10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2012

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _________________________.

Commission file number: 0-16084

CITIZENS & NORTHERN CORPORATION

(Exact name of Registrant as specified in its charter)

PENNSYLVANIA	23-2451943
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

90-92 MAIN STREET, WELLSBORO, PA 16901

(Address of principal executive offices) (Zip code)

570-724-3411

(Registrant's telephone number including area code)

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

Title of Each Class	Name of Exchange Where Registered
Common Stock Par Value $1.00	The NASDAQ Stock Market LLC

Securities registered pursuant to section 12(g) of the Act: None

Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer “and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

(Check one:) Large accelerated filer ¨ Accelerated filer x Non-accelerated filer ¨ Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

The aggregate market value of the registrant's common stock held by non-affiliates at June 30, 2012, the registrant’s most recently completed second fiscal quarter, was $228,460,311.

The number of shares of common stock outstanding at February 19, 2013 was 12,331,554.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s proxy statement for the annual meeting of its shareholders to be held April 16, 2013 are incorporated by reference into Parts III and IV of this report.

PART I

ITEM 1. BUSINESS

Citizens & Northern Corporation (“Corporation”) is a holding company whose principal activity is community banking. The Corporation’s principal office is located in Wellsboro, Pennsylvania. The largest subsidiary is Citizens & Northern Bank (“C&N Bank” or the “Bank”). In 2005, the Corporation acquired Canisteo Valley Corporation and its subsidiary, First State Bank, a New York State chartered commercial bank with offices in Canisteo and South Hornell, NY. Management considers the New York State branches, which are located in the southern tier of New York State in close proximity to some of the Pennsylvania branches, to be part of the same community banking operating segment as the Pennsylvania locations. Effective September 1, 2010, the First State Bank operations were merged into C&N Bank, and later in September 2010, Canisteo Valley Corporation was merged into the Corporation. The Corporation’s other wholly-owned subsidiaries are Citizens & Northern Investment Corporation and Bucktail Life Insurance Company (“Bucktail”). Citizens & Northern Investment Corporation was formed in 1999 to engage in investment activities. Bucktail reinsures credit and mortgage life and accident and health insurance on behalf of C&N Bank.

C&N Bank is a Pennsylvania banking institution that was formed by the consolidation of Northern National Bank of Wellsboro and Citizens National Bank of Towanda on October 1, 1971. Subsequent mergers included: First National Bank of Ralston in May 1972; Sullivan County National Bank in October 1977; Farmers National Bank of Athens in January 1984; and First National Bank of East Smithfield in May 1990. On May 1, 2007, the Corporation acquired Citizens Bancorp, Inc. (“Citizens”), with banking offices in Coudersport, Emporium and Port Allegany, Pennsylvania. Citizens Trust Company, the banking subsidiary of Citizens, was merged with and into C&N Bank as part of the transaction. C&N Bank has held its current name since May 6, 1975, at which time C&N Bank changed its charter from a national bank to a Pennsylvania bank.

C&N Bank provides an extensive range of banking services, including deposit and loan products for personal and commercial customers. The Bank also maintains a trust division that provides a wide range of financial services, such as 401(k) plans, retirement planning, estate planning, estate settlements and asset management. In January 2000, C&N Bank formed a subsidiary, C&N Financial Services Corporation (“C&NFSC”). C&NFSC is a licensed insurance agency that provides insurance products to individuals and businesses. In 2001, C&NFSC added a broker-dealer division, which offers mutual funds, annuities, educational savings accounts and other investment products through registered agents. C&NFSC’s operations are not significant in relation to the total operations of the Corporation.

All phases of the Bank’s business are competitive. The Bank primarily competes in Tioga, Bradford, Sullivan, Lycoming, Potter, Cameron and McKean counties in Pennsylvania, and Steuben and Allegany counties in New York. The Bank competes with local commercial banks headquartered in our market area as well as other commercial banks with branches in our market area. Some of the banks that have branches in our market area are larger in overall size. With respect to lending activities and attracting deposits, the Bank also competes with savings banks, savings and loan associations, insurance companies, regulated small loan companies and credit unions. Also, the Bank competes with mutual funds for deposits. C&N Bank competes with insurance companies, investment counseling firms, mutual funds and other business firms and individuals for trust, investment management, brokerage and insurance services. The Bank is generally competitive with all financial institutions in our service area with respect to interest rates paid on time and savings deposits, service charges on deposit accounts and interest rates charged on loans. The Bank serves a diverse customer base, and is not economically dependent on any small group of customers or on any individual industry.

Major initiatives within the last 5 years included the following:

· implemented an overdraft privilege program in 2008;

· underwent an operational process review in 2008, resulting in identification of opportunities for increases in revenue and decreases in expenses, including a net reduction in work force of 15.9%, to 297 full-time equivalent employees at December 31, 2008 from 353 at December 31, 2007;

· in 2009, raised capital of $26.440 million by issuing preferred stock and a warrant to sell 194,794 shares of common stock to the U.S. Department of the Treasury under the Troubled Asset Relief Program (“TARP”) Capital Purchase Program;

· in 2009, issued common stock, which raised a total of $24.585 million of capital, net of offering costs;

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· in 2009, began originating and selling residential mortgage loans to the secondary market through the MPF Xtra program administered by the Federal Home Loan Banks of Pittsburgh and Chicago, with significant growth in volume of activity under this program in 2010 through 2012, as evidenced by net gains from sales of loans of $1,925,000 in 2012, $1,107,000 in 2011 and $761,000 in 2010 and a total outstanding balance of residential mortgages sold and serviced of $100,631,000 at December 31, 2012;

· repurchased in 2010 all of the preferred stock and redeemed the warrant from the TARP Capital Purchase Program;

· merged the operations of First State Bank into C&N Bank and Canisteo Valley Corporation into Citizens & Northern Corporation in 2010;

· in 2011, sold the banking facility at 130 Court Street, Williamsport, PA, and entered into a leasing arrangement to continue to offer banking and trust services from the facility, resulting in an estimated $122,000 (pre-tax) reduction in operating expenses in 2012; and

· in April 2012, re-opened the Athens, PA, facility, which was damaged by flooding in September 2011.

Virtually all of the Corporation’s banking offices are located in the “Marcellus Shale,” an area extending across portions of New York State, Pennsylvania, Ohio, Maryland, West Virginia and Virginia. In 2009 through 2012, most of the Pennsylvania counties in which the Corporation operates have been significantly affected by an upsurge in natural gas exploration, as technological developments have made exploration of the Marcellus Shale commercially feasible. A significant portion of the Corporation’s new business opportunities in lending, Trust and other services during this time frame have arisen either directly or indirectly from Marcellus Shale-related activity. Due in large part to a decline in the market price of natural gas, Marcellus Shale natural gas exploration activity slowed over the course of 2012, though it has not completely stalled, and the Corporation continues to find gas-related business development opportunities. Due to its pervasive nature, it is virtually impossible to quantify the aggregate impact of Marcellus Shale-related activity on the Corporation’s financial position and results of operations in 2009 through 2012.

At December 31, 2012, C&N Bank had total assets of $1,274,880,000, total deposits of $1,008,356,000, net loans outstanding of $677,053,000 and 292full-time equivalent employees.

Most activities of the Corporation and its subsidiaries are regulated by federal or state agencies. The primary regulatory relationships are described as follows:

· The Corporation is a bank holding company formed under the provisions of Section 3 of the Federal Reserve Act. The Corporation is under the direct supervision of the Federal Reserve and must comply with the reporting requirements of the Federal Bank Holding Company Act.

· C&N Bank is a state-chartered, nonmember bank, supervised by the Federal Deposit Insurance Corporation and the Pennsylvania Department of Banking.

· C&NFSC is a Pennsylvania corporation. The Pennsylvania Department of Insurance regulates C&NFSC’s insurance activities. Brokerage products are offered through third party networking agreements.

· Bucktail is incorporated in the state of Arizona and supervised by the Arizona Department of Insurance.

A copy of the Corporation’s annual report on Form 10-K, quarterly reports on Form 10-Q, current events reports on Form 8-K, and amendments to these reports, will be furnished without charge upon written request to the Corporation’s Treasurer at P.O. Box 58, Wellsboro, PA 16901. Copies of these reports will be furnished as soon as reasonably possible, after they are filed electronically with the Securities and Exchange Commission. The information is also available through the Corporation’s web site at www.cnbankpa.com.

ITEM 1A. RISK FACTORS

The Corporation is subject to the many risks and uncertainties applicable to all banking companies, as well as risks specific to the Corporation’s geographic locations. Although the Corporation seeks to effectively manage risks, and maintains a level of equity that exceeds the banking regulatory agencies’ thresholds for being considered “well capitalized” (see Note 18 to the consolidated financial statements), management cannot predict the future and cannot eliminate the possibility of credit, operational or other losses. Accordingly, actual results may differ materially from management's expectations. Some of the Corporation’s significant risks and uncertainties are discussed below.

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Credit Risk from Lending Activities - A significant source of risk is the possibility that losses will be sustained because borrowers, guarantors and related parties may fail to perform in accordance with the terms of their loan agreements. Most of the Corporation’s loans are secured, but some loans are unsecured. With respect to secured loans, the collateral securing the repayment of these loans may be insufficient to cover the obligations owed under such loans. Collateral values may be adversely affected by changes in economic, environmental and other conditions, including declines in the value of real estate, changes in interest rates, changes in monetary and fiscal policies of the federal government, wide-spread disease, terrorist activity, environmental contamination and other external events. In addition, collateral appraisals that are out of date or that do not meet industry recognized standards may create the impression that a loan is adequately collateralized when it is not. The Corporation has adopted underwriting and credit monitoring procedures and policies, including regular reviews of appraisals and borrower financial statements, that management believes are appropriate to mitigate the risk of loss. Also, as discussed further in the “Provision and Allowance for Loan Losses” section of Management’s Discussion and Analysis, the Corporation attempts to estimate the amount of losses that may be inherent in the portfolio through a quarterly evaluation process that includes several members of management and that addresses specifically identified problem loans, as well as other quantitative data and qualitative factors. Such risk management and accounting policies and procedures, however, may not prevent unexpected losses that could have a material adverse effect on the Corporation’s financial condition, results of operations or liquidity.

Interest Rate Risk - Business risk arising from changes in interest rates is an inherent factor in operating a banking organization. The Corporation’s assets are predominantly long-term, fixed-rate loans and debt securities. Funding for these assets comes principally from shorter-term deposits and borrowed funds. Accordingly, there is an inherent risk of lower future earnings or decline in fair value of the Corporation’s financial instruments when interest rates change. Significant fluctuations in interest rates could have a material adverse effect on the Corporation’s financial condition, results of operations or liquidity. For additional information regarding interest rate risk, see Part II, Item 7A, "Quantitative and Qualitative Disclosures About Market Risk."

Mortgage Banking – In September 2009, the Corporation entered into an agreement to originate and sell residential mortgage loans to the secondary market through the MPF Xtra program administered by the Federal Home Loan Banks of Pittsburgh and Chicago. The Corporation’s mortgage sales activity under this program was not significant in 2009, but increased in 2010, 2011 and 2012. At December 31, 2012, total residential mortgages serviced amounted to $100,631,000. The Corporation must strictly adhere to the MPF Xtra program guidelines for origination, underwriting and servicing loans, and failure to do so could result in the Corporation being forced to repurchase loans or being dropped from the program. If such a forced repurchase of loans were to occur, or if the Corporation were to be dropped from the program, it could have a material adverse effect on the Corporation’s financial condition, results of operations or liquidity.

Equity Securities Risk - The Corporation’s equity securities portfolio consists of investments in stocks of banks and bank holding companies. Investments in bank stocks are subject to the risk factors affecting the banking industry, and that could cause a general market decline in the value of bank stocks. Also, losses could occur in individual stocks held by the Corporation because of specific circumstances related to each bank. These factors could have a material adverse effect on the Corporation’s financial condition, results of operations or liquidity. For additional information regarding equity securities risk, including management’s assessment of equity securities for other-than-temporary impairment as of December 31, 2012, see Part II, Item 7A, "Quantitative and Qualitative Disclosures About Market Risk."

Debt Securities Risk – In 2009, the Corporation’s earnings were materially impaired by securities losses. Much of the Corporation’s 2009 losses from trust-preferred securities and other securities stem from the much-publicized economic problems affecting the national and international economy, which particularly hurt the banking industry. The Corporation has exposure to the possibility of future losses from investments in a senior tranche pooled trust-preferred security, a trust-preferred security issued by an individual bank, obligations of states and political subdivisions (also known as municipal bonds) and other debt securities. For additional information regarding debt securities, see Note 7 to the consolidated financial statements.

The Federal Home Loan Bank of Pittsburgh - Through its subsidiary (C&N Bank), the Corporation is a member of the Federal Home Loan Bank of Pittsburgh (FHLB-Pittsburgh), which is one of 12 regional Federal Home Loan Banks. The Corporation has a line of credit with the FHLB-Pittsburgh that is secured by a blanket lien on its loan portfolio. Access to this line of credit is critical if a funding need arises. However, there can be no assurance that the FHLB-Pittsburgh will be able to provide funding when needed, nor can there be assurance that the FHLB-Pittsburgh will provide funds specifically to the Corporation should its financial condition deteriorate and/or regulators prevent that access. The inability to access this source of funds could have a materially adverse effect on the Corporation’s financial flexibility if alternate financing is not available at acceptable interest rates. The failure of the FHLB-Pittsburgh or the FHLB system in general, may materially impair the Corporation’s ability to meet short- and long-term liquidity needs or to meet growth plans.

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The Corporation owns common stock of the FHLB-Pittsburgh in order to qualify for membership in the FHLB system and access services from the FHLB-Pittsburgh. The FHLB-Pittsburgh faces a variety of risks in its operations including interest rate risk, counterparty credit risk, and adverse changes in its regulatory framework. In addition, the 12 Federal Home Loan Banks are jointly liable for the consolidated obligations of the FHLB system. To the extent that one FHLB cannot meet its obligations, other FHLBs can be called upon to make required payments. Such risks affecting the FHLB-Pittsburgh could adversely impact the value of the Corporation’s investment in the common stock of the FHLB-Pittsburgh and/or affect its access to credit.

Soundness of Other Financial Institutions - In addition to the FHLB-Pittsburgh, the Corporation maintains other credit facilities that provide it with additional liquidity. These facilities include secured and unsecured borrowings from the Federal Reserve Bank and third-party commercial banks. The Corporation believes that it maintains a strong liquidity position and that it is well positioned to withstand foreseeable market conditions. However, legal agreements with counterparties typically include provisions allowing them to restrict or terminate the Corporation’s access to these credit facilities with or without advance notice and at their sole discretion.

Financial institutions are interconnected as a result of trading, clearing, counterparty, and other relationships. Financial market conditions have been negatively impacted in the past and such disruptions or adverse changes in the Corporation's results of operations or financial condition could, in the future, have a negative impact on available sources of liquidity. Such a situation may arise due to circumstances that are outside the Corporation’s control, such as general market disruptions or operational problems affecting the Corporation or third parties. The Corporation’s efforts to monitor and manage liquidity risk may not be successful or sufficient to deal with dramatic or unanticipated reductions in available liquidity. In such events, the Corporation’s cost of funds may increase, thereby reducing net interest income, or the Corporation may need to sell a portion of its securities and/or loan portfolio, which, depending upon market conditions, could necessitate realizing a loss.

FDIC Insurance Assessments - In 2008 and 2009, higher levels of bank failures dramatically increased the resolution costs of the Federal Deposit Insurance Corporation, or the FDIC, and depleted the deposit insurance fund. In addition, the FDIC and the U.S. Congress have taken action to increase federal deposit insurance coverage, placing additional stress on the deposit insurance fund. In order to maintain a strong funding position and restore reserve ratios of the deposit insurance fund, in 2009 the FDIC increased assessment rates and imposed a special assessment on all insured institutions. The FDIC has indicated that future special assessments are possible, although it has not determined the magnitude or timing of any future assessments. In December 2009, we paid a pre-payment of the FDIC’s estimated assessment total for the next three years, totaling approximately $5.5 million. The pre-payment amount has been included in Other Assets in the consolidated balance sheet, with amounts amortized in 2010, 2011 and 2012 based on current assessments. At the end of 2012, approximately $2.8 million remains to be amortized, subject to adjustments imposed by the FDIC, over future years.

Although our total expenses from FDIC assessments have decreased to $633,000 in 2012, $832,000 in 2011 and $1,450,000 in 2010 from $2,092,000 in 2009, we are generally unable to control the amount of premiums that we are required to pay for FDIC insurance. If additional bank or financial institution failures occur, we may be required to pay higher FDIC premiums. Future increases in FDIC insurance premiums or additional special assessments may materially adversely affect our results of operations.

Breach of Information Security and Technology Dependence - The Corporation relies on software, communication, and information exchange on a variety of computing platforms and networks and over the Internet. Despite numerous safeguards, the Corporation cannot be certain that all of its systems are entirely free from vulnerability to attack or other technological difficulties or failures. The Corporation relies on the services of a variety of vendors to meet its data processing and communication needs. If information security is breached or other technology difficulties or failures occur, information may be lost or misappropriated, services and operations may be interrupted and the Corporation could be exposed to claims from customers. Any of these results could have a material adverse effect on the Corporation’s financial condition, results of operations or liquidity.

Limited Geographic Diversification - The Corporation grants commercial, residential and personal loans to customers primarily in the Pennsylvania counties of Tioga, Bradford, Sullivan, Lycoming, Potter, Cameron and McKean, and in Steuben and Allegany Counties in New York State. Although the Corporation has a diversified loan portfolio, a significant portion of its debtors’ ability to honor their contracts is dependent on the local economic conditions within the region. As described in the “Business” section of Form 10-K, in recent years the Corporation’s market area has been significantly impacted by natural gas development activities associated with exploration of the Marcellus Shale. While Marcellus Shale-related development has created economic opportunities for business and individuals throughout much of our market area, natural gas exploration activity slowed over the course of 2012, and the possibility exists that this activity could be further reduced or cease as a result of changes in economic conditions, environmental concerns or other factors.

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Deterioration in economic conditions, including possible effects if Marcellus Shale-related activity were to further diminish or cease, could adversely affect the quality of the Corporation's loan portfolio and the demand for its products and services, and accordingly, could have a material adverse effect on the Corporation's financial condition, results of operations or liquidity.

Competition - All phases of the Corporation’s business are competitive. Some competitors are much larger in total assets and capitalization than the Corporation, have greater access to capital markets and can offer a broader array of financial services. There can be no assurance that the Corporation will be able to compete effectively in its markets. Furthermore, developments increasing the nature or level of competition could have a material adverse effect on the Corporation's financial condition, results of operations or liquidity.

Government Regulation and Monetary Policy - The Corporation and the banking industry are subject to extensive regulation and supervision under federal and state laws and regulations. The requirements and limitations imposed by such laws and regulations limit the manner in which the Corporation conducts its business, undertakes new investments and activities and obtains financing. These regulations are designed primarily for the protection of the deposit insurance funds and consumers and not to benefit the Corporation's shareholders. Financial institution regulation has been the subject of significant legislation in recent years and may be the subject of further significant legislation in the future, none of which is in the control of the Corporation. Significant new laws or changes in, or repeals of, existing laws could have a material adverse effect on the Corporation's financial condition, results of operations or liquidity. Further, federal monetary policy, particularly as implemented through the Federal Reserve System, significantly affects short-term interest rates and credit conditions, and any unfavorable change in these conditions could have a material adverse effect on the Corporation's financial condition, results of operations or liquidity.

Bank Secrecy Act and Related Laws and Regulations - These laws and regulations have significant implications for all financial institutions. They increase due diligence requirements and reporting obligations for financial institutions, create new crimes and penalties, and require the federal banking agencies, in reviewing merger and other acquisition transactions, to consider the effectiveness of the parties to such transactions in combating money laundering activities. Even innocent noncompliance and inconsequential failure to follow the regulations could result in significant fines or other penalties, which could have a material adverse impact on the Corporation's financial condition, results of operations or liquidity.

Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”) - On July 21, 2010, President Obama signed the Act into law. The Act contains numerous and wide-ranging changes to the structure of the U.S. financial system. Portions of the Act are effective at different times, and though some provisions have been implemented, many of the provisions require follow-on, more detailed rulemaking by regulators. Consequently, the Act’s impact on the financial system in general and the Corporation in particular cannot be predicted at this time. Some of the Act’s provisions that management believes may impact the Corporation’s financial condition and results of operations over the next few years are as follows:

· required the Federal Reserve to prescribe regulations to establish standards for determining that interchange transaction fees meet the new statutory standard of reasonable and proportional to the cost. These regulations were enacted, effective October 1, 2011, establishing maximum rates that may be paid to large (as defined) financial institutions. The maximum rates established under the rule are approximately 45% lower than the rates paid to the Corporation throughout most of the last several years. Although the rules do not apply directly to the Corporation (because the Corporation is not considered a large financial institution for this purpose), management believes interchange revenues could be reduced in the future, either because of lower volumes or because market conditions will dictate that smaller financial institutions receive rates similar to larger financial institutions.

· eliminated the prohibition against paying interest on commercial checking accounts;

· effective for the second quarter 2011 assessment, altered the FDIC’s base for determining deposit insurance assessments by requiring the assessments be determined based on “average consolidated total assets” less the institution’s “average tangible equity,” rather than on a bank’s deposits;

· increases the FDIC’s minimum reserve ratio for the deposit insurance fund from 1.15% to 1.35% of estimated deposits with no upward limit. The FDIC is required to “offset the effect” of the increased minimum reserve ratio on institutions with less than $10 billion in total consolidated assets. The intent appears to be to require the FDIC to impose higher premiums on larger banks in order to get from the old minimum of 1.15% to the new 1.35%, but all institutions can expect assessments to remain significant for the foreseeable future. The Act allows the FDIC until September 30, 2020 to reach 1.35%; and

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· requires the establishment of minimum leverage and risk-based capital requirements applicable to bank holding companies that are not less than those currently applicable to insured depository institutions (currently 5%, 6% and 10% to be “well capitalized”, and 4%, 4% and 8% to be “adequately capitalized”).

The Act has other significant features, some of which are as follows: (i) makes permanent the 2008 increase in the maximum deposit insurance amount to $250,000, and extended until December 31, 2012 full deposit insurance coverage for qualifying noninterest-bearing transaction accounts, (ii) within the Act is the Mortgage Reform and Anti-Predatory Lending Act, a broad piece of legislation intended to curtail abusive residential mortgage lending practices that contributed to the mortgage/housing crisis, (iii) required the formation of the Consumer Financial Protection Bureau as a new, independent bureau within the Federal Reserve, with very broad rulemaking and supervisory authority with respect to federal consumer financial laws, (iv) establishes the Financial Stability Oversight Council, to serve as an early warning system identifying risks in firms and market activities, to enhance oversight of the financial system as a whole and to harmonize prudential standards across financial regulatory agencies, and (v) establishes several requirements related to executive compensation and corporate governance.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2. PROPERTIES

The Bank owns each of its properties, except for the branch facilities located at 130 Court Street, Williamsport, PA, and at 2 East Mountain Avenue, South Williamsport, PA, which are leased. In September 2011, the Athens, PA office was damaged by flooding and reopened in April 2012. The Bank did not incur a significant financial loss associated with the flooding, as almost all of the cost of replacement was covered by insurance. All of the other properties are in good condition. None of the owned properties are subject to encumbrance.

A listing of properties is as follows:

Main administrative offices:
90-92 Main Street	or	10 Nichols Street
Wellsboro, PA 16901		Wellsboro, PA 16901

Branch offices – Citizens & Northern Bank:
428 S. Main Street	514 Main Street	2 East Mountain Avenue **
Athens, PA 18810	Laporte, PA 18626	South Williamsport, PA 17702
10 North Main Street	4534 Williamson Trail	41 Main Street
Coudersport, PA 16915	Liberty, PA 16930	Tioga, PA 16946
111 W. Main Street	1085 S. Main Street	428 Main Street
Dushore, PA 18614	Mansfield, PA 16933	Towanda, PA 18848
563 Main Street	612 James Monroe Avenue	64 Elmira Street
East Smithfield, PA 18817	Monroeton, PA 18832	Troy, PA 16947
104 W. Main Street	3461 Route 405 Highway	90-92 Main Street
Elkland, PA 16920	Muncy, PA 17756	Wellsboro, PA 16901
135 East Fourth Street	100 Maple Street	1510 Dewey Avenue
Emporium, PA 15834	Port Allegany, PA 16743	Williamsport, PA 17701
230 Railroad Street	24 Thompson Street	130 Court Street **
Jersey Shore, PA 17740	Ralston, PA 17763	Williamsport, PA 17701
102 E. Main Street	1827 Elmira Street	1467 Golden Mile Road
Knoxville, PA 16928	Sayre, PA 18840	Wysox, PA 18854
3 Main Street	6250 County Rte 64
Canisteo, NY 14823	Hornell, NY 14843

Facilities management office:

13 Water Street

Wellsboro, PA 16901

** designates leased branch facility

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ITEM 3. LEGAL PROCEEDINGS

The Corporation and the Bank are involved in various legal proceedings incidental to their business. Management believes the aggregate liability, if any, resulting from such pending and threatened legal proceedings will not have a material adverse effect on the Corporation’s financial condition or results of operations.

ITEM 4. MINE SAFETY DISCLOSURE

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

QUARTERLY SHARE DATA

Trades of the Corporation’s stock are executed through various brokers who maintain a market in the Corporation’s stock. The Corporation’s stock is listed on the NASDAQ Capital Market with the trading symbol CZNC. As of December 31, 2012, there were 2,540 shareholders of record of the Corporation’s common stock.

The following table sets forth the high and low sales prices of the common stock during 2012 and 2011.

			2012						2011
					Dividend						Dividend
					Declared						Declared
					per						Per
	High		Low		Quarter		High		Low		Quarter
First quarter	$	22.48	$	18.12	$	0.18	$	16.96	$	14.37	$	0.13
Second quarter		20.69		16.79		0.20		17.66		13.10		0.14
Third quarter		20.80		17.78		0.22		17.40		14.06		0.15
Fourth quarter		20.25		17.51		0.24		19.16		14.00		0.16

Future dividend payments will depend upon maintenance of a strong financial condition, future earnings and capital and regulatory requirements. Also, the Corporation and C&N Bank are subject to restrictions on the amount of dividends that may be paid without approval of banking regulatory authorities. These restrictions are described in Note 18 to the consolidated financial statements.

On May 19, 2011, the Corporation authorized a plan for repurchases of outstanding common stock, up to a total of $1 million. On September 22, 2011, the Corporation’s Board of Directors authorized additional repurchases of outstanding common stock in open market or privately negotiated transactions, up to a total of $1 million, as an addition to the May 2011 stock repurchase program. The Board of Directors’ authorizations provide that: (1) the treasury stock repurchase programs became effective when publicly announced and shall continue thereafter until suspended or terminated by the Board of Directors, in its sole discretion; and (2) all shares of common stock repurchased pursuant to the programs shall be held as treasury shares and be available for use and reissuance for purposes as and when determined by the Board of Directors including, without limitation, pursuant to the Corporation’s Dividend Reinvestment and Stock Purchase Plan and its equity compensation program. As of December 31, 2012, the maximum additional value available for purchases under this program was $980,694.

In the fourth quarter 2012, the Corporation made no purchases of its equity securities.

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PERFORMANCE GRAPH

Set forth below is a chart comparing the Corporation’s cumulative return to stockholders against the cumulative return of the Russell 2000 and a Peer Group Index of similar banking organizations selected by the Corporation for the five-year period commencing December 31, 2007 and ended December 31, 2012. The index values are market-weighted dividend-reinvestment numbers, which measure the total return for investing $100.00 five years ago. This meets Securities & Exchange Commission requirements for showing dividend reinvestment share performance over a five-year period and measures the return to an investor for placing $100.00 into a group of bank stocks and reinvesting any and all dividends into the purchase of more of the same stock for which dividends were paid.

COMPARISON OF 5-YEAR CUMULATIVE RETURN

Citizens & Northern Corporation

	Period Ending
Index	12/31/07		12/31/08		12/31/09		12/31/10		12/31/11		12/31/12
Citizens & Northern Corporation		100.00		117.61		59.21		95.22		122.54		130.91
Russell 2000		100.00		66.21		84.20		106.82		102.36		119.09
CZNC Peer Group Index*		100.00		83.21		76.93		83.57		80.69		96.04

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The Corporation’s peer group consists of banks headquartered in Pennsylvania with total assets of $700 million to $2 billion. This peer group consists of ACNB Corporation, Gettysburg; AmeriServ Financial, Inc., Johnstown; Bryn Mawr Bank Corporation, Bryn Mawr; Citizens Financial Services, Inc., Mansfield; CNB Financial Corporation, Clearfield; Codorus Valley Bancorp, Inc., York; ENB Financial Corp., Ephrata; First Keystone Corporation, Berwick; First National Community Bancorp, Inc., Dunmore; FNB Bancorp, Inc., Newtown; Franklin Financial Services Corporation, Chambersburg; Mid Penn Bancorp, Inc., Millersburg; Orrstown Financial Services, Inc., Shippensburg; Penns Woods Bancorp, Inc., Williamsport; Penseco Financial Services Corporation, Scranton; QNB Corp., Quakertown; Republic First Bancorp, Inc., Philadelphia; Royal Bancshares of Pennsylvania, Inc., Narberth; Somerset Trust Holding Company, Somerset.

The data for this graph was obtained from SNL Financial LC, Charlottesville, VA.

EQUITY COMPENSATION PLAN INFORMATION

The following table sets forth information concerning the Stock Incentive Plan and Independent Directors Stock Incentive Plan, both of which have been approved by the Corporation’s shareholders. The figures shown in the table below are as of December 31, 2012.

					Number of
	Number of		Weighted-		Securities
	Securities to be		average		Remaining
	Issued Upon		Exercise		for Future
	Exercise of		Price of		Issuance Under
	Outstanding		Outstanding		Equity Compen-
	Options		Options		sation Plans
Equity compensation plans approved by shareholders		337,670	$	19.08		400,299
Equity compensation plans not approved by shareholders		0		N/A		0

More details related to the Corporation’s equity compensation plans are provided in Notes 1 and 13 to the consolidated financial statements.

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ITEM 6. SELECTED FINANCIAL DATA

	As of or for the Year Ended December 31,
INCOME STATEMENT (In Thousands)	2012			2011			2010			2009			2008
Interest and fee income	$	56,632		$	61,256		$	62,114		$	67,976		$	74,237
Interest expense		9,031			13,556			19,245			24,456			31,049
Net interest income		47,601			47,700			42,869			43,520			43,188
Provision (credit) for loan losses		288			(285	)		1,191			680			909
Net interest income after provision (credit) for loan losses		47,313			47,985			41,678			42,840			42,279
Noninterest income excluding securities gains (losses)		16,317			13,938			13,917			13,021			13,140
Net impairment losses recognized in earnings from available-for-sale securities		(67	)		0			(433	)		(85,363	)		(10,088	)
Net realized gains on available-for-sale securities		2,749			2,216			1,262			1,523			750
Loss on prepayment of debt		2,333			0			0			0			0
Noninterest expense excluding loss on prepayment of debt		32,848			32,057			31,569			34,011			33,703
Income (loss) before income tax provision (credit)		31,131			32,082			24,855			(61,990	)		12,378
Income tax provision (credit)		8,426			8,714			5,800			(22,655	)		2,319
Net income (loss)		22,705			23,368			19,055			(39,335	)		10,059
U.S. Treasury preferred dividends		0			0			1,474			1,428			0
Net income (loss) available to common shareholders	$	22,705		$	23,368		$	17,581		$	(40,763	)	$	10,059
PER COMMON SHARE: (1)
Basic earnings per share	$	1.86		$	1.92		$	1.45		$	(4.40	)	$	1.12
Diluted earnings per share	$	1.85		$	1.92		$	1.45		$	(4.40	)	$	1.12
Cash dividends declared per share	$	0.84		$	0.58		$	0.39		$	0.72		$	0.96
Book value per common share at period-end	$	14.89		$	13.77		$	11.43		$	10.46		$	13.66
Tangible book value per common share at period-end	$	13.91		$	12.77		$	10.42		$	9.43		$	12.22
Weighted average common shares outstanding - basic		12,235,748			12,162,045			12,131,039			9,271,869			8,961,805
Weighted average common shares outstanding - diluted		12,260,208			12,166,768			12,131,039			9,271,869			8,983,300
END OF PERIOD BALANCES (In Thousands)
Available-for-sale securities	$	472,577		$	481,685		$	443,956		$	396,288		$	419,688
Gross loans		683,910			708,315			730,411			721,011			743,544
Allowance for loan losses		6,857			7,705			9,107			8,265			7,857
Total assets		1,286,907			1,323,735			1,316,588			1,321,795			1,281,637
Deposits		1,006,106			1,018,206			1,004,348			926,789			864,057
Borrowings		89,379			130,313			166,908			235,471			285,473
Stockholders' equity		182,786			167,385			138,944			152,410			122,026
Common stockholders' equity (stockholders' equity, excluding preferred stock)		182,786			167,385			138,944			126,661			122,026
AVERAGE BALANCES (In Thousands)
Total assets		1,305,163			1,313,445			1,326,145			1,296,086			1,280,924
Earning assets		1,199,538			1,208,584			1,205,608			1,208,280			1,202,872
Gross loans		700,241			714,421			721,997			728,748			743,741
Deposits		1,008,469			1,001,125			965,615			886,703			847,714
Stockholders' equity		175,822			152,718			150,133			141,787			130,790

11

ITEM 6. SELECTED FINANCIAL DATA, Continued

	As of or for the Year Ended Dec. 31,
	2012			2011			2010			2009			2008
KEY RATIOS
Return on average assets		1.74	%		1.78	%		1.44	%		-3.03	%		0.79	%
Return on average equity		12.91	%		15.30	%		12.69	%		-27.74	%		7.69	%
Average equity to average assets		13.47	%		11.63	%		11.32	%		10.94	%		10.21	%
Net interest margin (2)		4.26	%		4.22	%		3.81	%		3.84	%		3.77	%
Efficiency (3)		48.77	%		49.40	%		52.73	%		57.22	%		57.59	%
Cash dividends as a % of diluted earnings per share		45.41	%		30.21	%		26.90	%		NM			85.71	%
Tier 1 leverage		12.53	%		10.93	%		9.20	%		9.86	%		10.12	%
Tier 1 risk-based capital		22.86	%		19.95	%		15.87	%		16.70	%		13.99	%
Total risk-based capital		24.01	%		21.17	%		17.17	%		17.89	%		14.84	%
Tangible common equity/tangible assets		13.39	%		11.84	%		9.71	%		8.72	%		8.61	%
Nonperforming assets/total assets		0.82	%		0.73	%		0.92	%		0.76	%		0.69	%
Nonperforming loans/total loans		1.41	%		1.19	%		1.58	%		1.27	%		1.14	%
Allowance for loan losses/total loans		1.00	%		1.09	%		1.25	%		1.15	%		1.06	%
Net charge-offs/average loans		0.16	%		0.16	%		0.05	%		0.04	%		0.26	%

NM = Not a meaningful ratio.

(1) All share and per share data have been restated to give effect to stock dividends and splits.

(2) Rates of return on tax-exempt securities and loans are calculated on a fully-taxable equivalent basis.

(3) The efficiency ratio is calculated by dividing total noninterest expense by the sum of net interest income (including income from tax-exempt securities and loans on a fully-taxable equivalent basis) and noninterest income excluding securities gains and losses.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Certain statements in this section and elsewhere in this Annual Report on Form 10-K are forward-looking statements. Citizens & Northern Corporation and its wholly-owned subsidiaries (collectively, the Corporation) intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Reform Act of 1995. Forward-looking statements, which are not historical facts, are based on certain assumptions and describe future plans, business objectives and expectations, and are generally identifiable by the use of words such as, "should", “likely”, "expect", “plan”, "anticipate", “target”, “forecast”, and “goal”. These forward-looking statements are subject to risks and uncertainties that are difficult to predict, may be beyond management’s control and could cause results to differ materially from those expressed or implied by such forward-looking statements. Factors which could have a material, adverse impact on the operations and future prospects of the Corporation include, but are not limited to, the following:

· changes in monetary and fiscal policies of the Federal Reserve Board and the U.S. Government, particularly related to changes in interest rates

· changes in general economic conditions

· legislative or regulatory changes

· downturn in demand for loan, deposit and other financial services in the Corporation’s market area

· increased competition from other banks and non-bank providers of financial services

· technological changes and increased technology-related costs

· changes in accounting principles, or the application of generally accepted accounting principles.

These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

12

EARNINGS OVERVIEW

Net income available to common shareholders for 2012 was $22,705,000, or $1.86 per share – basic and $1.85 per share – diluted, as compared to $1.92 per basic and diluted share in 2011 and $1.45 per basic and diluted share in 2010.

2012 vs. 2011

Net income for 2012 of $22,705,000 was $663,000 (2.8%) lower than 2011 net income. Some of the more significant highlights related to annual earnings are as follows:

· Net interest income totaled $47,601,000 in 2012, down slightly ($99,000) from 2011. The fully taxable equivalent net interest margin of 4.26% in 2012 was 0.04% higher than the 2011 margin, while total average earning assets were 0.7% lower in 2012. In 2012 and 2011, net interest income included the benefit of accretion from the recovery of a previous write-down on a security, including a benefit of $855,000 in 2012 and $825,000 in 2011.

· The provision for loan losses was $288,000 in 2012 as compared to a credit (reduction in expense) of $285,000 in 2011. The provision for loan losses in 2012 included charges related to a few larger commercial loans, while both 2012 and 2011 included reductions in the general components of the allowance for loan losses attributable to reductions in total loans outstanding.

· Total noninterest revenue of $16,317,000 in 2012 was $2,379,000 higher than the corresponding 2011 amount. In 2011, noninterest revenue included an impairment loss of $948,000 related to an investment in a real estate limited partnership. Excluding the 2011 impairment loss, noninterest revenue for 2012 was $1,431,000 (9.6%) higher than the total in 2011. The increase in noninterest revenue for 2012 included a significant increase in gains from sales of residential mortgage loans, which totaled $1,925,000 in 2012, up $818,000 over 2011. Trust revenues totaled $3,847,000 in 2012, an increase of $375,000 (10.8%) over 2011, while brokerage revenues of $801,000 increased $161,000 (25.2%) over 2011. Service charges on deposit accounts of $5,036,000 in 2012 were up $263,000 (5.5%) over 2011. Included in noninterest revenue were net losses related to real estate properties acquired in foreclosures of $66,000 in 2012 as compared to net gains of $41,000 in 2011.

· In 2012, pre-tax net realized gains from securities totaled $2,682,000, while losses were incurred from prepayment of borrowings totaling $2,333,000. In comparison, security gains totaled $2,216,000 in 2011, and there were no losses from prepayments of borrowings. In both years, securities gains included significant amounts from sales of pooled trust-preferred securities that had previously been written off. The loss from pre-payment of borrowings included third quarter 2012 losses of $2,190,000 from prepayment of principal of $12 million on long-term borrowings (repurchase agreements) with an average interest rate of 3.93%.

· Noninterest expense, excluding the loss from prepayment of borrowings, was $32,848,000 in 2012, up $791,000 (2.5%) from 2011. The increase in noninterest expense in 2012 includes an increase in other operating expense of $597,000. Within other operating expense, the largest increases in 2012 included increases in software subscriptions and updates, ATM and debit card processing costs, legal fees related to lending and collection matters and expenses related to other real estate properties. Salaries and wages were $504,000, or 3.6%, higher for 2012 as compared to 2011, including an increase in stock-based compensation of $98,000. FDIC assessments were $199,000 lower in 2012 than in 2011, reflecting the benefit of a change in the FDIC’s method for determining assessments that became effective in the second quarter 2011. Occupancy expense was $162,000 lower in 2012 as compared to 2011, in part due to reduced costs associated with the Court Street, Williamsport location.

2011 vs. 2010

The most significant fluctuations in earnings in 2011 as compared to 2010 are as follows:

· Net interest income of $47,700,000 was $4,831,000 (11.3%) higher in 2011 than 2010. The improvement in 2011 resulted from several factors, including reductions in cost of funds, reduction in outstanding borrowings and lower balances maintained in overnight investment with the Federal Reserve and other banks. In 2011, net interest income includes the benefit of accretion of $825,000 from the offset of a previous write-down on a security, with a corresponding benefit of $83,000 recorded in 2010.

13

· In 2011, the provision for loan losses was a credit (reduction in expense) of $285,000, as compared to a provision of $1,191,000 in 2010. The credit for loan losses in 2011 resulted, in part, from a reduction in loans outstanding, as the general component of the allowance for loan losses was reduced.

· Total noninterest revenue was $13,938,000 in 2011, up $100,000 over 2010, despite an impairment loss in 2011 of $948,000 related to an investment in a real estate limited partnership. In 2011, noninterest revenue included net gains from sales of premises and equipment totaling $324,000, including a gain in the third quarter of $329,000 from sale of the banking facility at 130 Court Street, Williamsport, PA. The Corporation has entered into a leasing arrangement to continue to utilize a portion of the facility and continues to provide retail, trust and commercial banking services at the location. In 2010, noninterest revenue included net gains from sales of premises and equipment totaling $445,000. Excluding gains from sales of premises and equipment and the impairment loss, noninterest revenue for 2011 totaled $14,562,000, or 8.7% higher than the corresponding 2010 amount. In 2011, revenues increased significantly over 2010 from origination and sale of mortgage loans, interchange on debt card transactions, service charges on deposit accounts, brokerage services and other operating income.

· Gains from available-for-sale securities totaled $2,216,000 in 2011, considerably higher than the total gains of $829,000 realized in 2010. In the first quarter 2011, the Corporation realized gains of $1,510,000 from two pooled trust-preferred securities that had been written off in prior periods.

· Total noninterest expense was $32,057,000 in 2011, up $567,000, or 1.8%, over 2010. Total salaries and wages for 2011 were $803,000 (6.1%) higher than in 2010, including an increase in total employee stock-based compensation of $319,000. Pensions and employee benefits expense was $567,000 (14.8%) higher in 2011 than in 2010, including higher estimated self-insured employee health insurance expense. Furniture and equipment expense was $171,000 (8.1%) lower in 2011 as compared to 2010, as depreciation expense was lower due to some computer-related hardware and software becoming fully depreciated. FDIC assessments were $618,000 (42.6%) lower in 2011 than in 2010, reflecting the benefit of changes in the FDIC’s method for determining assessments and improvements in the Corporation’s financial data that impact the amounts assessed.

· The provision for income taxes totaled $8,714,000 or 27.2% of pre-tax income in 2011, up from $5,800,000 or 23.3% of pre-tax income in 2010. The provision for income taxes was higher in 2011 than in 2010 primarily because of the increase in pre-tax income. Also, the provision for income tax in 2010 included a benefit (reduction in expense) of $373,000 resulting from reduction in a valuation reserve.

· In the third quarter 2010, the Corporation redeemed preferred stock that had previously been issued, and had no preferred stock outstanding and no corresponding dividend costs in 2011. In 2010, earnings available for common shareholders were impacted by dividends paid on preferred stock totaling $1,474,000.

More detailed information concerning fluctuations in the Corporation’s earnings results are provided in other sections of Management’s Discussion and Analysis.

CRITICAL ACCOUNTING POLICIES

The presentation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect many of the reported amounts and disclosures. Actual results could differ from these estimates

A material estimate that is particularly susceptible to significant change is the determination of the allowance for loan losses. The Corporation maintains an allowance for loan losses that represents management’s estimate of the losses inherent in the loan portfolio as of the balance sheet date and recorded as a reduction of the investment in loans. Management believes the allowance for loan losses is adequate and reasonable. Notes 1 and 8 to the consolidated financial statements provide an overview of the process management uses for evaluating and determining the allowance for loan losses, and additional discussion of the allowance for loan losses is provided in a separate section later in Management’s Discussion and Analysis. Given the very subjective nature of identifying and valuing loan losses, it is likely that well-informed individuals could make materially different assumptions, and could, therefore calculate a materially different allowance value. While management uses available information to recognize losses on loans, changes in economic conditions may necessitate revisions in future years. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Corporation’s allowance for loan losses. Such agencies may require the Corporation to recognize adjustments to the allowance based on their judgments of information available to them at the time of their examination.

14

Another material estimate is the calculation of fair values of the Corporation’s debt securities. For most of the Corporation’s debt securities, the Corporation receives estimated fair values of debt securities from an independent valuation service, or from brokers. In developing fair values, the valuation service and the brokers use estimates of cash flows, based on historical performance of similar instruments in similar interest rate environments. Based on experience, management is aware that estimated fair values of debt securities tend to vary among brokers and other valuation services.

As described in Note 7 to the consolidated financial statements, management evaluates securities for other-than-temporary impairment (“OTTI”). In making that evaluation, consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) whether the Corporation intends to sell the security or more likely than not will be required to sell the security before its anticipated recovery. Management’s assessments of the likelihood and potential for recovery in value of securities are subjective and based on sensitive assumptions.

NET INTEREST INCOME

The Corporation’s primary source of operating income is net interest income, which is equal to the difference between the amounts of interest income and interest expense. Tables I, II and III include information regarding the Corporation’s net interest income in 2012, 2011, and 2010. In each of these tables, the amounts of interest income earned on tax-exempt securities and loans have been adjusted to a fully taxable-equivalent basis. Accordingly, the net interest income amounts reflected in these tables exceed the amounts presented in the consolidated financial statements. The discussion that follows is based on amounts in the tables.

2012 vs. 2011

Fully taxable equivalent net interest income was $51,041,000 in 2012, $86,000 (0.2%) higher than in 2011. As shown in Table III, net changes in volume had the effect of increasing net interest income $961,000 in 2012 compared to 2011, and interest rate changes had the effect of decreasing net interest income $875,000. The most significant components of the volume change in net interest income in 2012 were a decrease in interest expense of $1,203,000 attributable to a reduction in the balance of borrowed funds, a decrease in interest expense of $411,000 attributable to a reduction in the balance of interest-bearing deposits (primarily certificates of deposit and Individual Retirement Accounts), and a decrease in interest income of $887,000 attributable to a decline in the balance of loans receivable. The most significant components of the rate change in net interest income in 2012 were a decrease in interest expense of $2,894,000 due to lower rates paid on interest-bearing deposits, a decrease in interest income of $2,072,000 attributable to lower rates earned on available-for-sale securities and a decrease in interest income of $1,733,000 attributable to lower rates earned on loans receivable. As presented in Table II, the “Interest Rate Spread” (excess of average rate of return on earning assets over average cost of funds on interest-bearing liabilities) was 4.04% in 2012, as compared to 3.96% in 2011.

INTEREST INCOME AND EARNING ASSETS

Interest income totaled $60,072,000 in 2012, a decrease of 6.9% from 2011. Interest and fees on loans receivable decreased $2,620,000, or 5.8% while income from available-for-sale securities decreased $1,914,000, or 10.1%. As indicated in Table II, average available-for-sale securities (at amortized cost) totaled $464,349,000 in 2012, an increase of $2,445,000 (0.5%) from 2011. Net growth in the Corporation’s available-for-sale securities portfolio was primarily made up of U.S. Government agency collateralized mortgage obligations and municipal securities. This growth was partially offset by reductions in the balances of mortgage-backed securities, U.S. Government agency bonds, and trust preferred securities. The Corporation’s yield on taxable securities fell in 2011 and 2012 because of rapid prepayments on mortgage-backed securities and collateralized mortgage obligations as well as low market interest rates. Also, the Corporation had been booking a recovery on a trust preferred security that had been previously written down as OTTI but subsequently resumed payment; this security matured in May 2012. Additional information on this security is presented below. The average rate of return on available-for-sale securities was 3.67% for 2012 and 4.11% in 2011.

The average balance of gross loans receivable decreased 2.0% to $700,241,000 in 2012 from $714,421,000 in 2011. The Corporation experienced contraction in the balance of loans receivable due to borrowers prepaying or refinancing existing loans combined with modest demand for new loans. The decline in the balance of the residential mortgage portfolio was also affected by management’s decision to sell a significant portion of newly originated residential mortgages on the secondary market. The Corporation’s average rate of return on loans receivable declined to 6.11% in 2012 from 6.36% in 2011 as rates on new loans as well as existing, variable-rate loans have decreased.

15

The average balance of interest-bearing due from banks increased to $32,337,000 in 2012 from $31,359,000 in 2011. This has consisted primarily of balances held by the Federal Reserve, as well as FDIC-insured certificates of deposit. Although the rates of return on balances with the Federal Reserve are low, the Corporation has maintained relatively high levels of liquid assets in 2011 and 2012 (as opposed to increasing long-term, available-for-sale securities at higher yields) in order to maximize flexibility for dealing with possible fluctuations in cash requirements, and due to management’s concern about the possibility of substantial increases in interest rates in the future. During the fourth quarter 2011, the Corporation began investing in FDIC-insured certificates of deposit issued by other financial institutions and maturing within five years; these investments totaled $4,820,000 at December 31, 2012. The average balance of certificates of deposit issued by other financial institutions increased to $4,554,000 in 2012 from $677,000 in 2011.

INTEREST EXPENSE AND INTEREST-BEARING LIABILITIES

Interest expense fell $4,525,000, or 33.4%, to $9,031,000 in 2012 from $13,556,000 in 2011. Table II shows that the overall cost of funds on interest-bearing liabilities fell to 0.97% in 2012 from 1.38% in 2011.

Total average deposits (interest-bearing and noninterest-bearing) increased 0.7%, to $1,008,469,000 in 2012 from $1,001,125,000 in 2011. Increases in the average balances of demand deposits, savings accounts, and money market accounts were partially offset by decreases in Individual Retirement Accounts and certificates of deposit. Consistent with continuing low short-term market interest rates, the average rates incurred on deposit accounts decreased significantly in 2012 as compared to 2011.

Variable-rate accounts made up $130,833,000 of the average balance in Individual Retirement Accounts in 2012 and $144,008,000 in 2011. Prior to May 2011, substantially all of these accounts were paid interest at a rate that could change quarterly at management’s discretion with a contractual floor of 3.00%. Effective in May 2011, the rate floor was removed; following this change, the rate paid on these accounts was lowered several times and was 0.35% at December 31, 2012. As shown in Table II, the average rate on Individual Retirement Accounts decreased to 0.80% in 2012 from 2.04% in 2011.

Total average borrowed funds decreased $40,059,000 to $112,051,000 in 2012 from $152,110,000 in 2011. During 2011 and 2012, the Corporation has paid off long-term borrowings as they matured using the cash flow received from loans and investment securities. In September 2012, the Corporation prepaid principal of $12,000,000 on long-term borrowings (repurchase agreements). The Corporation incurred a loss from the prepayment totaling $2,190,000, which is reported in Other Expenses in the Consolidated Statements of Operations. The average rate on the borrowings that were partially prepaid was 3.93%, and management expects that the prepayment will have a favorable effect on the net interest margin in the future. After the effect of the prepayment, the remaining balance of long-term borrowings under repurchase agreements was $68,000,000 at December 31, 2012. The average rate on borrowed funds was 3.77% in 2012, compared to 3.58% in 2011.

The average balance of “RepoSweep” arrangements, which are used by the Corporation to borrow funds from commercial banking customers on an overnight basis and included within short-term borrowings, declined to $4,454,000 in 2012 from $17,216,000 in 2011 primarily as a result of changes to service charges assessed on related business checking accounts. During 2012, the Corporation took several short-term and overnight advances from the Federal Home Loan Bank of Pittsburgh (FHLB-Pittsburgh) to offset seasonal declines in deposit balances and meet other liquidity needs. Short-term and overnight advances averaged $2,377,000 in 2012 with no such advances outstanding during 2011. The Corporation had no short-term or overnight advances outstanding at December 31, 2012.

2011 vs. 2010

Fully taxable equivalent net interest income was $50,955,000 in 2011, $5,001,000 (10.9%) higher than in 2010. As shown in Table III, net changes in volume had the effect of increasing net interest income $3,238,000 in 2011 compared to 2010, and interest rate changes had the effect of increasing net interest income $1,763,000. The most significant components of the volume change in net interest income in 2011 were a decrease in interest expense of $1,623,000 attributable to a reduction in the balance of long-term borrowed funds and an increase in interest income of $1,600,000 attributable to growth in the balance of available-for-sale securities. The most significant components of the rate change in net interest income in 2011 were a decrease in interest expense of $3,260,000 due to lower rates paid on interest-bearing deposits and a decrease in interest income of $1,126,000 attributable to lower rates earned on available-for-sale securities. As presented in Table II, the “Interest Rate Spread” (excess of average rate of return on earning assets over average cost of funds on interest-bearing liabilities) was 3.96% in 2011, as compared to 3.53% in 2010.

16

INTEREST INCOME AND EARNING ASSETS

Interest income totaled $64,511,000 in 2011, a decrease of 1.1% from 2010. Income from available-for-sale securities increased $474,000 (2.6%), while interest and fees from loans receivable decreased $1,086,000, or 2.3%. As indicated in Table II, total average available-for-sale securities (at amortized cost) in 2011 increased to $461,904,000, an increase of $34,384,000, or 8.0% from 2010. During 2010 and 2011, the Corporation increased the size of its tax-exempt municipal security portfolio. Net growth in the taxable available-for-sale securities portfolio was primarily made up of U.S. Government agency collateralized mortgage obligations and also included a significant increase in the balance of taxable municipal securities. This growth was partially offset by reductions in the balances of U.S. Government agency bonds and pooled trust preferred securities. The Corporation’s yield on taxable securities fell in 2010 and 2011 primarily because of low market interest rates, including the effects of management’s decision to limit purchases of taxable securities to investments that mature or are expected to repay a substantial portion of principal within approximately four years or less. The average rate of return on available-for-sale securities was 4.11% for 2011 and 4.33% in 2010.

The average balance of gross loans receivable decreased 1.0% to $714,421,000 in 2011 from $721,997,000 in 2010. The Corporation experienced modest contraction in the residential mortgage and consumer loan portfolios, primarily resulting from management’s decision to sell a portion of newly originated residential mortgages on the secondary market. The total average balance of commercial loans receivable increased slightly in 2011 compared to 2010. The Corporation’s yield on loans receivable fell as rates on new loans as well as existing, variable-rate loans decreased. The average rate of return on loans receivable was 6.36% in 2011 and 6.44% in 2010.

The average balance of interest-bearing due from banks decreased to $31,359,000 in 2011 from $54,655,000 in 2010. This consisted primarily of balances held by the Federal Reserve. Although the rates of return on balances with the Federal Reserve are low, the Corporation maintained relatively high levels of liquid assets in 2010 and 2011 (as opposed to increasing long-term, available-for-sale securities at higher yields) in order to maximize flexibility for dealing with possible fluctuations in cash requirements, and due to management’s concern about the possibility of substantial increases in interest rates in the future. Also, in 2010, management maintained a portion of the balance with the Federal Reserve in anticipation of repurchasing the TARP Preferred Stock and Warrant. These repurchases were completed during the third quarter 2010. During the fourth quarter 2011, the Corporation began investing in FDIC-insured certificates of deposit issued by other financial institutions and maturing within five years; these investments averaged $677,000 for 2011 and totaled $3,760,000 at December 31, 2011. The Corporation held no such investments in 2010 or prior periods.

INTEREST EXPENSE AND INTEREST-BEARING LIABILITIES

Interest expense fell $5,689,000, or 29.6%, to $13,556,000 in 2011 from $19,245,000 in 2010. Table II shows that the overall cost of funds on interest-bearing liabilities fell to 1.38% in 2011 from 1.88% in 2010.

Total average deposits (interest-bearing and noninterest-bearing) increased 3.7%, to $1,001,125,000 in 2011 from $965,615,000 in 2010. This increase came mainly in demand deposits, savings accounts, and interest checking; the increases were partially offset by decreases in the average balance of certificates of deposit and Individual Retirement Accounts. Consistent with continuing low short-term market interest rates, the average rates incurred on deposit accounts decreased significantly in 2011 as compared to 2010.

Variable-rate accounts comprised $144,008,000 of the average balance in Individual Retirement Accounts in 2011 and $151,688,000 in 2010. Prior to May 2011, substantially all of these accounts were paid interest at a rate that could change quarterly at management’s discretion with a contractual floor of 3.00%. Effective in May 2011, the rate floor was removed; following this change, the rate paid on these accounts was lowered several times and was 0.75% at December 31, 2011. As shown in Table II, the average rate on Individual Retirement Accounts decreased to 2.04% in 2011 from 3.06% in 2010.

Total average borrowed funds decreased $50,682,000 to $152,110,000 in 2011 from $202,792,000 in 2010. During 2010 and 2011, the Corporation paid off long-term borrowings as they matured using the cash flow received from loans, mortgage-backed securities, and growth in deposit balances. The average rate on borrowed funds was 3.58% in 2011, down from 3.62% in 2010.

17

TABLE I - ANALYSIS OF INTEREST INCOME AND EXPENSE

	Years Ended December 31,						Increase/(Decrease)
(In Thousands)	2012		2011		2010		2012/2011			2011/2010
INTEREST INCOME
Available-for-sale securities:
Taxable	$	9,334	$	11,297	$	11,342	$	(1,963	)	$	(45	)
Tax-exempt		7,725		7,676		7,157		49			519
Total available-for-sale securities		17,059		18,973		18,499		(1,914	)		474
Held-to-maturity securities,
Taxable		0		0		2		0			(2	)
Trading securities		0		0		2		0			(2	)
Interest-bearing due from banks		114		73		124		41			(51	)
Loans held for sale		107		53		74		54			(21	)
Loans receivable:
Taxable		40,453		43,178		44,155		(2,725	)		(977	)
Tax-exempt		2,339		2,234		2,343		105			(109	)
Total loans receivable		42,792		45,412		46,498		(2,620	)		(1,086	)
Total Interest Income		60,072		64,511		65,199		(4,439	)		(688	)
INTEREST EXPENSE
Interest-bearing deposits:
Interest checking		206		399		798		(193	)		(399	)
Money market		354		494		872		(140	)		(378	)
Savings		108		161		194		(53	)		(33	)
Certificates of deposit		3,002		3,905		5,060		(903	)		(1,155	)
Individual Retirement Accounts		1,136		3,150		4,977		(2,014	)		(1,827	)
Other time deposits		1		3		6		(2	)		(3	)
Total interest-bearing deposits		4,807		8,112		11,907		(3,305	)		(3,795	)
Borrowed funds:
Short-term		10		23		177		(13	)		(154	)
Long-term		4,214		5,421		7,161		(1,207	)		(1,740	)
Total borrowed funds		4,224		5,444		7,338		(1,220	)		(1,894	)
Total Interest Expense		9,031		13,556		19,245		(4,525	)		(5,689	)
Net Interest Income	$	51,041	$	50,955	$	45,954	$	86		$	5,001

(1) Interest income from tax-exempt securities and loans has been adjusted to a fully taxable-equivalent basis, using the Corporation’s marginal federal income tax rate of 35% in 2012 and 34% in 2011 and 2010.

(2) Fees on loans are included with interest on loans and amounted to $1,427,000 in 2012, $1,312,000 in 2011 and $1,207,000 in 2010.

18

Table II - Analysis of Average Daily Balances and Rates

(Dollars in Thousands)

	Year						Year						Year
	Ended			Rate of			Ended			Rate of			Ended			Rate of
	12/31/2012			Return/			12/31/2011			Return/			12/31/2010			Return/
	Average			Cost of			Average			Cost of			Average			Cost of
	Balance			Funds %			Balance			Funds %			Balance			Funds %
EARNING ASSETS
Available-for-sale securities, at amortized cost:
Taxable	$	332,911			2.80	%	$	333,441			3.39	%	$	314,462			3.61	%
Tax-exempt		131,438			5.88	%		128,463			5.98	%		113,058			6.33	%
Total available-for-sale securities		464,349			3.67	%		461,904			4.11	%		427,520			4.33	%
Held-to-maturity securities,
Taxable		0			0.00	%		0			0.00	%		38			5.27	%
Trading securities		0			0.00	%		0			0.00	%		29			6.99	%
Interest-bearing due from banks		32,337			0.35	%		31,359			0.23	%		54,655			0.23	%
Federal funds sold		0			0.00	%		0			0.00	%		48			0.00	%
Loans held for sale		2,611			4.10	%		900			5.89	%		1,321			5.60	%
Loans receivable:
Taxable		662,751			6.10	%		679,357			6.36	%		686,199			6.43	%
Tax-exempt		37,490			6.24	%		35,064			6.37	%		35,798			6.55	%
Total loans receivable		700,241			6.11	%		714,421			6.36	%		721,997			6.44	%
Total Earning Assets		1,199,538			5.01	%		1,208,584			5.34	%		1,205,608			5.41	%
Cash		17,408						17,762						17,505
Unrealized gain/loss on securities		18,444						7,105						2,555
Allowance for loan losses		(7,688	)					(8,688	)					(8,552	)
Bank premises and equipment		18,956						21,381						23,522
Intangible Asset - Core Deposit Intangible		176						272						417
Intangible Asset - Goodwill		11,942						11,942						11,942
Other assets		46,387						55,087						73,148
Total Assets	$	1,305,163					$	1,313,445					$	1,326,145
INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Interest checking	$	163,840			0.13	%	$	162,583			0.25	%	$	147,494			0.54	%
Money market		208,814			0.17	%		206,612			0.24	%		203,191			0.43	%
Savings		108,218			0.10	%		97,099			0.17	%		78,012			0.25	%
Certificates of deposit		194,175			1.55	%		205,231			1.90	%		225,542			2.24	%
Individual Retirement Accounts		142,315			0.80	%		154,688			2.04	%		162,754			3.06	%
Other time deposits		1,191			0.08	%		1,231			0.24	%		1,242			0.48	%
Total interest-bearing deposits		818,553			0.59	%		827,444			0.98	%		818,235			1.46	%
Borrowed funds:
Short-term		6,831			0.15	%		17,216			0.13	%		27,563			0.64	%
Long-term		105,220			4.00	%		134,894			4.02	%		175,229			4.09	%
Total borrowed funds		112,051			3.77	%		152,110			3.58	%		202,792			3.62	%
Total Interest-bearing Liabilities		930,604			0.97	%		979,554			1.38	%		1,021,027			1.88	%
Demand deposits		189,916						173,681						147,380
Other liabilities		8,821						7,492						7,605
Total Liabilities		1,129,341						1,160,727						1,176,012
Stockholders' equity, excluding other comprehensive income/loss		164,316						148,324						148,735
Other comprehensive income/loss		11,506						4,394						1,398
Total Stockholders' Equity		175,822						152,718						150,133
Total Liabilities and Stockholders' Equity	$	1,305,163					$	1,313,445					$	1,326,145
Interest Rate Spread					4.04	%					3.96	%					3.53	%
Net Interest Income/Earning Assets					4.26	%					4.22	%					3.81	%
Total Deposits (Interest-bearing and Demand)	$	1,008,469					$	1,001,125					$	965,615

(1) 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 35% in 2012 and 34% in 2011 and 2010.

(2) Nonaccrual loans have been included with loans for the purpose of analyzing net interest earnings.

19

TABLE III - ANALYSIS OF VOLUME AND RATE CHANGES
(In Thousands)	Year Ended 12/31/12 vs. 12/31/11									Year Ended 12/31/11 vs. 12/31/10
	Change in			Change in			Total			Change in			Change in			Total
	Volume			Rate			Change			Volume			Rate			Change
EARNING ASSETS
Available-for-sale securities:
Taxable	$	(18	)	$	(1,945	)	$	(1,963	)	$	664		$	(709	)	$	(45	)
Tax-exempt		176			(127	)		49			936			(417	)		519
Total available-for-sale securities		158			(2,072	)		(1,914	)		1,600			(1,126	)		474
Held-to-maturity securities,
Taxable		0			0			0			(1	)		(1	)		(2	)
Trading securities		0			0			0			(1	)		(1	)		(2	)
Interest-bearing due from banks		2			39			41			(54	)		3			(51	)
Loans held for sale		74			(20	)		54			(25	)		4			(21	)
Loans receivable:
Taxable		(1,039	)		(1,686	)		(2,725	)		(440	)		(537	)		(977	)
Tax-exempt		152			(47	)		105			(48	)		(61	)		(109	)
Total loans receivable		(887	)		(1,733	)		(2,620	)		(488	)		(598	)		(1,086	)
Total Interest Income		(653	)		(3,786	)		(4,439	)		1,031			(1,719	)		(688	)
INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Interest checking		3			(196	)		(193	)		75			(474	)		(399	)
Money market		5			(145	)		(140	)		15			(393	)		(378	)
Savings		16			(69	)		(53	)		41			(74	)		(33	)
Certificates of deposit		(201	)		(702	)		(903	)		(430	)		(725	)		(1,155	)
Individual Retirement Accounts		(234	)		(1,780	)		(2,014	)		(236	)		(1,591	)		(1,827	)
Other time deposits		0			(2	)		(2	)		0			(3	)		(3	)
Total interest-bearing deposits		(411	)		(2,894	)		(3,305	)		(535	)		(3,260	)		(3,795	)
Borrowed funds:
Short-term		(15	)		2			(13	)		(49	)		(105	)		(154	)
Long-term		(1,188	)		(19	)		(1,207	)		(1,623	)		(117	)		(1,740	)
Total borrowed funds		(1,203	)		(17	)		(1,220	)		(1,672	)		(222	)		(1,894	)
Total Interest Expense		(1,614	)		(2,911	)		(4,525	)		(2,207	)		(3,482	)		(5,689	)
Net Interest Income	$	961		$	(875	)	$	86		$	3,238		$	1,763		$	5,001

(1) Changes in income on tax-exempt securities and loans are presented on a fully taxable-equivalent basis, using the Corporation’s marginal federal income tax rate of 35% in 2012 and 34% in 2011 and 2010.

(2) The change in interest due to both volume and rates has been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amounts of the change in each.

20

RECOVERY ON IMPAIRED INVESTMENT SECURITY

In 2009 and the first quarter 2010, the Corporation recorded OTTI on its holding of a trust preferred security issued by Carolina First Mortgage Loan Trust, a subsidiary of The South Financial Group, Inc. In the fourth quarter 2010, The Toronto-Dominion Bank acquired The South Financial Group, Inc., made a payment for the full amount of previously deferred interest, and resumed quarterly payments on the security. The Corporation recognized a material change in the expected cash flows and began recording accretion income (included in interest income) to offset the previous OTTI charges as an adjustment to the security’s yield over its remaining life. The yield to maturity was 147.03%. The security had a face amount of $2,000,000 and matured in May 2012.

Accretion income from this security was recognized as follows:

	Accretion of
	Prior OTTI
4th Quarter 2010	$	83
1st Quarter 2011		111
2nd Quarter 2011		160
3rd Quarter 2011		229
4th Quarter 2011		325
1st Quarter 2012		457
2nd Quarter 2012		398
Total	$	1,763

Excluding interest income (including accretion) and the average balance of this security from the calculations used to determine Tables I, II and III, the interest rate spread and interest margin (fully taxable equivalent net interest income divided by average total earning assets) would be as follows:

	Year Ended December 31,
	2012			2011			2010
Interest rate spread:
Actual from Table II		4.04	%		3.96	%		3.53	%
Excluding Carolina First security		3.97	%		3.89	%		3.51	%
Interest margin:
Actual from Table II		4.26	%		4.22	%		3.81	%
Excluding Carolina First security		4.18	%		4.14	%		3.80	%

21

NONINTEREST INCOME

Years Ended December 31, 2012, 2011 and 2010

The table below presents a comparison of noninterest income and excludes realized gains on available for sale securities, which are discussed in the “Earnings Overview” section of Management’s Discussion and Analysis.

TABLE IV - COMPARISON OF NONINTEREST INCOME
(In Thousands)							$			%
	2012			2011			Change			Change
Service charges on deposit accounts	$	5,036		$	4,773		$	263			5.5
Service charges and fees		929			849			80			9.4
Trust and financial management revenue		3,847			3,472			375			10.8
Brokerage revenue		801			640			161			25.2
Insurance commissions, fees and premiums		221			257			(36	)		(14.0	)
Interchange revenue from debit card transactions		1,938			1,922			16			0.8
Net gains from sales of loans		1,925			1,107			818			73.9
Increase in cash surrender value of life insurance		455			509			(54	)		(10.6	)
Net (loss) gain from other real estate		(66	)		41			(107	)		(261.0	)
Net gain from premises and equipment		270			324			(54	)		(16.7	)
Impairment loss on limited partnership investment		0			(948	)		948			(100.0	)
Other operating income		961			992			(31	)		(3.1	)
Total other operating income before realized gains on available-for-sale securities, net	$	16,317		$	13,938		$	2,379			17.1

						$			%
	2011			2010		Change			Change
Service charges on deposit accounts	$	4,773		$	4,579	$	194			4.2
Service charges and fees		849			858		(9	)		(1.0	)
Trust and financial management revenue		3,472			3,475		(3	)		(0.1	)
Brokerage revenue		640			465		175			37.6
Insurance commissions, fees and premiums		257			248		9			3.6
Interchange revenue from debit card transactions		1,922			1,678		244			14.5
Net gains from sales of loans		1,107			761		346			45.5
Increase in cash surrender value of life insurance		509			466		43			9.2
Net gain from other real estate		41			108		(67	)		(62.0	)
Net gain from premises and equipment		324			445		(121	)		(27.2	)
Impairment loss on limited partnership investment		(948	)		0		(948	)
Other operating income		992			755		237			31.4
Total other operating income before realized gains on available-for-sale securities, net	$	13,938		$	13,838	$	100			0.7

Total noninterest income, excluding realized gains on available-for-sale securities, increased $2,379,000 or 17.1% in 2012 compared to 2011. In 2011, total noninterest income increased $100,000 (0.7%) from 2010. Total noninterest income in 2011 included an impairment loss of $948,000 related to an investment in a real estate limited partnership (discussed in more detail below). Excluding the 2011 impairment loss on the limited partnership investment and gains from available-for-sale securities, noninterest income increased $1,431,000 (9.6%) in 2012 over 2011, and $1,048,000 (7.6%) in 2011 over 2010. Items of significance related to noninterest income are as follows:

2012 vs. 2011

· In 2011, the Corporation reported an impairment loss of $948,000 related to an investment in a real estate limited partnership. Based on updated financial information, management prepared an estimated valuation based on cash flow analysis. That analysis showed the estimated cash flows to be derived from the limited partnership’s activities would not be sufficient to provide a return on the Corporation’s limited partnership investment. Accordingly, management made the decision to completely write-off the limited partnership investment in 2011. In addition to the limited partnership investment, the Corporation has a loan receivable from the limited partnership with a balance of $1,021,000 at December 31, 2012 and $1,036,000 at December 31, 2011. The loan was scheduled to mature with a balloon payment of approximately $1,022,000 plus interest due in December 2012; however, the maturity date was extended to June 2013 to permit additional time for sale of the underlying real estate collateral. Based on management’s estimate of the value of the underlying collateral, the Corporation has no allowance for loan losses associated with the loan to the limited partnership at December 31, 2012.

22

· Net gains from sales of loans increased $818,000. Starting in late 2009, the Corporation began to sell a significant amount of residential mortgage loans into the secondary market through the MPF Xtra program administered by the Federal Home Loan Banks of Pittsburgh and Chicago. The increase in revenue from sales in 2012 reflects the impact of significant refinancing activity, as market interest rates have continued to fall throughout most of the time frame since the Corporation began to offer the program.

· Trust and financial management revenue increased $375,000, or 10.8%. Trust revenue from employee benefit and retirement services was $129,000 higher in 2012 as compared to 2011. The increase in trust revenue in 2012 reflects the impact of new business obtained as well as higher valuations of U.S. equities and fixed income securities throughout most of the period. Assets under management by the Corporation’s Trust and financial management group totaled $707,912,000 at December 31, 2012, an increase of 11.5% over the total one year earlier.

· Service charges on deposit accounts increased $263,000, or 5.5%, reflecting changes in prices and terms for some types of fees effective at the beginning of 2012. Net revenues from consumer overdraft privilege services totaled approximately 66% of the total revenues in this category in 2012, down from approximately 74% in 2011.

· Brokerage revenue increased $161,000, or 25.2%, reflecting increased sales of annuities used by customers as investment vehicles in retirement.

· The net gain from premises and equipment of $270,000 in 2012 included a gain of $272,000 from the excess of insurance proceeds received over the historical book value of assets replaced or reconstructed at the Athens, PA branch, which was damaged by a flood in September 2011 and remained closed until it was re-opened in April 2012. In 2011, the Corporation realized net gains from sales of premises and equipment totaling $324,000, including a gain of $329,000 from sale of the Court Street, Williamsport, PA location. The Corporation has entered into a leasing arrangement to continue to utilize a portion of the facility. The leaseback is for use of approximately 18% of the total building space, for a period of two years with monthly rent of approximately $8,000 per month, plus allocable utilities, property taxes and other building-related expenses identified in the lease. The lease provides the Corporation with an option to renew for an additional two years, for monthly rent of approximately $9,000 per month, plus allocable building-related expenses. The Corporation’s continuing interest in the property is limited to its role as lessee, and the Corporation did not provide financing to the buyer. The Corporation has accounted for the leaseback as an operating lease.

2011 vs. 2010

· Net gains from the sale of loans totaled $1,107,000 in 2011, an increase of $346,000 (45.5%) over 2010, reflecting the Corporation’s increased originations and sales of residential mortgages as described in the “2012 vs. 2011” analysis above. Similar to 2012, the increasing volume of mortgage loans sold in 2011 reflected the impact of significant refinancing activity as a result of falling market interest rates on mortgages.

· Interchange revenue from debit card transactions of $1,922,000 in 2011 was $244,000, or 14.5%, higher than in 2010. The increased level of interchange fees reflects customers’ higher volume of debit card transactions.

· Other operating income of $992,000 in 2011 was $237,000 higher than in 2010. In 2011, this category included income of $150,000 from a limited liability equity investment in an entity performing title insurance services throughout Pennsylvania. Comparatively, the Corporation recognized $20,000 of income from investment in this entity in 2010. The Corporation also experienced increases in revenues from check sales (up $41,000) and merchant services (up $30,000) in 2011 as compared to 2010.

· Service charges on deposit accounts increased $194,000 or 4.2% in 2011 compared to 2010 mainly due to fee pricing changes for certain services effective at the beginning of 2011. Net revenues from consumer overdraft privilege services totaled approximately 74% of the total revenues in this category in 2011 as compared to 75% in 2010.

23

· Brokerage revenue of $640,000 in 2011 was $175,000 higher than in 2010. The increase in brokerage revenue includes the effects of sales of annuities to customers who had previously held variable-rate Individual Retirement Accounts (deposits) with the Corporation. Changes in variable-rate Individual Retirement Account deposits are discussed in more detail in the Net Interest Income section of Management’s Discussion and Analysis.

· As described above, in 2011 the Corporation reported an impairment loss of $948,000 related to an investment in a real estate limited partnership.

· As described above, in 2011 the Corporation realized net gains from sales of premises and equipment totaling $324,000, including a gain of $329,000 from sale of the Court Street, Williamsport, PA location. In 2010, net gains from sales of premises and equipment totaled $445,000, including a gain of $448,000 from the sale of a parcel adjacent to the Court Street, Williamsport location.

NONINTEREST EXPENSE

Years Ended December 31, 2012, 2011 and 2010

As shown in Table V below, total noninterest expense increased $3,124,000 in 2012 as compared to 2011. As discussed in the Earnings Overview section of Management’s Discussion and Analysis, in 2012, the Corporation incurred losses totaling $2,333,000 from prepayment of borrowings (repurchase agreements) with an average interest rate of 3.93%. Excluding losses from prepayment of debt, total noninterest expense was $791,000 (2.5%) higher in 2012 as compared to 2011. In 2011 total noninterest expense increased $567,000 or 1.8% over 2011. Changes of significance (other than the previously discussed loss on prepayment of debt) are discussed in the narrative that follows.

TABLE V - COMPARISON OF NONINTEREST EXPENSE
(In Thousands)
					$			%
	2012		2011		Change			Change
Salaries and wages	$	14,370	$	13,866	$	504			3.6
Pensions and other employee benefits		4,497		4,407		90			2.0
Occupancy expense, net		2,476		2,638		(162	)		(6.1	)
Furniture and equipment expense		1,887		1,932		(45	)		(2.3	)
FDIC Assessments		633		832		(199	)		(23.9	)
Pennsylvania shares tax		1,312		1,306		6			0.5
Loss on prepayment of debt		2,333		0		2,333
Other operating expense		7,673		7,076		597			8.4
Total Other Expense	$	35,181	$	32,057	$	3,124			9.7

					$			%
	2011		2010		Change			Change
Salaries and wages	$	13,866	$	13,063	$	803			6.1
Pensions and other employee benefits		4,407		3,840		567			14.8
Occupancy expense, net		2,638		2,645		(7	)		(0.3	)
Furniture and equipment expense		1,932		2,103		(171	)		(8.1	)
FDIC Assessments		832		1,450		(618	)		(42.6	)
Pennsylvania shares tax		1,306		1,222		84			6.9
Other operating expense		7,076		7,167		(91	)		(1.3	)
Total Other Expense	$	32,057	$	31,490	$	567			1.8

2012 vs. 2011

Salaries and wages increased $504,000, or 3.6%, mainly as a result of merit-based salary increases. The number of full-time equivalent employees was 292 at December 31, 2012, up slightly from 290 at December 31, 2011. The increase in this category in 2012 also included an increase in stock-based compensation for employees (excluding non-employee Directors) of $98,000.

24

Occupancy expense decreased $162,000, or 6.1%. Within this category, snow removal and related expenses were $52,000 lower in 2012, reflecting the milder winter weather throughout the Corporation’s market area. Depreciation expense was $118,000 lower in 2012, mainly due to the impact of the sale of the Court Street, Williamsport property in the third quarter 2011. In connection with the sale, the Corporation entered into a lease arrangement to continue to use a portion of the building. The lease is accounted for as an operating lease. Management estimates that total building-related expenses (including the effects of lower depreciation referred to above) for this location were $122,000 lower in 2012 than in 2011.

FDIC Assessments decreased $199,000, or 23.9%. Effective April 1, 2011, the FDIC’s method of determining assessments to banks changed, with the new methodology resulting in higher assessments to larger, more complex or higher-risk institutions, and smaller assessments to many community and small regional banks. The Corporation’s estimated first quarter 2012 FDIC assessment was substantially lower than the first quarter 2011 amount, reflecting the new methodology. The favorable decline also reflects rate changes attributed to improvements in the Corporation’s risk profile based on financial ratios.

Other operating expense increased $597,000, or 8.4%. This category includes many different types of expenses, with the most significant differences in amounts between 2012 and 2011 as follows:

· Software-related subscriptions and updates, mainly related to lending-related activities, up $186,000, or 26.5%

· Fees paid related to interchange and ATM processing, up $110,000 or 10.8%

· Expense related to a change in third-party merchant processing in 2012 of $110,000, with no corresponding expense in 2011

· Attorney fees, mainly from lending-related collection matters, up $100,000, or 47.2%

· Expenses associated with other real estate properties, up $78,000, or 92.2%

2011 vs. 2010

Salaries and wages increased $803,000, or 6.1%. In 2011, salaries and wages expense includes officers’ incentive stock option compensation of $244,000; however, since no stock options were awarded in 2010, there was no officers’ incentive stock option expense incurred in 2010. In addition, salaries and wages expense in 2011 include increases of $55,000 in estimated incentive bonuses and $75,000 in officers’ restricted stock compensation over the comparable 2010 amounts. Excluding performance based stock and bonus compensation incentives, total salaries and wages were 3.3% higher in 2011 as compared to 2010.

Pensions and other employee benefits increased $567,000, or 14.8%. Within this category, group health insurance expense was $368,000 higher in 2011. In the first quarter 2010, the Corporation recorded a reduction in group health insurance expense of $215,000 for the difference between actual and estimated claims from the previous year (2009). Payroll taxes and employer contributions expense associated with the Savings & Retirement Plan (a 401(k) plan) and Employee Stock Ownership Plan are $90,000 higher in 2011 than in the same period of 2010, including higher costs in the first quarter 2011 related to incentive compensation paid in January 2011 based on 2010 performance.

Furniture and equipment expense decreased $171,000, or 8.1% in 2011 with the decrease primarily associated with reductions in depreciation for the Corporation’s core banking systems.

FDIC Assessments decreased $618,000, or 42.6% in 2011. Effective April 1, 2011, the FDIC’s method of determining assessments to banks has changed, with the new methodology resulting in higher assessments to larger, more complex or higher-risk institutions, with smaller assessments to many community and small regional banks. Since the second quarter 2011, the Corporation’s 2011 FDIC assessments, determined using the new methodology, are substantially lower than the amounts assessed for the prior several quarters. The favorable decline also reflects rate changes attributed to improvements in the Corporation’s risk profile based on financial ratios.

Other operating expense decreased $91,000, or 1.3%, in 2011 as compared to 2010. This category includes many different types of expenses, with the most significant differences in amounts between 2011 and 2010 as follows:

· Professional fees and other costs associated with public company requirements, down $137,000, or 48.9%

· Consulting fees associated with an overdraft privilege program, down $71,000, or 93.3%

· Amortization of core deposit intangibles from 2005 and 2007 acquisitions, down $62,000, or 35.2%

· Out-of-pocket collection-related expenses, net of reimbursements, down $58,000, or 33.0%

· Office supplies, down $53,000, or 16.3%

· Attorney fees, primarily associated with lending and collection matters, down $51,000, or 19.4%

· Telephone data lines and service, down $39,000, or 7.6%

25

· Professional and administrative expenses associated with Citizens & Northern Investment Corporation activities, down $36,000, or 58.1%

· Expenses associated with other real estate properties, down $31,000, or 26.8%

· Software-related subscriptions and updates, up $164,000, or 25.3%

· Expenses associated with Bucktail Life Insurance Company, up $156,000. In the second quarter 2010, the Corporation recorded a $245,000 reduction in estimated insurance reserves

· Fees paid related to interchange and ATM processing increased $98,000, or 10.6%

· Charitable donations, up $26,000, mainly due to a $50,000 donation to the Red Cross for victims of flooding that occurred in the Corporation’s market area in September 2011.

INCOME TAXES

The effective income tax rate was approximately 27% of pre-tax income in 2012 and 2011, and 23% in 2010. For 2012 and 2011, the Corporation’s effective tax rates differ from the statutory rate of 35% principally because of the effects of tax-exempt interest income. In 2010, in addition to the effects of tax-exempt interest income, the Corporation’s lower effective tax rate included the benefit of a reduction in expense of $373,000 from the elimination of a valuation reserve related to deferred tax assets that had been established in the preceding year.

The Corporation recognizes deferred tax assets and liabilities based on differences between the financial statement carrying amounts and the tax basis of assets and liabilities. At December 31, 2012, the net deferred tax asset was $1,725,000, down from the balance at December 31, 2011 of $6,173,000. The main reasons for the decrease in net deferred tax asset included: (1) reduction in deferred tax asset related to realized losses on securities to $1,254,000 at December 31, 2012 from $3,175,000 at December 31, 2011; (2) reduction in deferred tax asset related to the credit for alternative minimum tax (AMT) paid in prior periods, which decreased to $3,609,000 at December 31, 2012 from $4,569,000 at December 31, 2011; (3) reduction in deferred tax asset related to general business credit carryforwards, which fell to $0 at December 31, 2012 from $831,000 at December 31, 2011; and (4) increase in deferred tax liability associated with unrealized gains on available-for-sale securities to $6,228,000 at December 31, 2012 from $5,559,000 at December 31, 2011. The reduction in deferred tax asset from realized losses on securities resulted from the 2012 sale of a pooled trust-preferred security for which OTTI had been recorded for financial reporting purposes in previous years. The reduction in deferred tax assets for general business credit carryforwards and the credit for AMT resulted from the estimated excess of the Corporation’s regular tax liability over the AMT liability in 2012, as results indicate the credits would be fully utilized and a portion of the credit for prior years’ AMT paid would be realized.

The Corporation regularly reviews deferred tax assets for recoverability based on history of earnings, expectations for future earnings and expected timing of reversals of temporary differences. Realization of deferred tax assets ultimately depends on the existence of sufficient taxable income, including taxable income in prior carryback years, as well as future taxable income. Management believes the recorded net deferred tax asset at December 31, 2012 is fully realizable; however, if management determines the Corporation will be unable to realize all or part of the net deferred tax asset, the Corporation would adjust the deferred tax asset, which would negatively impact earnings.

Additional information related to income taxes is presented in Note 14 to the consolidated financial statements.

26

SECURITIES

Table VI shows the composition of the investment portfolio at December 31, 2012, 2011 and 2010. Comparison of the amortized cost totals of available-for-sale securities at each year-end presented reflects an increase of $19,334,000 to $465,335,000 at December 31, 2011 from December 31, 2010. This change was followed by a decrease of $10,554,000 to $454,781,000 at December 31, 2012. In both 2011 and 2012, the Corporation increased its holdings of municipal bonds and agency collateralized mortgage obligations. The increases were partially offset by decreases in the balances of U.S. Government agency securities, mortgage-backed securities, and trust preferred securities as management reinvested cash flows from these securities in other types of investments. Changes in the investment portfolio are discussed in more detail in the Net Interest Income section of Management’s Discussion and Analysis. As discussed in more detail in Note 7 to the financial statements, in 2012 the Corporation reported net realized gains from available-for-sale securities of $2,682,000, including a realized pretax gain of $1,754,000 on the sale of a pooled trust preferred security in the third quarter 2012. Management has reviewed the Corporation’s holdings as of December 31, 2012 and concluded that unrealized losses on all of the securities in an unrealized loss position are considered temporary. Notes 6 and 7 to the consolidated financial statements provide more detail concerning the Corporation’s processes for evaluating securities for other-than-temporary impairment, and for valuation of trust-preferred securities. Management will continue to closely monitor the status of impaired securities in 2013.

TABLE VI - INVESTMENT SECURITIES

					As of December 31,
	2012				2011				2010
	Amortized		Fair		Amortized		Fair		Amortized		Fair
(In Thousands)	Cost		Value		Cost		Value		Cost		Value
AVAILABLE-FOR-SALE SECURITIES:
Obligations of U.S. Government agencies	$	30,695	$	31,217	$	24,877	$	25,587	$	44,005	$	44,247
Obligations of states and political subdivisions:
Tax-exempt		130,168		137,020		129,401		132,962		127,210		119,874
Taxable		24,426		24,817		14,004		14,334		7,808		7,668
Mortgage-backed securities		76,368		80,196		116,602		121,769		113,176		118,386
Collateralized mortgage obligations,
Issued by U.S. Government agencies		179,770		183,510		161,818		165,131		131,040		130,826
Corporate bonds		0		0		0		0		1,000		1,027
Trust preferred securities issued by individual institutions		5,167		5,171		7,334		8,146		6,535		7,838
Collateralized debt obligations:
Pooled trust preferred securities - senior tranches		1,615		1,613		4,996		4,638		9,957		7,400
Pooled trust preferred securities - mezzanine tranches		0		0		0		730		0		0
Other collateralized debt obligations		660		660		660		660		681		681
Total debt securities		448,869		464,204		459,692		473,957		441,412		437,947
Marketable equity securities		5,912		8,373		5,643		7,728		4,589		6,009
Total	$	454,781	$	472,577	$	465,335	$	481,685	$	446,001	$	443,956

27

The following table presents the contractual maturities and the weighted-average yields (calculated based on amortized cost) of investment securities as of December 31, 2012. Yields on tax-exempt securities are presented on a nominal basis, that is, the yields are not presented on a fully taxable-equivalent basis. Actual maturities may differ from contractual maturities because counterparties may have the right to call or prepay obligations with or without call or prepayment penalties.

(In Thousands, Except for Percentages)	Within					One-					Five-					After
	One					Five					Ten					Ten
	Year		Yield			Years		Yield			Years		Yield			Years		Yield			Total		Yield
AVAILABLE-FOR-SALE SECURITIES:
Obligations of U.S. Government agencies	$	2,038		1.89	%	$	18,602		1.89	%	$	10,055		1.23	%	$	0		0.00	%	$	30,695		1.67	%
Obligations of states and political subdivisions:
Tax-exempt		9,045		3.92	%		19,184		2.02	%		31,850		2.79	%		70,089		4.91	%		130,168		3.90	%
Taxable		2,013		1.42	%		13,800		2.18	%		8,613		2.03	%		0		0.00	%		24,426		2.06	%
Trust preferred securities issued by individual institutions		0		0.00	%		0		0.00	%		0		0.00	%		5,167		8.94	%		5,167		8.94	%
Collateralized debt obligations:
Pooled trust preferred securities - senior tranches		0		0.00	%		0		0.00	%		0		0.00	%		1,615		7.84	%		1,615		7.84	%
Other collateralized debt obligations		0		0.00	%		0		0.00	%		0		0.00	%		660		0.00	%		660		0.00	%
Subtotal	$	13,096		3.22	%	$	51,586		2.02	%	$	50,518		2.35	%	$	77,531		5.20	%	$	192,731		3.47	%
Mortgage-backed securities																						76,368		3.13	%
Collateralized mortgage obligations,
Issued by U.S. Government agencies																						179,770		1.84	%
Total																					$	448,869		2.76	%

The Corporation’s mortgage-backed securities and collateralized mortgage obligations have stated maturities that may differ from actual maturities due to borrowers’ ability to prepay obligations. Cash flows from such investments are dependent upon the performance of the underlying mortgage loans and are generally influenced by the level of interest rates. As rates increase, cash flows generally decrease as prepayments on the underlying mortgage loans decrease. As rates decrease, cash flows generally increase as prepayments increase. In the table above, the entire balances and weighted-average rates for mortgage-backed securities and collateralized mortgage obligations are shown in one period.

FINANCIAL CONDITION

Significant changes in the average balances of the Corporation’s earning assets and interest-bearing liabilities are described in the Net Interest Income section of Management’s Discussion and Analysis. The discussion provides useful information regarding changes in the Corporation’s balance sheet over the 3-year period ended December 31, 2012, including discussions related to available-for-sale securities, loans, deposits and borrowings. Other significant balance sheet items - the allowance for loan losses and stockholders’ equity - are discussed in separate sections of Management’s Discussion and Analysis.

The total of loans outstanding (without consideration of the allowance for loan losses) at December 31, 2012 reflects a total decrease of $59,634,000 (8%) from the balance at December 31, 2008 to the total outstanding of $683,910,000 at December 31, 2012. Loan volumes are heavily dependent on economic conditions in the Corporation’s market area, and are significantly influenced by interest rates. Since the end of 2008, the Corporation experienced a net decrease in total loans outstanding under the residential mortgage segment ($42,898,000) with more residential mortgage originations than in previous years sold into the secondary market. In September 2009, the Corporation initiated participation in the MPF Xtra program administered by the Federal Home Loan Banks of Pittsburgh and Chicago for the sale of mortgage loans to the secondary market. At December 31, 2012, the outstanding balance of residential mortgage loans originated by the Corporation, and sold with servicing retained was $100,631,000. Also, in the last four years, consumer loans have steadily decreased ($15,463,000) to the December 31, 2012 balance of $11,269,000. Total commercial segment loans outstanding decreased $1,273,000 at December 31, 2012 as compared to December 31, 2008, including a reduction of $7,381,000 at December 31, 2012 from year-end 2011.

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Table VIII presents loan maturity data as of October 31, 2012 (the last date in 2012 for which the Corporation ran the interest rate simulation model used to generate the loan maturity information included in Table VIII). The interest rate simulation model classifies certain loans under different categories than they appear in Table VII. Fixed-rate loans are shown in Table VIII based on their contractually scheduled principal repayments, and variable-rate loans are shown based on the date of the next change in rate. Table VIII shows that fixed-rate loans are approximately 40% of the loan portfolio. Of the 60% of the portfolio made up of variable-rate loans, a significant portion (35%) will re-price after more than one year. Variable-rate loans re-pricing after more than one year include significant amounts of residential and commercial real estate loans. The Corporation’s substantial investment in long-term, fixed-rate loans and variable-rate loans with extended periods until re-pricing is one of the concerns management attempts to address through interest rate risk management practices. See Part II, Item 7A for a more detailed discussion of the Corporation’s interest rate risk.

Total future capital purchases in 2013 are estimated at approximately $1.7 million. Management does not expect capital expenditures to have a material, detrimental effect on the Corporation’s financial condition during 2013.

TABLE VII - FIVE-YEAR SUMMARY OF LOANS BY TYPE

(In Thousands)
	2012			%		2011			%		2010			%		2009			%		2008			%
Residential mortgage:
Residential mortgage loans - first liens	$	311,627			45.6	$	331,015			46.7	$	333,012			45.6	$	340,268			47.2	$	353,909			47.6
Residential mortgage loans - junior liens		26,748			3.9		28,851			4.1		31,590			4.3		35,734			5.0		40,657			5.5
Home equity lines of credit		33,017			4.8		30,037			4.2		26,853			3.7		23,577			3.3		21,304			2.9
1-4 Family residential construction		12,842			1.9		9,959			1.4		14,379			2.0		11,452			1.6		11,262			1.5
Total residential mortgage		384,234			56.2		399,862			56.5		405,834			55.6		411,031			57.0		427,132			57.4
Commercial:
Commercial loans secured by real estate		158,413			23.2		156,388			22.1		167,094			22.9		163,483			22.7		165,979			22.3
Commercial and industrial		48,442			7.1		57,191			8.1		59,005			8.1		49,753			6.9		48,295			6.5
Political subdivisions		31,789			4.6		37,620			5.3		36,480			5.0		37,598			5.2		38,790			5.2
Commercial construction and land		28,200			4.1		23,518			3.3		24,004			3.3		15,264			2.1		13,730			1.8
Loans secured by farmland		11,403			1.7		10,949			1.5		11,353			1.6		11,856			1.6		9,140			1.2
Multi-family (5 or more) residential		6,745			1.0		6,583			0.9		7,781			1.1		8,338			1.2		8,367			1.1
Agricultural loans		3,053			0.4		2,987			0.4		3,472			0.5		3,848			0.5		4,495			0.6
Other commercial loans		362			0.1		552			0.1		392			0.1		638			0.1		884			0.1
Total commercial		288,407			42.2		295,788			41.8		309,581			42.4		290,778			40.3		289,680			39.0
Consumer		11,269			1.6		12,665			1.8		14,996			2.1		19,202			2.7		26,732			3.6
Total		683,910			100.0		708,315			100.0		730,411			100.0		721,011			100.0		743,544			100.0
Less: allowance for loan losses		(6,857	)				(7,705	)				(9,107	)				(8,265	)				(7,857	)
Loans, net	$	677,053				$	700,610				$	721,304				$	712,746				$	735,687

TABLE VIII – LOAN MATURITY DISTRIBUTION

(In Thousands)	As of October 31, 2012
	Fixed-Rate Loans								Variable- or Adjustable-Rate Loans
	1 Year		1-5		>5				1 Year		1-5		>5
	or Less		Years		Years		Total		or Less		Years		Years		Total
Real Estate	$	8,817	$	15,677	$	197,788	$	222,282	$	112,204	$	221,503	$	7,075	$	340,782
Commercial		22,931		12,255		12,806		47,992		58,307		14,553		996		73,856
Consumer		2,630		5,911		3,441		11,982		126		21		0		147
Total	$	34,378	$	33,843	$	214,035	$	282,256	$	170,637	$	236,077	$	8,071	$	414,785

PROVISION AND ALLOWANCE FOR LOAN LOSSES

The Corporation maintains an allowance for loan losses that represents management’s estimate of the losses inherent in the loan portfolio as of the balance sheet date and recorded as a reduction of the investment in loans. Notes 1 and 8 to the consolidated financial statements provide an overview of the process management uses for evaluating and determining the allowance for loan losses.

While management uses available information to recognize losses on loans, changes in economic conditions may necessitate revisions in future years. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Corporation’s allowance for loan losses. Such agencies may require the Corporation to recognize adjustments to the allowance based on their judgments of information available to them at the time of their examination.

29

The allowance for loan losses of $6,857,000 at December 31, 2012 was down from $7,705,000 at December 31, 2011. As presented in Table X, the specific component of the allowance on impaired loans decreased to $623,000 at December 31, 2012 from $1,126,000 at December 31, 2011. The decrease in the allowance on impaired loans at December 31, 2012 as compared to December 31, 2011 included a reduction of $296,000 related to one commercial relationship. In 2012, charge-offs totaling $760,000 (all in the fourth quarter) were recorded related to this commercial relationship for which specific allowances totaling $380,000 had been established at December 31, 2011. After the impact of these charge-offs and re-evaluation of the allowances required, the Corporation had loans outstanding totaling $2,448,000 with a specific allowance of $84,000 at December 31, 2012 related to this commercial borrower.

Table X also shows that the collectively determined components of the allowance fell by a total of $345,000 as of December 31, 2012 compared to December 31, 2011, mainly because of the decrease in the balance of outstanding loans. In addition to the effect of the decrease in outstanding loans, the collectively determined allowance for the commercial segment was impacted by a lower net charge-off percentage used to determine a portion of the collectively determined allowance in 2012 as compared to 2011. (The Corporation used net charge-offs as a percentage of average outstanding loans for the previous three calendar years to estimate a portion of the collectively determined allowance at both December 31, 2012 and December 31, 2011.) The net charge-off percentages did not change significantly for the residential mortgage and consumer segments, and the qualitative factors used in determining the collectively evaluated components of the allowance did not change significantly for any of the segments, at December 31, 2012 as compared to December 31, 2011.

Table IX shows a provision for loan losses of $288,000 in 2012, in comparison to a credit for loan losses of $285,000 in 2011. As shown in Table XII, the average provision for loan losses for the five-year period ended December 31, 2012 was $557,000. The total amount of the provision for loan losses for each period is determined based on the amount required to maintain an appropriate allowance in light of all of the factors described above. In 2012, the Corporation’s provision for loan losses included a net provision of $464,000 related to the commercial relationship referred to above for which charge-offs totaling $760,000 were recorded. Also in 2012, the provision was reduced as a result of the reduction in the collectively determined components of the allowance, mainly due to the reduction in outstanding loans, as described above. In 2011, the credit for loan losses reflected a reduction in the collectively determined portion of the allowance, mainly due to a reduction in outstanding loans. Note 8 to the consolidated financial statements includes a summary of the provision (credit) for loan losses and activity in the allowance for loan losses, by segment and class, for 2012 and 2011.

Table XI presents information related to past due and impaired loans, and loans that have been modified under terms that are considered troubled debt restructurings (TDRs). At December 31, 2012, total impaired loans were $7,429,000, down from $7,864,000 at December 31, 2011. Nonaccrual loans totaled $7,353,000 at December 31, 2012, up from $7,197,000 at December 31, 2011, and total loans past due 90 days or more and still in accrual status increased to $2,311,000 at December 31, 2012 from $1,267,000 at December 31, 2011. Interest continues to be accrued on loans 90 days or more past due that management deems to be well secured and in the process of collection, and for which no loss is anticipated. Over the period 2008-2012, each period includes a few large commercial relationships that have required significant monitoring and workout efforts. As a result, a limited number of relationships may significantly impact the total amount of allowance required on impaired loans, and may significantly impact the amount of total charge-offs reported in any one period.

Management believes it has been conservative in its decisions concerning identification of impaired loans, estimates of loss, and nonaccrual status; however, the actual losses realized from these relationships could vary materially from the allowances calculated as of December 31, 2012. Management continues to closely monitor its commercial loan relationships for possible credit losses, and will adjust its estimates of loss and decisions concerning nonaccrual status, if appropriate.

Tables IX through XII present historical data related to the allowance for loan losses.

30

TABLE IX - ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES

(In Thousands)	Years Ended December 31,
	2012			2011			2010			2009			2008
Balance, beginning of year	$	7,705		$	9,107		$	8,265		$	7,857		$	8,859
Charge-offs:
Residential mortgage		(552	)		(100	)		(340	)		(146	)		(173	)
Commercial		(498	)		(1,189	)		(91	)		(39	)		(1,607	)
Consumer		(171	)		(157	)		(188	)		(293	)		(259	)
Total charge-offs		(1,221	)		(1,446	)		(619	)		(478	)		(2,039	)
Recoveries:
Residential mortgage		18			3			55			8			19
Commercial		8			255			113			77			22
Consumer		59			71			102			121			87
Total recoveries		85			329			270			206			128
Net charge-offs		(1,136	)		(1,117	)		(349	)		(272	)		(1,911	)
Provision (credit) for loan losses		288			(285	)		1,191			680			909
Balance, end of period	$	6,857		$	7,705		$	9,107		$	8,265		$	7,857

TABLE X - COMPONENTS OF THE ALLOWANCE FOR LOAN LOSSES

(In Thousands)	As of December 31,
	2012		2011		2010		2009		2008
ASC 310 - Impaired loans	$	623	$	1,126	$	2,288	$	1,126	$	456
ASC 450 - Collective segments:
Commercial		2,594		2,811		3,047		2,677		2,654
Residential mortgage		3,011		3,130		3,227		3,859		3,920
Consumer		188		204		232		281		399
Unallocated		441		434		313		322		428
Total Allowance	$	6,857	$	7,705	$	9,107	$	8,265	$	7,857

The above allocation is based on estimates and subjective judgments and is not necessarily indicative of the specific amounts or loan categories in which losses may occur.

31

TABLE XI - PAST DUE AND IMPAIRED LOANS, NONPERFORMING ASSETS

AND TROUBLED DEBT RESTRUCTURINGS (TDRs)

(In Thousands)

	As of December 31,
	2012			2011			2010			2009			2008
Impaired loans with a valuation allowance	$	2,710		$	3,433		$	5,457		$	2,690		$	2,230
Impaired loans without a valuation allowance		4,719			4,431			3,191			3,257			3,435
Total impaired loans	$	7,429		$	7,864		$	8,648		$	5,947		$	5,665
Total loans past due 30-89 days and still accruing	$	7,756		$	7,898		$	7,125		$	9,445		$	9,875
Nonperforming assets:
Total nonaccrual loans	$	7,353		$	7,197		$	10,809		$	9,092		$	7,200
Total loans past due 90 days or more and still accruing		2,311			1,267			727			31			1,305
Total nonperforming loans		9,664			8,464			11,536			9,123			8,505
Foreclosed assets held for sale (real estate)		879			1,235			537			873			298
Total nonperforming assets	$	10,543		$	9,699		$	12,073		$	9,996		$	8,803
Loans subject to troubled debt restructurings (TDRs):
Performing	$	906		$	1,064		$	645		$	326		$	0
Nonperforming		1,155			2,413			0			0			0
Total TDRs	$	2,061		$	3,477		$	645		$	326		$	0
Total nonperforming loans as a % of loans		1.41	%		1.19	%		1.58	%		1.27	%		1.14	%
Total nonperforming assets as a % of assets		0.82	%		0.73	%		0.92	%		0.76	%		0.69	%
Allowance for loan losses as a % of total loans		1.00	%		1.09	%		1.25	%		1.15	%		1.06	%
Allowance for loan losses as a % of nonperforming loans		70.95	%		91.03	%		78.94	%		90.60	%		92.38	%

TABLE XII - FIVE-YEAR HISTORY OF LOAN LOSSES (In Thousands)

	2012			2011			2010			2009			2008			Average
Average gross loans	$	700,241		$	714,421		$	721,997		$	728,748		$	743,741		$	721,830
Year-end gross loans		683,910			708,315			730,411			721,011			743,544			717,438
Year-end allowance for loan losses		6,857			7,705			9,107			8,265			7,857			7,958
Year-end nonaccrual loans		7,353			7,197			10,809			9,092			7,200			8,330
Year-end loans 90 days or more past due and still accruing		2,311			1,267			727			31			1,305			1,128
Net charge-offs		1,136			1,117			349			272			1,911			957
Provision (credit) for loan losses		288			(285	)		1,191			680			909			557
Earnings coverage of charge-offs		20			21			55			(145	)		5			7
Allowance coverage of charge-offs		6			7			26			30			4			8
Net charge-offs as a % of provision (credit) for loan losses		394.44	%		-391.93	%		29.30	%		40.00	%		210.23	%		171.81	%
Net charge-offs as a % of average gross loans		0.16	%		0.16	%		0.05	%		0.04	%		0.26	%		0.13	%
Net income (loss)		22,705			23,368			19,055			(39,335	)		10,059			7,170

32

CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS

Table XIII presents the Corporation’s significant fixed and determinable contractual obligations as of December 31, 2012 by payment date. The payment amounts represent the principal amounts of time deposits and borrowings and do not include interest.

TABLE XIII – CONTRACTUAL OBLIGATIONS

(In Thousands)

	1 Year		1-3		3-5		Over 5
	or Less		Years		Years		Years		Total
Time deposits	$	197,014	$	91,314	$	24,091	$	0	$	312,419
Long-term borrowings:
Federal Home Loan Bank of Pittsburgh		3,211		0		10,223		2,378		15,812
Repurchase agreements		0		0		68,000		0		68,000
Total	$	200,225	$	91,314	$	102,314	$	2,378	$	396,231

In addition to the amounts described in Table XIII, the Corporation has obligations related to deposits without a stated maturity with outstanding principal balances totaling $693,687,000 at December 31, 2012. The Corporation also has obligations related to overnight customer repurchase agreements with principal balances of $5,567,000 at December 31, 2012.

The Corporation’s operating lease commitments at December 31, 2012 are immaterial. The Corporation’s significant off-balance sheet arrangements consist of commitments to extend credit and standby letters of credit. Off-balance sheet arrangements are described in Note 16 to the consolidated financial statements.

LIQUIDITY

Liquidity is the ability to quickly raise cash at a reasonable cost. An adequate liquidity position permits the Corporation to pay creditors, compensate for unforeseen deposit fluctuations and fund unexpected loan demand. At December 31, 2012, the Corporation maintained overnight interest-bearing deposits with the Federal Reserve Bank of Philadelphia and other correspondent banks totaling $33,660,000.

The Corporation maintains overnight borrowing facilities with several correspondent banks that provide a source of day-to-day liquidity. Also, the Corporation maintains borrowing facilities with the Federal Home Loan Bank of Pittsburgh, secured by various mortgage loans.

The Corporation has a line of credit with the Federal Reserve Bank of Philadelphia’s Discount Window. Management intends to use this line of credit as a contingency funding source. As collateral for the line, the Corporation has pledged available-for-sale securities with a carrying value of $28,432,000 at December 31, 2012.

The Corporation’s outstanding, available, and total credit facilities at December 31, 2012 and 2011 are as follows:

	Outstanding				Available				Total Credit
(In Thousands)	Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,
	2012		2011		2012		2011		2012		2011
Federal Home Loan Bank of Pittsburgh	$	17,809	$	40,363	$	328,023	$	292,304	$	345,832	$	332,667
Federal Reserve Bank Discount Window		0		0		27,367		27,438		27,367		27,438
Other correspondent banks		0		0		45,000		25,000		45,000		25,000
Total credit facilities	$	17,809	$	40,363	$	400,390	$	344,742	$	418,199	$	385,105

At December 31, 2012, the Corporation’s outstanding credit facilities with the Federal Home Loan Bank of Pittsburgh consisted of long-term borrowings with a total amount of $15,812,000 as well as a letter of credit in the amount of $1,997,000. At December 31, 2011, the Corporation’s outstanding credit facilities with the Federal Home Loan Bank of Pittsburgh consisted of long-term borrowings; no letters of credit were outstanding. Additional information regarding borrowed funds is included in Note 12 of the consolidated financial statements.

33

Additionally, the Corporation uses repurchase agreements placed with brokers to borrow funds secured by investment assets, and uses “RepoSweep” arrangements to borrow funds from commercial banking customers on an overnight basis. If required to raise cash in an emergency situation, the Corporation could sell available-for-sale securities to meet its obligations. At December 31, 2012, the carrying value of available-for-sale securities in excess of amounts required to meet pledging or repurchase agreement obligations was $218,190,000.

Management believes the Corporation is well-positioned to meet its short-term and long-term obligations.

STOCKHOLDERS’ EQUITY AND CAPITAL ADEQUACY

The Corporation and C&N Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Details concerning regulatory capital amounts and ratios are presented in Note 18 to the consolidated financial statements. As reflected in Note 18, at December 31, 2012 and 2011, the ratios of total capital to risk-weighted assets, tier 1 capital to risk-weighted assets and tier 1 capital to average total assets are well in excess of regulatory capital requirements.

Future dividend payments will depend upon maintenance of a strong financial condition, future earnings and capital and regulatory requirements. In addition, the Corporation, and C&N Bank are subject to restrictions on the amount of dividends that may be paid without approval of banking regulatory authorities. These restrictions are described in Note 18 to the consolidated financial statements.

The Corporation’s total stockholders’ equity is affected by fluctuations in the fair values of available-for-sale securities. The difference between amortized cost and fair value of available-for-sale securities, net of deferred income tax, is included in “Accumulated Other Comprehensive Income (Loss)” within stockholders’ equity. The balance in Accumulated Other Comprehensive Income (Loss) related to unrealized gains or losses on available-for-sale securities, net of deferred income tax, amounted to $11,568,000 at December 31, 2012 and $10,791,000 at December 31, 2011. Changes in accumulated other comprehensive income are excluded from earnings and directly increase or decrease stockholders’ equity. If available-for-sale securities are deemed to be other-than-temporarily impaired, unrealized losses are recorded as a charge against earnings, and amortized cost for the affected securities is reduced. Note 7 to the consolidated financial statements provides additional information concerning management’s evaluation of available-for-sale securities for other-than-temporary impairment at December 31, 2012.

Stockholders’ equity is also affected by the underfunded or overfunded status of defined benefit pension and postretirement plans. The balance in Accumulated Other Comprehensive Income (Loss) related to underfunded defined benefit plans, net of deferred income tax, was ($565,000) at December 31, 2012 and ($631,000) at December 31, 2011.

COMPREHENSIVE INCOME

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220) – Presentation of Comprehensive Income. The intent of this standard is to increase the prominence of comprehensive income in the financial statements. Accordingly, the Corporation has included Statements of Comprehensive Income in the consolidated financial statements for 2012, 2011 and 2010.

Comprehensive Income is the total of (1) net income, and (2) all other changes in equity from non-stockholder sources, which are referred to as Other Comprehensive Income. Changes in the components of Accumulated Other Comprehensive Income (Loss) are included in Other Comprehensive Income, and for the Corporation, consist of changes in unrealized gains or losses on available-for-sale securities and changes in underfunded defined benefit plans.

Comprehensive Income totaled $23,548,000 in 2012 as compared to $35,129,000 in 2011 and $18,345,000 in 2010. In 2012, Comprehensive Income included: (1) Net Income of $22,705,000 in 2012, which was $663,000 lower than in 2011 and $3,650,000 higher than in 2010; (2) Other Comprehensive Income from unrealized gains on available-for-sale securities, net of deferred income tax, of $777,000 in 2012 as compared to $12,142,000 in 2011 and an Other Comprehensive Loss from net unrealized losses of $829,000 in 2010; and (3) Other Comprehensive Income from defined benefit plans of $66,000 in 2012 as compared to an Other Comprehensive Loss of $381,000 in 2011 and Other Comprehensive Income of $119,000 in 2011.

INFLATION

The Corporation is significantly affected by the Federal Reserve Board’s efforts to control inflation through changes in short-term interest rates. Beginning in September 2007, in response to concerns about weakness in the U.S. economy, the Federal Reserve lowered the fed funds target rate numerous times; in December 2008, it established a target range of 0% to 0.25%, which it has maintained through 2012. Also, the Federal Reserve has injected massive amounts of liquidity into the nation’s monetary system through a variety of programs. The Federal Reserve has purchased large amounts of securities in an effort to keep interest rates low and stimulate economic growth. Further, the Federal Reserve announced that it expects to continue exceptionally accommodative monetary policies with a general target of maintaining accommodative policy until the U.S. unemployment rate hits a sustainable level of 6.5% or less.

34

Despite the current low short-term rate environment, liquidity injections, and commodity price increases, inflation statistics indicate that the overall rate of inflation is unlikely to significantly affect the Corporation’s operations within the near future. Although management cannot predict future changes in the rates of inflation, management monitors the impact of economic trends, including any indicators of inflationary pressures, in managing interest rate and other financial risks.

RECENT ACCOUNTING PRONOUNCEMENTS

See Note 2 to the consolidated financial statements for a description of recent accounting pronouncements and their recent or potential future effects on the Corporation’s financial statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

MARKET RISK

Market risk is the risk of loss arising from adverse changes in market rates and prices of the Corporation’s financial instruments. In addition to the effects of interest rates, the market prices of the Corporation’s debt securities within the available-for-sale securities portfolio are affected by fluctuations in the risk premiums (amounts of spread over risk-free rates) demanded by investors.

Management cannot control changes in market prices of securities based on fluctuations in the risk premiums demanded by investors, nor can management control the volume of deferrals or defaults by the issuers of debt securities owned by the Corporation. However, management attempts to limit the risk that economic conditions would force the Corporation to sell securities for realized losses by maintaining a strong capital position (discussed in the “Stockholders’ Equity and Capital Adequacy” section of Management’s Discussion and Analysis) and ample sources of liquidity (discussed in the “Liquidity” section of Management’s Discussion and Analysis).

The Corporation’s two major categories of market risk are interest rate risk and equity securities risk, which are discussed in the following sections.

INTEREST RATE RISK

Business risk arising from changes in interest rates is an inherent factor in operating a bank. The Corporation’s assets are predominantly long-term, fixed-rate loans and debt securities. Funding for these assets comes principally from shorter-term deposits and borrowed funds. Accordingly, there is an inherent risk of lower future earnings or decline in fair value of the Corporation’s financial instruments when interest rates change.

The Corporation uses a simulation model to calculate the potential effects of interest rate fluctuations on net interest income and the market value of portfolio equity. For purposes of these calculations, the market value of portfolio equity includes the fair values of financial instruments, such as securities, loans, deposits and borrowed funds, and the book values of nonfinancial assets and liabilities, such as premises and equipment and accrued expenses. The model measures and projects potential changes in net interest income, and calculates the discounted present value of anticipated cash flows of financial instruments, assuming an immediate increase or decrease in interest rates. Management ordinarily runs a variety of scenarios within a range of plus or minus 50-400 basis points of current rates.

The model makes estimates, at each level of interest rate change, regarding cash flows from principal repayments on loans and mortgage-backed securities and call activity on other investment securities. Actual results could vary significantly from these estimates, which could result in significant differences in the calculations of projected changes in net interest income and market value of portfolio equity. Also, the model does not make estimates related to changes in the composition of the deposit portfolio that could occur due to rate competition, and the table does not necessarily reflect changes that management would make to realign the portfolio as a result of changes in interest rates.

The Corporation’s Board of Directors has established policy guidelines for acceptable levels of interest rate risk, based on an immediate increase or decrease in interest rates. The policy limits acceptable fluctuations in net interest income from the baseline (flat rates) one-year scenario and variances in the market value of portfolio equity from the baseline values based on current rates.

35

Table XIV, which follows this discussion, is based on the results of calculations performed using the simulation model as of October 31, 2012 and 2011. The table shows that as of October 31, 2012 and 2011, the changes in net interest income and changes in market value were within the policy limits in all scenarios.

36

TABLE XIV - THE EFFECT OF HYPOTHETICAL CHANGES IN INTEREST RATES

October 31, 2012 Data
(In Thousands)		Period Ending October 31, 2013
Basis Point		Interest		Interest		Net Interest		NII			NII
Change in Rates		Income		Expense		Income (NII)		% Change			Risk Limit
	+400	$	60,813	$	26,050	$	34,763		-18.9	%		25.0	%
	+300		58,329		20,789		37,540		-12.4	%		20.0	%
	+200		55,398		16,004		39,394		-8.1	%		15.0	%
	+100		52,592		11,338		41,254		-3.7	%		10.0	%
	0		49,534		6,673		42,861		0.0	%		0.0	%
	-100		46,881		6,236		40,645		-5.2	%		10.0	%
	-200		46,178		6,233		39,945		-6.8	%		15.0	%
	-300		45,925		6,233		39,692		-7.4	%		20.0	%
	-400		45,800		6,233		39,567		-7.7	%		25.0	%

Market Value of Portfolio Equity at October 31, 2012

		Present		Present			Present
Basis Point		Value		Value			Value
Change in Rates		Equity		% Change			Risk Limit
	+400	$	165,826		-21.7	%		50.0	%
	+300		179,904		-15.1	%		45.0	%
	+200		193,117		-8.8	%		35.0	%
	+100		204,290		-3.6	%		25.0	%
	0		211,846		0.0	%		0.0	%
	-100		207,561		-2.0	%		25.0	%
	-200		230,184		8.7	%		35.0	%
	-300		268,229		26.6	%		45.0	%
	-400		309,611		46.1	%		50.0	%

October 31, 2011 Data
(In Thousands)		Period Ending October 31, 2012
Basis Point		Interest		Interest		Net Interest		NII			NII
Change in Rates		Income		Expense		Income (NII)		% Change			Risk Limit
	+400	$	66,369	$	29,617	$	36,752		-18.0	%		25.0	%
	+300		63,690		24,535		39,155		-12.6	%		20.0	%
	+200		60,927		19,806		41,121		-8.2	%		15.0	%
	+100		58,095		15,076		43,019		-4.0	%		10.0	%
	0		55,164		10,346		44,818		0.0	%		0.0	%
	-100		51,929		8,720		43,209		-3.6	%		10.0	%
	-200		50,441		8,680		41,761		-6.8	%		15.0	%
	-300		49,961		8,680		41,281		-7.9	%		20.0	%
	-400		49,828		8,680		41,148		-8.2	%		25.0	%

Market Value of Portfolio Equity at October 31, 2011

		Present		Present			Present
Basis Point		Value		Value			Value
Change in Rates		Equity		% Change			Risk Limit
	+400	$	153,307		-23.2	%		50.0	%
	+300		165,701		-17.0	%		45.0	%
	+200		178,261		-10.7	%		35.0	%
	+100		189,315		-5.2	%		25.0	%
	0		199,726		0.0	%		0.0	%
	-100		197,329		-1.2	%		25.0	%
	-200		211,794		6.0	%		35.0	%
	-300		238,309		19.3	%		45.0	%
	-400		278,876		39.6	%		50.0	%

37

EQUITY SECURITIES RISK

The Corporation’s equity securities portfolio consists of investments in stocks of banks and bank holding companies. Investments in bank stocks are subject to risk factors that affect the banking industry in general, including credit risk, competition from non-bank entities, interest rate risk and other factors, which could result in a decline in market prices. Also, losses could occur in individual stocks held by the Corporation because of specific circumstances related to each bank. As discussed further in Note 7 of the consolidated financial statements, the Corporation recognized an impairment loss in earnings related to a bank stock of $67,000 in 2012. The Corporation recognized no OTTI losses related to bank stocks in 2011.

Equity securities held as of December 31, 2012 and 2011 are presented in Table XV. Table XV presents quantitative data concerning the effects of a decline in fair value of the Corporation’s equity securities of 10% or 20%. The data in Table XV does not reflect the effects of any appreciation in value that may occur, nor does it present the Corporation’s maximum exposure to loss on equity securities, which would be 100% of their fair value as of December 31, 2012.

TABLE XV - EQUITY SECURITIES RISK
(In Thousands)
	Dec. 31,			Dec. 31,
	2012			2011
Cost	$	5,912		$	5,643
Fair Value		8,373			7,728
Hypothetical 10% Decline In Market Value		(837	)		(773	)
Hypothetical 20% Decline In Market Value		(1,675	)		(1,546	)

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share and Per Share Data)	December 31,			December 31,
	2012			2011
ASSETS
Cash and due from banks:
Noninterest-bearing	$	21,356		$	17,618
Interest-bearing		38,480			42,957
Total cash and due from banks		59,836			60,575
Available-for-sale securities, at fair value		472,577			481,685
Loans held for sale		2,545			939
Loans receivable		683,910			708,315
Allowance for loan losses		(6,857	)		(7,705	)
Loans, net		677,053			700,610
Bank-owned life insurance		21,344			20,889
Accrued interest receivable		4,281			4,797
Bank premises and equipment, net		18,707			19,028
Foreclosed assets held for sale		879			1,235
Deferred tax asset, net		1,725			6,173
Intangible asset - Core deposit intangibles		138			212
Intangible asset - Goodwill		11,942			11,942
Other assets		15,880			15,650
TOTAL ASSETS	$	1,286,907		$	1,323,735
LIABILITIES
Deposits:
Noninterest-bearing	$	189,941		$	193,595
Interest-bearing		816,165			824,611
Total deposits		1,006,106			1,018,206
Short-term borrowings		5,567			4,950
Long-term borrowings		83,812			125,363
Accrued interest and other liabilities		8,636			7,831
TOTAL LIABILITIES		1,104,121			1,156,350
STOCKHOLDERS' EQUITY
Preferred stock, $1,000 par value; authorized 30,000 shares; $1,000 liquidation preference per share; no shares issued at December 31, 2012 and December 31, 2011		0			0
Common stock, par value $1.00 per share; authorized 20,000,000 shares in 2012 and 2011; issued 12,525,411 at December 31, 2012 and 12,460,920 at December 31, 2011		12,525			12,461
Paid-in capital		68,622			67,568
Retained earnings		94,839			82,302
Treasury stock, at cost; 251,376 shares at December 31, 2012 and 305,391 shares at December 31, 2011		(4,203	)		(5,106	)
Sub-total		171,783			157,225
Accumulated other comprehensive income:
Unrealized gains on available-for-sale securities		11,568			10,791
Defined benefit plans		(565	)		(631	)
Total accumulated other comprehensive income		11,003			10,160
TOTAL STOCKHOLDERS' EQUITY		182,786			167,385
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	$	1,286,907		$	1,323,735

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

39

Consolidated Statements of Income	Years Ended December 31,
(In Thousands Except Per Share Data)	2012			2011			2010
INTEREST INCOME
Interest and fees on loans	$	40,453		$	43,178		$	44,155
Interest on balances with depository institutions		114			73			124
Interest on loans to political subdivisions		1,539			1,499			1,582
Interest on mortgages held for sale		107			53			74
Interest on trading securities		0			0			1
Income from available-for-sale and held-to-maturity securities:
Taxable		9,029			11,036			11,092
Tax-exempt		5,085			5,156			4,834
Dividends		305			261			252
Total interest and dividend income		56,632			61,256			62,114
INTEREST EXPENSE
Interest on deposits		4,807			8,112			11,907
Interest on short-term borrowings		10			23			177
Interest on long-term borrowings		4,214			5,421			7,161
Total interest expense		9,031			13,556			19,245
Net interest income		47,601			47,700			42,869
Provision (credit) for loan losses		288			(285	)		1,191
Net interest income after provision (credit) for loan losses		47,313			47,985			41,678
OTHER INCOME
Service charges on deposit accounts		5,036			4,773			4,579
Service charges and fees		929			849			858
Trust and financial management revenue		3,847			3,472			3,475
Interchange revenue from debit card transactions		1,938			1,922			1,678
Net gains from sale of loans		1,925			1,107			761
Increase in cash surrender value of life insurance		455			509			466
Insurance commissions, fees and premiums		221			257			248
Impairment loss on limited partnership investment		0			(948	)		0
Other operating income		1,966			1,997			1,773
Sub-total		16,317			13,938			13,838
Total other-than-temporary impairment losses on available-for-sale securities		(67	)		0			(381	)
Portion of (gain) recognized in other comprehensive loss (before taxes)		0			0			(52	)
Net impairment losses recognized in earnings		(67	)		0			(433	)
Realized gains on available-for-sale securities, net		2,749			2,216			1,262
Net realized gains recognized in earnings on available-for-sale securities		2,682			2,216			829
Total other income		18,999			16,154			14,667
OTHER EXPENSES
Salaries and wages		14,370			13,866			13,063
Pensions and other employee benefits		4,497			4,407			3,840
Occupancy expense, net		2,476			2,638			2,645
Furniture and equipment expense		1,887			1,932			2,103
FDIC Assessments		633			832			1,450
Pennsylvania shares tax		1,312			1,306			1,222
Loss on prepayment of debt		2,333			0			0
Other operating expense		7,673			7,076			7,167
Total other expenses		35,181			32,057			31,490
Income before income tax provision		31,131			32,082			24,855
Income tax provision		8,426			8,714			5,800
Net income		22,705			23,368			19,055
U.S. Treasury preferred dividends		0			0			1,474
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	22,705		$	23,368		$	17,581
NET INCOME PER SHARE - BASIC	$	1.86		$	1.92		$	1.45
NET INCOME PER SHARE - DILUTED	$	1.85		$	1.92		$	1.45

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

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Thousands)	2012			2011			2010
Net income	$	22,705		$	23,368		$	19,055
Unrealized gains (losses) on available-for-sale securities:
Unrealized holding gains (losses) on available-for-sale securities		4,128			20,611			(448	)
Reclassification adjustment for gains realized in income		(2,682	)		(2,216	)		(829	)
Other comprehensive gain (loss) on available-for-sale securities		1,446			18,395			(1,277	)
Unfunded pension and postretirement obligations:
Change in items from defined benefit plans included in accumulated other comprehensive gain (loss)		8			(626	)		126
Amortization of net transition obligation, prior service cost and net actuarial loss included in net periodic benefit cost		77			55			53
Other comprehensive gain (loss) on unfunded retirement obligations		85			(571	)		179
Other comprehensive income (loss) before income tax		1,531			17,824			(1,098	)
Income tax related to other comprehensive (income) loss		(688	)		(6,063	)		388
Net other comprehensive income (loss)		843			11,761			(710	)
Comprehensive income	$	23,548		$	35,129		$	18,345

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

41

Consolidated Statements of Changes in
Stockholders' Equity
(In Thousands Except Share and Per
Share Data)																	Accumulated
																	Other
																	Comprehensive
	Common		Treasury			Preferred			Common		Paid-in			Retained			Income			Treasury
	Shares		Shares			Stock			Stock		Capital			Earnings			(Loss)			Stock			Total
Balance, January 1, 2010		12,374,481		262,780		$	25,749		$	12,374	$	66,726		$	53,027		$	(891	)	$	(4,575	)	$	152,410
Net income															19,055									19,055
Other comprehensive loss, net																		(710	)					(710	)
Accretion of discount associated with U.S. Treasury preferred stock							691								(691	)								0
Cash dividends on U.S. Treasury preferred stock															(783	)								(783	)
Redemption of U.S. Treasury preferred stock, 26,440 shares							(26,440	)																(26,440	)
Redemption of U.S. Treasury warrant												(400	)											(400	)
Cash dividends declared on common stock, $.39 per share															(4,730	)								(4,730	)
Shares issued for dividend reinvestment plan		33,731								34		399												433
Restricted stock granted				(9,125	)							(159	)								159			0
Forfeiture of restricted stock				959								15									(15	)		0
Stock-based compensation expense												67												67
Tax benefit from employee benefit plan															42									42
Balance, December 31, 2010		12,408,212		254,614			0			12,408		66,648			65,920			(1,601	)		(4,431	)		138,944
Net income															23,368									23,368
Other comprehensive income, net																		11,761						11,761
Cash dividends declared on common stock, $.58 per share															(7,052	)								(7,052	)
Treasury stock purchased				70,849																	(1,022	)		(1,022	)
Shares issued for dividend reinvestment plan		52,708								53		772												825
Shares issued from treasury related to exercise of stock options				(4,856	)							(11	)								82			71
Restricted stock granted				(15,622	)							(272	)								272			0
Forfeiture of restricted stock				406								7									(7	)		0
Stock-based compensation expense												423												423
Tax benefit from stock-based compensation												1												1
Tax benefit from employee benefit plan															66									66
Balance, December 31, 2011		12,460,920		305,391			0			12,461		67,568			82,302			10,160			(5,106	)		167,385
Net income															22,705									22,705
Other comprehensive income, net																		843						843
Cash dividends declared on common stock, $.84 per share															(10,272	)								(10,272	)
Shares issued for dividend reinvestment plan		64,491								64		1,147												1,211
Shares issued from treasury related to exercise of stock options				(15,023	)							(22	)								251			229
Restricted stock granted				(42,552	)							(711	)								711			0
Forfeiture of restricted stock				3,560								59									(59	)		0
Stock-based compensation expense												567												567
Tax benefit from stock-based compensation												14												14
Tax benefit from employee benefit plan															104									104
Balance, December 31, 2012		12,525,411		251,376		$	0		$	12,525	$	68,622		$	94,839		$	11,003		$	(4,203	)	$	182,786

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

42

CONSOLIDATED STATEMENTS OF CASH FLOWS	Years Ended December 31,
(In Thousands)	2012			2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	22,705		$	23,368		$	19,055
Adjustments to reconcile net income to net cash provided by operating activities:
Provision (credit) for loan losses		288			(285	)		1,191
Realized gains on available-for-sale securities, net		(2,682	)		(2,216	)		(829	)
Loss on prepayment of debt		2,333			0			0
Gain on disposition of premises and equipment		(270	)		(324	)		(445	)
Loss (gain) on sale of foreclosed assets, net		66			(41	)		(108	)
Depreciation expense		1,939			2,077			2,339
Accretion and amortization on securities, net		1,581			1,317			2,233
Accretion and amortization on loans, deposits and borrowings, net		(49	)		(35	)		(262	)
Amortization of mortgage servicing rights		97			68			12
Impairment loss on limited partnership interest		0			948			0
Increase in cash surrender value of life insurance		(455	)		(509	)		(466	)
Stock-based compensation		567			423			67
Amortization of core deposit intangibles		74			114			176
Deferred income taxes		3,760			3,818			6,371
Gains on sales of mortgage loans, net		(1,925	)		(1,107	)		(761	)
Origination of mortgage loans for sale		(62,829	)		(26,610	)		(30,720	)
Proceeds from sales of mortgage loans		62,821			31,786			26,826
Net decrease in trading securities		0			0			1,045
(Increase) decrease in accrued interest receivable and other assets		(1,043	)		3,580			9,624
Increase (decrease) in accrued interest payable and other liabilities		674			1,092			(302	)
Net Cash Provided by Operating Activities		27,652			37,464			35,046
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of certificates of deposit		(1,060	)		(3,760	)		0
Proceeds from maturity of held-to-maturity securities		0			0			300
Proceeds from sales of available-for-sale securities		24,228			25,471			53,115
Proceeds from calls and maturities of available-for-sale securities		114,247			108,138			163,618
Purchase of available-for-sale securities		(126,820	)		(152,044	)		(267,082	)
Redemption of Federal Home Loan Bank of Pittsburgh stock		1,931			1,513			429
Net decrease (increase) in loans		22,320			19,264			(10,330	)
Proceeds from bank-owned life insurance		0			1,442			1,442
Purchase of premises and equipment		(1,622	)		(998	)		(707	)
Proceeds from disposition of premises and equipment		456			3,060			103
Purchase of investment in limited liability entity		(538	)		(397	)		0
Return of principal on limited liability entity investments		114			116			66
Proceeds from sale of foreclosed assets		1,380			1,112			1,169
Net Cash Provided by (Used in) Investing Activities		34,636			2,917			(57,877	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase in deposits		(12,106	)		13,839			77,537
Net increase (decrease) in short-term borrowings		617			(13,463	)		(20,816	)
Repayments of long-term borrowings		(43,884	)		(23,132	)		(47,607	)
Redemption of US Treasury preferred stock and warrant		0			0			(26,840	)
Purchase of treasury stock		0			(1,022	)		0
Sale of treasury stock		229			71			0
Tax benefit from compensation plans		118			67			42
US Treasury preferred dividends paid		0			0			(952	)
Common dividends paid		(9,061	)		(6,227	)		(4,297	)
Net Cash Used in Financing Activities		(64,087	)		(29,867	)		(22,933	)
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(1,799	)		10,514			(45,764	)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		56,815			46,301			92,065
CASH AND CASH EQUIVALENTS, END OF YEAR	$	55,016		$	56,815		$	46,301

43

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)	Years Ended December 31,
(In Thousands)	2012		2011		2010
Assets acquired through foreclosure of real estate loans	$	1,004	$	1,769	$	725
Interest paid	$	9,246	$	13,609	$	19,614
Income taxes paid (refunded)	$	4,250	$	3,616	$	(8,134	)

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

44

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF CONSOLIDATION - The consolidated financial statements include the accounts of Citizens & Northern Corporation and its subsidiaries, Citizens & Northern Bank (“C&N Bank”), Bucktail Life Insurance Company and Citizens & Northern Investment Corporation (collectively, “Corporation”), as well as C&N Bank’s wholly-owned subsidiary, C&N Financial Services Corporation. The consolidated financial statements also include the accounts of the former Canisteo Valley Corporation (merged into Citizens & Northern Corporation in September 2010) and its former wholly-owned subsidiary, First State Bank (merged into C&N Bank, effective September 1, 2010). All material intercompany balances and transactions have been eliminated in consolidation.

NATURE OF OPERATIONS - The Corporation is primarily engaged in providing a full range of banking and mortgage services to individual and corporate customers in North Central Pennsylvania and Southern New York State. Lending products include mortgage loans, commercial loans and consumer loans, as well as specialized instruments such as commercial letters-of-credit. Deposit products include various types of checking accounts, passbook and statement savings, money market accounts, interest checking accounts, Individual Retirement Accounts and certificates of deposit. The Corporation also offers non-insured “RepoSweep” accounts.

The Corporation provides Trust and Financial Management services, including administration of trusts and estates, retirement plans, and other employee benefit plans, and investment management services. The Corporation offers a variety of personal and commercial insurance products through C&N Financial Services Corporation. C&N Financial Services Corporation also offers mutual funds, annuities, educational savings accounts and other investment products through registered agents. Management has determined that the Corporation has one reportable segment, “Community Banking.” All of the Corporation’s activities are interrelated, and each activity is dependent and assessed based on how each of the activities of the Corporation supports the others.

The Corporation is subject to competition from other financial institutions. It is also subject to regulation by certain federal and state agencies and undergoes periodic examination by those regulatory authorities. As a consequence, the Corporation’s business is particularly susceptible to being affected by future federal and state legislation and regulations.

USE OF ESTIMATES - The financial information is presented in accordance with generally accepted accounting principles and general practice for financial institutions in the United States of America. In preparing financial statements, management is required to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements. In addition, these estimates and assumptions affect revenues and expenses in the financial statements and as such, actual results could differ from those estimates.

Material estimates that are particularly susceptible to change include: (1) the allowance for loan losses, (2) fair values of debt securities based on estimates from independent valuation services or from brokers, (3) fair values of debt securities based on unobservable inputs, as determined using management’s estimates of cash flows and applicable discount rates,(4) assessment of impaired securities to determine whether or not the securities are other-than-temporarily impaired, (5) valuation of deferred tax assets and (6) valuation of obligations from defined benefit plans.

INVESTMENT SECURITIES - Investment securities are accounted for as follows:

Available-for-sale securities - includes debt securities not classified as held-to-maturity or trading, and unrestricted equity securities. Such securities are reported at fair value, with unrealized gains and losses excluded from earnings and reported separately through accumulated other comprehensive income, net of tax. Amortization of premiums and accretion of discounts on available-for-sale securities are recorded using the level yield method over the remaining contractual life of the securities, adjusted for actual prepayments. Realized gains and losses on sales of available-for-sale securities are computed on the basis of specific identification of the adjusted cost of each security. Securities within the available-for-sale portfolio may be used as part of the Corporation’s asset and liability management strategy and may be sold in response to changes in interest rate risk, prepayment risk or other factors.

Other-than-temporary impairment - Declines in the fair value of available-for-sale securities that are deemed to be other-than-temporary are reflected in earnings as realized losses. In estimating other-than-temporary impairment losses, management considers (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) the intent and ability of the Corporation to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value, and (4) whether the Corporation intends to sell the security or if it is more likely than not that the Corporation will be required to sell the security before the recovery of its amortized cost basis. The credit-related impairment is recognized in earnings and is the difference between a security’s amortized cost basis and the present value of expected future cash flows discounted at the security’s effective interest rate. For debt securities classified as held-to-maturity, if any, the amount of noncredit-related impairment is recognized in other comprehensive income and accreted over the remaining life of the debt security as an increase in the carrying value of the security. In addition, the risk of future other-than-temporary impairment may be influenced by additional bank failures, prolonged recession in the U.S. economy, changes to real estate values, interest deferrals and whether the federal government provides assistance to financial institutions.

45

Restricted equity securities - Restricted equity securities consist primarily of Federal Home Loan Bank of Pittsburgh stock, and are carried at cost and evaluated for impairment. Holdings of restricted equity securities are included in Other Assets in the Consolidated Balance Sheet, and dividends received on restricted securities are included in Other Income in the Consolidated Statement of Income.

LOANS HELD FOR SALE - Mortgage loans held for sale are reported at the lower of cost or market, determined in the aggregate.

LOANS RECEIVABLE - Loans receivable which management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at unpaid principal balances, less the allowance for loan losses and net deferred loan fees. Interest income is accrued on the unpaid principal balance. Loan origination and commitment fees, as well as certain direct origination costs, are deferred and amortized as a yield adjustment over the lives of the related loans using the interest method.

The loans receivable portfolio is segmented into residential mortgage, commercial and consumer loans. The residential mortgage segment includes the following classes: first and junior lien residential mortgages, home equity lines of credit and residential construction loans. The most significant classes of commercial loans are commercial loans secured by real estate, non-real estate secured commercial and industrial loans, loans to political subdivisions, commercial construction, and loans secured by farmland.

Loans are placed on nonaccrual status for all classes of loans when, in the opinion of management, collection of interest is doubtful. Any unpaid interest previously accrued on those loans is reversed from income. Interest income is not recognized on specific impaired loans unless the likelihood of further loss is remote. Interest payments received on loans for which the risk of further loss is greater than remote are applied as a reduction of the loan principal balance. Interest income on other nonaccrual loans is recognized only to the extent of interest payments received. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time (generally six months) and the ultimate collectability of the total contractual principal and interest is no longer in doubt. The past due status of all classes of loans receivable is determined based on contractual due dates for loan payments. Also, the amortization of deferred loan fees is discontinued when a loan is placed on nonaccrual status.

ALLOWANCE FOR LOAN LOSSES - The allowance for loan losses represents management’s estimate of losses inherent in the loan portfolio as of the balance sheet date and is recorded as a reduction to loans. The allowance for loan losses is increased by the provision for loan losses, and decreased by charge-offs, net of recoveries. Loans deemed to be uncollectible are charged against the allowance for loan losses, and subsequent recoveries, if any, are credited to the allowance. All, or part, of the principal balance of loans receivable are charged off to the allowance as soon as it is determined that the repayment of all, or part, of the principal balance is highly unlikely. Non-residential consumer loans are generally charged off no later than when they are 120 days past due on a contractual basis, or earlier in the event of bankruptcy or if there is an amount deemed uncollectible.

The allowance for loan losses is maintained at a level considered adequate to provide for losses that can be reasonably anticipated. Management performs a quarterly evaluation of the adequacy of the allowance. The allowance is based on the Corporation’s past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision as more information becomes available. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Corporation’s allowance for loan losses. Such agencies may require the Corporation to recognize adjustments to the allowance based on their judgments of information available to them at the time of their examination. In the process of evaluating the loan portfolio, management also considers the Corporation’s exposure to losses from unfunded loan commitments. As of December 31, 2012 and 2011, management determined that no allowance for credit losses related to unfunded loan commitments was required.

The allowance consists primarily of two major components – (1) a specific component based on a detailed assessment of certain larger loan relationships, mainly commercial purpose, determined on a loan-by-loan basis; and (2) a general component for the remainder of the portfolio based on a collective evaluation of pools of loans with similar risk characteristics. The general component is assigned to each pool of loans based on both historical net charge-off experience, and an evaluation of certain qualitative factors. An unallocated component is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the above methodologies for estimating specific and general losses in the portfolio.

46

The specific component relates to loans that are classified as impaired based on a detailed assessment of certain larger loan relationships evaluated by a management committee referred to as the Watch List Committee. Specific loan relationships are identified for evaluation based on the related credit risk rating. For individual loans classified as impaired, an allowance is established when the collateral value less estimated selling costs, present value of discounted cash flows or observable market price of the impaired loan is lower than the carrying value of that loan.

The general component covers pools of loans by loan class including commercial loans not considered individually impaired, as well as smaller balance homogeneous classes of loans, such as residential real estate, home equity lines of credit and other consumer loans. Accordingly, the Corporation generally does not separately identify individual consumer and residential loans for impairment disclosures, unless such loans are subject to a restructuring agreement. The pools of loans for each loan segment are evaluated for loss exposure based upon average historical net charge-off rates (currently three years), adjusted for qualitative factors. Qualitative risk factors (described in the following paragraph) are evaluated for the impact on each of the three distinct segments (residential mortgage, commercial and consumer) within the loan portfolio. Each qualitative factor is assigned a value to reflect improving, stable or declining conditions based on management’s judgment using relevant information available at the time of the evaluation. Any adjustments to the factors are supported by a narrative documentation of changes in conditions accompanying the allowance for loan loss calculation.

The qualitative factors used in the general component calculations are designed to address credit risk characteristics associated with each segment. The Corporation’s credit risk associated with all of the segments is significantly impacted by these factors, which include economic conditions within its market area, the Corporation’s lending policies, changes or trends in the portfolio, risk profile, competition, regulatory requirements and other factors. Further, the residential mortgage segment is significantly affected by the values of residential real estate that provide collateral for the loans. The majority of the Corporation’s commercial segment loans (approximately 71% at December 31, 2012) is secured by real estate, and accordingly, the Corporation’s risk for the commercial segment is significantly affected by commercial real estate values. The consumer segment includes a wide mix of loans for different purposes, primarily secured loans, including loans secured by motor vehicles, manufactured housing and other types of collateral.

Loans are classified as impaired when, based on current information and events, it is probable that the Corporation will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for commercial loans by the fair value of the collateral (if the loan is collateral dependent), by future cash flows discounted at the loan’s effective rate or by the loan’s observable market price.

For commercial loans secured by real estate, estimated fair values are determined primarily through third-party appraisals. When a real estate secured loan becomes impaired, a decision is made regarding whether an updated certified appraisal of the real estate is necessary. This decision is based on various considerations, including the age of the most recent appraisal, the loan-to-value ratio based on the original appraisal and the condition of the property. Appraised values are discounted to arrive at the estimated selling price of the collateral, which is considered to be the estimated fair value. The discounts also include estimated costs to sell the property.

For commercial and industrial loans secured by non-real estate collateral, such as accounts receivable, inventory and equipment, estimated fair values are determined based on the borrower’s financial statements, inventory reports, accounts receivable agings or equipment appraisals or invoices. Indications of value from these sources are generally discounted based on the age of the financial information or the quality of the assets.

Loans whose terms are modified are classified as troubled debt restructurings if the Corporation grants such borrowers concessions and it is deemed that those borrowers are experiencing financial difficulty. Concessions granted under a troubled debt restructuring generally involve an extension of a loan’s stated maturity date or a temporary reduction in interest rate. Non-accrual troubled debt restructurings are restored to accrual status if principal and interest payments, under the modified terms, are current for six consecutive months after modification. Loans classified as troubled debt restructurings are designated as impaired.

BANK PREMISES AND EQUIPMENT - Bank premises and equipment are stated at cost less accumulated depreciation. Repair and maintenance expenditures which extend the useful lives of assets are capitalized, and other repair and maintenance expenditures are expensed as incurred. Depreciation expense is computed using the straight-line method.

47

IMPAIRMENT OF LONG-LIVED ASSETS - The Corporation reviews long-lived assets, such as premises and equipment and intangibles, for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. These changes in circumstances may include a significant decrease in the market value of an asset or the manner in which an asset is used. If there is an indication the carrying value of an asset may not be recoverable, future undiscounted cash flows expected to result from use of the asset are estimated. If the sum of the expected cash flows is less than the carrying value of the asset, a loss is recognized for the difference between the carrying value and fair market value of the asset.

INTEREST COSTS - The Corporation capitalizes interest as a component of the cost of premises and equipment constructed or acquired for its own use. The amount of capitalized interest in 2012, 2011, and 2010 was not significant.

FORECLOSED ASSETS HELD FOR SALE - Foreclosed assets held for sale consist of real estate acquired by foreclosure and are initially recorded at fair value, less estimated selling costs.

GOODWILL AND CORE DEPOSIT INTANGIBLE ASSETS - Goodwill represents the excess of the cost of acquisitions over the fair value of the net assets acquired. Goodwill is tested at least annually for impairment, or more often if events or circumstances indicate there may be impairment. Core deposit intangibles are being amortized over periods of time that represent the expected lives using a method of amortization that reflects the pattern of economic benefit. Core deposit intangibles are subject to impairment testing whenever events or changes in circumstances indicate their carrying amounts may not be recoverable.

SERVICING RIGHTS - The estimated fair value of servicing rights related to mortgage loans sold and serviced by the Corporation is recorded as an asset upon the sale of such loans. The valuation of servicing rights is adjusted quarterly, with changes in fair value included in Other Operating Income in the consolidated statements of operations. Significant inputs to the valuation include expected net servicing income to be received, the expected life of the underlying loans and the discount rate. The servicing rights asset is included in Other Assets in the consolidated balance sheet, with a balance equal to fair value of $605,000 at December 31, 2012 and $375,000 at December 31, 2011.

INCOME TAXES - Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amount of existing assets and liabilities and their respective tax bases given the provisions of the enacted tax laws. Deferred tax assets are reduced, if necessary, by the amount of such benefits that are not expected to be realized based upon available evidence. The Corporation includes income tax penalties in the provision for income tax. The Corporation has no accrued interest related to unrecognized tax benefits.

STOCK COMPENSATION PLANS - The Corporation’s stock-based compensation policy applies to all forms of stock-based compensation including stock options and restricted stock units. All stock-based compensation is accounted for under the fair value method as required by generally accepted accounting principles in the United States. The expense associated with stock-based compensation is recognized over the vesting period of each individual arrangement.

The fair value of each stock option is estimated on the date of grant using the Black-Scholes-Merton option valuation model. The fair value of restricted stock is based on the current market price on the date of grant.

OFF-BALANCE SHEET FINANCIAL INSTRUMENTS - In the ordinary course of business, the Corporation has entered into off-balance sheet financial instruments consisting of commitments to extend credit and standby letters of credit. Such financial instruments are recorded in the financial statements when they become payable.

CASH FLOWS - The Corporation utilizes the net reporting of cash receipts and cash payments for certain deposit and lending activities. Cash equivalents include federal funds sold and all cash and amounts due from depository institutions and interest-bearing deposits in other banks with original maturities of three months or less.

TRUST ASSETS AND INCOME - Assets held by the Corporation in a fiduciary or agency capacity for its customers are not included in the financial statements since such items are not assets of the Corporation. Trust income is recorded on a cash basis, which is not materially different from the accrual basis.

2. RECENT ACCOUNTING PRONOUNCEMENTS:

The FASB issues Accounting Standards Updates (ASUs) to the FASB Accounting Standards Codification (ASC). This section provides a summary description of recent ASUs that have significant implications (elected or required) within the consolidated financial statements, or that management expects may have a significant impact on financial statements issued in the near future.

In April 2011, the FASB issued ASU 2011-02, Receivables (Topic 310) - A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring. The Update amends ASC Topic 310 to provide guidance in evaluating whether a restructuring constitutes a Troubled Debt Restructuring. The main provisions conclude that a creditor must separately conclude that both of the following exist – (1) the restructuring constitutes a concession, and (2) the debtor is experiencing financial difficulties. The amendments then provide guidance on a creditor’s evaluation of each of the requirements for a Troubled Debt Restructuring. For public entities, the Update was effective for the first interim or annual period beginning on or after June 15, 2011, including retrospective application to the beginning of the annual period of adoption. Note 8 provides disclosures required by this standard.

48

In May 2011, the FASB issued ASU 2011-04, Fair Value Measurement (Topic 820) – Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The amendments in this Update will result in common fair value measurement and disclosure requirements in U.S. GAAP and IFRSs. The Update includes various amendments, including amendments that: (1) clarify FASB’s intent about the application of existing fair value measurement and disclosure requirements, and (2) change some particular principles or requirements for measuring fair value or disclosing information about fair value measurements. There were no changes in the Corporation’s procedures for determining fair value measurements as a result of this Update; however, additional quantitative disclosures about unobservable inputs used in fair value measurements categorized within Level 3 of the fair value hierarchy are provided. The amendments in this ASU are applied prospectively, and Note 6 includes disclosures required by this ASU.

In June 2011, the FASB issued ASU 2011-05, Comprehensive Income (Topic 220) – Presentation of Comprehensive Income. The intent of this standard is to increase the prominence of comprehensive income in the financial statements. This standard requires the components of comprehensive income be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The single format includes the traditional income statement and the components of other comprehensive income, total other comprehensive income and total comprehensive income. In the two statement approach, the first statement is the traditional income statement, which would be immediately followed by a separate statement which would include the components of other comprehensive income, total other comprehensive income and total comprehensive income. The amendments in this ASU are applied retrospectively, and the Corporation has adopted the two statement approach as reflected in the accompanying financial statements.

In September 2011, the FASB issued ASU 2011-08, Intangibles – Goodwill and Other (Topic 350) – Testing Goodwill for Impairment. The amendments in this ASU permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in Topic 350. The amendments in this ASU are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011.

In December 2011, the FASB issued ASU 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05. This ASU deferred only those changes in ASU 2011-05 (discussed above) that relate to the presentation of reclassification adjustments.

In February 2013, the FASB issued ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. The amendments in this standard will require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, this standard will require an entity to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required by U.S. GAAP to be reclassified in their entirety to net income, an entity will be required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts. The amendments in this ASU are effective prospectively for annual and interim periods beginning after December 15, 2012.

3. COMPREHENSIVE INCOME

Comprehensive income (loss) is the total of (1) net income (loss), and (2) all other changes in equity from non-stockholder sources, which are referred to as other comprehensive income. The components of other comprehensive income (loss), and the related tax effects, are as follows:

(In Thousands)	Before-Tax			Income Tax			Net-of-Tax
	Amount			Effect			Amount
2012
Unrealized gains on available-for-sale securities:
Unrealized holding gains on available-for-sale securities	$	4,128		$	(1,608	)	$	2,520
Reclassification adjustment for (gains) realized in income		(2,682	)		939			(1,743	)
Other comprehensive gain on available-for-sale securities		1,446			(669	)		777
Unfunded pension and postretirement obligations:
Change in items from defined benefit plans included in accumulated other comprehensive income		8			(2	)		6
Amortization of net transition obligation, prior service cost and net actuarial loss included in net periodic benefit cost		77			(17	)		60
Other comprehensive gain on unfunded retirement obligations		85			(19	)		66
Total other comprehensive income	$	1,531		$	(688	)	$	843

49

	Before-Tax			Income Tax			Net-of-Tax
(In Thousands)	Amount			Effect			Amount
2011
Unrealized gains on available-for-sale securities:
Unrealized holding gains on available-for-sale securities	$	20,611		$	(7,006	)	$	13,605
Reclassification adjustment for gains realized in income		(2,216	)		753			(1,463	)
Other comprehensive gain on available-for-sale securities		18,395			(6,253	)		12,142
Unfunded pension and postretirement obligations:
Change in items from defined benefit plans included in accumulated other comprehensive income		(626	)		208			(418	)
Amortization of net transition obligation, prior service cost and net actuarial loss included in net periodic benefit cost		55			(18	)		37
Other comprehensive loss on unfunded retirement obligations		(571	)		190			(381	)
Total other comprehensive income	$	17,824		$	(6,063	)	$	11,761

	Before-Tax			Income Tax			Net-of-Tax
(In Thousands)	Amount			Effect			Amount
2010
Unrealized losses on available-for-sale securities:
Unrealized holding losses on available-for-sale securities	$	(448	)	$	166		$	(282	)
Reclassification adjustment for gains realized in income		(829	)		282			(547	)
Other comprehensive loss on available-for-sale securities		(1,277	)		448			(829	)
Unfunded pension and postretirement obligations:
Change in items from defined benefit plans included in accumulated other comprehensive income		126			(42	)		84
Amortization of net transition obligation, prior service cost and net actuarial loss included in net periodic benefit cost		53			(18	)		35
Other comprehensive gain on unfunded retirement obligations		179			(60	)		119
Total other comprehensive loss	$	(1,098	)	$	388		$	(710	)

Changes in the components of accumulated other comprehensive income (loss), included in stockholders’ equity, are as follows:

	Unrealized						Accumulated
	Holding Gains			Unfunded			Other
	(Losses)			Retirement			Comprehensive
(In Thousands)	on Securities			Obligations			Income (Loss)
2012
Balance, beginning of period	$	10,791		$	(631	)	$	10,160
Change during year ended December 31, 2012		777			66			843
Balance, end of period	$	11,568		$	(565	)	$	11,003
2011
Balance, beginning of period	$	(1,351	)	$	(250	)	$	(1,601	)
Change during year ended December 31, 2011		12,142			(381	)		11,761
Balance, end of period	$	10,791		$	(631	)	$	10,160
2010
Balance, beginning of period	$	(522	)	$	(369	)	$	(891	)
Change during year ended December 31, 2010		(829	)		119			(710	)
Balance, end of period	$	(1,351	)	$	(250	)	$	(1,601	)

50

4. PER SHARE DATA

Net income per share is based on the weighted-average number of shares of common stock outstanding. The following data show the amounts used in computing basic and diluted net income per share. As shown in the table that follows, diluted earnings per share is computed using weighted average common shares outstanding, plus weighted-average common shares available from the exercise of all dilutive stock options, less the number of shares that could be repurchased with the proceeds of stock option exercises based on the average share price of the Corporation's common stock during the period.

			Weighted-
			Average			Earnings
	Net		Common			Per
	Income		Shares			Share
2012
Earnings per share – basic	$	22,705,000		12,235,748		$	1.86
Dilutive effect of potential common stock arising from stock options:
Exercise of outstanding stock options				200,589
Hypothetical share repurchase at $ 19.16				(176,129	)
Earnings per share – diluted	$	22,705,000		12,260,208		$	1.85
2011
Earnings per share – basic	$	23,368,000		12,162,045		$	1.92
Dilutive effect of potential common stock arising from stock options:
Exercise of outstanding stock options				92,398
Hypothetical share repurchase at $ 15.87				(87,675	)
Earnings per share – diluted	$	23,368,000		12,166,768		$	1.92
2010
Earnings per common share – basic and diluted	$	17,581,000		12,131,039		$	1.45

Stock options and a warrant that were anti-dilutive were excluded from net income per share calculations. Weighted-average common shares available from anti-dilutive instruments totaled 145,333 shares in 2012, 223,333 shares in 2011 and 359,092 shares in 2010.

5. CASH AND DUE FROM BANKS

Cash and due from banks at December 31, 2012 and 2011 include the following:

	Dec. 31,		Dec. 31,
(In thousands)	2012		2011
Cash and cash equivalents	$	55,016	$	56,815
Certificates of deposit		4,820		3,760
Total cash and due from banks	$	59,836	$	60,575

Certificates of deposit are issues by U.S. banks with original maturities greater than three months. Each certificate of deposit is fully FDIC-insured. The Corporation maintains cash and cash equivalents with certain financial institutions in excess of the FDIC insurance limit.

The Corporation is required to maintain reserves against deposit liabilities in the form of cash and balances with the Federal Reserve Bank. The reserves are based on deposit levels, account activity, and other services provided by the Federal Reserve Bank. Required reserves were $14,128,000 at December 31, 2012 and $14,035,000 at December 31, 2011.

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6. FAIR VALUE MEASUREMENTS AND FAIR VALUES OF FINANCIAL INSTRUMENTS

The Corporation measures certain assets at fair value. Fair value is defined as the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. FASB ASC topic 820, “Fair Value Measurements and Disclosures” establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The hierarchy prioritizes the inputs used in determining valuations into three levels. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows:

Level 1 – Fair value is based on unadjusted quoted prices in active markets that are accessible to the Corporation for identical assets. These generally provide the most reliable evidence and are used to measure fair value whenever available.

Level 2 – Fair value is based on significant inputs, other than Level 1 inputs, that are observable either directly or indirectly for substantially the full term of the asset through corroboration with observable market data. Level 2 inputs include quoted market prices in active markets for similar assets, quoted market prices in markets that are not active for identical or similar assets and other observable inputs.

Level 3 – Fair value is based on significant unobservable inputs. Examples of valuation methodologies that would result in Level 3 classification include option pricing models, discounted cash flows and other similar techniques.

The Corporation monitors and evaluates available data relating to fair value measurements on an ongoing basis and recognizes transfers among the levels of the fair value hierarchy as of the date of an event or change in circumstances that affects the valuation method chosen. Examples of such changes may include the market for a particular asset becoming active or inactive, changes in the availability of quoted prices, or changes in the availability of other market data.

At December 31, 2012 and 2011, assets measured at fair value and the valuation methods used are as follows:

			December 31, 2012
	Quoted Prices		Other
	in Active		Observable		Unobservable			Total
	Markets		Inputs		Inputs			Fair
(In Thousands)	(Level 1)		(Level 2)		(Level 3)			Value
Recurring fair value measurements
AVAILABLE-FOR-SALE SECURITIES:
Obligations of U.S. Government agencies	$	0	$	31,217	$	0		$	31,217
Obligations of states and political subdivisions:
Tax-exempt		0		137,020		0			137,020
Taxable		0		24,817		0			24,817
Mortgage-backed securities		0		80,196		0			80,196
Collateralized mortgage obligations,
Issued by U.S. Government agencies		0		183,510		0			183,510
Trust preferred securities issued by individual institutions		0		5,171		0			5,171
Collateralized debt obligations:
Pooled trust preferred securities - senior tranches		0		0		1,613			1,613
Other collateralized debt obligations		0		660		0			660
Total debt securities		0		462,591		1,613			464,204
Marketable equity securities		8,373		0		0			8,373
Total available-for-sale securities		8,373		462,591		1,613			472,577
Servicing rights		0		0		605			605
Total recurring fair value measurements	$	8,373	$	462,591	$	2,218		$	473,182
Nonrecurring fair value measurements
Impaired loans with a valuation allowance	$	0	$	0	$	2,710		$	2,710
Valuation allowance		0		0		(623	)		(623	)
Impaired loans, net		0		0		2,087			2,087
Foreclosed assets held for sale		0		0		879			879
Total nonrecurring fair value measurements	$	0	$	0	$	2,966		$	2,966

52

			December 31, 2011
	Quoted Prices		Other
	in Active		Observable		Unobservable			Total
	Markets		Inputs		Inputs			Fair
(In Thousands)	(Level 1)		(Level 2)		(Level 3)			Value
Recurring fair value measurements
AVAILABLE-FOR-SALE SECURITIES:
Obligations of U.S. Government agencies	$	0	$	25,587	$	0		$	25,587
Obligations of states and political subdivisions:
Tax-exempt		0		132,962		0			132,962
Taxable		0		14,334		0			14,334
Mortgage-backed securities		0		121,769		0			121,769
Collateralized mortgage obligations,
Issued by U.S. Government agencies		0		165,131		0			165,131
Trust preferred securities issued by individual institutions		0		8,146		0			8,146
Collateralized debt obligations:
Pooled trust preferred securities - senior tranches		0		0		4,638			4,638
Pooled trust preferred securities - mezzanine tranches		0		0		730			730
Other collateralized debt obligations		0		660		0			660
Total debt securities		0		468,589		5,368			473,957
Marketable equity securities		7,728		0		0			7,728
Total available-for-sale securities		7,728		468,589		5,368			481,685
Servicing rights		0		0		375			375
Total recurring fair value measurements	$	7,728	$	468,589	$	5,743		$	482,060
Nonrecurring fair value measurements
Impaired loans with a valuation allowance	$	0	$	0	$	3,433		$	3,433
Valuation allowance		0		0		(1,126	)		(1,126	)
Impaired loans, net		0		0		2,307			2,307
Foreclosed assets held for sale		0		0		1,235			1,235
Total nonrecurring fair value measurements	$	0	$	0	$	3,542		$	3,542

Management determined there have been few trades of pooled trust-preferred securities since 2008, except for a limited number of transactions that have taken place as a result of bankruptcies, forced liquidations or similar circumstances. Also, in management’s judgment, there were no available quoted market prices in active markets for assets sufficiently similar to the Corporation’s pooled trust-preferred securities to be reliable as observable inputs. Accordingly, the Corporation follows a method of valuing pooled trust-preferred securities using a Level 3 methodology, based on discounted cash flows.

Management has calculated the fair value of the Corporation’s pooled trust-preferred securities by applying a discount rate to the estimated cash flows. Management used the cash flow estimates determined using the process described in Note 7 for evaluating pooled trust-preferred securities for other-than-temporary impairment (OTTI). Management used discount rates considered reflective of a market participant’s expectations regarding the extent of credit and liquidity risk inherent in the securities. In establishing the discount rate, management considered: (1) the implied discount rates as of the end of 2007, prior to the market for trust-preferred securities becoming inactive; (2) an adjustment to the year-end 2007 discount rates for the change in the spread between indicative market rates and corresponding risk-free rates; and (3) an additional adjustment for liquidity risk. Management considered the adjustment for liquidity risk necessary in order to give some consideration to price estimates based on trades made under distressed conditions, as reported by brokers and pricing services.

Loans are classified as impaired when, based on current information and events, it is probable that the Corporation will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Foreclosed assets held for sale consist of real estate acquired by foreclosure. For impaired commercial loans secured by real estate and foreclosed assets held for sale, estimated fair values are determined primarily using values from third-party appraisals less estimated selling costs.

53

Management’s evaluation and selection of valuation techniques and the unobservable inputs used in determining the fair values of assets valued using Level 3 methodologies include sensitive assumptions. Other market participants might use substantially different assumptions, which could result in calculations of fair values that would be substantially different than the amount calculated by management. The following table shows quantitative information regarding significant techniques and inputs used at December 31, 2012 for assets measured using unobservable inputs (Level 3 methodologies) on a recurring basis:

	Fair Value at
	12/31/12		Valuation	Unobservable	Method or Value As of
Asset	(In Thousands)		Technique	Input(s)	12/31/12
Pooled trust preferred securities - senior tranches	$	1,613	Discounted cash flow	Issuer defaults		50.26	%	Actual deferrals and defaults as % of outstanding collateral
						19.73	%	Expected additional net deferrals and defaults as % of performing collateral
				Issuer prepayments		41.24	%	Expected issuer prepayments as % of performing collateral
				Discount rate		11.70	%	Implied 7.57% discount rate at 12/31/07 plus 4.13% spread for credit and liquidity risk
Servicing rights		605	Discounted cash flow	Discount rate		12.00	%	Rate used through modeling period
				Loan prepayment speeds		288.00	%	Weighted-average PSA
				Servicing fees		0.25	%	of loan balances
						5.00	%	of payments are late
						5.00	%	late fees assessed
					$	1.94		Miscellaneous fees per account per month
				Servicing costs	$	6.00		Monthly servicing cost per account
					$	24.00		Additional monthly servicing cost per loan on loans more than 30 days delinquent
						1.50	%	of loans more than 30 days delinquent
						3.00	%	annual increase in servicing costs

Increases (decreases) in actual or expected issuer defaults tend to decrease (increase) the fair value of the Corporation’s pooled trust preferred securities. The fair value of servicing rights is affected by expected future interest rates. Increases (decreases) in future expected interest rates tend to increase (decrease) the fair value of the Corporation’s servicing rights because of changes in expected prepayment behavior by the borrowers on the underlying loans.

Following is a reconciliation of activity for Level 3 assets measured at fair value on a recurring basis:

	Year Ended December 31, 2012
	Pooled Trust			Pooled Trust
	Preferred			Preferred
	Securities -			Securities -
	Senior			Mezzanine			Servicing
(In Thousands)	Tranches			Tranches			Rights			Total
Balance, beginning of period	$	4,638		$	730		$	375		$	5,743
Issuances of servicing rights		0			0			327			327
Accretion and amortization, net		(8	)		0			0			(8	)
Proceeds from sales and calls		(3,429	)		(1,835	)		0			(5,264	)
Realized gains, net		56			1,835			0			1,891
Unrealized losses included in earnings		0			0			(97	)		(97	)
Unrealized gains (losses) included in other comprehensive income		356			(730	)		0			(374	)
Balance, end of period	$	1,613		$	0		$	605		$	2,218

54

	Year Ended December 31, 2011
	Pooled Trust			Pooled Trust
	Preferred			Preferred
	Securities -			Securities -
	Senior			Mezzanine			Servicing
	Tranches			Tranches			Rights			Total
Balance, beginning of period	$	7,400		$	0		$	204		$	7,604
Issuances of servicing rights		0			0			239			239
Accretion and amortization, net		(41	)		0			0			(41	)
Proceeds from sales and calls		(5,001	)		(98	)		0			(5,099	)
Realized gains, net		81			98			0			179
Unrealized losses included in earnings		0			0			(68	)		(68	)
Unrealized gains included in other comprehensive income		2,199			730			0			2,929
Balance, end of period	$	4,638		$	730		$	375		$	5,743

	Year Ended December 31, 2010
	Pooled Trust			Pooled Trust			Trust Preferred
	Preferred			Preferred			Securities
	Securities -			Securities -			Issued by
	Senior			Mezzanine			Individual			Servicing
	Tranches			Tranches			Institutions			Rights			Total
Balance, beginning of period	$	8,199		$	115		$	800		$	0		$	9,114
Issuances of servicing rights		0			0			0			216			216
Transfers		0			0			(240	)		0			(240	)
Accretion and amortization, net		(117	)		(162	)		0			0			(279	)
Proceeds from sales and calls		(1,309	)		(310	)		(240	)		0			(1,859	)
Realized gains, net		0			310			0			0			310
Unrealized losses included in earnings		0			(103	)		(320	)		(12	)		(435	)
Unrealized gains included in other comprehensive income		627			150			0			0			777
Balance, end of period	$	7,400		$	0		$	0		$	204		$	7,604

No other-than-temporary impairment losses on securities valued using Level 3 methodologies were recorded in 2012 or 2011. Unrealized losses included in earnings shown above include other-than-temporary impairment losses on securities valued using Level 3 methodologies, as described in Note 7, of $423,000 in 2010, which are presented in net impairment losses recognized in earnings in the Consolidated Statements of Income.

Certain of the Corporation’s financial instruments are not measured at fair value in the consolidated financial statements. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. Certain financial instruments and all nonfinancial instruments are excluded from disclosure requirements. Therefore, the aggregate fair value amounts presented may not represent the underlying fair value of the Corporation.

The Corporation used the following methods and assumptions in estimating fair value disclosures for financial instruments:

CASH AND CASH EQUIVALENTS - The carrying amounts of cash and short-term instruments approximate fair values.

CERTIFICATES OF DEPOSIT - Fair values for certificates of deposit, included in cash and due from banks in the consolidated balance sheet, are based on quoted market prices for certificates of similar remaining maturities.

SECURITIES - Fair values for securities, excluding restricted equity securities, are based on quoted market prices or other methods as described above. The carrying value of restricted equity securities approximates fair value based on applicable redemption provisions.

LOANS HELD FOR SALE - Fair values of loans held for sale are determined based on applicable sale prices available under the Federal Home Loan Banks’ MPF Xtra program.

55

LOANS - Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as commercial, commercial real estate, residential mortgage and other consumer. Each loan category is further segmented into fixed and adjustable rate interest terms and by performing and nonperforming categories. The fair value of performing loans is calculated by discounting contractual cash flows, adjusted for estimated prepayments based on historical experience, using estimated market discount rates that reflect the credit and interest rate risk inherent in the loans. Fair value of nonperforming loans is based on recent appraisals or estimates prepared by the Corporation’s lending officers.

SERVICING RIGHTS - The fair value of servicing rights, included in other assets in the consolidated balance sheet, is determined through a discounted cash flow valuation. Significant inputs include expected net servicing income, the discount rate and the expected prepayment speeds of the underlying loans.

DEPOSITS - The fair value of deposits with no stated maturity, such as noninterest-bearing demand deposits, savings, money market and interest checking accounts, is (by definition) equal to the amount payable on demand at December 31, 2012 and 2011. The fair value of time deposits, such as certificates of deposit and Individual Retirement Accounts, is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar remaining maturities. The fair value estimates of deposits do not include the benefit that results from the low-cost funding provided by the deposit liabilities compared to the cost of borrowing funds in the market, commonly referred to as the core deposit intangible.

BORROWED FUNDS - The fair value of borrowings is estimated using discounted cash flow analyses based on rates currently available to the Corporation for similar types of borrowing arrangements.

ACCRUED INTEREST - The carrying amounts of accrued interest receivable and payable approximate fair values.

OFF-BALANCE SHEET COMMITMENTS - The Corporation has commitments to extend credit and has issued standby letters of credit. Standby letters of credit are conditional guarantees of performance by a customer to a third party. Estimates of the fair value of these off-balance sheet items were not made because of the short-term nature of these arrangements and the credit standing of the counterparties.

The estimated fair values, and related carrying amounts, of the Corporation’s financial instruments are as follows:

(In Thousands)	Valuation	December 31, 2012				December 31, 2011
	Method(s)	Carrying		Fair		Carrying		Fair
	Used	Amount		Value		Amount		Value
Financial assets:
Cash and cash equivalents	Level 1	$	55,016	$	55,016	$	56,815	$	56,815
Certificates of deposit	Level 2		4,820		4,860		3,760		3,683
Available-for-sale securities	See Above		472,577		472,577		481,685		481,685
Restricted equity securities (included in Other Assets)	Level 2		4,842		4,842		6,773		6,773
Loans held for sale	Level 1		2,545		2,545		939		939
Loans, net	Level 3		677,053		693,047		700,610		718,670
Accrued interest receivable	Level 1		4,281		4,281		4,797		4,797
Servicing rights	Level 3		605		605		375		375
Financial liabilities:
Deposits with no stated maturity	Level 1		693,687		693,687		677,461		677,461
Time deposits	Level 3		312,419		315,005		340,745		344,936
Short-term borrowings	Level 3		5,567		5,527		4,950		4,897
Long-term borrowings	Level 3		83,812		96,032		125,363		145,641
Accrued interest payable	Level 1		137		137		358		358

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7. SECURITIES

Amortized cost and fair value of available-for-sale securities at December 31, 2012 and 2011 are summarized as follows:

			December 31, 2012
			Gross		Gross
			Unrealized		Unrealized
	Amortized		Holding		Holding			Fair
(In Thousands)	Cost		Gains		Losses			Value
Obligations of U.S. Government agencies	$	30,695	$	572	$	(50	)	$	31,217
Obligations of states and political subdivisions:
Tax-exempt		130,168		7,030		(178	)		137,020
Taxable		24,426		462		(71	)		24,817
Mortgage-backed securities		76,368		3,828		0			80,196
Collateralized mortgage obligations,
Issued by U.S. Government agencies		179,770		3,887		(147	)		183,510
Trust preferred securities issued by individual institutions		5,167		4		0			5,171
Collateralized debt obligations:
Pooled trust preferred securities - senior tranches		1,615		0		(2	)		1,613
Other collateralized debt obligations		660		0		0			660
Total debt securities		448,869		15,783		(448	)		464,204
Marketable equity securities		5,912		2,500		(39	)		8,373
Total	$	454,781	$	18,283	$	(487	)	$	472,577

			December 31, 2011
			Gross		Gross
			Unrealized		Unrealized
	Amortized		Holding		Holding			Fair
(In Thousands)	Cost		Gains		Losses			Value
Obligations of U.S. Government agencies	$	24,877	$	710	$	0		$	25,587
Obligations of states and political subdivisions:
Tax-exempt		129,401		4,891		(1,330	)		132,962
Taxable		14,004		334		(4	)		14,334
Mortgage-backed securities		116,602		5,167		0			121,769
Collateralized mortgage obligations,
Issued by U.S. Government agencies		161,818		3,350		(37	)		165,131
Trust preferred securities issued by individual institutions		7,334		865		(53	)		8,146
Collateralized debt obligations:
Pooled trust preferred securities - senior tranches		4,996		0		(358	)		4,638
Pooled trust preferred securities - mezzanine tranches		0		730		0			730
Other collateralized debt obligations		660		0		0			660
Total debt securities		459,692		16,047		(1,782	)		473,957
Marketable equity securities		5,643		2,186		(101	)		7,728
Total	$	465,335	$	18,233	$	(1,883	)	$	481,685

57

The following table presents gross unrealized losses and fair value of available-for-sale securities with unrealized loss positions that are not deemed to be other-than-temporarily impaired, aggregated by length of time that individual securities have been in a continuous unrealized loss position at December 31, 2012 and 2011:

December 31, 2012	Less Than 12 Months					12 Months or More					Total
(In Thousands)	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
Obligations of U.S. Government agencies	$	10,006	$	(50	)	$	0	$	0		$	10,006	$	(50	)
Obligations of states and political subdivisions:
Tax-exempt		7,082		(92	)		3,285		(86	)		10,367		(178	)
Taxable		4,149		(71	)		0		0			4,149		(71	)
Collateralized mortgage obligations,
Issued by U.S. Government agencies		16,755		(146	)		454		(1	)		17,209		(147	)
Collateralized debt obligations,
Pooled trust preferred securities - senior tranches		0		0			1,613		(2	)		1,613		(2	)
Total debt securities		37,992		(359	)		5,352		(89	)		43,344		(448	)
Marketable equity securities		95		(6	)		67		(33	)		162		(39	)
Total temporarily impaired available-for-sale securities	$	38,087	$	(365	)	$	5,419	$	(122	)	$	43,506	$	(487	)

December 31, 2011	Less Than 12 Months					12 Months or More					Total
(In Thousands)	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
Obligations of states and political subdivisions:
Tax-exempt	$	4,301	$	(34	)	$	20,692	$	(1,296	)	$	24,993	$	(1,330	)
Taxable		927		(2	)		244		(2	)		1,171		(4	)
Collateralized mortgage obligations,
Issued by U.S. Government agencies		6,886		(36	)		5,075		(1	)		11,961		(37	)
Trust preferred securities issued by individual institutions		0		0			947		(53	)		947		(53	)
Collateralized debt obligations,
Pooled trust preferred securities - senior tranches		0		0			4,638		(358	)		4,638		(358	)
Total debt securities		12,114		(72	)		31,596		(1,710	)		43,710		(1,782	)
Marketable equity securities		776		(44	)		98		(57	)		874		(101	)
Total temporarily impaired available-for-sale securities	$	12,890	$	(116	)	$	31,694	$	(1,767	)	$	44,584	$	(1,883	)

Gross realized gains and losses from available-for-sale securities (including OTTI losses in gross realized losses) and the related income tax provision were as follows:

(In Thousands)
	2012			2011			2010
Gross realized gains	$	2,798		$	2,226		$	1,270
Gross realized losses		(116	)		(10	)		(441	)
Net realized gains	$	2,682		$	2,216		$	829
Income tax provision related to net realized gains	$	939		$	753		$	282

58

The amortized cost and fair value of available-for-sale debt securities by contractual maturity are shown in the following table as of December 31, 2012. Actual maturities may differ from contractual maturities because counterparties may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized		Fair
(In Thousands)	Cost		Value
Due in one year or less	$	13,096	$	13,315
Due from one year through five years		51,586		52,896
Due from five years through ten years		50,518		51,657
Due after ten years		77,531		82,630
Subtotal		192,731		200,498
Mortgage-backed securities		76,368		80,196
Collateralized mortgage obligations, Issued by U.S. Government agencies		179,770		183,510
Total	$	448,869	$	464,204

The Corporation’s mortgage-backed securities and collateralized mortgage obligations have stated maturities that may differ from actual maturities due to borrowers’ ability to prepay obligations. Cash flows from such investments are dependent upon the performance of the underlying mortgage loans and are generally influenced by the level of interest rates. In the table above, mortgage-backed securities and collateralized mortgage obligations are shown in one period.

Investment securities carried at $293,310,000 at December 31, 2012 and $266,149,000 at December 31, 2011 were pledged as collateral for public deposits, trusts and certain other deposits as provided by law. See Note 12 for information concerning securities pledged to secure borrowing arrangements.

Management evaluates securities for OTTI at least on a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) whether the Corporation intends to sell the security or more likely than not will be required to sell the security before its anticipated recovery.

The Corporation recognized net impairment losses in earnings, as follows:

(In Thousands)
	2012			2011		2010
Trust preferred securities issued by individual institutions	$	0		$	0	$	(320	)
Pooled trust preferred securities - mezzanine tranches		0			0		(103	)
Marketable equity securities (bank stocks)		(67	)		0		(10	)
Net impairment losses recognized in earnings	$	(67	)	$	0	$	(433	)

A summary of information management considered in evaluating debt and equity securities for OTTI at December 31, 2012 is provided below.

Debt Securities

At December 31, 2012, management performed an assessment for possible OTTI of the Corporation’s debt securities on an issue-by-issue basis, relying on information obtained from various sources, including publicly available financial data, ratings by external agencies, brokers and other sources. The extent of individual analysis applied to each security depended on the size of the Corporation’s investment, as well as management’s perception of the credit risk associated with each security. Based on the results of the assessment, management believes impairment of these debt securities, including municipal bonds with no external ratings, at December 31, 2012 to be temporary.

The credit rating agencies have withdrawn their ratings on numerous municipal bonds held by the Corporation. At December 31, 2012, the total amortized cost basis of municipal bonds with no external credit ratings was $21,396,000, with an aggregate unrealized gain of $311,000. At the time of purchase, each of these bonds was considered investment grade and had been rated by at least one credit rating agency. The bonds for which the ratings were removed were almost all insured by an entity that has reported significant financial problems and declines in its regulatory capital ratios, and most of the ratings were removed in the fourth quarter 2009. However, the insurance remains in effect on the bonds, and none of the affected municipal bonds has failed to make a scheduled interest payment.

59

The following table provides detailed information related to a security issued by Astoria Capital Trust I, a subsidiary of Astoria Financial Corporation, which is the only trust preferred security issued by an individual institution held by the Corporation as of December 31, 2012:

Par Amount Outstanding	$	5,000
Amortized Cost		5,167
Fair Value		5,171
Unrealized Gain		4
Cumulative Realized Credit Losses		0
Moody's Credit Rating		Ba1
S&P Credit Rating		BB
Fitch Credit Rating		B+

Management assesses the security shown above for the possibility of OTTI by reviewing financial information that is publicly available. Astoria Financial Corporation has not deferred or defaulted on payments associated with the Corporation’s security.

The Corporation recognized OTTI charges in 2009 and 2010 related to its holding of a trust preferred security issued by Carolina First Mortgage Loan Trust, a subsidiary of The South Financial Group, Inc. In the fourth quarter 2010, The Toronto-Dominion Bank acquired The South Financial Group, Inc. After the acquisition, The Toronto-Dominion Bank made a payment for the full amount of previously deferred interest and resumed quarterly payments on the security. The Corporation recognized a material change in the expected cash flows in the fourth quarter 2010. The security had a face amount of $2,000,000 and matured in May 2012. The Corporation recorded accretion income (included in interest income) totaling $855,000 in 2012, $825,000 in 2011 and $83,000 in 2010.

Pooled trust-preferred securities are very long-term (usually 30-year maturity) instruments. Each pool contains debt securities issued by banks and/or insurance companies. The Corporation’s investments in pooled trust-preferred securities are each made up of companies with geographic and size diversification. Most of the underlying debt securities are issued by banking companies, with a lesser amount issued by insurance companies. Trust-preferred securities typically permit deferral of quarterly interest payments for up to five years. Some of the issuers of trust-preferred securities that are included in the Corporation’s pooled investments have elected to defer payment of interest on these obligations, and some issuers have defaulted.

Management evaluated pooled trust-preferred securities for OTTI by estimating the cash flows expected to be received from each security, taking into account estimated levels of deferrals and defaults by the underlying issuers. In determining cash flows, management assumed all issuers currently deferring or in default would make no future payments, and assigned estimated future default levels for the remaining issuers in each security based on financial strength ratings assigned by a national ratings service. Management’s estimates of cash flows used to evaluate other-than-temporary impairment of pooled trust-preferred securities were based on sensitive assumptions regarding the timing and amounts of defaults that may occur, and changes in the assumptions used could produce different conclusions for each security. Additional information regarding these assumptions is included in Note 6.

During the third quarter 2012, management sold the Corporation’s holdings of the mezzanine tranches of U.S. Capital Funding II, Ltd. The securities were sold for aggregate pretax proceeds of $1,754,000, which was recorded as a gain on the sale of securities. During the first quarter 2011, management sold the Corporation’s holding of the mezzanine tranche of MMCAPS Funding I, Ltd. The security was sold for aggregate pretax proceeds of $1,485,000, which was recorded as a gain on the sale of securities.

The following table provides detailed information related to ALESCO Preferred Funding IX, Ltd., which is the only mezzanine tranche pooled trust preferred security held by the Corporation as of December 31, 2012:

Tranche		C-1
Original Face Amount	$	3,000
Amortized Cost		0
Fair Value		0
Unrealized Gain		0
Cumulative OTTI	$	(2,988	)

60

As of December 31, 2012, the Corporation’s investment in the senior tranche of MMCAPS Funding I, Ltd. is the only senior tranche pooled trust preferred security held by the Corporation. The security, with an amortized cost of $1,615,000, has an investment grade rating and has been subjected to impairment analysis based on estimated cash flows (using the process described above). Management determined that impairment was temporary as of December 31, 2012. The following table provides detailed information related to this security:

Number of Issuers Currently Performing	8
Moody's Credit Rating	A3
Fitch Credit Rating	A
Actual Deferrals and Defaults as % of Outstanding Collateral	50.26	%
Expected Additional Net Deferrals and Defaults as % of Performing Collateral	19.73	%
Excess Subordination as % of Performing Collateral	67.90	%
Expected Issuer Prepayments as % of Performing Collateral	41.24	%

In the table above, “Excess Subordination as % of Performing Collateral” (Excess Subordination Ratio) was calculated as follows: (Total face value of performing collateral – Face value of all outstanding note balances not subordinate to the Corporation’s investment)/Total face value of performing collateral.

The Excess Subordination Ratio measures the extent to which there may be tranches within the pooled trust preferred structure available to absorb credit losses before the Corporation’s security would be impacted. A positive Excess Subordination Ratio signifies there is available support from subordinate tranches to absorb losses before the Corporation’s investment would be impacted. A negative Excess Subordination Ratio signifies there is no available support from subordinate tranches to absorb losses before the Corporation’s securities would be impacted. The Excess Subordination Ratio is not definitive, in isolation, for determining OTTI or whether the Corporation will receive future payments on a pooled trust preferred security. Other factors affect the timing and amount of cash flows available for payments to the note holders (investors), including the excess interest paid by the issuers, who typically pay higher rates of interest than are paid out to the note holders.

The Corporation separates OTTI related to the trust-preferred securities into (a) the amount of the total impairment related to credit loss, which is recognized in the statement of earnings, and (b) the amount of the total impairment related to all other factors, which is recognized in other comprehensive income. The Corporation measures the credit loss component of OTTI based on the difference between: (1) the present value of estimated cash flows, at the book yield in effect prior to recognition of any OTTI, as of the most recent balance sheet date, and (2) the present value of estimated cash flows as of the previous quarter-end balance sheet date based on management’s cash flow assumptions at that time.

The Corporation recorded no OTTI losses related to pooled trust-preferred securities in 2012 or 2011. Total OTTI from pooled trust-preferred securities in 2010 amounted to $51,000, including a pre-tax loss reflected in earnings of $103,000, with a pre-tax other comprehensive gain of $52,000 included in other comprehensive income.

A roll-forward of the credit losses from securities for which a portion of OTTI has been recognized in other comprehensive income is as follows:

(In Thousands)
	2012		2011		2010
Balance of credit losses on debt securities for which a portion of OTTI was recognized in other comprehensive income, beginning of period	$	0	$	0	$	(10,695	)
Reduction for securities losses realized during the period		0		0		10,798
Additional credit loss for which an OTTI was previously recognized when the Corporation does not intend to sell the security and it is not more likely than not the Corporation will be required to sell the security before recovery of its amortized cost basis		0		0		(103	)
Balance of credit losses on debt securities for which a portion of OTTI was recognized in other comprehensive income, end of period	$	0	$	0	$	0

The line item labeled “Reduction for securities losses realized during the period” in the table immediately above includes OTTI write-downs associated with securities the Corporation continues to hold, but which have been deemed worthless.

61

Equity Securities

The Corporation’s marketable equity securities at December 31, 2012 and 2011 consisted exclusively of stocks of banking companies. In 2012, the Corporation recognized an other-than-temporary impairment loss related to a bank stock of $67,000. Management’s decision followed an evaluation of the issuer’s published financial results in which management determined that the recovery of the Corporation’s cost basis within the foreseeable future was uncertain. As a result of this determination, the Corporation recognized an impairment loss to write the stock down to the most recent trade price at March 31, 2012. The Corporation recorded no OTTI losses related to bank stocks in 2011. The Corporation recorded OTTI on bank stocks totaling $10,000 in 2010. Management’s decision to record OTTI losses on bank stocks in 2010 was based on a combination of: (1) significant depreciation in market prices in the first quarter 2009 (with some improvement subsequent to June 30, 2009), and (2) management’s intent to sell some of the stocks to generate capital losses, which could be carried back and offset against capital gains generated in previous years to realize tax refunds. At December 31, 2012, management did not intend to sell impaired bank stocks, and based on the intent to hold the securities for the foreseeable future and other factors specific to the securities, has determined that none of the Corporation’s bank stock holdings at December 31, 2012 were other than temporarily impaired.

Realized gains from sales of bank stocks totaled $538,000 in 2012, $91,000 in 2011, and $588,000 in 2010.

C&N Bank is a member of the Federal Home Loan Bank of Pittsburgh (FHLB-Pittsburgh), which is one of 12 regional Federal Home Loan Banks. As a member, C&N Bank is required to purchase and maintain stock in FHLB-Pittsburgh. There is no active market for FHLB-Pittsburgh stock, and it must ordinarily be redeemed by FHLB-Pittsburgh in order to be liquidated. C&N Bank’s investment in FHLB-Pittsburgh stock, included in Other Assets in the consolidated balance sheet, was $4,712,000 at December 31, 2012 and $6,643,000 at December 31, 2011. The Corporation evaluated its holding of FHLB-Pittsburgh stock for impairment and deemed the stock to not be impaired at December 31, 2012 and 2011. In making this determination, management concluded that recovery of total outstanding par value, which equals the carrying value, is expected. The decision was based on review of financial information that FHLB-Pittsburgh has made publicly available.

8. LOANS

Loans outstanding at December 31, 2012 and 2011 are summarized as follows:

Summary of Loans by Type
(In Thousands)	Dec. 31,			% of			Dec. 31,			% of
	2012			Total			2011			Total
Residential mortgage:
Residential mortgage loans - first liens	$	311,627			45.57	%	$	331,015			46.73	%
Residential mortgage loans - junior liens		26,748			3.91	%		28,851			4.07	%
Home equity lines of credit		33,017			4.83	%		30,037			4.24	%
1-4 Family residential construction		12,842			1.88	%		9,959			1.41	%
Total residential mortgage		384,234			56.18	%		399,862			56.45	%
Commercial:
Commercial loans secured by real estate		158,413			23.16	%		156,388			22.08	%
Commercial and industrial		48,442			7.08	%		57,191			8.07	%
Political subdivisions		31,789			4.65	%		37,620			5.31	%
Commercial construction and land		28,200			4.12	%		23,518			3.32	%
Loans secured by farmland		11,403			1.67	%		10,949			1.55	%
Multi-family (5 or more) residential		6,745			0.99	%		6,583			0.93	%
Agricultural loans		3,053			0.45	%		2,987			0.42	%
Other commercial loans		362			0.05	%		552			0.08	%
Total commercial		288,407			42.17	%		295,788			41.76	%
Consumer		11,269			1.65	%		12,665			1.79	%
Total		683,910			100.00	%		708,315			100.00	%
Less: allowance for loan losses		(6,857	)					(7,705	)
Loans, net	$	677,053					$	700,610

The Corporation grants loans to individuals as well as commercial and tax-exempt entities. Commercial, residential and personal loans are made to customers geographically concentrated in the Pennsylvania and New York counties that make up the market serviced by Citizens & Northern Bank. Although the Corporation has a diversified loan portfolio, a significant portion of its debtors’ ability to honor their contracts is dependent on the local economic conditions within the region. There is no concentration of loans to borrowers engaged in similar businesses or activities that exceed 10% of total loans at December 31, 2012.

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A summary of transactions in the allowance for loan losses is as follows:

(In Thousands)	2012			2011			2010
Balance at beginning of year	$	7,705		$	9,107		$	8,265
Provision (credit) charged to operations		288			(285	)		1,191
Loans charged off		(1,221	)		(1,446	)		(619	)
Recoveries		85			329			270
Balance at end of year	$	6,857		$	7,705		$	9,107

Transactions within the allowance for loan losses, summarized by segment and class, for 2012 and 2011 were as follows:

	Dec. 31,										Dec. 31,
Year Ended December 31, 2012	2011							Provision			2012
(In Thousands)	Balance		Charge-offs			Recoveries		(Credit)			Balance
Allowance for Loan Losses:
Residential mortgage:
Residential mortgage loans - first liens	$	3,026	$	(543	)	$	18	$	118		$	2,619
Residential mortgage loans - junior liens		266		(9	)		0		(10	)		247
Home equity lines of credit		231		0			0		24			255
1-4 Family residential construction		79		0			0		17			96
Total residential mortgage		3,602		(552	)		18		149			3,217
Commercial:
Commercial loans secured by real estate		2,004		0			1		(75	)		1,930
Commercial and industrial		946		(57	)		7		(315	)		581
Political subdivisions		0		0			0		0			0
Commercial construction and land		267		(441	)		0		408			234
Loans secured by farmland		126		0			0		3			129
Multi-family (5 or more) residential		66		0			0		1			67
Agricultural loans		27		0			0		0			27
Other commercial loans		5		0			0		(2	)		3
Total commercial		3,441		(498	)		8		20			2,971
Consumer		228		(171	)		59		112			228
Unallocated		434							7			441
Total Allowance for Loan Losses	$	7,705	$	(1,221	)	$	85	$	288		$	6,857

63

	December 31,										December 31,
	2010							Provision			2011
(In Thousands)	Balance		Charge-offs			Recoveries		(Credit)			Balance
Allowance for Loan Losses:
Residential mortgage:
Residential mortgage loans - first liens	$	2,745	$	(49	)	$	0	$	330		$	3,026
Residential mortgage loans - junior liens		334		(51	)		3		(20	)		266
Home equity lines of credit		218		0			0		13			231
1-4 Family residential construction		208		0			0		(129	)		79
Total residential mortgage		3,505		(100	)		3		194			3,602
Commercial:
Commercial loans secured by real estate		3,314		(973	)		1		(338	)		2,004
Commercial and industrial		862		(216	)		254		46			946
Political subdivisions		0		0			0		0			0
Commercial construction and land		590		0			0		(323	)		267
Loans secured by farmland		139		0			0		(13	)		126
Multi-family (5 or more) residential		63		0			0		3			66
Agricultural loans		32		0			0		(5	)		27
Other commercial loans		0		0			0		5			5
Total commercial		5,000		(1,189	)		255		(625	)		3,441
Consumer		289		(157	)		71		25			228
Unallocated		313							121			434
Total Allowance for Loan Losses	$	9,107	$	(1,446	)	$	329	$	(285	)	$	7,705

In the evaluation of the loan portfolio, management determines two major components for the allowance for loan losses – (1) a specific component based on an assessment of certain larger relationships, mainly commercial purpose loans, on a loan-by-loan basis; and (2) a general component for the remainder of the portfolio based on a collective evaluation of pools of loans with similar risk characteristics.

In determining the larger loan relationships for detailed assessment under the specific allowance component, the Corporation uses an internal risk rating system. Under the risk rating system, the Corporation classifies problem or potential problem loans as “Special Mention,” “Substandard,” or “Doubtful” on the basis of currently existing facts, conditions and values. Substandard loans include those characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected. Loans classified as Doubtful have all the weaknesses inherent in those classified as Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Loans that do not currently expose the Corporation to sufficient risk to warrant classification as Substandard or Doubtful, but possess weaknesses that deserve management’s close attention, are deemed to be Special Mention. Risk ratings are updated any time that conditions or the situation warrants. Loans not classified are included in the “Pass” column in the table below.

64

The following tables summarize the aggregate credit quality classification of outstanding loans by risk rating as of December 31, 2012 and 2011:

December 31, 2012:			Special
(In Thousands)	Pass		Mention		Substandard		Doubtful		Total
Residential Mortgage:
Residential Mortgage loans - first liens	$	295,929	$	3,633	$	11,872	$	193	$	311,627
Residential Mortgage loans - junior liens		25,394		420		934		0		26,748
Home Equity lines of credit		32,374		130		513		0		33,017
1-4 Family residential construction		12,759		0		83		0		12,842
Total residential mortgage		366,456		4,183		13,402		193		384,234
Commercial:
Commercial loans secured by real estate		146,381		6,994		5,038		0		158,413
Commercial and Industrial		41,237		3,030		3,810		365		48,442
Political subdivisions		31,679		110		0		0		31,789
Commercial construction and land		26,744		231		477		748		28,200
Loans secured by farmland		9,102		751		1,517		33		11,403
Multi-family (5 or more) residential		6,394		342		9		0		6,745
Agricultural loans		2,963		28		62		0		3,053
Other commercial loans		362		0		0		0		362
Total Commercial		264,862		11,486		10,913		1,146		288,407
Consumer		11,053		12		203		1		11,269
Totals	$	642,371	$	15,681	$	24,518	$	1,340	$	683,910

December 31, 2011:			Special
(In Thousands)	Pass		Mention		Substandard		Doubtful		Total
Residential Mortgage:
Residential mortgage loans - first liens	$	314,900	$	2,955	$	12,956	$	204	$	331,015
Residential mortgage loans - junior liens		27,260		660		924		7		28,851
Home equity lines of credit		29,408		264		365		0		30,037
1-4 Family residential construction		9,959		0		0		0		9,959
Total residential mortgage		381,527		3,879		14,245		211		399,862
Commercial:
Commercial loans secured by real estate		143,247		7,385		5,046		710		156,388
Commercial and industrial		46,110		6,254		4,413		414		57,191
Political subdivisions		37,499		121		0		0		37,620
Commercial construction and land		21,668		211		1,639		0		23,518
Loans secured by farmland		8,040		1,341		1,531		37		10,949
Multi-family (5 or more) residential		6,200		369		14		0		6,583
Agricultural loans		2,765		164		58		0		2,987
Other commercial loans		552		0		0		0		552
Total commercial		266,081		15,845		12,701		1,161		295,788
Consumer		12,437		20		207		1		12,665
Totals	$	660,045	$	19,744	$	27,153	$	1,373	$	708,315

The scope of loans evaluated individually for impairment include all loan relationships greater than $200,000 for which there is at least one extension of credit graded Special Mention, Substandard or Doubtful. Also, all loans classified as troubled debt restructurings (discussed in more detail below) and all loan relationships less than $200,000 in the aggregate, but with an estimated loss of $100,000 or more, are individually evaluated for impairment. Loans that are individually evaluated for impairment, but which are not determined to be impaired, are combined with all remaining loans that are not reviewed on a specific basis, and such loans are included within larger pools of loans based on similar risk and loss characteristics for purposes of determining the general component of the allowance. The loans that have been individually evaluated, but which have not been determined to be impaired, are included in the “Collectively Evaluated” column in the table summarizing the allowance and associated loan balances as of December 31, 2012 and 2011.

65

The following tables present a summary of loan balances and the related allowance for loan losses summarized by portfolio segment and class for each impairment method used as of December 31, 2012 and 2011:

December 31, 2012	Loans:						Allowance for Loan Losses:
(In Thousands)	Individually		Collectively				Individually		Collectively
	Evaluated		Evaluated		Totals		Evaluated		Evaluated		Totals
Residential mortgage:
Residential mortgage loans - first liens	$	2,341	$	309,286	$	311,627	$	206	$	2,413	$	2,619
Residential mortgage loans - junior liens		158		26,590		26,748		0		247		247
Home equity lines of credit		0		33,017		33,017		0		255		255
1-4 Family residential construction		0		12,842		12,842		0		96		96
Total residential mortgage		2,499		381,735		384,234		206		3,011		3,217
Commercial:
Commercial loans secured by real estate		1,938		156,475		158,413		146		1,784		1,930
Commercial and industrial		939		47,503		48,442		197		384		581
Political subdivisions		0		31,789		31,789		0		0		0
Commercial construction and land		1,034		27,166		28,200		0		234		234
Loans secured by farmland		923		10,480		11,403		34		95		129
Multi-family (5 or more) residential		9		6,736		6,745		0		67		67
Agricultural loans		40		3,013		3,053		0		27		27
Other commercial loans		0		362		362		0		3		3
Total commercial		4,883		283,524		288,407		377		2,594		2,971
Consumer		47		11,222		11,269		40		188		228
Unallocated												441
Total	$	7,429	$	676,481	$	683,910	$	623	$	5,793	$	6,857

December 31, 2011	Loans:						Allowance for Loan Losses:
(In Thousands)	Individually		Collectively				Individually		Collectively
	Evaluated		Evaluated		Totals		Evaluated		Evaluated		Totals
Residential mortgage:
Residential mortgage loans - first liens	$	2,227	$	328,788	$	331,015	$	461	$	2,565	$	3,026
Residential mortgage loans - junior liens		137		28,714		28,851		11		255		266
Home equity lines of credit		93		29,944		30,037		0		231		231
1-4 Family residential construction		0		9,959		9,959		0		79		79
Total residential mortgage		2,457		397,405		399,862		472		3,130		3,602
Commercial:
Commercial loans secured by real estate		2,169		154,219		156,388		169		1,835		2,004
Commercial and industrial		942		56,249		57,191		361		585		946
Political subdivisions		0		37,620		37,620		0		0		0
Commercial construction and land		1,266		22,252		23,518		65		202		267
Loans secured by farmland		927		10,022		10,949		35		91		126
Multi-family (5 or more) residential		14		6,569		6,583		0		66		66
Agricultural loans		39		2,948		2,987		0		27		27
Other commercial loans		0		552		552		0		5		5
Total commercial		5,357		290,431		295,788		630		2,811		3,441
Consumer		50		12,615		12,665		24		204		228
Unallocated												434
Total	$	7,864	$	700,451	$	708,315	$	1,126	$	6,145	$	7,705

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Summary information related to impaired loans as of December 31, 2012 and 2011 is as follows:

(In Thousands)	2012		2011
Impaired loans with a valuation allowance	$	2,710	$	3,433
Impaired loans without a valuation allowance		4,719		4,431
Total impaired loans	$	7,429	$	7,864
Valuation allowance related to impaired loans	$	623	$	1,126

No additional funds are committed to be advanced in connection with impaired loans.

Additional summary information related to impaired loans for 2012, 2011 and 2010 is as follows:

(In Thousands)	2012		2011		2010
Average investment in impaired loans	$	7,209	$	7,455	$	6,142
Interest income recognized on impaired loans	$	278	$	245	$	204
Interest income recognized on a cash basis on impaired loans	$	278	$	245	$	204

The breakdown by portfolio segment and class of nonaccrual loans and loans past due ninety days or more and still accruing is as follows:

	December 31, 2012				December 31, 2011
	Past Due				Past Due
	90+ Days and				90+ Days and
(In Thousands)	Accruing		Nonaccrual		Accruing		Nonaccrual
Residential mortgage:
Residential mortgage loans - first liens	$	1,900	$	3,064	$	949	$	3,058
Residential mortgage loans - junior liens		29		111		11		67
Home equity lines of credit		40		200		0		0
Total residential mortgage		1,969		3,375		960		3,125
Commercial:
Commercial loans secured by real estate		120		1,338		75		1,595
Commercial and industrial		68		761		21		541
Commercial construction and land		149		887		139		978
Loans secured by farmland		0		923		53		927
Agricultural loans		0		40		0		0
Total commercial		337		3,949		288		4,041
Consumer		5		29		19		31
Totals	$	2,311	$	7,353	$	1,267	$	7,197

The amounts shown in the table immediately above include loans classified as troubled debt restructuring (described in more detail below), if such loans are considered past due ninety days or more, or nonaccrual.

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The tables below present a summary of the contractual aging of loans as of December 31, 2012 and 2011:

	As of December 31, 2012								As of December 31, 2011
	Current &								Current &
(In Thousands)	Past Due		Past Due		Past Due				Past Due		Past Due		Past Due
	Less than		30-89		90+				Less than		30-89		90+
	30 Days		Days		Days		Total		30 Days		Days		Days		Total
Residential mortgage:
Residential mortgage loans - first liens	$	302,373	$	6,228	$	3,026	$	311,627	$	321,907	$	6,723	$	2,385	$	331,015
Residential mortgage loans - junior liens		26,247		371		130		26,748		28,437		393		21		28,851
Home equity lines of credit		32,593		184		240		33,017		29,986		51		0		30,037
1-4 Family residential construction		12,627		215		0		12,842		9,959		0		0		9,959
Total residential mortgage		373,840		6,998		3,396		384,234		390,289		7,167		2,406		399,862
Commercial:
Commercial loans secured by real estate		156,834		704		875		158,413		155,025		343		1,020		156,388
Commercial and industrial		47,569		317		556		48,442		56,835		169		187		57,191
Political subdivisions		31,789		0		0		31,789		37,620		0		0		37,620
Commercial construction and land		26,944		248		1,008		28,200		22,323		1,056		139		23,518
Loans secured by farmland		10,438		75		890		11,403		9,973		33		943		10,949
Multi-family (5 or more) residential		6,743		2		0		6,745		6,583		0		0		6,583
Agricultural loans		3,003		10		40		3,053		2,945		3		39		2,987
Other commercial loans		362		0		0		362		552		0		0		552
Total commercial		283,682		1,356		3,369		288,407		291,856		1,604		2,328		295,788
Consumer		11,135		129		5		11,269		12,340		306		19		12,665
Totals	$	668,657	$	8,483	$	6,770	$	683,910	$	694,485	$	9,077	$	4,753	$	708,315

Nonaccrual loans are included in the contractual aging immediately above. A summary of the contractual aging of nonaccrual loans at December 31, 2012 and 2011 is as follows:

	Current &
	Past Due		Past Due		Past Due
	Less than		30-89		90+
(In Thousands)	30 Days		Days		Days		Total
December 31, 2012 Nonaccrual Totals	$	2,167	$	727	$	4,459	$	7,353
December 31, 2011 Nonaccrual Totals	$	2,532	$	1,179	$	3,486	$	7,197

Loans whose terms are modified are classified as Troubled Debt Restructurings (TDRs) if the Corporation grants such borrowers concessions and it is deemed that those borrowers are experiencing financial difficulty. Loans classified as TDRs are designated as impaired. The outstanding balance of loans subject to TDRs, as well as the contractual aging information at December 31, 2012 and 2011 is as follows:

Troubled Debt Restructurings (TDRs):
	Current &
(In Thousands)	Past Due		Past Due		Past Due
	Less than		30-89		90+
	30 Days		Days		Days		Nonaccrual		Total
December 31, 2012 Totals	$	785	$	121	$	0	$	1,155	$	2,061
December 31, 2011 Totals	$	1,064	$	0	$	146	$	2,267	$	3,477

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A summary of TDRs that occurred during 2012 and 2011 is as follows:

Year Ended December 31, 2012			Pre-		Post-
(Balances in Thousands)			Modification		Modification
	Number		Outstanding		Outstanding
	of		Recorded		Recorded
	Contracts		Investment		Investment
Commercial,
Commercial and industrial		1	$	65	$	65

Year Ended December 31, 2011			Pre-		Post-
(Balances in Thousands)			Modification		Modification
	Number		Outstanding		Outstanding
	Of		Recorded		Recorded
	Contracts		Investment		Investment
Residential mortgage,
Home equity lines of credit		1	$	93	$	93
Commercial:
Commercial loans secured by real estate		11		1,941		1,941
Commercial and industrial		3		14		14
Commercial construction and land		5		1,238		1,238
Multi-family (5 or more) residential		1		15		15

The TDR in 2012 was an extension of the final maturity and lowering of monthly payments required on a commercial loan. There was no allowance for loan losses on this loan at December 31, 2012, and no change in the allowance for loan losses resulting from this TDR.

In the table above, the 2011 TDR category for commercial loans secured by real estate includes six (6) contracts that stem from a forbearance agreement entered into with a commercial customer. The total principal balance of loans included in the forbearance agreement was $1,588,000, of which the Corporation had charged off $663,000 in the second quarter 2011 (prior to the forbearance agreement), and subsequently charged off an additional $438,000 in the fourth quarter 2011. Under the terms of the forbearance agreement, the Corporation had agreed to accept payment of less than the total principal amount of the loans, assuming payment was received by dates specified within the forbearance agreement. In 2012, the loans were not repaid and the forbearance agreement expired. Accordingly, the Corporation’s concession terminated, and the loans were not classified as TDRs at December 31, 2012. The outstanding balance of the loans was $466,000 at December 31, 2012 and December 31, 2011. The loans were in nonaccrual status at December 31, 2012 and December 31, 2011. At December 31, 2012, the risk rating of the loans was Substandard, while the risk rating of the loans was Doubtful at December 31, 2011. Based on management’s estimate of the value of the underlying collateral, net of selling costs, the Corporation had no allowance for loan losses associated with these loans at December 31, 2012 and December 31, 2011.

Other TDRs in 2011 included extensions of terms and maturities at lower than current market rates and acceptance of interest-only payments for extended periods of time. Except for the fourth quarter 2011 charge-off of $438,000 related to commercial loans subject to the forbearance agreement described above, there were no changes in the allowance for loan losses in 2011 resulting from the TDRs that occurred in 2011.

In 2012, there were no defaults on loans for which modifications considered to be TDRs were entered into within the previous 12 months. In 2011, defaults on loans for which modifications considered to be TDRs were entered into within the previous 12 months are summarized as follows:

Year Ended December 31, 2011	Number
(Balances in Thousands)	of		Recorded
	Contracts		Investment
Residential mortgage,
Home equity lines of credit		1	$	93
Commercial:
Commercial loans secured by real estate		2		207
Commercial construction and land		2		1,089

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The events of default in the table above resulted from the borrowers’ failure to make payments due at maturity, based on loan maturity dates that had been extended from their original due dates. At December 31, 2012 and 2011, the Corporation evaluated loans to the borrowers who defaulted subsequent to restructurings, in determining the specific allowance for loan loss amounts related to the underlying loans. For one loan included in the Commercial construction and land class, with a balance of $950,000, the Corporation had an allowance for loan losses of $65,000 at December 31, 2011. In 2012, the Corporation recorded a charge-off of $288,000 related to this loan, leaving an outstanding balance of $662,000 at December 31, 2012. Based on the estimated value of the underlying collateral, net of estimated costs to sell the collateral, the Corporation determined that no allowance for loan losses was required at December 31, 2012 for loans for which an event of default had occurred subsequent to restructuring.

9. BANK PREMISES AND EQUIPMENT

Bank premises and equipment are summarized as follows:

(In Thousands)	December 31,
	2012			2011
Land	$	2,823		$	2,823
Buildings and improvements		26,850			26,362
Furniture and equipment		17,015			16,180
Construction in progress		40			173
Total		46,728			45,538
Less: accumulated depreciation		(28,021	)		(26,510	)
Net	$	18,707		$	19,028

Depreciation expense included in occupancy expense and furniture and equipment expense was as follows:

(In Thousands)	2012		2011		2010
Occupancy expense	$	1,050	$	1,168	$	1,238
Furniture and equipment expense		889		909		1,101
Total	$	1,939	$	2,077	$	2,339

10. INTANGIBLE ASSETS

There were no changes in the carrying amount of goodwill in 2012 and 2011. The balance in goodwill was $11,942,000 at December 31, 2012 and 2011. The Corporation did not complete any acquisitions in 2012 or 2011.

The Corporation has adopted ASU No. 2011-08, Intangibles – Goodwill and Other (Topic 350) – Testing Goodwill for Impairment. In testing goodwill for impairment as of December 31, 2012, the Corporation assessed qualitative factors to determine whether it is more likely than not that the fair value of its only reporting unit, its community banking operation, is less than its carrying amount. The qualitative factors assessed included the Corporation’s recent financial performance, economic conditions in the Corporation’s market area, macroeconomic conditions and other factors. Based on the assessment of qualitative factors, the Corporation determined that it is not more likely than not that the fair value of the community banking operation has fallen below its carrying value, and therefore, the Corporation did not perform the more detailed, two-step goodwill impairment test described in Topic 350. Accordingly, there was no goodwill impairment as of December 31, 2012.

Information related to the core deposit intangibles are as follows:

	December 31,
(In Thousands)	2012			2011
Gross amount	$	2,034		$	2,034
Less: accumulated amortization		(1,896	)		(1,822	)
Net	$	138		$	212

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Amortization expense was $74,000 in 2012, $114,000 in 2011 and $176,000 in 2010. Estimated amortization expense for each of the ensuing five years is as follows:

(In Thousands)
2013	$	51
2014		35
2015		22
2016		12
2017		6

11. DEPOSITS

At December 31, 2012, the scheduled maturities of time deposits are as follows:

(In Thousands)
2013	$	197,014
2014		69,859
2015		21,455
2016		10,786
2017		13,305
	$	312,419

Included in interest-bearing deposits are time deposits in the amount of $100,000 or more. As of December 31, 2012, the remaining maturities or time to next re-pricing of time deposits of $100,000 or more are as follows:

(In Thousands)
Three months or less	$	69,264
Over 3 months through 12 months		13,900
Over 1 year through 3 years		12,103
Over 3 years		8,637
Total	$	103,904

Interest expense from deposits of $100,000 or more amounted to $1,846,000 in 2012, $2,369,000 in 2011 and $3,454,000 in 2010.

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12. BORROWED FUNDS

SHORT-TERM BORROWINGS

Short-term borrowings include the following:

(In Thousands)	At December 31,
	2012		2011
Overnight borrowings	$	0	$	0
Customer repurchase agreements		5,567		4,950
Total short-term borrowings	$	5,567	$	4,950

The weighted average interest rate on total short-term borrowings outstanding was 0.10% at December 31, 2012 and 2011. The maximum amount of total short-term borrowings outstanding at any month-end was $20,120,000 in 2012, $21,968,000 in 2011 and $40,600,000 in 2010.

Overnight borrowings are available from the FHLB-Pittsburgh, federal funds purchased overnight from other banks, and from the Federal Reserve Bank of Philadelphia’s Discount Window. There were no overnight borrowings outstanding at December 31, 2012 or December 31, 2011.

The Corporation had available credit with other correspondent banks totaling $45,000,000 at December 31, 2012 and $25,000,000 at December 31, 2011. These lines of credit are primarily unsecured. No amounts were outstanding at December 31, 2012 or December 31, 2011.

The Corporation has a line of credit with the Federal Reserve Bank of Philadelphia’s Discount Window. At December 31, 2012, the Corporation had available credit in the amount of $27,367,000 on this line with no outstanding advances. At December 31, 2011, the Corporation had available credit in the amount of $27,438,000 on this line with no outstanding advances. As collateral for the line, the Corporation has pledged available-for-sale securities with a carrying value of $28,432,000 at December 31, 2012 and $28,681,000 at December 31, 2011.

The Corporation engages in repurchase agreements with certain commercial customers. These agreements provide that the Corporation sells specified investment securities to the customers on an overnight basis and repurchases them on the following business day. The carrying value of the underlying securities was $11,179,000 at December 31, 2012 and $19,837,000 at December 31, 2011.

LONG-TERM BORROWINGS

Long-term borrowings are as follows:

(In Thousands)	At December 31,
	2012		2011
FHLB-Pittsburgh borrowings	$	15,812	$	40,363
Repurchase agreements		68,000		85,000
Total long-term borrowings	$	83,812	$	125,363

Long-term borrowings from FHLB-Pittsburgh are as follows:

(In Thousands)	At December 31,
	2012		2011
Loans matured in 2012 with rates ranging from 3.66% to 4.82%	$	0	$	23,507
Loans maturing in 2013 with rates ranging from 2.86% to 3.62%		3,211		3,553
Loan maturing in 2016 with a rate of 6.86%		196		236
Loans maturing in 2017 with rates ranging from 3.81% to 6.83%		10,027		10,032
Loan maturing in 2020 with a rate of 4.79%		1,297		1,892
Loan maturing in 2025 with a rate of 4.91%		1,081		1,143
Total long-term FHLB-Pittsburgh borrowings	$	15,812	$	40,363

The FHLB-Pittsburgh loan facilities are collateralized by qualifying loans secured by real estate with a book value totaling $516,127,000 at December 31, 2012 and $499,311,000 at December 31, 2011. Also, the FHLB-Pittsburgh loan facilities require the Corporation to invest in established amounts of FHLB-Pittsburgh stock. The carrying values of the Corporation’s holdings of FHLB-Pittsburgh stock (included in Other Assets) were $4,712,000 at December 31, 2012 and $6,643,000 at December 31, 2011.

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Repurchase agreements included in long-term borrowings are as follows:

(In Thousands)	At December 31,
	2012		2011
Agreement maturing in 2013 with a rate of 3.13%, prepaid in 2012	$	0	$	5,000
Agreements maturing in 2017 with rates ranging from 3.60% to 4.27%		68,000		80,000
Total long-term repurchase agreements	$	68,000	$	85,000

The Corporation incurred losses totaling $2,333,000 from prepayment of repurchase agreement obligations in 2012, including: (1) a loss of $143,000 in the second quarter 2012 on prepayment of the agreement contractually scheduled to mature in 2013, and (2) a loss of $2,190,000 in the third quarter 2012 on prepayment of a total of $12,000,000 of the agreements contractually scheduled to mature in 2017.

In December 2007, the Corporation entered into two repurchase agreements of $40,000,000 each with embedded caps. These repurchase agreements mature in 2017. In the third quarter 2012, the Corporation paid off principal totaling $6,000,000 on each of these agreements, incurring the loss from prepayment noted above and leaving a balance of $34,000,000 outstanding for each agreement at December 31, 2012. One of these borrowings has an interest rate of 3.60% and became putable by the issuer at quarterly intervals starting in December 2010. The other borrowing has an interest rate of 4.27% and became putable by the issuer at quarterly intervals starting in December 2012. Each of these borrowings contained an embedded cap, providing that on the quarterly anniversary of the transaction settlement date, if three-month LIBOR were higher than 5.15%, the Corporation’s interest rate payable would decrease by twice the amount of the excess, down to a minimum rate of 0%. The embedded cap on one of the agreements expired in December 2010, and the embedded cap on the other agreement expired in December 2012.

Securities sold under repurchase agreements were delivered to the broker-dealers who arranged the transactions. The broker-dealers may have sold, loaned or otherwise disposed of such securities to other parties in the normal course of their operations, and have agreed to resell to the Corporation substantially identical securities at the maturities of the agreements. The carrying value of the underlying securities was $89,428,000 at December 31, 2012 and $110,759,000 at December 31, 2011. Average daily repurchase agreement borrowings amounted to $78,790,000 in 2012, $90,644,000 in 2011 and $94,097,000 in 2010. The maximum amounts of outstanding borrowings under repurchase agreements with broker-dealers were $85,000,000 in 2012, $92,500,000 in 2011 and $97,500,000 in 2010. The weighted average interest rate on repurchase agreements was 3.97% in 2012, 3.93% in 2011 and 3.93% in 2010.

13. EMPLOYEE AND POSTRETIREMENT BENEFIT PLANS

DEFINED BENEFIT PLANS

The Corporation sponsors a defined benefit health care plan that provides postretirement medical benefits and life insurance to employees who meet certain age and length of service requirements. This plan contains a cost-sharing feature, designed to cause participants to pay for all future increases in premiums (after January 1, 1993) related to benefit coverage. Accordingly, actuarial assumptions related to health care cost trend rates do not significantly affect the liability balance at December 31, 2012 and December 31, 2011, and are not expected to significantly affect the Corporation's future expenses. The Corporation uses a December 31 measurement date for the postretirement plan.

In an acquisition in 2007, the Corporation assumed the Citizens Trust Company Retirement Plan, a defined benefit pension plan. This plan covers certain employees who were employed by Citizens Trust Company on December 31, 2002, when the plan was amended to discontinue admittance of any future participant and to freeze benefit accruals. Information related to the Citizens Trust Company Retirement Plan has been included in the tables that follow. The Corporation uses a December 31 measurement date for this plan.

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The following table shows the funded status of the defined benefit plans:

(In Thousands)

	Pension:						Postretirement:
	2012			2011			2012			2011
CHANGE IN BENEFIT OBLIGATION:
Benefit obligation at beginning of year	$	1,613		$	1,339		$	2,054		$	1,616
Service cost		0			0			91			83
Interest cost		72			73			81			92
Plan participants' contributions		0			0			199			226
Actuarial (gain) loss		128			222			(87	)		322
Benefits paid		(30	)		(21	)		(257	)		(285	)
Benefit obligation at end of year	$	1,783		$	1,613		$	2,081		$	2,054
CHANGE IN PLAN ASSETS:
Fair value of plan assets at beginning of year	$	1,057		$	1,080		$	0		$	0
Actual return on plan assets		121			(6	)		0			0
Employer contribution		694			4			58			59
Plan participants' contributions		0			0			199			226
Benefits paid		(30	)		(21	)		(257	)		(285	)
Fair value of plan assets at end of year	$	1,842		$	1,057		$	0		$	0
Funded status at end of year	$	59		$	(556	)	$	(2,081	)	$	(2,054	)

At December 31, 2012 and 2011, the following pension plan and postretirement plan asset and liability amounts were recognized in the consolidated balance sheet:

(In Thousands)	Pension:				Postretirement:
	2012		2011		2012		2011
Other assets	$	59
Accrued interest and other liabilities			$	556	$	2,081	$	2,054

At December 31, 2012 and 2011, the following items included in accumulated other comprehensive income (loss) had not been recognized as components of expense:

(In Thousands)	Pension:				Postretirement:
	2012		2011		2012		2011
Net transition obligation	$	0	$	0	$	0	$	37
Prior service cost		0		0		94		107
Net actuarial loss (gain)		546		494		230		317
Total	$	546	$	494	$	324	$	461

For the defined benefit pension plan, amortization of the net actuarial loss is expected to be $32,000 in 2013. For the postretirement plan, the estimated amounts of prior service cost and net actuarial loss that will be amortized from accumulated other comprehensive income into net periodic benefit cost in 2013 are $14,000 and $2,000, respectively.

The accumulated benefit obligation for the defined benefit pension plan was $1,783,000 at December 31, 2012 and $1,613,000 at December 31, 2011.

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The components of net periodic benefit costs from defined benefit plans are as follows:

(In Thousands)	Pension:									Postretirement:
	2012			2011			2010			2012		2011		2010
Service cost	$	0		$	0		$	0		$	91	$	83	$	68
Interest cost		72			73			67			81		92		89
Expected return on plan assets		(72	)		(73	)		(66	)		0		0		0
Amortization of transition (asset) obligation		0			0			0			37		36		36
Amortization of prior service cost		0			0			0			13		14		14
Recognized net actuarial loss		27			5			3			0		0		0
Total net periodic benefit cost	$	27		$	5		$	4		$	222	$	225	$	207

The weighted-average assumptions used to determine net periodic benefit cost are as follows:

	Pension:									Postretirement:
	2012			2011			2010			2012			2011			2010
Citizens Trust Company Retirement Plan
and postretirement plan:
Discount rate		4.50	%		5.50	%		5.50	%		4.50	%		5.50	%		6.00	%
Expected return on plan assets		7.50	%		7.50	%		7.50	%		N/A			N/A			N/A
Rate of compensation increase		N/A			N/A			N/A			N/A			N/A			N/A

The weighted-average assumptions used to determine benefit obligations as of December 31, 2012 and 2011 are as follows:

	Pension:						Postretirement:
	2012			2011			2012			2010
Discount rate		4.00	%		4.50	%		4.00	%		4.50	%
Rate of compensation increase		N/A			N/A			N/A			N/A

Estimated future benefit payments, including only estimated employer contributions for the postretirement plan, which reflect expected future service, are as follows:

(In Thousands)	Pension		Postretirement
2013	$	21	$	112
2014		236		108
2015		20		105
2016		43		109
2017		19		116
2018-2022		1,420		749

No estimated minimum contribution to the defined benefit pension plan is required in 2013, though the Corporation may make discretionary contributions.

The expected return on pension plan (Citizens Trust Company Retirement Plan) assets is a significant assumption used in the calculation of net periodic benefit cost. This assumption reflects the average long-term rate of earnings expected on the funds invested or to be invested to provide for the benefits included in the projected benefit obligation.

The fair values of pension plan assets at December 31, 2012 and 2011 are as follows:

	2012			2011
Cash and cash equivalents		37	%		3	%
Debt securities		24	%		39	%
Equity securities		27	%		40	%
Alternative funds		12	%		18	%
Total		100	%		100	%

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C&N Bank’s Trust and Financial Management Department manages the investment of the Citizens Trust Company Retirement Plan (pension plan) assets. Most of the Plan’s securities are mutual funds, including mutual funds principally invested in debt securities, mutual funds invested in a diversified mix of large, mid- and small-capitalization U.S. stocks, foreign stocks, and mutual funds invested in alternative asset classes such as real estate, commodities and inflation-protected securities. The fair values of plan assets are determined based on Level 1 inputs (as described in Note 6). At December 31, 2012, the targeted asset allocation for the pension plan was 26% equity securities, 61% debt securities, 11% alternative assets and 2% cash. The comparatively high allocation of plan assets to cash and cash equivalents at December 31, 2012 reflects receipt of a Corporation contribution in late December 2012 that had not been transferred to other asset categories. At December 31, 2011, the targeted asset allocation for the pension plan was 43% equity securities, 38% debt securities, 17% alternative assets and 2% cash. The targeted asset allocation reflects an attempt to generate a long-term average rate of return necessary to meet the projected benefit obligation, and considers the need for ongoing liquidity necessary to fund benefit payments. Changes in the targeted asset allocation in 2012 reflect possible lump sum distribution requirements within the next 2 to 3 years. The pension plan’s assets do not include any shares of the Corporation’s common stock.

PROFIT SHARING AND DEFERRED COMPENSATION PLANS

The Corporation has a profit sharing plan that incorporates the deferred salary savings provisions of Section 401(k) of the Internal Revenue Code. The Corporation’s matching contributions to the Plan depend upon the tax deferred contributions of employees. The Corporation’s total basic and matching contributions were $587,000 in 2012, $559,000 in 2011 and $511,000 in 2010.

The Corporation has an Employee Stock Ownership Plan (ESOP). Contributions to the ESOP are discretionary, and the ESOP uses funds contributed to purchase Corporation stock for the accounts of ESOP participants. These purchases are made on the market (not directly from the Corporation), and employees are not permitted to purchase Corporation stock under the ESOP. The ESOP includes a diversification feature, which allows participants, upon reaching age 55 and 10 years of service (as defined), to sell up to 50% of their Corporation shares back to the ESOP over a period of 6 years. As of December 31, 2012 and 2011, there were no shares allocated for repurchase by the ESOP.

Dividends paid on shares held by the ESOP are charged to retained earnings. All Corporation shares owned through the ESOP are included in the calculation of weighted-average shares outstanding for purposes of calculating earnings per share - basic and diluted. The ESOP held 346,218 shares of Corporation stock at December 31, 2012 and 339,537 shares at December 31, 2011, all of which had been allocated to Plan participants. The Corporation’s contributions to the ESOP totaled $507,000 in 2012, $496,000 in 2011 and $454,000 in 2010.

The Corporation also has a nonqualified supplemental deferred compensation arrangement with its key officers. Charges to operating expense for officers’ supplemental deferred compensation were $140,000 in 2012, $108,000 in 2011 and $95,000 in 2010.

STOCK-BASED COMPENSATION PLANS

The Corporation has a Stock Incentive Plan for a selected group of senior officers. A total of 850,000 shares of common stock may be issued under the Stock Incentive Plan. Awards may be made under the Stock Incentive Plan in the form of qualified options (“Incentive Stock Options,” as defined in the Internal Revenue Code), nonqualified options, stock appreciation rights or restricted stock. From 2000 through 2011, except for 2006 when no awards were granted and 2010 (described below), awards granted to all participants under the Stock Incentive Plan included awards of Incentive Stock Options and restricted stock. In 2012, the Corporation’s executive officers were awarded a mix of Incentive Stock Options and restricted stock, while awards to the rest of the senior officers consisted exclusively of restricted stock. Incentive Stock Options granted in 2000 and thereafter have an exercise price equal to the market value of the stock at the date of grant, vest after 6 months and expire after 10 years. Except for the 2010 award, restricted stock awards through 2011 vest ratably over 3 years. Restricted stock awards to executive officers in 2012 vest ratably over 3 years, while 2012 restricted stock awards to the rest of the senior officers vest ratably over 4 years. For restricted stock awards granted under the Stock Incentive Plan in 2012, 2011, 2009 and 2008, the Corporation must meet an annual targeted return on average equity (“ROAE”) performance ratio, as defined, in order for participants to vest. The Corporation met the ROAE target for the 2012, 2011, 2010 and 2008 plan years, but did not meet the ROAE target for the 2009 plan year. In 2010, the only award under the Stock Incentive Plan was 9,125 shares of restricted stock to the Chief Executive Officer. The 2010 award provides that vesting will occur upon the earliest of (i) the third anniversary of the date of grant, (ii) death or disability or (iii) the occurrence of a change in control of the Corporation. There are 360,849 shares available for issuance under the Stock Incentive Plan as of December 31, 2012.

Also, the Corporation has an Independent Directors Stock Incentive Plan. This plan permits awards of nonqualified stock options and/or restricted stock to non-employee directors. A total of 135,000 shares of common stock may be issued under the Independent Directors Stock Incentive Plan. The recipients’ rights to exercise stock options under this plan expire 10 years from the date of grant. The exercise prices of all stock options awarded under the Independent Directors Stock Incentive Plan are equal to market value as of the dates of grant. The restricted stock awards vest ratably over 3 years. There were no awards made under the Independent Directors Stock Incentive Plan in 2006 and 2010. There are 39,450 shares available for issuance under the Independent Directors Stock Incentive Plan as of December 31, 2012.

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The Corporation records stock option expense based on estimated fair value calculated using the Black-Scholes-Merton option-pricing model with the following assumptions:

	2012			2011			2010
Volatility		41	%		37	%		N/A
Expected option lives		7 Years			8 Years			N/A
Risk-free interest rate		1.53	%		3.10	%		N/A
Dividend yield		3.97	%		3.86	%		N/A

Management estimated the lives for options based on the Corporation’s average historical experience with both plans. The Corporation utilized its historical volatility and dividend yield over the immediately prior 7-year period to estimate future levels of volatility and dividend yield for the 2012 awards, and utilized its historical volatility and dividend yield over the immediately prior 8-year period in estimating the value of the 2011 awards. The risk-free interest rate was based on the published yield of zero-coupon U.S. Treasury strips as of the grant date, with a maturity coinciding with the estimated option lives.

Total stock-based compensation expense is as follows:

(In Thousands)	2012		2011		2010
Stock options	$	247	$	279	$	0
Restricted stock		320		144		67
Total	$	567	$	423	$	67

A summary of stock option activity is presented below:

	2012					2011					2010
				Weighted					Weighted					Weighted
				Average					Average					Average
				Exercise					Exercise					Exercise
	Shares			Price		Shares			Price		Shares			Price
Outstanding, beginning of year		301,797		$	19.05		226,894		$	20.54		306,358		$	20.53
Granted		64,757		$	18.54		93,674		$	15.06		0
Exercised		(17,284	)	$	16.20		(13,042	)	$	16.71		0
Forfeited		(6,830	)	$	21.51		(5,501	)	$	18.30		(76,331	)	$	20.74
Expired		(4,770	)	$	17.00		(228	)	$	14.17		(3,133	)	$	14.11
Outstanding, end of year		337,670		$	19.08		301,797		$	19.05		226,894		$	20.54
Options exercisable at year-end		337,670		$	19.08		301,797		$	19.05		226,894		$	20.54
Weighted-average fair value of options granted				$	5.15				$	4.26					N/A
Weighted-average fair value of options forfeited				$	4.03				$	3.95				$	3.03

The weighted-average remaining contractual term of outstanding stock options at December 31, 2012 was 5.9 years. The aggregate intrinsic value of stock options outstanding (excluding options issued at exercise prices greater than the final closing price of the Corporation’s stock in 2012) was $403,000 at December 31, 2012. The total intrinsic value of options exercised was $72,000 in 2012 and $17,000 in 2011. There were no options exercised in 2010.

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The following summarizes non-vested stock options and restricted stock activity as of and for the year ended December 31, 2012:

	Stock Options					Restricted Stock
				Weighted					Weighted
				Average					Average
	Number			Grant Date		Number			Grant Date
	of Shares			Fair Value		of Shares			Fair Value
Outstanding, December 31, 2011		0					27,071		$	14.35
Granted		64,757		$	5.15		42,552		$	18.54
Vested		(64,757	)	$	5.15		(7,005	)	$	16.08
Forfeited		0					(3,560	)	$	17.85
Outstanding, December 31, 2012		0					59,058		$	16.95

Compensation cost related to restricted stock is recognized based on the market price of the stock at the grant date over the vesting period. As of December 31, 2012, there was $614,000 total unrecognized compensation costs related to restricted stock, which is expected to be recognized over a weighted average period of 1.8 years.

Effective January 3, 2013, the Corporation granted options to purchase a total of 64,050 shares of common stock through the Stock Incentive and Independent Directors Stock Incentive Plans. The exercise price for these options is $19.21 per share, which was the market price at the date of grant, as determined under the Plans. The Corporation’s preliminary estimate of stock option compensation expense in 2013 is approximately $262,000. Management expects to use the Black-Scholes-Merton option-pricing model to measure compensation cost for these options. Also, effective January 3, 2013, the Corporation awarded a total of 37,886 shares of restricted stock under the Stock Incentive and Independent Directors Stock Incentive Plans. Total estimated restricted stock expense for 2013 is $477,000. The stock options and restricted stock awards made in January 2013 are not included in the tables above.

The Corporation has issued shares from treasury stock for all stock option exercises through December 31, 2012. Management does not anticipate that stock repurchases will be necessary to accommodate stock option exercises in 2013.

14. INCOME TAXES

The net deferred tax asset at December 31, 2012 and 2011 represents the following temporary difference components:

	December 31,		December 31,
(In Thousands)	2012		2011
Deferred tax assets:
Defined benefit plans - ASC 835	$	305	$	324
Net realized losses on securities		1,254		3,175
Allowance for loan losses		2,400		2,697
Credit for alternative minimum tax paid		3,609		4,569
Net operating loss carryforwards		0		44
General business credit carryforwards		0		831
Other deferred tax assets		2,019		1,671
Total deferred tax assets		9,587		13,311
Deferred tax liabilities:
Unrealized holding gains on securities		6,228		5,559
Bank premises and equipment		1,337		1,357
Core deposit intangibles		48		74
Other deferred tax liabilities		249		148
Total deferred tax liabilities		7,862		7,138
Deferred tax asset, net	$	1,725	$	6,173

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The provision for income taxes includes the following:

(In thousands)	2012		2011		2010
Currently payable (refundable)	$	4,545	$	4,792	($	735	)
Tax expense resulting from allocations of certain tax benefits to equity or as a reduction in other assets		121		104		164
Deferred		3,760		3,818		6,371
Total provision	$	8,426	$	8,714	$	5,800

A reconciliation of income tax at the statutory rate to the Corporation’s effective rate is as follows (amounts in thousands):

(Amounts in thousands)	2012						2011						2010
	Amount			%			Amount			%			Amount			%
Expected provision	$	10,896			35.00		$	11,229			35.00		$	8,699			35.00
Valuation allowance on deferred tax assets		0			0.00			0			0.00			(373	)		(1.50	)
Tax-exempt interest income		(2,287	)		(7.35	)		(2,292	)		(7.14	)		(2,208	)		(8.88	)
Nondeductible interest expense		92			0.30			129			0.40			169			0.68
Dividends received deduction		(78	)		(0.25	)		(66	)		(0.21	)		(64	)		(0.26	)
Increase in cash surrender value of life insurance		(159	)		(0.51	)		(178	)		(0.55	)		(163	)		(0.66	)
Employee stock option compensation		62			0.20			85			0.26			0			0.00
Other, net		(100	)		(0.32	)		60			0.19			(80	)		(0.32	)
Surtax exemption		0			0.00			(253	)		(0.79	)		(180	)		(0.72	)
Effective income tax provision	$	8,426			27.07		$	8,714			27.16		$	5,800			23.34

The deferred tax asset from realized losses on securities resulted primarily from OTTI charges for financial statement purposes that are not deductible for income tax reporting purposes through December 31, 2012. Of the total deferred tax asset from realized losses on securities, $346,000 is from securities that, if the Corporation were to sell them, would be classified as capital losses for income tax reporting purposes.

The Corporation has no unrecognized tax benefits, nor pending examination issues related to tax positions taken in preparation of its income tax returns. With limited exceptions, the Corporation is no longer subject to examination by the Internal Revenue Service for years prior to 2009.

15. RELATED PARTY TRANSACTIONS

Loans to executive officers, directors of the Corporation and its subsidiaries and any associates of the foregoing persons are as follows:

(In Thousands)	Beginning		New					Other		Ending
	Balance		Loans		Repayments			Changes		Balance
11 directors, 7 executive officers 2012	$	12,997	$	2,517	($	1,424	)	$	35	$	14,125
12 directors, 6 executive officers 2011	$	11,345	$	2,756	($	1,107	)	$	3	$	12,997
12 directors, 6 executive officers 2010	$	9,914	$	1,939	($	1,700	)	$	1,192	$	11,345

The above transactions were made in the ordinary course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and do not involve more than normal risks of collectability. Other changes represent net increases in existing lines of credit and transfers in and out of the related party category.

Deposits from related parties held by the Corporation amounted to $4,505,000 at December 31, 2012 and $4,098,000 at December 31, 2011.

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16. OFF-BALANCE SHEET RISK

The Corporation is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit, interest rate or liquidity risk in excess of the amount recognized in the consolidated balance sheet. The contract amounts of these instruments express the extent of involvement the Corporation has in particular classes of financial instruments.

The Corporation’s exposure to credit loss from nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual amount of these instruments. The Corporation uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.

Financial instruments whose contract amounts represent credit risk at December 31, 2012 and 2011 are as follows:

(In Thousands)	2012		2011
Commitments to extend credit	$	165,972	$	182,833
Standby letters of credit		22,108		22,849

Commitments to extend credit are legally binding agreements to lend to customers. Commitments generally have fixed expiration dates or other termination clauses and may require payment of fees. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future liquidity requirements. The Corporation evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Corporation, for extensions of credit is based on management’s credit assessment of the counterparty.

Standby letters of credit are conditional commitments issued by the Corporation guaranteeing performance by a customer to a third party. Those guarantees are issued primarily to support public and private borrowing arrangements, including commercial paper, bond financing and similar transactions. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. Some of the standby letters of credit are collateralized by real estate or other assets, and others are unsecured. The extent to which proceeds from liquidation of collateral would be expected to cover the maximum potential amount of future payments related to standby letters of credit is not estimable. The Corporation has recorded no liability associated with standby letters of credit as of December 31, 2012 and 2011.

Standby letters of credit as of December 31, 2012 expire as follows:

	Amount
Year of Expiration		(In Thousands)
2013	$	13,895
2014		2,901
2015		278
2016		2,587
2018 and Thereafter		2,447
Total	$	22,108

17. CONTINGENCIES

In the normal course of business, the Corporation is subject to pending and threatened litigation in which claims for monetary damages are asserted. In management’s opinion, the Corporation’s financial position and results of operations would not be materially affected by the outcome of these legal proceedings.

18. REGULATORY MATTERS

The Corporation (on a consolidated basis) and C&N Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory - and possibly additional discretionary - actions by regulators that, if undertaken, could have a direct material effect on the Corporation’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Corporation and C&N Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Prompt corrective action provisions are not applicable to bank holding companies.

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Quantitative measures established by regulation to ensure capital adequacy require the Corporation and C&N Bank to maintain minimum amounts and ratios (set forth in the following table) of total and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined) and of Tier I capital (as defined) to average assets (as defined). Management believes, as of December 31, 2012 and 2011, that the Corporation and C&N Bank meet all capital adequacy requirements to which they are subject.

To be categorized as well capitalized, an institution must maintain minimum total risk based, Tier I risk based and Tier I leverage ratios as set forth in the following table. The Corporation’s and C&N Bank’s actual capital amounts and ratios are also presented in the following table:

										Minimum To Be Well
(Dollars in Thousands)						Minimum				Capitalized Under
						Capital				Prompt Corrective
	Actual					Requirement				Action Provisions
	Amount		Ratio			Amount		Ratio		Amount		Ratio
December 31, 2012:
Total capital to risk-weighted assets:
Consolidated	$	165,972		24.01	%	$	55,299		³8%		n/a		n/a
C&N Bank		152,462		22.31	%		54,665		³8%	$	68,331		³10%
Tier 1 capital to risk-weighted assets:
Consolidated		158,008		22.86	%		27,650		³4%		n/a		n/a
C&N Bank		145,596		21.31	%		27,332		³4%		40,998		³6%
Tier 1 capital to average assets:
Consolidated		158,008		12.53	%		50,459		³4%		n/a		n/a
C&N Bank		145,596		11.64	%		50,053		³4%		62,567		³5%
December 31, 2011:
Total capital to risk-weighted assets:
Consolidated	$	149,898		21.17	%	$	56,636		³8%		n/a		n/a
C&N Bank		137,717		19.66	%		56,046		³8%	$	70,058		³10%
Tier 1 capital to risk-weighted assets:
Consolidated		141,255		19.95	%		28,318		³4%		n/a		n/a
C&N Bank		129,978		18.55	%		28,023		³4%		42,035		³6%
Tier 1 capital to average assets:
Consolidated		141,255		10.93	%		51,712		³4%		n/a		n/a
C&N Bank		129,978		10.14	%		51,285		³4%		64,107		³5%

Banking regulators limit the amount of dividends that may be paid by the Citizens & Northern Bank to the Corporation. Retained earnings against which dividends may be paid without prior approval of the banking regulators amounted to approximately $83,318,000 at December 31, 2012, subject to the minimum capital ratio requirements noted above.

Restrictions imposed by federal law prohibit the Corporation from borrowing from C&N Bank unless the loans are secured in specific amounts. Such secured loans to the Corporation are generally limited to 10% of C&N Bank’s tangible stockholder’s equity (excluding accumulated other comprehensive income) or $14,705,000 at December 31, 2012.

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19. PARENT COMPANY ONLY

The following is condensed financial information for Citizens & Northern Corporation:

CONDENSED BALANCE SHEET	December 31,
(In Thousands)	2012		2011
ASSETS
Cash	$	1,895	$	1,361
Investment in subsidiaries:
Citizens & Northern Bank		168,542		154,473
Citizens & Northern Investment Corporation		9,081		8,289
Bucktail Life Insurance Company		3,267		3,139
Other assets		7		123
TOTAL ASSETS	$	182,792	$	167,385
LIABILITIES AND STOCKHOLDERS' EQUITY
Other liabilities	$	6	$	0
Stockholders' equity		182,786		167,385
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	182,792	$	167,385

CONDENSED INCOME STATEMENT
(In Thousands)	2012			2011			2010
Dividends from Citizens & Northern Bank	$	9,245		$	7,856		$	31,170
Dividends from non-bank subsidiaries		0			0			3
Other income		0			0			10
Expenses		(105	)		(94	)		(188	)
Income before equity in undistributed income
of subsidiaries		9,140			7,762			30,995
Equity in undistributed income of subsidiaries		13,565			15,606			(11,940	)
NET INCOME	$	22,705		$	23,368		$	19,055

CONDENSED STATEMENT OF CASH FLOWS
(In Thousands)	2012			2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	22,705		$	23,368		$	19,055
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in undistributed net income of subsidiaries		(13,565	)		(15,606	)		11,940
Decrease (increase) in other assets		116			11			(55	)
Increase (decrease) in other liabilities		6			(62	)		(6	)
Net Cash Provided by Operating Activities		9,262			7,711			30,934
CASH FLOWS FROM INVESTING ACTIVITIES,
Proceeds from merger with Canisteo Valley Corporation		0			0			47
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of treasury stock		229			71			0
Tax benefit from compensation plans, net		104			67			40
Purchase of treasury stock		0			(1,022	)		0
Payment to repurchase preferred stock and warrant		0			0			(26,840	)
Dividends paid		(9,061	)		(6,224	)		(5,249	)
Net Cash Used in Financing Activities		(8,728	)		(7,108	)		(32,049	)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		534			603			(1,068	)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		1,361			758			1,826
CASH AND CASH EQUIVALENTS, END OF YEAR	$	1,895		$	1,361		$	758

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20. SUMMARY OF QUARTERLY CONSOLIDATED FINANCIAL DATA (Unaudited)

The following table presents summarized quarterly financial data for 2012 and 2011:

	2012 Quarter Ended
	Mar. 31,			June 30,		Sept. 30,		Dec. 31,
Interest income	$	14,776		$	14,529	$	13,836	$	13,491
Interest expense		2,502			2,401		2,228		1,900
Net interest income		12,274			12,128		11,608		11,591
(Credit) provision for loan losses		(182	)		367		236		(133	)
Net interest income after (credit) provision for loan losses		12,456			11,761		11,372		11,724
Other income		3,759			4,095		4,103		4,360
Net (losses) gains on available-for-sale securities		(2	)		203		2,430		51
Loss on prepayment of debt		0			143		2,190		0
Other expenses		8,517			8,137		8,207		7,987
Income before income tax provision		7,696			7,779		7,508		8,148
Income tax provision		2,109			2,094		2,014		2,209
Net income available to common shareholders	$	5,587		$	5,685	$	5,494	$	5,939
Net income per share – basic	$	0.46		$	0.46	$	0.45	$	0.48
Net income per share – diluted	$	0.46		$	0.46	$	0.45	$	0.48

	2011 Quarter Ended
	Mar. 31,			June 30,		Sept. 30,			Dec. 31,
Interest income	$	15,298		$	15,443	$	15,317		$	15,198
Interest expense		4,016			3,628		3,108			2,804
Net interest income		11,282			11,815		12,209			12,394
(Credit) provision for loan losses		(192	)		31		(37	)		(87	)
Net interest income after (credit) provision for loan losses		11,474			11,784		12,246			12,481
Other income		2,555			3,673		3,999			3,711
Net gains on available-for-sale securities		1,839			163		26			188
Other expenses		8,263			7,794		8,052			7,948
Income before income tax provision		7,605			7,826		8,219			8,432
Income tax provision		2,064			2,129		2,230			2,291
Net income available to common shareholders	$	5,541		$	5,697	$	5,989		$	6,141
Net income per share – basic	$	0.46		$	0.47	$	0.49		$	0.51
Net income per share – diluted	$	0.45		$	0.47	$	0.49		$	0.51

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21. PREFERRED STOCK AND WARRANT UNDER THE TARP CAPITAL PURCHASE PROGRAM

On January 16, 2009, the Corporation issued 26,440 shares of Series A Preferred Stock (“Preferred Stock”) and a Warrant to purchase up to 194,794 shares of common stock at an exercise price of $20.36 per share. The Corporation sold the Preferred Stock and Warrant to the United States Department of the Treasury (“Treasury”) under the TARP Capital Purchase Program (the “Program”) for an aggregate price of $26,440,000. The Preferred Stock paid a cumulative dividend rate of 5% per annum. On August 4, 2010, the Corporation redeemed all of the Preferred Stock. After repurchasing the Preferred Stock, the Corporation negotiated with the Treasury for repurchase of the Warrant on September 1, 2010 for a total cash cost of $400,000, which was recorded as a reduction in paid-in capital.

In 2009, the Corporation recorded issuance of the Preferred Stock and Warrant as increases in stockholders’ equity. Proceeds from the transaction, net of direct issuance costs of $31,000, were allocated between Preferred Stock and the Warrant based on their respective fair values at the date of issuance. The fair value of the Preferred Stock was estimated based on dividend rates on recent preferred stock and other capital issuances by banking companies, and the fair value of the Warrant was estimated using the Black-Scholes-Merton option model. The amount allocated to the Warrant (recorded as an increase in Paid in Capital) was $821,000, and the amount initially allocated to Preferred Stock was $25,588,000. As a result, the Preferred Stock’s initial carrying value was at a discount to the liquidation value or stated value of $26,440,000. In accordance with the SEC’s Staff Accounting Bulletin No. 68, “Increasing Rate Preferred Stock,” the discount is considered an unstated dividend cost that shall be accreted over the period preceding commencement of the perpetual dividend using the effective interest method, by charging the imputed dividend cost against retained earnings and increasing the carrying amount of the Preferred Stock by a corresponding amount. The discount was therefore being accreted over five years, resulting in an effective dividend rate (including stated dividends and the accretion of the discount on Preferred Stock) of 5.80%. In 2010, total dividends on Preferred Stock were deducted from net income to arrive at net income available to common shareholders in the Consolidated Statements of Operations. Dividends on Preferred Stock included quarterly dividends paid, plus dividends accrued based on the stated value and the accretion of the discount on Preferred Stock. The accretion of the discount on Preferred Stock was $691,000 in 2010, including accelerated discount of $607,000 related to the redemption.

22. IMPAIRMENT OF LIMITED PARTNERSHIP INVESTMENT

In the first quarter 2011, the Corporation reported an impairment loss of $948,000 related to an investment in a real estate limited partnership. This investment had been included in Other Assets in the consolidated balance sheet at December 31, 2010. Based on updated financial information, management prepared an estimated valuation based on cash flow analysis. That analysis showed the estimated cash flows to be derived from the limited partnership’s activities would not be sufficient to provide a return on the Corporation’s limited partnership investment. Accordingly, management made the decision to completely write-off the limited partnership investment in the first quarter 2011.

In addition to the limited partnership investment, the Corporation has a loan receivable from the limited partnership with a balance of $1,021,000 at December 31, 2012 and $1,036,000 at December 31, 2011. The loan was scheduled to mature with a balloon payment of approximately $1,022,000 plus interest due in December 2012; however, the maturity date was extended to June 2013 to permit additional time for sale of the underlying real estate collateral. Based on management’s estimate of the value of the underlying collateral, the Corporation has no allowance for loan losses associated with the loan to the limited partnership at December 31, 2012.

23. SALE-LEASEBACK OF BANK FACILITY

In 2011, the Corporation sold its banking facility at 130 Court Street, Williamsport, PA, and entered into a leasing arrangement to continue to utilize a portion of the facility. Proceeds from the sale, net of selling costs, amounted to $3,024,000, and the gain on sale of $329,000 is included in Other Operating Income in the Consolidated Statements of Income in the year ended December 31, 2011. The leaseback is for use of approximately 18% of the total building space, for a period of two years with monthly rent of approximately $8,000 per month, plus allocable utilities, property taxes and other building-related expenses identified in the lease. The lease provides the Corporation with an option to renew for an additional two years, for monthly rent of approximately $9,000 per month, plus allocable building-related expenses. The Corporation’s continuing interest in the property is limited to its role as lessee, and the Corporation did not provide financing to the buyer. The Corporation has accounted for the leaseback as an operating lease.

84

Report of Independent Registered Public Accounting Firm

Stockholders and Board of Directors of Citizens & Northern Corporation:

We have audited the accompanying consolidated balance sheets of Citizens & Northern Corporation and subsidiaries as of December 31, 2012 and 2011 and the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2012. Citizens & Northern Corporation and subsidiaries’ management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Citizens & Northern Corporation and subsidiaries as of December 31, 2012 and 2011, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2012 in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Citizens & Northern Corporation and subsidiaries’ internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 21, 2013 expressed an unqualified opinion.

/s/ParenteBeard LLC

Williamsport, Pennsylvania

February 21, 2013

85

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None

ITEM 9A. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

The Corporation’s management, under the supervision of and with the participation of the Corporation’s Chief Executive Officer and Chief Financial Officer, has carried out an evaluation of the design and effectiveness of the Corporation’s disclosure controls and procedures as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Securities Exchange Act of 1934 as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Corporation’s disclosure controls and procedures are effective to ensure that all material information required to be disclosed in reports the Corporation files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms.

There were no significant changes in the Corporation’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or that is reasonably likely to affect, our internal control over financial reporting.

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The Corporation’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as that term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). The Corporation’s system of internal control over financial reporting has been designed to provide reasonable assurance to the Corporation’s management and board of directors regarding the reliability of financial reporting and the preparation and fair presentation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

Any system of internal control over financial reporting, no matter how well designed, has inherent limitations, including the possibility that a control can be circumvented or overridden and misstatements due to error or fraud may occur and not be detected. Also, because of changes in conditions, internal control effectiveness may vary over time. Accordingly, even an effective system of internal control will provide only reasonable assurance with respect to financial statement preparation and presentation.

The Corporation’s management has assessed the effectiveness of the Corporation’s internal control over financial reporting as of December 31, 2012. To make this assessment, we used the criteria for effective internal control over financial reporting described in Internal Control – Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our assessment and based on such criteria, we believe that, as of December 31, 2012, the Corporation’s internal control over financial reporting was effective.

ParenteBeard LLC, the independent registered public accounting firm that audited the Corporation’s consolidated financial statements, has issued an audit report on the Corporation’s internal control over financial reporting as of December 31, 2012. That report appears below.

February 21, 2013	By:	/s/ Charles H. Updegraff, Jr.
Date		President and Chief Executive Officer
February 21, 2013	By:	/s/ Mark A. Hughes
Date		Treasurer and Chief Financial Officer

86

Report Of Independent Registered Public Accounting Firm

Stockholders and Board of Directors of Citizens & Northern Corporation:

We have audited Citizens & Northern Corporation and subsidiaries’ internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Citizens & Northern Corporation and subsidiaries’ management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on Citizens & Northern Corporation and subsidiaries’ internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

87

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Citizens and Northern Corporation and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets and the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows of Citizens & Northern Corporation and subsidiaries, and our report dated February 21, 2013 expressed an unqualified opinion.

/s/ ParenteBeard LLC

Williamsport, Pennsylvania

February 21, 2013

88

ITEM 9B. OTHER INFORMATION

There was no information the Corporation was required to disclose in a report on Form 8-K during the fourth quarter 2012 that was not disclosed.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information concerning Directors and Executive Officers is incorporated herein by reference to disclosure under the captions “Proposal 1 - Election of Directors,” “Executive Officers,” “Information Concerning Security Ownership” and “Meetings and Committees of the Board of Directors” of the Corporation’s proxy statement dated March 7, 2013 for the annual meeting of stockholders to be held on April 16, 2013.

The Corporation’s Board of Directors has adopted a Code of Ethics, available on the Corporation’s web site at www.cnbankpa.com for the Corporation’s employees, officers and directors. (The provisions of the Code of Ethics are also included in the Corporation’s employee handbook.)

ITEM 11. EXECUTIVE COMPENSATION

Information concerning executive compensation is incorporated herein by reference to disclosure under the captions “Compensation Discussion and Analysis” and “Executive Compensation Tables” of the Corporation’s proxy statement dated March 7, 2013 for the annual meeting of stockholders to be held on April 16, 2013.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information concerning security ownership of certain beneficial owners and management is incorporated herein by reference to disclosure under the caption “Beneficial Ownership of Executive Officers and Directors” of the Corporation’s proxy statement dated March 7, 2013 for the annual meeting of stockholders to be held on April 16, 2013.

“Equity Compensation Plan Information” as required by Item 201(d) of Regulation S-K is incorporated by reference herein from Item 5 (Market for Registrant’s Common Equity and Related Stockholder Matters) of this Form 10-K.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information concerning loans and deposits with Directors and Executive Officers is provided in Note 15 to the Consolidated Financial Statements, which is included in Part II, Item 8 of this Annual Report on Form 10-K. Additional information, including information concerning director independence, is incorporated herein by reference to disclosure appearing under the captions “Director Independence” and "Related Person Transaction and Policies" of the Corporation's proxy statement dated March 7, 2013 for the annual meeting of stockholders to be held on April 16, 2013.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information concerning services provided by the Corporation’s independent auditors, ParenteBeard LLC, the audit committee’s pre-approval policies and procedures for such services, and fees paid by the Corporation to that firm, is incorporated herein by reference to disclosure under the caption “Fees of Independent Public Accountants” of the Corporation’s proxy statement dated March 7, 2013 for the annual meeting of stockholders to be held on April 16, 2013.

89

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) (1). The following consolidated financial statements are set forth in Part II, Item 8:

	Page
Report of Independent Registered Public Accounting Firm	85
Financial Statements:
Consolidated Balance Sheets - December 31, 2012 and 2011	39
Consolidated Statements of Income - Years Ended December 31, 2012, 2011, and 2010	40
Consolidated Statements of Comprehensive Income - Years Ended December 31, 2012, 2011, and 2010	41
Consolidated Statements of Changes in Stockholders' Equity - Years Ended December 31, 2012, 2011, and 2010	42
Consolidated Statements of Cash Flows - Years Ended December 31, 2012, 2011, and 2010	43 - 44
Notes to Consolidated Financial Statements	45 - 84

(a)(2) Financial statement schedules are not applicable or included in the financial statements or related notes.

2. Plan of acquisition, reorganization, arrangement,	Not applicable
liquidation or succession
3. (i) Articles of Incorporation	Incorporated by reference to Exhibit 3.1 of
	the Corporation's Form 8-K filed
	September 21, 2009
3. (ii) By-laws	Incorporated by reference to Exhibit 3.2 of the
	Corporation's Form 8-K filed September 21, 2009
4. Instruments defining the rights of Security holders, including
indentures	Not applicable
9. Voting trust agreement	Not applicable
10. Material contracts:
10.1 Form of Stock Option and Restricted Stock agreement dated January 3, 2013 between the Corporation and its independent directors pursuant to the Citizens & Northern Corporation Independent Directors Stock Incentive Plan	Filed herewith
10.2 Form of Stock Option agreement dated January 3, 2013 between the Corporation and certain officers pursuant to the Citizens & Northern Corporation Stock Incentive Plan	Filed herewith
10.3 Form of Restricted Stock agreement dated January 3, 2013 between the Corporation and certain officers pursuant to the Citizens & Northern Corporation Stock Incentive Plan	Filed herewith
10.4 Form of Indemnification Agreements dated May 2004 between the Corporation and the Directors and certain officers	Incorporated by reference to Exhibit 10.1 filed with the Corporation's Form 10-K on March 11, 2005
10.5 Form of Indemnification Agreement dated January 2, 2013 between the Corporation and Shelley L. D'Haene	Filed herewith

90

10.6 Form of Indemnification Agreement dated January 19, 2011 between the Corporation and John M. Reber	Incorporated by reference to Exhibit 10.6 filed with Corporation's Form 10-K on Feb. 28, 2011
10.7 Change in Control Agreement dated January 2, 2013 between the Corporation and Shelley L. D'Haene	Filed herewith
10.8 Change in Control Agreement dated March 1, 2010 between the Corporation and Charles H. Updegraff, Jr.	Incorporated by reference to Exhibit 10.1 filed with Corporation’s Form 8-K on March 1, 2010
10.9 Change in Control Agreement dated April 15, 2008 between the Corporation and George M. Raup	Incorporated by reference to Exhibit 10.9 filed with the Corporation's Form 10-K on March 6, 2009
10.10 Change in Control Agreement dated July 21, 2005 between the Corporation and Harold F. Hoose, III	Incorporated by reference to Exhibit 10.1 filed with the Corporation's Form 10-K on March 3, 2006
10.11 Change in Control Agreement dated December 31, 2003 between the Corporation and Thomas L. Rudy, Jr.	Incorporated by reference to Exhibit 10.2 filed with the Corporation's Form 10-K on March 11, 2005
10.12 Change in Control Agreement dated December 31, 2003 between the Corporation and Mark A. Hughes	Incorporated by reference to Exhibit 10.2 filed with the Corporation's Form 10-K on March 10, 2004
10.13 Change in Control Agreement dated December 31, 2003 between the Corporation and Deborah E. Scott	Incorporated by reference to Exhibit 10.4 filed with the Corporation's Form 10-K on March 10, 2004
10.14 Third Amendment to Citizens & Northern Corporation Stock Incentive Plan	Incorporated by reference to Exhibit A to the Corporation's proxy statement dated March 18, 2008 for the annual meeting of stockholders held on April 15, 2008
10.15 Second Amendment to Citizens & Northern Corporation Stock Incentive Plan	Incorporated by reference to Exhibit 10.5 filed with the Corporation's Form 10-K on March 10, 2004
10.16 First Amendment to Citizens & Northern Corporation Stock Incentive Plan	Incorporated by reference to Exhibit 10.6 filed with the Corporation's Form 10-K on March 10, 2004
10.17 Citizens & Northern Corporation Stock Incentive Plan	Incorporated by reference to Exhibit 10.7 filed with the Corporation's Form 10-K on March 10, 2004
10.18 First Amendment to Citizens & Northern Corporation Independent Directors Stock Incentive Plan	Incorporated by reference to Exhibit B to the Corporation's proxy statement dated March 18, 2008 for the annual meeting of stockholders held on April 15, 2008
10.19 Citizens & Northern Corporation Independent Directors Stock Incentive Plan	Incorporated by reference to Exhibit A to the Corporation's proxy statement dated March 19, 2001 for the annual meeting of stockholders held on April 17, 2001.

91

10.20 Citizens & Northern Corporation Supplemental Executive Retirement Plan (as amended and restated)	Incorporated by reference to Exhibit 10.21 filed with the Corporation's Form 10-K on March 6, 2009
11. Statement re: computation of per share earnings	Information concerning the computation of earnings per share is provided in Note 4 to the Consolidated Financial Statements, which is included in Part II, Item 8 of Form 10-K
12. Statements re: computation of ratios	Not applicable
13. Annual report to security holders, Form 10-Q or quarterly report to security holders	Not applicable
14. Code of ethics	The Code of Ethics is available through the Corporation's website at www.cnbankpa.com. To access the Code of Ethics, click on "Investor Relations," followed by "Corporate Governance" and "Code of Ethics."
16. Letter re: change in certifying accountant	Not applicable
18. Letter re: change in accounting principles	Not applicable
21. Subsidiaries of the registrant	Filed herewith
22. Published report regarding matters submitted to vote of security holders	Not applicable
23. Consents of experts and counsel	Filed herewith
24. Power of attorney	Not applicable
31. Rule 13a-14(a)/15d-14(a) certifications:
31.1 Certification of Chief Executive Officer	Filed herewith
31.2 Certification of Chief Financial Officer	Filed herewith
32. Section 1350 certifications	Filed herewith
33. Report on assessment of compliance with servicing criteria for asset-backed securities	Not applicable
34. Attestation report on assessment of compliance with servicing criteria for asset-backed securities	Not applicable
35. Service compliance statement	Not applicable
99. Additional exhibits:
99.1 Additional information mailed or made available online to shareholders with proxy statement and Form 10-K on March 7, 2013	Filed herewith
100. XBRL-related documents	Not applicable
101. Interactive data file	Furnished herewith*

* These interactive data files shall not be deemed filed for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Act of 1934, as amended, or otherwise subject to liability under those sections.

92

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Citizens & Northern Corporation has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized:

By: /s/ Charles H. Updegraff, Jr

President and Chief Executive Officer

Date: February 21, 2013

By: /s/ Mark A. Hughes

Treasurer and Principal Accounting Officer

Date: February 21, 2013

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

BOARD OF DIRECTORS

/s/	Dennis F. Beardslee	/s/	Edward H. Owlett, III
	Dennis F. Beardslee		Edward H. Owlett, III
	Date: February 21, 2013		Date: February 21, 2013
/s/	Jan E. Fisher	/s/	Leonard Simpson
	Jan E. Fisher		Leonard Simpson
	Date: February 21, 2013		Date: February 21, 2013
/s/	R. Bruce Haner	/s/	James E. Towner
	R. Bruce Haner		James E. Towner
	Date: February 21, 2013		Date: February 21, 2013
/s/	Susan E. Hartley	/s/	Ann M. Tyler
	Susan E. Hartley		Ann M. Tyler
	Date: February 21, 2013		Date: February 21, 2013
/s/	Leo F. Lambert	/s/	Charles H. Updegraff, Jr.
	Leo F. Lambert		Charles H. Updegraff, Jr.
	Date: February 21, 2013		Date: February 21, 2013
/s/	Raymond R. Mattie
	Raymond R. Mattie
	Date: February 21, 2013

93

EX-10.1

EXHIBIT 10.1

CITIZENS & NORTHERN CORPORATION

INDEPENDENT DIRECTORS STOCK INCENTIVE PLAN

STOCK OPTION AGREEMENT

A STOCK OPTION for a total of One Thousand Two Hundred Fifty-One (1,251) shares of common stock, par value $1.00, of Citizens & Northern Corporation, a Pennsylvania business corporation (herein the “Corporation”) is hereby granted as of January 3, 2013 to «Account_Name_» (herein the “Director”), subject in all respects to the terms and provisions of Citizens & Northern Corporation Independent Stock Incentive Plan (herein the “Plan”), dated April 15, 2008, which has been adopted by the Corporation’s shareholders and which is incorporated herein by reference. The option price as determined under paragraph 8 of the Plan is Nineteen and 21/100 ($19.21) Dollars per share. The option is fully vested.

This Option may not be exercised more than ten (10) years from the date of its grant, and may be exercised during such term only in accordance with the terms of the Plan.

RESTRICTED STOCK AGREEMENT

A total of Two Hundred Nine (209) shares of RESTRICTED common STOCK, par value $1.00, of Citizens & Northern Corporation, a Pennsylvania business corporation (herein the “Corporation”) is hereby awarded as of January 3, 2013 to «Account_Name_» (herein the “Director”), subject in all respects to the terms and provisions of Citizens & Northern Corporation Independent Stock Incentive Plan (herein the “Plan”), dated April 15, 2008, which has been adopted by the Corporation’s shareholders and which is incorporated herein by reference.

These shares cannot be sold, exchanged, transferred, pledged or otherwise disposed of, except in accordance with the Plan. These transferability restrictions will lapse as follows: 70 shares on January 3, 2014; 70 shares on January 3, 2015; and 69 shares on January 3, 2016.

Provisions Applicable To Both Stock Option And

Restricted Stock Agreements

All Awards (Options and Restricted Stock) issued under the Plan which have not fully vested (i.e., continue to have restrictions that have not lapsed) shall automatically fully vest (i.e., all restrictions shall lapse) upon a change in control event as follows:

(a) If the Corporation or its stockholders execute an agreement to dispose of all or substantially all of the Corporation’s assets or capital stock by means of sale, merger, consolidation, reorganization, liquidation or otherwise, as a result of which the Corporation’s stockholders as of immediately before such transaction will not own at least fifty percent (50%) of the total combined voting power of all classes of voting capital stock of the surviving entity (be it the Corporation or otherwise) immediately after the consummation of such transaction, thereupon any and all Awards immediately shall become and remain exercisable with respect to the total number of shares of Stock still subject thereto for the remainder of their respective terms until the consummation of such transaction, or if not consummated, until the agreement therefore expires or is terminated, in which case thereafter all Awards shall be treated as if said agreement never had been executed; (b) if there is an actual, attempted or threatened change in the ownership of at least twenty-five percent (25%) of all classes of voting capital stock of the Corporation through the acquisition of, or an offer to acquire such percentage of the Corporation’s voting capital stock by any person or entity, or persons or entities acting in concert or as a group, and such acquisition or offer has not been duly approved by the Board; or (c) if during any period of two (2) consecutive years, the individuals who at the beginning of such period constituted the Board, cease for any reason to constitute at least a majority of the Board, unless the election of each director of the Board, who was not a director of the Board at the beginning of such period, was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period, thereupon any and all Awards immediately shall become and remain exercisable with respect to the total number of shares of Stock still subject thereto for the remainder of their respective terms.

In the case of an event specified in clause (a) of the foregoing sentence, the full lapse of any restrictions on shares of Restricted Stock shall occur immediately prior to the consummation of the described transaction and any Options that vest as a result of execution of the described agreement shall remain fully vested upon consummation thereof; and in the case of an event specified in clause (b) or (c) of the foregoing sentence, the full vesting and lapse shall occur upon occurrence of the described event.

Dated: January 3, 2013

	CITIZENS & NORTHERN CORPORATION
	BY
ATTEST:		Charles H. Updegraff, Jr.
		Chairman, President &
		Chief Executive Officer
Jessica R. Brown
Corporate Secretary

The Director acknowledges receipt of a copy of the Plan, and represents that he or she is familiar with the terms and provisions thereof. The Director hereby accepts this Option and Award subject to all the terms and provisions of the Plan.

Dated:
	«Account_Name_», Director

EX-10.2

EXHIBIT 10.2

INCENTIVE STOCK OPTION AGREEMENT

OPTION AGREEMENT dated as of the 3rd day of January 2013, by and between Citizens & Northern Corporation (the "Corporation") and «name», an employee of the Corporation or of a subsidiary (the "Optionee").

Pursuant to the Citizens & Northern Corporation 1995 Stock Incentive Plan (the "Plan"), as amended, the Compensation Committee of the Board of Directors (the "Committee") has determined that the Optionee is to be granted, on the terms and conditions set forth herein, an option (the "Option") to purchase shares of the Corporation's common stock and hereby grants such Option. It is intended that the Option qualify as an "Incentive Stock Option" within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").

1. Number of Shares and Option Price. The Option is to purchase «Options» shares of the Corporation's common stock (the "Option Shares") at a price (the "Option Price") of $19.21 per share, which is not less than the fair market value of the Option Shares of the date hereof as determined in accordance with the Plan rules.

2. Period of Option and Conditions of Exercise.

a. Period of Option. Unless the option is previously terminated pursuant to this Option Agreement, the term of the Option and of this Option Agreement shall commence on the date hereof (the "Date of Grant") and terminate upon the expiration of ten (10) years from the Date of Grant. Upon the termination of the Option, all rights of the Optionee hereunder shall cease.

b. Conditions of Exercise. The Option shall not be exercisable during the six months following the Date of Grant. Thereafter, subject to the following provisions of this paragraph and section 3 of this Agreement, the Option shall become exercisable as follows: one hundred percent (100%) of the shares optioned hereunder may be exercised, provided, however, that the Option may be exercised only to purchase whole shares, and in no case may a fraction of a share be purchased. The right of the Optionee to purchase shares with respect to which this Option has become exercisable as herein provided may be exercised in whole or in part at any time or from time to time, prior to the tenth anniversary of the Date of Grant.

3. Termination of Employment.

a. Except as provided in this Section 3, the Option may not be exercised after the holder thereof has ceased to be employed by the Corporation or a subsidiary thereof.

b. If the Optionee ceases to be employed by the Corporation or a subsidiary thereof for any reason other than death, disability, or termination of employment by the Corporation or a subsidiary for cause, (as determined by the Committee), the Optionee or his or her legal representative may exercise the Option at any time within three (3) months after such cessation of employment to the extent that the Option was then and remains exercisable.

c. If the Optionee ceases to be employed by the Corporation or a subsidiary thereof by reason of death or disability as defined by in Section 22(e)(3) of the Code, the Optionee or his or her legal representative may exercise the Option at any time within one year after such cessation of employment to the extent that that the Option was then and remains exercisable.

d. Notwithstanding anything to the contrary in this Section 3, the option shall not be exercisable later than ten years from the Date of Grant.

e. For the purposes of this agreement, “cessation of employment” or “ceases to be employed” will mean, in the case of termination of employment other than for cause, death or disability, the last day the Optionee actively performed his or her job for the Corporation or a subsidiary of the Corporation. In the event of the Optionee’s death,“cessation of employment” or “ceases to be employed” will mean the last day the employee actively performed work for the Corporation or a subsidiary of the Corporation. In the event of disability, as defined by in Section 22(e)(3) of the Code, “cessation of employment” or “ceases to be employed” will mean the last business day for which the Corporation’s short-term disability benefit is paid.

4. Non-Transferability of Option. The Option and this Option Agreement shall not be transferable otherwise than by will or by the laws of descent and distribution; and the Option may be exercised, during the lifetime of the Optionee, only by the Optionee or, in the event of the Optionee’s death, by his or her legal representative.

5. Exercise of Option. The Option shall be exercised in the following manner: the Optionee, or the person(s) having the right to exercise the Option upon the death of the Optionee, shall deliver to the Corporation written notice, in substantially the form of the notice attached hereto, specifying the number of Option Shares which he or she elects to purchase, together with either:

i. Cash;

ii. A number of shares of the Corporation's common stock having a fair market value (as of the date of exercise) equal to the price to be paid upon the exercise of the Option; or

iii. Any combination of cash and shares of the Corporation's common stock, the sum of which equals the total price to be paid upon the exercise of the Option, and the stock purchased shall thereupon be promptly delivered; provided, however, that the Corporation may, in its discretion, require that the Optionee pay to the Corporation, at the time of exercise, any such additional amount as the Corporation deems necessary to satisfy its liability to withhold Federal, state, or local income or other taxes incurred by reason of the exercise or the transfer of shares thereupon. The Optionee will not be deemed to be a holder of any shares pursuant to exercise of the Option until the date of the issuance of a stock certificate to him or her for such shares and until the shares are paid for in full.

6. Change of Control. If any of the change in control events described in Section 11 of the Plan occur, all Options shall fully vest as provided in Section 11; any Options that vest as a result of the execution of an agreement described in clause (a) of the second sentence of the third paragraph of Section 11 shall remain fully vested upon consummation of the described transaction and , in the case of an event described in clause (b) or (c) of said sentence, the full vesting shall occur upon occurrence of the described event.

7. Notices. Any notice required or permitted under this Option Agreement shall be deemed given when delivered personally, or when deposited in a United States Post Office, postage prepaid, addressed, as appropriate, to the Optionee either at his address herein above set forth or such other address as he or she may designate in writing to the Corporation.

8. Failure to Enforce Not a Waiver. The failure of the Corporation to enforce at any time any provision of this Option Agreement shall in no way be construed to be a waiver of such provision or of any other provision hereof.

9. Governing Law. This Option Agreement shall be governed by and construed according to the laws of the State of Pennsylvania.

10. Incorporation of Plan. The Plan is hereby incorporated by reference and made a part hereof, and the Option and this Option Agreement are subject to all terms and conditions of the Plan.

11. Amendments. This Option Agreement may be amended or modified at any time by an instrument in writing signed by the parties hereto, provided that no such amendment or modification shall be made which would cause the option to fail to continue to qualify as an "incentive stock option."

IN WITNESS WHEREOF, the parties have executed this Option Agreement on the day and year first above written.

By

Charles H. Updegraff, Jr., Chairman, President & CEO

The undersigned hereby accepts and agrees to all the terms and provisions of the foregoing Option Agreement and to all the terms and provisions of the Citizens & Northern Corporation 1995 Stock Incentive Plan herein incorporated by reference.

Optionee – «name»

Signed in duplicate - one set to Optionee - Return one to Corporation

EX-10.3

EXHIBIT 10.3

CITIZENS & NORTHERN CORPORATION

1995 STOCK INCENTIVE PLAN (As Amended)

RESTRICTED STOCK AGREEMENT

RESTRICTED STOCK AGREEMENT dated as of the 3rd day of January, 2013, by and between Citizens & Northern Corporation (the "Corporation") and «name», an employee of the Corporation or of a subsidiary (the "Recipient").

Pursuant to the Citizens & Northern Corporation 1995 Stock Incentive Plan (the "Plan"), as amended, the Compensation Committee of the Board of Directors (the "Committee") has determined that the Recipient is to be granted, on the terms and conditions set forth herein, «Restricted_Shares» Restricted Shares of the Corporation's common stock and hereby grants such Restricted Shares. It is intended that the Restricted Shares qualify as an "Incentive Stock Option" within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").

1. Number of Shares and Price. Restricted Stock shall consist of shares of Stock that will be acquired by and issued to the Recipient at a designated time approved by the board of directors, for no purchase price, and under and subject to such transfer, forfeiture and other restrictions, conditions or terms as shall be determined by the Committee, including but not limited to prohibitions against transfer and substantial risks of forfeiture within the meaning of Section 83 of the Code,

2. Rights of Recipient. Except as otherwise provided in the Plan or the Restricted Stock Agreement, a Recipient of shares of Restricted Stock shall have all the rights as does a holder of Stock, including without limitation the right to vote such shares and receive dividends with respect thereto; however, during the time period of any restrictions, conditions or terms applicable to such Restricted Stock, the shares thereof and the right to vote the same and receive dividends thereon shall not be sold, assigned, transferred, exchanged, pledged, hypothecated, encumbered or otherwise disposed of except as permitted by the Plan or the Restricted Stock Agreement. Cash dividends shall be paid out and shall not participate in Dividend Reinvestment. Stock dividends resulting in whole shares shall be added to the shares held in the Restricted Account and shall be distributed to the Recipient with subsequent distributions of any Award for which they accrued. Partial shares that result from any stock dividend shall be paid to the Recipient in cash at the time of the payment of the stock dividend. If the Restricted Shares expire prior to the satisfaction of performance standards set forth in section 4 or due to forfeiture as set forth in section 5, all shares accrued by virtue of stock dividends shall be forfeited.

3. Holding of Restricted Shares. Each certificate for shares of Restricted Stock shall be deposited with the Secretary of the Corporation, or the office thereof, and shall bear a legend in substantially the following form and content:

This Certificate and the shares of Stock hereby represented are subject to the provisions of the Corporation’s Stock Incentive Plan and a certain agreement entered into between the owner and the Corporation pursuant to said Plan. The release of the Certificate and the shares of Stock hereby represented from such provision shall occur only as provided by said Plan and Agreement, a copy of which are on file in the office of the Secretary of the Corporation.

Upon the lapse or satisfaction of the restrictions, conditions and terms applicable to such Restricted Stock, a certificate for the shares of Stock free thereof with such legend shall be issued to the Recipient.

4. Release and Lapse of Restricted Shares. One-third of the total shares will be distributed on the anniversary date of this award based on the Recipient’s satisfactory performance of his or her job and the Corporation’s attainment of an earnings-based performance standard. For the first year of this award, the performance standard will be based on achieving 100% or more of the Return on Equity of a defined peer group of bank holding companies, herein defined (adjusting for the difference between the Corporation’s and the peer group’s equity to asset ratios), for the four consecutive calendar quarters ending with the third quarter of each calendar year following the Award Date, until all Restricted Shares awarded herewith are distributed. If all the Restricted Shares awarded by this agreement are not distributed within the ten (10) year period following the date of this Agreement, they shall expire and revert back to the Corporation. No partial shares may be released, thus an amount equal to the next whole share amount will be released subject to the specified performance criteria at each anniversary. The shares released may be in certificate form, or may be directed to be held in a custodial account designated by the Recipient. The peer group consists of banks headquartered in Pennsylvania with total assets of $750 million to $2.0 billion with the addition of Chemung Financial Corporation in Elmira, NY.

The Committee reserves the right to change the composition of the peer group, as well as the method of evaluating the Corporation’s earnings performance as compared to the peer group, based on mergers or acquisitions involving members of the peer group, changes in size of the Corporation or members of the peer group, or other factors deemed appropriate by the Committee.

5. Terms of Forfeiture. If a Recipient’s employment with the Corporation, or a subsidiary, ceases for any reason prior to the lapse of the restrictions, conditions or terms applicable to his or her Restricted Stock, all of the Recipient’s Restricted Stock still subject to unexpired restrictions, conditions or terms shall be forfeited absolutely by the Recipient to the Corporation without payment or delivery of any consideration or other thing of value by the Corporation or its affiliates, and thereupon and thereafter neither the Recipient nor his or her heirs, personal or legal representatives, successors, assigns, beneficiaries, or any claimants under the Recipient’s Last Will or laws of descent and distribution, shall have any rights or claims to or interests in the forfeited Restricted Stock or any certificates representing shares thereof, or claims against the Corporation or its affiliates with respect thereto. Except in the case of disability, employment ceases with the Corporation, or its Subsidiary, on the day the Recipient’s employment is terminated with or without cause, or on their date of death. In the event of disability, the Recipient’s employment is considered terminated on the date for which the Recipient receives the final payment of the Corporation’s, or Subsidiary’s, short-term disability.

6. Non-Transferability of Restricted Stock. The Restricted Stock and this Restricted Stock Agreement shall not be transferable.

7. Change in Control. If any of the change in control events described in Section 11 of the Plan occur, all shares of Restricted Stock shall fully vest and all restrictions on the shares of Restricted Stock shall lapse as follows: In the case of an event specified in clause (a) of the second sentence of the third paragraph of Section 11, the lapse of all restrictions on the shares of Restricted Stock shall occur immediately prior to the consummation of the described transaction and, in the case of an event specified in clause (b) or (c) of said sentence, the full vesting and lapse of restrictions shall occur upon occurrence of the described event.

8. Notices. Any notice required or permitted under this Restricted Stock Agreement shall be deemed given when delivered personally, or when deposited in a United States Post Office, postage prepaid, addressed, as appropriate, to the Recipient either at his or her address herein above set forth or such other address as he or she may designate in writing to the Corporation.

9. Failure to Enforce Not a Waiver. The failure of the Corporation to enforce at any time any provision of this Restricted Stock Agreement shall in no way be construed to be a waiver of such provision or of any other provision hereof.

10. Governing Law. This Restricted Stock Agreement shall be governed by and construed according to the laws of the State of Pennsylvania.

11. Incorporation of Plan. The Plan is hereby incorporated by reference and made a part hereof, and the Restricted Stock and this Restricted Stock Agreement are subject to all terms and conditions of the Plan.

12. Amendments. This Option Agreement may be amended or modified at any time by an instrument in writing signed by the parties hereto, provided that no such amendment or modification shall be made which would cause the Restricted Stock to fail to continue to qualify as "incentive restricted stock."

IN WITNESS WHEREOF, the parties have executed this Option Agreement on the day and year first above written.

By

Charles H. Updegraff, Jr., Chairman, President & CEO

The undersigned hereby accepts and agrees to all the terms and provisions of the foregoing Restricted Stock Agreement and to all the terms and provisions of the Citizens & Northern Corporation 1995 Stock Incentive Plan herein incorporated by reference.

Recipient – «name»

EX-10.5

EXHIBIT 10.5

INDEMNIFICATION AGREEMENT

This Agreement made this 2^nd day of January, 2013, between Citizens & Northern Corporation, a bank holding company registered under the Bank Holding Company Act of 1956, as amended, and a Pennsylvania corporation (the “Company”) and Shelley L. D’Haene, a director, officer or representative (as hereinafter defined) of the Company (the “Indemnitee”);

WHEREAS, the Company and the Indemnitee are each aware of the exposure to litigation of officers, directors and representatives of the Company as such persons exercise their duties to the Company;

WHEREAS, the Company and the Indemnitee are also aware of conditions in the insurance industry that have affected and may continue to affect the Company’s ability to obtain appropriate directors’ and officers’ liability insurance on an economically acceptable basis;

WHEREAS, the Company desires to continue to benefit from the services of highly qualified, experienced and competent persons such as the Indemnitee;

WHEREAS, the Indemnitee desires to serve or to continue to serve the Company as a director, officer or as a director, officer or trustee of another corporation, joint venture, trust or other enterprise in which the Company has a direct or indirect ownership interest, for so long as the Company continues to provide on an acceptable basis adequate and reliable indemnification against certain liabilities and expenses which may be incurred by the Indemnitee.

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, the parties hereto agree as follows:

1.          Indemnification. Subject to the terms of this Agreement, the Company shall indemnify the Indemnitee with respect to his activities as a director or officer of the Company and/or as a person who is serving or has served on behalf of the Company (“representative”) as a director, officer, or trustee of another corporation, joint venture, trust or other enterprise, domestic or foreign, in which the Company has a direct or indirect ownership interest (an “affiliated entity”) against expenses (including, without limitation, attorneys’ fees, judgments, fines, and amounts paid in settlement) actually and reasonably incurred by him (“Expenses”) in connection with any claim against Indemnitee which is the subject of any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, investigative or otherwise and whether formal or informal (a “Proceeding”), to which Indemnitee was, is, or is threatened to be made a party by reason of facts which include Indemnitee’s being or having been such a director, officer or representative, to the extent of the highest and most advantageous to the Indemnitee, as determined by the Indemnitee, of one or any combination of the following:

(a)	The benefits provided by the Company’s Articles of Incorporation in effect on the date hereof;
(b)	The benefits provided by the Articles of Incorporation or By-Laws or their equivalent of the Company in effect at the time Expenses are incurred by Indemnitee;
(c)	The benefits allowable under Pennsylvania law in effect at the date hereof;
(d)	The benefits allowable under the law of the jurisdiction under which the Company exists at the time Expenses are incurred by the Indemnitee;
(e)	The benefits available under liability insurance obtained by the Company;
(f)	The benefits available under the $5,000,000 D&O Selectplus Insurance Policy obtained by the Company from The Fidelity and Deposit Companies in effect for 2004; and

(g) Such other benefits as are or may be otherwise available to Indemnitee.

Combination of two or more of the benefits provided by (a) through (g) shall be available to the extent that the Applicable Document, as hereafter defined, does not require that the benefits provided therein be exclusive of other benefits. The document or law providing for the benefits listed in items (a) through (g) above is called the “Applicable Document” in this Agreement. Company hereby undertakes to use its best efforts to assist Indemnitee, in all proper legal ways, to obtain the benefits selected by Indemnitee under items (a) through (g) above.

For purposes of this Agreement, references to “other enterprises” shall include employee benefit plans for employees of the Company or of any affiliated entity without regard to ownership of such plans; references to “fines” shall include any excise taxes assessed on the Indemnitee with respect to any employee benefit plan; references to “serving on behalf of the company” shall include any services as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, the Indemnitee with respect to an employee benefits plan, its participants or beneficiaries; references to the singular shall include the plural and vice versa; and if the Indemnitee acted in good faith and in a manner he or she reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan Indemnitee shall be deemed to have acted in a manner consistent with the standards required for indemnification by the Company under the Applicable Documents.

2.          Insurance. The Company shall maintain directors’ and officers’ liability insurance for so long as Indemnitee’s services are covered hereunder, provided and only to the extent that such insurance is available in amounts and on terms and conditions determined by the Company to be acceptable. However, the Company agrees that the provisions hereof shall remain in effect regardless of whether liability or other insurance coverage is at any time obtained or retained by the Company; except that any payments in fact made to Indemnitee under an insurance policy obtained or retained by the Company shall reduce the obligation of the Company to make payments hereunder by the amount of the payments made under any such insurance policy.

3.          Payment of Expenses. At Indemnitee’s request, the Company shall pay the Expenses as and when incurred by Indemnitee, after receipt of written notice pursuant to Section 6 hereof and an undertaking in the form of Exhibit I attached hereto by or on behalf of Indemnitee (i) to repay such amounts so paid on Indemnitee’s behalf if it shall ultimately be determined under the Applicable Document or applicable law that Indemnitee is required to repay such amounts and (ii) to reasonably cooperate with the Company concerning such Proceeding. That portion of Expenses which represents attorneys’ fees and other costs incurred in defending any Proceeding shall be paid by the Company within thirty (30) days of its receipt of such request, together with reasonable documentation (consistent, in the case of attorneys’ fees, with Company practice in payment of legal fees for outside counsel generally) evidencing the amount and nature of such Expenses, subject to its also having received such notice and undertaking.

It is understood and agreed before the Company pays the Expenses incurred in a Proceeding brought by a banking agency in which a final order has not been entered, the following conditions must be met:

(a)	The Board of Directors, in good faith, shall determine in writing after due investigation and consideration that the Indemnitee acted in a manner believed to be in the best interests of the Company;
(b)	The Board of Directors, in good faith, shall determine after due investigation and consideration that the payment of such Expenses will not materially or adversely affect the Company’s safety and soundness.
(c)	The Indemnitee shall agree in writing to reimburse the Company for Expenses which subsequently are deemed “prohibited indemnification payments”, as defined in 12 C.F.R. § 359.1(1).

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The Indemnitee shall not participate in any way in the Board’s discussion and approval of Expenses, provided however, that the Indemnitee may present his or her request to the Board and respond to any inquiries from the Board concerning his or her involvement in the circumstances giving rise to the banking agency Proceeding or civil action.

4.          Escrow. The Company may dedicate such amounts as the Board of Directors of the Company may from time to time authorize, as collateral security for the funding of its obligations hereunder (and under similar agreements with other directors, officers and representatives) by depositing assets or bank letters of credit in escrow or reserving lines of credit that may be drawn down by an escrow agent in the dedicated amount (the “Escrow Reserve”). The Company shall promptly provide Indemnitee with a true and complete copy of the agreement relating to the establishment and operation of the Escrow Reserve, together with such additional documentation or information with respect to the escrow as Indemnitee may from time to time reasonably request. The Company shall promptly deliver an executed copy of the Agreement to the escrow agent for the Escrow Reserve to evidence to that agent that Indemnitee is a beneficiary of that Escrow Reserve and shall deliver to Indemnitee the escrow agent’s signed receipt evidencing that delivery.

5.          Additional Rights. The indemnification provided in this Agreement shall not be exclusive of any other indemnification or right to which Indemnitee may be entitled and shall continue after Indemnitee has ceased to occupy a position as an officer, director or representative as described in Paragraph 1 above with respect to Proceedings relating to or arising out of Indemnitee’s acts or omissions during his or her service in such position.

6.          Notice to Company. Indemnitee shall provide to the Company prompt written notice of any Proceeding brought, threatened, asserted or commenced against Indemnitee with respect to which Indemnitee may assert a right to indemnification hereunder; provided that failure to provide such notice shall not in any way limit Indemnitee’s rights under this Agreement.

7.          Cooperation in Defense and Settlement. Indemnitee shall not make any admission or effect any settlement of any Proceeding without the Company’s written consent unless Indemnitee shall have determined to undertake his or her own defense in such matter and has waived the benefits of this Agreement. The Company shall not settle any Proceeding to which Indemnitee is a party in any manner which would impose any Expense on Indemnitee without his written consent. Neither Indemnitee nor the Company will unreasonably withhold consent to any proposed settlement. Indemnitee and the Company shall cooperate to the extent reasonably possible with each other and with the Company’s insurers, in attempts to defend and/or settle such Proceeding.

8.          Assumption of Defense. Except as otherwise provided below, to the extent that it may wish, the Company (jointly with any other indemnifying party similarly notified), will be entitled to assume Indemnitee’s defense in any Proceeding, with counsel mutually satisfactory to Indemnitee and the Company. Indemnitee shall have the right to employ counsel in such Proceeding, but the fees and expenses of such counsel incurred after notice from the Company of its assumption of the defense thereof shall be at Indemnitee’s expense unless:

(a)	the employment of counsel by Indemnitee has been authorized by the Company;
(b)	counsel employed by the Company initially is unacceptable or later becomes unacceptable to Indemnitee and such unacceptability is reasonable under then existing circumstances;
(c)	Indemnitee shall have reasonably concluded that there may be a conflict of interest between Indemnitee and the Company in the conduct of the defense of such Proceeding; or
(d)	the Company shall not have employed counsel promptly to assume the defense of such Proceeding,

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in each of which case fees and expenses of counsel shall be at the expense of the Company and subject to payment pursuant to this Agreement. The Company shall not be entitled to assume the defense of Indemnitee in any Proceeding brought on behalf of the Company or as to which Indemnitee shall have drawn either of the conclusions provided for in clauses (b) or (c) above.

9.          Enforcement. In the event that any dispute or controversy shall arise under this Agreement between Indemnitee and the Company with respect to whether the Indemnitee is entitled to indemnification in connection with any Proceeding or with respect to the amount of Expenses incurred, then with respect to each such dispute or controversy Indemnitee may seek to enforce the Agreement through legal action or, at Indemnitee’s sole option and written request, through arbitration. If arbitration is requested, such dispute or controversy shall be submitted by the parties to binding arbitration in the Borough of Wellsboro in the Commonwealth of Pennsylvania, before a single arbitrator agreeable to both parties. If the parties cannot agree on a designated arbitrator within fifteen (15) days after arbitration is requested in writing by Indemnitee, the arbitration shall proceed in the Borough of Wellsboro in the Commonwealth of Pennsylvania, before an arbitrator appointed by the American Arbitration Association. In either case, the arbitration proceeding shall commence promptly under the rules then in effect of that Association and the arbitrator agreed to by the parties or appointed by that Association shall be an attorney other than an attorney who has, or is associated with a firm having associated with it an attorney which has been retained by or performed services for the Company or Indemnitee at any time during the five years preceding the commencement of arbitration. The award shall be rendered in such form that judgment may be entered thereon in any court having jurisdiction thereof. The prevailing party shall be entitled to prompt reimbursement of any costs and expenses (including, without limitation, reasonable attorneys’ fees) incurred in connection with such legal action or arbitration; provided that Indemnitee shall not be obligated to reimburse the Company unless the arbitrator or court which resolves the dispute determines that Indemnitee acted in bad faith in bringing such action or arbitration.

10.         Exclusions. Notwithstanding the scope of indemnification which may be available to Indemnitee from time to time under any Applicable Document, no indemnification, reimbursement or payment shall be required of the Company hereunder with respect to:

(a)	Any claim or any part thereof as to which Indemnitee shall have been determined by a court of competent jurisdiction from which no appeal is or can be taken, by clear and convincing evidence, to have acted or failed to act with deliberate intent to cause injury to the Company or with reckless disregard for the best interest of the Company;
(b)	Any claim or any part thereof arising under Section 16(b) of the Securities Exchange Act of 1934 pursuant to which Indemnitee shall be obligated to pay any penalty, fine, settlement or judgment;
(c)	Any civil money penalty or judgment resulting from any Proceeding instituted by any federal banking agency, or any other liability or legal expense with regard to any administrative proceeding or civil action by any banking agency that results in a final order or settlement pursuant to which Indemnitee:

(1)	is assessed a civil money penalty;
(2)	is removed from office or prohibited from participating in the conduct of the affairs of the Company or its affiliates;
(3)	is required to cease and desist from taking any affirmative action described under the Federal Deposit Insurance Act or other applicable banking laws with respect to the Company and its affiliates;

(d) Any obligation of Indemnitee based upon or attributable to the Indemnitee gaining in fact any personal gain, profit or advantage to which he was not entitled; or

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(e) Any Proceeding initiated by Indemnitee without the consent or authorization of the Board of Directors of the Company, provided that this exclusion shall not apply with respect to any claims brought by Indemnitee (i) to enforce his rights under this Agreement or (ii) in any Proceeding initiated by another person or entity whether or not such claims were brought by Indemnitee against a person or entity who was otherwise a party to such Proceeding.

Nothing in this Section 10 shall eliminate or diminish Company’s obligations to advance that portion of Indemnitee’s Expenses which represent attorneys’ fees and other costs incurred in defending any Proceeding pursuant to Section 3 of this Agreement; subject however to the undertaking by Indemnitee in the form attached hereto as Exhibit 1 and incorporated by reference herein.

11.         Extraordinary Transactions. The Company covenants and agrees that, in the event of any merger, consolidation or reorganization in which the Company is not the surviving entity, any sale of all or substantially all of the assets of the Company or any liquidation of the Company (each such event is hereinafter referred to as an “extraordinary transaction”), the Company shall:

(a)	have the obligations of the Company under this Agreement expressly assumed by the survivor, purchaser or successor, as the case may be, in such extraordinary transaction; or
(b)	otherwise adequately provide for the satisfaction of the Company’s obligations under this Agreement in a manner acceptable to Indemnitee.

12.         No Personal Liability. Indemnitee agrees that neither the directors nor any officer, employee, representative or agent of the Company shall be personally liable for the satisfaction of the Company’s obligations under this Agreement, and Indemnitee shall look solely to the assets of the Company and the escrow the Company may establish, as referred to in Section 4 hereof, for satisfaction of any claims hereunder.

13.         Severability. If any provision, phrase, or other portion of this Agreement should be determined by any court of competent jurisdiction to be invalid, illegal or unenforceable, in whole or in part, and such determination should become final, such provision, phrase or other portion shall be deemed to be severed or limited, but only to the extent required to render the remaining provisions and portions of the Agreement enforceable, and the Agreement as thus amended shall be enforced to give effect to the intention of the parties insofar as that is possible.

14.         Subrogation. In the event of any payment under this Agreement, the Company shall be subrogated to the extent thereof to all rights to indemnification or reimbursement against any insurer or other entity or person vested in the Indemnitee, who shall execute all instruments and take all other actions as shall be reasonably necessary for the Company to enforce such rights.

15.         Governing Law. The parties hereto agree that this Agreement shall be construed and enforced in accordance with and governed by the laws of the Commonwealth of Pennsylvania.

16.         Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be considered to have been duly given if delivered by hand and receipted for by the party to whom the notice, request, demand or other communication shall have been directed, or mailed by certified mail, return receipt requested, with postage prepaid:

(a)	If to the Company, to:
	Citizens & Northern Corporation
	90-92 Main Street
	P.O. Box 58
	Wellsboro, PA 16901

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(b)	If to Indemnitee, to:
	Shelley L. D’Haene
	471 Bailey Hill Road
	Lawrenceville, PA 16929

or to such other or further address as shall be designated from time to time by the Indemnitee or the Company to the other.

17.         Termination. This Agreement may be terminated by either party upon not less than sixty (60) days prior written notice delivered to the other party, but such termination shall not in any way diminish the obligations of Company hereunder with respect to the Indemnitee’s activities prior to the effective date of termination.

18.         Amendments and Binding Effect. This Agreement and the Undertaking and the rights and duties of Indemnitee and the Company hereunder and thereunder may not be amended, modified or terminated except by written instrument signed and delivered by the parties hereto. This Agreement is and shall be binding upon and shall inure to the benefits of the parties thereto and their respective heirs, executors, administrator, successors and assigns.

In Witness Whereof, the undersigned have executed this Agreement in triplicate as of the date first above written.

INDEMNITEE		CITIZENS & NORTHERN CORPORATION
By:		By:	Charles H. Updegraff, Jr.
	Shelley L. D’Haene
Title:	EVP – Director of Alternate Delivery Channels	Title:	Chairman, President, and CEO

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EXHIBIT 1

FORM OF UNDERTAKING

THIS UNDERTAKING has been entered into by ___________________ (hereinafter “Indemnitee”) pursuant to an Indemnification Agreement dated ___________ ___, 20__ (the “Indemnification Agreement”), by and between Citizens & Northern Corporation, a bank holding company registered under the Bank Holding Company Act of 1956, as amended, and a Pennsylvania corporation (the “Company”), and Indemnitee.

WITNESSETH:

WHEREAS, pursuant to the Indemnification Agreement, Company agreed to pay Expenses (within the meaning of the Indemnification Agreement) as and when incurred by Indemnitee in connection with any claim against Indemnitee which is the subject of any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative or investigative, to which Indemnitee was, is, or is threatened to be made a party by reason of facts which include Indemnitee’s being or having been a director, officer or representative (within the meaning of the Indemnification Agreement) of the Company;

WHEREAS, such a claim has arisen against Indemnitee and Indemnitee has notified Company thereof in accordance with the terms of Section 6 of the Indemnification Agreement (hereinafter the “Proceeding”);

NOW, THEREFORE, Indemnitee hereby agrees that in consideration of Company’s advance payment of Indemnitee’s Expenses incurred prior to a final disposition of the Proceeding, Indemnitee hereby undertakes to reimburse Company for any and all Expenses paid by Company on behalf of Indemnitee prior to a final disposition of the Proceeding in the event that Indemnitee is determined under the Applicable Document (within the meaning of the Indemnification Agreement) or applicable law to be required to repay such amounts to the Company, provided that if Indemnitee is entitled under the Applicable Document or applicable law to indemnification for some or a portion of such Expenses, Indemnitee’s obligation to reimburse Company shall only be for those Expenses for which Indemnitee is determined to be required to so repay such amounts to the Company pursuant to the Indemnification Agreement or applicable law.

If the Indemnitee is involved in an administrative proceeding or action instituted by an appropriate banking agency and requests the Company to pay the Expenses incurred before a final order is entered, the Indemnitee shall reimburse the Company for all Expenses paid by the Company if a final order is entered (i) assessing civil money penalties; (ii) removing Indemnitee from office or prohibiting Indemnitee from participating in the conduct of the affairs of the Company or its affiliates; or (iii) requiring Indemnitee to cease and desist from taking any affirmative action described under the Federal Deposit Insurance Act or other applicable banking laws with respect to the Company and its affiliates. The Indemnitee hereby agrees to reimburse the Company for Expenses which subsequently are deemed “prohibited indemnification payments”, as defined in 12 C.F.R. § 359.1(1).

Further, the Indemnitee agrees to reasonably cooperate with the Company concerning such Proceeding.

In Witness Whereof, the undersigned has set his hand this _____ day of ______________, 20__.

INDEMNITEE

The Form Provided for Informational Purposes Only

(In the event this form is needed, a blank to be signed and returned will be provided upon request.)

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EX-10.7

EXHIBIT 10.7

CHANGE IN CONTROL AGREEMENT

THIS CHANGE IN CONTROL AGREEMENT (“Agreement”) is entered into as of the 1^st day of January, 2013, by and among CITIZENS & NORTHERN CORPORATION, a Pennsylvania corporation (the “Corporation”), CITIZENS & NORTHERN BANK, a Pennsylvania bank (the “Bank”), and SHELLEY L. D’HAENE, an employee of the Corporation and/or the Bank and/or of a subsidiary of either (the “Employee”). The Corporation and the Bank are collectively referred to herein as the “Employer.”

WHEREAS, the Employer wishes to assure itself of the continuity of the Employee’s services in the event of any actual change in control of the Corporation; and

WHEREAS, the Employer and the Employee accordingly desire to enter into this Agreement on the terms and conditions set forth below;

NOW, THEREFORE, in consideration of the premises and mutual covenants set forth herein, it is hereby agreed by and between the parties as follows:

1.          Term of Agreement. The “Term” of this Agreement shall commence on the date hereof and shall continue through December 31, 2013; provided, however, that on such date and on each December 31 thereafter, the Term of this Agreement shall automatically be extended for one additional year unless, not later than the preceding January 1 either party shall have given written notice to the other that such party does not wish to extend the Term; and provided, however, that if a Change in Control (as defined in Section 3 below) shall have occurred during the original or any extended Term of this Agreement, the Term of this Agreement shall continue for a period of twenty-four (24) calendar months commencing with the calendar month in which such Change in Control occurs and shall end upon the expiration of such 24 month period.

2.          Employment After a Change in Control. If the Employee is in the employ of the Bank on the date of a Change in Control, the Bank hereby agrees to continue the Employee in its employ for the period commencing on the date of the Change in Control and ending on the last day of the Term of this Agreement (the “Employment Period”). During the Employment Period, the Employee shall hold such position with the Bank and exercise such authority and perform such employment duties as are commensurate with the Employee’s position, authority and duties immediately prior to the Change in Control. The Employee agrees that during the Employment Period the Employee shall devote full business time exclusively to the Employee’s duties and perform such duties faithfully and efficiently; provided, however, that nothing in this Agreement shall prevent either (i) the Employee from voluntarily resigning from employment upon at least sixty (60) days’ written notice to the Bank under circumstances which do not constitute a Termination (as defined below in Section 5), or (ii) the Bank terminating the Employee for “Cause” as defined in Section 5 hereof or for any other reason or no reason.

3.          Change in Control. For purposes of this Agreement, a “Change in Control” means the happening of any of the following: the merger of the Corporation into, or the consolidation of the Corporation with, another entity; the sale or other disposition of all or substantially all of the Corporation’s assets; or the liquidation of the Corporation; provided, however, that a Change in Control shall not be deemed to have occurred by reason of a transaction, or a substantially concurrent or otherwise related series of transactions, upon the completion of which 50 percent or more of the beneficial ownership of the voting power of the Corporation (or of the surviving corporation or corporation directly or indirectly controlling the Corporation) is held by (i) employee benefit plans of the Corporation ; or (ii) an “Affiliate” of the Corporation (as defined in the Securities Exchange Act of 1934, as amended).

4.          Compensation During the Employment Period. During the Employment Period, the Employee shall be compensated as follows:

a.          The Employee shall receive compensation which is not less than compensation paid by the Employer to the Employee immediately prior to the Employment Period; and

b.          The Employee shall be eligible to participate in the Employer employee benefit plans which are not materially less favorable to the Employee than the Employer employee benefit plans in which the Employee participated in immediately prior to the Employment Period.

5.          Termination. For purposes of this Agreement, the term “Termination” shall mean termination of the employment of the Employee during the Employment Period either (i) by the Employer, for any reason other than death, Disability (as defined below), or Cause (as described below), or (ii) by resignation of the Employee upon the occurrence of one or more of the following events:

a.          A significant change in the nature or scope of the Employee’s authorities or duties from those described in Section 2 above, a breach of any of the provisions of Section 4 above, or the breach by the Employer of any other provision of this Agreement;

b.          The relocation of the Employee’s office to a location more than 35 miles from the location of the Employee’s office immediately prior to the Employment Period;

c.          A reasonable determination by the Employee that, as a result of a Change in Control and a change in circumstances thereafter significantly affecting the nature and scope of Employee’s authorities and duties from those described in Section 2 above, the Employee is unable to exercise the authorities, powers, functions or duties associated with the Employee’s position as contemplated by Section 2 above; or

d.          The failure of the Corporation to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement as contemplated in Section 15 below.

The date of the Employee’s Termination under this Section 5 shall be the date specified by the Employee or the Employer, as the case may be, in a written notice to the other party complying with the requirements of Section 11 below. For purposes of this Agreement, the Employee shall be considered to have a “Disability” during the period in which the Employee is unable, by reason of a medically determinable physical or mental impairment, to engage in the material and substantial duties of the Employee’s regular occupation, which condition is expected to be permanent. For purposes of this Agreement, the term “Cause” means, in the reasonable judgment of the Board of Directors of the Employer, (i) the willful and continued failure by the Employee to substantially perform the Employee’s duties with the Employer after written notification by the Employer, or (ii) the willful engaging by the Employee in conduct which is demonstrably injurious to the Employer, monetarily or otherwise, or (iii) the engaging by the Employee in egregious misconduct involving moral turpitude. For purposes of this Agreement, no act, or failure to act, on the Employee’s part shall be deemed “willful” unless done, or omitted to be done, by the Employee not in good faith and without reasonable belief that such action was in the best interest of the Employer.

6.          Severance Payments. In the event of a Termination described in Section 5 above, in lieu of the amounts otherwise payable under Section 4 above, the Employee shall be entitled to receive (i) Employer-paid COBRA premiums (relating to the Employee’s group medical insurance continuation premiums) for a period of eighteen (18) months after the date of Termination, and (ii) a lump sum payment in cash no later than thirty (30) business days after the date of Termination equal to the sum of:

Page 2 of 5

a. the Employee’s unpaid salary, accrued vacation pay and unreimbursed business expenses through and including the date of Termination; and

b. an amount equal to one times the Employee’s base salary in effect immediately prior to the date of Termination.

7.          Excess Parachute Payment Limitation. Notwithstanding any other provision of this Agreement, if the sum of the payments to the Employee described in this Agreement and in any other agreement, program, or plan between the Employee and the Employer (or an affiliate of the Employer) attributable to the same Change in Control constitute “excess parachute payments” (as defined in Section 280G(b)(1) of the Internal Revenue Code of 1986, as amended (“Code”)), the Employer shall reduce the amounts otherwise payable to the Employee under this Agreement so that the Employee’s total “parachute payment” (as defined in Code Section 280G(b)(2)(A)) under this Agreement and any other agreements, programs, or plans shall be One Thousand Dollars ($1,000) less than the amount that would be an “excess parachute payment.”

8.          Withholding. All payments to the Employee under this Agreement will be subject to all applicable withholding of state and federal taxes.

9.          Confidentiality and Non-Solicitation. The Employee agrees that:

a.          Except as may be required by the lawful order of a court or agency of competent jurisdiction, or except to the extent that the Employee has express authorization from the Employer, the Employee agrees to keep secret and confidential all non-public information concerning the Employer (or any entity controlled by the Employer) which was acquired by or disclosed to the Employee during the course of the Employee’s employment with the Employer (or any entity controlled by the Employer), and not to disclose the same, either directly or indirectly, to any other person, firm or business entity or to use it in any way.

b.          While the Employee is employed by the Employer (or any entity controlled by the Employer) and for a period of twelve (12) months after the date of the Employee’s Termination or other termination of employment with the Employer, the Employee covenants and agrees that Employee will not, whether for Employee or for any other person, business, partnership, association, firm, company or corporation, initiate contact with, solicit, divert or take away any of the customers (entities or individuals from which the Employer or any entity controlled by the Employer receives payment for services) of the Employer (or any entity controlled by the Employer) or employees of the Employer (or any entity controlled by the Employer) in existence from time to time during Employee’s employment with the Employer (or any entity controlled by the Employer) and at the time of such initiation, solicitation or diversion.

10.          Mitigation and Set-Off. The Employee shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise. The Employer shall not be entitled to set off against the amounts payable to the Employee under this Agreement any amounts earned by the Employee in other employment after termination of employment with the Employer, or any amounts which might have been earned by the Employee in other employment had he sought such other employment.

11.          Notices. Any notice of Termination of the Employee’s employment by the Employer or the Employee for any reason under Section 5 above shall be upon no less than fifteen (15) days’ and no greater than forty-five (45) days’ advance written notice to the other party. Any notices, requests, demand and other communications provided for by this Agreement shall be sufficient if in writing and if sent by registered or certified mail to the Employee at the last address the Employee has filed in writing with the Employer or, in the case of the Employer, to the attention of the Secretary of the Employer, at its principal executive offices.

Page 3 of 5

12.          Non-Alienation. The Employee shall not have any right to pledge, hypothecate, anticipate or in any way create a lien upon any amounts provided under this Agreement; and no amounts payable hereunder shall be assignable in anticipation of payment either by voluntary or involuntary acts, or by operation of law. Nothing in this Section 12 shall limit the Employee’s rights or powers to dispose of the Employee’s property by Last Will and Testament or limit any rights or powers which the Employee’s executor or administrator would otherwise have. This Agreement shall inure to the benefit of and be enforceable by the Employee’s personal or legal representatives, executors, administrators, successors, heirs, designees, devisees, and legatees. If the Employee should die while any amount is still payable to the Employee hereunder had the Employee continued to live, all such amounts shall be paid in accordance with the terms of this Agreement to the Employee’s designees, devisees, or legatee, or if there are none, to the Employee’s estate.

13.          Governing Law. The provisions of this Agreement shall be construed in accordance with the laws of the State of Pennsylvania, without application of conflict of laws provisions thereunder.

14.          Amendment. This Agreement may be amended or canceled by mutual agreement of the parties in writing without the consent of any other person and, except as specifically provided in Section 15 hereto, so long as the Employee lives, no person, other than the parties hereto, shall have any rights under or interest in this Agreement or the subject matter hereof.

15.          Successors to the Employer. This Agreement shall be binding upon and inure to the benefit of the Employer and any successor of the Employer. The Employer shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Employer to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Employer would be required to perform it if no succession had taken place.

16.          Employment Status. Nothing herein contained shall be deemed to create an employment agreement between the Employer and the Employee, providing for the employment of the Employee by the Employer for any fixed period of time. The Employee’s employment with the Employer is terminable at will by the Employer or the Employee, and each shall have the right to terminate the Employee’s employment with the Employer at any time, with or without Cause, subject to (i) the notice provisions of this Agreement, and (ii) the Employer’s obligation to provide severance payments if and as required by Section 6. Upon a termination of the Employee’s employment prior to the date of a Change in Control, there shall be no rights of the Employee under this Agreement.

17.          Severability. In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect.

18.          Survival. Notwithstanding any other provision of this Agreement to the contrary, Sections 9 and 15 shall survive the termination of this Agreement and the termination of the Employee’s employment with the Employer.

19.          Counterparts. This Agreement may be executed in two or more counterparts, any one of which shall be deemed the original without reference to the others.

Page 4 of 5

IN WITNESS WHEREOF, the Employee and the Employer have executed this Agreement as of the day and year first above written, but on the dates indicated below each.

EMPLOYEE:
Signature:
Printed Name:	SHELLEY L. D’HAENE
Address:	411 Bailey Hill Road
	Lawrenceville, Pa 16929
Date:	December 28, 2012

CORPORATION:
CITIZENS & NORTHERN CORPORATION
By:	Charles H. Updegraff, Jr.
Title:	Chairman, President, and CEO
Date:	January 2, 2013
BANK:
CITIZENS & NORTHERN BANK
By:	Charles H. Updegraff, Jr.
Title:	Chairman, President, and CEO
Date:	January 2, 2013

Page 5 of 5

EX-21

EXHIBIT 21

	Jurisdiction or
Name	State of Incorporation
Citizens & Northern Bank (A)	Pennsylvania
Bucktail Life Insurance Company (A)	Arizona
Citizens & Northern Investment Corporation (A)	Delaware
C&N Financial Services Corporation (B)	Pennsylvania

(A) Wholly-owned subsidiary of Citizens & Northern Corporation

(B) Wholly-owned subsidiary of Citizens & Northern Bank

EX-23

EXHIBIT 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-162279 and 333-160682) and Form S-8 (No. 333-150517 and 333-138398) of Citizens & Northern Corporation and subsidiaries of our reports dated February 21, 2013, relating to the consolidated financial statements and the effectiveness of Citizens & Northern Corporation and subsidiaries’ internal control over financial reporting, which appears in this Form 10-K.

/s/ParenteBeard LLC

Williamsport, Pennsylvania

February 21, 2013

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Charles H. Updegraff, Jr., President and Chief Executive Officer of Citizens & Northern Corporation, certify that:

1. I have reviewed this annual report on Form 10-K of Citizens & Northern Corporation;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

February 21, 2013	By: /s/	Charles H. Updegraff, Jr.
Date		President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Mark A. Hughes, Treasurer and Chief Financial Officer of Citizens & Northern Corporation, certify that:

1. I have reviewed this annual report on Form 10-K of Citizens & Northern Corporation;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to

state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

February 21, 2013	By: /s/ Mark A. Hughes
Date	Treasurer and Chief Financial Officer

EX-32

Exhibit 32

SECTION 1350 CERTIFICATIONS

In connection with the Annual Report of Citizens & Northern Corporation (the “Corporation”) on Form 10-K for the year ended December 31, 2012, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned hereby certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to each of the undersigned’s best knowledge and belief:

(a) the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 as amended; and

(b) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

February 21, 2013	By:	/s/ Charles H. Updegraff, Jr.
Date		President and Chief Executive Officer
February 21, 2013	By:	/s/ Mark A. Hughes
Date		Treasurer and Chief Financial Officer

EX-99.1

XML

Bank Premises and Equipment (Tables)

12 Months Ended

Dec. 31, 2012

Bank Premises and Equipment [Abstract]

Property, Plant and Equipment [Table Text Block]

Bank premises and equipment are summarized as follows:

(In Thousands)	December 31,
	2012	2011
Land	$2,823	$2,823
Buildings and improvements	26,850	26,362
Furniture and equipment	17,015	16,180
Construction in progress	40	173
Total	46,728	45,538
Less: accumulated depreciation	(28,021)	(26,510)
Net	$18,707	$19,028

Property, Plant and Equipment, Income Statement Disclosures [Table Text Block]

Depreciation expense included in occupancy expense and furniture and equipment expense was as follows:

(In Thousands)	2012	2011	2010
Occupancy expense	$1,050	$1,168	$1,238
Furniture and equipment expense	889	909	1,101
Total	$1,939	$2,077	$2,339

XML

Related Party Transactions (Schedule of Related Party Transactions) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Related Party Transaction [Line Items]
Related Party Deposit Liabilities	$ 4,505	$ 4,098
Management [Member]
Related Party Transaction [Line Items]
Loans and Leases Receivable, Related Parties, Beginning Balance	12,997	11,345	9,914
Loans and Leases Receivable, Related Parties, Additions	2,517	2,756	1,939
Loans and Leases Receivable, Related Parties, Collections	(1,424)	(1,107)	(1,700)
Loans and Leases Receivable, Related Parties, Other Changes	35	3	1,192
Loans and Leases Receivable, Related Parties, Ending Balance	$ 14,125	$ 12,997	$ 11,345
Director [Member]
Related Party Transaction [Line Items]
Number of Related Parties with Loans	11	12	12
Executive Officer [Member]
Related Party Transaction [Line Items]
Number of Related Parties with Loans	7	6	6

XML

Per Common Share Data (Tables) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Per Share Data [Abstract]
Net Income (Loss) Available to Common Stockholders, Basic									$ 22,705	$ 23,368	$ 17,581
Weighted Average Number of Shares Outstanding, Basic									12,235,748	12,162,045
Dilutive effect of potential common stock arising from stock options: Exercise of outstanding stock options									200,589	92,398
Dilutive effect of potential common stock arising from stock options: Hypothetical share repurchase									(176,129)	(87,675)
Weighted Average Number of Shares Outstanding, Diluted									12,260,208	12,166,768
Earnings Per Share - basic	$ 0.48	$ 0.45	$ 0.46	$ 0.46	$ 0.51	$ 0.49	$ 0.47	$ 0.46	$ 1.86	$ 1.92	$ 1.45
Earnings per share - diluted	$ 0.48	$ 0.45	$ 0.46	$ 0.46	$ 0.51	$ 0.49	$ 0.47	$ 0.45	$ 1.85	$ 1.92	$ 1.45
Weighted Average Number of Shares Outstanding, Basic and Diluted											12,131,039
Earnings Per Share, Basic and Diluted											$ 1.45

XML

Parent Company Only (Tables)

12 Months Ended

Dec. 31, 2012

Parent Company Only [Abstract]

Schedule of Condensed Balance Sheet [Table Text Block]

CONDENSED BALANCE SHEET	December 31,
(In Thousands)	2012	2011
ASSETS
Cash	$1,895	$1,361
Investment in subsidiaries:
Citizens & Northern Bank	168,542	154,473
Citizens & Northern Investment Corporation	9,081	8,289
Bucktail Life Insurance Company	3,267	3,139
Other assets	7	123
TOTAL ASSETS	$182,792	$167,385
LIABILITIES AND STOCKHOLDERS' EQUITY
Other liabilities	$6	$0
Stockholders' equity	182,786	167,385
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$182,792	$167,385

Schedule of Condensed Income Statement [Table Text Block]

CONDENSED INCOME STATEMENT
(In Thousands)	2012	2011	2010
Dividends from Citizens & Northern Bank	$9,245	$7,856	$31,170
Dividends from non-bank subsidiaries	0	0	3
Other income	0	0	10
Expenses	(105)	(94)	(188)
Income before equity in undistributed income
of subsidiaries	9,140	7,762	30,995
Equity in undistributed income of subsidiaries	13,565	15,606	(11,940)
NET INCOME	$22,705	$23,368	$19,055

Schedule of Condensed Cash Flow Statement [Table Text Block]

CONDENSED STATEMENT OF CASH FLOWS
(In Thousands)	2012	2011	2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$22,705	$23,368	$19,055
Adjustments to reconcile net income to net
cash provided by operating activities:
Equity in undistributed net income of subsidiaries	(13,565)	(15,606)	11,940
Decrease (increase) in other assets	116	11	(55)
Increase (decrease) in other liabilities	6	(62)	(6)
Net Cash Provided by Operating Activities	9,262	7,711	30,934
CASH FLOWS FROM  INVESTING ACTIVITIES,
Proceeds from merger with Canisteo Valley Corporation	0	0	47
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of treasury stock	229	71	0
Tax benefit from compensation plans, net	104	67	40
Purchase of treasury stock	0	(1,022)	0
Payment to repurchase preferred stock and warrant	0	0	(26,840)
Dividends paid	(9,061)	(6,224)	(5,249)
Net Cash Used in Financing Activities	(8,728)	(7,108)	(32,049)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	534	603	(1,068)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR	1,361	758	1,826
CASH AND CASH EQUIVALENTS, END OF YEAR	$1,895	$1,361	$758

XML

Impairment of Limited Partnership Investment (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Impairment of Limited Partnership Investment [Abstract]
Impairment Losses Related to Real Estate Partnerships	$ 948	$ 0	$ 948	$ 0
Loans and Leases Receivable, Other, Net of Deferred Income		1,021	1,036
Loans and Leases Receivable, Other, Balloon Payment Due		$ 1,022

XML

Securities (OTTI Rollforward) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Securities [Abstract]
Other than Temporary Impairment, Credit Losses Recognized in Earnings, Credit Losses on Debt Securities Held, Beginning Balance	$ 0	$ 0	$ 10,695
Other than Temporary Impairment, Credit Losses Recognized in Earnings, Reductions, Securities Sold	0	0	10,798
Other than Temporary Impairment, Credit Losses Recognized in Earnings, Reductions, Change in Status	0	0	(103)
Other than Temporary Impairment, Credit Losses Recognized in Earnings, Credit Losses on Debt Securities Held, Ending Balance	$ 0	$ 0	$ 0

XML

Cash And Due From Banks (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Cash and Due from Banks [Abstract]
Restricted Cash and Cash Equivalents, Current	$ 14,128	$ 14,035

XML

Loans (Nonaccrual Loans and Loans Past Ninety Days Still Accruing) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Financing Receivable, Recorded Investment [Line Items]
Past Due 90+ Days and Accruing	$ 2,311	$ 1,267
Nonaccrual	7,353	7,197
Residential mortgage loans - first liens [Member]
Financing Receivable, Recorded Investment [Line Items]
Past Due 90+ Days and Accruing	1,900	949
Nonaccrual	3,064	3,058
Residential mortgage loans - junior liens [Member]
Financing Receivable, Recorded Investment [Line Items]
Past Due 90+ Days and Accruing	29	11
Nonaccrual	111	67
Home equity lines of credit [Member]
Financing Receivable, Recorded Investment [Line Items]
Past Due 90+ Days and Accruing	40	0
Nonaccrual	200	0
Commercial loans secured by real estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Past Due 90+ Days and Accruing	120	75
Nonaccrual	1,338	1,595
Commercial and industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Past Due 90+ Days and Accruing	68	21
Nonaccrual	761	541
Commercial construction and land [Member]
Financing Receivable, Recorded Investment [Line Items]
Past Due 90+ Days and Accruing	149	139
Nonaccrual	887	978
Loans secured by farmland [Member]
Financing Receivable, Recorded Investment [Line Items]
Past Due 90+ Days and Accruing	0	53
Nonaccrual	923	927
Agricultural loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Past Due 90+ Days and Accruing	0	0
Nonaccrual	40	0
Total commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Past Due 90+ Days and Accruing	337	288
Nonaccrual	3,949	4,041
Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Past Due 90+ Days and Accruing	5	19
Nonaccrual	29	31
Total residential mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Past Due 90+ Days and Accruing	1,969	960
Nonaccrual	$ 3,375	$ 3,125

XML

Defined Benefit Plans (Stock Option Assumptions) (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Stock-Based Compensation Plans [Abstract]
Fair Value Of Each Option Granted	$ 5.15	$ 4.26
Volatility	41.00%	37.00%
Expected option lives	7 years	8 years
Risk-Free Interest Rate	1.53%	3.10%
Dividend Yield	3.97%	3.86%

XML

Off-Balance Sheet Risk (Tables)

12 Months Ended

Dec. 31, 2012

Schedules of Concentration of Risk, by Risk Factor [Table Text Block]

Financial instruments whose contract amounts represent credit risk at December 31, 2012 and 2011 are as follows:

(In Thousands)	2012	2011
Commitments to extend credit	$165,972	$182,833
Standby letters of credit	22,108	22,849

Standby Letters of Credit [Member]

Schedules of Concentration of Risk, by Risk Factor [Table Text Block]

Standby letters of credit as of December 31, 2012 expire as follows:

	Amount
Year of Expiration	(In Thousands)
2013	$13,895
2014	2,901
2015	278
2016	2,587
2018 and Thereafter	2,447
Total	$22,108

XML

Comprehensive Income (Tables)

12 Months Ended

Dec. 31, 2012

Comprehensive Income [Abstract]

Components of Other Comprehensive Income and Related Tax Effects [Table Text Block]

(In Thousands)	Before-Tax	Income Tax	Net-of-Tax
	Amount	Effect	Amount
2012
Unrealized gains on available-for-sale securities:
Unrealized holding gains on available-for-sale securities	$4,128	($1,608)	$2,520
Reclassification adjustment for (gains) realized in income	(2,682)	939	(1,743)
Other comprehensive gain on available-for-sale securities	1,446	(669)	777
Unfunded pension and postretirement obligations:
Change in items from defined benefit plans included in
accumulated other comprehensive income	8	(2)	6
Amortization of net transition obligation, prior service cost and net
actuarial loss included in net periodic benefit cost	77	(17)	60
Other comprehensive gain on unfunded retirement obligations	85	(19)	66
Total other comprehensive income	$1,531	($688)	$843

(In Thousands)	Before-Tax	Income Tax	Net-of-Tax
	Amount	Effect	Amount
2011
Unrealized gains on available-for-sale securities:
Unrealized holding gains on available-for-sale securities	$20,611	($7,006)	$13,605
Reclassification adjustment for gains realized in income	(2,216)	753	(1,463)
Other comprehensive gain on available-for-sale securities	18,395	(6,253)	12,142
Unfunded pension and postretirement obligations:
Change in items from defined benefit plans included in
accumulated other comprehensive income	(626)	208	(418)
Amortization of net transition obligation, prior service cost and net
actuarial loss included in net periodic benefit cost	55	(18)	37
Other comprehensive loss on unfunded retirement obligations	(571)	190	(381)
Total other comprehensive income	$17,824	($6,063)	$11,761
(In Thousands)	Before-Tax	Income Tax	Net-of-Tax
	Amount	Effect	Amount
2010
Unrealized losses on available-for-sale securities:
Unrealized holding losses on available-for-sale securities	($448)	$166	($282)
Reclassification adjustment for gains realized in income	(829)	282	(547)
Other comprehensive loss on available-for-sale securities	(1,277)	448	(829)
Unfunded pension and postretirement obligations:
Change in items from defined benefit plans included in
accumulated other comprehensive income	126	(42)	84
Amortization of net transition obligation, prior service cost and net
actuarial loss included in net periodic benefit cost	53	(18)	35
Other comprehensive gain on unfunded retirement obligations	179	(60)	119
Total other comprehensive loss	($1,098)	$388	($710)

Components of Accumulated Other Comprehensive Income [Table Text Block]

Changes in the components of accumulated other comprehensive income (loss), included in stockholders' equity, are as follows:

(In Thousands)	Unrealized		Accumulated
	Holding Gains	Unfunded	Other
	(Losses)	Retirement	Comprehensive
	on Securities	Obligations	Income (Loss)
2012
Balance, beginning of period	$10,791	($631)	$10,160
Change during year ended December 31, 2012	777	66	843
Balance, end of period	$11,568	($565)	$11,003
2011
Balance, beginning of period	($1,351)	($250)	($1,601)
Change during year ended December 31, 2011	12,142	(381)	11,761
Balance, end of period	$10,791	($631)	$10,160
2010
Balance, beginning of period	($522)	($369)	($891)
Change during year ended December 31, 2010	(829)	119	(710)
Balance, end of period	($1,351)	($250)	($1,601)

XML

Loans (Contractual Aging Of Loans) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Financing Receivable, Recorded Investment [Line Items]
Current & Past Due Less than 30 Days	$ 668,657	$ 694,485
Past Due 30-89 Days	8,483	9,077
Past Due 90+ Days	6,770	4,753
Loans and Leases Receivable, Gross, Carrying Amount	683,910	708,315
Residential mortgage loans - first liens [Member]
Financing Receivable, Recorded Investment [Line Items]
Current & Past Due Less than 30 Days	302,373	321,907
Past Due 30-89 Days	6,228	6,723
Past Due 90+ Days	3,026	2,385
Loans and Leases Receivable, Gross, Carrying Amount	311,627	331,015
Residential mortgage loans - junior liens [Member]
Financing Receivable, Recorded Investment [Line Items]
Current & Past Due Less than 30 Days	26,247	28,437
Past Due 30-89 Days	371	393
Past Due 90+ Days	130	21
Loans and Leases Receivable, Gross, Carrying Amount	26,748	28,851
Home equity lines of credit [Member]
Financing Receivable, Recorded Investment [Line Items]
Current & Past Due Less than 30 Days	32,593	29,986
Past Due 30-89 Days	184	51
Past Due 90+ Days	240	0
Loans and Leases Receivable, Gross, Carrying Amount	33,017	30,037
1-4 Family residential construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Current & Past Due Less than 30 Days	12,627	9,959
Past Due 30-89 Days	215	0
Past Due 90+ Days	0	0
Loans and Leases Receivable, Gross, Carrying Amount	12,842	9,959
Commercial loans secured by real estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Current & Past Due Less than 30 Days	156,834	155,025
Past Due 30-89 Days	704	343
Past Due 90+ Days	875	1,020
Loans and Leases Receivable, Gross, Carrying Amount	158,413	156,388
Commercial and industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Current & Past Due Less than 30 Days	47,569	56,835
Past Due 30-89 Days	317	169
Past Due 90+ Days	556	187
Loans and Leases Receivable, Gross, Carrying Amount	48,442	57,191
Political subdivisions [Member]
Financing Receivable, Recorded Investment [Line Items]
Current & Past Due Less than 30 Days	31,789	37,620
Past Due 30-89 Days	0	0
Past Due 90+ Days	0	0
Loans and Leases Receivable, Gross, Carrying Amount	31,789	37,620
Commercial construction and land [Member]
Financing Receivable, Recorded Investment [Line Items]
Current & Past Due Less than 30 Days	26,944	22,323
Past Due 30-89 Days	248	1,056
Past Due 90+ Days	1,008	139
Loans and Leases Receivable, Gross, Carrying Amount	28,200	23,518
Loans secured by farmland [Member]
Financing Receivable, Recorded Investment [Line Items]
Current & Past Due Less than 30 Days	10,438	9,973
Past Due 30-89 Days	75	33
Past Due 90+ Days	890	943
Loans and Leases Receivable, Gross, Carrying Amount	11,403	10,949
Multi-family (5 or more) residential [Member]
Financing Receivable, Recorded Investment [Line Items]
Current & Past Due Less than 30 Days	6,743	6,583
Past Due 30-89 Days	2	0
Past Due 90+ Days	0	0
Loans and Leases Receivable, Gross, Carrying Amount	6,745	6,583
Agricultural loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Current & Past Due Less than 30 Days	3,003	2,945
Past Due 30-89 Days	10	3
Past Due 90+ Days	40	39
Loans and Leases Receivable, Gross, Carrying Amount	3,053	2,987
Other commercial loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Current & Past Due Less than 30 Days	362	552
Past Due 30-89 Days	0	0
Past Due 90+ Days	0	0
Loans and Leases Receivable, Gross, Carrying Amount	362	552
Total commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Current & Past Due Less than 30 Days	283,682	291,856
Past Due 30-89 Days	1,356	1,604
Past Due 90+ Days	3,369	2,328
Loans and Leases Receivable, Gross, Carrying Amount	288,407	295,788
Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Current & Past Due Less than 30 Days	11,135	12,340
Past Due 30-89 Days	129	306
Past Due 90+ Days	5	19
Loans and Leases Receivable, Gross, Carrying Amount	11,269	12,665
Total residential mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Current & Past Due Less than 30 Days	373,840	390,289
Past Due 30-89 Days	6,998	7,167
Past Due 90+ Days	3,396	2,406
Loans and Leases Receivable, Gross, Carrying Amount	$ 384,234	$ 399,862

XML

Parent Company Only (Condensed Statement of Cash Flows) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Net Income (Loss) Attributable to Parent	$ 22,705	$ 23,368	$ 19,055
Increase (Decrease) in Other Operating Assets	1,043	(3,580)	(9,624)
Increase (Decrease) in Other Operating Liabilities	674	1,092	(302)
Net Cash Provided by (Used in) Operating Activities	27,652	37,464	35,046
Net Cash Provided by (Used in) Investing Activities	34,636	2,917	(57,877)
Proceeds from Sale of Treasury Stock	229	71	0
Excess Tax Benefit from Share-based Compensation, Financing Activities	118	67	42
Payments for Repurchase of Common Stock	0	1,022	0
Redemption of US Treasury preferred stock and warrant	0	0	26,840
Payments of Dividends, Common Stock	9,061	6,227	4,297
Net Cash Provided by (Used in) Financing Activities	(64,087)	(29,867)	(22,933)
Cash and Cash Equivalents, Period Increase (Decrease)	(1,799)	10,514	(45,764)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR	56,815	46,301	92,065
CASH AND CASH EQUIVALENTS, END OF YEAR	55,016	56,815	46,301
Parent Company [Member]
Net Income (Loss) Attributable to Parent	22,705	23,368	19,055
Income (Loss) from Equity Method Investments	(13,565)	(15,606)	11,940
Increase (Decrease) in Other Operating Assets	116	11	(55)
Increase (Decrease) in Other Operating Liabilities	(6)	62	6
Net Cash Provided by (Used in) Operating Activities	9,262	7,711	30,934
Payments for (Proceeds from) Businesses and Interest in Affiliates	0	0	47
Proceeds from Issuance of Common Stock	229	71	0
Excess Tax Benefit from Share-based Compensation, Financing Activities	104	67	40
Payments for Repurchase of Common Stock	0	1,022	0
Redemption of US Treasury preferred stock and warrant	0	0	26,840
Payments of Dividends, Common Stock	9,061	6,224	5,249
Net Cash Provided by (Used in) Financing Activities	(8,728)	(7,108)	(32,049)
Cash and Cash Equivalents, Period Increase (Decrease)	534	603	(1,068)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR	1,361	758	1,826
CASH AND CASH EQUIVALENTS, END OF YEAR	$ 1,895	$ 1,361	$ 758

XML

Loans (Allowance For Loan Losses by Segment And Class) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Financing Receivable, Recorded Investment [Line Items]
Beginning Balance	$ 7,705	$ 9,107	$ 8,265
Charge-offs	(1,221)	(1,446)	(619)
Recoveries	85	329	270
Provision (Credit)	288	(285)	1,191
Ending Balance	6,857	7,705	9,107
Residential mortgage loans - first liens [Member]
Financing Receivable, Recorded Investment [Line Items]
Beginning Balance	3,026	2,745
Charge-offs	(543)	(49)
Recoveries	18	0
Provision (Credit)	118	330
Ending Balance	2,619	3,026
Residential mortgage loans - junior liens [Member]
Financing Receivable, Recorded Investment [Line Items]
Beginning Balance	266	334
Charge-offs	(9)	(51)
Recoveries	0	3
Provision (Credit)	(10)	(20)
Ending Balance	247	266
Home equity lines of credit [Member]
Financing Receivable, Recorded Investment [Line Items]
Beginning Balance	231	218
Charge-offs	0	0
Recoveries	0	0
Provision (Credit)	24	13
Ending Balance	255	231
1-4 Family residential construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Beginning Balance	79	208
Charge-offs	0	0
Recoveries	0	0
Provision (Credit)	17	(129)
Ending Balance	96	79
Total residential mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Beginning Balance	3,602	3,505
Charge-offs	(552)	(100)
Recoveries	18	3
Provision (Credit)	149	194
Ending Balance	3,217	3,602
Commercial loans secured by real estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Beginning Balance	2,004	3,314
Charge-offs	0	(973)
Recoveries	1	1
Provision (Credit)	(75)	(338)
Ending Balance	1,930	2,004
Commercial and industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Beginning Balance	946	862
Charge-offs	(57)	(216)
Recoveries	7	254
Provision (Credit)	(315)	46
Ending Balance	581	946
Political subdivisions [Member]
Financing Receivable, Recorded Investment [Line Items]
Beginning Balance	0	0
Charge-offs	0	0
Recoveries	0	0
Provision (Credit)	0	0
Ending Balance	0	0
Commercial construction and land [Member]
Financing Receivable, Recorded Investment [Line Items]
Beginning Balance	267	590
Charge-offs	(441)	0
Recoveries	0	0
Provision (Credit)	408	(323)
Ending Balance	234	267
Loans secured by farmland [Member]
Financing Receivable, Recorded Investment [Line Items]
Beginning Balance	126	139
Charge-offs	0	0
Recoveries	0	0
Provision (Credit)	3	(13)
Ending Balance	129	126
Multi-family (5 or more) residential [Member]
Financing Receivable, Recorded Investment [Line Items]
Beginning Balance	66	63
Charge-offs	0	0
Recoveries	0	0
Provision (Credit)	1	3
Ending Balance	67	66
Agricultural loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Beginning Balance	27	32
Charge-offs	0	0
Recoveries	0	0
Provision (Credit)	0	(5)
Ending Balance	27	27
Other commercial loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Beginning Balance	5	0
Charge-offs	0	0
Recoveries	0	0
Provision (Credit)	(2)	5
Ending Balance	3	5
Total commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Beginning Balance	3,441	5,000
Charge-offs	(498)	(1,189)
Recoveries	8	255
Provision (Credit)	20	(625)
Ending Balance	2,971	3,441
Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Beginning Balance	228	289
Charge-offs	(171)	(157)
Recoveries	59	71
Provision (Credit)	112	25
Ending Balance	228	228
Unallocated [Member]
Financing Receivable, Recorded Investment [Line Items]
Beginning Balance	434	313
Provision (Credit)	7	121
Ending Balance	$ 441	$ 434

XML

Deposits (Schedule of Maturities of Time Deposits) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012
Deposits [Abstract]
Time Deposit Maturities, Next Twelve Months	$ 197,014
Time Deposit Maturities, Year Two	69,859
Time Deposit Maturities, Year Three	21,455
Time Deposit Maturities, Year Four	10,786
Time Deposit Maturities, Year Five	13,305
Time Deposits, Total	$ 312,419

XML

Fair Value Measurements and Fair Values of Financial Instruments (Fair Value, by Balance Sheet Grouping) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	$ 472,577	$ 481,685
Servicing rights	605	375
Total recurring fair value measurements	473,182	482,060
Impaired loans with a valuation allowance	2,710	3,433
Valuation allowance	(623)	(1,126)
Impaired loans, net	2,087	2,307
Foreclosed assets held for sale	879	1,235
Total nonrecurring fair value measurements	2,966	3,542
Obligations of states and political subdivisions, Taxable [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	24,817	14,334
US Government Corporations and Agencies Securities [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	31,217	25,587
Mortgage-backed Securities [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	80,196	121,769
Obligations of states and political subdivisions, Tax-exempt [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	137,020	132,962
Collateralized mortgage obligations, Issued by U.S. Government agencies [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	183,510	165,131
Trust preferred securities issued by individual institutions [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	5,171	8,146
Collateralized debt obligations, Pooled trust preferred securities - senior tranches [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	1,613	4,638
Collateralized debt obligations, Pooled trust preferred securities - mezzanine tranches [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities		730
Other Collateralized debt obligations [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	660	660
Debt Securities [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	464,204	473,957
Marketable Equity Securities [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	8,373	7,728
Quoted Prices in Active Markets [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	8,373	7,728
Servicing rights	0	0
Total recurring fair value measurements	8,373	7,728
Impaired loans with a valuation allowance	0	0
Valuation allowance	0	0
Impaired loans, net	0	0
Foreclosed assets held for sale	0	0
Total nonrecurring fair value measurements	0	0
Quoted Prices in Active Markets [Member] | Obligations of states and political subdivisions, Taxable [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	0	0
Quoted Prices in Active Markets [Member] | US Government Corporations and Agencies Securities [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	0	0
Quoted Prices in Active Markets [Member] | Mortgage-backed Securities [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	0	0
Quoted Prices in Active Markets [Member] | Obligations of states and political subdivisions, Tax-exempt [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	0	0
Quoted Prices in Active Markets [Member] | Collateralized mortgage obligations, Issued by U.S. Government agencies [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	0	0
Quoted Prices in Active Markets [Member] | Trust preferred securities issued by individual institutions [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	0	0
Quoted Prices in Active Markets [Member] | Collateralized debt obligations, Pooled trust preferred securities - senior tranches [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	0	0
Quoted Prices in Active Markets [Member] | Collateralized debt obligations, Pooled trust preferred securities - mezzanine tranches [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities		0
Quoted Prices in Active Markets [Member] | Other Collateralized debt obligations [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	0	0
Quoted Prices in Active Markets [Member] | Debt Securities [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	0	0
Quoted Prices in Active Markets [Member] | Marketable Equity Securities [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	8,373	7,728
Other Observable Inputs [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	462,591	468,589
Servicing rights	0	0
Total recurring fair value measurements	462,591	468,589
Impaired loans with a valuation allowance	0	0
Valuation allowance	0	0
Impaired loans, net	0	0
Foreclosed assets held for sale	0	0
Total nonrecurring fair value measurements	0	0
Other Observable Inputs [Member] | Obligations of states and political subdivisions, Taxable [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	24,817	14,334
Other Observable Inputs [Member] | US Government Corporations and Agencies Securities [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	31,217	25,587
Other Observable Inputs [Member] | Mortgage-backed Securities [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	80,196	121,769
Other Observable Inputs [Member] | Obligations of states and political subdivisions, Tax-exempt [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	137,020	132,962
Other Observable Inputs [Member] | Collateralized mortgage obligations, Issued by U.S. Government agencies [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	183,510	165,131
Other Observable Inputs [Member] | Trust preferred securities issued by individual institutions [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	5,171	8,146
Other Observable Inputs [Member] | Collateralized debt obligations, Pooled trust preferred securities - senior tranches [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	0	0
Other Observable Inputs [Member] | Collateralized debt obligations, Pooled trust preferred securities - mezzanine tranches [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities		0
Other Observable Inputs [Member] | Other Collateralized debt obligations [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	660	660
Other Observable Inputs [Member] | Debt Securities [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	462,591	468,589
Other Observable Inputs [Member] | Marketable Equity Securities [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	0	0
Unobservable Inputs [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	1,613	5,368
Servicing rights	605	375
Total recurring fair value measurements	2,218	5,743
Impaired loans with a valuation allowance	2,710	3,433
Valuation allowance	(623)	(1,126)
Impaired loans, net	2,087	2,307
Foreclosed assets held for sale	879	1,235
Total nonrecurring fair value measurements	2,966	3,542
Unobservable Inputs [Member] | Obligations of states and political subdivisions, Taxable [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	0	0
Unobservable Inputs [Member] | US Government Corporations and Agencies Securities [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	0	0
Unobservable Inputs [Member] | Mortgage-backed Securities [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	0	0
Unobservable Inputs [Member] | Obligations of states and political subdivisions, Tax-exempt [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	0	0
Unobservable Inputs [Member] | Collateralized mortgage obligations, Issued by U.S. Government agencies [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	0	0
Unobservable Inputs [Member] | Trust preferred securities issued by individual institutions [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	0	0
Unobservable Inputs [Member] | Collateralized debt obligations, Pooled trust preferred securities - senior tranches [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	1,613	4,638
Unobservable Inputs [Member] | Collateralized debt obligations, Pooled trust preferred securities - mezzanine tranches [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities		730
Unobservable Inputs [Member] | Other Collateralized debt obligations [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	0	0
Unobservable Inputs [Member] | Debt Securities [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	1,613	5,368
Unobservable Inputs [Member] | Marketable Equity Securities [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Available-for-sale securities	$ 0	$ 0

XML

Income Taxes (Net Deferred Tax Assets) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Income Taxes [Abstract]
Deferred tax assets: Defined benefit plans - ASC 835	$ 305	$ 324
Deferred tax assets: Net realized losses on securities	1,254	3,175
Deferred tax assets: Allowance for loan losses	2,400	2,697
Deferred tax assets: Credit for alternative minimum tax paid	3,609	4,569
Deferred tax assets: Net operating loss carryforwards	0	44
Deferred tax assets: General business credit carryforwards	0	831
Deferred tax assets: Other deferred tax assets	2,019	1,671
Total deferred tax assets	9,587	13,311
Deferred tax liabilities: Unrealized holding gains on securities	6,228	5,559
Deferred tax liabilities: Bank premises and equipment	1,337	1,357
Deferred tax liabilities: Core deposit intangibles	48	74
Deferred tax liabilities: Other deferred tax liabilities	249	148
Total deferred tax liabilities	7,862	7,138
Deferred tax asset, net	$ 1,725	$ 6,173

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Loans (Impaired Loans Summary) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Loans [Abstract]
Impaired loans with a valuation allowance	$ 2,710	$ 3,433
Impaired loans without a valuation allowance	4,719	4,431
Total impaired loans	7,429	7,864
Valuation allowance related to impaired loans	$ 623	$ 1,126

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Intangible Assets (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Intangible Assets [Abstract]
Goodwill	$ 11,942	$ 11,942
Amortization of Intangible Assets	$ 74	$ 114	$ 176

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Loans (Aging of Troubled Debt Restructurings) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Financing Receivable, Recorded Investment [Line Items]
Current & Past Due Less than 30 Days	$ 668,657	$ 694,485
Past Due 30-89 Days	8,483	9,077
Past Due 90+ Days	6,770	4,753
Nonaccrual	7,353	7,197
Loans: Totals	683,910	708,315
Troubled Debt Restructuring [Member]
Financing Receivable, Recorded Investment [Line Items]
Current & Past Due Less than 30 Days	785	1,064
Past Due 30-89 Days	121	0
Past Due 90+ Days	0	146
Nonaccrual	1,155	2,267
Loans: Totals	2,061	3,477
Commercial and industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Current & Past Due Less than 30 Days	47,569	56,835
Past Due 30-89 Days	317	169
Past Due 90+ Days	556	187
Nonaccrual	761	541
Loans: Totals	$ 48,442	$ 57,191

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Intangible Assets (Core Deposit Intangibles) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Intangible Assets [Abstract]
Finite-Lived Intangible Assets, Gross	$ 2,034	$ 2,034
Finite-Lived Intangible Assets, Accumulated Amortization	(1,896)	(1,822)
Finite-Lived Intangible Assets, Net	$ 138	$ 212

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Loans (Average Balance and Interest Income Recognized) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Loans [Abstract]
Average investment in impaired loans	$ 7,209	$ 7,455	$ 6,142
Interest income recognized on impaired loans	278	245	204
Interest income recognized on a cash basis on impaired loans	$ 278	$ 245	$ 204

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Loans (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended				3 Months Ended	12 Months Ended
	Dec. 31, 2011	Jun. 30, 2011	Dec. 31, 2012	Mar. 31, 2011	Dec. 31, 2011 Commercial Loan [Member]	Dec. 31, 2012 Commercial construction and land [Member]	Dec. 31, 2011 Commercial construction and land [Member]
Financing Receivable, Recorded Investment [Line Items]
Financing Receivable, Modifications, Recorded Investment				$ 1,588		$ 1,089
Financing Receivables, Impaired, Troubled Debt Restructuring, Write-down	438	663			438	288
Impaired Financing Receivable, Related Allowance	1,126		623				65
Impaired Financing Receivable, with Related Allowance, Recorded Investment	$ 2,307		$ 2,087			$ 662	$ 950

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Contingencies

12 Months Ended

Dec. 31, 2012

Contingencies [Abstract]

CONTINGENCIES

17. CONTINGENCIES

In the normal course of business, the Corporation is subject to pending and threatened litigation in which claims for monetary damages are asserted. In management's opinion, the Corporation's financial position and results of operations would not be materially affected by the outcome of these legal proceedings.

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Nature of Operations and Summary of Significant Accounting Policies (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Nature of Operations and Summary of Significant Accounting Policies [Abstract]
Servicing Asset	$ 605	$ 375

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Borrowed Funds (Tables)

12 Months Ended

Dec. 31, 2012

Borrowed Funds [Abstract]

Short Term Borrowings [Table Text Block]

Short-term borrowings include the following:

(In Thousands)	At December 31,
	2012	2011
Overnight borrowings	$0	$0
Customer repurchase agreements	5,567	4,950
Total short-term borrowings	$5,567	$4,950

Schedule of Long-term Debt Instruments [Table Text Block]

Long-term borrowings are as follows:

(In Thousands)	At December 31,
	2012	2011
FHLB-Pittsburgh borrowings	$15,812	$40,363
Repurchase agreements	68,000	85,000
Total long-term borrowings	$83,812	$125,363

Long-term borrowings from FHLB-Pittsburgh are as follows:

(In Thousands)	At December 31,
	2012	2011
Loans matured in 2012 with rates ranging from 3.66% to 4.82%	$0	$23,507
Loans maturing in 2013 with rates ranging from 2.86% to 3.62%	3,211	3,553
Loan maturing in 2016 with a rate of 6.86%	196	236
Loans maturing in 2017 with rates ranging from 3.81% to 6.83%	10,027	10,032
Loan maturing in 2020 with a rate of 4.79%	1,297	1,892
Loan maturing in 2025 with a rate of 4.91%	1,081	1,143
Total long-term FHLB-Pittsburgh borrowings	$15,812	$40,363

Schedule of Maturities of Long-term Debt [Table Text Block]

Repurchase agreements included in long-term borrowings are as follows:

(In Thousands)	At December 31,
	2012	2011
Agreement maturing in 2013 with a rate of 3.13%, prepaid in 2012	$0	$5,000
Agreements maturing in 2017 with rates ranging from 3.60% to 4.27%	68,000	80,000
Total long-term repurchase agreements	$68,000	$85,000

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Loans (Summary Of Loan Balances and Allowance For Loan Losses) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Financing Receivable, Recorded Investment [Line Items]
Loans: Individually Evaluated	$ 7,429	$ 7,864
Loans: Collectively Evaluated	676,481	700,451
Loans: Totals	683,910	708,315
Allowance for Loan Losses: Individually Evaluated	623	1,126
Allowance for Loan Losses: Collectively Evaluated	5,793	6,145
Allowance for Loan Losses: Totals	6,857	7,705	9,107	8,265
Residential mortgage loans - first liens [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans: Individually Evaluated	2,341	2,227
Loans: Collectively Evaluated	309,286	328,788
Loans: Totals	311,627	331,015
Allowance for Loan Losses: Individually Evaluated	206	461
Allowance for Loan Losses: Collectively Evaluated	2,413	2,565
Allowance for Loan Losses: Totals	2,619	3,026	2,745
Residential mortgage loans - junior liens [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans: Individually Evaluated	158	137
Loans: Collectively Evaluated	26,590	28,714
Loans: Totals	26,748	28,851
Allowance for Loan Losses: Individually Evaluated	0	11
Allowance for Loan Losses: Collectively Evaluated	247	255
Allowance for Loan Losses: Totals	247	266	334
Home equity lines of credit [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans: Individually Evaluated	0	93
Loans: Collectively Evaluated	33,017	29,944
Loans: Totals	33,017	30,037
Allowance for Loan Losses: Individually Evaluated	0	0
Allowance for Loan Losses: Collectively Evaluated	255	231
Allowance for Loan Losses: Totals	255	231	218
1-4 Family residential construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans: Individually Evaluated	0	0
Loans: Collectively Evaluated	12,842	9,959
Loans: Totals	12,842	9,959
Allowance for Loan Losses: Individually Evaluated	0	0
Allowance for Loan Losses: Collectively Evaluated	96	79
Allowance for Loan Losses: Totals	96	79	208
Total residential mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans: Individually Evaluated	2,499	2,457
Loans: Collectively Evaluated	381,735	397,405
Loans: Totals	384,234	399,862
Allowance for Loan Losses: Individually Evaluated	206	472
Allowance for Loan Losses: Collectively Evaluated	3,011	3,130
Allowance for Loan Losses: Totals	3,217	3,602	3,505
Commercial loans secured by real estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans: Individually Evaluated	1,938	2,169
Loans: Collectively Evaluated	156,475	154,219
Loans: Totals	158,413	156,388
Allowance for Loan Losses: Individually Evaluated	146	169
Allowance for Loan Losses: Collectively Evaluated	1,784	1,835
Allowance for Loan Losses: Totals	1,930	2,004	3,314
Commercial and industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans: Individually Evaluated	939	942
Loans: Collectively Evaluated	47,503	56,249
Loans: Totals	48,442	57,191
Allowance for Loan Losses: Individually Evaluated	197	361
Allowance for Loan Losses: Collectively Evaluated	384	585
Allowance for Loan Losses: Totals	581	946	862
Political subdivisions [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans: Individually Evaluated	0	0
Loans: Collectively Evaluated	31,789	37,620
Loans: Totals	31,789	37,620
Allowance for Loan Losses: Individually Evaluated	0	0
Allowance for Loan Losses: Collectively Evaluated	0	0
Allowance for Loan Losses: Totals	0	0	0
Commercial construction and land [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans: Individually Evaluated	1,034	1,266
Loans: Collectively Evaluated	27,166	22,252
Loans: Totals	28,200	23,518
Allowance for Loan Losses: Individually Evaluated	0	65
Allowance for Loan Losses: Collectively Evaluated	234	202
Allowance for Loan Losses: Totals	234	267	590
Loans secured by farmland [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans: Individually Evaluated	923	927
Loans: Collectively Evaluated	10,480	10,022
Loans: Totals	11,403	10,949
Allowance for Loan Losses: Individually Evaluated	34	35
Allowance for Loan Losses: Collectively Evaluated	95	91
Allowance for Loan Losses: Totals	129	126	139
Multi-family (5 or more) residential [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans: Individually Evaluated	9	14
Loans: Collectively Evaluated	6,736	6,569
Loans: Totals	6,745	6,583
Allowance for Loan Losses: Individually Evaluated	0	0
Allowance for Loan Losses: Collectively Evaluated	67	66
Allowance for Loan Losses: Totals	67	66	63
Agricultural loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans: Individually Evaluated	40	39
Loans: Collectively Evaluated	3,013	2,948
Loans: Totals	3,053	2,987
Allowance for Loan Losses: Individually Evaluated	0	0
Allowance for Loan Losses: Collectively Evaluated	27	27
Allowance for Loan Losses: Totals	27	27	32
Other commercial loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans: Individually Evaluated	0	0
Loans: Collectively Evaluated	362	552
Loans: Totals	362	552
Allowance for Loan Losses: Individually Evaluated	0	0
Allowance for Loan Losses: Collectively Evaluated	3	5
Allowance for Loan Losses: Totals	3	5	0
Total commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans: Individually Evaluated	4,883	5,357
Loans: Collectively Evaluated	283,524	290,431
Loans: Totals	288,407	295,788
Allowance for Loan Losses: Individually Evaluated	377	630
Allowance for Loan Losses: Collectively Evaluated	2,594	2,811
Allowance for Loan Losses: Totals	2,971	3,441	5,000
Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans: Individually Evaluated	47	50
Loans: Collectively Evaluated	11,222	12,615
Loans: Totals	11,269	12,665
Allowance for Loan Losses: Individually Evaluated	40	24
Allowance for Loan Losses: Collectively Evaluated	188	204
Allowance for Loan Losses: Totals	228	228	289
Unallocated [Member]
Financing Receivable, Recorded Investment [Line Items]
Allowance for Loan Losses: Totals	$ 441	$ 434	$ 313

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Defined Benefit Plans (Funded Status of Plans) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Pension Plans, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Benefit Obligation, Beginning Balance	$ 1,613	$ 1,339
Defined Benefit Plan, Service Cost	0	0	0
Defined Benefit Plan, Interest Cost	72	73	67
Defined Benefit Plan, Contributions by Plan Participants	0	0
Defined Benefit Plan, Actuarial Gain (Loss)	128	222
Defined Benefit Plan, Benefits Paid	(30)	(21)
Defined Benefit Plan, Benefit Obligation, Ending Balance	1,783	1,613	1,339
Defined Benefit Plan, Fair Value of Plan Assets, Beginning Balance	1,057	1,080
Defined Benefit Plan, Actual Return on Plan Assets	121	(6)
Defined Benefit Plan, Contributions by Employer	694	4
Defined Benefit Plan, Fair Value of Plan Assets, Ending Balance	1,842	1,057	1,080
Defined Benefit Plan, Funded Status of Plan	59	(556)
Other Postretirement Benefit Plans, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Benefit Obligation, Beginning Balance	2,054	1,616
Defined Benefit Plan, Service Cost	91	83	68
Defined Benefit Plan, Interest Cost	81	92	89
Defined Benefit Plan, Contributions by Plan Participants	199	226
Defined Benefit Plan, Actuarial Gain (Loss)	(87)	322
Defined Benefit Plan, Benefits Paid	(257)	(285)
Defined Benefit Plan, Benefit Obligation, Ending Balance	2,081	2,054	1,616
Defined Benefit Plan, Fair Value of Plan Assets, Beginning Balance	0	0
Defined Benefit Plan, Actual Return on Plan Assets	0	0
Defined Benefit Plan, Contributions by Employer	58	59
Defined Benefit Plan, Fair Value of Plan Assets, Ending Balance	0	0	0
Defined Benefit Plan, Funded Status of Plan	$ (2,081)	$ (2,054)

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Securities (Tables)

12 Months Ended

Dec. 31, 2012

Schedule of Investment Income, Reported Amounts, by Category [Line Items]

Amortized Cost and Fair Value of Available-for-sale Securities [Table Text Block]

December 31, 2012
		Gross	Gross
		Unrealized	Unrealized
	Amortized	Holding	Holding	Fair
(In Thousands)	Cost	Gains	Losses	Value
Obligations of U.S. Government agencies	$30,695	$572	($50)	$31,217
Obligations of states and political subdivisions:
Tax-exempt	130,168	7,030	(178)	137,020
Taxable	24,426	462	(71)	24,817
Mortgage-backed securities	76,368	3,828	0	80,196
Collateralized mortgage obligations,
Issued by U.S. Government agencies	179,770	3,887	(147)	183,510
Trust preferred securities issued by individual institutions	5,167	4	0	5,171
Collateralized debt obligations:
Pooled trust preferred securities - senior tranches	1,615	0	(2)	1,613
Other collateralized debt obligations	660	0	0	660
Total debt securities	448,869	15,783	(448)	464,204
Marketable equity securities	5,912	2,500	(39)	8,373
Total	$454,781	$18,283	($487)	$472,577

		December 31, 2011
		Gross	Gross
		Unrealized	Unrealized
	Amortized	Holding	Holding	Fair
(In Thousands)	Cost	Gains	Losses	Value
Obligations of U.S. Government agencies	$24,877	$710	$0	$25,587
Obligations of states and political subdivisions:
Tax-exempt	129,401	4,891	(1,330)	132,962
Taxable	14,004	334	(4)	14,334
Mortgage-backed securities	116,602	5,167	0	121,769
Collateralized mortgage obligations,
Issued by U.S. Government agencies	161,818	3,350	(37)	165,131
Trust preferred securities issued by individual institutions	7,334	865	(53)	8,146
Collateralized debt obligations:
Pooled trust preferred securities - senior tranches	4,996	0	(358)	4,638
Pooled trust preferred securities - mezzanine tranches	0	730	0	730
Other collateralized debt obligations	660	0	0	660
Total debt securities	459,692	16,047	(1,782)	473,957
Marketable equity securities	5,643	2,186	(101)	7,728
Total	$465,335	$18,233	($1,883)	$481,685

Gross Unrealized Losses and Fair Value of Available-for-sale Securities [Table Text Block]

December 31, 2012	Less Than 12 Months		12 Months or More		Total
(In Thousands)	Fair	Unrealized	Fair	Unrealized	Fair	Unrealized
	Value	Losses	Value	Losses	Value	Losses
Obligations of U.S. Government agencies	$10,006	($50)	$0	$0	$10,006	($50)
Obligations of states and political subdivisions:
Tax-exempt	7,082	(92)	3,285	(86)	10,367	(178)
Taxable	4,149	(71)	0	0	4,149	(71)
Collateralized mortgage obligations,
Issued by U.S. Government agencies	16,755	(146)	454	(1)	17,209	(147)
Collateralized debt obligations,
Pooled trust preferred securities - senior tranches	0	0	1,613	(2)	1,613	(2)
Total debt securities	37,992	(359)	5,352	(89)	43,344	(448)
Marketable equity securities	95	(6)	67	(33)	162	(39)
Total temporarily impaired available-for-sale securities	$38,087	($365)	$5,419	($122)	$43,506	($487)

December 31, 2011	Less Than 12 Months		12 Months or More		Total
(In Thousands)	Fair	Unrealized	Fair	Unrealized	Fair	Unrealized
	Value	Losses	Value	Losses	Value	Losses
Obligations of states and political subdivisions:
Tax-exempt	$4,301	($34)	$20,692	($1,296)	$24,993	($1,330)
Taxable	927	(2)	244	(2)	1,171	(4)
Collateralized mortgage obligations,
Issued by U.S. Government agencies	6,886	(36)	5,075	(1)	11,961	(37)
Trust preferred securities issued by individual institutions	0	0	947	(53)	947	(53)
Collateralized debt obligations,
Pooled trust preferred securities - senior tranches	0	0	4,638	(358)	4,638	(358)
Total debt securities	12,114	(72)	31,596	(1,710)	43,710	(1,782)
Marketable equity securities	776	(44)	98	(57)	874	(101)
Total temporarily impaired available-for-sale securities	$12,890	($116)	$31,694	($1,767)	$44,584	($1,883)

Gross Realized Gains and Losses From Available-for-sale Securities [Table Text Block]

(In Thousands)
	2012	2011	2010
Gross realized gains	$2,798	$2,226	$1,270
Gross realized losses	(116)	(10)	(441)
Net realized gains	$2,682	$2,216	$829
Income tax provision related to net realized gains	$939	$753	$282

Amortized Cost and Fair Value of Available-for-sale Debt Securities [Table Text Block]

	Amortized	Fair
(In Thousands)	Cost	Value
Due in one year or less	$13,096	$13,315
Due from one year through five years	51,586	52,896
Due from five years through ten years	50,518	51,657
Due after ten years	77,531	82,630
Subtotal	192,731	200,498
Mortgage-backed securities	76,368	80,196
Collateralized mortgage obligations,
Issued by U.S. Government agencies	179,770	183,510
Total	$448,869	$464,204

Trust Preferred Secured Securities Information [Table Text Block]

 

Par Amount Outstanding	$5,000
Amortized Cost	5,167
Fair Value	5,171
Unrealized Gain	4
Cumulative Realized Credit Losses	0
Moody's Credit Rating	Ba1
S&P Credit Rating	BB
Fitch Credit Rating	B+

Pooled Trust Preferred Securities Information [Table Text Block]

Tranche	C-1
Original Face Amount	$3,000
Amortized Cost	0
Fair Value	0
Unrealized Gain	0
Cumulative OTTI	($2,988)

Number of Issuers Currently Performing	8
Moody's Credit Rating	A3
Fitch Credit Rating	A
Actual Deferrals and Defaults as % of Outstanding Collateral	50.26%
Expected Additional Net Deferrals and Defaults as % of Performing Collateral	19.73%
Excess Subordination as % of Performing Collateral	67.90%
Expected Issuer Prepayments as % of Performing Collateral	41.24%

OTTI Credit Losses [Table Text Block]

(In Thousands)
	2012	2011	2010
Trust preferred securities issued by individual institutions	$0	$0	($320)
Pooled trust preferred securities - mezzanine tranches	0	0	(103)
Marketable equity securities (bank stocks)	(67)	0	(10)
Net impairment losses recognized in earnings	($67)	$0	($433)

Pooled Trust-Preferred Securities [Member]

Schedule of Investment Income, Reported Amounts, by Category [Line Items]

OTTI Credit Losses [Table Text Block]

(In Thousands)
	2012	2011	2010
Balance of credit losses on debt securities for which a portion
of OTTI was recognized in other comprehensive income,
beginning of period	$0	$0	($10,695)
Reduction for securities losses realized during the period	0	0	10,798
Additional credit loss for which an OTTI was previously
recognized when the Corporation does not intend to sell
the security and it is not more likely than not the Corporation
will be required to sell the security before recovery of its
amortized cost basis	0	0	(103)
Balance of credit losses on debt securities for which a portion
of OTTI was recognized in other comprehensive income,
end of period	$0	$0	$0

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Comprehensive Income (Components of Other Comprehensive Income and Accumulated Other Comprehensive Income) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Balance, beginning of period	$ 10,160	$ (1,601)	$ (891)
Change during period	843	11,761	(710)
Balance, end of period	11,003	10,160	(1,601)
Unrealized Holding Gains (Losses) On Securities [Member]
Balance, beginning of period	10,791	(1,351)	(522)
Change during period	777	12,142	(829)
Balance, end of period	11,568	10,791	(1,351)
Unfunded Retirement Obligations [Member]
Balance, beginning of period	(631)	(250)	(369)
Change during period	66	(381)	119
Balance, end of period	$ (565)	$ (631)	$ (250)

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Securities (Trust Preferred Securities) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Fair Value	$ 472,577	$ 481,685
Cumulative OTTI	67	0	381
Astoria Capital Trust I [Member]
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Par Amount Outstanding	5,000
Amortized Cost	5,167
Fair Value	5,171
Unrealized Gain	4
Cumulative OTTI	$ 0
Astoria Capital Trust I [Member] | Moody's, Ba1 Rating [Member]
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Debt Instrument, Credit Rating	Ba1
Astoria Capital Trust I [Member] | Standard & Poor's, BB Rating [Member]
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Debt Instrument, Credit Rating	BB
Astoria Capital Trust I [Member] | Fitch, B+ Rating [Member]
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Debt Instrument, Credit Rating	B+

XML

Income Taxes (Effective Tax and Rate Reconciliation) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Income Taxes [Abstract]
Expected provision	$ 10,896	$ 11,229	$ 8,699
Valuation allowance on deferred tax assets	0	0	(373)
Tax-exempt interest income	(2,287)	(2,292)	(2,208)
Nondeductible interest expense	92	129	169
Dividends received deduction	(78)	(66)	(64)
Increase in cash surrender value of life insurance	(159)	(178)	(163)
Employee stock option compensation	62	85	0
Other, net	(100)	60	(80)
Surtax exemption	0	(253)	(180)
Total provision	$ 8,426	$ 8,714	$ 5,800
Expected provision	35.00%	35.00%	35.00%
Valuation allowance of deferred tax assets	0.00%	0.00%	(1.50%)
Tax-exempt interest income	(7.35%)	(7.14%)	(8.88%)
Nondeductible interest expense	0.30%	0.40%	0.68%
Dividends received deduction	(0.25%)	(0.21%)	(0.26%)
Increase in cash surrender value of life insurance	(0.51%)	(0.55%)	(0.66%)
Employee stock option compensation	0.20%	0.26%	0.00%
Other, net	(0.32%)	0.19%	(0.32%)
Surtax exemption	0.00%	(0.79%)	(0.72%)
Effective income tax provision	27.07%	27.16%	23.34%

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Securities (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Available-for-sale Securities Pledged as Collateral	$ 293,310				$ 266,149				$ 293,310	$ 266,149
Available-for-sale Securities, Gross Realized Gain (Loss)	51	2,430	203	(2)	188	26	163	1,839	2,682	2,216	829
Available-for-sale Securities, Amortized Cost Basis	454,781				465,335				454,781	465,335
Impairment of Investments									67	0	381
Other than Temporary Impairment Losses, Investments, Portion in Other Comprehensive Income (Loss), before Tax, Portion Attributable to Parent									0	0	52
Asset Impairment Charges									67	0	433
Federal Home Loan Bank Stock	4,712				6,643				4,712	6,643
Debt Securities [Member]
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Municipal Debt Securities, at Carrying Value	21,396								21,396
Available-for-sale Securities, Gross Unrealized Gain (Loss)	311								311
Available-for-sale Securities, Amortized Cost Basis	448,869				459,692				448,869	459,692
Pooled Trust Preferred Securities Mezzanine Tranches[ Member]
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Available-for-sale Securities, Gross Realized Gain (Loss)		1,754						1,485
Asset Impairment Charges									0	0	103
Carolina First Mortgage Loan Trust [Member]
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Available-for-sale Securities, Gross Unrealized Gain (Loss)	2,000								2,000
Interest Income, Other									855	825	83
Pooled Trust Preferred Securities Senior Tranches[ Member]
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Available-for-sale Securities, Amortized Cost Basis	1,615								1,615
Impairment of Investments											51
Other than Temporary Impairment Losses, Investments, Portion in Other Comprehensive Income (Loss), before Tax, Portion Attributable to Parent											103
Asset Impairment Charges											52
Marketable Equity Securities [Member]
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Available-for-sale Securities, Gross Realized Gain (Loss)									538	91	588
Available-for-sale Securities, Amortized Cost Basis	5,912				5,643				5,912	5,643
Impairment of Investments									67
Asset Impairment Charges									$ 67	$ 0	$ 10

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Regulatory Matters (Tables)

12 Months Ended

Dec. 31, 2012

Regulatory Matters [Abstract]

Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations [Table Text Block]

					Minimum To Be Well
(Dollars in Thousands)			Minimum		Capitalized Under
			Capital		Prompt Corrective
	Actual		Requirement		Action Provisions
	Amount	Ratio	Amount	Ratio	Amount	Ratio
December 31, 2012:
Total capital to risk-weighted assets:
Consolidated	$165,972	24.01%	$55,299	³8%	n/a	n/a
C&N Bank	152,462	22.31%	54,665	³8%	$68,331	³10%
Tier 1 capital to risk-weighted assets:
Consolidated	158,008	22.86%	27,650	³4%	n/a	n/a
C&N Bank	145,596	21.31%	27,332	³4%	40,998	³6%
Tier 1 capital to average assets:
Consolidated	158,008	12.53%	50,459	³4%	n/a	n/a
C&N Bank	145,596	11.64%	50,053	³4%	62,567	³5%
December 31, 2011:
Total capital to risk-weighted assets:
Consolidated	$149,898	21.17%	$56,636	³8%	n/a	n/a
C&N Bank	137,717	19.66%	56,046	³8%	$70,058	³10%
Tier 1 capital to risk-weighted assets:
Consolidated	141,255	19.95%	28,318	³4%	n/a	n/a
C&N Bank	129,978	18.55%	28,023	³4%	42,035	³6%
Tier 1 capital to average assets:
Consolidated	141,255	10.93%	51,712	³4%	n/a	n/a
C&N Bank	129,978	10.14%	51,285	³4%	64,107	³5%

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Nature Of Operations And Summary Of Significant Accounting Policies

12 Months Ended

Dec. 31, 2012

Nature of Operations and Summary of Significant Accounting Policies [Abstract]

NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF CONSOLIDATION - The consolidated financial statements include the accounts of Citizens & Northern Corporation and its subsidiaries, Citizens & Northern Bank ("C&N Bank"), Bucktail Life Insurance Company and Citizens & Northern Investment Corporation (collectively, "Corporation"), as well as C&N Bank's wholly-owned subsidiary, C&N Financial Services Corporation. The consolidated financial statements also include the accounts of the former Canisteo Valley Corporation (merged into Citizens & Northern Corporation in September 2010) and its former wholly-owned subsidiary, First State Bank (merged into C&N Bank, effective September 1, 2010). All material intercompany balances and transactions have been eliminated in consolidation.

NATURE OF OPERATIONS - The Corporation is primarily engaged in providing a full range of banking and mortgage services to individual and corporate customers in North Central Pennsylvania and Southern New York State. Lending products include mortgage loans, commercial loans and consumer loans, as well as specialized instruments such as commercial letters-of-credit. Deposit products include various types of checking accounts, passbook and statement savings, money market accounts, interest checking accounts, Individual Retirement Accounts and certificates of deposit. The Corporation also offers non-insured "RepoSweep" accounts.

The Corporation provides Trust and Financial Management services, including administration of trusts and estates, retirement plans, and other employee benefit plans, and investment management services. The Corporation offers a variety of personal and commercial insurance products through C&N Financial Services Corporation. C&N Financial Services Corporation also offers mutual funds, annuities, educational savings accounts and other investment products through registered agents. Management has determined that the Corporation has one reportable segment, "Community Banking." All of the Corporation's activities are interrelated, and each activity is dependent and assessed based on how each of the activities of the Corporation supports the others.

The Corporation is subject to competition from other financial institutions. It is also subject to regulation by certain federal and state agencies and undergoes periodic examination by those regulatory authorities. As a consequence, the Corporation's business is particularly susceptible to being affected by future federal and state legislation and regulations.

USE OF ESTIMATES - The financial information is presented in accordance with generally accepted accounting principles and general practice for financial institutions in the United States of America. In preparing financial statements, management is required to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements. In addition, these estimates and assumptions affect revenues and expenses in the financial statements and as such, actual results could differ from those estimates.

Material estimates that are particularly susceptible to change include: (1) the allowance for loan losses, (2) fair values of debt securities based on estimates from independent valuation services or from brokers, (3) fair values of debt securities based on unobservable inputs, as determined using management's estimates of cash flows and applicable discount rates,(4) assessment of impaired securities to determine whether or not the securities are other-than-temporarily impaired, (5) valuation of deferred tax assets and (6) valuation of obligations from defined benefit plans.

INVESTMENT SECURITIES - Investment securities are accounted for as follows:

Available-for-sale securities - includes debt securities not classified as held-to-maturity or trading, and unrestricted equity securities. Such securities are reported at fair value, with unrealized gains and losses excluded from earnings and reported separately through accumulated other comprehensive income, net of tax. Amortization of premiums and accretion of discounts on available-for-sale securities are recorded using the level yield method over the remaining contractual life of the securities, adjusted for actual prepayments. Realized gains and losses on sales of available-for-sale securities are computed on the basis of specific identification of the adjusted cost of each security. Securities within the available-for-sale portfolio may be used as part of the Corporation's asset and liability management strategy and may be sold in response to changes in interest rate risk, prepayment risk or other factors.

Other-than-temporary impairment - Declines in the fair value of available-for-sale securities that are deemed to be other-than-temporary are reflected in earnings as realized losses. In estimating other-than-temporary impairment losses, management considers (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) the intent and ability of the Corporation to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value, and (4) whether the Corporation intends to sell the security or if it is more likely than not that the Corporation will be required to sell the security before the recovery of its amortized cost basis. The credit-related impairment is recognized in earnings, and is the difference between a security's amortized cost basis and the present value of expected future cash flows discounted at the security's effective interest rate. For debt securities classified as held-to-maturity, if any, the amount of noncredit-related impairment is recognized in other comprehensive income and accreted over the remaining life of the debt security as an increase in the carrying value of the security. In addition, the risk of future other-than-temporary impairment may be influenced by additional bank failures, prolonged recession in the U.S. economy, changes to real estate values, interest deferrals and whether the federal government provides assistance to financial institutions.

Restricted equity securities - Restricted equity securities consist primarily of Federal Home Loan Bank of Pittsburgh stock, and are carried at cost and evaluated for impairment. Holdings of restricted equity securities are included in Other Assets in the Consolidated Balance Sheet, and dividends received on restricted securities are included in Other Income in the Consolidated Statement of Income.

LOANS HELD FOR SALE - Mortgage loans held for sale are reported at the lower of cost or market, determined in the aggregate.

LOANS RECEIVABLE - Loans receivable which management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at unpaid principal balances, less the allowance for loan losses and net deferred loan fees. Interest income is accrued on the unpaid principal balance. Loan origination and commitment fees, as well as certain direct origination costs, are deferred and amortized as a yield adjustment over the lives of the related loans using the interest method.

The loans receivable portfolio is segmented into residential mortgage, commercial and consumer loans. The residential mortgage segment includes the following classes: first and junior lien residential mortgages, home equity lines of credit and residential construction loans. The most significant classes of commercial loans are commercial loans secured by real estate, non-real estate secured commercial and industrial loans, loans to political subdivisions, commercial construction, and loans secured by farmland.

Loans are placed on nonaccrual status for all classes of loans when, in the opinion of management, collection of interest is doubtful. Any unpaid interest previously accrued on those loans is reversed from income. Interest income is not recognized on specific impaired loans unless the likelihood of further loss is remote. Interest payments received on loans for which the risk of further loss is greater than remote are applied as a reduction of the loan principal balance. Interest income on other nonaccrual loans is recognized only to the extent of interest payments received. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time (generally six months) and the ultimate collectability of the total contractual principal and interest is no longer in doubt. The past due status of all classes of loans receivable is determined based on contractual due dates for loan payments. Also, the amortization of deferred loan fees is discontinued when a loan is placed on nonaccrual status.

ALLOWANCE FOR LOAN LOSSES - The allowance for loan losses represents management's estimate of losses inherent in the loan portfolio as of the balance sheet date and is recorded as a reduction to loans. The allowance for loan losses is increased by the provision for loan losses, and decreased by charge-offs, net of recoveries. Loans deemed to be uncollectible are charged against the allowance for loan losses, and subsequent recoveries, if any, are credited to the allowance. All, or part, of the principal balance of loans receivable are charged off to the allowance as soon as it is determined that the repayment of all, or part, of the principal balance is highly unlikely. Non-residential consumer loans are generally charged off no later than when they are 120 days past due on a contractual basis, or earlier in the event of bankruptcy or if there is an amount deemed uncollectible.

The allowance for loan losses is maintained at a level considered adequate to provide for losses that can be reasonably anticipated. Management performs a quarterly evaluation of the adequacy of the allowance. The allowance is based on the Corporation's past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower's ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision as more information becomes available. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Corporation's allowance for loan losses. Such agencies may require the Corporation to recognize adjustments to the allowance based on their judgments of information available to them at the time of their examination. In the process of evaluating the loan portfolio, management also considers the Corporation's exposure to losses from unfunded loan commitments. As of December 31, 2012 and 2011, management determined that no allowance for credit losses related to unfunded loan commitments was required.

The allowance consists primarily of two major components – (1) a specific component based on a detailed assessment of certain larger loan relationships, mainly commercial purpose, determined on a loan-by-loan basis; and (2) a general component for the remainder of the portfolio based on a collective evaluation of pools of loans with similar risk characteristics. The general component is assigned to each pool of loans based on both historical net charge-off experience, and an evaluation of certain qualitative factors. An unallocated component is maintained to cover uncertainties that could affect management's estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the above methodologies for estimating specific and general losses in the portfolio.

The specific component relates to loans that are classified as impaired based on a detailed assessment of certain larger loan relationships evaluated by a management committee referred to as the Watch List Committee. Specific loan relationships are identified for evaluation based on the related credit risk rating. For individual loans classified as impaired, an allowance is established when the collateral value less estimated selling costs, present value of discounted cash flows or observable market price of the impaired loan is lower than the carrying value of that loan.

The general component covers pools of loans by loan class including commercial loans not considered individually impaired, as well as smaller balance homogeneous classes of loans, such as residential real estate, home equity lines of credit and other consumer loans. Accordingly, the Corporation generally does not separately identify individual consumer and residential loans for impairment disclosures, unless such loans are subject to a restructuring agreement. The pools of loans for each loan segment are evaluated for loss exposure based upon average historical net charge-off rates (currently three years), adjusted for qualitative factors. Qualitative risk factors (described in the following paragraph) are evaluated for the impact on each of the three distinct segments (residential mortgage, commercial and consumer) within the loan portfolio. Each qualitative factor is assigned a value to reflect improving, stable or declining conditions based on management's judgment using relevant information available at the time of the evaluation. Any adjustments to the factors are supported by a narrative documentation of changes in conditions accompanying the allowance for loan loss calculation.

The qualitative factors used in the general component calculations are designed to address credit risk characteristics associated with each segment. The Corporation's credit risk associated with all of the segments is significantly impacted by these factors, which include economic conditions within its market area, the Corporation's lending policies, changes or trends in the portfolio, risk profile, competition, regulatory requirements and other factors. Further, the residential mortgage segment is significantly affected by the values of residential real estate that provide collateral for the loans. The majority of the Corporation's commercial segment loans (approximately 71% at December 31, 2012) is secured by real estate, and accordingly, the Corporation's risk for the commercial segment is significantly affected by commercial real estate values. The consumer segment includes a wide mix of loans for different purposes, primarily secured loans, including loans secured by motor vehicles, manufactured housing and other types of collateral.

Loans are classified as impaired when, based on current information and events, it is probable that the Corporation will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower's prior payment record and the amount of shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for commercial loans by the fair value of the collateral (if the loan is collateral dependent), by future cash flows discounted at the loan's effective rate or by the loan's observable market price.

For commercial loans secured by real estate, estimated fair values are determined primarily through third-party appraisals. When a real estate secured loan becomes impaired, a decision is made regarding whether an updated certified appraisal of the real estate is necessary. This decision is based on various considerations, including the age of the most recent appraisal, the loan-to-value ratio based on the original appraisal and the condition of the property. Appraised values are discounted to arrive at the estimated selling price of the collateral, which is considered to be the estimated fair value. The discounts also include estimated costs to sell the property.

For commercial and industrial loans secured by non-real estate collateral, such as accounts receivable, inventory and equipment, estimated fair values are determined based on the borrower's financial statements, inventory reports, accounts receivable agings or equipment appraisals or invoices. Indications of value from these sources are generally discounted based on the age of the financial information or the quality of the assets.

Loans whose terms are modified are classified as troubled debt restructurings if the Corporation grants such borrowers concessions and it is deemed that those borrowers are experiencing financial difficulty. Concessions granted under a troubled debt restructuring generally involve an extension of a loan's stated maturity date or a temporary reduction in interest rate. Non-accrual troubled debt restructurings are restored to accrual status if principal and interest payments, under the modified terms, are current for six consecutive months after modification. Loans classified as troubled debt restructurings are designated as impaired.

BANK PREMISES AND EQUIPMENT - Bank premises and equipment are stated at cost less accumulated depreciation. Repair and maintenance expenditures which extend the useful lives of assets are capitalized, and other repair and maintenance expenditures are expensed as incurred. Depreciation expense is computed using the straight-line method.

IMPAIRMENT OF LONG-LIVED ASSETS - The Corporation reviews long-lived assets, such as premises and equipment and intangibles, for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. These changes in circumstances may include a significant decrease in the market value of an asset or the manner in which an asset is used. If there is an indication the carrying value of an asset may not be recoverable, future undiscounted cash flows expected to result from use of the asset are estimated. If the sum of the expected cash flows is less than the carrying value of the asset, a loss is recognized for the difference between the carrying value and fair market value of the asset.

INTEREST COSTS - The Corporation capitalizes interest as a component of the cost of premises and equipment constructed or acquired for its own use. The amount of capitalized interest in 2012, 2011, and 2010 was not significant.

FORECLOSED ASSETS HELD FOR SALE - Foreclosed assets held for sale consist of real estate acquired by foreclosure and are initially recorded at fair value, less estimated selling costs. Subsequent to foreclosure, revenues are included in Other Operating income and expenses from operations and lower of cost or market changes in the valuation are included in Other Operating Expenses.

GOODWILL AND CORE DEPOSIT INTANGIBLE ASSETS - Goodwill represents the excess of the cost of acquisitions over the fair value of the net assets acquired. Goodwill is tested at least annually for impairment, or more often if events or circumstances indicate there may be impairment. Core deposit intangibles are being amortized over periods of time that represent the expected lives using a method of amortization that reflects the pattern of economic benefit. Core deposit intangibles are subject to impairment testing whenever events or changes in circumstances indicate their carrying amounts may not be recoverable.

SERVICING RIGHTS - The estimated fair value of servicing rights related to mortgage loans sold and serviced by the Corporation is recorded as an asset upon the sale of such loans. The valuation of servicing rights is adjusted quarterly, with changes in fair value included in Other Operating Income in the consolidated statements of operations.   Significant inputs to the valuation include expected net servicing income to be received, the expected life of the underlying loans and the discount rate. The servicing rights asset is included in Other Assets in the consolidated balance sheet, with a balance equal to fair value of $605,000 at December 31, 2012 and $375,000 at December 31, 2011.

INCOME TAXES - Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amount of existing assets and liabilities and their respective tax bases given the provisions of the enacted tax laws. Deferred tax assets are reduced, if necessary, by the amount of such benefits that are not expected to be realized based upon available evidence.The Corporation includes income tax penalties in the provision for income tax. The Corporation has no accrued interest related to unrecognized tax benefits.

STOCK COMPENSATION PLANS - The Corporation's stock-based compensation policy applies to all forms of stock-based compensation including stock options and restricted stock units. All stock-based compensation is accounted for under the fair value method as required by generally accepted accounting principles in the United States. The expense associated with stock-based compensation is recognized over the vesting period of each individual arrangement.

The fair value of each stock option is estimated on the date of grant using the Black-Scholes-Merton option valuation model. The fair value of restricted stock is based on the current market price on the date of grant.

OFF-BALANCE SHEET FINANCIAL INSTRUMENTS - In the ordinary course of business, the Corporation has entered into off-balance sheet financial instruments consisting of commitments to extend credit and standby letters of credit. Such financial instruments are recorded in the financial statements when they become payable.

CASH FLOWS - The Corporation utilizes the net reporting of cash receipts and cash payments for certain deposit and lending activities. Cash equivalents include federal funds sold and all cash and amounts due from depository institutions and interest-bearing deposits in other banks with original maturities of three months or less.

TRUST ASSETS AND INCOME - Assets held by the Corporation in a fiduciary or agency capacity for its customers are not included in the financial statements since such items are not assets of the Corporation. Trust income is recorded on a cash basis, which is not materially different from the accrual basis.

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Parent Company Only (Condensed Balance Sheet) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Other assets	$ 15,880	$ 15,650
Assets	1,286,907	1,323,735
Other Liabilities	8,636	7,831
Liabilities	1,104,121	1,156,350
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	182,786	167,385	138,944	152,410
Liabilities and Stockholders' Equity	1,286,907	1,323,735
Parent Company [Member]
Cash	1,895	1,361
Other assets	7	123
Assets	182,792	167,385
Liabilities	6	0
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest	182,786	167,385
Liabilities and Stockholders' Equity	182,792	167,385
Parent Company [Member] | Citizens & Northern Bank [Member]
Equity Method Investments	168,542	154,473
Parent Company [Member] | Citizens & Northern Investment Corporation [Member]
Equity Method Investments	9,081	8,289
Parent Company [Member] | Bucktail Life Insurance Company [Member]
Equity Method Investments	$ 3,267	$ 3,139

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Securities (Available For Sale Securities Amortized Cost and Fair Value) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Amortized Cost	$ 454,781	$ 465,335
Gross Unrealized Holding Gains	18,283	18,233
Gross Unrealized Holding Losses	(487)	(1,883)
Fair Value	472,577	481,685
Obligations of U.S. Government agencies [Member]
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Amortized Cost	30,695	24,877
Gross Unrealized Holding Gains	572	710
Gross Unrealized Holding Losses	(50)	0
Fair Value	31,217	25,587
Obligations of states and political subdivisions, Tax-exempt [Member]
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Amortized Cost	130,168	129,401
Gross Unrealized Holding Gains	7,030	4,891
Gross Unrealized Holding Losses	(178)	(1,330)
Fair Value	137,020	132,962
Obligations of states and political subdivisions, Taxable [Member]
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Amortized Cost	24,426	14,004
Gross Unrealized Holding Gains	462	334
Gross Unrealized Holding Losses	(71)	(4)
Fair Value	24,817	14,334
Mortgage-backed Securities [Member]
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Amortized Cost	76,368	116,602
Gross Unrealized Holding Gains	3,828	5,167
Gross Unrealized Holding Losses	0	0
Fair Value	80,196	121,769
Collateralized mortgage obligations, Issued by U.S. Government agencies [Member]
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Amortized Cost	179,770	161,818
Gross Unrealized Holding Gains	3,887	3,350
Gross Unrealized Holding Losses	(147)	(37)
Fair Value	183,510	165,131
Trust preferred securities issued by individual institutions [Member]
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Amortized Cost	5,167	7,334
Gross Unrealized Holding Gains	4	865
Gross Unrealized Holding Losses	0	(53)
Fair Value	5,171	8,146
Collateralized debt obligations, Pooled trust preferred securities - senior tranches [Member]
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Amortized Cost	1,615	4,996
Gross Unrealized Holding Gains	0	0
Gross Unrealized Holding Losses	(2)	(358)
Fair Value	1,613	4,638
Collateralized debt obligations, Pooled trust preferred securities - mezzanine tranches [Member]
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Amortized Cost		0
Gross Unrealized Holding Gains		730
Gross Unrealized Holding Losses		0
Fair Value		730
Other Collateralized debt obligations [Member]
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Amortized Cost	660	660
Gross Unrealized Holding Gains	0	0
Gross Unrealized Holding Losses	0	0
Fair Value	660	660
Debt Securities [Member]
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Amortized Cost	448,869	459,692
Gross Unrealized Holding Gains	15,783	16,047
Gross Unrealized Holding Losses	(448)	(1,782)
Fair Value	464,204	473,957
Marketable Equity Securities [Member]
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Amortized Cost	5,912	5,643
Gross Unrealized Holding Gains	2,500	2,186
Gross Unrealized Holding Losses	(39)	(101)
Fair Value	$ 8,373	$ 7,728

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Employee and Postretirement Benefit Plans (Tables)

12 Months Ended

Dec. 31, 2012

Employee and Postretirement Benefit Plans [Abstract]

Schedule of Net Funded Status [Table Text Block]

The following table shows the funded status of the defined benefit plans:

(In Thousands)

	Pension:		Postretirement:
	2012	2011	2012	2011
CHANGE IN BENEFIT OBLIGATION:
Benefit obligation at beginning of year	$1,613	$1,339	$2,054	$1,616
Service cost	0	0	91	83
Interest cost	72	73	81	92
Plan participants' contributions	0	0	199	226
Actuarial (gain) loss	128	222	(87)	322
Benefits paid	(30)	(21)	(257)	(285)
Benefit obligation at end of year	$1,783	$1,613	$2,081	$2,054
CHANGE IN PLAN ASSETS:
Fair value of plan assets at
beginning of year	$1,057	$1,080	$0	$0
Actual return on plan assets	121	(6)	0	0
Employer contribution	694	4	58	59
Plan participants' contributions	0	0	199	226
Benefits paid	(30)	(21)	(257)	(285)
Fair value of plan assets at end of year	$1,842	$1,057	$0	$0
Funded status at end of year	$59	($556)	($2,081)	($2,054)

Schedule of Amounts Recognized in Balance Sheet [Table Text Block]

At December 31, 2012 and 2011, the following pension plan and postretirement plan asset and liability amounts were recognized in the consolidated balance sheet:

(In Thousands)	Pension:		Postretirement:
	2012	2011	2012	2011
Other assets	$59
Accrued interest and other liabilities		$556	$2,081	$2,054

Schedule of Amounts in Accumulated Other Comprehensive Income (Loss) to be Recognized over Next Fiscal Year [Table Text Block]

At December 31, 2012 and 2011, the following items included in accumulated other comprehensive income (loss) had not been recognized as components of expense:

(In Thousands)	Pension:		Postretirement:
	2012	2011	2012	2011
Net transition obligation	$0	$0	$0	$37
Prior service cost	0	0	94	107
Net actuarial loss (gain)	546	494	230	317
Total	$546	$494	$324	$461

Net Periodic Benefit Costs Components [Table Text Block]

The components of net periodic benefit costs from defined benefit plans are as follows:

(In Thousands)	Pension:			Postretirement:
	2012	2011	2010	2012	2011	2010
Service  cost	$0	$0	$0	$91	$83	$68
Interest cost	72	73	67	81	92	89
Expected return on plan assets	(72)	(73)	(66)	0	0	0
Amortization of transition (asset) obligation	0	0	0	37	36	36
Amortization of prior service cost	0	0	0	13	14	14
Recognized net actuarial loss	27	5	3	0	0	0
Total net periodic benefit cost	$27	$5	$4	$222	$225	$207

Schedule of Assumptions Used [Table Text Block]

The weighted-average assumptions used to determine net periodic benefit cost are as follows:

	Pension:			Postretirement:
	2012	2011	2010	2012	2011	2010
Citizens Trust Company Retirement Plan
and postretirement plan:
Discount rate	4.50%	5.50%	5.50%	4.50%	5.50%	6.00%
Expected return on plan assets	7.50%	7.50%	7.50%	N/A	N/A	N/A
Rate of compensation increase	N/A	N/A	N/A	N/A	N/A	N/A

The weighted-average assumptions used to determine benefit obligations as of December 31, 2012 and 2011 are as follows:

	Pension:		Postretirement:
	2012	2011	2012	2010
Discount rate	4.00%	4.50%	4.00%	4.50%
Rate of compensation increase	N/A	N/A	N/A	N/A

Schedule of Expected Benefit Payments [Table Text Block]

Estimated future benefit payments, including only estimated employer contributions for the postretirement plan, which reflect expected future service, are as follows:

(In Thousands)	Pension	Postretirement
2013	$21	$112
2014	236	108
2015	20	105
2016	43	109
2017	19	116
2018-2022	1,420	749

Schedule of Allocation of Plan Assets [Table Text Block]

The fair values of pension plan assets at December 31, 2012 and 2011 are as follows:

	2012	2011
Cash and cash equivalents	37%	3%
Debt securities	24%	39%
Equity securities	27%	40%
Alternative funds	12%	18%
Total	100%	100%

Disclosure of Share-based Compensation Arrangements by Share-based Payment Award [Table Text Block]

The Corporation records stock option expense based on estimated fair value calculated using the Black-Scholes-Merton option-pricing model with the following assumptions:

	2012	2011	2010
Volatility	41%	37%	N/A
Expected option lives	7 Years	8 Years	N/A
Risk-free interest rate	1.53%	3.10%	N/A
Dividend yield	3.97%	3.86%	N/A

Stock Based Compensation Expense [Table Text Block]

Total stock-based compensation expense is as follows:

(In Thousands)	2012	2011	2010
Stock options	$247	$279	$0
Restricted stock	320	144	67
Total	$567	$423	$67

Schedule of Stock Options Roll Forward [Table Text Block]

A summary of stock option activity is presented below:

	2012		2011		2010
		Weighted		Weighted		Weighted
		Average		Average		Average
		Exercise		Exercise		Exercise
	Shares	Price	Shares	Price	Shares	Price
Outstanding, beginning of year	301,797	$19.05	226,894	$20.54	306,358	$20.53
Granted	64,757	$18.54	93,674	$15.06	0
Exercised	(17,284)	$16.20	(13,042)	$16.71	0
Forfeited	(6,830)	$21.51	(5,501)	$18.30	(76,331)	$20.74
Expired	(4,770)	$17.00	(228)	$14.17	(3,133)	$14.11
Outstanding, end of year	337,670	$19.08	301,797	$19.05	226,894	$20.54
Options exercisable at year-end	337,670	$19.08	301,797	$19.05	226,894	$20.54
Weighted-average fair value of options granted		$5.15		$4.26		N/A
Weighted-average fair value of options forfeited		$4.03		$3.95		$3.03

Schedule of Unvested Restricted Stock Units Roll Forward [Table Text Block]

The following summarizes non-vested stock options and restricted stock activity as of and for the year ended December 31, 2012:

	Stock Options		Restricted Stock
		Weighted		Weighted
		Average		Average
	Number	Grant Date	Number	Grant Date
	of Shares	Fair Value	of Shares	Fair Value
Outstanding, December 31, 2011	0		27,071	$14.35
Granted	64,757	$5.15	42,552	$18.54
Vested	(64,757)	$5.15	(7,005)	$16.08
Forfeited	0		(3,560)	$17.85
Outstanding, December 31, 2012	0		59,058	$16.95

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Preferred Stock And Warrant Under The Tarp Capital Purchase Program

12 Months Ended

Dec. 31, 2012

Preferred Stock And Warrant Under The Tarp Capital Purchase Program

PREFERRED STOCK AND WARRANT UNDER THE TARP CAPITAL PURCHASE PROGRAM

21. PREFERRED STOCK AND WARRANT UNDER THE TARP CAPITAL PURCHASE PROGRAM

On January 16, 2009, the Corporation issued 26,440 shares of Series A Preferred Stock ("Preferred Stock") and a Warrant to purchase up to 194,794 shares of common stock at an exercise price of $20.36 per share. The Corporation sold the Preferred Stock and Warrant to the United States Department of the Treasury ("Treasury") under the TARP Capital Purchase Program (the "Program") for an aggregate price of $26,440,000. The Preferred Stock paid a cumulative dividend rate of 5% per annum. On August 4, 2010, the Corporation redeemed all of the Preferred Stock. After repurchasing the Preferred Stock, the Corporation negotiated with the Treasury for repurchase of the Warrant on September 1, 2010 for a total cash cost of $400,000, which was recorded as a reduction in paid-in capital.

In 2009, the Corporation recorded issuance of the Preferred Stock and Warrant as increases in stockholders' equity. Proceeds from the transaction, net of direct issuance costs of $31,000, were allocated between Preferred Stock and the Warrant based on their respective fair values at the date of issuance. The fair value of the Preferred Stock was estimated based on dividend rates on recent preferred stock and other capital issuances by banking companies, and the fair value of the Warrant was estimated using the Black-Scholes-Merton option model. The amount allocated to the Warrant (recorded as an increase in Paid in Capital) was $821,000, and the amount initially allocated to Preferred Stock was $25,588,000. As a result, the Preferred Stock's initial carrying value was at a discount to the liquidation value or stated value of $26,440,000. In accordance with the SEC's Staff Accounting Bulletin No. 68, "Increasing Rate Preferred Stock," the discount is considered an unstated dividend cost that shall be accreted over the period preceding commencement of the perpetual dividend using the effective interest method, by charging the imputed dividend cost against retained earnings and increasing the carrying amount of the Preferred Stock by a corresponding amount. The discount was therefore being accreted over five years, resulting in an effective dividend rate (including stated dividends and the accretion of the discount on Preferred Stock) of 5.80%. In 2010, total dividends on Preferred Stock were deducted from net income to arrive at net income available to common shareholders in the Consolidated Statements of Operations. Dividends on Preferred Stock included quarterly dividends paid, plus dividends accrued based on the stated value and the accretion of the discount on Preferred Stock. The accretion of the discount on Preferred Stock was $691,000 in 2010, including accelerated discount of $607,000 related to the redemption.

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Summary of Quarterly Consolidated Financial Data

12 Months Ended

Dec. 31, 2012

Summary of Quarterly Consolidated Financial Data [Abstract]

SUMMARY OF QUARTERLY CONSOLIDATED FINANCIAL DATA (Unaudited)

20. SUMMARY OF QUARTERLY CONSOLIDATED FINANCIAL DATA (Unaudited)

The following table presents summarized quarterly financial data for 2012 and 2011:

                                                                                                            2012 Quarter Ended

	Mar. 31,	June 30,	Sept. 30,	Dec. 31,
Interest income	$14,776	$14,529	$13,836	$13,491
Interest expense	2,502	2,401	2,228	1,900
Net interest income	12,274	12,128	11,608	11,591
(Credit) provision for loan losses	(182)	367	236	(133)
Net interest income after (credit) provision for loan losses	12,456	11,761	11,372	11,724
Other income	3,759	4,095	4,103	4,360
Net (losses) gains on available-for-sale securities	(2)	203	2,430	51
Loss on prepayment of debt	0	143	2,190	0
Other expenses	8,517	8,137	8,207	7,987
Income before income tax provision	7,696	7,779	7,508	8,148
Income tax provision	2,109	2,094	2,014	2,209
Net income available to common shareholders	$5,587	$5,685	$5,494	$5,939
Net income per share – basic	$0.46	$0.46	$0.45	$0.48
Net income per share – diluted	$0.46	$0.46	$0.45	$0.48

2011 Quarter Ended

	Mar. 31,	June 30,	Sept. 30,	Dec. 31,
Interest income	$15,298	$15,443	$15,317	$15,198
Interest expense	4,016	3,628	3,108	2,804
Net interest income	11,282	11,815	12,209	12,394
(Credit) provision for loan losses	(192)	31	(37)	(87)
Net interest income after (credit) provision for loan losses	11,474	11,784	12,246	12,481
Other income	2,555	3,673	3,999	3,711
Net gains on available-for-sale securities	1,839	163	26	188
Other expenses	8,263	7,794	8,052	7,948
Income before income tax provision	7,605	7,826	8,219	8,432
Income tax provision	2,064	2,129	2,230	2,291
Net income available to common shareholders	$5,541	$5,697	$5,989	$6,141
Net income per share – basic	$0.46	$0.47	$0.49	$0.51
Net income per share – diluted	$0.45	$0.47	$0.49	$0.51

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Defined Benefit Plans (Net Periodic Benefit Costs) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Pension Plans, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Service cost	$ 0	$ 0	$ 0
Interest cost	72	73	67
Expected return on plan assets	(72)	(73)	(66)
Amortization of transition (asset) obligation	0	0	0
Amortization of prior service cost	0	0	0
Recognized net actuarial loss	27	5	3
Net periodic benefit cost	27	5	4
Other Postretirement Benefit Plans, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Service cost	91	83	68
Interest cost	81	92	89
Expected return on plan assets	0	0	0
Amortization of transition (asset) obligation	37	36	36
Amortization of prior service cost	13	14	14
Recognized net actuarial loss	0	0	0
Net periodic benefit cost	$ 222	$ 225	$ 207

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Cash And Due From Banks (Cash and Due From Banks) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Cash and Due from Banks [Abstract]
Cash and cash equivalents	$ 55,016	$ 56,815
Certificates of deposit	4,820	3,760
Total cash and due from banks	$ 59,836	$ 60,575

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Income Taxes [Abstract]

Deferred Tax Assets and Liabilities [Table Text Block]

The net deferred tax asset at December 31, 2012 and 2011 represents the following temporary difference components:

	December 31,	December 31,
(In Thousands)	2012	2011
Deferred tax assets:
Defined benefit plans - ASC 835	$305	$324
Net realized losses on securities	1,254	3,175
Allowance for loan losses	2,400	2,697
Credit for alternative minimum tax paid	3,609	4,569
Net operating loss carryforwards	0	44
General business credit carryforwards	0	831
Other deferred tax assets	2,019	1,671
Total deferred tax assets	9,587	13,311
Deferred tax liabilities:
Unrealized holding gains on securities	6,228	5,559
Bank premises and equipment	1,337	1,357
Core deposit intangibles	48	74
Other deferred tax liabilities	249	148
Total deferred tax liabilities	7,862	7,138
Deferred tax asset, net	$1,725	$6,173

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

The provision for income taxes includes the following:

(In thousands)	2012	2011	2010
Currently payable (refundable)	$4,545	$4,792	($735)
Tax expense resulting from allocations
of certain tax benefits to equity or as a
reduction in other assets	121	104	164
Deferred	3,760	3,818	6,371
Total provision	$8,426	$8,714	$5,800

Effective Tax Rate Reconciliation [Table Text Block]

A reconciliation of income tax at the statutory rate to the Corporation's effective rate is as follows (amounts in thousands):

(Amounts in thousands)	2012		2011		2010
	Amount	%	Amount	%	Amount	%
Expected provision	$10,896	35.00	$11,229	35.00	$8,699	35.00
Valuation allowance on deferred tax assets	0	0.00	0	0.00	(373)	(1.50)
Tax-exempt interest income	(2,287)	(7.35)	(2,292)	(7.14)	(2,208)	(8.88)
Nondeductible interest expense	92	0.30	129	0.40	169	0.68
Dividends received deduction	(78)	(0.25)	(66)	(0.21)	(64)	(0.26)
Increase in cash surrender value of life insurance	(159)	(0.51)	(178)	(0.55)	(163)	(0.66)
Employee stock option compensation	62	0.20	85	0.26	0	0.00
Other, net	(100)	(0.32)	60	0.19	(80)	(0.32)
Surtax exemption	0	0.00	(253)	(0.79)	(180)	(0.72)
Effective income tax provision	$8,426	27.07	$8,714	27.16	$5,800	23.34

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Impairment of Limited Partnership Investment

12 Months Ended

Dec. 31, 2012

Impairment of Limited Partnership Investment [Abstract]

IMPAIRMENT OF LIMITED PARTNERSHIP INVESTMENT [Text Block]

22. IMPAIRMENT OF LIMITED PARTNERSHIP INVESTMENT

In the first quarter 2011, the Corporation reported an impairment loss of $948,000 related to an investment in a real estate limited partnership. This investment had been included in Other Assets in the consolidated balance sheet at December 31, 2010. Based on updated financial information, management prepared an estimated valuation based on cash flow analysis. That analysis showed the estimated cash flows to be derived from the limited partnership's activities would not be sufficient to provide a return on the Corporation's limited partnership investment. Accordingly, management made the decision to completely write-off the limited partnership investment in the first quarter 2011.

In addition to the limited partnership investment, the Corporation has a loan receivable from the limited partnership with a balance of $1,021,000 at December 31, 2012 and $1,036,000 at December 31, 2011. The loan was scheduled to mature with a balloon payment of approximately $1,022,000 plus interest due in December 2012; however, the maturity date was extended to June 2013 to permit additional time for sale of the underlying real estate collateral. Based on management's estimate of the value of the underlying collateral, the Corporation has no allowance for loan losses associated with the loan to the limited partnership at December 31, 2012.

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Sale-Leaseback of Bank Facility

12 Months Ended

Dec. 31, 2012

Sale-Leaseback of Bank Facility [Abstract]

SALE-LEASEBACK OF BANK FACILITY

23. SALE-LEASEBACK OF BANK FACILITY

In 2011, the Corporation sold its banking facility at 130 Court Street, Williamsport, PA, and entered into a leasing arrangement to continue to utilize a portion of the facility. Proceeds from the sale, net of selling costs, amounted to $3,024,000, and the gain on sale of $329,000 is included in Other Operating Income in the Consolidated Statements of Income in the year ended December 31, 2011. The leaseback is for use of approximately 18% of the total building space, for a period of two years with monthly rent of approximately $8,000 per month, plus allocable utilities, property taxes and other building-related expenses identified in the lease. The lease provides the Corporation with an option to renew for an additional two years, for monthly rent of approximately $9,000 per month, plus allocable building-related expenses. The Corporation's continuing interest in the property is limited to its role as lessee, and the Corporation did not provide financing to the buyer. The Corporation has accounted for the leaseback as an operating lease.

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 22,705	$ 23,368	$ 19,055
Adjustments to reconcile net income to net cash provided by operating activities:
Provision (credit) for loan losses	288	(285)	1,191
Realized gains on available-for-sale securities, net	(2,682)	(2,216)	(829)
Loss on prepayment of debt	2,333	0	0
Gain on disposition of premises and equipment	(270)	(324)	(445)
Loss (gain) on sale of foreclosed assets, net	66	(41)	(108)
Depreciation expense	1,939	2,077	2,339
Accretion and amortization on securities, net	1,581	1,317	2,233
Accretion and amortization on loans, deposits and borrowings, net	(49)	(35)	(262)
Amortization of mortgage servicing rights	97	68	12
Impairment loss on limited partnership interest	0	948	0
Increase in cash surrender value of life insurance	(455)	(509)	(466)
Stock-based compensation	567	423	67
Amortization of core deposit intangibles	74	114	176
Deferred income taxes	3,760	3,818	6,371
Gains on sales of mortgage loans, net	(1,925)	(1,107)	(761)
Origination of mortgage loans for sale	(62,829)	(26,610)	(30,720)
Proceeds from sales of mortgage loans	62,821	31,786	26,826
Net decrease in trading securities	0	0	1,045
(Increase) decrease in accrued interest receivable and other assets	1,043	(3,580)	(9,624)
Increase (decrease) in accrued interest payable and other liabilities	674	1,092	(302)
Net Cash Provided by Operating Activities	27,652	37,464	35,046
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of certificates of deposit	(1,060)	(3,760)	0
Proceeds from maturity of held-to-maturity securities	0	0	300
Proceeds from sales of available-for-sale securities	24,228	25,471	53,115
Proceeds from calls and maturities of available-for-sale securities	114,247	108,138	163,618
Purchase of available-for-sale securities	(126,820)	(152,044)	(267,082)
Redemption of Federal Home Loan Bank of Pittsburgh stock	1,931	1,513	429
Net decrease (increase) in loans	22,320	19,264	(10,330)
Proceeds from bank-owned life insurance	0	1,442	1,442
Purchase of premises and equipment	(1,622)	(998)	(707)
Proceeds from disposition of premises and equipment	456	3,060	103
Purchase of investment in limited liability entity	(538)	(397)	0
Return of principal on limited liability entity investments	114	116	66
Proceeds from sale of foreclosed assets	1,380	1,112	1,169
Net Cash Provided by (Used In) Investing Activities	34,636	2,917	(57,877)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase in deposits	(12,106)	13,839	77,537
Net increase (decrease) in short-term borrowings	617	(13,463)	(20,816)
Repayments of long-term borrowings	(43,884)	(23,132)	(47,607)
Redemption of US Treasury preferred stock and warrant	0	0	(26,840)
Purchase of treasury stock	0	(1,022)	0
Sale of treasury stock	229	71	0
Tax benefit from compensation plans	118	67	42
US Treasury preferred dividends paid	0	0	(952)
Common dividends paid	(9,061)	(6,227)	(4,297)
Net Cash Used in Financing Activities	(64,087)	(29,867)	(22,933)
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(1,799)	10,514	(45,764)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR	56,815	46,301	92,065
CASH AND CASH EQUIVALENTS, END OF YEAR	55,016	56,815	46,301
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Assets acquired through foreclosure of real estate loans	1,004	1,769	725
Interest paid	9,246	13,609	19,614
Income taxes paid (refunded)	$ 4,250	$ 3,616	$ (8,134)

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Nature Of Operations And Summary Of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2012

Nature of Operations and Summary of Significant Accounting Policies [Abstract]

Basis Of Consolidation [Policy Text Block]

BASIS OF CONSOLIDATION - The consolidated financial statements include the accounts of Citizens & Northern Corporation and its subsidiaries, Citizens & Northern Bank ("C&N Bank"), Bucktail Life Insurance Company and Citizens & Northern Investment Corporation (collectively, "Corporation"), as well as C&N Bank's wholly-owned subsidiary, C&N Financial Services Corporation. The consolidated financial statements also include the accounts of the former Canisteo Valley Corporation (merged into Citizens & Northern Corporation in September 2010) and its former wholly-owned subsidiary, First State Bank (merged into C&N Bank, effective September 1, 2010). All material intercompany balances and transactions have been eliminated in consolidation.

Nature of Operations [Policy Text Block]

NATURE OF OPERATIONS - The Corporation is primarily engaged in providing a full range of banking and mortgage services to individual and corporate customers in North Central Pennsylvania and Southern New York State. Lending products include mortgage loans, commercial loans and consumer loans, as well as specialized instruments such as commercial letters-of-credit. Deposit products include various types of checking accounts, passbook and statement savings, money market accounts, interest checking accounts, Individual Retirement Accounts and certificates of deposit. The Corporation also offers non-insured "RepoSweep" accounts.

The Corporation provides Trust and Financial Management services, including administration of trusts and estates, retirement plans, and other employee benefit plans, and investment management services. The Corporation offers a variety of personal and commercial insurance products through C&N Financial Services Corporation. C&N Financial Services Corporation also offers mutual funds, annuities, educational savings accounts and other investment products through registered agents. Management has determined that the Corporation has one reportable segment, "Community Banking." All of the Corporation's activities are interrelated, and each activity is dependent and assessed based on how each of the activities of the Corporation supports the others.

The Corporation is subject to competition from other financial institutions. It is also subject to regulation by certain federal and state agencies and undergoes periodic examination by those regulatory authorities. As a consequence, the Corporation's business is particularly susceptible to being affected by future federal and state legislation and regulations.

Use of Estimates [Policy Text Block]

USE OF ESTIMATES - The financial information is presented in accordance with generally accepted accounting principles and general practice for financial institutions in the United States of America. In preparing financial statements, management is required to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements. In addition, these estimates and assumptions affect revenues and expenses in the financial statements and as such, actual results could differ from those estimates.

Material estimates that are particularly susceptible to change include: (1) the allowance for loan losses, (2) fair values of debt securities based on estimates from independent valuation services or from brokers, (3) fair values of debt securities based on unobservable inputs, as determined using management's estimates of cash flows and applicable discount rates,(4) assessment of impaired securities to determine whether or not the securities are other-than-temporarily impaired, (5) valuation of deferred tax assets and (6) valuation of obligations from defined benefit plans.

Investment Securities [Policy Text Block]

INVESTMENT SECURITIES - Investment securities are accounted for as follows:

Available-for-sale securities - includes debt securities not classified as held-to-maturity or trading, and unrestricted equity securities. Such securities are reported at fair value, with unrealized gains and losses excluded from earnings and reported separately through accumulated other comprehensive income, net of tax. Amortization of premiums and accretion of discounts on available-for-sale securities are recorded using the level yield method over the remaining contractual life of the securities, adjusted for actual prepayments. Realized gains and losses on sales of available-for-sale securities are computed on the basis of specific identification of the adjusted cost of each security. Securities within the available-for-sale portfolio may be used as part of the Corporation's asset and liability management strategy and may be sold in response to changes in interest rate risk, prepayment risk or other factors.

Other-than-temporary impairment - Declines in the fair value of available-for-sale securities that are deemed to be other-than-temporary are reflected in earnings as realized losses. In estimating other-than-temporary impairment losses, management considers (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) the intent and ability of the Corporation to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value, and (4) whether the Corporation intends to sell the security or if it is more likely than not that the Corporation will be required to sell the security before the recovery of its amortized cost basis. The credit-related impairment is recognized in earnings, and is the difference between a security's amortized cost basis and the present value of expected future cash flows discounted at the security's effective interest rate. For debt securities classified as held-to-maturity, if any, the amount of noncredit-related impairment is recognized in other comprehensive income and accreted over the remaining life of the debt security as an increase in the carrying value of the security. In addition, the risk of future other-than-temporary impairment may be influenced by additional bank failures, prolonged recession in the U.S. economy, changes to real estate values, interest deferrals and whether the federal government provides assistance to financial institutions.

Restricted equity securities - Restricted equity securities consist primarily of Federal Home Loan Bank of Pittsburgh stock, and are carried at cost and evaluated for impairment. Holdings of restricted equity securities are included in Other Assets in the Consolidated Balance Sheet, and dividends received on restricted securities are included in Other Income in the Consolidated Statement of Income.

Loand Held for Sale [Policy Text Block]

LOANS HELD FOR SALE - Mortgage loans held for sale are reported at the lower of cost or market, determined in the aggregate.

Loans Receivable [Policy Text Block]

LOANS RECEIVABLE - Loans receivable which management has the intent and ability to hold for the foreseeable future or until maturity or payoff are stated at unpaid principal balances, less the allowance for loan losses and net deferred loan fees. Interest income is accrued on the unpaid principal balance. Loan origination and commitment fees, as well as certain direct origination costs, are deferred and amortized as a yield adjustment over the lives of the related loans using the interest method.

The loans receivable portfolio is segmented into residential mortgage, commercial and consumer loans. The residential mortgage segment includes the following classes: first and junior lien residential mortgages, home equity lines of credit and residential construction loans. The most significant classes of commercial loans are commercial loans secured by real estate, non-real estate secured commercial and industrial loans, loans to political subdivisions, commercial construction, and loans secured by farmland.

Loans are placed on nonaccrual status for all classes of loans when, in the opinion of management, collection of interest is doubtful. Any unpaid interest previously accrued on those loans is reversed from income. Interest income is not recognized on specific impaired loans unless the likelihood of further loss is remote. Interest payments received on loans for which the risk of further loss is greater than remote are applied as a reduction of the loan principal balance. Interest income on other nonaccrual loans is recognized only to the extent of interest payments received. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time (generally six months) and the ultimate collectability of the total contractual principal and interest is no longer in doubt. The past due status of all classes of loans receivable is determined based on contractual due dates for loan payments. Also, the amortization of deferred loan fees is discontinued when a loan is placed on nonaccrual status.

Allowance For Loan Losses [Policy Text Block]

ALLOWANCE FOR LOAN LOSSES - The allowance for loan losses represents management's estimate of losses inherent in the loan portfolio as of the balance sheet date and is recorded as a reduction to loans. The allowance for loan losses is increased by the provision for loan losses, and decreased by charge-offs, net of recoveries. Loans deemed to be uncollectible are charged against the allowance for loan losses, and subsequent recoveries, if any, are credited to the allowance. All, or part, of the principal balance of loans receivable are charged off to the allowance as soon as it is determined that the repayment of all, or part, of the principal balance is highly unlikely. Non-residential consumer loans are generally charged off no later than when they are 120 days past due on a contractual basis, or earlier in the event of bankruptcy or if there is an amount deemed uncollectible.

The allowance for loan losses is maintained at a level considered adequate to provide for losses that can be reasonably anticipated. Management performs a quarterly evaluation of the adequacy of the allowance. The allowance is based on the Corporation's past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower's ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision as more information becomes available. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Corporation's allowance for loan losses. Such agencies may require the Corporation to recognize adjustments to the allowance based on their judgments of information available to them at the time of their examination. In the process of evaluating the loan portfolio, management also considers the Corporation's exposure to losses from unfunded loan commitments. As of December 31, 2012 and 2011, management determined that no allowance for credit losses related to unfunded loan commitments was required.

The allowance consists primarily of two major components – (1) a specific component based on a detailed assessment of certain larger loan relationships, mainly commercial purpose, determined on a loan-by-loan basis; and (2) a general component for the remainder of the portfolio based on a collective evaluation of pools of loans with similar risk characteristics. The general component is assigned to each pool of loans based on both historical net charge-off experience, and an evaluation of certain qualitative factors. An unallocated component is maintained to cover uncertainties that could affect management's estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the above methodologies for estimating specific and general losses in the portfolio.

The specific component relates to loans that are classified as impaired based on a detailed assessment of certain larger loan relationships evaluated by a management committee referred to as the Watch List Committee. Specific loan relationships are identified for evaluation based on the related credit risk rating. For individual loans classified as impaired, an allowance is established when the collateral value less estimated selling costs, present value of discounted cash flows or observable market price of the impaired loan is lower than the carrying value of that loan.

The general component covers pools of loans by loan class including commercial loans not considered individually impaired, as well as smaller balance homogeneous classes of loans, such as residential real estate, home equity lines of credit and other consumer loans. Accordingly, the Corporation generally does not separately identify individual consumer and residential loans for impairment disclosures, unless such loans are subject to a restructuring agreement. The pools of loans for each loan segment are evaluated for loss exposure based upon average historical net charge-off rates (currently three years), adjusted for qualitative factors. Qualitative risk factors (described in the following paragraph) are evaluated for the impact on each of the three distinct segments (residential mortgage, commercial and consumer) within the loan portfolio. Each qualitative factor is assigned a value to reflect improving, stable or declining conditions based on management's judgment using relevant information available at the time of the evaluation. Any adjustments to the factors are supported by a narrative documentation of changes in conditions accompanying the allowance for loan loss calculation.

The qualitative factors used in the general component calculations are designed to address credit risk characteristics associated with each segment. The Corporation's credit risk associated with all of the segments is significantly impacted by these factors, which include economic conditions within its market area, the Corporation's lending policies, changes or trends in the portfolio, risk profile, competition, regulatory requirements and other factors. Further, the residential mortgage segment is significantly affected by the values of residential real estate that provide collateral for the loans. The majority of the Corporation's commercial segment loans (approximately 71% at December 31, 2012) is secured by real estate, and accordingly, the Corporation's risk for the commercial segment is significantly affected by commercial real estate values. The consumer segment includes a wide mix of loans for different purposes, primarily secured loans, including loans secured by motor vehicles, manufactured housing and other types of collateral.

Loans are classified as impaired when, based on current information and events, it is probable that the Corporation will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower's prior payment record and the amount of shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for commercial loans by the fair value of the collateral (if the loan is collateral dependent), by future cash flows discounted at the loan's effective rate or by the loan's observable market price.

For commercial loans secured by real estate, estimated fair values are determined primarily through third-party appraisals. When a real estate secured loan becomes impaired, a decision is made regarding whether an updated certified appraisal of the real estate is necessary. This decision is based on various considerations, including the age of the most recent appraisal, the loan-to-value ratio based on the original appraisal and the condition of the property. Appraised values are discounted to arrive at the estimated selling price of the collateral, which is considered to be the estimated fair value. The discounts also include estimated costs to sell the property.

For commercial and industrial loans secured by non-real estate collateral, such as accounts receivable, inventory and equipment, estimated fair values are determined based on the borrower's financial statements, inventory reports, accounts receivable agings or equipment appraisals or invoices. Indications of value from these sources are generally discounted based on the age of the financial information or the quality of the assets.

Loans whose terms are modified are classified as troubled debt restructurings if the Corporation grants such borrowers concessions and it is deemed that those borrowers are experiencing financial difficulty. Concessions granted under a troubled debt restructuring generally involve an extension of a loan's stated maturity date or a temporary reduction in interest rate. Non-accrual troubled debt restructurings are restored to accrual status if principal and interest payments, under the modified terms, are current for six consecutive months after modification. Loans classified as troubled debt restructurings are designated as impaired.

Bank Premises And Equipment [Policy Text Block]

BANK PREMISES AND EQUIPMENT - Bank premises and equipment are stated at cost less accumulated depreciation. Repair and maintenance expenditures which extend the useful lives of assets are capitalized, and other repair and maintenance expenditures are expensed as incurred. Depreciation expense is computed using the straight-line method.

Impairment of Long-Lived Assets [Policy Text Block]

IMPAIRMENT OF LONG-LIVED ASSETS - The Corporation reviews long-lived assets, such as premises and equipment and intangibles, for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. These changes in circumstances may include a significant decrease in the market value of an asset or the manner in which an asset is used. If there is an indication the carrying value of an asset may not be recoverable, future undiscounted cash flows expected to result from use of the asset are estimated. If the sum of the expected cash flows is less than the carrying value of the asset, a loss is recognized for the difference between the carrying value and fair market value of the asset.

Interest Costs [Policy Text Block]

INTEREST COSTS - The Corporation capitalizes interest as a component of the cost of premises and equipment constructed or acquired for its own use. The amount of capitalized interest in 2012, 2011, and 2010 was not significant.

Foreclosed Assets Held for Sale [Policy Text Block]

FORECLOSED ASSETS HELD FOR SALE - Foreclosed assets held for sale consist of real estate acquired by foreclosure and are initially recorded at fair value, less estimated selling costs. Subsequent to foreclosure, revenues are included in Other Operating income and expenses from operations and lower of cost or market changes in the valuation are included in Other Operating Expenses.

Goodwill And Core Deposit Intangible Assets [Policy Text Block]

GOODWILL AND CORE DEPOSIT INTANGIBLE ASSETS - Goodwill represents the excess of the cost of acquisitions over the fair value of the net assets acquired. Goodwill is tested at least annually for impairment, or more often if events or circumstances indicate there may be impairment. Core deposit intangibles are being amortized over periods of time that represent the expected lives using a method of amortization that reflects the pattern of economic benefit. Core deposit intangibles are subject to impairment testing whenever events or changes in circumstances indicate their carrying amounts may not be recoverable.

Servicing Rights [Policy Text Block]

SERVICING RIGHTS - The estimated fair value of servicing rights related to mortgage loans sold and serviced by the Corporation is recorded as an asset upon the sale of such loans. The valuation of servicing rights is adjusted quarterly, with changes in fair value included in Other Operating Income in the consolidated statements of operations.   Significant inputs to the valuation include expected net servicing income to be received, the expected life of the underlying loans and the discount rate. The servicing rights asset is included in Other Assets in the consolidated balance sheet, with a balance equal to fair value of $605,000 at December 31, 2012 and $375,000 at December 31, 2011.

Income Taxes [Policy Text Block]

INCOME TAXES - Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amount of existing assets and liabilities and their respective tax bases given the provisions of the enacted tax laws. Deferred tax assets are reduced, if necessary, by the amount of such benefits that are not expected to be realized based upon available evidence.The Corporation includes income tax penalties in the provision for income tax. The Corporation has no accrued interest related to unrecognized tax benefits.

Stock Compensation Plans [Policy Text Block]

STOCK COMPENSATION PLANS - The Corporation's stock-based compensation policy applies to all forms of stock-based compensation including stock options and restricted stock units. All stock-based compensation is accounted for under the fair value method as required by generally accepted accounting principles in the United States. The expense associated with stock-based compensation is recognized over the vesting period of each individual arrangement.

The fair value of each stock option is estimated on the date of grant using the Black-Scholes-Merton option valuation model. The fair value of restricted stock is based on the current market price on the date of grant.

Off-Balance Sheet Financial Instrument [Policy Text Block]

OFF-BALANCE SHEET FINANCIAL INSTRUMENTS - In the ordinary course of business, the Corporation has entered into off-balance sheet financial instruments consisting of commitments to extend credit and standby letters of credit. Such financial instruments are recorded in the financial statements when they become payable.

Cash Flows [Policy Text Block]

CASH FLOWS - The Corporation utilizes the net reporting of cash receipts and cash payments for certain deposit and lending activities. Cash equivalents include federal funds sold and all cash and amounts due from depository institutions and interest-bearing deposits in other banks with original maturities of three months or less.

Trust Assets and Income [Policy Text Block]

TRUST ASSETS AND INCOME - Assets held by the Corporation in a fiduciary or agency capacity for its customers are not included in the financial statements since such items are not assets of the Corporation. Trust income is recorded on a cash basis, which is not materially different from the accrual basis.

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Loans (Troubled Debt Restructuring In The Past Years) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2011	Dec. 31, 2012 Home equity lines of credit [Member] loan	Dec. 31, 2011 Home equity lines of credit [Member] loan	Dec. 31, 2012 Commercial construction and land [Member] loan	Dec. 31, 2011 Commercial construction and land [Member] loan	Dec. 31, 2012 Commercial loans secured by real estate [Member] loan	Dec. 31, 2011 Commercial loans secured by real estate [Member] loan
Financing Receivable, Recorded Investment [Line Items]
Number Of Contracts		1	1	2	5	2	11
Recorded Investment	$ 1,588	$ 93		$ 1,089		$ 207

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Off-Balance Sheet Risk (Standby Letters of Credit) (Details) (Standby Letters of Credit [Member], USD $) In Thousands, unless otherwise specified	Dec. 31, 2012
Standby Letters of Credit [Member]
Other Commitment, Due in Next Twelve Months	$ 13,895
Other Commitment, Due in Second Year	2,901
Other Commitment, Due in Third Year	278
Other Commitment, Due in Fourth Year	2,587
Other Commitment, Due after Fifth Year	2,447
Other Commitment, Total	$ 22,108

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Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2012

Intangible Assets [Abstract]

Information Related to Core Deposit Intangibles [Table Text Block]

Information related to the core deposit intangibles are as follows

                                                                                             December 31,

         (In Thousands)                                                          2012           2011

Gross amount	$2,034	$2,034
Less: accumulated amortization	(1,896)	(1,822)
Net	$138	$212

Amortization expense was $74,000 in 2012, $114,000 in 2011 and $176,000 in 2010. Estimated amortization expense for each of the ensuing five years is as follows:

Schedule of Expected Amortization Expense [Table Text Block]

   (In Thousands)

2013	$51
2014	35
2015	22
2016	12
2017	6

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Per Common Share Data (Narrative) (Details)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Per Share Data [Abstract]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	145,333	223,333	359,092

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Loans (Summary Of Loans By Type) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	$ 683,910	$ 708,315
Allowance for loan losses	(6,857)	(7,705)	(9,107)	(8,265)
Loans, net	677,053	700,610
Percentage of Gross Loans	100.00%	100.00%
Residential mortgage loans - first liens [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	311,627	331,015
Allowance for loan losses	(2,619)	(3,026)	(2,745)
Percentage of Gross Loans	45.57%	46.73%
Residential mortgage loans - junior liens [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	26,748	28,851
Allowance for loan losses	(247)	(266)	(334)
Percentage of Gross Loans	3.91%	4.07%
Home equity lines of credit [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	33,017	30,037
Allowance for loan losses	(255)	(231)	(218)
Percentage of Gross Loans	4.83%	4.24%
1-4 Family residential construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	12,842	9,959
Allowance for loan losses	(96)	(79)	(208)
Percentage of Gross Loans	1.88%	1.41%
Commercial loans secured by real estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	158,413	156,388
Allowance for loan losses	(1,930)	(2,004)	(3,314)
Percentage of Gross Loans	23.16%	22.08%
Commercial and industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	48,442	57,191
Allowance for loan losses	(581)	(946)	(862)
Percentage of Gross Loans	7.08%	8.07%
Political subdivisions [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	31,789	37,620
Allowance for loan losses	0	0	0
Percentage of Gross Loans	4.65%	5.31%
Commercial construction and land [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	28,200	23,518
Allowance for loan losses	(234)	(267)	(590)
Percentage of Gross Loans	4.12%	3.32%
Loans secured by farmland [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	11,403	10,949
Allowance for loan losses	(129)	(126)	(139)
Percentage of Gross Loans	1.67%	1.55%
Multi-family (5 or more) residential [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	6,745	6,583
Allowance for loan losses	(67)	(66)	(63)
Percentage of Gross Loans	0.99%	0.93%
Agricultural loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	3,053	2,987
Allowance for loan losses	(27)	(27)	(32)
Percentage of Gross Loans	0.45%	0.42%
Other commercial loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	362	552
Allowance for loan losses	(3)	(5)	0
Percentage of Gross Loans	0.05%	0.08%
Total commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	288,407	295,788
Allowance for loan losses	(2,971)	(3,441)	(5,000)
Percentage of Gross Loans	42.17%	41.76%
Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	11,269	12,665
Allowance for loan losses	(228)	(228)	(289)
Percentage of Gross Loans	1.65%	1.79%
Total residential mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	384,234	399,862
Allowance for loan losses	$ (3,217)	$ (3,602)	$ (3,505)
Percentage of Gross Loans	56.18%	56.45%

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
ASSETS
Cash and due from banks: Noninterest-bearing	$ 21,356	$ 17,618
Cash and due from banks: Interest-bearing	38,480	42,957
Total cash and due from banks	59,836	60,575
Available-for-sale securities, at fair value	472,577	481,685
Loans held for sale	2,545	939
Loans receivable	683,910	708,315
Allowance for loan losses	(6,857)	(7,705)
Loans, net	677,053	700,610
Bank-owned life insurance	21,344	20,889
Accrued interest receivable	4,281	4,797
Bank premises and equipment, net	18,707	19,028
Foreclosed assets held for sale	879	1,235
Deferred tax asset, net	1,725	6,173
Intangible asset - Core deposit intangibles	138	212
Intangible asset - Goodwill	11,942	11,942
Other assets	15,880	15,650
TOTAL ASSETS	1,286,907	1,323,735
LIABILITIES
Deposits: Noninterest-bearing	189,941	193,595
Deposits: Interest-bearing	816,165	824,611
Total deposits	1,006,106	1,018,206
Short-term borrowings	5,567	4,950
Long-term borrowings	83,812	125,363
Accrued interest and other liabilities	8,636	7,831
TOTAL LIABILITIES	1,104,121	1,156,350
STOCKHOLDERS' EQUITY
Preferred stock, $1,000 par value; authorized 30,000 shares; $1,000 liquidation preference per share; no shares issued at December 31, 2012 and December 31, 2011	0	0
Common stock, par value $1.00 per share; authorized 20,000,000 shares in 2012 and 2011; issued 12,525,411 at December 31, 2012 and 12,460,920 at December 31, 2011	12,525	12,461
Paid-in capital	68,622	67,568
Retained earnings	94,839	82,302
Treasury stock, at cost; 251,376 shares at December 31, 2012 and 305,391 shares at December 31, 2011	(4,203)	(5,106)
Total Equity Before Accumulated Other Comprehensive Income	171,783	157,225
Accumulated other comprehensive income:
Unrealized gains on available-for-sale securities	11,568	10,791
Defined benefit plans	(565)	(631)
Total accumulated other comprehensive income	11,003	10,160
TOTAL STOCKHOLDERS' EQUITY	182,786	167,385
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	$ 1,286,907	$ 1,323,735

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Related Party Transactions (Tables)

12 Months Ended

Dec. 31, 2012

Related Party Transactions [Abstract]

Schedule of Related Party Transactions [Table Text Block]

Loans to executive officers, directors of the Corporation and its subsidiaries and any associates of the foregoing persons are as follows:

(In Thousands)	Beginning	New		Other	Ending
	Balance	Loans	Repayments	Changes	Balance
11 directors, 7 executive officers 2012	$12,997	$2,517	($1,424)	$35	$14,125
12 directors, 6 executive officers 2011	$11,345	$2,756	($1,107)	$3	$12,997
12 directors, 6 executive officers 2010	$9,914	$1,939	($1,700)	$1,192	$11,345

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Defined Benefit Plans (Narrative) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	0 Months Ended	12 Months Ended
	Jan. 03, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Defined Benefit Plan Disclosure [Line Items]
Pension and Other Postretirement Benefit Contributions		$ 587	$ 559	$ 511
Employee Stock Ownership Plan (ESOP), Cash Contributions to ESOP		507	496	454
Employee Stock Ownership Plan (ESOP), Shares in ESOP		346,218	339,537
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized		850,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant		360,849
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross		64,757	93,674	0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term		5 years 10 months 24 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value		403
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Total Intrinsic Value		72	17
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized		614
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Period for Recognition		1 year 9 months 18 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value		$ 5.15	$ 4.26
Allocated Share-based Compensation Expense		567	423	67
Granted in 2000 and Thereafter [Member]
Defined Benefit Plan Disclosure [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period		6 months
Share-based Compensation Arrangement by Share-based Payment Award, Award Expiration Period		10 years
2010 through 2011 Award [Member]
Defined Benefit Plan Disclosure [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period		3 years
Granted in 2012 [Member]
Defined Benefit Plan Disclosure [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period		4 years
Cash and Cash Equivalents [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Target Allocation Percentage		26	43
Debt Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Target Allocation Percentage		61	38
Marketable Equity Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Target Allocation Percentage		11	17
Other Assets [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Target Allocation Percentage		2	2
Pension Plans, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Expected Future Amortization of Net Actuarial Loss		32
Defined Benefit Plan, Accumulated Benefit Obligation		1,783	1,613
Other Postretirement Benefit Plans, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Expected Future Amortization of Net Actuarial Loss		2
Defined Benefit Plan, Expected Future Amortization of Prior Service Cost		14
Supplemental Employee Retirement Plans, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Officers' Compensation		140	108	95
Director [Member]
Defined Benefit Plan Disclosure [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized		135,000
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period		3 years
Share-based Compensation Arrangement by Share-based Payment Award, Award Expiration Period		10 years
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant		39,450
Stock Options [Member]
Defined Benefit Plan Disclosure [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	64,050
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 19.21
Allocated Share-based Compensation Expense	262	247	279	0
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period		64,757
Restricted Stock [Member]
Defined Benefit Plan Disclosure [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross				9,125
Allocated Share-based Compensation Expense	$ 477	$ 320	$ 144	$ 67
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	37,886	42,552

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Off-Balance Sheet Risk (Credit Risk) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Commitments to Extend Credit [Member]
Concentration Risk, Credit Risk, Financial Instrument, Maximum Exposure	$ 165,972	$ 182,833
Standby Letters of Credit [Member]
Concentration Risk, Credit Risk, Financial Instrument, Maximum Exposure	$ 22,108	$ 22,849

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Consolidated Statement of Changes in Stockholders' Equity (USD $) In Thousands, except Share data	Preferred Stock [Member]	Common Stock [Member]	Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Treasury Stock [Member]	Total
Balance at Dec. 31, 2009	$ 25,749	$ 12,374	$ 66,726	$ 53,027	$ (891)	$ (4,575)	$ 152,410
Shares Balance at Dec. 31, 2009		12,374,481				262,780
Net income				19,055			19,055
Other comprehensive income (loss), net					(710)		(710)
Accretion of discount associated with U.S. Treasury preferred stock	691			(691)			0
Cash dividends on U.S. Treasury preferred stock				783			783
Redemption of U.S. Tresury preferred stock	(26,440)						(26,440)
Redemption of U.S. Treasury warrant			(400)				(400)
Cash dividends declared on common stock				(4,730)			(4,730)
Treasury stock purchased, value							0
Shares issued for dividend reinvestment plan, value		34	399				433
Shares issued for dividend reinvestment plan, shares		33,731
Restricted stock granted, value			(159)			159	0
Restricted stock granted, shares						(9,125)
Forfeiture of restricted stock, value			15			(15)	0
Forfeiture of restricted stock, shares						959
Stock-based compensation expense			67				67
Tax benefit from employee benefit plan				42			42
Balance at Dec. 31, 2010	0	12,408	66,648	65,920	(1,601)	(4,431)	138,944
Shares Balance at Dec. 31, 2010		12,408,212				254,614
Net income				23,368			23,368
Other comprehensive income (loss), net					11,761		11,761
Cash dividends declared on common stock				(7,052)			(7,052)
Treasury stock purchased, value						(1,022)	(1,022)
Treasury stock purchased, shares						70,849
Shares issued for dividend reinvestment plan, value		53	772				825
Shares issued for dividend reinvestment plan, shares		52,708
Shares issued from treasury related to exercise of stock options, value			(11)			82	71
Shares issued from treasury related to exercise of stock options, shares						(4,856)
Restricted stock granted, value			(272)			272	0
Restricted stock granted, shares						(15,622)
Forfeiture of restricted stock, value			7			(7)	0
Forfeiture of restricted stock, shares						406
Stock-based compensation expense			423				423
Tax benefit from stock-based compensation			1				1
Tax benefit from employee benefit plan				66			66
Balance at Dec. 31, 2011	0	12,461	67,568	82,302	10,160	(5,106)	167,385
Shares Balance at Dec. 31, 2011		12,460,920				305,391
Net income				22,705			22,705
Other comprehensive income (loss), net					843		843
Cash dividends declared on common stock				(10,272)			(10,272)
Treasury stock purchased, value							0
Shares issued for dividend reinvestment plan, value		64	1,147				1,211
Shares issued for dividend reinvestment plan, shares		64,491
Shares issued from treasury related to exercise of stock options, value			(22)			251	229
Shares issued from treasury related to exercise of stock options, shares						(15,023)
Restricted stock granted, value			(711)			711	0
Restricted stock granted, shares						(42,552)
Forfeiture of restricted stock, value			59			(59)	0
Forfeiture of restricted stock, shares						3,560
Stock-based compensation expense			567				567
Tax benefit from stock-based compensation			14				14
Tax benefit from employee benefit plan				104			104
Balance at Dec. 31, 2012	$ 0	$ 12,525	$ 68,622	$ 94,839	$ 11,003	$ (4,203)	$ 182,786
Shares Balance at Dec. 31, 2012		12,525,411				251,376

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Borrowed Funds (Long Term Debt Maturities) (Details) (Calc) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Borrowed Funds [Abstract]
Federal Home Loan Bank, Advances, Maturities Summary, Due in Remainder of Fiscal Year	$ 0	$ 23,507
Federal Home Loan Bank, Advances, Maturities Summary, Due in Next Twelve Months	3,211	3,553
Federal Home Loan Bank, Advances, Maturities Summary, Due in Year Four	196	236
Federal Home Loan Bank, Advances, Maturities Summary, Due in Year Fifteen	10,027	10,032
Federal Home Loan Bank, Advances, Maturities Summary, Due in Year Eighteen	1,297	1,892
Federal Home Loan Bank, Advances, Maturities Summary, Due in Year Twenty-Three	1,081	1,143
Federal Home Loan Bank, Advances, Total	$ 15,812	$ 40,363

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Fair Value Measurements and Fair Values of Financial Instruments (Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance, Beginning of Period				$ 482,060					$ 482,060
Accretion and amortization, net									(1,581)	(1,317)	(2,233)
Realized gains, net	51	2,430	203	(2)	188	26	163	1,839	2,682	2,216	829
Unrealized gains (losses) included in other comprehensive income									2,520	13,605	(282)
Balance, End of Period	473,182				482,060				473,182	482,060
Unobservable Inputs [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance, Beginning of Period				5,743				7,604	5,743	7,604	9,114
Issuances of servicing rights									327	239	216
Transfers											(240)
Accretion and amortization, net									(8)	(41)	(279)
Proceeds from sales and calls									(5,264)	(5,099)	(1,859)
Realized gains, net									1,891	179	310
Unrealized losses included in earnings	(97)				(68)				(97)	(68)	(435)
Unrealized gains (losses) included in other comprehensive income									(374)	2,929	777
Balance, End of Period	2,218				5,743				2,218	5,743	7,604
Unobservable Inputs [Member] | Pooled Trust Preferred Securities Senior Tranches[ Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance, Beginning of Period				4,638				7,400	4,638	7,400	8,199
Issuances of servicing rights									0	0	0
Transfers											0
Accretion and amortization, net									(8)	(41)	(117)
Proceeds from sales and calls									(3,429)	(5,001)	(1,309)
Realized gains, net									56	81	0
Unrealized losses included in earnings	0				0				0	0	0
Unrealized gains (losses) included in other comprehensive income									356	2,199	627
Balance, End of Period	1,613				4,638				1,613	4,638	7,400
Unobservable Inputs [Member] | Pooled Trust Preferred Securities Mezzanine Tranches[ Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance, Beginning of Period				730				0	730	0	115
Issuances of servicing rights									0	0	0
Transfers											0
Accretion and amortization, net									0	0	(162)
Proceeds from sales and calls									(1,835)	(98)	(310)
Realized gains, net									1,835	98	310
Unrealized losses included in earnings	0				0				0	0	(103)
Unrealized gains (losses) included in other comprehensive income									(730)	730	150
Balance, End of Period	0				730				0	730	0
Unobservable Inputs [Member] | Trust Preferred Securities Issued by Indvidual Institutions [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance, Beginning of Period											800
Issuances of servicing rights											0
Transfers											(240)
Accretion and amortization, net											0
Proceeds from sales and calls											(240)
Realized gains, net											0
Unrealized losses included in earnings											(320)
Unrealized gains (losses) included in other comprehensive income											0
Balance, End of Period											0
Unobservable Inputs [Member] | Servicing Rights Asset [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance, Beginning of Period				375				204	375	204	0
Issuances of servicing rights									327	239	216
Transfers											0
Accretion and amortization, net									0	0	0
Proceeds from sales and calls									0	0	0
Realized gains, net									0	0	0
Unrealized losses included in earnings	(97)				(68)				(97)	(68)	(12)
Unrealized gains (losses) included in other comprehensive income									0	0	0
Balance, End of Period	$ 605				$ 375				$ 605	$ 375	$ 204

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Defined Benefit Plans (Amounts Recognized in Accumulated Other Comprehensive Income) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Pension Plans, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Net transition obligation	$ 0	$ 0
Prior service cost	0	0
Net actuarial loss (gain)	(546)	(494)
Total	546	494
Other Postretirement Benefit Plans, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Net transition obligation	0	37
Prior service cost	94	107
Net actuarial loss (gain)	(230)	(317)
Total	$ 324	$ 461

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Cash And Due From Banks (Tables)

12 Months Ended

Dec. 31, 2012

Cash and Due from Banks [Abstract]

Cash and Due From Banks [Table Text Block]

(In thousands)	Dec. 31,	Dec. 31,
	2012	2011
Cash and cash equivalents	$55,016	$56,815
Certificates of deposit	4,820	3,760
Total cash and due from banks	$59,836	$60,575

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Securities (Amortized Cost and Fair Value of Available-for-sale Securities) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Due in one year or less, Amortized Cost	$ 13,096
Due in one through five years, Amortized Cost	51,586
Due in five through ten years, Amortized Cost	50,518
Due after ten years, Amortized Cost	77,531
Subtotal, Amortized Cost	192,731
Total, Amortized Cost	448,869
Due in one year or less, Fair Value	13,315
Due in one through five years, Fair Value	52,896
Due in five through ten years, Fair Value	51,657
Due after ten years, Fair Value	82,630
Subtotal, Fair Value	200,498
Total, Fair Value	464,204
Mortgage-backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Mortgage-backed securities and obligations, Amortized Cost	76,368
Mortgage-backed securities and obligations, Fair Value	80,196
Collateralized mortgage obligations, Issued by U.S. Government agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Mortgage-backed securities and obligations, Amortized Cost	179,770
Mortgage-backed securities and obligations, Fair Value	$ 183,510

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Income Taxes

12 Months Ended

Dec. 31, 2012

Income Taxes [Abstract]

INCOME TAXES

14. INCOME TAXES

The net deferred tax asset at December 31, 2012 and 2011 represents the following temporary difference components:

	December 31,	December 31,
(In Thousands)	2012	2011
Deferred tax assets:
Defined benefit plans - ASC 835	$305	$324
Net realized losses on securities	1,254	3,175
Allowance for loan losses	2,400	2,697
Credit for alternative minimum tax paid	3,609	4,569
Net operating loss carryforwards	0	44
General business credit carryforwards	0	831
Other deferred tax assets	2,019	1,671
Total deferred tax assets	9,587	13,311
Deferred tax liabilities:
Unrealized holding gains on securities	6,228	5,559
Bank premises and equipment	1,337	1,357
Core deposit intangibles	48	74
Other deferred tax liabilities	249	148
Total deferred tax liabilities	7,862	7,138
Deferred tax asset, net	$1,725	$6,173

The provision for income taxes includes the following:

(In thousands)	2012	2011	2010
Currently payable (refundable)	$4,545	$4,792	($735)
Tax expense resulting from allocations
of certain tax benefits to equity or as a
reduction in other assets	121	104	164
Deferred	3,760	3,818	6,371
Total provision	$8,426	$8,714	$5,800

A reconciliation of income tax at the statutory rate to the Corporation's effective rate is as follows (amounts in thousands):

(Amounts in thousands)	2012		2011		2010
	Amount	%	Amount	%	Amount	%
Expected provision	$10,896	35.00	$11,229	35.00	$8,699	35.00
Valuation allowance on deferred tax assets	0	0.00	0	0.00	(373)	(1.50)
Tax-exempt interest income	(2,287)	(7.35)	(2,292)	(7.14)	(2,208)	(8.88)
Nondeductible interest expense	92	0.30	129	0.40	169	0.68
Dividends received deduction	(78)	(0.25)	(66)	(0.21)	(64)	(0.26)
Increase in cash surrender value of life insurance	(159)	(0.51)	(178)	(0.55)	(163)	(0.66)
Employee stock option compensation	62	0.20	85	0.26	0	0.00
Other, net	(100)	(0.32)	60	0.19	(80)	(0.32)
Surtax exemption	0	0.00	(253)	(0.79)	(180)	(0.72)
Effective income tax provision	$8,426	27.07	$8,714	27.16	$5,800	23.34

The deferred tax asset from realized losses on securities resulted primarily from OTTI charges for financial statement purposes that are not deductible for income tax reporting purposes through December 31, 2012. Of the total deferred tax asset from realized losses on securities, $346,000 is from securities that, if the Corporation were to sell them, would be classified as capital losses for income tax reporting purposes.

The Corporation has no unrecognized tax benefits, nor pending examination issues related to tax positions taken in preparation of its income tax returns. With limited exceptions, the Corporation is no longer subject to examination by the Internal Revenue Service for years prior to 2009.

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Fair Value Measurements and Fair Values of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2012

Fair Value Measurements and Fair Values of Financial Instruments [Abstract]

Fair Value, by Balance Sheet Grouping [Table Text Block]

At December 31, 2012 and 2011, assets measured at fair value and the valuation methods used are as follows:

		December 31, 2012
	Quoted Prices	Other
	in Active	Observable	Unobservable	Total
	Markets	Inputs	Inputs	Fair
(In Thousands)	(Level 1)	(Level 2)	(Level 3)	Value
Recurring fair value measurements
AVAILABLE-FOR-SALE SECURITIES:
Obligations of U.S. Government agencies	$0	$31,217	$0	$31,217
Obligations of states and political subdivisions:
Tax-exempt	0	137,020	0	137,020
Taxable	0	24,817	0	24,817
Mortgage-backed securities	0	80,196	0	80,196
Collateralized mortgage obligations,
Issued by U.S. Government agencies	0	183,510	0	183,510
Trust preferred securities issued by individual institutions	0	5,171	0	5,171
Collateralized debt obligations:
Pooled trust preferred securities - senior tranches	0	0	1,613	1,613
Other collateralized debt obligations	0	660	0	660
Total debt securities	0	462,591	1,613	464,204
Marketable equity securities	8,373	0	0	8,373
Total available-for-sale securities	8,373	462,591	1,613	472,577
Servicing rights	0	0	605	605
Total recurring fair value measurements	$8,373	$462,591	$2,218	$473,182
Nonrecurring fair value measurements
Impaired loans with a valuation allowance	$0	$0	$2,710	$2,710
Valuation allowance	0	0	(623)	(623)
Impaired loans, net	0	0	2,087	2,087
Foreclosed assets held for sale	0	0	879	879
Total nonrecurring fair value measurements	$0	$0	$2,966	$2,966

		December 31, 2011
	Quoted Prices	Other
	in Active	Observable	Unobservable	Total
	Markets	Inputs	Inputs	Fair
(In Thousands)	(Level 1)	(Level 2)	(Level 3)	Value
Recurring fair value measurements
AVAILABLE-FOR-SALE SECURITIES:
Obligations of U.S. Government agencies	$0	$25,587	$0	$25,587
Obligations of states and political subdivisions:
Tax-exempt	0	132,962	0	132,962
Taxable	0	14,334	0	14,334
Mortgage-backed securities	0	121,769	0	121,769
Collateralized mortgage obligations,
Issued by U.S. Government agencies	0	165,131	0	165,131
Trust preferred securities issued by individual institutions	0	8,146	0	8,146
Collateralized debt obligations:
Pooled trust preferred securities - senior tranches	0	0	4,638	4,638
Pooled trust preferred securities - mezzanine tranches	0	0	730	730
Other collateralized debt obligations	0	660	0	660
Total debt securities	0	468,589	5,368	473,957
Marketable equity securities	7,728	0	0	7,728
Total available-for-sale securities	7,728	468,589	5,368	481,685
Servicing rights	0	0	375	375
Total recurring fair value measurements	$7,728	$468,589	$5,743	$482,060
Nonrecurring fair value measurements
Impaired loans with a valuation allowance	$0	$0	$3,433	$3,433
Valuation allowance	0	0	(1,126)	(1,126)
Impaired loans, net	0	0	2,307	2,307
Foreclosed assets held for sale	0	0	1,235	1,235
Total nonrecurring fair value measurements	$0	$0	$3,542	$3,542

Fair Value Inputs, Assets, Quantitative Information [Table Text Block]

	Fair Value at
	12/31/12	Valuation	Unobservable	Method or Value As of
Asset	(In Thousands)	Technique	Input(s)	12/31/12
Pooled trust preferred securities - senior tranches	$1,613	Discounted cash flow	Issuer defaults	50.26%	Actual deferrals and defaults as % of outstanding collateral
				19.73%	Expected additional net deferrals and defaults as % of performing collateral
			Issuer prepayments	41.24%	Expected issuer prepayments as % of performing collateral
			Discount rate	11.70%	Implied 7.57% discount rate at 12/31/07 plus 4.13% spread for credit and liquidity risk
Servicing rights	605	Discounted cash flow	Discount rate	12.00%	Rate used through modeling period
			Loan prepayment speeds	288.00%	Weighted-average PSA
			Servicing fees	0.25%	of loan balances
				5.00%	of payments are late
				5.00%	late fees assessed
				$1.94	Miscellaneous fees per account per month
			Servicing costs	$6.00	Monthly servicing cost per account
				$24.00	Additional monthly servicing cost per loan on loans more than 30 days delinquent
				1.50%	of loans more than 30 days delinquent
				3.00%	annual increase in servicing costs

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

Following is a reconciliation of activity for Level 3 assets measured at fair value on a recurring basis:

	Year Ended December 31, 2012
	Pooled Trust	Pooled Trust
	Preferred	Preferred
	Securities -	Securities -
(In Thousands)	Senior	Mezzanine	Servicing
	Tranches	Tranches	Rights	Total
Balance, beginning of period	$4,638	$730	$375	$5,743
Issuances of servicing rights	0	0	327	327
Accretion and amortization, net	(8)	0	0	(8)
Proceeds from sales and calls	(3,429)	(1,835)	0	(5,264)
Realized gains, net	56	1,835	0	1,891
Unrealized losses included in earnings	0	0	(97)	(97)
Unrealized gains (losses) included in
other comprehensive income	356	(730)	0	(374)
Balance, end of period	$1,613	$0	$605	$2,218

	Year Ended December 31, 2011
	Pooled Trust	Pooled Trust
	Preferred	Preferred
	Securities -	Securities -
	Senior	Mezzanine	Servicing
	Tranches	Tranches	Rights	Total
Balance, beginning of period	$7,400	$0	$204	$7,604
Issuances of servicing rights	0	0	239	239
Accretion and amortization, net	(41)	0	0	(41)
Proceeds from sales and calls	(5,001)	(98)	0	(5,099)
Realized gains, net	81	98	0	179
Unrealized losses included in earnings	0	0	(68)	(68)
Unrealized gains included in
other comprehensive income	2,199	730	0	2,929
Balance, end of period	$4,638	$730	$375	$5,743

	Year Ended December 31, 2010
	Pooled Trust	Pooled Trust	Trust Preferred
	Preferred	Preferred	Securities
	Securities -	Securities -	Issued by
	Senior	Mezzanine	Individual	Servicing
	Tranches	Tranches	Institutions	Rights	Total
Balance, beginning of period	$8,199	$115	$800	$0	$9,114
Issuances of servicing rights	0	0	0	216	216
Transfers	0	0	(240)	0	(240)
Accretion and amortization, net	(117)	(162)	0	0	(279)
Proceeds from sales and calls	(1,309)	(310)	(240)	0	(1,859)
Realized gains, net	0	310	0	0	310
Unrealized losses included in earnings	0	(103)	(320)	(12)	(435)
Unrealized gains included in
other comprehensive income	627	150	0	0	777
Balance, end of period	$7,400	$0	$0	$204	$7,604

Fair Value Measurements, Recurring and Nonrecurring [Table Text Block]

The estimated fair values, and related carrying amounts, of the Corporation's financial instruments are as follows:

(In Thousands)	Valuation	December 31, 2012		December 31, 2011
	Method(s)	Carrying	Fair	Carrying	Fair
	Used	Amount	Value	Amount	Value
Financial assets:
Cash and cash equivalents	Level 1	$55,016	$55,016	$56,815	$56,815
Certificates of deposit	Level 2	4,820	4,860	3,760	3,683
Available-for-sale securities	See Above	472,577	472,577	481,685	481,685
Restricted equity securities (included in Other Assets)	Level 2	4,842	4,842	6,773	6,773
Loans held for sale	Level 1	2,545	2,545	939	939
Loans, net	Level 3	677,053	693,047	700,610	718,670
Accrued interest receivable	Level 1	4,281	4,281	4,797	4,797
Servicing rights	Level 3	605	605	375	375
Financial liabilities:
Deposits with no stated maturity	Level 1	693,687	693,687	677,461	677,461
Time deposits	Level 3	312,419	315,005	340,745	344,936
Short-term borrowings	Level 3	5,567	5,527	4,950	4,897
Long-term borrowings	Level 3	83,812	96,032	125,363	145,641
Accrued interest payable	Level 1	137	137	358	358

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Defined Benefit Plans (Amounts Recognized in Balance Sheets) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Pension Plans, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Assets for Plan Benefits, Noncurrent	$ 59
Pension and Other Postretirement Defined Benefit Plans, Liabilities, Noncurrent		556
Other Postretirement Benefit Plans, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Pension and Other Postretirement Defined Benefit Plans, Liabilities, Noncurrent	$ 2,081	$ 2,054

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Off-Balance Sheet Risk

12 Months Ended

Dec. 31, 2012

Off-Balance Sheet Risk [Abstract]

OFF-BALANCE SHEET RISK

16. OFF-BALANCE SHEET RISK

The Corporation is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit, interest rate or liquidity risk in excess of the amount recognized in the consolidated balance sheet. The contract amounts of these instruments express the extent of involvement the Corporation has in particular classes of financial instruments.

The Corporation's exposure to credit loss from nonperformance by the other party to the financial instruments for commitments to extend credit and standby letters of credit is represented by the contractual amount of these instruments. The Corporation uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.

Financial instruments whose contract amounts represent credit risk at December 31, 2012 and 2011 are as follows:

(In Thousands)	2012	2011
Commitments to extend credit	$165,972	$182,833
Standby letters of credit	22,108	22,849

Commitments to extend credit are legally binding agreements to lend to customers. Commitments generally have fixed expiration dates or other termination clauses and may require payment of fees. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future liquidity requirements. The Corporation evaluates each customer's creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Corporation, for extensions of credit is based on management's credit assessment of the counterparty.

Standby letters of credit are conditional commitments issued by the Corporation guaranteeing performance by a customer to a third party. Those guarantees are issued primarily to support public and private borrowing arrangements, including commercial paper, bond financing and similar transactions. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. Some of the standby letters of credit are collateralized by real estate or other assets, and others are unsecured. The extent to which proceeds from liquidation of collateral would be expected to cover the maximum potential amount of future payments related to standby letters of credit is not estimable. The Corporation has recorded no liability associated with standby letters of credit as of December 31, 2012 and 2011.

Standby letters of credit as of December 31, 2012 expire as follows:

	Amount
Year of Expiration	(In Thousands)
2013	$13,895
2014	2,901
2015	278
2016	2,587
2018 and Thereafter	2,447
Total	$22,108

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Securities (Pooled Trust Preferred Securities Mezzanine Tranches) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Schedule of Investments [Line Items]
Fair Value	$ 472,577	$ 481,685
Cumulative OTTI	67	0	381
ALESCO Preferred Funding IX Member
Schedule of Investments [Line Items]
Debt Instrument, Credit Rating	C-1
Original Face Amount	3,000
Amortized Cost	0
Fair Value	0
Unrealized Gain	0
Cumulative OTTI	$ 2,988

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Income Taxes (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012
Income Taxes [Abstract]
Deferred Tax Assets, Capital Loss Carryforwards	$ 346

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Consolidated Statement of Changes in Stockholders' Equity (Parenthetical) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Consolidated Statement of Changes in Stockholders' Equity [Abstract]
Common stock, dividends, per share	$ 0.84	$ 0.58	$ 0.39
Stock Redeemed or Called During Period, Shares			26,440

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Consolidated Balance Sheets (Parenthetical) (USD $)	Dec. 31, 2012	Dec. 31, 2011
Consolidated Balance Sheets [Abstract]
Preferred Stock, Par value	$ 1,000	$ 1,000
Preferred Stock, Shares Authorized	30,000	30,000
Preferred Stock, Liquidation Preference Per Share	$ 1,000	$ 1,000
Preferred Stock, Shares Issued	0	0
Common Stock, Par Value	$ 1	$ 1
Common Stock, Shares Authorized	20,000,000	20,000,000
Common Stock, Shares, Issued	12,525,411	12,460,920
Treasury Stock, Shares	251,376	305,391

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Bank Premises and Equipment

12 Months Ended

Dec. 31, 2012

Bank Premises and Equipment [Abstract]

BANK PREMISES AND EQUIPMENT

9. BANK PREMISES AND EQUIPMENT

Bank premises and equipment are summarized as follows:

(In Thousands)	December 31,
	2012	2011
Land	$2,823	$2,823
Buildings and improvements	26,850	26,362
Furniture and equipment	17,015	16,180
Construction in progress	40	173
Total	46,728	45,538
Less: accumulated depreciation	(28,021)	(26,510)
Net	$18,707	$19,028

Depreciation expense included in occupancy expense and furniture and equipment expense was as follows:

(In Thousands)	2012	2011	2010
Occupancy expense	$1,050	$1,168	$1,238
Furniture and equipment expense	889	909	1,101
Total	$1,939	$2,077	$2,339

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Defined Benefit Plans (Fair Values of Plan Assets) (Details)	Dec. 31, 2012	Dec. 31, 2011
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Actual Plan Asset Allocations	100.00%	100.00%
Cash and Cash Equivalents [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Actual Plan Asset Allocations	37.00%	3.00%
Debt Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Actual Plan Asset Allocations	24.00%	39.00%
Marketable Equity Securities [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Actual Plan Asset Allocations	27.00%	40.00%
Other Assets [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Actual Plan Asset Allocations	12.00%	18.00%

XML

Borrowed Funds (Long Term Debt) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Long-term Debt	$ 83,812	$ 125,363
Federal Home Loan Bank Advances [Member]
Long-term Debt	15,812	40,363
Securities Sold under Agreements to Repurchase [Member]
Long-term Debt	$ 68,000	$ 85,000

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Borrowed Funds (Narrative) (Details) (USD $)	3 Months Ended				12 Months Ended										3 Months Ended			3 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2012 Other Correspondent Banks [Member]	Dec. 31, 2011 Other Correspondent Banks [Member]	Dec. 31, 2012 Federal Reserve Bank of Philadelphia [Member]	Dec. 31, 2011 Federal Reserve Bank of Philadelphia [Member]	Dec. 31, 2012 Securities Sold under Agreements to Repurchase [Member]	Dec. 31, 2011 Securities Sold under Agreements to Repurchase [Member]	Dec. 31, 2010 Securities Sold under Agreements to Repurchase [Member]	Sep. 30, 2012 Agreement Maturing in 2017 - Agreement One [Member]	Dec. 31, 2012 Agreement Maturing in 2017 - Agreement One [Member]	Dec. 31, 2007 Agreement Maturing in 2017 - Agreement One [Member]	Sep. 30, 2012 Agreement Maturing in 2017 - Agreement Two [Member]	Dec. 31, 2012 Agreement Maturing in 2017 - Agreement Two [Member]	Dec. 31, 2007 Agreement Maturing in 2017 - Agreement Two [Member]	Dec. 31, 2012 Maximum [Member]	Dec. 31, 2011 Maximum [Member]	Dec. 31, 2010 Maximum [Member]
Line of Credit Facility [Line Items]
Carrying Value of Securities Sold under Repurchase Agreements and Deposits Received for Securities Loaned	$ 11,179,000				$ 11,179,000	$ 19,837,000
Federal Home Loan Bank Stock	4,712,000				4,712,000	6,643,000
Debt, Weighted Average Interest Rate	0.10%				0.10%							3.97%	3.93%	3.93%
Line of Credit Facility, Maximum Month-end Outstanding Amount					20,120,000	21,968,000	40,600,000
Line of Credit Facility, Maximum Borrowing Capacity								45,000,000	25,000,000	27,367,000	27,438,000
Available-for-sale Securities Pledged as Collateral	293,310,000				293,310,000	266,149,000				28,432,000	28,681,000
Loss on prepayment of debt	0	2,190,000	143,000	0	(2,333,000)	0	0
Short-term Debt, Average Outstanding Amount					78,790,000	90,644,000	94,097,000
Federal Home Loan Bank, Advances, General Debt Obligations, Disclosures, Collateral Pledged	516,127,000				516,127,000	499,311,000
Debt Instrument, Repurchase Amount	68,000,000				68,000,000	85,000,000										34,000,000	40,000,000		34,000,000	40,000,000
Debt Instrument, Interest Rate, Stated Percentage																3.60%			4.27%
Repayments of Debt															6,000,000			6,000,000
Securities Sold under Agreements to Repurchase	$ 89,428,000				$ 89,428,000	$ 110,759,000															$ 85,000,000	$ 92,500,000	$ 97,500,000

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Sale-Leaseback of Bank Facility (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011
Sale Leaseback Transaction [Line Items]
Sale Leaseback Transaction, Current Period Gain Recognized	$ 329
Sale Leaseback Transaction, Gross Proceeds	3,024
Sale Leaseback Transaction, Lease Terms	The leaseback is for use of approximately 18% of the total building space, for a period of two years with monthly rent of approximately $8,000 per month, plus allocable utilities, property taxes and other building-related expenses identified in the lease. The lease provides the Corporation with an option to renew for an additional two years, for monthly rent of approximately $9,000 per month, plus allocable building-related expenses.
Sale Leaseback Transaction, Monthly Rental Payments	8
Option to Renew [Member]
Sale Leaseback Transaction [Line Items]
Sale Leaseback Transaction, Monthly Rental Payments	$ 9

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Summary of Quarterly Consolidated Financial Data (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Summary of Quarterly Consolidated Financial Data [Abstract]
Interest and Dividend Income, Operating	$ 13,491	$ 13,836	$ 14,529	$ 14,776	$ 15,198	$ 15,317	$ 15,443	$ 15,298	$ 56,632	$ 61,256	$ 62,114
Interest Expense	1,900	2,228	2,401	2,502	2,804	3,108	3,628	4,016	9,031	13,556	19,245
Interest Income (Expense), Net	11,591	11,608	12,128	12,274	12,394	12,209	11,815	11,282	47,601	47,700	42,869
Provision for Loan, Lease, and Other Losses	(133)	236	367	(182)	(87)	(37)	31	(192)	288	(285)	1,191
Interest Income (Expense), after Provision for Loan Loss	11,724	11,372	11,761	12,456	12,481	12,246	11,784	11,474	47,313	47,985	41,678
Other Income	4,360	4,103	4,095	3,759	3,711	3,999	3,673	2,555
Available-for-sale Securities, Gross Realized Gain (Loss)	51	2,430	203	(2)	188	26	163	1,839	2,682	2,216	829
Loss on prepayment of debt	0	2,190	143	0					(2,333)	0	0
Other Noninterest Expense	7,987	8,207	8,137	8,517	7,948	8,052	7,794	8,263	7,673	7,076	7,167
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Cumulative Effects of Changes in Accounting Principles, Noncontrolling Interest	8,148	7,508	7,779	7,696	8,432	8,219	7,826	7,605	31,131	32,082	24,855
Current Income Tax Expense (Benefit)	2,209	2,014	2,094	2,109	2,291	2,230	2,129	2,064	4,545	4,792	(735)
Net Income (Loss) Attributable to Parent	$ 5,939	$ 5,494	$ 5,685	$ 5,587	$ 6,141	$ 5,989	$ 5,697	$ 5,541	$ 22,705	$ 23,368	$ 19,055
Earnings Per Share, Basic	$ 0.48	$ 0.45	$ 0.46	$ 0.46	$ 0.51	$ 0.49	$ 0.47	$ 0.46	$ 1.86	$ 1.92	$ 1.45
Earnings Per Share, Diluted	$ 0.48	$ 0.45	$ 0.46	$ 0.46	$ 0.51	$ 0.49	$ 0.47	$ 0.45	$ 1.85	$ 1.92	$ 1.45

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Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2012	Feb. 19, 2013	Jun. 30, 2012
Document and Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2012
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2012
Entity Registrant Name	CITIZENS & NORTHERN CORP
Entity Central Index Key	0000810958
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		12,331,554
Entity Current Reporting Status	Yes
Entity Public Float			$ 228,460,311
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No

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Intangible Assets

12 Months Ended

Dec. 31, 2012

Intangible Assets [Abstract]

INTANGIBLE ASSETS

10. INTANGIBLE ASSETS

There were no changes in the carrying amount of goodwill in 2012 and 2011. The balance in goodwill was $11,942,000 at December 31, 2012 and 2011. The Corporation did not complete any acquisitions in 2012 or 2011.

The Corporation has adopted ASU No. 2011-08, Intangibles – Goodwill and Other (Topic 350) – Testing Goodwill for Impairment. In testing goodwill for impairment as of December 31, 2012, the Corporation assessed qualitative factors to determine whether it is more likely than not that the fair value of its only reporting unit, its community banking operation, is less than its carrying amount. The qualitative factors assessed included the Corporation's recent financial performance, economic conditions in the Corporation's market area, macroeconomic conditions and other factors. Based on the assessment of qualitative factors, the Corporation determined that it is not more likely than not that the fair value of the community banking operation has fallen below its carrying value, and therefore, the Corporation did not perform the more detailed, two-step goodwill impairment test described in Topic 350. Accordingly, there was no goodwill impairment as of December 31, 2012.

Information related to the core deposit intangibles are as follows

                                                                                             December 31,

         (In Thousands)                                                          2012           2011

Gross amount	$2,034	$2,034
Less: accumulated amortization	(1,896)	(1,822)
Net	$138	$212

Amortization expense was $74,000 in 2012, $114,000 in 2011 and $176,000 in 2010. Estimated amortization expense for each of the ensuing five years is as follows:

   (In Thousands)

2013	$51
2014	35
2015	22
2016	12
2017	6

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Loans (Contractual Aging Of Nonaccrual Loans) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Financing Receivable, Recorded Investment [Line Items]
Current & Past Due Less than 30 Days	$ 668,657	$ 694,485
Past Due 30-89 Days	8,483	9,077
Past Due 90+ Days	6,770	4,753
Nonaccrual	7,353	7,197
Total	7,353	7,197
Nonaccrual Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Current & Past Due Less than 30 Days	2,167	2,532
Past Due 30-89 Days	727	1,179
Past Due 90+ Days	4,459	3,486
Nonaccrual	7,353	7,197
Total	$ 7,353	$ 7,197

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Deposits (Maturities of Time Deposits in Excess of $100,000) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Deposits [Abstract]
Contractual Maturities, Time Deposits, $100,000 or More, Three Months or Less	$ 69,264
Contractual Maturities, Time Deposits, $100,000 or More, Over Three Months through 12 Months	13,900
Contractual Maturities, Time Deposits, $100,000 or More, Over One Year through Three Years	12,103
Contractual Maturities, Time Deposits, $100,000 or More, Over Three Years	8,637
Time Deposits, $100,000 or More, Total	103,904
Interest Expense, Time Deposits, $100,000 or More	$ 1,846	$ 2,369	$ 3,454

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Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
INTEREST INCOME
Interest and fees on loans	$ 40,453	$ 43,178	$ 44,155
Interest on balances with depository institutions	114	73	124
Interest on loans to political subdivisions	1,539	1,499	1,582
Interest on mortgages held for sale	107	53	74
Interest on trading securities	0	0	1
Income from available-for-sale and held-to-maturity securities:
Taxable	9,029	11,036	11,092
Tax-exempt	5,085	5,156	4,834
Dividends	305	261	252
Total interest and dividend income	56,632	61,256	62,114
INTEREST EXPENSE
Interest on deposits	4,807	8,112	11,907
Interest on short-term borrowings	10	23	177
Interest on long-term borrowings	4,214	5,421	7,161
Total interest expense	9,031	13,556	19,245
Net interest income	47,601	47,700	42,869
Provision (credit) for loan losses	288	(285)	1,191
Net interest income after provision (credit) for loan losses	47,313	47,985	41,678
OTHER INCOME
Service charges on deposit accounts	5,036	4,773	4,579
Service charges and fees	929	849	858
Trust and financial management revenue	3,847	3,472	3,475
Interchange revenue from debit card transactions	1,938	1,922	1,678
Net gains from sale of loans	1,925	1,107	761
Increase in cash surrender value of life insurance	455	509	466
Insurance commissions, fees and premiums	221	257	248
Impairment loss on limited partnership investment	0	(948)	0
Other operating income	1,966	1,997	1,773
Sub-total	16,317	13,938	13,838
Total other-than-temporary impairment losses on available-for-sale securities	(67)	0	(381)
Portion of (gain) recognized in other comprehensive loss (before taxes)	0	0	(52)
Net impairment losses recognized in earnings	(67)	0	(433)
Realized gains on available-for-sale securities, net	2,749	2,216	1,262
Net realized gains on available-for-sale securities	2,682	2,216	829
Total other income	18,999	16,154	14,667
OTHER EXPENSES
Salaries and wages	14,370	13,866	13,063
Pension and other employee benefits	4,497	4,407	3,840
Occupancy expense, net	2,476	2,638	2,645
Furniture and equipment expense	1,887	1,932	2,103
FDIC Assessments	633	832	1,450
Pennsylvania shares tax	1,312	1,306	1,222
Loss on prepayment of debt	2,333	0	0
Other operating expense	7,673	7,076	7,167
Total other expenses	35,181	32,057	31,490
Income before income tax provision	31,131	32,082	24,855
Income tax provision	8,426	8,714	5,800
NET INCOME	22,705	23,368	19,055
U.S Treasury preferred dividends	0	0	1,474
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$ 22,705	$ 23,368	$ 17,581
NET INCOME PER SHARE - BASIC	$ 1.86	$ 1.92	$ 1.45
NET INCOME PER SHARE - DILUTED	$ 1.85	$ 1.92	$ 1.45

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Per Share Data

12 Months Ended

Dec. 31, 2012

Per Share Data [Abstract]

PER SHARE DATA

4. PER SHARE DATA

Net income per share is based on the weighted-average number of shares of common stock outstanding. The following data show the amounts used in computing basic and diluted net income per share. As shown in the table that follows, diluted earnings per share is computed using weighted average common shares outstanding, plus weighted-average common shares available from the exercise of all dilutive stock options, less the number of shares that could be repurchased with the proceeds of stock option exercises based on the average share price of the Corporation's common stock during the period.

		Weighted-
		Average	Earnings
	Net	Common	Per
	Income	Shares	Share
2012
Earnings per share – basic	$22,705,000	12,235,748	$1.86
Dilutive effect of potential common stock
arising from stock options:
Exercise of outstanding stock options		200,589
Hypothetical share repurchase at $ 19.16		(176,129)
Earnings per share – diluted	$22,705,000	12,260,208	$1.85
2011
Earnings per share – basic	$23,368,000	12,162,045	$1.92
Dilutive effect of potential common stock
arising from stock options:
Exercise of outstanding stock options		92,398
Hypothetical share repurchase at $ 15.87		(87,675)
Earnings per share – diluted	$23,368,000	12,166,768	$1.92
2010
Earnings per common share – basic and diluted	$17,581,000	12,131,039	$1.45

Stock options and a warrant that were anti-dilutive were excluded from net income per share calculations. Weighted-average common shares available from anti-dilutive instruments totaled 145,333 shares in 2012, 223,333 shares in 2011 and 359,092 shares in 2010.

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Comprehensive Income

12 Months Ended

Dec. 31, 2012

Comprehensive Income [Abstract]

COMPREHENSIVE INCOME

3. COMPREHENSIVE INCOME

Comprehensive income (loss) is the total of (1) net income (loss), and (2) all other changes in equity from non-stockholder sources, which are referred to as other comprehensive income. The components of other comprehensive income (loss), and the related tax effects, are as follows:

(In Thousands)	Before-Tax	Income Tax	Net-of-Tax
	Amount	Effect	Amount
2012
Unrealized gains on available-for-sale securities:
Unrealized holding gains on available-for-sale securities	$4,128	($1,608)	$2,520
Reclassification adjustment for (gains) realized in income	(2,682)	939	(1,743)
Other comprehensive gain on available-for-sale securities	1,446	(669)	777
Unfunded pension and postretirement obligations:
Change in items from defined benefit plans included in
accumulated other comprehensive income	8	(2)	6
Amortization of net transition obligation, prior service cost and net
actuarial loss included in net periodic benefit cost	77	(17)	60
Other comprehensive gain on unfunded retirement obligations	85	(19)	66
Total other comprehensive income	$1,531	($688)	$843

(In Thousands)	Before-Tax	Income Tax	Net-of-Tax
	Amount	Effect	Amount
2011
Unrealized gains on available-for-sale securities:
Unrealized holding gains on available-for-sale securities	$20,611	($7,006)	$13,605
Reclassification adjustment for gains realized in income	(2,216)	753	(1,463)
Other comprehensive gain on available-for-sale securities	18,395	(6,253)	12,142
Unfunded pension and postretirement obligations:
Change in items from defined benefit plans included in
accumulated other comprehensive income	(626)	208	(418)
Amortization of net transition obligation, prior service cost and net
actuarial loss included in net periodic benefit cost	55	(18)	37
Other comprehensive loss on unfunded retirement obligations	(571)	190	(381)
Total other comprehensive income	$17,824	($6,063)	$11,761
(In Thousands)	Before-Tax	Income Tax	Net-of-Tax
	Amount	Effect	Amount
2010
Unrealized losses on available-for-sale securities:
Unrealized holding losses on available-for-sale securities	($448)	$166	($282)
Reclassification adjustment for gains realized in income	(829)	282	(547)
Other comprehensive loss on available-for-sale securities	(1,277)	448	(829)
Unfunded pension and postretirement obligations:
Change in items from defined benefit plans included in
accumulated other comprehensive income	126	(42)	84
Amortization of net transition obligation, prior service cost and net
actuarial loss included in net periodic benefit cost	53	(18)	35
Other comprehensive gain on unfunded retirement obligations	179	(60)	119
Total other comprehensive loss	($1,098)	$388	($710)

Changes in the components of accumulated other comprehensive income (loss), included in stockholders' equity, are as follows:

(In Thousands)	Unrealized		Accumulated
	Holding Gains	Unfunded	Other
	(Losses)	Retirement	Comprehensive
	on Securities	Obligations	Income (Loss)
2012
Balance, beginning of period	$10,791	($631)	$10,160
Change during year ended December 31, 2012	777	66	843
Balance, end of period	$11,568	($565)	$11,003
2011
Balance, beginning of period	($1,351)	($250)	($1,601)
Change during year ended December 31, 2011	12,142	(381)	11,761
Balance, end of period	$10,791	($631)	$10,160
2010
Balance, beginning of period	($522)	($369)	($891)
Change during year ended December 31, 2010	(829)	119	(710)
Balance, end of period	($1,351)	($250)	($1,601)

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Related Party Transactions

12 Months Ended

Dec. 31, 2012

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

15. RELATED PARTY TRANSACTIONS

Loans to executive officers, directors of the Corporation and its subsidiaries and any associates of the foregoing persons are as follows:

(In Thousands)	Beginning	New		Other	Ending
	Balance	Loans	Repayments	Changes	Balance
11 directors, 7 executive officers 2012	$12,997	$2,517	($1,424)	$35	$14,125
12 directors, 6 executive officers 2011	$11,345	$2,756	($1,107)	$3	$12,997
12 directors, 6 executive officers 2010	$9,914	$1,939	($1,700)	$1,192	$11,345

The above transactions were made in the ordinary course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and do not involve more than normal risks of collectability. Other changes represent net increases in existing lines of credit and transfers in and out of the related party category.

Deposits from related parties held by the Corporation amounted to $4,505,000 at December 31, 2012 and $4,098,000 at December 31, 2011.

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Deposits

12 Months Ended

Dec. 31, 2012

Deposits [Abstract]

DEPOSITS

11. DEPOSITS

At December 31, 2012, the scheduled maturities of time deposits are as follows:

(In Thousands)
	2013	$197,014
	2014	69,859
	2015	21,455
	2016	10,786
	2017	13,305
		$312,419

Included in interest-bearing deposits are time deposits in the amount of $100,000 or more. As of December 31, 2012, the remaining maturities or time to next re-pricing of time deposits of $100,000 or more are as follows:

(In Thousands)
Three months or less	$69,264
Over 3 months through 12 months	13,900
Over 1 year through 3 years	12,103
Over 3 years	8,637
Total	$103,904

Interest expense from deposits of $100,000 or more amounted to $1,846,000 in 2012, $2,369,000 in 2011 and $3,454,000 in 2010.

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Bank Premises and Equipment (Summary of Premises and Equipment) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	$ 46,728	$ 45,538
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	(28,021)	(26,510)
Property, Plant and Equipment, Net, Total	18,707	19,028
Land [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	2,823	2,823
Building and Building Improvements [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	26,850	26,362
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	17,015	16,180
Construction in Progress [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	$ 40	$ 173

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Securities

12 Months Ended

Dec. 31, 2012

Securities [Abstract]

SECURITIES

7. SECURITIES

Amortized cost and fair value of available-for-sale securities at December 31, 2012 and 2011 are summarized as follows:

		December 31, 2012
		Gross	Gross
		Unrealized	Unrealized
	Amortized	Holding	Holding	Fair
(In Thousands)	Cost	Gains	Losses	Value
Obligations of U.S. Government agencies	$30,695	$572	($50)	$31,217
Obligations of states and political subdivisions:
Tax-exempt	130,168	7,030	(178)	137,020
Taxable	24,426	462	(71)	24,817
Mortgage-backed securities	76,368	3,828	0	80,196
Collateralized mortgage obligations,
Issued by U.S. Government agencies	179,770	3,887	(147)	183,510
Trust preferred securities issued by individual institutions	5,167	4	0	5,171
Collateralized debt obligations:
Pooled trust preferred securities - senior tranches	1,615	0	(2)	1,613
Other collateralized debt obligations	660	0	0	660
Total debt securities	448,869	15,783	(448)	464,204
Marketable equity securities	5,912	2,500	(39)	8,373
Total	$454,781	$18,283	($487)	$472,577

		December 31, 2011
		Gross	Gross
		Unrealized	Unrealized
	Amortized	Holding	Holding	Fair
(In Thousands)	Cost	Gains	Losses	Value
Obligations of U.S. Government agencies	$24,877	$710	$0	$25,587
Obligations of states and political subdivisions:
Tax-exempt	129,401	4,891	(1,330)	132,962
Taxable	14,004	334	(4)	14,334
Mortgage-backed securities	116,602	5,167	0	121,769
Collateralized mortgage obligations,
Issued by U.S. Government agencies	161,818	3,350	(37)	165,131
Trust preferred securities issued by individual institutions	7,334	865	(53)	8,146
Collateralized debt obligations:
Pooled trust preferred securities - senior tranches	4,996	0	(358)	4,638
Pooled trust preferred securities - mezzanine tranches	0	730	0	730
Other collateralized debt obligations	660	0	0	660
Total debt securities	459,692	16,047	(1,782)	473,957
Marketable equity securities	5,643	2,186	(101)	7,728
Total	$465,335	$18,233	($1,883)	$481,685

The following table presents gross unrealized losses and fair value of available-for-sale securities with unrealized loss positions that are not deemed to be other-than-temporarily impaired, aggregated by length of time that individual securities have been in a continuous unrealized loss position at December 31, 2012 and 2011:

December 31, 2012	Less Than 12 Months		12 Months or More		Total
(In Thousands)	Fair	Unrealized	Fair	Unrealized	Fair	Unrealized
	Value	Losses	Value	Losses	Value	Losses
Obligations of U.S. Government agencies	$10,006	($50)	$0	$0	$10,006	($50)
Obligations of states and political subdivisions:
Tax-exempt	7,082	(92)	3,285	(86)	10,367	(178)
Taxable	4,149	(71)	0	0	4,149	(71)
Collateralized mortgage obligations,
Issued by U.S. Government agencies	16,755	(146)	454	(1)	17,209	(147)
Collateralized debt obligations,
Pooled trust preferred securities - senior tranches	0	0	1,613	(2)	1,613	(2)
Total debt securities	37,992	(359)	5,352	(89)	43,344	(448)
Marketable equity securities	95	(6)	67	(33)	162	(39)
Total temporarily impaired available-for-sale securities	$38,087	($365)	$5,419	($122)	$43,506	($487)

December 31, 2011	Less Than 12 Months		12 Months or More		Total
(In Thousands)	Fair	Unrealized	Fair	Unrealized	Fair	Unrealized
	Value	Losses	Value	Losses	Value	Losses
Obligations of states and political subdivisions:
Tax-exempt	$4,301	($34)	$20,692	($1,296)	$24,993	($1,330)
Taxable	927	(2)	244	(2)	1,171	(4)
Collateralized mortgage obligations,
Issued by U.S. Government agencies	6,886	(36)	5,075	(1)	11,961	(37)
Trust preferred securities issued by individual institutions	0	0	947	(53)	947	(53)
Collateralized debt obligations,
Pooled trust preferred securities - senior tranches	0	0	4,638	(358)	4,638	(358)
Total debt securities	12,114	(72)	31,596	(1,710)	43,710	(1,782)
Marketable equity securities	776	(44)	98	(57)	874	(101)
Total temporarily impaired available-for-sale securities	$12,890	($116)	$31,694	($1,767)	$44,584	($1,883)

Gross realized gains and losses from available-for-sale securities (including OTTI losses in gross realized losses) and the related income tax provision were as follows:

(In Thousands)
	2012	2011	2010
Gross realized gains	$2,798	$2,226	$1,270
Gross realized losses	(116)	(10)	(441)
Net realized gains	$2,682	$2,216	$829
Income tax provision related to net realized gains	$939	$753	$282

The amortized cost and fair value of available-for-sale debt securities by contractual maturity are shown in the following table as of December 31, 2012. Actual maturities may differ from contractual maturities because counterparties may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized	Fair
(In Thousands)	Cost	Value
Due in one year or less	$13,096	$13,315
Due from one year through five years	51,586	52,896
Due from five years through ten years	50,518	51,657
Due after ten years	77,531	82,630
Subtotal	192,731	200,498
Mortgage-backed securities	76,368	80,196
Collateralized mortgage obligations,
Issued by U.S. Government agencies	179,770	183,510
Total	$448,869	$464,204

The Corporation's mortgage-backed securities and collateralized mortgage obligations have stated maturities that may differ from actual maturities due to borrowers' ability to prepay obligations. Cash flows from such investments are dependent upon the performance of the underlying mortgage loans and are generally influenced by the level of interest rates. In the table above, mortgage-backed securities and collateralized mortgage obligations are shown in one period.

Investment securities carried at $293,310,000 at December 31, 2012 and $266,149,000 at December 31, 2011 were pledged as collateral for public deposits, trusts and certain other deposits as provided by law. See Note 12 for information concerning securities pledged to secure borrowing arrangements.

Management evaluates securities for OTTI at least on a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) whether the Corporation intends to sell the security or more likely than not will be required to sell the security before its anticipated recovery.

A summary of information management considered in evaluating debt and equity securities for OTTI at September 30, 2012 is provided below.

The Corporation recognized net impairment losses in earnings, as follows:

(In Thousands)
	2012	2011	2010
Trust preferred securities issued by individual institutions	$0	$0	($320)
Pooled trust preferred securities - mezzanine tranches	0	0	(103)
Marketable equity securities (bank stocks)	(67)	0	(10)
Net impairment losses recognized in earnings	($67)	$0	($433)

A summary of information management considered in evaluating debt and equity securities for OTTI at December 31, 2012 is provided below.

Debt Securities

At December 31, 2012, management performed an assessment for possible OTTI of the Corporation's debt securities on an issue-by-issue basis, relying on information obtained from various sources, including publicly available financial data, ratings by external agencies, brokers and other sources. The extent of individual analysis applied to each security depended on the size of the Corporation's investment, as well as management's perception of the credit risk associated with each security. Based on the results of the assessment, management believes impairment of these debt securities, including municipal bonds with no external ratings, at December 31, 2012 to be temporary.

The credit rating agencies have withdrawn their ratings on numerous municipal bonds held by the Corporation. At December 31, 2012, the total amortized cost basis of municipal bonds with no external credit ratings was $21,396,000, with an aggregate unrealized gain of $311,000. At the time of purchase, each of these bonds was considered investment grade and had been rated by at least one credit rating agency. The bonds for which the ratings were removed were almost all insured by an entity that has reported significant financial problems and declines in its regulatory capital ratios, and most of the ratings were removed in the fourth quarter 2009. However, the insurance remains in effect on the bonds, and none of the affected municipal bonds has failed to make a scheduled interest payment.

The following table provides detailed information related to a security issued by Astoria Capital Trust I, a subsidiary of Astoria Financial Corporation, which is the only trust preferred security issued by an individual institution held by the Corporation as of December 31, 2012:

Par Amount Outstanding	$5,000
Amortized Cost	5,167
Fair Value	5,171
Unrealized Gain	4
Cumulative Realized Credit Losses	0
Moody's Credit Rating	Ba1
S&P Credit Rating	BB
Fitch Credit Rating	B+

Management assesses the security shown above for the possibility of OTTI by reviewing financial information that is publicly available. Astoria Financial Corporation has not deferred or defaulted on payments associated with the Corporation's security.

The Corporation recognized OTTI charges in 2009 and 2010 related to its holding of a trust preferred security issued by Carolina First Mortgage Loan Trust, a subsidiary of The South Financial Group, Inc. In the fourth quarter 2010, The Toronto-Dominion Bank acquired The South Financial Group, Inc. After the acquisition, The Toronto-Dominion Bank made a payment for the full amount of previously deferred interest and resumed quarterly payments on the security. The Corporation recognized a material change in the expected cash flows in the fourth quarter 2010. The security had a face amount of $2,000,000 and matured in May 2012. The Corporation recorded accretion income (included in interest income) totaling $855,000 in 2012, $825,000 in 2011 and $83,000 in 2010.

Pooled trust-preferred securities are very long-term (usually 30-year maturity) instruments. Each pool contains debt securities issued by banks and/or insurance companies. The Corporation's investments in pooled trust-preferred securities are each made up of companies with geographic and size diversification. Most of the underlying debt securities are issued by banking companies, with a lesser amount issued by insurance companies. Trust-preferred securities typically permit deferral of quarterly interest payments for up to five years. Some of the issuers of trust-preferred securities that are included in the Corporation's pooled investments have elected to defer payment of interest on these obligations, and some issuers have defaulted.

Management evaluated pooled trust-preferred securities for OTTI by estimating the cash flows expected to be received from each security, taking into account estimated levels of deferrals and defaults by the underlying issuers. In determining cash flows, management assumed all issuers currently deferring or in default would make no future payments, and assigned estimated future default levels for the remaining issuers in each security based on financial strength ratings assigned by a national ratings service. Management's estimates of cash flows used to evaluate other-than-temporary impairment of pooled trust-preferred securities were based on sensitive assumptions regarding the timing and amounts of defaults that may occur, and changes in the assumptions used could produce different conclusions for each security. Additional information regarding these assumptions is included in Note 6.

During the third quarter 2012, management sold the Corporation's holdings of the mezzanine tranches of U.S. Capital Funding II, Ltd. The securities were sold for aggregate pretax proceeds of $1,754,000, which was recorded as a gain on the sale of securities. During the first quarter 2011, management sold the Corporation's holding of the mezzanine tranche of MMCAPS Funding I, Ltd. The security was sold for aggregate pretax proceeds of $1,485,000, which was recorded as a gain on the sale of securities.

The following table provides detailed information related to ALESCO Preferred Funding IX, Ltd., which is the only mezzanine tranche pooled trust preferred security held by the Corporation as of December 31, 2012:

Tranche	C-1
Original Face Amount	$3,000
Amortized Cost	0
Fair Value	0
Unrealized Gain	0
Cumulative OTTI	($2,988)

As of December 31, 2012, the Corporation's investment in the senior tranche of MMCAPS Funding I, Ltd. is the only senior tranche pooled trust preferred security held by the Corporation. The security, with an amortized cost of $1,615,000, has an investment grade rating and has been subjected to impairment analysis based on estimated cash flows (using the process described above). Management determined that impairment was temporary as of December 31, 2012. The following table provides detailed information related to this security:

Number of Issuers Currently Performing	8
Moody's Credit Rating	A3
Fitch Credit Rating	A
Actual Deferrals and Defaults as % of Outstanding Collateral	50.26%
Expected Additional Net Deferrals and Defaults as % of Performing Collateral	19.73%
Excess Subordination as % of Performing Collateral	67.90%
Expected Issuer Prepayments as % of Performing Collateral	41.24%

In the table above, "Excess Subordination as % of Performing Collateral" (Excess Subordination Ratio) was calculated as follows: (Total face value of performing collateral – Face value of all outstanding note balances not subordinate to the Corporation's investment)/Total face value of performing collateral.

The Excess Subordination Ratio measures the extent to which there may be tranches within the pooled trust preferred structure available to absorb credit losses before the Corporation's security would be impacted. A positive Excess Subordination Ratio signifies there is available support from subordinate tranches to absorb losses before the Corporation's investment would be impacted. A negative Excess Subordination Ratio signifies there is no available support from subordinate tranches to absorb losses before the Corporation's securities would be impacted. The Excess Subordination Ratio is not definitive, in isolation, for determining OTTI or whether the Corporation will receive future payments on a pooled trust preferred security. Other factors affect the timing and amount of cash flows available for payments to the note holders (investors), including the excess interest paid by the issuers, who typically pay higher rates of interest than are paid out to the note holders.

The Corporation separates OTTI related to the trust-preferred securities into (a) the amount of the total impairment related to credit loss, which is recognized in the statement of earnings, and (b) the amount of the total impairment related to all other factors, which is recognized in other comprehensive income. The Corporation measures the credit loss component of OTTI based on the difference between: (1) the present value of estimated cash flows, at the book yield in effect prior to recognition of any OTTI, as of the most recent balance sheet date, and (2) the present value of estimated cash flows as of the previous quarter-end balance sheet date based on management's cash flow assumptions at that time.

The Corporation recorded no OTTI losses related to pooled trust-preferred securities in 2012 or 2011. Total OTTI from pooled trust-preferred securities in 2010 amounted to $51,000, including a pre-tax loss reflected in earnings of $103,000, with a pre-tax other comprehensive gain of $52,000 included in other comprehensive income.

A roll-forward of the credit losses from securities for which a portion of OTTI has been recognized in other comprehensive income is as follows:

(In Thousands)
	2012	2011	2010
Balance of credit losses on debt securities for which a portion
of OTTI was recognized in other comprehensive income,
beginning of period	$0	$0	($10,695)
Reduction for securities losses realized during the period	0	0	10,798
Additional credit loss for which an OTTI was previously
recognized when the Corporation does not intend to sell
the security and it is not more likely than not the Corporation
will be required to sell the security before recovery of its
amortized cost basis	0	0	(103)
Balance of credit losses on debt securities for which a portion
of OTTI was recognized in other comprehensive income,
end of period	$0	$0	$0

The line item labeled "Reduction for securities losses realized during the period" in the table immediately above includes OTTI write-downs associated with securities the Corporation continues to hold, but which have been deemed worthless.

Equity Securities

The Corporation's marketable equity securities at December 31, 2012 and 2011 consisted exclusively of stocks of banking companies. In 2012, the Corporation recognized an other-than-temporary impairment loss related to a bank stock of $67,000. Management's decision followed an evaluation of the issuer's published financial results in which management determined that the recovery of the Corporation's cost basis within the foreseeable future was uncertain. As a result of this determination, the Corporation recognized an impairment loss to write the stock down to the most recent trade price at March 31, 2012. The Corporation recorded no OTTI losses related to bank stocks in 2011. The Corporation recorded OTTI on bank stocks totaling $10,000 in 2010. Management's decision to record OTTI losses on bank stocks in 2010 was based on a combination of: (1) significant depreciation in market prices in the first quarter 2009 (with some improvement subsequent to June 30, 2009), and (2) management's intent to sell some of the stocks to generate capital losses, which could be carried back and offset against capital gains generated in previous years to realize tax refunds. At December 31, 2012, management did not intend to sell impaired bank stocks, and based on the intent to hold the securities for the foreseeable future and other factors specific to the securities, has determined that none of the Corporation's bank stock holdings at December 31, 2012 were other than temporarily impaired.

Realized gains from sales of bank stocks totaled $538,000 in 2012, $91,000 in 2011, and $588,000 in 2010.

C&N Bank is a member of the Federal Home Loan Bank of Pittsburgh (FHLB-Pittsburgh), which is one of 12 regional Federal Home Loan Banks. As a member, C&N Bank is required to purchase and maintain stock in FHLB-Pittsburgh. There is no active market for FHLB-Pittsburgh stock, and it must ordinarily be redeemed by FHLB-Pittsburgh in order to be liquidated. C&N Bank's investment in FHLB-Pittsburgh stock, included in Other Assets in the consolidated balance sheet, was $4,712,000 at December 31, 2012 and $6,643,000 at December 31, 2011. The Corporation evaluated its holding of FHLB-Pittsburgh stock for impairment and deemed the stock to not be impaired at December 31, 2012 and 2011. In making this determination, management concluded that recovery of total outstanding par value, which equals the carrying value, is expected. The decision was based on review of financial information that FHLB-Pittsburgh has made publicly available.

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Fair Value Measurements and Fair Values of Financial Instruments (Fair Value Measurements, Recurring and Nonrecurring) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	$ 55,016	$ 56,815	$ 46,301	$ 92,065
Certificates of deposit	4,820	3,760
Available-for-sale securities	472,577	481,685
Loans, net	677,053	700,610
Accrued interest receivable	4,281	4,797
Servicing rights	605	375
Time deposits	312,419
Short-term borrowings	5,567	4,950
Long-term borrowings	83,812	125,363
Carrying (Reported) Amount, Fair Value Disclosure [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available-for-sale securities	472,577	481,685
Estimate of Fair Value, Fair Value Disclosure [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available-for-sale securities	472,577	481,685
Quoted Prices in Active Markets [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available-for-sale securities	8,373	7,728
Servicing rights	0	0
Quoted Prices in Active Markets [Member] | Carrying (Reported) Amount, Fair Value Disclosure [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	55,016	56,815
Loans held for sale	2,545	939
Accrued interest receivable	4,281	4,797
Deposits with no stated maturity	693,687	677,461
Accrued interest payable	137	358
Quoted Prices in Active Markets [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	55,016	56,815
Loans held for sale	2,545	939
Accrued interest receivable	4,281	4,797
Deposits with no stated maturity	693,687	677,461
Accrued interest payable	137	358
Other Observable Inputs [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available-for-sale securities	462,591	468,589
Servicing rights	0	0
Other Observable Inputs [Member] | Carrying (Reported) Amount, Fair Value Disclosure [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Certificates of deposit	4,820	3,760
Restricted equity securities	4,842	6,773
Other Observable Inputs [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Certificates of deposit	4,860	3,683
Restricted equity securities	4,842	6,773
Unobservable Inputs [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available-for-sale securities	1,613	5,368
Servicing rights	605	375
Unobservable Inputs [Member] | Carrying (Reported) Amount, Fair Value Disclosure [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Loans, net	677,053	700,610
Servicing rights	605	375
Time deposits	312,419	340,745
Short-term borrowings	5,567	4,950
Long-term borrowings	83,812	125,363
Unobservable Inputs [Member] | Estimate of Fair Value, Fair Value Disclosure [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Loans, net	693,047	718,670
Servicing rights	605	375
Time deposits	315,005	344,936
Short-term borrowings	5,527	4,897
Long-term borrowings	$ 96,032	$ 145,641

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Income Taxes (Provision for Income Taxes) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Income Taxes [Abstract]
Currently payable (refundable)	$ 2,209	$ 2,014	$ 2,094	$ 2,109	$ 2,291	$ 2,230	$ 2,129	$ 2,064	$ 4,545	$ 4,792	$ (735)
Tax expense resulting from allocations of certain tax beenfits to equity or as a reduction in other assets									121	104	164
Deferred									3,760	3,818	6,371
Total provision									$ 8,426	$ 8,714	$ 5,800

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Cash and Due from Banks

12 Months Ended

Dec. 31, 2012

Cash and Due from Banks [Abstract]

CASH AND DUE FROM BANKS

5. CASH AND DUE FROM BANKS

Cash and due from banks at December 31, 2012 and 2011 include the following:

(In thousands)	Dec. 31,	Dec. 31,
	2012	2011
Cash and cash equivalents	$55,016	$56,815
Certificates of deposit	4,820	3,760
Total cash and due from banks	$59,836	$60,575

Certificates of deposit are issues by U.S. banks with original maturities greater than three months. Each certificate of deposit is fully FDIC-insured. The Corporation maintains cash and cash equivalents with certain financial institutions in excess of the FDIC insurance limit.

The Corporation is required to maintain reserves against deposit liabilities in the form of cash and balances with the Federal Reserve Bank. The reserves are based on deposit levels, account activity, and other services provided by the Federal Reserve Bank. Required reserves were $14,128,000 at December 31, 2012 and $14,035,000 at December 31, 2011.

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Fair Value Measurements and Fair Values of Financial Instruments

12 Months Ended

Dec. 31, 2012

Fair Value Measurements and Fair Values of Financial Instruments [Abstract]

FAIR VALUE MEASUREMENTS AND FAIR VALUES OF FINANCIAL INSTRUMENTS

6. FAIR VALUE MEASUREMENTS AND FAIR VALUES OF FINANCIAL INSTRUMENTS

The Corporation measures certain assets at fair value. Fair value is defined as the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. FASB ASC topic 820, "Fair Value Measurements and Disclosures" establishes a framework for measuring fair value that includes a hierarchy used to classify the inputs used in measuring fair value. The hierarchy prioritizes the inputs used in determining valuations into three levels. The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement. The levels of the fair value hierarchy are as follows:

Level 1 – Fair value is based on unadjusted quoted prices in active markets that are accessible to the Corporation for identical assets. These generally provide the most reliable evidence and are used to measure fair value whenever available.

Level 2 – Fair value is based on significant inputs, other than Level 1 inputs, that are observable either directly or indirectly for substantially the full term of the asset through corroboration with observable market data. Level 2 inputs include quoted market prices in active markets for similar assets, quoted market prices in markets that are not active for identical or similar assets and other observable inputs.

Level 3 – Fair value is based on significant unobservable inputs. Examples of valuation methodologies that would result in Level 3 classification include option pricing models, discounted cash flows and other similar techniques.

The Corporation monitors and evaluates available data relating to fair value measurements on an ongoing basis and recognizes transfers among the levels of the fair value hierarchy as of the date of an event or change in circumstances that affects the valuation method chosen. Examples of such changes may include the market for a particular asset becoming active or inactive, changes in the availability of quoted prices, or changes in the availability of other market data

At December 31, 2012 and 2011, assets measured at fair value and the valuation methods used are as follows:

		December 31, 2012
	Quoted Prices	Other
	in Active	Observable	Unobservable	Total
	Markets	Inputs	Inputs	Fair
(In Thousands)	(Level 1)	(Level 2)	(Level 3)	Value
Recurring fair value measurements
AVAILABLE-FOR-SALE SECURITIES:
Obligations of U.S. Government agencies	$0	$31,217	$0	$31,217
Obligations of states and political subdivisions:
Tax-exempt	0	137,020	0	137,020
Taxable	0	24,817	0	24,817
Mortgage-backed securities	0	80,196	0	80,196
Collateralized mortgage obligations,
Issued by U.S. Government agencies	0	183,510	0	183,510
Trust preferred securities issued by individual institutions	0	5,171	0	5,171
Collateralized debt obligations:
Pooled trust preferred securities - senior tranches	0	0	1,613	1,613
Other collateralized debt obligations	0	660	0	660
Total debt securities	0	462,591	1,613	464,204
Marketable equity securities	8,373	0	0	8,373
Total available-for-sale securities	8,373	462,591	1,613	472,577
Servicing rights	0	0	605	605
Total recurring fair value measurements	$8,373	$462,591	$2,218	$473,182
Nonrecurring fair value measurements
Impaired loans with a valuation allowance	$0	$0	$2,710	$2,710
Valuation allowance	0	0	(623)	(623)
Impaired loans, net	0	0	2,087	2,087
Foreclosed assets held for sale	0	0	879	879
Total nonrecurring fair value measurements	$0	$0	$2,966	$2,966

		December 31, 2011
	Quoted Prices	Other
	in Active	Observable	Unobservable	Total
	Markets	Inputs	Inputs	Fair
(In Thousands)	(Level 1)	(Level 2)	(Level 3)	Value
Recurring fair value measurements
AVAILABLE-FOR-SALE SECURITIES:
Obligations of U.S. Government agencies	$0	$25,587	$0	$25,587
Obligations of states and political subdivisions:
Tax-exempt	0	132,962	0	132,962
Taxable	0	14,334	0	14,334
Mortgage-backed securities	0	121,769	0	121,769
Collateralized mortgage obligations,
Issued by U.S. Government agencies	0	165,131	0	165,131
Trust preferred securities issued by individual institutions	0	8,146	0	8,146
Collateralized debt obligations:
Pooled trust preferred securities - senior tranches	0	0	4,638	4,638
Pooled trust preferred securities - mezzanine tranches	0	0	730	730
Other collateralized debt obligations	0	660	0	660
Total debt securities	0	468,589	5,368	473,957
Marketable equity securities	7,728	0	0	7,728
Total available-for-sale securities	7,728	468,589	5,368	481,685
Servicing rights	0	0	375	375
Total recurring fair value measurements	$7,728	$468,589	$5,743	$482,060
Nonrecurring fair value measurements
Impaired loans with a valuation allowance	$0	$0	$3,433	$3,433
Valuation allowance	0	0	(1,126)	(1,126)
Impaired loans, net	0	0	2,307	2,307
Foreclosed assets held for sale	0	0	1,235	1,235
Total nonrecurring fair value measurements	$0	$0	$3,542	$3,542

.Management determined there have been few trades of pooled trust-preferred securities since 2008, except for a limited number of transactions that have taken place as a result of bankruptcies, forced liquidations or similar circumstances. Also, in management's judgment, there were no available quoted market prices in active markets for assets sufficiently similar to the Corporation's pooled trust-preferred securities to be reliable as observable inputs. Accordingly, the Corporation follows a method of valuing pooled trust-preferred securities using a Level 3 methodology, based on discounted cash flows.

Management has calculated the fair value of the Corporation's pooled trust-preferred securities by applying a discount rate to the estimated cash flows. Management used the cash flow estimates determined using the process described in Note 7 for evaluating pooled trust-preferred securities for other-than-temporary impairment (OTTI). Management used discount rates considered reflective of a market participant's expectations regarding the extent of credit and liquidity risk inherent in the securities. In establishing the discount rate, management considered: (1) the implied discount rates as of the end of 2007, prior to the market for trust-preferred securities becoming inactive; (2) an adjustment to the year-end 2007 discount rates for the change in the spread between indicative market rates and corresponding risk-free rates; and (3) an additional adjustment for liquidity risk. Management considered the adjustment for liquidity risk necessary in order to give some consideration to price estimates based on trades made under distressed conditions, as reported by brokers and pricing services.

Loans are classified as impaired when, based on current information and events, it is probable that the Corporation will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Foreclosed assets held for sale consist of real estate acquired by foreclosure. For impaired commercial loans secured by real estate and foreclosed assets held for sale, estimated fair values are determined primarily using values from third-party appraisals less estimated selling costs.

Management's evaluation and selection of valuation techniques and the unobservable inputs used in determining the fair values of assets valued using Level 3 methodologies include sensitive assumptions. Other market participants might use substantially different assumptions, which could result in calculations of fair values that would be substantially different than the amount calculated by management. The following table shows quantitative information regarding significant techniques and inputs used at December 31, 2012 for assets measured using unobservable inputs (Level 3 methodologies) on a recurring basis:

	Fair Value at
	12/31/12	Valuation	Unobservable	Method or Value As of
Asset	(In Thousands)	Technique	Input(s)	12/31/12
Pooled trust preferred securities - senior tranches	$1,613	Discounted cash flow	Issuer defaults	50.26%	Actual deferrals and defaults as % of outstanding collateral
				19.73%	Expected additional net deferrals and defaults as % of performing collateral
			Issuer prepayments	41.24%	Expected issuer prepayments as % of performing collateral
			Discount rate	11.70%	Implied 7.57% discount rate at 12/31/07 plus 4.13% spread for credit and liquidity risk
Servicing rights	605	Discounted cash flow	Discount rate	12.00%	Rate used through modeling period
			Loan prepayment speeds	288.00%	Weighted-average PSA
			Servicing fees	0.25%	of loan balances
				5.00%	of payments are late
				5.00%	late fees assessed
				$1.94	Miscellaneous fees per account per month
			Servicing costs	$6.00	Monthly servicing cost per account
				$24.00	Additional monthly servicing cost per loan on loans more than 30 days delinquent
				1.50%	of loans more than 30 days delinquent
				3.00%	annual increase in servicing costs

Increases (decreases) in actual or expected issuer defaults tend to decrease (increase) the fair value of the Corporation's pooled trust preferred securities. The fair value of servicing rights is affected by expected future interest rates. Increases (decreases) in future expected interest rates tend to increase (decrease) the fair value of the Corporation's servicing rights because of changes in expected prepayment behavior by the borrowers on the underlying loans.

Following is a reconciliation of activity for Level 3 assets measured at fair value on a recurring basis:

	Year Ended December 31, 2012
	Pooled Trust	Pooled Trust
	Preferred	Preferred
	Securities -	Securities -
(In Thousands)	Senior	Mezzanine	Servicing
	Tranches	Tranches	Rights	Total
Balance, beginning of period	$4,638	$730	$375	$5,743
Issuances of servicing rights	0	0	327	327
Accretion and amortization, net	(8)	0	0	(8)
Proceeds from sales and calls	(3,429)	(1,835)	0	(5,264)
Realized gains, net	56	1,835	0	1,891
Unrealized losses included in earnings	0	0	(97)	(97)
Unrealized gains (losses) included in
other comprehensive income	356	(730)	0	(374)
Balance, end of period	$1,613	$0	$605	$2,218

	Year Ended December 31, 2011
	Pooled Trust	Pooled Trust
	Preferred	Preferred
	Securities -	Securities -
	Senior	Mezzanine	Servicing
	Tranches	Tranches	Rights	Total
Balance, beginning of period	$7,400	$0	$204	$7,604
Issuances of servicing rights	0	0	239	239
Accretion and amortization, net	(41)	0	0	(41)
Proceeds from sales and calls	(5,001)	(98)	0	(5,099)
Realized gains, net	81	98	0	179
Unrealized losses included in earnings	0	0	(68)	(68)
Unrealized gains included in
other comprehensive income	2,199	730	0	2,929
Balance, end of period	$4,638	$730	$375	$5,743

	Year Ended December 31, 2010
	Pooled Trust	Pooled Trust	Trust Preferred
	Preferred	Preferred	Securities
	Securities -	Securities -	Issued by
	Senior	Mezzanine	Individual	Servicing
	Tranches	Tranches	Institutions	Rights	Total
Balance, beginning of period	$8,199	$115	$800	$0	$9,114
Issuances of servicing rights	0	0	0	216	216
Transfers	0	0	(240)	0	(240)
Accretion and amortization, net	(117)	(162)	0	0	(279)
Proceeds from sales and calls	(1,309)	(310)	(240)	0	(1,859)
Realized gains, net	0	310	0	0	310
Unrealized losses included in earnings	0	(103)	(320)	(12)	(435)
Unrealized gains included in
other comprehensive income	627	150	0	0	777
Balance, end of period	$7,400	$0	$0	$204	$7,604

No other-than-temporary impairment losses on securities valued using Level 3 methodologies were recorded in 2012 or 2011. Unrealized losses included in earnings shown above include other-than-temporary impairment losses on securities valued using Level 3 methodologies, as described in Note 7, of $423,000 in 2010, which are presented in net impairment losses recognized in earnings in the Consolidated Statements of Income.

Certain of the Corporation's financial instruments are not measured at fair value in the consolidated financial statements. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. Certain financial instruments and all nonfinancial instruments are excluded from disclosure requirements. Therefore, the aggregate fair value amounts presented may not represent the underlying fair value of the Corporation.

The Corporation used the following methods and assumptions in estimating fair value disclosures for financial instruments:

CASH AND CASH EQUIVALENTS - The carrying amounts of cash and short-term instruments approximate fair values.

CERTIFICATES OF DEPOSIT - Fair values for certificates of deposit, included in cash and due from banks in the consolidated balance sheet, are based on quoted market prices for certificates of similar remaining maturities.

SECURITIES - Fair values for securities, excluding restricted equity securities, are based on quoted market prices or other methods as described above. The carrying value of restricted equity securities approximates fair value based on applicable redemption provisions.

LOANS HELD FOR SALE - Fair values of loans held for sale are determined based on applicable sale prices available under the Federal Home Loan Banks' MPF Xtra program.

LOANS - Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as commercial, commercial real estate, residential mortgage and other consumer. Each loan category is further segmented into fixed and adjustable rate interest terms and by performing and nonperforming categories. The fair value of performing loans is calculated by discounting contractual cash flows, adjusted for estimated prepayments based on historical experience, using estimated market discount rates that reflect the credit and interest rate risk inherent in the loans. Fair value of nonperforming loans is based on recent appraisals or estimates prepared by the Corporation's lending officers.

SERVICING RIGHTS - The fair value of servicing rights, included in other assets in the consolidated balance sheet, is determined through a discounted cash flow valuation. Significant inputs include expected net servicing income, the discount rate and the expected prepayment speeds of the underlying loans.

DEPOSITS - The fair value of deposits with no stated maturity, such as noninterest-bearing demand deposits, savings, money market and interest checking accounts, is (by definition) equal to the amount payable on demand at December 31, 2012 and 2011. The fair value of time deposits, such as certificates of deposit and Individual Retirement Accounts, is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently offered for deposits of similar remaining maturities. The fair value estimates of deposits do not include the benefit that results from the low-cost funding provided by the deposit liabilities compared to the cost of borrowing funds in the market, commonly referred to as the core deposit intangible.

BORROWED FUNDS - The fair value of borrowings is estimated using discounted cash flow analyses based on rates currently available to the Corporation for similar types of borrowing arrangements.

ACCRUED INTEREST - The carrying amounts of accrued interest receivable and payable approximate fair values.

OFF-BALANCE SHEET COMMITMENTS - The Corporation has commitments to extend credit and has issued standby letters of credit. Standby letters of credit are conditional guarantees of performance by a customer to a third party. Estimates of the fair value of these off-balance sheet items were not made because of the short-term nature of these arrangements and the credit standing of the counterparties.

The estimated fair values, and related carrying amounts, of the Corporation's financial instruments are as follows:

(In Thousands)	Valuation	December 31, 2012		December 31, 2011
	Method(s)	Carrying	Fair	Carrying	Fair
	Used	Amount	Value	Amount	Value
Financial assets:
Cash and cash equivalents	Level 1	$55,016	$55,016	$56,815	$56,815
Certificates of deposit	Level 2	4,820	4,860	3,760	3,683
Available-for-sale securities	See Above	472,577	472,577	481,685	481,685
Restricted equity securities (included in Other Assets)	Level 2	4,842	4,842	6,773	6,773
Loans held for sale	Level 1	2,545	2,545	939	939
Loans, net	Level 3	677,053	693,047	700,610	718,670
Accrued interest receivable	Level 1	4,281	4,281	4,797	4,797
Servicing rights	Level 3	605	605	375	375
Financial liabilities:
Deposits with no stated maturity	Level 1	693,687	693,687	677,461	677,461
Time deposits	Level 3	312,419	315,005	340,745	344,936
Short-term borrowings	Level 3	5,567	5,527	4,950	4,897
Long-term borrowings	Level 3	83,812	96,032	125,363	145,641
Accrued interest payable	Level 1	137	137	358	358

XML

Loans

12 Months Ended

Dec. 31, 2012

Loans [Abstract]

LOANS

8. LOANS

Loans outstanding at December 31, 2012 and 2011 are summarized as follows:

Summary of Loans by Type
(In Thousands)	Dec. 31,	% of	Dec. 31,	% of
	2012	Total	2011	Total
Residential mortgage:
Residential mortgage loans - first liens	$311,627	45.57%	$331,015	46.73%
Residential mortgage loans - junior liens	26,748	3.91%	28,851	4.07%
Home equity lines of credit	33,017	4.83%	30,037	4.24%
1-4 Family residential construction	12,842	1.88%	9,959	1.41%
Total residential mortgage	384,234	56.18%	399,862	56.45%
Commercial:
Commercial loans secured by real estate	158,413	23.16%	156,388	22.08%
Commercial and industrial	48,442	7.08%	57,191	8.07%
Political subdivisions	31,789	4.65%	37,620	5.31%
Commercial construction and land	28,200	4.12%	23,518	3.32%
Loans secured by farmland	11,403	1.67%	10,949	1.55%
Multi-family (5 or more) residential	6,745	0.99%	6,583	0.93%
Agricultural loans	3,053	0.45%	2,987	0.42%
Other commercial loans	362	0.05%	552	0.08%
Total commercial	288,407	42.17%	295,788	41.76%
Consumer	11,269	1.65%	12,665	1.79%
Total	683,910	100.00%	708,315	100.00%
Less: allowance for loan losses	(6,857)		(7,705)
Loans, net	$677,053		$700,610

The Corporation grants loans to individuals as well as commercial and tax-exempt entities. Commercial, residential and personal loans are made to customers geographically concentrated in the Pennsylvania and New York counties that make up the market serviced by Citizens & Northern Bank. Although the Corporation has a diversified loan portfolio, a significant portion of its debtors' ability to honor their contracts is dependent on the local economic conditions within the region. There is no concentration of loans to borrowers engaged in similar businesses or activities that exceed 10% of total loans at December 31, 2012.

A summary of transactions in the allowance for loan losses is as follows:

(In Thousands)	2012	2011	2010
Balance at beginning of year	$7,705	$9,107	$8,265
Provision (credit) charged to operations	288	(285)	1,191
Loans charged off	(1,221)	(1,446)	(619)
Recoveries	85	329	270
Balance at end of year	$6,857	$7,705	$9,107

Transactions within the allowance for loan losses, summarized by segment and class, for 2012 and 2011 were as follows:

Year Ended December 31, 2012	Dec. 31,				Dec. 31,
(In Thousands)	2011     Balance	Charge-offs	Recoveries	Provision (Credit)	2012 Balance
Allowance for Loan Losses:
Residential mortgage:
Residential mortgage loans - first liens	$3,026	($543)	$18	$118	$2,619
Residential mortgage loans - junior liens	266	(9)	0	(10)	247
Home equity lines of credit	231	0	0	24	255
1-4 Family residential construction	79	0	0	17	96
Total residential mortgage	3,602	(552)	18	149	3,217
Commercial:
Commercial loans secured by real estate	2,004	0	1	(75)	1,930
Commercial and industrial	946	(57)	7	(315)	581
Political subdivisions	0	0	0	0	0
Commercial construction	267	(441)	0	408	234
Loans secured by farmland	126	0	0	3	129
Multi-family (5 or more) residential	66	0	0	1	67
Agricultural loans	27	0	0	0	27
Other commercial loans	5	0	0	(2)	3
Total commercial	3,441	(498)	8	20	2,971
Consumer	228	(171)	59	112	228
Unallocated	434			7	441
Total Allowance for Loan Losses	$7,705	($1,221)	$85	$288	$6,857

	December 31,				December 31,
(In Thousands)	2010     Balance	Charge-offs	Recoveries	Provision (Credit)	2011    Balance
Allowance for Loan Losses:
Residential mortgage:
Residential mortgage loans - first liens	$2,745	($49)	$0	$330	$3,026
Residential mortgage loans - junior liens	334	(51)	3	(20)	266
Home equity lines of credit	218	0	0	13	231
1-4 Family residential construction	208	0	0	(129)	79
Total residential mortgage	3,505	(100)	3	194	3,602
Commercial:
Commercial loans secured by real estate	3,314	(973)	1	(338)	2,004
Commercial and industrial	862	(216)	254	46	946
Political subdivisions	0	0	0	0	0
Commercial construction and land	590	0	0	(323)	267
Loans secured by farmland	139	0	0	(13)	126
Multi-family (5 or more) residential	63	0	0	3	66
Agricultural loans	32	0	0	(5)	27
Other commercial loans	0	0	0	5	5
Total commercial	5,000	(1,189)	255	(625)	3,441
Consumer	289	(157)	71	25	228
Unallocated	313			121	434
Total Allowance for Loan Losses	$9,107	($1,446)	$329	($285)	$7,705

In the evaluation of the loan portfolio, management determines two major components for the allowance for loan losses – (1) a specific component based on an assessment of certain larger relationships, mainly commercial purpose loans, on a loan-by-loan basis; and (2) a general component for the remainder of the portfolio based on a collective evaluation of pools of loans with similar risk characteristics.

In determining the larger loan relationships for detailed assessment under the specific allowance component, the Corporation uses an internal risk rating system. Under the risk rating system, the Corporation classifies problem or potential problem loans as "Special Mention," "Substandard," or "Doubtful" on the basis of currently existing facts, conditions and values. Substandard loans include those characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected. Loans classified as Doubtful have all the weaknesses inherent in those classified as Substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Loans that do not currently expose the Corporation to sufficient risk to warrant classification as Substandard or Doubtful, but possess weaknesses that deserve management's close attention, are deemed to be Special Mention. Risk ratings are updated any time that conditions or the situation warrants. Loans not classified are included in the "Pass" column in the table below.

The following tables summarize the aggregate credit quality classification of outstanding loans by risk rating as of December 31, 2012 and 2011:

December 31, 2012:		Special
(In Thousands)	Pass	Mention	Substandard	Doubtful	Total
Residential Mortgage:
Residential Mortgage loans - first liens	$295,929	$3,633	$11,872	$193	$311,627
Residential Mortgage loans - junior liens	25,394	420	934	0	26,748
Home Equity lines of credit	32,374	130	513	0	33,017
1-4 Family residential construction	12,759	0	83	0	12,842
Total residential mortgage	366,456	4,183	13,402	193	384,234
Commercial:
Commercial loans secured by real estate	146,381	6,994	5,038	0	158,413
Commercial and Industrial	41,237	3,030	3,810	365	48,442
Political subdivisions	31,679	110	0	0	31,789
Commercial construction and land	26,744	231	477	748	28,200
Loans secured by farmland	9,102	751	1,517	33	11,403
Multi-family (5 or more) residential	6,394	342	9	0	6,745
Agricultural loans	2,963	28	62	0	3,053
Other commercial loans	362	0	0	0	362
Total Commercial	264,862	11,486	10,913	1,146	288,407
Consumer	11,053	12	203	1	11,269
Totals	$642,371	$15,681	$24,518	$1,340	$683,910

December 31, 2011:		Special
(In Thousands)	Pass	Mention	Substandard	Doubtful	Total
Residential Mortgage:
Residential mortgage loans - first liens	$314,900	$2,955	$12,956	$204	$331,015
Residential mortgage loans - junior liens	27,260	660	924	7	28,851
Home equity lines of credit	29,408	264	365	0	30,037
1-4 Family residential construction	9,959	0	0	0	9,959
Total residential mortgage	381,527	3,879	14,245	211	399,862
Commercial:
Commercial loans secured by real estate	143,247	7,385	5,046	710	156,388
Commercial and industrial	46,110	6,254	4,413	414	57,191
Political subdivisions	37,499	121	0	0	37,620
Commercial construction	21,668	211	1,639	0	23,518
Loans secured by farmland	8,040	1,341	1,531	37	10,949
Multi-family (5 or more) residential	6,200	369	14	0	6,583
Agricultural loans	2,765	164	58	0	2,987
Other commercial loans	552	0	0	0	552
Total commercial	266,081	15,845	12,701	1,161	295,788
Consumer	12,437	20	207	1	12,665
Totals	$660,045	$19,744	$27,153	$1,373	$708,315

The scope of loans evaluated individually for impairment include all loan relationships greater than $200,000 for which there is at least one extension of credit graded Special Mention, Substandard or Doubtful. Also, all loans classified as troubled debt restructurings (discussed in more detail below) and all loan relationships less than $200,000 in the aggregate, but with an estimated loss of $100,000 or more, are individually evaluated for impairment. Loans that are individually evaluated for impairment, but which are not determined to be impaired, are combined with all remaining loans that are not reviewed on a specific basis, and such loans are included within larger pools of loans based on similar risk and loss characteristics for purposes of determining the general component of the allowance. The loans that have been individually evaluated, but which have not been determined to be impaired, are included in the "Collectively Evaluated" column in the table summarizing the allowance and associated loan balances as of December 31, 2012 and 2011.

The following tables present a summary of loan balances and the related allowance for loan losses summarized by portfolio segment and class for each impairment method used as of December 31, 2012 and 2011:

December 31, 2012	Loans:			Allowance for Loan Losses:
(In Thousands)
	Individually	Collectively		Individually	Collectively
	Evaluated	Evaluated	Totals	Evaluated	Evaluated	Totals
Residential mortgage:
Residential mortgage loans - first liens	$2,341	$309,286	$311,627	$206	$2,413	$2,619
Residential mortgage loans - junior liens	158	26,590	26,748	0	247	247
Home equity lines of credit	0	33,017	33,017	0	255	255
1-4 Family residential construction	0	12,842	12,842	0	96	96
Total residential mortgage	2,499	381,735	384,234	206	3,011	3,217
Commercial:
Commercial loans secured by real estate	1,938	156,475	158,413	146	1,784	1,930
Commercial and industrial	939	47,503	48,442	197	384	581
Political subdivisions	0	31,789	31,789	0	0	0
Commercial construction	1,034	27,166	28,200	0	234	234
Loans secured by farmland	923	10,480	11,403	34	95	129
Multi-family (5 or more) residential	9	6,736	6,745	0	67	67
Agricultural loans	40	3,013	3,053	0	27	27
Other commercial loans	0	362	362	0	3	3
Total commercial	4,883	283,524	288,407	377	2,594	2,971
Consumer	47	11,222	11,269	40	188	228
Unallocated						441
Total	$7,429	$676,481	$683,910	$623	$5,793	$6,857

December 31, 2011	Loans:			Allowance for Loan Losses:
(In Thousands)
	Individually	Collectively		Individually	Collectively
	Evaluated	Evaluated	Totals	Evaluated	Evaluated	Totals
Residential mortgage:
Residential mortgage loans - first liens	$2,227	$328,788	$331,015	$461	$2,565	$3,026
Residential mortgage loans - junior liens	137	28,714	28,851	11	255	266
Home equity lines of credit	93	29,944	30,037	0	231	231
1-4 Family residential construction	0	9,959	9,959	0	79	79
Total residential mortgage	2,457	397,405	399,862	472	3,130	3,602
Commercial:
Commercial loans secured by real estate	2,169	154,219	156,388	169	1,835	2,004
Commercial and industrial	942	56,249	57,191	361	585	946
Political subdivisions	0	37,620	37,620	0	0	0
Commercial construction	1,266	22,252	23,518	65	202	267
Loans secured by farmland	927	10,022	10,949	35	91	126
Multi-family (5 or more) residential	14	6,569	6,583	0	66	66
Agricultural loans	39	2,948	2,987	0	27	27
Other commercial loans	0	552	552	0	5	5
Total commercial	5,357	290,431	295,788	630	2,811	3,441
Consumer	50	12,615	12,665	24	204	228
Unallocated						434
Total	$7,864	$700,451	$708,315	$1,126	$6,145	$7,705

Summary information related to impaired loans as of December 31, 2012 and 2011 is as follows:

(In Thousands)	2012	2011
Impaired loans with a valuation allowance	$2,710	$3,433
Impaired loans without a valuation allowance	4,719	4,431
Total impaired loans	$7,429	$7,864
Valuation allowance related to impaired loans	$623	$1,126

No additional funds are committed to be advanced in connection with impaired loans.

Additional summary information related to impaired loans for 2012, 2011 and 2010 is as follows:

(In Thousands)	2012	2011	2010
Average investment in impaired loans	$7,209	$7,455	$6,142
Interest income recognized on impaired loans	$278	$245	$204
Interest income recognized on a cash basis on impaired loans	$278	$245	$204

The breakdown by portfolio segment and class of nonaccrual loans and loans past due ninety days or more and still accruing is as follows:

(In Thousands)	December 31, 2012		December 31, 2011
	Past Due		Past Due
	90+ Days and		90+ Days and
	Accruing	Nonaccrual	Accruing	Nonaccrual
Residential mortgage:
Residential mortgage loans - first liens	$1,900	$3,064	$949	$3,058
Residential mortgage loans - junior liens	29	111	11	67
Home equity lines of credit	40	200	0	0
Total residential mortgage	1,969	3,375	960	3,125
Commercial:
Commercial loans secured by real estate	120	1,338	75	1,595
Commercial and industrial	68	761	21	541
Commercial construction	149	887	139	978
Loans secured by farmland	0	923	53	927
Agricultural loans	0	40	0	0
Total commercial	337	3,949	288	4,041
Consumer	5	29	19	31
Totals	$2,311	$7,353	$1,267	$7,197

The amounts shown in the table immediately above include loans classified as troubled debt restructuring (described in more detail below), if such loans are considered past due ninety days or more, or nonaccrual.

The tables below present a summary of the contractual aging of loans as of December 31, 2012 and 2011:

	As of December 31, 2012				As of December 31, 2011
	Current &				Current &
(In Thousands)	Past Due	Past Due	Past Due		Past Due	Past Due	Past Due
	Less than	30-89	90+		Less than	30-89	90+
	30 Days	Days	Days	Total	30 Days	Days	Days	Total
Residential mortgage:
Residential mortgage loans - first liens	$302,373	$6,228	$3,026	$311,627	$321,907	$6,723	$2,385	$331,015
Residential mortgage loans - junior liens	26,247	371	130	26,748	28,437	393	21	28,851
Home equity lines of credit	32,593	184	240	33,017	29,986	51	0	30,037
1-4 Family residential construction	12,627	215	0	12,842	9,959	0	0	9,959
Total residential mortgage	373,840	6,998	3,396	384,234	390,289	7,167	2,406	399,862
Commercial:
Commercial loans secured by real estate	156,834	704	875	158,413	155,025	343	1,020	156,388
Commercial and industrial	47,569	317	556	48,442	56,835	169	187	57,191
Political subdivisions	31,789	0	0	31,789	37,620	0	0	37,620
Commercial construction	26,944	248	1,008	28,200	22,323	1,056	139	23,518
Loans secured by farmland	10,438	75	890	11,403	9,973	33	943	10,949
Multi-family (5 or more) residential	6,743	2	0	6,745	6,583	0	0	6,583
Agricultural loans	3,003	10	40	3,053	2,945	3	39	2,987
Other commercial loans	362	0	0	362	552	0	0	552
Total commercial	283,682	1,356	3,369	288,407	291,856	1,604	2,328	295,788
Consumer	11,135	129	5	11,269	12,340	306	19	12,665
Totals	$668,657	$8,483	$6,770	$683,910	$694,485	$9,077	$4,753	$708,315

Nonaccrual loans are included in the contractual aging immediately above. A summary of the contractual aging of nonaccrual loans at December 31, 2012 and 2011 is as follows:

	Current &
(In Thousands)	Past Due	Past Due	Past Due
	Less than	30-89	90+
	30 Days	Days	Days	Total
December 31, 2012 Nonaccrual Totals	$2,167	$727	$4,459	$7,353
December 31, 2011 Nonaccrual Totals	$2,532	$1,179	$3,486	$7,197

Loans whose terms are modified are classified as Troubled Debt Restructurings (TDRs) if the Corporation grants such borrowers concessions and it is deemed that those borrowers are experiencing financial difficulty. Loans classified as TDRs are designated as impaired. The outstanding balance of loans subject to TDRs, as well as the contractual aging information at December 31, 2012 and 2011 is as follows:

Troubled Debt Restructurings (TDRs):
	Current &
(In Thousands)	Past Due	Past Due	Past Due
	Less than	30-89	90+
	30 Days	Days	Days	Nonaccrual	Total
December 31, 2012 Totals	$785	$121	$0	$1,155	$2,061
December 31, 2011 Totals	$1,064	$0	$146	$2,267	$3,477

A summary of TDRs that occurred during 2012 and 2011 is as follows:

Year Ended December 31, 2012		Pre-	Post-
(Balances in Thousands)		Modification	Modification
	Number	Outstanding	Outstanding
	of	Recorded	Recorded
	Contracts	Investment	Investment
Commercial,
Commercial and industrial	1	$65	$65

Year Ended December 31, 2011		Pre-	Post-
(Balances in Thousands)		Modification	Modification
	Number	Outstanding	Outstanding
	Of	Recorded	Recorded
	Contracts	Investment	Investment
Residential mortgage,
Home equity lines of credit	1	$93	$93
Commercial:
Commercial loans secured by real estate	11	1,941	1,941
Commercial and industrial	3	14	14
Commercial construction and land	5	1,238	1,238
Multi-family (5 or more) residential	1	15	15

The TDR in 2012 was an extension of the final maturity and lowering of monthly payments required on a commercial loan. There was no allowance for loan losses on this loan at December 31, 2012, and no change in the allowance for loan losses resulting from this TDR.

In the table above, the 2011 TDR category for commercial loans secured by real estate includes six (6) contracts that stem from a forbearance agreement entered into with a commercial customer. The total principal balance of loans included in the forbearance agreement was $1,588,000, of which the Corporation had charged off $663,000 in the second quarter 2011 (prior to the forbearance agreement), and subsequently charged off an additional $438,000 in the fourth quarter 2011. Under the terms of the forbearance agreement, the Corporation had agreed to accept payment of less than the total principal amount of the loans, assuming payment was received by dates specified within the forbearance agreement. In 2012, the loans were not repaid and the forbearance agreement expired. Accordingly, the Corporation's concession terminated, and the loans were not classified as TDRs at December 31, 2012. The outstanding balance of the loans was $466,000 at December 31, 2012 and December 31, 2011. The loans were in nonaccrual status at December 31, 2012 and December 31, 2011. At December 31, 2012, the risk rating of the loans was Substandard, while the risk rating of the loans was Doubtful at December 31, 2011. Based on management's estimate of the value of the underlying collateral, net of selling costs, the Corporation had no allowance for loan losses associated with these loans at December 31, 2012 and December 31, 2011.

Other TDRs in 2011 included extensions of terms and maturities at lower than current market rates and acceptance of interest-only payments for extended periods of time. Except for the fourth quarter 2011 charge-off of $438,000 related to commercial loans subject to the forbearance agreement described above, there were no changes in the allowance for loan losses in 2011 resulting from the TDRs that occurred in 2011.

In 2012, there were no defaults on loans for which modifications considered to be TDRs were entered into within the previous 12 months. In 2011, defaults on loans for which modifications considered to be TDRs were entered into within the previous 12 months are summarized as follows:

Year Ended December 31, 2011	Number
(Balances in Thousands)	of	Recorded
	Contracts	Investment
Residential mortgage,
Home equity lines of credit	1	$93
Commercial:
Commercial loans secured by real estate	2	207
Commercial construction and land	2	1,089

The events of default in the table above resulted from the borrowers' failure to make payments due at maturity, based on loan maturity dates that had been extended from their original due dates. At December 31, 2012 and 2011, the Corporation evaluated loans to the borrowers who defaulted subsequent to restructurings, in determining the specific allowance for loan loss amounts related to the underlying loans. For one loan included in the Commercial construction and land class, with a balance of $950,000, the Corporation had an allowance for loan losses of $65,000 at December 31, 2011.  In 2012, the Corporation recorded a charge-off of $288,000 related to this loan, leaving an outstanding balance of $662,000 at December 31, 2012.   Based on the estimated value of the underlying collateral, net of estimated costs to sell the collateral, the Corporation determined that no allowance for loan losses was required at December 31, 2012 for loans for which an event of default had occurred subsequent to restructuring.

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Securities (Available For Sale Securities Realized Gains and Losses) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Securities [Abstract]
Gross realized gains									$ 2,798	$ 2,226	$ 1,270
Gross realized losses									(116)	(10)	(441)
Net realized gains	51	2,430	203	(2)	188	26	163	1,839	2,682	2,216	829
Income tax provision related to net realized gains									$ 939	$ 753	$ 282

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Preferred Stock Warrant Under the TARP Capital Purchase Program (Details) (USD $) In Thousands, except Share data, unless otherwise specified	0 Months Ended		12 Months Ended
	Sep. 01, 2010	Jan. 16, 2009	Dec. 31, 2010	Dec. 31, 2009
Stock Issued During Period, Shares, New Issues		26,440
Class of Warrant or Right, Number of Securities Called by Warrants or Rights		194,794
Share Price		$ 20.36
Proceeds from Issuance of Warrants		$ 26,440
Preferred Stock, Dividend Rate, Percentage		5.00%	5.80%
Payments for Repurchase of Warrants	400		400
Payments of Stock Issuance Costs				31
Preferred Stock, Accretion of Redemption Discount			691
Preferred Stock [Member]
Proceeds from Issuance of Preferred Stock, Preference Stock, and Warrants			26,440	25,588
Warrant [Member]
Proceeds from Issuance of Preferred Stock, Preference Stock, and Warrants				821
Accelerated Discount [Member]
Preferred Stock, Accretion of Redemption Discount			$ 607

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Bank Premises and Equipment (Allocation of Depreciation Expense) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Property, Plant and Equipment [Line Items]
Depreciation expense	$ 1,939	$ 2,077	$ 2,339
Occupancy Expense [Member]
Property, Plant and Equipment [Line Items]
Depreciation expense	1,050	1,168	1,238
Furniture and Equipment Expense [Member]
Property, Plant and Equipment [Line Items]
Depreciation expense	$ 889	$ 909	$ 1,101

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Securities (Net Impairment Losses) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Asset Impairment Charges	$ 67	$ 0	$ 433
Trust Preferred Securities Issued by Indvidual Institutions [Member]
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Asset Impairment Charges	0	0	320
Pooled Trust Preferred Securities Mezzanine Tranches[ Member]
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Asset Impairment Charges	0	0	103
Marketable Equity Securities [Member]
Schedule of Investment Income, Reported Amounts, by Category [Line Items]
Asset Impairment Charges	$ 67	$ 0	$ 10

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Defined Benefit Plans (Estimated Future Benefit Payments) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012
Pension Plans, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Expected Future Benefit Payments, Next Twelve Months	$ 21
Defined Benefit Plan, Expected Future Benefit Payments, Year Two	236
Defined Benefit Plan, Expected Future Benefit Payments, Year Three	20
Defined Benefit Plan, Expected Future Benefit Payments, Year Four	43
Defined Benefit Plan, Expected Future Benefit Payments, Year Five	19
Defined Benefit Plan, Expected Future Benefit Payments, Five Fiscal Years Thereafter	1,420
Other Postretirement Benefit Plans, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Expected Future Benefit Payments, Next Twelve Months	112
Defined Benefit Plan, Expected Future Benefit Payments, Year Two	108
Defined Benefit Plan, Expected Future Benefit Payments, Year Three	105
Defined Benefit Plan, Expected Future Benefit Payments, Year Four	109
Defined Benefit Plan, Expected Future Benefit Payments, Year Five	116
Defined Benefit Plan, Expected Future Benefit Payments, Five Fiscal Years Thereafter	$ 749

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Securities (Available For Sale Securities Unrealized Losses and Fair Value) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 Months, Fair Value	$ 38,087	$ 12,890
Less Than 12 Months, Unrealized Losses	(365)	(116)
12 Months or More, Fair Value	5,419	31,694
12 Months or More, Unrealized Losses	(122)	(1,767)
Total Fair Value	43,506	44,584
Total Unrealized Losses	(487)	(1,883)
Obligations of U.S. Government agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 Months, Fair Value	10,006
Less Than 12 Months, Unrealized Losses	(50)
12 Months or More, Fair Value	0
12 Months or More, Unrealized Losses	0
Total Fair Value	10,006
Total Unrealized Losses	(50)
Obligations of states and political subdivisions, Tax-exempt [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 Months, Fair Value	7,082	4,301
Less Than 12 Months, Unrealized Losses	(92)	(34)
12 Months or More, Fair Value	3,285	20,692
12 Months or More, Unrealized Losses	(86)	(1,296)
Total Fair Value	10,367	24,993
Total Unrealized Losses	(178)	(1,330)
Obligations of states and political subdivisions, Taxable [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 Months, Fair Value	4,149	927
Less Than 12 Months, Unrealized Losses	(71)	(2)
12 Months or More, Fair Value	0	244
12 Months or More, Unrealized Losses	0	(2)
Total Fair Value	4,149	1,171
Total Unrealized Losses	(71)	(4)
Collateralized mortgage obligations, Issued by U.S. Government agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 Months, Fair Value	16,755	6,886
Less Than 12 Months, Unrealized Losses	(146)	(36)
12 Months or More, Fair Value	454	5,075
12 Months or More, Unrealized Losses	(1)	(1)
Total Fair Value	17,209	11,961
Total Unrealized Losses	(147)	(37)
Trust preferred securities issued by individual institutions [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 Months, Fair Value		0
Less Than 12 Months, Unrealized Losses		0
12 Months or More, Fair Value		947
12 Months or More, Unrealized Losses		(53)
Total Fair Value		947
Total Unrealized Losses		(53)
Collateralized debt obligations, Pooled trust preferred securities - senior tranches [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 Months, Fair Value	0	0
Less Than 12 Months, Unrealized Losses	0	0
12 Months or More, Fair Value	1,613	4,638
12 Months or More, Unrealized Losses	(2)	(358)
Total Fair Value	1,613	4,638
Total Unrealized Losses	(2)	(358)
Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 Months, Fair Value	37,992	12,114
Less Than 12 Months, Unrealized Losses	(359)	(72)
12 Months or More, Fair Value	5,352	31,596
12 Months or More, Unrealized Losses	(89)	(1,710)
Total Fair Value	43,344	43,710
Total Unrealized Losses	(448)	(1,782)
Marketable Equity Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 Months, Fair Value	95	776
Less Than 12 Months, Unrealized Losses	(6)	(44)
12 Months or More, Fair Value	67	98
12 Months or More, Unrealized Losses	(33)	(57)
Total Fair Value	162	874
Total Unrealized Losses	$ (39)	$ (101)

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Borrowed Funds (Short Term Borrowings) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Short-term Borrowings	$ 5,567	$ 4,950
Maturity Overnight [Member]
Short-term Borrowings	0	0
Securities Sold under Agreements to Repurchase [Member]
Short-term Borrowings	$ 5,567	$ 4,950

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Per Common Share Data (Tables)

12 Months Ended

Dec. 31, 2012

Per Share Data [Abstract]

Schedule of Earnings Per Share Reconciliation [Table Text Block]

		Weighted-
		Average	Earnings
	Net	Common	Per
	Income	Shares	Share
2012
Earnings per share – basic	$22,705,000	12,235,748	$1.86
Dilutive effect of potential common stock
arising from stock options:
Exercise of outstanding stock options		200,589
Hypothetical share repurchase at $ 19.16		(176,129)
Earnings per share – diluted	$22,705,000	12,260,208	$1.85
2011
Earnings per share – basic	$23,368,000	12,162,045	$1.92
Dilutive effect of potential common stock
arising from stock options:
Exercise of outstanding stock options		92,398
Hypothetical share repurchase at $ 15.87		(87,675)
Earnings per share – diluted	$23,368,000	12,166,768	$1.92
2010
Earnings per common share – basic and diluted	$17,581,000	12,131,039	$1.45

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Comprehensive Income (Comprehensive Income Related Tax Effects) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Comprehensive Income [Abstract]
Unrealized holding gains on available-for-sale securities, Before-Tax Amount	$ 4,128	$ 20,611	$ (448)
Unrealized holding gains on available-for-sale securities, Income Tax Effect	(1,608)	(7,006)	166
Unrealized holding gains on available-for-sale securities, Net-of-Tax Amount	2,520	13,605	(282)
Reclassification adjustment for losses (gains) realized in income, Before-Tax Amount	(2,682)	(2,216)	(829)
Reclassification adjustment for losses (gains) realized in income, Income Tax Effect	939	753	282
Reclassification adjustment for losses (gains) realized in income, Net-of-Tax Amount	(1,743)	(1,463)	(547)
Other comprehensive gain on available-for-sale securities, Before-Tax Amount	1,446	18,395	(1,277)
Other comprehensive gain on available-for-sale securities, Income Tax Effect	(669)	(6,253)	448
Other comprehensive gain on available-for-sale securities, Net-of-Tax Amount	777	12,142	(829)
Change in items from defined benefit plans included in accumulated other comprehensive income, Before-Tax Amount	8	(626)	126
Chnage in items from defined benefit plans included in accumulated other comprehensive income, Income Tax Effect	(2)	208	(42)
Change in items from defined benefit plans included in accumulated other comprehensive income, Net-of-Tax Amount	6	(418)	84
Amortization of net transition obligation, prior service cost and net actuarial loss included in net periodic benefit cost, Before-Tax Amount	(77)	(55)	(53)
Amortization of net transition obligation, prior service cost and net actuarial loss included in net periodic benefit cost, Income Tax Effect	(17)	(18)	(18)
Amortization of net transition obligation, prior service cost and net actuarial loss included in net periodic benefit cost, Net-of-Tax Amount	(60)	(37)	(35)
Other comprehensive gain on unfunded retirement obligations, Before-Tax Amount	85	(571)	179
Other comprehensive gain on unfunded retirement obligations, Income Tax Effect	(19)	190	(60)
Other comprehensive gain on unfunded retirement obligations, Net-of-Tax Amount	66	(381)	119
Total other comprehensive income, Before-Tax Amount	1,531	17,824	(1,098)
Total other comprehensive income, Income Tax Effect	688	6,063	(388)
Net other comprehensive income (loss)	$ 843	$ 11,761	$ (710)

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Employee And Postretirement Benefit Plans

12 Months Ended

Dec. 31, 2012

Employee and Postretirement Benefit Plans [Abstract]

EMPLOYEE AND POSTRETIREMENT BENEFIT PLANS

13. EMPLOYEE AND POSTRETIREMENT BENEFIT PLANS

DEFINED BENEFIT PLANS

The Corporation sponsors a defined benefit health care plan that provides postretirement medical benefits and life insurance to employees who meet certain age and length of service requirements. This plan contains a cost-sharing feature, designed to cause participants to pay for all future increases in premiums (after January 1, 1993) related to benefit coverage. Accordingly, actuarial assumptions related to health care cost trend rates do not significantly affect the liability balance at December 31, 2012 and December 31, 2011, and are not expected to significantly affect the Corporation's future expenses. The Corporation uses a December 31 measurement date for the postretirement plan.

In an acquisition in 2007, the Corporation assumed the Citizens Trust Company Retirement Plan, a defined benefit pension plan. This plan covers certain employees who were employed by Citizens Trust Company on December 31, 2002, when the plan was amended to discontinue admittance of any future participant and to freeze benefit accruals. Information related to the Citizens Trust Company Retirement Plan has been included in the tables that follow. The Corporation uses a December 31 measurement date for this plan.

The following table shows the funded status of the defined benefit plans:

(In Thousands)

	Pension:		Postretirement:
	2012	2011	2012	2011
CHANGE IN BENEFIT OBLIGATION:
Benefit obligation at beginning of year	$1,613	$1,339	$2,054	$1,616
Service cost	0	0	91	83
Interest cost	72	73	81	92
Plan participants' contributions	0	0	199	226
Actuarial (gain) loss	128	222	(87)	322
Benefits paid	(30)	(21)	(257)	(285)
Benefit obligation at end of year	$1,783	$1,613	$2,081	$2,054
CHANGE IN PLAN ASSETS:
Fair value of plan assets at
beginning of year	$1,057	$1,080	$0	$0
Actual return on plan assets	121	(6)	0	0
Employer contribution	694	4	58	59
Plan participants' contributions	0	0	199	226
Benefits paid	(30)	(21)	(257)	(285)
Fair value of plan assets at end of year	$1,842	$1,057	$0	$0
Funded status at end of year	$59	($556)	($2,081)	($2,054)

At December 31, 2012 and 2011, the following pension plan and postretirement plan asset and liability amounts were recognized in the consolidated balance sheet:

(In Thousands)	Pension:		Postretirement:
	2012	2011	2012	2011
Other assets	$59
Accrued interest and other liabilities		$556	$2,081	$2,054

At December 31, 2012 and 2011, the following items included in accumulated other comprehensive income (loss) had not been recognized as components of expense:

(In Thousands)	Pension:		Postretirement:
	2012	2011	2012	2011
Net transition obligation	$0	$0	$0	$37
Prior service cost	0	0	94	107
Net actuarial loss (gain)	546	494	230	317
Total	$546	$494	$324	$461

For the defined benefit pension plan, amortization of the net actuarial loss is expected to be $32,000 in 2013. For the postretirement plan, the estimated amounts of prior service cost and net actuarial loss that will be amortized from accumulated other comprehensive income into net periodic benefit cost in 2013 are $14,000 and $2,000, respectively.

The accumulated benefit obligation for the defined benefit pension plan was $1,783,000 at December 31, 2012 and $1,613,000 at December 31, 2011.

The components of net periodic benefit costs from defined benefit plans are as follows:

(In Thousands)	Pension:			Postretirement:
	2012	2011	2010	2012	2011	2010
Service  cost	$0	$0	$0	$91	$83	$68
Interest cost	72	73	67	81	92	89
Expected return on plan assets	(72)	(73)	(66)	0	0	0
Amortization of transition (asset) obligation	0	0	0	37	36	36
Amortization of prior service cost	0	0	0	13	14	14
Recognized net actuarial loss	27	5	3	0	0	0
Total net periodic benefit cost	$27	$5	$4	$222	$225	$207

The weighted-average assumptions used to determine net periodic benefit cost are as follows:

	Pension:			Postretirement:
	2012	2011	2010	2012	2011	2010
Citizens Trust Company Retirement Plan
and postretirement plan:
Discount rate	4.50%	5.50%	5.50%	4.50%	5.50%	6.00%
Expected return on plan assets	7.50%	7.50%	7.50%	N/A	N/A	N/A
Rate of compensation increase	N/A	N/A	N/A	N/A	N/A	N/A

The weighted-average assumptions used to determine benefit obligations as of December 31, 2012 and 2011 are as follows:

	Pension:		Postretirement:
	2012	2011	2012	2010
Discount rate	4.00%	4.50%	4.00%	4.50%
Rate of compensation increase	N/A	N/A	N/A	N/A

Estimated future benefit payments, including only estimated employer contributions for the postretirement plan, which reflect expected future service, are as follows:

(In Thousands)	Pension	Postretirement
2013	$21	$112
2014	236	108
2015	20	105
2016	43	109
2017	19	116
2018-2022	1,420	749

No estimated minimum contribution to the defined benefit pension plan is required in 2013, though the Corporation may make discretionary contributions.

The expected return on pension plan (Citizens Trust Company Retirement Plan) assets is a significant assumption used in the calculation of net periodic benefit cost. This assumption reflects the average long-term rate of earnings expected on the funds invested or to be invested to provide for the benefits included in the projected benefit obligation.

The fair values of pension plan assets at December 31, 2012 and 2011 are as follows:

	2012	2011
Cash and cash equivalents	37%	3%
Debt securities	24%	39%
Equity securities	27%	40%
Alternative funds	12%	18%
Total	100%	100%

C&N Bank's Trust and Financial Management Department manages the investment of the Citizens Trust Company Retirement Plan (pension plan) assets. Most of the Plan's securities are mutual funds, including mutual funds principally invested in debt securities, mutual funds invested in a diversified mix of large, mid- and small-capitalization U.S. stocks, foreign stocks, and mutual funds invested in alternative asset classes such as real estate, commodities and inflation-protected securities. The fair values of plan assets are determined based on Level 1 inputs (as described in Note 6). At December 31, 2012, the targeted asset allocation for the pension plan was 26% equity securities, 61% debt securities, 11% alternative assets and 2% cash. Thecomparatively high allocation of plan assets to cash and cash equivalents at December 31, 2012 reflects receipt of a Corporation contribution in late December 2012 that had not been transferred to other asset categories. At December 31, 2011, the targeted asset allocation for the pension plan was 43% equity securities, 38% debt securities, 17% alternative assets and 2% cash. The targeted asset allocation reflects an attempt to generate a long-term average rate of return necessary to meet the projected benefit obligation, and considers the need for ongoing liquidity necessary to fund benefit payments. Changes in the targeted asset allocation in 2012 reflect possible lump sum distribution requirements within the next 2 to 3 years. The pension plan's assets do not include any shares of the Corporation's common stock.

PROFIT SHARING AND DEFERRED COMPENSATION PLANS

The Corporation has a profit sharing plan that incorporates the deferred salary savings provisions of Section 401(k) of the Internal Revenue Code. The Corporation's matching contributions to the Plan depend upon the tax deferred contributions of employees. The Corporation's total basic and matching contributions were $587,000 in 2012, $559,000 in 2011 and $511,000 in 2010.

The Corporation has an Employee Stock Ownership Plan (ESOP). Contributions to the ESOP are discretionary, and the ESOP uses funds contributed to purchase Corporation stock for the accounts of ESOP participants. These purchases are made on the market (not directly from the Corporation), and employees are not permitted to purchase Corporation stock under the ESOP. The ESOP includes a diversification feature, which allows participants, upon reaching age 55 and 10 years of service (as defined), to sell up to 50% of their Corporation shares back to the ESOP over a period of 6 years. As of December 31, 2012 and 2011, there were no shares allocated for repurchase by the ESOP.

Dividends paid on shares held by the ESOP are charged to retained earnings. All Corporation shares owned through the ESOP are included in the calculation of weighted-average shares outstanding for purposes of calculating earnings per share - basic and diluted. The ESOP held 346,218 shares of Corporation stock at December 31, 2012 and 339,537 shares at December 31, 2011, all of which had been allocated to Plan participants. The Corporation's contributions to the ESOP totaled $507,000 in 2012, $496,000 in 2011 and $454,000 in 2010.

The Corporation also has a nonqualified supplemental deferred compensation arrangement with its key officers. Charges to operating expense for officers' supplemental deferred compensation were $140,000 in 2012, $108,000 in 2011 and $95,000 in 2010.

STOCK-BASED COMPENSATION PLANS

The Corporation has a Stock Incentive Plan for a selected group of senior officers. A total of 850,000 shares of common stock may be issued under the Stock Incentive Plan. Awards may be made under the Stock Incentive Plan in the form of qualified options ("Incentive Stock Options," as defined in the Internal Revenue Code), nonqualified options, stock appreciation rights or restricted stock. From 2000 through 2011, except for 2006 when no awards were granted and 2010 (described below), awards granted to all participants under the Stock Incentive Plan included awards of Incentive Stock Options and restricted stock. In 2012, the Corporation's executive officers were awarded a mix of Incentive Stock Options and restricted stock, while awards to the rest of the senior officers consisted exclusively of restricted stock. Incentive Stock Options granted in 2000 and thereafter have an exercise price equal to the market value of the stock at the date of grant, vest after 6 months and expire after 10 years. Except for the 2010 award, restricted stock awards through 2011 vest ratably over 3 years. Restricted stock awards to executive officers in 2012 vest ratably over 3 years, while 2012 restricted stock awards to the rest of the senior officers vest ratably over 4 years. For restricted stock awards granted under the Stock Incentive Plan in 2012, 2011, 2009 and 2008, the Corporation must meet an annual targeted return on average equity ("ROAE") performance ratio, as defined, in order for participants to vest. The Corporation met the ROAE target for the 2012, 2011, 2010 and 2008 plan years, but did not meet the ROAE target for the 2009 plan year. In 2010, the only award under the Stock Incentive Plan was 9,125 shares of restricted stock to the Chief Executive Officer. The 2010 award provides that vesting will occur upon the earliest of (i) the third anniversary of the date of grant, (ii) death or disability or (iii) the occurrence of a change in control of the Corporation. There are 360,849 shares available for issuance under the Stock Incentive Plan as of December 31, 2012.

Also, the Corporation has an Independent Directors Stock Incentive Plan. This plan permits awards of nonqualified stock options and/or restricted stock to non-employee directors. A total of 135,000 shares of common stock may be issued under the Independent Directors Stock Incentive Plan. The recipients' rights to exercise stock options under this plan expire 10 years from the date of grant. The exercise prices of all stock options awarded under the Independent Directors Stock Incentive Plan are equal to market value as of the dates of grant. The restricted stock awards vest ratably over 3 years. There were no awards made under the Independent Directors Stock Incentive Plan in 2006 and 2010. There are 39,450 shares available for issuance under the Independent Directors Stock Incentive Plan as of December 31, 2012.

The Corporation records stock option expense based on estimated fair value calculated using the Black-Scholes-Merton option-pricing model with the following assumptions:

	2012	2011	2010
Volatility	41%	37%	N/A
Expected option lives	7 Years	8 Years	N/A
Risk-free interest rate	1.53%	3.10%	N/A
Dividend yield	3.97%	3.86%	N/A

Management estimated the lives for options based on the Corporation's average historical experience with both plans. The Corporation utilized its historical volatility and dividend yield over the immediately prior 7-year period to estimate future levels of volatility and dividend yield for the 2012 awards, and utilized its historical volatility and dividend yield over the immediately prior 8-year period in estimating the value of the 2011 awards. The risk-free interest rate was based on the published yield of zero-coupon U.S. Treasury strips as of the grant date, with a maturity coinciding with the estimated option lives.

Total stock-based compensation expense is as follows:

(In Thousands)	2012	2011	2010
Stock options	$247	$279	$0
Restricted stock	320	144	67
Total	$567	$423	$67

A summary of stock option activity is presented below:

	2012		2011		2010
		Weighted		Weighted		Weighted
		Average		Average		Average
		Exercise		Exercise		Exercise
	Shares	Price	Shares	Price	Shares	Price
Outstanding, beginning of year	301,797	$19.05	226,894	$20.54	306,358	$20.53
Granted	64,757	$18.54	93,674	$15.06	0
Exercised	(17,284)	$16.20	(13,042)	$16.71	0
Forfeited	(6,830)	$21.51	(5,501)	$18.30	(76,331)	$20.74
Expired	(4,770)	$17.00	(228)	$14.17	(3,133)	$14.11
Outstanding, end of year	337,670	$19.08	301,797	$19.05	226,894	$20.54
Options exercisable at year-end	337,670	$19.08	301,797	$19.05	226,894	$20.54
Weighted-average fair value of options granted		$5.15		$4.26		N/A
Weighted-average fair value of options forfeited		$4.03		$3.95		$3.03

The weighted-average remaining contractual term of outstanding stock options at December 31, 2012 was 5.9 years. The aggregate intrinsic value of stock options outstanding (excluding options issued at exercise prices greater than the final closing price of the Corporation's stock in 2012) was $403,000 at December 31, 2012. The total intrinsic value of options exercised was $72,000 in 2012 and $17,000 in 2011. There were no options exercised in 2010.

The following summarizes non-vested stock options and restricted stock activity as of and for the year ended December 31, 2012:

	Stock Options		Restricted Stock
		Weighted		Weighted
		Average		Average
	Number	Grant Date	Number	Grant Date
	of Shares	Fair Value	of Shares	Fair Value
Outstanding, December 31, 2011	0		27,071	$14.35
Granted	64,757	$5.15	42,552	$18.54
Vested	(64,757)	$5.15	(7,005)	$16.08
Forfeited	0		(3,560)	$17.85
Outstanding, December 31, 2012	0		59,058	$16.95

Compensation cost related to restricted stock is recognized based on the market price of the stock at the grant date over the vesting period. As of December 31, 2012, there was $614,000 total unrecognized compensation costs related to restricted stock, which is expected to be recognized over a weighted average period of 1.8 years.

Effective January 3, 2013, the Corporation granted options to purchase a total of 64,050 shares of common stock through the Stock Incentive and Independent Directors Stock Incentive Plans. The exercise price for these options is $19.21 per share, which was the market price at the date of grant, as determined under the Plans. The Corporation's preliminary estimate of stock option compensation expense in 2013 is approximately $262,000. Management expects to use the Black-Scholes-Merton option-pricing model to measure compensation cost for these options. Also, effective January 3, 2013, the Corporation awarded a total of 37,886 shares of restricted stock under the Stock Incentive and Independent Directors Stock Incentive Plans. Total estimated restricted stock expense for 2013 is $477,000. The stock options and restricted stock awards made in January 2013 are not included in the tables above.

The Corporation has issued shares from treasury stock for all stock option exercises through December 31, 2012. Management does not anticipate that stock repurchases will be necessary to accommodate stock option exercises in 2013.

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Regulatory Matters (Capital Requirements under Banking Regulations) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Retained Earnings, Unappropriated	$ 83,318
Tangible Capital	14,705
Tangible Capital to Tangible Assets	10.00%
Consolidated [Member]
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Capital	165,972	149,898
Capital to Risk Weighted Assets	24.01%	21.17%
Capital Required for Capital Adequacy	55,299	56,636
Capital Required for Capital Adequacy to Risk Weighted Assets	8.00%	8.00%
Tier One Risk Based Capital	158,008	141,255
Tier One Risk Based Capital to Risk Weighted Assets	22.86%	19.95%
Tier One Risk Based Capital Required for Capital Adequacy	27,650	28,318
Tier One Risk Based Capital Required for Capital Adequacy to Risk Weighted Assets	4.00%	4.00%
Tier One Leverage Capital	158,008	141,255
Tier One Leverage Capital to Average Assets	12.53%	10.93%
Tier One Leverage Capital Required for Capital Adequacy	50,459	51,712
Tier One Leverage Capital Required for Capital Adequacy to Average Assets	4.00%	4.00%
C&N Bank [Member]
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Capital	152,462	137,717
Capital to Risk Weighted Assets	22.31%	19.66%
Capital Required for Capital Adequacy	54,665	56,046
Capital Required for Capital Adequacy to Risk Weighted Assets	8.00%	8.00%
Capital Required to be Well Capitalized	68,331	70,058
Capital Required to be Well Capitalized to Risk Weighted Assets	10.00%	10.00%
Tier One Risk Based Capital	145,596	129,978
Tier One Risk Based Capital to Risk Weighted Assets	21.31%	18.55%
Tier One Risk Based Capital Required for Capital Adequacy	27,332	28,023
Tier One Risk Based Capital Required for Capital Adequacy to Risk Weighted Assets	4.00%	4.00%
Tier One Risk Based Capital Required to be Well Capitalized	40,998	42,035
Tier One Risk Based Capital Required to be Well Capitalized to Risk Weighted Assets	6.00%	6.00%
Tier One Leverage Capital	145,596	129,978
Tier One Leverage Capital to Average Assets	11.64%	10.14%
Tier One Leverage Capital Required for Capital Adequacy	50,053	51,285
Tier One Leverage Capital Required for Capital Adequacy to Average Assets	4.00%	4.00%
Tier One Leverage Capital Required to be Well Capitalized	$ 62,567	$ 64,107
Tier One Leverage Capital Required to be Well Capitalized to Average Assets	5.00%	5.00%

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Regulatory Matters

12 Months Ended

Dec. 31, 2012

Regulatory Matters [Abstract]

REGULATORY MATTERS

18. REGULATORY MATTERS

The Corporation (on a consolidated basis) and C&N Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory - and possibly additional discretionary - actions by regulators that, if undertaken, could have a direct material effect on the Corporation's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Corporation and C&N Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Prompt corrective action provisions are not applicable to bank holding companies.

Quantitative measures established by regulation to ensure capital adequacy require the Corporation and C&N Bank to maintain minimum amounts and ratios (set forth in the following table) of total and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined) and of Tier I capital (as defined) to average assets (as defined). Management believes, as of December 31, 2012 and 2011, that the Corporation and C&N Bank meet all capital adequacy requirements to which they are subject.

To be categorized as well capitalized, an institution must maintain minimum total risk based, Tier I risk based and Tier I leverage ratios as set forth in the following table. The Corporation's and C&N Bank's actual capital amounts and ratios are also presented in the following table:

					Minimum To Be Well
(Dollars in Thousands)			Minimum		Capitalized Under
			Capital		Prompt Corrective
	Actual		Requirement		Action Provisions
	Amount	Ratio	Amount	Ratio	Amount	Ratio
December 31, 2012:
Total capital to risk-weighted assets:
Consolidated	$165,972	24.01%	$55,299	³8%	n/a	n/a
C&N Bank	152,462	22.31%	54,665	³8%	$68,331	³10%
Tier 1 capital to risk-weighted assets:
Consolidated	158,008	22.86%	27,650	³4%	n/a	n/a
C&N Bank	145,596	21.31%	27,332	³4%	40,998	³6%
Tier 1 capital to average assets:
Consolidated	158,008	12.53%	50,459	³4%	n/a	n/a
C&N Bank	145,596	11.64%	50,053	³4%	62,567	³5%
December 31, 2011:
Total capital to risk-weighted assets:
Consolidated	$149,898	21.17%	$56,636	³8%	n/a	n/a
C&N Bank	137,717	19.66%	56,046	³8%	$70,058	³10%
Tier 1 capital to risk-weighted assets:
Consolidated	141,255	19.95%	28,318	³4%	n/a	n/a
C&N Bank	129,978	18.55%	28,023	³4%	42,035	³6%
Tier 1 capital to average assets:
Consolidated	141,255	10.93%	51,712	³4%	n/a	n/a
C&N Bank	129,978	10.14%	51,285	³4%	64,107	³5%

Banking regulators limit the amount of dividends that may be paid by the Citizens & Northern Bank to the Corporation. Retained earnings against which dividends may be paid without prior approval of the banking regulators amounted to approximately $83,318,000 at December 31, 2012, subject to the minimum capital ratio requirements noted above.

Restrictions imposed by federal law prohibit the Corporation from borrowing from C&N Bank unless the loans are secured in specific amounts. Such secured loans to the Corporation are generally limited to 10% of C&N Bank's tangible stockholder's equity (excluding accumulated other comprehensive income) or $14,705,000 at December 31, 2012.

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Borrowed Funds (Long-Term Repurchase Agreements) (Details) (USD $)	Dec. 31, 2012	Dec. 31, 2011
Debt Instrument, Repurchase Amount	$ 68,000,000	$ 85,000,000
Agreement Maturing in 2013 [Member]
Debt Instrument, Repurchase Amount	0	5,000,000
Agreement Maturing in 2017 [Member]
Debt Instrument, Repurchase Amount	$ 68,000,000	$ 80,000,000

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Summary of Quarterly Consolidated Financial Data (Tables)

12 Months Ended

Dec. 31, 2012

Summary of Quarterly Consolidated Financial Data [Abstract]

Schedule of Quarterly Financial Information [Table Text Block]

The following table presents summarized quarterly financial data for 2012 and 2011:

                                                                                                            2012 Quarter Ended

	Mar. 31,	June 30,	Sept. 30,	Dec. 31,
Interest income	$14,776	$14,529	$13,836	$13,491
Interest expense	2,502	2,401	2,228	1,900
Net interest income	12,274	12,128	11,608	11,591
(Credit) provision for loan losses	(182)	367	236	(133)
Net interest income after (credit) provision for loan losses	12,456	11,761	11,372	11,724
Other income	3,759	4,095	4,103	4,360
Net (losses) gains on available-for-sale securities	(2)	203	2,430	51
Loss on prepayment of debt	0	143	2,190	0
Other expenses	8,517	8,137	8,207	7,987
Income before income tax provision	7,696	7,779	7,508	8,148
Income tax provision	2,109	2,094	2,014	2,209
Net income available to common shareholders	$5,587	$5,685	$5,494	$5,939
Net income per share – basic	$0.46	$0.46	$0.45	$0.48
Net income per share – diluted	$0.46	$0.46	$0.45	$0.48

2011 Quarter Ended

	Mar. 31,	June 30,	Sept. 30,	Dec. 31,
Interest income	$15,298	$15,443	$15,317	$15,198
Interest expense	4,016	3,628	3,108	2,804
Net interest income	11,282	11,815	12,209	12,394
(Credit) provision for loan losses	(192)	31	(37)	(87)
Net interest income after (credit) provision for loan losses	11,474	11,784	12,246	12,481
Other income	2,555	3,673	3,999	3,711
Net gains on available-for-sale securities	1,839	163	26	188
Other expenses	8,263	7,794	8,052	7,948
Income before income tax provision	7,605	7,826	8,219	8,432
Income tax provision	2,064	2,129	2,230	2,291
Net income available to common shareholders	$5,541	$5,697	$5,989	$6,141
Net income per share – basic	$0.46	$0.47	$0.49	$0.51
Net income per share – diluted	$0.45	$0.47	$0.49	$0.51

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Defined Benefit Plans (Stock-Based Compensation Expense) (Details) (USD $) In Thousands, unless otherwise specified	0 Months Ended	12 Months Ended
	Jan. 03, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Allocated Share-based Compensation Expense		$ 567	$ 423	$ 67
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Allocated Share-based Compensation Expense	262	247	279	0
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Allocated Share-based Compensation Expense	$ 477	$ 320	$ 144	$ 67

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Deposits (Tables)

12 Months Ended

Dec. 31, 2012

Deposits [Abstract]

Scheduled Maturities of Time Deposits [Table Text Block]

(In Thousands)
	2013	$197,014
	2014	69,859
	2015	21,455
	2016	10,786
	2017	13,305
		$312,419

Schedule of Remaining Maturities of Time Deposits in Excess of $100,000 [Table Text Block]

(In Thousands)
Three months or less	$69,264
Over 3 months through 12 months	13,900
Over 1 year through 3 years	12,103
Over 3 years	8,637
Total	$103,904

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Defined Benefit Plans (Summary of Non-Vested Stock Options and Restricted Stock) (Details) (USD $)	0 Months Ended	12 Months Ended
	Jan. 03, 2013	Dec. 31, 2012
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number, Beginning Balance		0
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period		64,757
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period		(64,757)
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period		0
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number, Ending Balance		0
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value		$ 5.15
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value		$ 5.15
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number, Beginning Balance		27,071
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	37,886	42,552
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period		(7,005)
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period		(3,560)
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number, Ending Balance		59,058
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value, Beginning Balance		$ 14.35
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value		$ 18.54
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value		$ 16.08
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value		$ 17.85
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value, Ending Balance		$ 16.95

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Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Consolidated Statements of Comprehensive Income [Abstract]
Net income	$ 22,705	$ 23,368	$ 19,055
Unrealized gains (losses) on available-for-sale securities:
Unrealized holding gains (losses) on available-for-sale securities	4,128	20,611	(448)
Reclassification adjustment for gains realized in income	(2,682)	(2,216)	(829)
Other comprehensive gain (loss) on available-for-sale securities	1,446	18,395	(1,277)
Unfunded pension and postretirement obligations:
Change in items from defined benefit plans included in accumulated other comprehensive income	8	(626)	126
Amortization of net transition obligation, prior service cost and net actuarial loss included in net periodic benefit cost, Before-Tax Amount	77	55	53
Other comprehensive gain (loss) on unfunded retirement obligations	85	(571)	179
Other comprehensive income (loss) before income tax	1,531	17,824	(1,098)
Income tax related to other comprehensive (income) loss	(688)	(6,063)	388
Net other comprehensive income (loss)	843	11,761	(710)
Comprehensive income	$ 23,548	$ 35,129	$ 18,345

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Intangible Assets (Estimated Future Amortization Expense) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012
Intangible Assets [Abstract]
Finite-Lived Intangible Assets, Amortization Expense, Next Twelve Months	$ 51
Finite-Lived Intangible Assets, Amortization Expense, Year Two	35
Finite-Lived Intangible Assets, Amortization Expense, Year Three	22
Finite-Lived Intangible Assets, Amortization Expense, Year Four	12
Finite-Lived Intangible Assets, Amortization Expense, Year Five	$ 6

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Recent Accounting Pronouncements

12 Months Ended

Dec. 31, 2012

Recent Accounting Pronouncements [Abstract]

RECENT ACCOUNTING PRONOUNCEMENTS

2. RECENT ACCOUNTING PRONOUNCEMENTS:

The FASB issues Accounting Standards Updates (ASUs) to the FASB Accounting Standards Codification (ASC). This section provides a summary description of recent ASUs that have significant implications (elected or required) within the consolidated financial statements, or that management expects may have a significant impact on financial statements issued in the near future.

In April 2011, the FASB issued ASU 2011-02, Receivables (Topic 310) - A Creditor's Determination of Whether a Restructuring Is a Troubled Debt Restructuring. The Update amends ASC Topic 310 to provide guidance in evaluating whether a restructuring constitutes a Troubled Debt Restructuring. The main provisions conclude that a creditor must separately conclude that both of the following exist – (1) the restructuring constitutes a concession, and (2) the debtor is experiencing financial difficulties. The amendments then provide guidance on a creditor's evaluation of each of the requirements for a Troubled Debt Restructuring. For public entities, the Update was effective for the first interim or annual period beginning on or after June 15, 2011, including retrospective application to the beginning of the annual period of adoption.  Note 8 provides disclosures required by this standard.

In May 2011, the FASB issued ASU 2011-04, Fair Value Measurement (Topic 820) – Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. The amendments in this Update will result in common fair value measurement and disclosure requirements in U.S. GAAP and IFRSs. The Update includes various amendments, including amendments that: (1) clarify FASB's intent about the application of existing fair value measurement and disclosure requirements, and (2) change some particular principles or requirements for measuring fair value or disclosing information about fair value measurements. There were no changes in the Corporation's procedures for determining fair value measurements as a result of this Update; however, additional quantitative disclosures about unobservable inputs used in fair value measurements categorized within Level 3 of the fair value hierarchy are provided. The amendments in this ASU are applied prospectively, and Note 6 includes disclosures required by this ASU.

In June 2011, the FASB issued ASU 2011-05, Comprehensive Income (Topic 220) – Presentation of Comprehensive Income. The intent of this standard is to increase the prominence of comprehensive income in the financial statements. This standard requires the components of comprehensive income be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The single format includes the traditional income statement and the components of other comprehensive income, total other comprehensive income and total comprehensive income. In the two statement approach, the first statement is the traditional income statement, which would be immediately followed by a separate statement which would include the components of other comprehensive income, total other comprehensive income and total comprehensive income. The amendments in this ASU are applied retrospectively, and the Corporation has adopted the two statement approach as reflected in the accompanying financial statements.

In September 2011, the FASB issued ASU 2011-08, Intangibles – Goodwill and Other (Topic 350) – Testing Goodwill for Impairment. The amendments in this ASU permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in Topic 350. The amendments in this ASU are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011.

In December 2011, the FASB issued ASU 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05. This ASU deferred only those changes in ASU 2011-05 (discussed above) that relate to the presentation of reclassification adjustments.

In February 2013, the FASB issued ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income.  The amendments in this standard will require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component.  In addition, this standard will require an entity to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period.  For other amounts that are not required by U.S. GAAP to be reclassified in their entirety to net income, an entity will be required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts.   The amendments in this ASU are effective prospectively for annual and interim periods beginning after December 15, 2012.

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Fair Value Measurements and Fair Values of Financial Statements (Fair Value Inputs, Assets, Quantitative Information) (Details) (USD $)				12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012 Pooled Trust Preferred Securities Senior Tranches[ Member]	Dec. 31, 2012 Servicing Rights Asset [Member]
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Actual Deferrals and Defaults as a Percentage of Performing Capital			50.26%
Expected Additional Net Deferrals as a Percentage of Performing Collateral			19.73%
Expected Issuer Prepayments as a Percentage of Performing Collateral			41.24%
Discount Rate			11.70%
Implied Discount Rate	7.57%
Spread Rate For Credit And Liquidity Risk	4.13%
Modeling Period Rate				12.00%
Weighted-average PSA				288.00%
Servicing Fees Percent Of Loan Balances				0.25%
Servicing Fees Percent of Late Payments				5.00%
Servicing Rights Percent of Late Fees Assessed				5.00%
Miscellaneous Fees Per Account Per Month				$ 1.94
Monthly Servicing Cost Per Account Per Month				6.00
Additional Monthly servicing Cost Per Loan, More Than 30 Days Delinquent				24.00
Percent of Loans More Than 30 Days Delinquent				1.50%
Annual Increase In Servicing Costs				3.00%
Available-for-sale securities	472,577,000	481,685,000	1,613,000
Servicing rights	$ 605,000	$ 375,000		$ 605,000

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Loans (Troubled Debt Restructurings In 2012 and 2011) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012 loan	Dec. 31, 2011 loan
Commercial and industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Number Of Contracts	1	3
Pre-Modification Outstanding Recorded Investment	$ 65	$ 14
Post-Modification Outstanding Recorded Investment	65	14
Commercial loans secured by real estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Number Of Contracts	2	11
Pre-Modification Outstanding Recorded Investment		1,941
Post-Modification Outstanding Recorded Investment		1,941
Home equity lines of credit [Member]
Financing Receivable, Recorded Investment [Line Items]
Number Of Contracts	1	1
Pre-Modification Outstanding Recorded Investment		93
Post-Modification Outstanding Recorded Investment		93
Commercial construction and land [Member]
Financing Receivable, Recorded Investment [Line Items]
Number Of Contracts	2	5
Pre-Modification Outstanding Recorded Investment		1,238
Post-Modification Outstanding Recorded Investment		1,238
Multi-family (5 or more) residential [Member]
Financing Receivable, Recorded Investment [Line Items]
Number Of Contracts		1
Pre-Modification Outstanding Recorded Investment		15
Post-Modification Outstanding Recorded Investment		$ 15

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Defined Benefit Plans (Summary of Stock Option Activity) (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Beginning Balance	301,797	226,894	306,358
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	64,757	93,674	0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period	(17,284)	(13,042)	0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Expirations in Period	(6,830)	(5,501)	(76,331)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period	(4,770)	(228)	(3,133)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance	337,670	301,797	226,894
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number	337,670	301,797	226,894
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Beginning Balance	$ 19.05	$ 20.54	$ 20.53
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price	$ 18.54	$ 15.06
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price	$ 16.20	$ 16.71
Share-based Compensation Arrangements by Share-based Payment Award, Options, Forfeitures in Period, Weighted Average Exercise Price	$ 21.51	$ 18.30	$ 20.74
Share-based Compensation Arrangements by Share-based Payment Award, Options, Expirations in Period, Weighted Average Exercise Price	$ 17.00	$ 14.17	$ 14.11
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Ending Balance	$ 19.08	$ 19.05	$ 20.54
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price	$ 19.08	$ 19.05	$ 20.54
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 5.15	$ 4.26
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures, Weighted Average Forfeiture Date Fair Value	$ 4.03	$ 3.95	$ 3.03
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross			9,125

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Securities (Pooled Trust Preferred Securities Additional Information) (Details) (MMCAPS Funding I, Ltd. Senior [Member])	12 Months Ended
	Dec. 31, 2012
Schedule of Investments [Line Items]
Number of Banks Currently Reporting	8
Actual Deferrals and Defaults as % of Outstanding Collateral	50.26%
Expected Additional Net Deferrals and Defaults as % of Performing Collateral	19.73%
Excess Subordination as % of Performing Collateral	67.90%
Expected Issuer Prepayments as % of Performing Collateral	41.24%
Moody's, A3 Rating [Member]
Schedule of Investments [Line Items]
Debt Instrument, Credit Rating	A3
Fitch, A Rating [Member]
Schedule of Investments [Line Items]
Debt Instrument, Credit Rating	A

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Parent Company Only

12 Months Ended

Dec. 31, 2012

Parent Company Only [Abstract]

PARENT COMPANY ONLY

19. PARENT COMPANY ONLY

The following is condensed financial information for Citizens & Northern Corporation:

CONDENSED BALANCE SHEET	December 31,
(In Thousands)	2012	2011
ASSETS
Cash	$1,895	$1,361
Investment in subsidiaries:
Citizens & Northern Bank	168,542	154,473
Citizens & Northern Investment Corporation	9,081	8,289
Bucktail Life Insurance Company	3,267	3,139
Other assets	7	123
TOTAL ASSETS	$182,792	$167,385
LIABILITIES AND STOCKHOLDERS' EQUITY
Other liabilities	$6	$0
Stockholders' equity	182,786	167,385
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$182,792	$167,385

CONDENSED INCOME STATEMENT
(In Thousands)	2012	2011	2010
Dividends from Citizens & Northern Bank	$9,245	$7,856	$31,170
Dividends from non-bank subsidiaries	0	0	3
Other income	0	0	10
Expenses	(105)	(94)	(188)
Income before equity in undistributed income
of subsidiaries	9,140	7,762	30,995
Equity in undistributed income of subsidiaries	13,565	15,606	(11,940)
NET INCOME	$22,705	$23,368	$19,055
CONDENSED STATEMENT OF CASH FLOWS
(In Thousands)	2012	2011	2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$22,705	$23,368	$19,055
Adjustments to reconcile net income to net
cash provided by operating activities:
Equity in undistributed net income of subsidiaries	(13,565)	(15,606)	11,940
Decrease (increase) in other assets	116	11	(55)
Increase (decrease) in other liabilities	6	(62)	(6)
Net Cash Provided by Operating Activities	9,262	7,711	30,934
CASH FLOWS FROM  INVESTING ACTIVITIES,
Proceeds from merger with Canisteo Valley Corporation	0	0	47
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of treasury stock	229	71	0
Tax benefit from compensation plans, net	104	67	40
Purchase of treasury stock	0	(1,022)	0
Payment to repurchase preferred stock and warrant	0	0	(26,840)
Dividends paid	(9,061)	(6,224)	(5,249)
Net Cash Used in Financing Activities	(8,728)	(7,108)	(32,049)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	534	603	(1,068)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR	1,361	758	1,826
CASH AND CASH EQUIVALENTS, END OF YEAR	$1,895	$1,361	$758

XML

Parent Company Only (Condensed Income Statement) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Dividend Income, Operating									$ 305	$ 261	$ 252
Other Income	4,360	4,103	4,095	3,759	3,711	3,999	3,673	2,555
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Cumulative Effects of Changes in Accounting Principles, Noncontrolling Interest	8,148	7,508	7,779	7,696	8,432	8,219	7,826	7,605	31,131	32,082	24,855
Net Income (Loss) Attributable to Parent	5,939	5,494	5,685	5,587	6,141	5,989	5,697	5,541	22,705	23,368	19,055
Parent Company [Member]
Other Income									0	0	10
Operating Expenses									(105)	(94)	(188)
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Cumulative Effects of Changes in Accounting Principles, Noncontrolling Interest									9,140	7,762	30,995
Income (Loss) from Equity Method Investments									(13,565)	(15,606)	11,940
Net Income (Loss) Attributable to Parent									22,705	23,368	19,055
Citizens & Northern Bank [Member] | Parent Company [Member]
Dividend Income, Operating									9,245	7,856	31,170
Subsidiaries [Member] | Parent Company [Member]
Dividend Income, Operating									$ 0	$ 0	$ 3

XML

Loans (Outstanding Loans by Risk Rating) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	$ 683,910	$ 708,315
Residential mortgage loans - first liens [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	311,627	331,015
Residential mortgage loans - junior liens [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	26,748	28,851
Home equity lines of credit [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	33,017	30,037
1-4 Family residential construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	12,842	9,959
Total residential mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	384,234	399,862
Commercial loans secured by real estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	158,413	156,388
Commercial and industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	48,442	57,191
Political subdivisions [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	31,789	37,620
Commercial construction and land [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	28,200	23,518
Loans secured by farmland [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	11,403	10,949
Multi-family (5 or more) residential [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	6,745	6,583
Agricultural loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	3,053	2,987
Other commercial loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	362	552
Total commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	288,407	295,788
Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	11,269	12,665
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	642,371	660,045
Pass [Member] | Residential mortgage loans - first liens [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	295,929	314,900
Pass [Member] | Residential mortgage loans - junior liens [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	25,394	27,260
Pass [Member] | Home equity lines of credit [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	32,374	29,408
Pass [Member] | 1-4 Family residential construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	12,759	9,959
Pass [Member] | Total residential mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	366,456	381,527
Pass [Member] | Commercial loans secured by real estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	146,381	143,247
Pass [Member] | Commercial and industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	41,237	46,110
Pass [Member] | Political subdivisions [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	31,679	37,499
Pass [Member] | Commercial construction and land [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	26,744	21,668
Pass [Member] | Loans secured by farmland [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	9,102	8,040
Pass [Member] | Multi-family (5 or more) residential [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	6,394	6,200
Pass [Member] | Agricultural loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	2,963	2,765
Pass [Member] | Other commercial loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	362	552
Pass [Member] | Total commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	264,862	266,081
Pass [Member] | Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	11,053	12,437
Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	15,681	19,744
Special Mention [Member] | Residential mortgage loans - first liens [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	3,633	2,955
Special Mention [Member] | Residential mortgage loans - junior liens [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	420	660
Special Mention [Member] | Home equity lines of credit [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	130	264
Special Mention [Member] | 1-4 Family residential construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	0	0
Special Mention [Member] | Total residential mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	4,183	3,879
Special Mention [Member] | Commercial loans secured by real estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	6,994	7,385
Special Mention [Member] | Commercial and industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	3,030	6,254
Special Mention [Member] | Political subdivisions [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	110	121
Special Mention [Member] | Commercial construction and land [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	231	211
Special Mention [Member] | Loans secured by farmland [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	751	1,341
Special Mention [Member] | Multi-family (5 or more) residential [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	342	369
Special Mention [Member] | Agricultural loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	28	164
Special Mention [Member] | Other commercial loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	0	0
Special Mention [Member] | Total commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	11,486	15,845
Special Mention [Member] | Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	12	20
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	24,518	27,153
Substandard [Member] | Residential mortgage loans - first liens [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	11,872	12,956
Substandard [Member] | Residential mortgage loans - junior liens [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	934	924
Substandard [Member] | Home equity lines of credit [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	513	365
Substandard [Member] | 1-4 Family residential construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	83	0
Substandard [Member] | Total residential mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	13,402	14,245
Substandard [Member] | Commercial loans secured by real estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	5,038	5,046
Substandard [Member] | Commercial and industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	3,810	4,413
Substandard [Member] | Political subdivisions [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	0	0
Substandard [Member] | Commercial construction and land [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	477	1,639
Substandard [Member] | Loans secured by farmland [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	1,517	1,531
Substandard [Member] | Multi-family (5 or more) residential [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	9	14
Substandard [Member] | Agricultural loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	62	58
Substandard [Member] | Other commercial loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	0	0
Substandard [Member] | Total commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	10,913	12,701
Substandard [Member] | Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	203	207
Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	1,340	1,373
Doubtful [Member] | Residential mortgage loans - first liens [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	193	204
Doubtful [Member] | Residential mortgage loans - junior liens [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	0	7
Doubtful [Member] | Home equity lines of credit [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	0	0
Doubtful [Member] | 1-4 Family residential construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	0	0
Doubtful [Member] | Total residential mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	193	211
Doubtful [Member] | Commercial loans secured by real estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	0	710
Doubtful [Member] | Commercial and industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	365	414
Doubtful [Member] | Political subdivisions [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	0	0
Doubtful [Member] | Commercial construction and land [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	748	0
Doubtful [Member] | Loans secured by farmland [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	33	37
Doubtful [Member] | Multi-family (5 or more) residential [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	0	0
Doubtful [Member] | Agricultural loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	0	0
Doubtful [Member] | Other commercial loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	0	0
Doubtful [Member] | Total commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	1,146	1,161
Doubtful [Member] | Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	$ 1	$ 1

XML

Loans (Tables)

12 Months Ended

Dec. 31, 2012

Loans [Abstract]

Summary Of Loans By Type [Table Text Block]

Summary of Loans by Type
(In Thousands)	Dec. 31,	% of	Dec. 31,	% of
	2012	Total	2011	Total
Residential mortgage:
Residential mortgage loans - first liens	$311,627	45.57%	$331,015	46.73%
Residential mortgage loans - junior liens	26,748	3.91%	28,851	4.07%
Home equity lines of credit	33,017	4.83%	30,037	4.24%
1-4 Family residential construction	12,842	1.88%	9,959	1.41%
Total residential mortgage	384,234	56.18%	399,862	56.45%
Commercial:
Commercial loans secured by real estate	158,413	23.16%	156,388	22.08%
Commercial and industrial	48,442	7.08%	57,191	8.07%
Political subdivisions	31,789	4.65%	37,620	5.31%
Commercial construction and land	28,200	4.12%	23,518	3.32%
Loans secured by farmland	11,403	1.67%	10,949	1.55%
Multi-family (5 or more) residential	6,745	0.99%	6,583	0.93%
Agricultural loans	3,053	0.45%	2,987	0.42%
Other commercial loans	362	0.05%	552	0.08%
Total commercial	288,407	42.17%	295,788	41.76%
Consumer	11,269	1.65%	12,665	1.79%
Total	683,910	100.00%	708,315	100.00%
Less: allowance for loan losses	(6,857)		(7,705)
Loans, net	$677,053		$700,610

Allowance for Credit Losses on Financing Receivables [Table Text Block]

(In Thousands)	2012	2011	2010
Balance at beginning of year	$7,705	$9,107	$8,265
Provision (credit) charged to operations	288	(285)	1,191
Loans charged off	(1,221)	(1,446)	(619)
Recoveries	85	329	270
Balance at end of year	$6,857	$7,705	$9,107

Year Ended December 31, 2012	Dec. 31,				Dec. 31,
(In Thousands)	2011     Balance	Charge-offs	Recoveries	Provision (Credit)	2012 Balance
Allowance for Loan Losses:
Residential mortgage:
Residential mortgage loans - first liens	$3,026	($543)	$18	$118	$2,619
Residential mortgage loans - junior liens	266	(9)	0	(10)	247
Home equity lines of credit	231	0	0	24	255
1-4 Family residential construction	79	0	0	17	96
Total residential mortgage	3,602	(552)	18	149	3,217
Commercial:
Commercial loans secured by real estate	2,004	0	1	(75)	1,930
Commercial and industrial	946	(57)	7	(315)	581
Political subdivisions	0	0	0	0	0
Commercial construction	267	(441)	0	408	234
Loans secured by farmland	126	0	0	3	129
Multi-family (5 or more) residential	66	0	0	1	67
Agricultural loans	27	0	0	0	27
Other commercial loans	5	0	0	(2)	3
Total commercial	3,441	(498)	8	20	2,971
Consumer	228	(171)	59	112	228
Unallocated	434			7	441
Total Allowance for Loan Losses	$7,705	($1,221)	$85	$288	$6,857

	December 31,				December 31,
(In Thousands)	2010     Balance	Charge-offs	Recoveries	Provision (Credit)	2011    Balance
Allowance for Loan Losses:
Residential mortgage:
Residential mortgage loans - first liens	$2,745	($49)	$0	$330	$3,026
Residential mortgage loans - junior liens	334	(51)	3	(20)	266
Home equity lines of credit	218	0	0	13	231
1-4 Family residential construction	208	0	0	(129)	79
Total residential mortgage	3,505	(100)	3	194	3,602
Commercial:
Commercial loans secured by real estate	3,314	(973)	1	(338)	2,004
Commercial and industrial	862	(216)	254	46	946
Political subdivisions	0	0	0	0	0
Commercial construction and land	590	0	0	(323)	267
Loans secured by farmland	139	0	0	(13)	126
Multi-family (5 or more) residential	63	0	0	3	66
Agricultural loans	32	0	0	(5)	27
Other commercial loans	0	0	0	5	5
Total commercial	5,000	(1,189)	255	(625)	3,441
Consumer	289	(157)	71	25	228
Unallocated	313			121	434
Total Allowance for Loan Losses	$9,107	($1,446)	$329	($285)	$7,705

Financing Receivable Credit Quality Indicators [Table Text Block]

The following tables summarize the aggregate credit quality classification of outstanding loans by risk rating as of December 31, 2012 and 2011:

December 31, 2012:		Special
(In Thousands)	Pass	Mention	Substandard	Doubtful	Total
Residential Mortgage:
Residential Mortgage loans - first liens	$295,929	$3,633	$11,872	$193	$311,627
Residential Mortgage loans - junior liens	25,394	420	934	0	26,748
Home Equity lines of credit	32,374	130	513	0	33,017
1-4 Family residential construction	12,759	0	83	0	12,842
Total residential mortgage	366,456	4,183	13,402	193	384,234
Commercial:
Commercial loans secured by real estate	146,381	6,994	5,038	0	158,413
Commercial and Industrial	41,237	3,030	3,810	365	48,442
Political subdivisions	31,679	110	0	0	31,789
Commercial construction and land	26,744	231	477	748	28,200
Loans secured by farmland	9,102	751	1,517	33	11,403
Multi-family (5 or more) residential	6,394	342	9	0	6,745
Agricultural loans	2,963	28	62	0	3,053
Other commercial loans	362	0	0	0	362
Total Commercial	264,862	11,486	10,913	1,146	288,407
Consumer	11,053	12	203	1	11,269
Totals	$642,371	$15,681	$24,518	$1,340	$683,910

December 31, 2011:		Special
(In Thousands)	Pass	Mention	Substandard	Doubtful	Total
Residential Mortgage:
Residential mortgage loans - first liens	$314,900	$2,955	$12,956	$204	$331,015
Residential mortgage loans - junior liens	27,260	660	924	7	28,851
Home equity lines of credit	29,408	264	365	0	30,037
1-4 Family residential construction	9,959	0	0	0	9,959
Total residential mortgage	381,527	3,879	14,245	211	399,862
Commercial:
Commercial loans secured by real estate	143,247	7,385	5,046	710	156,388
Commercial and industrial	46,110	6,254	4,413	414	57,191
Political subdivisions	37,499	121	0	0	37,620
Commercial construction	21,668	211	1,639	0	23,518
Loans secured by farmland	8,040	1,341	1,531	37	10,949
Multi-family (5 or more) residential	6,200	369	14	0	6,583
Agricultural loans	2,765	164	58	0	2,987
Other commercial loans	552	0	0	0	552
Total commercial	266,081	15,845	12,701	1,161	295,788
Consumer	12,437	20	207	1	12,665
Totals	$660,045	$19,744	$27,153	$1,373	$708,315

Impaired Financing Receivables [Table Text Block]

 

December 31, 2012	Loans:			Allowance for Loan Losses:
(In Thousands)
	Individually	Collectively		Individually	Collectively
	Evaluated	Evaluated	Totals	Evaluated	Evaluated	Totals
Residential mortgage:
Residential mortgage loans - first liens	$2,341	$309,286	$311,627	$206	$2,413	$2,619
Residential mortgage loans - junior liens	158	26,590	26,748	0	247	247
Home equity lines of credit	0	33,017	33,017	0	255	255
1-4 Family residential construction	0	12,842	12,842	0	96	96
Total residential mortgage	2,499	381,735	384,234	206	3,011	3,217
Commercial:
Commercial loans secured by real estate	1,938	156,475	158,413	146	1,784	1,930
Commercial and industrial	939	47,503	48,442	197	384	581
Political subdivisions	0	31,789	31,789	0	0	0
Commercial construction	1,034	27,166	28,200	0	234	234
Loans secured by farmland	923	10,480	11,403	34	95	129
Multi-family (5 or more) residential	9	6,736	6,745	0	67	67
Agricultural loans	40	3,013	3,053	0	27	27
Other commercial loans	0	362	362	0	3	3
Total commercial	4,883	283,524	288,407	377	2,594	2,971
Consumer	47	11,222	11,269	40	188	228
Unallocated						441
Total	$7,429	$676,481	$683,910	$623	$5,793	$6,857

December 31, 2011	Loans:			Allowance for Loan Losses:
(In Thousands)
	Individually	Collectively		Individually	Collectively
	Evaluated	Evaluated	Totals	Evaluated	Evaluated	Totals
Residential mortgage:
Residential mortgage loans - first liens	$2,227	$328,788	$331,015	$461	$2,565	$3,026
Residential mortgage loans - junior liens	137	28,714	28,851	11	255	266
Home equity lines of credit	93	29,944	30,037	0	231	231
1-4 Family residential construction	0	9,959	9,959	0	79	79
Total residential mortgage	2,457	397,405	399,862	472	3,130	3,602
Commercial:
Commercial loans secured by real estate	2,169	154,219	156,388	169	1,835	2,004
Commercial and industrial	942	56,249	57,191	361	585	946
Political subdivisions	0	37,620	37,620	0	0	0
Commercial construction	1,266	22,252	23,518	65	202	267
Loans secured by farmland	927	10,022	10,949	35	91	126
Multi-family (5 or more) residential	14	6,569	6,583	0	66	66
Agricultural loans	39	2,948	2,987	0	27	27
Other commercial loans	0	552	552	0	5	5
Total commercial	5,357	290,431	295,788	630	2,811	3,441
Consumer	50	12,615	12,665	24	204	228
Unallocated						434
Total	$7,864	$700,451	$708,315	$1,126	$6,145	$7,705

(In Thousands)	2012	2011
Impaired loans with a valuation allowance	$2,710	$3,433
Impaired loans without a valuation allowance	4,719	4,431
Total impaired loans	$7,429	$7,864
Valuation allowance related to impaired loans	$623	$1,126

(In Thousands)	2012	2011	2010
Average investment in impaired loans	$7,209	$7,455	$6,142
Interest income recognized on impaired loans	$278	$245	$204
Interest income recognized on a cash basis on impaired loans	$278	$245	$204

Past Due Financing Receivables [Table Text Block]

 

(In Thousands)	December 31, 2012		December 31, 2011
	Past Due		Past Due
	90+ Days and		90+ Days and
	Accruing	Nonaccrual	Accruing	Nonaccrual
Residential mortgage:
Residential mortgage loans - first liens	$1,900	$3,064	$949	$3,058
Residential mortgage loans - junior liens	29	111	11	67
Home equity lines of credit	40	200	0	0
Total residential mortgage	1,969	3,375	960	3,125
Commercial:
Commercial loans secured by real estate	120	1,338	75	1,595
Commercial and industrial	68	761	21	541
Commercial construction	149	887	139	978
Loans secured by farmland	0	923	53	927
Agricultural loans	0	40	0	0
Total commercial	337	3,949	288	4,041
Consumer	5	29	19	31
Totals	$2,311	$7,353	$1,267	$7,197

As of December 31, 2012					As of December 31, 2011
	Current &					Current &
(In Thousands)	Past Due	Past Due	Past Due			Past Due	Past Due	Past Due
	Less than	30-89	90+			Less than	30-89	90+
	30 Days	Days	Days	Total		30 Days	Days	Days	Total
Residential mortgage:
Residential mortgage loans - first liens	$302,373	$6,228	$3,026	$311,627		$321,907	$6,723	$2,385	$331,015
Residential mortgage loans - junior liens	26,247	371	130	26,748		28,437	393	21	28,851
Home equity lines of credit	32,593	184	240	33,017		29,986	51	0	30,037
1-4 Family residential construction	12,627	215	0	12,842		9,959	0	0	9,959
Total residential mortgage	373,840	6,998	3,396	384,234		390,289	7,167	2,406	399,862
Commercial:
Commercial loans secured by real estate	156,834	704	875	158,413		155,025	343	1,020	156,388
Commercial and industrial	47,569	317	556	48,442		56,835	169	187	57,191
Political subdivisions	31,789	0	0	31,789		37,620	0	0	37,620
Commercial construction	26,944	248	1,008	28,200		22,323	1,056	139	23,518
Loans secured by farmland	10,438	75	890	11,403		9,973	33	943	10,949
Multi-family (5 or more) residential	6,743	2	0	6,745		6,583	0	0	6,583
Agricultural loans	3,003	10	40	3,053		2,945	3	39	2,987
Other commercial loans	362	0	0	362		552	0	0	552
Total commercial	283,682	1,356	3,369	288,407		291,856	1,604	2,328	295,788
Consumer	11,135	129	5	11,269		12,340	306	19	12,665
Totals	$668,657	$8,483	$6,770	$683,910		$694,485	$9,077	$4,753	$708,315

Schedule of Financing Receivables, Non Accrual Status [Table Text Block]

	Current &
(In Thousands)	Past Due	Past Due	Past Due
	Less than	30-89	90+
	30 Days	Days	Days	Total
December 31, 2012 Nonaccrual Totals	$2,167	$727	$4,459	$7,353
December 31, 2011 Nonaccrual Totals	$2,532	$1,179	$3,486	$7,197

Troubled Debt Restructurings on Financing Receivables [Table Text Block]

Troubled Debt Restructurings (TDRs):
	Current &
(In Thousands)	Past Due	Past Due	Past Due
	Less than	30-89	90+
	30 Days	Days	Days	Nonaccrual	Total
December 31, 2012 Totals	$785	$121	$0	$1,155	$2,061
December 31, 2011 Totals	$1,064	$0	$146	$2,267	$3,477

Year Ended December 31, 2012		Pre-	Post-
(Balances in Thousands)		Modification	Modification
	Number	Outstanding	Outstanding
	of	Recorded	Recorded
	Contracts	Investment	Investment
Commercial,
Commercial and industrial	1	$65	$65

Year Ended December 31, 2011		Pre-	Post-
(Balances in Thousands)		Modification	Modification
	Number	Outstanding	Outstanding
	Of	Recorded	Recorded
	Contracts	Investment	Investment
Residential mortgage,
Home equity lines of credit	1	$93	$93
Commercial:
Commercial loans secured by real estate	11	1,941	1,941
Commercial and industrial	3	14	14
Commercial construction and land	5	1,238	1,238
Multi-family (5 or more) residential	1	15	15

Year Ended December 31, 2011	Number
(Balances in Thousands)	of	Recorded
	Contracts	Investment
Residential mortgage,
Home equity lines of credit	1	$93
Commercial:
Commercial loans secured by real estate	2	207
Commercial construction and land	2	1,089

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Borrowed Funds

12 Months Ended

Dec. 31, 2012

Borrowed Funds [Abstract]

BORROWED FUNDS

12. BORROWED FUNDS

SHORT-TERM BORROWINGS

Short-term borrowings include the following:

(In Thousands)	At December 31,
	2012	2011
Overnight borrowings	$0	$0
Customer repurchase agreements	5,567	4,950
Total short-term borrowings	$5,567	$4,950

The weighted average interest rate on total short-term borrowings outstanding was 0.10% at December 31, 2012 and 2011. The maximum amount of total short-term borrowings outstanding at any month-end was $20,120,000 in 2012 and $21,968,000 in 2011 and $40,600,000 in 2010.

Overnight borrowings are available from the FHLB-Pittsburgh, federal funds purchased overnight from other banks, and from the Federal Reserve Bank of Philadelphia's Discount Window. There were no overnight borrowings outstanding at December 31, 2012 or December 31, 2011.

The Corporation had available credit with other correspondent banks totaling $45,000,000 at December 31, 2012 and $25,000,000 at December 31, 2011. These lines of credit are primarily unsecured. No amounts were outstanding at December 31, 2012 or December 31, 2011.

The Corporation has a line of credit with the Federal Reserve Bank of Philadelphia's Discount Window. At December 31, 2012, the Corporation had available credit in the amount of $27,367,000 on this line with no outstanding advances. At December 31, 2011, the Corporation had available credit in the amount of $27,438,000 on this line with no outstanding advances. As collateral for the line, the Corporation has pledged available-for-sale securities with a carrying value of $28,432,000 at December 31, 2012 and $28,681,000 at December 31, 2011.

The Corporation engages in repurchase agreements with certain commercial customers. These agreements provide that the Corporation sells specified investment securities to the customers on an overnight basis and repurchases them on the following business day. The carrying value of the underlying securities was $11,179,000 at December 31, 2012 and $19,837,000 at December 31, 2011.

LONG-TERM BORROWINGS

Long-term borrowings are as follows:

(In Thousands)	At December 31,
	2012	2011
FHLB-Pittsburgh borrowings	$15,812	$40,363
Repurchase agreements	68,000	85,000
Total long-term borrowings	$83,812	$125,363

Long-term borrowings from FHLB-Pittsburgh are as follows:

(In Thousands)	At December 31,
	2012	2011
Loans matured in 2012 with rates ranging from 3.66% to 4.82%	$0	$23,507
Loans maturing in 2013 with rates ranging from 2.86% to 3.62%	3,211	3,553
Loan maturing in 2016 with a rate of 6.86%	196	236
Loans maturing in 2017 with rates ranging from 3.81% to 6.83%	10,027	10,032
Loan maturing in 2020 with a rate of 4.79%	1,297	1,892
Loan maturing in 2025 with a rate of 4.91%	1,081	1,143
Total long-term FHLB-Pittsburgh borrowings	$15,812	$40,363

The FHLB-Pittsburgh loan facilities are collateralized by qualifying loans secured by real estate with a book value totaling $516,127,000 at December 31, 2012 and $499,311,000 at December 31, 2011. Also, the FHLB-Pittsburgh loan facilities require the Corporation to invest in established amounts of FHLB-Pittsburgh stock. The carrying values of the Corporation's holdings of FHLB-Pittsburgh stock (included in Other Assets) were $4,712,000 at December 31, 2012 and $6,643,000 at December 31, 2011.

Repurchase agreements included in long-term borrowings are as follows:

(In Thousands)	At December 31,
	2012	2011
Agreement maturing in 2013 with a rate of 3.13%, prepaid in 2012	$0	$5,000
Agreements maturing in 2017 with rates ranging from 3.60% to 4.27%	68,000	80,000
Total long-term repurchase agreements	$68,000	$85,000

The Corporation incurred losses totaling $2,333,000 from prepayment of repurchase agreement obligations in 2012, including: (1) a loss of $143,000 in the second quarter 2012 on prepayment of the agreement contractually scheduled to mature in 2013, and (2) a loss of $2,190,000 in the third quarter 2012 on prepayment of a total of $12,000,000 of the agreements contractually scheduled to mature in 2017.

In December 2007, the Corporation entered into two repurchase agreements of $40,000,000 each with embedded caps. These repurchase agreements mature in 2017. In the third quarter 2012, the Corporation paid off principal totaling $6,000,000 on each of these agreements, incurring the loss from prepayment noted above and leaving a balance of $34,000,000 outstanding for each agreement at December 31, 2012. One of these borrowings has an interest rate of 3.60% and became putable by the issuer at quarterly intervals starting in December 2010. The other borrowing has an interest rate of 4.27% and became putable by the issuer at quarterly intervals starting in December 2012. Each of these borrowings contained an embedded cap, providing that on the quarterly anniversary of the transaction settlement date, if three-month LIBOR were higher than 5.15%, the Corporation's interest rate payable would decrease by twice the amount of the excess, down to a minimum rate of 0%. The embedded cap on one of the agreements expired in December 2010, and the embedded cap on the other agreement expired in December 2012.

Securities sold under repurchase agreements were delivered to the broker-dealers who arranged the transactions. The broker-dealers may have sold, loaned or otherwise disposed of such securities to other parties in the normal course of their operations, and have agreed to resell to the Corporation substantially identical securities at the maturities of the agreements. The carrying value of the underlying securities was $89,428,000 at December 31, 2012 and $110,759,000 at December 31, 2011. Average daily repurchase agreement borrowings amounted to $78,790,000 in 2012, $90,644,000 in 2011 and $94,097,000 in 2010. The maximum amounts of outstanding borrowings under repurchase agreements with broker-dealers were $85,000,000 in 2012, $92,500,000 in 2011 and $97,500,000 in 2010. The weighted average interest rate on repurchase agreements was 3.97% in 2012, 3.93% in 2011 and 3.93% in 2010.

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Defined Benefit Plans (Schedule of Assumptions Used) (Details)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Pension Plans, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Assumptions Used Calculating Net Periodic Benefit Cost, Discount Rate	4.50%	5.50%	5.50%
Defined Benefit Plan, Assumptions Used Calculating Net Periodic Benefit Cost, Expected Long-term Return on Assets	7.50%	7.50%	7.50%
Defined Benefit Plan, Assumptions Used Calculating Benefit Obligation, Discount Rate	4.00%	4.50%
Other Postretirement Benefit Plans, Defined Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Assumptions Used Calculating Net Periodic Benefit Cost, Discount Rate	4.50%	5.50%	6.00%
Defined Benefit Plan, Assumptions Used Calculating Benefit Obligation, Discount Rate	4.00%	4.50%