tangible Common Equity (Non-GAAP)<br>$185,417<br>$214,817<br>$243,400<br>$245,584<br>$248,045<br>$243,447<br>$245,584<br>$220,497<br>Total Number of Shares Outstanding<br>12,319<br>13,716<br>15,912<br>15,759<br>15,958<br>15,750<br>15,759<br>15,719<br>Tangible Book Value Per Share<br>$15.05<br>$15.66<br>$15.30<br>$15.58<br>$15.54<br>$15.46<br>$15.58<br>$14.03<br>Holding Company Tangible Assets<br>For the Year Ended<br>For the Quarter Ended<br>($000)<br>12/31/2018<br>12/31/2019<br>12/31/2020<br>12/31/2021<br>6/30/2021<br>9/30/2021<br>12/31/2021<br>3/31/2022<br>Assets (GAAP)<br>$1,290,893<br>$1,654,145<br>$2,239,100<br>$2,327,648<br>$2,339,063<br>$2,354,896<br>$2,327,648<br>$2,330,371<br>Less: Intangible Assets<br>11,951<br>29,635<br>56,356<br>55,821<br>56,088<br>55,955<br>55,821<br>55,711<br>Tangible Assets (Non-GAAP)<br>$1,278,942<br>$1,624,510<br>$2,182,744<br>$2,271,827<br>$2,282,975<br>$2,298,941<br>$2,271,827<br>$2,274,660<br>Bank Level Tangible Common Equity<br>For the Year Ended<br>For the Quarter Ended<br>($000)<br>12/31/2018<br>12/31/2019<br>12/31/2020<br>12/31/2021<br>6/30/2021<br>9/30/2021<br>12/31/2021<br>3/31/2022<br>Total Equity Capital (GAAP)<br>$174,795<br>$228,413<br>$292,455<br>$298,797<br>$296,871<br>$297,218<br>$298,797<br>$276,693<br>Less: Intangible Assets<br>13,355<br>30,912<br>58,153<br>58,150<br>58,204<br>58,202<br>58,150<br>58,140<br>Plus: Intangible Assets: Mortgage Servicing<br>1,404<br>1,277<br>1,689<br>2,329<br>2,116<br>2,247<br>2,329<br>2,429<br>Tangible Common Equity (Non-GAAP)<br>$162,844<br>$198,778<br>$235,991<br>$242,976<br>$240,783<br>$241,263<br>$242,976<br>$220,982<br>Bank Level Tangible Assets<br>For the Year Ended<br>For the Quarter Ended<br>($000)<br>12/31/2018<br>12/31/2019<br>12/31/2020<br>12/31/2021<br>6/30/2021<br>9/30/2021<br>12/31/2021<br>3/31/2022<br>Assets (GAAP)<br>$1,276,156<br>$1,638,285<br>$2,222,478<br>$2,311,213<br>$2,322,407<br>$2,338,322<br>$2,311,213<br>$2,314,317<br>Less: Intangible Assets<br>13,355<br>30,912<br>58,153<br>58,150<br>58,204<br>58,202<br>58,150<br>58,140<br>Plus: Intangible Assets: Mortgage Servicing<br>1,404<br>1,277<br>1,689<br>2,329<br>2,116<br>2,247<br>2,329<br>2,429<br>Tangible Assets (Non-GAAP)<br>$1,264,205<br>$1,608,650<br>$2,166,014<br>$2,255,392<br>$2,266,319<br>$2,282,367<br>$2,255,392<br>$2,258,606
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