8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

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

Date of Report (Date of earliest event reported)       June 30, 2007     

CITIZENS & NORTHERN CORPORATION

(Exact name of registrant as specified in its charter)

Pennsylvania	0-16084	23-2451943
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

90-92 Main Street, Wellsboro, PA	16901
(Address of Principal Executive Office)	(Zip Code)

Registrant’s telephone number, including area code       (570) 724-3411     

N/A

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

ITEM 2.02. Results of Operations and Financial Condition

Citizens & Northern Corporation announced the unaudited, consolidated financial results for Citizens & Northern Corporation and subsidiaries for the three-month period ended June 30, 2007. On July 25, 2007, Citizens & Northern Corporation issued a press release titled “C&N Announces Second Quarter 2007 Unaudited Financial Results, Portfolio Restructuring” a copy of which is filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference. Also, Citizens & Northern Corporation’s “Quarterly Report,” a report that includes unaudited financial information, will be mailed to shareholders on or about July 31, 2007. A copy of the Quarterly Report is filed as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference.

ITEM 9.01. Financial Statements and Exhibits

(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
(d) Exhibits.

Exhibit 99.1: Press Release issued by Citizens & Northern Corporation dated July 25, 2007, titled “C&N Announces Second Quarter 2007 Unaudited Financial Results, Portfolio Restructuring.”

Exhibit 99.2: Quarterly Report, which includes unaudited financial information.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned, thereunto duly authorized.

	CITIZENS & NORTHERN CORPORATION
Date: 7/25/07	By:	/s/ Craig G. Litchfield
		Chairman, President and Chief Executive Officer

EX-99.1

Exhibit 99.1

	Contact: Yvonne Gill
July 25, 2007	570-724-0247
	yvonneg@cnbankpa.com

C&N ANNOUNCES SECOND QUARTER 2007 UNAUDITED FINANCIAL RESULTS, PORTFOLIO RESTRUCTURING

FOR IMMEDIATE RELEASE:

     WELLSBORO, PA — Citizens & Northern Corporation announced its unaudited, consolidated financial results for the six-month and three-month periods ended June 30, 2007. As described in more detail below, earnings for the six-month and three-month periods ended June 30, 2007 were impacted by management’s decision to restructure the securities portfolio. Net Income totaled $4,394,000 in the first six months of 2007, down 27% from the first six months of 2006. Net Income Per Share was $0.52 (Basic and Diluted) in the first six months of 2007, down 28% from the first six months of 2006. Return on average assets was 0.76% in the first six months of 2007, as compared to 1.05% in the first six months of 2006. Return on average equity was 6.53% in the six months ended June 30, 2007, as compared to 9.17% in the six months ended June 30, 2006. Cash dividends declared were $0.48 per share in both 2007 and 2006.

     Results for the first six months of 2007 were impacted by a loss (net of tax) on impaired securities of $1,175,000. The loss from impaired securities reduced Net Income Per Share by $0.14 (Basic) and $0.13 (Diluted) for the first six months of 2007. The securities classified as impaired were adjustable rate mortgage-backed securities with a face value totaling $44,509,000, and were sold in July 2007. Craig Litchfield, C&N’s CEO explained, “the securities we have sold for a loss were purchased in 2003 and 2004, when interest rates were much lower than they are today. The average yield on these securities in the second quarter 2007 was 4.41%, and we intend to utilize the proceeds from the sales to purchase a combination of mortgage-backed securities and other securities for a yield of about 6%. This gives us an opportunity to significantly improve future earnings from the securities portfolio. At current interest

rates, we expect the total increase in earnings from the new securities to equal the amount of up-front loss on the sale in approximately three years, while the average remaining life of the securities being sold is estimated to be at least four years.” Litchfield also commented, “the decision to restructure the investment portfolio is part of management’s initiatives to enhance revenues and reduce expenses over the remainder of 2007 and 2008.”

     On May 1, 2007, C&N’s acquisition of Citizens Bancorp, Inc. became effective. Citizens Bancorp, Inc. was the parent company of Citizens Trust Company, with offices in Coudersport, Port Allegany and Emporium, PA. The Citizens Trust Company operations, which are now part of Citizens & Northern Bank, contributed significantly to growth in total assets, including loans, as well to growth in deposits and trust assets under management during the second quarter 2007.

     Unaudited financial ratios include the following:

• Total assets amounted to $1,224,983,000 as of June 30, 2007, up 9.0% from June 30, 2006.

• Net loans increased 14.9%, to $747,114,000 at June 30, 2007 from $650,294,000 at June 30, 2006. Excluding the addition of Citizens Trust Company, net loans increased 5.8%.

• Total deposits and repo sweep accounts increased 15.5%, to $901,145,000 at June 30, 2007 from $779,924,000 at June 30, 2006. Excluding Citizens Trust Company, total deposits and repo sweeps increased 2.3%.

• Assets under management by C&N’s Trust and Financial Management Group increased 39.9%, to $666,425,000 at June 30, 2007 from $476,437,000 at June 30, 2006. Excluding Citizens Trust Company, assets under management increased 18.4%.

• Tangible Equity/Tangible Assets Ratio was 10.55% at June 30, 2007.

     The net interest margin increased $253,000, or 1.5%, in the six months ended June 30, 2007 as compared to the first six months of 2006. The acquisition of Citizens Trust Company resulted in increased interest and fees on loans, and provided funding to help pay off borrowings. Overall, C&N continues to be hampered by the yield curve, which has been flat or inverted throughout 2006 and 2007, and has limited opportunities to earn a positive spread from maintaining borrowed funds and holding investment securities.

     Noninterest revenue increased $1,078,000 (28.9%) in the six months ended June 30, 2007 over the first six months of 2006. Trust and Financial Management revenue increased $563,000 (53.2%), including an increase of 40.0% excluding Citizens Trust Company, and a contribution to revenue from Citizens Trust Company of $140,000. Other significant increases in noninterest revenue included: service charges on deposits, which increased $167,000 (including $117,000 from Citizens Trust Company), and increases in fees for letter of credit, credit card (as a third party agent) and debit card services totaling $204,000.

     Net realized losses (pre-tax) from sales of securities amounted to $80,000 in the first six months of 2007. Excluding the $1,780,000 (pre-tax) loss on impaired securities described above, securities gains

for the six months ended June 30, 2007, totaled $1,700,000, down $948,000 from the first six months of 2006. Most of the gains realized in both periods were from sales of bank stocks.

     Noninterest expense increased $620,000 (3.9%) in the six months ended June 30, 2007 as compared to the same period in 2006. Excluding the addition of Citizens Trust Company, management estimates that total noninterest expense for the first six months of 2007 would be virtually the same as in the same period of 2006.

     The income tax provision decreased $321,000, to $918,000 in the six months ended June 30, 2007 from $1,239,000 in the first six months of 2006, as a result of lower pre-tax earnings.

SECOND QUARTER 2007:

     Second quarter 2007 results were impacted by the securities impairment loss described above. Net Income in the second quarter 2007 was $1,936,000, down $1,263,000 (39.5%) from second quarter 2006. Second quarter 2007 Net Income was $522,000 (21.2%) lower than first quarter 2007. Net Income Per Share (Basic and Diluted) was $0.22 in the second quarter 2007, as compared to $0.38 (Basic and Diluted) in the second quarter 2006, and $0.30 (Basic and Diluted) in the first quarter 2007. Excluding the securities impairment loss, Net Income Per Share (Basic and Diluted) would have been $0.36 in the second quarter 2007.

     Citizens & Northern Corporation is the parent company of Citizens & Northern Bank and First State Bank. Citizens & Northern Bank is a local, independent community bank providing complete financial, investment and insurance services through 24 full service offices throughout Tioga, Bradford, Sullivan and Lycoming counties in Pennsylvania, and through the Citizens Trust Company locations in Coudersport, Emporium and Port Allegany. Citizens Trust Company can be found on the worldwide web at www.citizenstrustcompany.com. First State Bank provides banking services through its offices in Canisteo and South Hornell, NY. C&N can be found on the worldwide web at www.cnbankpa.com. First State Bank can be found on the web at www.fsbcanisteo.com. The Company’s stock is listed on NASDAQ Capital Market Securities under the symbol CZNC.

Safe Harbor Statement: Except for historical information contained herein, the matters discussed in this release are forward-looking statements. Investors are cautioned that all forward-looking statements involve risks and uncertainty, including without limitation, the ability to achieve anticipated acquisition related operational efficiencies, the ability to enhance revenues through improved investment performance, increased market penetration, expanded lending capacity and product offerings and other risks detailed from time to time in Citizens & Northern’s SEC filings, including Forms 10-Q and 10-K (copies of which are available from Citizens & Northern in hard copy or online at www.sec.gov). Citizens & Northern disclaims any intention or obligation to publicly update or revise any forward-looking statements, whether as a result of events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

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 Member FEDERAL DEPOSIT INSURANCE CORP

June 30, 2007

QUARTERLY REPORT

Dear Shareholder:

The Citizens Trust Company (CTC) merger occurred on May 1st and the financial effects of the merger are reflected in the unaudited balance sheet and income statement attached. Total assets increased to $1.2 billion or 9% from last year. Net loans increased 14.9% with the addition of CTC loans, 5.8% excluding CTC. Total deposits and repo sweeps increased by 15.5% with the merger, 2.3% excluding CTC. Trust Assets under management increased to $666.4 million or 39.9%, 18.4% excluding CTC. Tangible Equity/Tangible Assets stood at 10.55%.

Due to a strategic investment portfolio restructuring resulting in an after tax loss of $1.175 million, our net income for the quarter dropped to $1.9 million. The securities that were sold at a loss were originally purchased in 2003 and 2004 when yields on fixed income securities were lower than today’s rates on similar instruments. The average yield on the sold instruments was 4.41%. We intend to reinvest the proceeds from the sale in securities that will yield about 6%. Net interest income increased by 1.5% in the six month period ending June 30th and noninterest revenue increased by $1.078 million or 28.9% due in large part to a 53.2% increase in Trust and Financial Management revenue.

Management has begun several initiatives to reduce future expenses and enhance our revenues and net income. You should see the results of those initiatives in our financial reports over the next 18 months.

Our EZ-Deposit program is off to a running start. EZ-Deposit permits businesses to capture and transmit from their own offices images of checks they receive during the day. This saves the businessperson time and money. When combined with our current and planned comprehensive cash management processes (e.g., Internet Banking, ACH origination and deposit and credit sweeps), we provide our business clients with significant savings and efficiencies.

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	Charles H. Updegraff Jr.

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.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

CITIZENS TRUST COMPANY
a Division of Citizens & Northern Bank
OFFICES

10 N Main Street, COUDERSPORT, PA 16915	814-274-9150
135 East Fourth Street, EMPORIUM, PA 15834	814-486-1112
100 Maple Street, PORT ALLEGANY, PA 16743	814-642-2571
www.citizenstrustcompany.com

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					6 MONTHS ENDED
	JUNE					JUNE
	2007		2006			2007			2006
	(Current)		(Prior Yr)			(Current)			(Prior Yr)
Interest and Dividend Income	$	17,692	$	15,984		$	33,935		$	31,847
Interest Expense		8,679		7,566			16,679			14,844
Interest Margin		9,013		8,418			17,256			17,003
(Credit)/Provision for Loan Losses		—		(300	)		229			300
Interest Margin After Provision for Loan Losses		9,013		8,718			17,027			16,703
Other Income		2,716		1,937			4,804			3,726
Realized (Losses) Gains on Securities, Net		(1,241		) 1,333			(80	)		2,648
Other Expenses		8,192		7,976			16,439			15,819
Income Before Income Tax Provision		2,296		4,012			5,312			7,258
Income Tax Provision		360		813			918			1,239
NET INCOME	$	1,936	$	3,199		$	4,394		$	6,019
PER SHARE DATA (**):
Net Income — Basic	$	0.22	$	0.38		$	0.52		$	0.72
Net Income — Diluted	$	0.22	$	0.38		$	0.52		$	0.72
Dividend Per Share	$	0.24	$	0.24		$	0.48		$	0.48
Number Shares Used in Computation — Basic		8,698,703		8,363,821			8,497,076			8,371,810
Number Shares Used in Computation — Diluted		8,711,732		8,386,723			8,512,559			8,402,130

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

	JUNE 30,			JUNE 30,
	2007			2006
ASSETS
Cash & Due from Banks	$	42,814		$	42,084
Trading Securities		2,514			—
Available-for-Sale Securities		344,283			362,573
Loans, Net		747,114			650,294
Intangible Assets		13,758			3,319
Other Assets		74,500			65,437
TOTAL ASSETS	$	1,224,983		$	1,123,707
LIABILITIES
Deposits	$	871,141		$	756,474
Repo Sweep Accounts		30,004			23,450
Total Deposits and Repo Sweeps		901,145			779,924
Borrowed Funds		172,704			208,389
Other Liabilities		9,641			6,768
TOTAL LIABILITIES		1,083,490			995,081
SHAREHOLDERS’ EQUITY
Shareholders’ Equity, Excluding Net Unrealized Gains/Losses on Available-for-Sale Securities		143,297			128,715
Accumulated Other Comprehensive Income/ Loss:
Net Unrealized Gains/Losses on Available-for-Sale Securities		(636	)		(89	)
Defined Benefit Plans Adjustment, Net (*)		(1,168	)		—
TOTAL SHAREHOLDERS’ EQUITY		141,493			128,626
TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY	$	1,224,983		$	1,123,707

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

	6 MONTHS ENDED						%
	JUNE						INCREASE
	2007			2006			(DECREASE)
EARNINGS PERFORMANCE
Net Income	$	4,394		$	6,019			-27.00	%
Return on Average Assets		0.76	%		1.05	%		-27.62	%
Return on Average Equity		6.53	%		9.17	%		-28.79	%
BALANCE SHEET HIGHLIGHTS
Total Assets	$	1,224,983		$	1,123,707			9.01	%
Available-for-Sale Securities		344,283			362,573			-5.04	%
Loans (Net)		747,114			650,294			14.89	%
Allowance for Loan Losses		8,922			8,062			10.67	%
Deposits and Repo Sweep Accounts		901,145			779,924			15.54	%
Trust Assets Under Management		666,425			476,437			39.88	%
SHAREHOLDERS’ VALUE (PER SHARE) (**)
Net Income — Basic	$	0.52		$	0.72			-27.78	%
Net Income — Diluted	$	0.52		$	0.72			-27.78	%
Dividends	$	0.48		$	0.48			0.00	%
Book Value	$	15.88		$	15.38			3.25	%
Tangible Book Value	$	14.34		$	14.99			-4.34	%
Market Value (Last Trade)	$	19.56		$	23.62			-17.19	%
Market Value / Book Value		123.17	%		153.58	%		-19.80	%
Market Value / Tangible Book Value		136.40	%		157.57	%		-13.44	%
Price Earnings Multiple		18.81			16.40			14.68	%
Dividend Yield		4.91	%		4.06	%		20.89	%
SAFETY AND SOUNDNESS
Tangible Equity / Tangible Assets		10.55	%		11.18	%		-5.67	%
Nonperforming Assets / Total Assets		0.56	%		0.53	%		5.66	%
Allowance for Loan Losses / Total Loans		1.18	%		1.22	%		-3.28	%
Risk Based Capital Ratio		16.84	%		17.58	%		-4.21	%
AVERAGE BALANCES
Average Assets	$	1,152,512		$	1,146,472			0.53	%
Average Equity		134,497			131,205			2.51	%

(*)	Effective December 31, 2006, Statement of Financial Accounting Standards No. 158 requires gains or losses, prior service costs or credits, and transition assets or obligations as of the end of the period that have not yet been included in net periodic benefit cost be recognized as accumulated other comprehensive income or loss, net of tax.
(**)	For purposes of per share calculations, the number of outstanding shares has been retroactively adjusted for the effects of 1% stock dividends issued in January of 2007 and 2006.