EX-99.2

Exhibit 99.2

90-92 Main Street, P.O. Box 58
Wellsboro, PA 16901
Phone: (570) 724-3411 Fax: (570) 723-8097
E-Mail: cnemail@cnbankpa.com Web Page: http://www.cnbankpa.com
Stock Symbol: CZNC


Chartered 1864		FEDERAL DEPOSIT INSURANCE CORP


*March 31, 2007*		QUARTERLY REPORT

Dear Shareholder:

The merger with Citizens Bancorp and its subsidiary, Citizens Trust Company, will occur on May 1st, 2007. All regulatory approvals have been received, and Citizens Bancorp shareholders overwhelmingly, 99.99% of the shares voted, approved the merger at their April 16th special meeting. This merger will extend the market of your company into Potter, McKean and Cameron Counties. We extend a warm welcome to the customers, communities, shareholders and employees of Citizens Bancorp.

The news on the earnings front is still old news, the yield curve remains flat to slightly inverted, which puts pressure on our interest spread and margin. The interest and dividend income increased 2.4% or $380 thousand compared to the first quarter of 2006 due chiefly to the 6.77% increase on loans. However, the net interest margin decreased by $342 thousand, or 4% due to a 9.9% increase in interest expense. There is no margin to be gained by holding or growing fixed income securities, and we continue to shrink the available for sale securities and borrowings.

Trust Assets Under Management increased by nearly 11% year over year, which has resulted in a $171 thousand, or 33.5% increase in revenue. First State Bank has been approved for trust powers and we are proceeding full speed to establish the department and to begin business development.

The long over due conversion of First State Bank to our computer system has been accomplished and we look forward to the economies and new service opportunities that conversion is expected to deliver. Our new offices in Lycoming County continue to make progress in growing deposits and loans. Short-term we have the extra expense. Long-term we expect greater revenue and net income.

Craig G. Litchfield
Chairman, President & CEO

CITIZENS & NORTHERN CORPORATION
BOARD OF DIRECTORS

Craig G. Litchfield Chairman of the Board


Dennis F. Beardslee		Edward L. Learn
R. Robert DeCamp		Raymond R. Mattie
Jan E. Fisher		Edward H. Owlett, III
R. Bruce Haner		Leonard Simpson
Susan E. Hartley		James E. Towner
Karl W. Kroeck		Ann M. Tyler
Leo F. Lambert


CITIZENS & NORTHERN BANK OFFICES
428 S. Main Street, ATHENS, PA 18810		570-888-2291
111 Main Street, DUSHORE, PA 18614		570-928-8124
Main Street, EAST SMITHFIELD, PA 18817		570-596-3131
104 Main Street, ELKLAND, PA 16920		814-258-5111
230-232 Railroad Street, JERSEY SHORE, PA 17740		570-398-4555
102 E. Main Street, KNOXVILLE, PA 16928		814-326-4151
Main Street, LAPORTE, PA 18626		570-946-4011
Main Street, LIBERTY, PA 16930		570-324-2331
1085 S. Main Street, MANSFIELD, PA 16933		570-662-1111
RR 2 Box 3036, MONROETON, PA 18832		570-265-2157
3461 Rte.405 Highway, MUNCY, PA 17756		570-546-6666
Thompson Street, RALSTON, PA 17763		570-995-5421
1827 Elmira Street, SAYRE, PA 18840		570-888-2220
2 E. Mountain Ave., SO. WILLIAMSPORT, PA 17702		570-601-3016
41 Main Street, TIOGA, PA 16946		570-835-5236
428 Main Street, TOWANDA, PA18848		570-265-6171
Court House Square, TROY, PA 16947		570-297-2159
90-92 Main Street, WELLSBORO, PA 16901		570-724-3411
130 Court Street, WILLIAMSPORT, PA 17701		570-320-0100
1510 Dewey Ave., WILLIAMSPORT, PA 17702		570-323-9305
Route 6, WYSOX, PA 18854		570-265-9148

TRUST & FINANCIAL MANAGEMENT GROUP
90-92 Main Street, Wellsboro, PA 16901		800-487-8784
428 Main Street, Towanda, PA 18848		888-987-8784
503 N. Elmira Street, Sayre, PA 18840		888-760-8192
130 Court Street, Williamsport, PA 17701		570-601-6000
ACCOUNT SERVICES - 90-92 Main St., Wellsboro, PA 16901		800-726-2265
BANKCARD SERVICES - 10 Nichols St., Wellsboro PA 16901		800-676-6639
CASH MANAGEMENT / INTERNET BANKING — 10 Nichols St., Wellsboro, PA 16901		570-724-0266
www.fmt@cnbankpa.com
FUNDS MANAGEMENT — 10 Nichols St., Wellsboro, PA 16901		800-577-9397
www.fmt@cnbankpa.com
C&N FINANCIAL SERVICES CORPORATION — 90-92 Main Street, Wellsboro, PA	866-ASK-CNFS
www.cnfinancialservices.com

CANISTEO VALLEY CORPORATION
3 Main Street, Canisteo, NY 14823		607-698-4295

FIRST STATE BANK OFFICES
3 Main Street, CANISTEO, NY 14823		607-698-4295
6250 County Route 64, HORNELL, NY 14843		607-324-4081
www.fsbcanisteo.com

CONSOLIDATED STATEMENT OF INCOME
(In Thousands, Except Per Share Data) (Unaudited)


	3 MONTHS ENDED
	MARCH
	2007		2006
	(Current)		(Prior Yr)
Interest and Dividend Income	$	16,243	$	15,863
Interest Expense		8,000		7,278

Interest Margin		8,243		8,585
Provision for Loan Losses		229		600

Interest Margin After Provision for Loan Losses		8,014		7,985
Other Income		2,082		1,789
Realized Gains on Securities, Net		1,167		1,315
Other Expenses		8,247		7,843

Income Before Income Tax Provision		3,016		3,246
Income Tax Provision		558		426

NET INCOME	$	2,458	$	2,820


PER SHARE DATA ():**
Net Income — Basic	$	0.30	$	0.34
Net Income — Diluted	$	0.30	$	0.33
Dividend Per Share	$	0.24	$	0.24
Number Shares Used in Computation — Basic		8,295,788		8,379,891
Number Shares Used in Computation — Diluted		8,313,814		8,417,978

CONSOLIDATED BALANCE SHEET
(In Thousands, Except Per Share Data) (Unaudited)


	MARCH 31,			MARCH 31,
	2007			2006
ASSETS
Cash & Due from Banks	$	23,548		$	21,462
Trading Securities		1,528			—
Available-for-Sale Securities		342,780			427,975
Loans, Net		687,661			644,071
Intangible Assets		3,124			3,321
Other Assets		62,318			63,815

TOTAL ASSETS	$	1,120,959		$	1,160,644


LIABILITIES
Deposits	$	770,158		$	752,714
Repo Sweep Accounts		27,367			24,364

Total Deposits and Repo Sweeps		797,525			777,078
Borrowed Funds		182,902			245,239
Other Liabilities		10,767			8,279

TOTAL LIABILITIES		991,194			1,030,596


SHAREHOLDERS’ EQUITY
Shareholders’ Equity, Excluding Net Unrealized Gains/Losses on Available-for sale Securities		129,500			127,716
Accumulated Other Comprehensive Income/ Loss:
Net Unrealized Gains/Losses on Available- for-sale Securities		1,440			2,332
Defined Benefit Plans Adjustment, Net (*)		(1,175	)		—

TOTAL SHAREHOLDERS’ EQUITY		129,765			130,048

TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY	$	1,120,959		$	1,160,644

CONSOLIDATED FINANCIAL HIGHLIGHTS
(In Thousands, Except Per Share Data) (Unaudited)


	3 MONTHS ENDED MARCH						%
							INCREASE
	2007			2006			(DECREASE)
EARNINGS PERFORMANCE
Net Income	$	2,458		$	2,820			-12.84	%
Return on Average Assets		0.88	%		0.98	%		-10.20	%
Return on Average Equity		7.54	%		8.51	%		-11.40	%

BALANCE SHEET HIGHLIGHTS Total Assets	$	1,120,959		$	1,160,644			-3.42	%
Available-for-Sale Securities		342,780			427,975			-19.91	%
Loans (Net)		687,661			644,071			6.77	%
Allowance for Loan Losses		8,338			8,915			-6.47	%
Deposits and Repo Sweep Accounts		797,525			777,078			2.63	%

Trust Assets Under Management		526,747			474,708			10.96	%

SHAREHOLDERS’ VALUE (PER SHARE) ()**
Net Income — Basic	$	0.30		$	0.34			-11.76	%
Net Income — Diluted	$	0.30		$	0.33			-9.09	%
Dividends	$	0.24		$	0.24			0.00	%
Book Value	$	15.67		$	15.54			0.84	%
Market Value (Last Trade)	$	20.60		$	24.20			-14.88	%
Market Value / Book Value		131.46	%		155.73	%		-15.58	%
Price Earnings Multiple		17.17			17.79			-3.49	%
Dividend Yield		4.66	%		3.97	%		17.38	%

SAFETY AND SOUNDNESS Tangible Equity / Tangible Assets		11.33	%		10.95	%		3.47	%
Nonperforming Assets / Total Assets		0.72	%		0.79	%		-8.86	%
Allowance for Loan Losses / Total Loans		1.20	%		1.37	%		-12.41	%
Risk Based Capital Ratio		17.91	%		17.75	%		0.90	%

AVERAGE BALANCES Average Assets	$	1,116,726		$	1,153,203			-3.16	%
Average Equity		130,371			132,609			-1.69	%