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, 2015

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, 2015, the registrant’s most recently completed second fiscal quarter, was $244,570,133.

The number of shares of common stock outstanding at February 12, 2016 was 12,151,108.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s proxy statement for the annual meeting of its shareholders to be held April 21, 2016 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”). 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. 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. In 2010, the First State Bank operations were merged into C&N Bank and Canisteo Valley Corporation was merged into the Corporation. 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:

· 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;

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

· in 2013, worked with consultants on projects which resulted in increases in revenues from service charges on deposit accounts, starting primarily in the fourth quarter 2013, and reductions in electronic funds processing expenses and other benefits over approximately the next five years;

· in 2014, approved a new treasury stock repurchase program. Under the new program, the Corporation is authorized to repurchase up to 622,500 shares of the Corporation’s common stock, or approximately 5% of the Corporation’s outstanding shares at July 16, 2014. Cumulatively through December 31, 2015, 435,200 shares had been repurchased; and

2

· in 2015, began an organization-wide effort to enhance customer relationships, growth and profitability, including working with consultants on enhanced employee engagement and customer service training, and hiring four new lending personnel to provide more access to commercial and mortgage lending opportunities.

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 recent years, most of the Pennsylvania counties in which the Corporation operates were significantly affected by an upsurge in natural gas exploration, as technological developments made exploration of the Marcellus Shale commercially feasible. After a surge of activity in 2009 through most of 2011, the market price of natural gas declined, causing Marcellus Shale natural gas exploration activity to slow, though some activity has continued to occur throughout the Corporation’s market area. Through December 31, 2015, the Corporation has not experienced significant credit issues as a result of the expansion and subsequent reduction in Marcellus Shale-related activity.

At December 31, 2015, C&N Bank had total assets of $1,209,389,000, total deposits of $942,331,000, net loans outstanding of $696,991,000 and 283full-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 and Securities.

· 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.

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.

3

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."

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. Deterioration in economic conditions 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.

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 has subsequently increased. In 2014, the Corporation entered into an agreement and in June 2014 began to originate and sell residential mortgage loans to the secondary market through the MPFX Original program, which is also administered by the Federal Home Loan Banks of Pittsburgh and Chicago. At December 31, 2015, total residential mortgages sold and serviced through the two programs amounted to $152,448,000. The Corporation must strictly adhere to the MPF Xtra and MPFX Original program guidelines for origination, underwriting and servicing loans, and failure to do so may result in the Corporation being forced to repurchase loans or being dropped from the program. As of December 31, 2015, the total outstanding balance of residential mortgage loans the Corporation has repurchased as a result of identified instances of noncompliance amounted to $1,968,000. If the volume of such forced repurchases of loans were to increase significantly, or if the Corporation were to be dropped from the programs, it could have a material adverse effect on the Corporation’s financial condition, results of operations or liquidity.

4

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 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 11 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.

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 11 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 increased 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. Although our total expenses from FDIC assessments have steadily decreased – to $600,000 in 2014 (up slightly to $603,000 in 2015) 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 a significant number of 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.

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.

5

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. All of the 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

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.

6

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, 2015, there were 2,316 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 2015 and 2014.

			2015						2014
					Dividend						Dividend
					Declared						Declared
					per						per
	High		Low		Quarter		High		Low		Quarter
First quarter	$	21.50	$	19.01	$	0.26	$	20.74	$	18.19	$	0.26
Second quarter		21.17		19.16		0.26		20.10		17.94		0.26
Third quarter		20.73		19.25		0.26		20.10		18.50		0.26
Fourth quarter		21.45		19.07		0.26		21.49		18.83		0.26

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.

Effective July 17, 2014, the Corporation terminated its existing treasury stock repurchase programs and approved a new treasury stock repurchase program. Under the new program, the Corporation is authorized to repurchase up to 622,500 shares of the Corporation’s common stock, or approximately 5% of the Corporation’s issued and outstanding shares at July 16, 2014. As permitted by securities laws and other legal requirements and subject to market conditions and other factors, purchases under the new program may be made from time to time in the open market at prevailing prices, or through privately negotiated transactions.

Consistent with previous programs, the Board of Directors’ July 17, 2014 authorization provides that: (1) the new treasury stock repurchase program shall be 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 new program 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. Through December 31, 2015, 435,200 shares had been repurchased at a cost of $8,417,000.

The following table sets forth a summary of purchases by the Corporation, in the open market, of its equity securities during the fourth quarter 2015:

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs
October 1 - 31, 2015		8,000	$	19.41		419,400		203,100
November 1 - 30, 2015		13,700	$	19.98		433,100		189,400
December 1 - 31, 2015		2,100	$	20.01		435,200		187,300

7

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, 2010 and ended December 31, 2015. 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.

	Period Ending
Index	12/31/10		12/31/11		12/31/12		12/31/13		12/31/14		12/31/15
Citizens & Northern Corporation		100.00		128.69		137.49		157.68		166.63		178.31
Russell 2000		100.00		95.82		111.49		154.78		162.35		155.18
CZNC Peer Group Index*		100.00		93.86		112.37		140.86		154.64		162.21

8

The Corporation’s peer group consists of banks headquartered in Pennsylvania with total assets of $700 million to $2 billion as of September 30, 2015. This peer group consists of ACNB Corporation, Gettysburg; AmeriServ Financial, Inc., Johnstown; CB Financial Services , Inc., Carmichaels; Citizens Financial Services, Inc., Mansfield; Codorus Valley Bancorp, Inc., York; DNB Financial Corporation, Downingtown; ENB Financial Corp., Ephrata; ESSA Bancorp, Inc., Stroudsburg; Fidelity D&D Bancorp, Inc., Dunmore; First Keystone Corporation, Berwick; First National Community Bancorp, Inc., Dunmore; FNB Bancorp, Inc., Newtown; Fox Chase Bancorp, Inc., Hatboro; Franklin Financial Services Corporation, Chambersburg; Harleysville Savings Financial Corporation, Harleysville; Norwood Financial Corp., Honesdale; Orrstown Financial Services, Inc., Shippensburg; Penns Woods Bancorp, Inc., Williamsport; Peoples Financial Services Corp., Scranton; QNB Corp., Quakertown; Republic First Bancorp, Inc., Philadelphia; Royal Bancshares of Pennsylvania, Inc., Bala Cynwyd; Somerset Trust Holding Company, Somerset;1^st Summit Bancorp of Johnstown, Inc., Johnstown; Mid Penn Bancorp, Inc., Millersburg; Embassy Bancorp, Inc., Bethlehem.

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, 2015.

					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		248,486	$	18.59		323,977
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.

9

ITEM 6. SELECTED FINANCIAL DATA

As of or for the Year Ended December 31,

INCOME STATEMENT (In Thousands)	2015		2014		2013			2012			2011
Interest and fee income	$	44,519	$	46,009	$	48,914		$	56,632		$	61,256
Interest expense		4,602		5,122		5,765			9,031			13,556
Net interest income		39,917		40,887		43,149			47,601			47,700
Provision (credit) for loan losses		845		476		2,047			288			(285	)
Net interest income after provision (credit) for loan losses		39,072		40,411		41,102			47,313			47,985
Noninterest income excluding securities gains		15,404		15,420		16,451			16,383			13,897
Net impairment losses recognized in earnings from
available-for-sale securities		0		0		(25	)		(67	)		0
Net realized gains on available-for-sale securities		2,861		1,104		1,743			2,749			2,216
Loss on prepayment of debt		2,573		0		1,023			2,333			0
Noninterest expense excluding loss on prepayment of debt		32,956		34,157		33,471			32,914			32,016
Income before income tax provision		21,808		22,778		24,777			31,131			32,082
Income tax provision		5,337		5,692		6,183			8,426			8,714
Net income	$	16,471	$	17,086	$	18,594		$	22,705		$	23,368
PER COMMON SHARE:
Basic earnings per share	$	1.35	$	1.38	$	1.51		$	1.86		$	1.92
Diluted earnings per share	$	1.35	$	1.38	$	1.50		$	1.85		$	1.92
Cash dividends declared per share	$	1.04	$	1.04	$	1.00		$	0.84		$	0.58
Book value per common share at period-end	$	15.39	$	15.34	$	14.49		$	14.89		$	13.77
Tangible book value per common share at period-end	$	14.41	$	14.36	$	13.51		$	13.91		$	12.77
Weighted average common shares outstanding - basic		12,211,941		12,390,067		12,352,383			12,235,748			12,162,045
Weighted average common shares outstanding - diluted		12,233,773		12,412,050		12,382,790			12,260,208			12,166,768
END OF PERIOD BALANCES (In Thousands)
Available-for-sale securities	$	420,290	$	516,807	$	482,658		$	472,577		$	481,685
Gross loans		704,880		630,545		644,303			683,910			708,315
Allowance for loan losses		7,889		7,336		8,663			6,857			7,705
Total assets		1,223,417		1,241,963		1,237,695			1,286,907			1,323,735
Deposits		935,615		967,989		954,516			1,006,106			1,018,206
Borrowings		92,263		78,597		96,723			89,379			130,313
Stockholders' equity		187,487		188,362		179,472			182,786			167,385
Common shares outstanding		12,180,623		12,279,980		12,390,063			12,274,035			12,155,529
AVERAGE BALANCES (In Thousands)
Total assets		1,243,209		1,239,897		1,237,096			1,305,163			1,313,445
Earning assets		1,159,298		1,155,401		1,145,340			1,199,538			1,208,584
Gross loans		657,727		627,753		656,495			700,241			714,421
Deposits		968,201		965,418		964,031			1,008,469			1,001,125
Stockholders' equity		188,905		185,469		181,412			175,822			152,718

10

ITEM 6. SELECTED FINANCIAL DATA (Continued)

As of or for the Year Ended December 31,

	2015			2014			2013			2012			2011
KEY RATIOS
Return on average assets		1.32	%		1.38	%		1.50	%		1.74	%		1.78	%
Return on average equity		8.72	%		9.21	%		10.25	%		12.91	%		15.30	%
Average equity to average assets		15.19	%		14.96	%		14.66	%		13.47	%		11.63	%
Net interest margin (1)		3.69	%		3.80	%		4.05	%		4.26	%		4.22	%
Efficiency (2)		56.60	%		57.59	%		53.27	%		48.82	%		49.37	%
Cash dividends as a % of diluted earnings per share		77.04	%		75.36	%		66.67	%		45.41	%		30.21	%
Tier 1 leverage		14.31	%		13.89	%		13.78	%		12.53	%		10.93	%
Tier 1 risk-based capital		23.40	%		26.26	%		25.15	%		22.86	%		19.95	%
Total risk-based capital		24.45	%		27.60	%		26.60	%		24.01	%		21.17	%
Tangible common equity/tangible assets		14.49	%		14.34	%		13.66	%		13.39	%		11.84	%
Nonperforming assets/total assets		1.31	%		1.34	%		1.53	%		0.82	%		0.73	%
Nonperforming loans/total loans		2.09	%		2.45	%		2.80	%		1.41	%		1.19	%
Allowance for loan losses/total loans		1.12	%		1.16	%		1.34	%		1.00	%		1.09	%
Net charge-offs/average loans		0.04	%		0.29	%		0.04	%		0.16	%		0.16	%

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

(2) The efficiency ratio is calculated by dividing: (a) total noninterest expense excluding losses from prepayment of debt, by (b) 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 or losses.

11

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.

EARNINGS OVERVIEW

In 2015, net income totaled $16,471,000, or $1.35 per common share - basic and diluted, as compared to $1.38 per share – basic and diluted in 2014 and $1.51 per share basic and $1.50 per share – diluted in 2013. The results for 2015 represented a return on average assets of 1.32% and a return on average equity of 8.72%.

2015 vs. 2014

Net income per share – diluted for 2015 was 2.2% lower than in 2014. Some of the more significant highlights related to annual earnings in 2015 as compared to 2014 are as follows:

· Net interest income totaled $39,917,000 in 2015, down $970,000 (2.4%) from 2014. In 2015, yields earned on securities and loans fell by more than the corresponding drop in interest rates paid on deposits and borrowings. The net interest margin was 3.69% in 2015, down from 3.80% in 2014.

· The provision for loan losses was $845,000 in 2015, up from $476,000 in 2014. The higher 2015 provision for loan losses reflected an increase in outstanding loans in the year which resulted in an increase in the collectively determined portion of the allowance for loan losses. Gross loans at December 31, 2015 were $74.3 million, or 11.8%, higher than the balance a year earlier.

· In 2015, noninterest revenue, excluding net realized gains on available-for-sale securities, totaled $15,404,000, which was down slightly from $15,420,000 in 2014 The most significant changes in components of noninterest revenue for the year ended December 31, 2015 as compared to the corresponding period in 2014 included the following: (1) decrease of $161,000 (3.2%) in service charges on deposit accounts, primarily as a result of lower overdraft fees; (2) reduction of $135,000 as the fair value of servicing rights declined $162,000 in 2015 as compared to $27,000 in 2014; (3) net increase in revenues from Trust and brokerage services of $74,000 (1.4%); and (4) an increase in other operating income of $315,000, including a gain of $212,000 from a life insurance arrangement in which benefits were split between the Corporation and the heirs of a former employee as well as an increase of $36,000 in dividends from Federal Home Loan Bank of Pittsburgh stock and an increase of $28,000 in revenue from merchant services.

12

· Realized gains from available-for-sale securities totaled $2,861,000 and losses from prepayment of borrowings totaled $2,573,000 in 2015, while in 2014 realized gains from securities totaled $1,104,000 and there were no losses from prepayment of borrowings. In 2015, the Corporation sold a significant portion of its marketable equity securities portfolio, which was made up of bank stocks, generating realized gains of $2,220,000. Losses from prepayment of borrowings stemmed from pay-downs made in May and December 2015 totaling $34,000,000 on a long-term repurchase agreement with an interest rate of 4.265%. After the effects of these pay-downs, there was no balance outstanding on this repurchase agreement as of December 31, 2015. Management expects the combined result of the debt prepayments and reinvestment of proceeds from sales of stocks will make a positive contribution to net interest income in 2016.

· In 2015, noninterest expenses, excluding losses on prepayment of borrowings; totaled $32,956,000, which was $1,201,000 (3.5%) lower than total 2014 noninterest expenses. The reduction in noninterest expenses for the year ended December 31, 2015 as compared to the corresponding period in 2014 included the following: (1) a reduction in salaries and wages expenses of $439,000, mainly due to severance expenses in 2014; (2) a reduction in employee benefit-related expenses of $349,000 due to lower employee health insurance expense as a result of lower claims; (3) a reduction in Pennsylvania shares tax expense of $176,000, reflecting an increase in tax credits; (4) a reduction in professional fees expense of $161,000, as 2014 included expenses associated with an executive search; and (5) a reduction in other expenses of $182,000, including reductions in expenses from loan collections and other real estate properties.

2014 vs. 2013

Net income per share – diluted for 2014 was 8.0% lower than in 2013. Some of the more significant highlights related to annual earnings in 2014 as compared to 2013 are as follows:

· Net interest income totaled $40,887,000 in 2014, down $2,262,000 (5.2%) from 2013. In 2014, yields earned on securities and loans fell by more than the corresponding drop in interest rates paid on deposits and borrowings. Also, average total loans outstanding were 4.3% lower in 2014 as compared to 2013. The net interest margin was 3.80% in 2014, down from 4.05% in 2013.

· The provision for loan losses was $476,000 in 2014, down from $2,047,000 in 2013. The higher levels of expense in 2013 included a provision of $1,552,000 from loans to one commercial customer.

· In 2014, noninterest revenue, excluding net realized gains on available-for-sale securities, totaled $15,420,000, which was lower than the 2013 amount by $1,031,000 (6.3%). Gains from sales of residential mortgage loans totaled $768,000 in 2014, down from $1,969,000 in 2013, reflecting lower volume from refinancing activity. Service charges on deposit accounts fell $221,000 in 2014 as compared to 2013, a decline of 4.2%, primarily as a result of lower net overdraft fees. Total Trust and brokerage revenue of $5,391,000 in 2014 was $520,000 (10.7%) higher than in 2013.

· Realized gains from available-for-sale securities totaled $1,104,000 in 2014, while in 2013 realized gains from securities totaled $1,718,000 and losses from prepayment of borrowings totaled $1,023,000.

· In 2014, noninterest expenses totaled $34,157,000, which was $686,000 (2.0%) higher than total 2013 noninterest expenses, excluding the loss on prepayment of borrowings. Salaries and wages expense increased $915,000 in 2014 as compared to 2013, mainly as a result of severance benefits. Pensions and other employee benefit expenses increased $619,000, mainly due to higher health care costs and a charge related to a distribution from a defined benefit pension plan. Professional fees expense was $835,000 lower in 2014 as compared to 2013, as the total in 2013 included fees associated with projects designed to identify sources of noninterest revenue and reductions in debit card and ATM processing expense.

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

13

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.

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 2015, 2014, and 2013. 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.

2015 vs. 2014

Fully taxable equivalent net interest income was $42,819,000 in 2015, which was $1,074,000 (2.4%) lower than in 2014. As shown in Table III, in 2015 compared to 2014, interest rate changes had the effect of decreasing net interest income $2,283,000, and net changes in volume had the effect of increasing net interest income $1,209,000. The most significant components of the rate-related change in net interest income in 2015 were a decrease in interest income of $1,957,000 attributable to lower rates earned on loans receivable and a decrease of $468,000 in interest income on available-for-sale securities. The most significant components of the volume-related increase in net interest income in 2015 was an increase in interest income of $1,544,000 attributable to an increase in the balance of loans receivable, a decrease in interest expense of $270,000 attributable to a reduction in the balance of borrowed funds, and a decrease in interest expense of $117,000 attributable to a reduction in the balance of interest-bearing deposits (primarily certificates of deposit), partially offset by a volume-related decrease in interest income on available-for-securities of $681,000. 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 3.54% in 2015 as compared to 3.63% in 2014.

INTEREST INCOME AND EARNING ASSETS

Interest income totaled $47,421,000 in 2015, a decrease of 3.2% from 2014. Interest and fees on loans receivable decreased $413,000, or 1.2%. As indicated in Table II, average available-for-sale securities (at amortized cost) totaled $479,148,000 in 2015, a decrease of $15,786,000 (3.2%) from 2014. The net decrease in the Corporation’s available-for-sale securities portfolio consisted of decreases in tax-exempt municipal securities, U.S. Government mortgage-backed securities, U.S. Government agency bonds, and equity securities. These decreases were partially offset by increases in the balances of collateralized mortgage obligations and taxable municipal securities. The Corporation’s yield on securities was lower in 2015 than in 2014, primarily because of low market interest rates on new investments combined with higher-yielding securities maturing. The average rate of return on available-for-sale securities was 2.81% for 2015 and 2.95% in 2014.

14

The average balance of gross loans receivable increased 4.8% to $657,727,000 in 2015 from $627,753,000 in 2014. The Corporation experienced growth in the balances of tax free municipal loans, residential mortgages and participation loans purchased. These increases were partially offset by decreases in balances of commercial real estate loans. The Corporation’s average rate of return on loans receivable declined to 5.15% in 2015 from 5.46% in 2014.

The average balance of interest-bearing due from banks decreased to $22,201,000 in 2015 from $32,510,000 in 2014. This has consisted primarily of balances held by the Federal Reserve and also includes other overnight deposits and FDIC-insured certificates of deposit issued by other financial institutions.

INTEREST EXPENSE AND INTEREST-BEARING LIABILITIES

Interest expense fell $520,000, or 10.2%, to $4,602,000 in 2015 from $5,122,000 in 2014. Table II shows that the overall cost of funds on interest-bearing liabilities fell to 0.55% in 2015 from 0.61% in 2014.

Total average deposits (interest-bearing and noninterest-bearing) increased 0.3%, to $968,201,000 in 2015 from $965,418,000 in 2014. Decreases in the average balances of certificates of deposit, Individual Retirement Accounts, and money market accounts were partially offset by increases in average balances of interest checking, savings accounts and non-interest bearing demand deposits. The average rate paid on interest-bearing deposits fell slightly to 0.26% in 2015 from 0.28% in 2014.

Total average borrowed funds decreased $2,298,000 to $77,642,000 in 2015 from $79,940,000 in 2014. The average rate on borrowed funds was 3.45% in 2015 compared to 3.70% in 2014, reflecting a $6,982,000 reduction in the average balance of higher-rate, long-term borrowings resulting from pre-payment of a long-term repurchase agreement borrowing with an interest rate of 4.265%. The Corporation paid off $10 million of principal on this borrowing in May 2015, and $24 million in December 2015, leaving no remaining balance outstanding at December 31, 2015. (The pre-payment of long-term borrowings is described in the Earnings Overview section.) The average balance of short-term borrowings increased $4,684,000 in 2015 over 2014, as average overnight borrowings were higher in 2015 and the Corporation funded the pay-off of the long-term repurchase agreement in December 2015 with funds from a series of short-term advances from the FHLB-Pittsburgh totaling $25,072,000 and an average rate of 0.86%.

2014 vs. 2013

Fully taxable equivalent net interest income was $43,893,000 in 2014, which was $2,491,000 (5.3%) lower than in 2013. As shown in Table III, in 2014 compared to 2013, interest rate changes had the effect of decreasing net interest income $1,622,000, and net changes in volume had the effect of decreasing net interest income $869,000. The most significant component of the rate-related change in net interest income in 2014 was a decrease in interest income of $1,718,000 attributable to lower rates earned on loans receivable. The most significant components of the volume-related decrease in net interest income in 2014 were a decrease in interest income of $1,602,000 attributable to a decline in the balance of loans receivable, partially offset by a volume-related increase in interest income on available-for-securities of $499,000, a decrease in interest expense of $161,000 attributable to a reduction in the balance of interest-bearing deposits (primarily certificates of deposit) and a decrease in interest expense of $109,000 attributable to a reduction in the balance of borrowed funds. 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 3.63% in 2014 as compared to 3.88% in 2013.

INTEREST INCOME AND EARNING ASSETS

Interest income totaled $49,015,000 in 2014, a decrease of 6.0% from 2013. Interest and fees on loans receivable decreased $3,320,000, or 8.8%. As indicated in Table II, average available-for-sale securities (at amortized cost) totaled $494,934,000 in 2014, an increase of $33,370,000 (7.2%) from 2013. Net increase in the Corporation’s available-for-sale securities portfolio was primarily made up of U.S. Government agency mortgage-backed securities and collateralized mortgage obligations. This increase was partially offset by decreases in the balances of U.S. Government agency bonds. The Corporation’s yield on securities was lower in 2014 than in 2013, primarily because of low market interest rates. The average rate of return on available-for-sale securities was 2.95% for 2014 and 3.12% in 2013.

The average balance of gross loans receivable decreased 4.3% to $627,753,000 in 2014 from $656,495,000 in 2013. 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 5.46% in 2014 from 5.73% in 2013.

15

The average balance of interest-bearing due from banks increased to $32,510,000 in 2014 from $26,159,000 in 2013. This has consisted primarily of balances held by the Federal Reserve and also includes other overnight deposits and FDIC-insured certificates of deposit issued by other financial institutions.

INTEREST EXPENSE AND INTEREST-BEARING LIABILITIES

Interest expense fell $643,000, or 11.1%, to $5,122,000 in 2014 from $5,765,000 in 2013. Table II shows that the overall cost of funds on interest-bearing liabilities fell to 0.61% in 2014 from 0.67% in 2013.

Total average deposits (interest-bearing and noninterest-bearing) increased 0.1%, to $965,418,000 in 2014 from $964,031,000 in 2013. Decreases in the average balances of certificates of deposit, Individual Retirement Accounts, and money market accounts were partially offset by increases in average balances of interest checking, savings accounts and non-interest bearing demand deposits. Consistent with continuing low short-term market interest rates, the average rates incurred on certificates of deposit and Individual Retirement Accounts have continued to decrease in 2014 as compared to 2013.

Total average borrowed funds decreased $2,388,000 to $79,940,000 in 2014 from $82,328,000 in 2013. The average rate on borrowed funds was 3.70% in 2014, compared to 3.72% in 2013.

16

TABLE I -  ANALYSIS OF INTEREST INCOME AND EXPENSE
	Years Ended December 31,						Increase/(Decrease)
(In Thousands)	2015		2014		2013		2015/2014			2014/2013
INTEREST INCOME
Available-for-sale securities:
Taxable	$	7,587	$	8,028	$	7,105	$	(441	)	$	923
Tax-exempt		5,869		6,577		7,296		(708	)		(719	)
Total available-for-sale securities		13,456		14,605		14,401		(1,149	)		204
Interest-bearing due from banks		93		125		105		(32	)		20
Loans held for sale		16		16		54		0			(38	)
Loans receivable:
Taxable		31,311		32,127		35,484		(816	)		(3,357	)
Tax-exempt		2,545		2,142		2,105		403			37
Total loans receivable		33,856		34,269		37,589		(413	)		(3,320	)
Total Interest Income		47,421		49,015		52,149		(1,594	)		(3,134	)
INTEREST EXPENSE
Interest-bearing deposits:
Interest checking		214		216		211		(2	)		5
Money market		299		286		290		13			(4	)
Savings		128		121		117		7			4
Certificates of deposit		831		1,069		1,522		(238	)		(453	)
Individual Retirement Accounts		451		470		562		(19	)		(92	)
Other time deposits		1		1		1		0			0
Total interest-bearing deposits		1,924		2,163		2,703		(239	)		(540	)
Borrowed funds:
Short-term		32		9		9		23			0
Long-term		2,646		2,950		3,053		(304	)		(103	)
Total borrowed funds		2,678		2,959		3,062		(281	)		(103	)
Total Interest Expense		4,602		5,122		5,765		(520	)		(643	)
Net Interest Income	$	42,819	$	43,893	$	46,384	$	(1,074	)	$	(2,491	)

(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%.

(2) Fees on loans are included with interest on loans and amounted to $1,004,000 in 2015, $1,013,000 in 2014, and $1,338,000 in 2013.

17

TABLE II - ANALYSIS OF AVERAGE DAILY BALANCES AND RATES

(Dollars in Thousands)

	Year						Year						Year
	Ended			Rate of			Ended			Rate of			Ended			Rate of
	12/31/2015			Return/			12/31/2014			Return/			12/31/2013			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	$	366,448			2.07	%	$	371,125			2.16	%	$	330,980			2.15	%
Tax-exempt		112,700			5.21	%		123,809			5.31	%		130,584			5.59	%
Total available-for-sale securities		479,148			2.81	%		494,934			2.95	%		461,564			3.12	%
Interest-bearing due from banks		22,201			0.42	%		32,510			0.38	%		26,159			0.40	%
Federal funds sold		0			0.00	%		0			0.00	%		4			0.00	%
Loans held for sale		222			7.21	%		204			7.84	%		1,118			4.83	%
Loans receivable:
Taxable		603,771			5.19	%		589,120			5.45	%		620,412			5.72	%
Tax-exempt		53,956			4.72	%		38,633			5.54	%		36,083			5.83	%
Total loans receivable		657,727			5.15	%		627,753			5.46	%		656,495			5.73	%
Total Earning Assets		1,159,298			4.09	%		1,155,401			4.24	%		1,145,340			4.55	%
Cash		16,639						16,865						16,854
Unrealized gain/loss on securities		8,871						6,350						8,875
Allowance for loan losses		(7,380	)					(7,992	)					(7,204	)
Bank premises and equipment		15,911						16,789						18,154
Intangible Asset - Core Deposit Intangible		41						70						113
Intangible Asset – Goodwill		11,942						11,942						11,942
Other assets		37,887						40,472						43,022
Total Assets	$	1,243,209					$	1,239,897					$	1,237,096
INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Interest checking	$	195,940			0.11	%	$	183,874			0.12	%	$	174,790			0.12	%
Money market		196,585			0.15	%		198,990			0.14	%		203,023			0.14	%
Savings		128,355			0.10	%		121,685			0.10	%		117,055			0.10	%
Certificates of deposit		121,803			0.68	%		134,732			0.79	%		148,598			1.02	%
Individual Retirement Accounts		110,659			0.41	%		120,016			0.39	%		129,255			0.43	%
Other time deposits		1,031			0.10	%		1,039			0.10	%		1,062			0.09	%
Total interest-bearing deposits		754,373			0.26	%		760,336			0.28	%		773,783			0.35	%
Borrowed funds:
Short-term		11,428			0.28	%		6,744			0.13	%		6,422			0.14	%
Long-term		66,214			4.00	%		73,196			4.03	%		75,906			4.02	%
Total borrowed funds		77,642			3.45	%		79,940			3.70	%		82,328			3.72	%
Total Interest-bearing Liabilities		832,015			0.55	%		840,276			0.61	%		856,111			0.67	%
Demand deposits		213,828						205,082						190,248
Other liabilities		8,461						9,070						9,325
Total Liabilities		1,054,304						1,054,428						1,055,684
Stockholders' equity, excluding other comprehensive income/loss		183,125						181,271						175,893
Other comprehensive income/loss		5,780						4,198						5,519
Total Stockholders' Equity		188,905						185,469						181,412
Total Liabilities and Stockholders' Equity	$	1,243,209					$	1,239,897					$	1,237,096
Interest Rate Spread					3.54	%					3.63	%					3.88	%
Net Interest Income/Earning Assets					3.69	%					3.80	%					4.05	%
Total Deposits (Interest-bearing and Demand)	$	968,201					$	965,418					$	964,031

(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%.

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

18

TABLE III -  ANALYSIS OF VOLUME AND RATE CHANGES
(In Thousands)	Year Ended 12/31/15 vs. 12/31/14									Year Ended  12/31/14 vs. 12/31/13
	Change in			Change in			Total			Change in			Change in			Total
	Volume			Rate			Change			Volume			Rate			Change
EARNING ASSETS
Available-for-sale securities:
Taxable	$	(100	)	$	(341	)	$	(441	)	$	868		$	55		$	923
Tax-exempt		(581	)		(127	)		(708	)		(369	)		(350	)		(719	)
Total available-for-sale securities		(681	)		(468	)		(1,149	)		499			(295	)		204
Interest-bearing due from banks		(42	)		10			(32	)		24			(4	)		20
Loans held for sale		1			(1	)		0			(60	)		22			(38	)
Loans receivable:
Taxable		786			(1,602	)		(816	)		(1,746	)		(1,611	)		(3,357	)
Tax-exempt		758			(355	)		403			144			(107	)		37
Total loans receivable		1,544			(1,957	)		(413	)		(1,602	)		(1,718	)		(3,320	)
Total Interest Income		822			(2,416	)		(1,594	)		(1,139	)		(1,995	)		(3,134	)
INTEREST-BEARING LIABILITIES
Interest-bearing deposits:
Interest checking		14			(16	)		(2	)		11			(6	)		5
Money market		(3	)		16			13			(6	)		2			(4	)
Savings		7			0			7			5			(1	)		4
Certificates of deposit		(97	)		(141	)		(238	)		(133	)		(320	)		(453	)
Individual Retirement Accounts		(38	)		19			(19	)		(38	)		(54	)		(92	)
Other time deposits		0			0			0			0			0			0
Total interest-bearing deposits		(117	)		(122	)		(239	)		(161	)		(379	)		(540	)
Borrowed funds:
Short-term		9			14			23			0			0			0
Long-term		(279	)		(25	)		(304	)		(109	)		6			(103	)
Total borrowed funds		(270	)		(11	)		(281	)		(109	)		6			(103	)
Total Interest Expense		(387	)		(133	)		(520	)		(270	)		(373	)		(643	)
Net Interest Income	$	1,209		$	(2,283	)	$	(1,074	)	$	(869	)	$	(1,622	)	$	(2,491	)

(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%.

(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.

19

NONINTEREST INCOME

Years Ended December 31, 2015, 2014 and 2013

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)

	Years Ended
	December 31,						$			%
	2015			2014			Change			Change
Service charges on deposit accounts	$	4,864		$	5,025		$	(161	)		(3.2	)
Service charges and fees		494			538			(44	)		(8.2	)
Trust and financial management revenue		4,626			4,490			136			3.0
Brokerage revenue		839			901			(62	)		(6.9	)
Insurance commissions, fees and premiums		109			118			(9	)		(7.6	)
Interchange revenue from debit card transactions		1,935			1,959			(24	)		(1.2	)
Net gains from sales of loans		735			768			(33	)		(4.3	)
Decrease in fair value of servicing rights		(162	)		(27	)		(135	)		500.0
Increase in cash surrender value of life insurance		386			376			10			2.7
Net (loss) gain from premises and equipment		(1	)		8			(9	)		(112.5	)
Other operating income		1,579			1,264			315			24.9
Total other operating income before realized gains on available-for-sale securities, net	$	15,404		$	15,420		$	(16	)		(0.1	)

	Years Ended
	December 31,						$			%
	2014			2013			Change			Change
Service charges on deposit accounts	$	5,025		$	5,246		$	(221	)		(4.2	)
Service charges and fees		538			597			(59	)		(9.9	)
Trust and financial management revenue		4,490			4,087			403			9.9
Brokerage revenue		901			784			117			14.9
Insurance commissions, fees and premiums		118			170			(52	)		(30.6	)
Interchange revenue from debit card transactions		1,959			1,941			18			0.9
Net gains from sales of loans		768			1,969			(1,201	)		(61.0	)
(Decrease) increase in fair value of servicing rights		(27	)		67			(94	)		(140.3	)
Increase in cash surrender value of life insurance		376			399			(23	)		(5.8	)
Net gain (loss) from premises and equipment		8			(16	)		24			(150.0	)
Other operating income		1,264			1,207			57			4.7
Total other operating income before realized gains   on available-for-sale securities, net	$	15,420		$	16,451		$	(1,031	)		(6.3	)

Total noninterest income, excluding realized gains on available-for-sale securities, decreased $16,000 in 2015 compared to 2014. In 2014, total noninterest income decreased $1,031,000 (6.3%) from 2013. Changes of significance are discussed in the narrative that follows.

2015 vs. 2014

Service charges on deposit accounts were $161,000 lower in 2015 than 2014. Total consumer and business overdraft and uncollected funds fees decreased $387,000 in 2015 as compared to 2014. These decreases were partially offset by adjustments to the existing fee structure of certain checking products in April 2015.

The fair value of servicing rights decreased $162,000 in 2015 as compared to a decrease of $27,000 in 2014. The greater decline in fair value in 2015 reflected the impact of a reduction in the outstanding balance of mortgage loans sold and serviced in 2015, as compared to an increase in the balance of loans serviced in 2014 over 2013.

20

Included in the $315,000 increase in other operating revenue in 2015 is the effect of a $212,000 gain recognized from a life insurance arrangement in which the benefits were split between Corporation and the heirs of the former employee.

In 2015, Trust and financial management revenue increased $136,000, or 3.0%. This increase was primarily in retirement services revenue.

2014 vs. 2013

Net gains from sales of loans decreased $1,201,000 in 2014. Since December 2009, the Corporation has sold a significant amount of residential mortgage loans into the secondary market through the MPF Xtra and Original programs administered by the Federal Home Loan Banks of Pittsburgh and Chicago. Volume remained brisk throughout most of 2013, slowing somewhat in the fourth quarter 2013 with a continued slowdown throughout 2014 reflecting a decrease in refinancing activity.

Service charges on deposit accounts were $221,000 lower in 2014 than 2013. Consumer and business overdraft fees decreased $543,000 in 2014 as compared to 2013. Changes made as a result of recommendations made by a consulting firm in 2013 resulted in service charges on deposit accounts of $611,000 in 2014 as compared to $229,000 in 2013, as most of the recommendations were implemented in the fourth quarter 2013.

In 2014, Trust and financial management revenue increased $403,000, or 9.9%. The increase in trust revenue in 2014 reflects the impact of new business obtained as well as higher valuations of U.S. equity securities throughout most of the period. Assets under management by the Corporation’s Trust and financial management group totaled $825,918,000 at December 31, 2014, an increase of 3.7% over the total one year earlier.

As a result of increased annuity sales, brokerage revenue increased $117,000 or 14.9% in 2014 over 2013.

NONINTEREST EXPENSE

Years Ended December 31, 2015, 2014 and 2013

As shown in Table V below, total noninterest expense increased $1,372,000, or 4.0%, in 2015 as compared to 2014; however, excluding losses from prepayment of debt, noninterest expense decreased $1,201,000 (3.5%) in 2015 as compared to 2014. Excluding losses from prepayment of debt, total noninterest expense was $686,000 (2.0%) higher in 2014 as compared to 2013. In 2015, the Corporation incurred losses totaling $2,573,000 and, in 2013, losses totaling $1,023,000 from prepayment of borrowings (repurchase agreements). There were no losses from prepayment of borrowings incurred in 2014. Changes of significance (other than the previously discussed losses on prepayment of debt) are discussed in the narrative that follows.

TABLE V - COMPARISON OF NONINTEREST EXPENSE

(In Thousands)

					$			%
	2015		2014		Change			Change
Salaries and wages	$	14,682	$	15,121	$	(439	)		(2.9	)
Pensions and other employee benefits		4,420		4,769		(349	)		(7.3	)
Occupancy expense, net		2,574		2,628		(54	)		(2.1	)
Furniture and equipment expense		1,860		1,859		1			0.1
FDIC Assessments		603		600		3			0.5
Pennsylvania shares tax		1,174		1,350		(176	)		(13.0	)
Professional fees		538		699		(161	)		(23.0	)
Automated teller machine and interchange expense		988		924		64			6.9
Software subscriptions		876		784		92			11.7
Loss on prepayment of debt		2,573		0		2,573			100.0
Other operating expense		5,241		5,423		(182	)		(3.4	)
Total Other Expense	$	35,529	$	34,157	$	1,372			4.0

21

					$			%
	2014		2013		Change			Change
Salaries and wages	$	15,121	$	14,206	$	915			6.4
Pensions and other employee benefits		4,769		4,150		619			14.9
Occupancy expense, net		2,628		2,473		155			6.3
Furniture and equipment expense		1,859		1,948		(89	)		(4.6	)
FDIC Assessments		600		604		(4	)		(0.7	)
Pennsylvania shares tax		1,350		1,402		(52	)		(3.7	)
Professional fees		699		1,534		(835	)		(54.4	)
Automated teller machine and interchange expense		924		1,020		(96	)		(9.4	)
Software subscriptions		784		836		(52	)		(6.2	)
Loss on prepayment of debt		0		1,023		(1,023	)		(100.0	)
Other operating expense		5,423		5,298		125			2.4
Total Other Expense	$	34,157	$	34,494	$	(337	)		(1.0	)

2015 vs 2014

Salaries and wages decreased $439,000, or 2.9%. As noted in the Earnings Overview section, this decrease is primarily the result of severance benefits incurred and paid in 2014. The decrease from severance benefits was partially offset by annual merit-based pay increases, an increase in incentive and other bonuses of $168,000 and the addition of new lending and other personnel. At December 31, 2015, the Corporation had 283 full-time equivalent employees, up from 278 a year earlier.

Pensions and other employee benefits decreased $349,000, or 7.3%. Health care expense decreased $342,000 as the amount of claims incurred during 2015 was lower than in 2014. The Corporation is self-insured for health insurance, up to a cap for catastrophic levels of losses, which are insured by a third party. In addition, pension expense decreased $111,000 as the result of a charge in 2014 related to a distribution from a defined benefit plan. These decreases were partially offset by annual increases in other benefit and administrative costs.

Pennsylvania shares tax decreased $176,000, including the effects of increased participation in state tax credit programs.

Professional fees decreased $161,000 as a result of nonrecurring executive search expenses that were incurred in 2014.

Included in other operating expense is a $191,000 decrease in loan collection expenses as well as an $86,000 decrease in other real estate expenses.

2014 vs. 2013

Salaries and wages increased $915,000, or 6.4%. As noted in the Earnings Overview section, this increase is primarily the result of severance benefits incurred and paid in 2014.

Pensions and other employee benefits increased $619,000, or 14.9%. Health care expense increased $415,000 as the amount of claims incurred during 2014 was higher than in 2013. The Corporation is self-insured for health insurance, up to a cap for catastrophic levels of losses, which are insured by a third party In addition, the Corporation incurred a $196,000 charge related to a distribution from a defined benefit plan.

Occupancy expense increased $155,000, or 6.3%, primarily due to increased weather related costs such as snow removal, fuel, utilities and maintenance.

Professional fees decreased $835,000, or 54.4%. The Corporation incurred professional fee expense of $1,039,000 in 2013 for two large consulting engagements. Similar size engagements did not occur during 2014.

Automated teller machine and interchange expenses decreased $96,000, or 9.4%, mainly resulting from benefits derived from a consulting project related to electronic funds processing that took place in 2013.

22

INCOME TAXES

The effective income tax rate was approximately 24.5% of pre-tax income in 2015, and 25% of pre-tax income in 2014 and 2013. The Corporation’s effective tax rates differ from the statutory rate of 35% principally because of the effects of tax-exempt interest income.

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, 2015, the net deferred tax asset was $3,115,000, an increase from the balance at December 31, 2014 of $1,668,000. The largest changes in temporary difference components were as follows:

· Primarily as a result of the realization of $2,861,000 in gains on the sale of available-for-sale securities, the deferred tax liability resulting from net unrealized gains on available-for-sale securities decreased to $1,342,000 at December 31, 2015 from $2,844,000 at December 31, 2014.

· There was no deferred tax asset representing a credit for alternative minimum tax paid at December 31, 2015 as the Corporation’s federal taxable income in 2015 exceeded alternative minimum taxable income sufficiently to utilize the available credit. At December 31, 2014 the related deferred tax asset amounted to $537,000.

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, 2015 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.

SECURITIES

Table VI shows the composition of the investment portfolio at December 31, 2015, 2014 and 2013. Comparison of the amortized cost totals of available-for-sale securities at each year-end presented reflects an increase of $24,479,000 to $508,682,000 at December 31, 2014 from December 31, 2013. This change was followed by a decrease of $92,227,000 to $416,455,000 at December 31, 2015. After experiencing an increase in securities in 2014 as a result of a reduction in the balances of loans outstanding, the Corporation saw a reversal of that trend in 2015. The decrease in securities in 2015 reflects, in part, using cash generated from the investment portfolio to fund the increase in loans outstanding. Over the last year, the Corporation saw a decrease in almost all categories of investments, with the largest decrease being a $46,475,000 reduction in collateralized mortgage-backed obligations (CMOs) issued or guaranteed by U.S. Government agencies. As discussed in more detail in Note 7 to the financial statements, the Corporation reported net realized gains from available-for-sale securities of $2,861,000 in 2015, including realized gains from sales of equity securities (bank stocks) of $2,220,000. In comparison, net realized gains from available-for-sale securities totaled $1,104,000 in 2014 and $1,718,000 in 2013.

As reflected in Table VI, the fair value of available-for-sale securities as of December 31, 2015 was $3,835,000, or 0.92%, higher than the total amortized cost basis. The aggregate unrealized gain position at December 31, 2015 was down from $8,125,000 at December 31, 2014, mainly due to sales of a significant portion of the Corporation’s equity securities with substantial market appreciation in 2015. The aggregate unrealized gain position at December 31, 2015 included an unrealized gain of $3,129,000 on debt securities as well as an unrealized gain of $706,000 on marketable equity securities. Changes in intermediate-term and long-term interest rates have a significant impact on changes in fair values of debt securities. The aggregate unrealized gain on debt securities at December 31, 2015 was 0.75% of the amortized cost basis, down slightly from 1.01% at December 31, 2014 and up from a net unrealized loss on debt securities of 0.93% of amortized cost at December 31, 2013.

Management has reviewed the Corporation’s holdings as of December 31, 2015 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. Management will continue to closely monitor the status of impaired securities in 2016.

23

TABLE VI - INVESTMENT SECURITIES
					As of December 31,
	2015				2014				2013
	Amortized		Fair		Amortized		Fair		Amortized		Fair
(In Thousands)	Cost		Value		Cost		Value		Cost		Value
AVAILABLE-FOR-SALE SECURITIES:
Obligations of U.S. Government agencies	$	10,663	$	10,483	$	27,221	$	26,676	$	47,382	$	45,877
Obligations of states and political subdivisions:
Tax-exempt		103,414		107,757		120,086		124,839		127,748		128,426
Taxable		34,317		34,597		33,637		33,878		35,154		34,471
Mortgage-backed securities		73,227		73,343		82,479		83,903		84,849		86,208
Collateralized mortgage obligations, Issued by U.S. Government agencies		193,145		191,715		239,620		238,823		182,372		178,092
Other collateralized debt obligations		9		9		34		34		660		660
Total debt securities		414,775		417,904		503,077		508,153		478,165		473,734
Marketable equity securities		1,680		2,386		5,605		8,654		6,038		8,924
Total	$	416,455	$	420,290	$	508,682	$	516,807	$	484,203	$	482,658

The following table presents the contractual maturities and the weighted-average yields (calculated based on amortized cost) of investment securities as of December 31, 2015. 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	$	1,006		3.32	%	$	6,650		1.35	%	$	3,007		1.53	%	$	0		0.00	%	$	10,663		1.59	%
Obligations of states and political subdivisions:
Tax-exempt		4,645		2.83	%		36,609		2.48	%		28,666		2.70	%		33,494		4.74	%		103,414		3.29	%
Taxable		3,436		2.03	%		17,381		2.02	%		13,500		2.91	%		0		0.00	%		34,317		2.37	%
Other collateralized debt obligations		0		0.00	%		0		0.00	%		0		0.00	%		9		0.00	%		9		0.00	%
Subtotal	$	9,087		2.58	%	$	60,640		2.23	%	$	45,173		2.69	%	$	33,503		4.73	%	$	148,403		2.95	%
Mortgage-backed securities																						73,227		2.17	%
Collateralized mortgage obligations, Issued by U.S. Government agencies																						193,145		2.01	%
Total																					$	414,775		2.38	%

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 due to increased refinance activity and other factors. In the table above, the entire balances and weighted-average rates for mortgage-backed securities and collateralized mortgage obligations are shown in one period.

24

FINANCIAL CONDITION

Gross loans outstanding (excluding mortgage loans held for sale) were $704,880,000 at December 31, 2015, up 11.8% from $630,545,000 at December 31, 2014. The outstanding balance of tax-exempt municipal loans totaled $40,007,000 at December 31, 2015, an increase of $22,473,000 from December 31, 2014, and total participation loans outstanding amounted to $33,059,000 at December 31, 2015, an increase of $28,113,000 from December 31, 2014. The increase in municipal loans in 2015 includes loans to two school districts in the Corporation’s market area with outstanding balances totaling $15,947,000 at December 31, 2015. Participation loans represent portions of larger commercial transactions for which other institutions are the “lead banks”. Although not the lead bank, the Corporation conducts detailed underwriting and monitoring of participation loan opportunities. Participation loans are included in the “Commercial and industrial” and “Commercial loans secured by real estate” classes in the loan tables presented in this Form 10-K. At December 31, 2015, the balance of participation loans outstanding includes $8,860,000 to a business based in the Corporation’s market area, $10,000,000 to an entity located outside of the Corporation’s market area and $10,020,000 from participations in loans originated through the Corporation’s membership in a network that originates loans throughout the U.S. The Corporation’s participation loans originated through the network consist of loans to businesses that are larger than the Corporation’s typical commercial customer base. The loans originated through the network are considered “leveraged loans,” meaning the businesses typically have minimal tangible book equity and the extent of collateral available is limited, though the businesses have demonstrated strong cash flow performance in their recent histories.

The balance of available-for-sale securities fell $96,517,000 to $420,290,000 at December 31, 2015 from $516,807,000 at December 31, 2014. As discussed in the Earnings Overview section, the reduction included sales of securities for which the proceeds were used to pre-pay long-term debt with a book value of $34 million prior to the pay-down. The reduction also included use of proceeds from calls and maturities of securities to fund the increase in loans receivable and to offset some of the impact of the decrease in deposits in the second half of 2015, as the Pennsylvania state budget impasse led to reduced deposit balances held by municipal entities such as school districts, local governments and human service agencies.

Other 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, 2015, 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.

Table VIII presents loan maturity data as of December 31, 2015. 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 39% of the loan portfolio. Of the 61% of the portfolio made up of variable-rate loans, a significant portion (42%) 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.

Since 2009, the Corporation has originated and sold residential mortgage loans to the secondary market through the MPF Xtra program administered by the Federal Home Loan Banks of Pittsburgh and Chicago. Residential mortgages originated and sold through the MPF Xtra program consist primarily of conforming, prime loans sold to the Federal National Mortgage Association (Fannie Mae), a government agency. In 2014, the Corporation began to originate and sell residential mortgage loans to the secondary market through the MPF Original program, which is also administered by the Federal Home Loan Banks of Pittsburgh and Chicago. Residential mortgages originated and sold through the MPF Original program consist primarily of conforming, prime loans sold to the Federal Home Loan Bank of Pittsburgh. For loans sold under the Original program, the Corporation provides a credit enhancement whereby the Corporation would assume credit losses in excess of a defined First Loss Account (“FLA”) balance, up to specified amounts. The FLA is funded by the Federal Home Loan Bank of Pittsburgh based on a percentage of the outstanding balance of loans sold. The Corporation does not provide a credit enhancement for loans sold through the Xtra program.

For loan sales originated under the MPF Xtra and Original programs, the Corporation provides customary representations and warranties to investors that specify, among other things, that the loans have been underwritten to the standards established by the investor. The Corporation may be required to repurchase a loan and reimburse a portion of fees received, or reimburse the investor for a credit loss incurred on a loan, if it is determined that the representations and warranties have not been met. Such repurchases or reimbursements generally result from an underwriting or documentation deficiency. At December 31, 2015, the total outstanding balance of loans the Corporation has repurchased as a result of identified instances of noncompliance amounted to $1,968,000, and the corresponding total outstanding balance repurchased at December 31, 2014 was $1,802,000.

25

At December 31, 2015, outstanding balances of loans sold and serviced through the two programs totaled $152,448,000, including loans sold through the MPF Xtra program of $125,571,000 and loans sold through the Original program of $26,877,000. At December 31, 2014, outstanding balances of loans sold and serviced through the two programs totaled $152,505,000, including loans sold through the MPF Xtra program of $144,743,000 and loans sold through the Original program of $7,762,000. Based on the fairly limited volume of required repurchases to date, and of sales through the Original program with credit enhancement, no allowance had been established for representation and warranty exposures, or for credit losses on loan sales through the Original program as of December 31, 2015 and 2014.

Total future capital purchases in 2016 are estimated at approximately $2.8 million. Management does not expect capital expenditures to have a material, detrimental effect on the Corporation’s financial condition during 2016.

TABLE VII - Five-year Summary of Loans by Type

(In Thousands)

	2015			%		2014			%		2013			%		2012			%		2011			%
Residential mortgage:
Residential mortgage loans - first liens	$	304,783			43.2	$	291,882			46.3	$	299,831			46.5	$	311,627			45.6	$	331,015			46.7
Residential mortgage loans - junior liens		21,146			3.0		21,166			3.4		23,040			3.6		26,748			3.9		28,851			4.1
Home equity lines of credit		39,040			5.5		36,629			5.8		34,530			5.4		33,017			4.8		30,037			4.2
1-4 Family residential construction		21,121			3.0		16,739			2.7		13,909			2.2		12,842			1.9		9,959			1.4
Total residential mortgage		386,090			54.8		366,416			58.1		371,310			57.6		384,234			56.2		399,862			56.5
Commercial:
Commercial loans secured by real estate		154,779			22.0		145,878			23.1		147,215			22.8		158,413			23.2		156,388			22.1
Commercial and industrial		75,196			10.7		50,157			8.0		42,387			6.6		48,442			7.1		57,191			8.1
Political subdivisions		40,007			5.7		17,534			2.8		16,291			2.5		31,789			4.6		37,620			5.3
Commercial construction		5,122			0.7		6,938			1.1		17,003			2.6		28,200			4.1		23,518			3.3
Loans secured by farmland		7,019			1.0		7,916			1.3		10,468			1.6		11,403			1.7		10,949			1.5
Multi-family (5 or more) residential		9,188			1.3		8,917			1.4		10,985			1.7		6,745			1.0		6,583			0.9
Agricultural loans		4,671			0.7		3,221			0.5		3,251			0.5		3,053			0.4		2,987			0.4
Other commercial loans		12,152			1.7		13,334			2.1		14,631			2.3		362			0.1		552			0.1
Total commercial		308,134			43.7		253,895			40.3		262,231			40.7		288,407			42.2		295,788			41.8
Consumer		10,656			1.5		10,234			1.6		10,762			1.7		11,269			1.6		12,665			1.8
Total		704,880			100.0		630,545			100.0		644,303			100.0		683,910			100.0		708,315			100.0
Less: allowance for loan losses		(7,889	)				(7,336	)				(8,663	)				(6,857	)				(7,705	)
Loans, net	$	696,991				$	623,209				$	635,640				$	677,053				$	700,610

TABLE VIII – LOAN MATURITY DISTRIBUTION

(In Thousands)

	As of December 31, 2015
	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	$	2,915	$	17,658	$	171,617	$	192,190	$	87,874	$	183,361	$	78,665	$	349,900
Commercial		8,964		28,121		31,850		68,935		51,460		31,220		602		83,282
Consumer		1,899		5,257		3,340		10,496		41		0		36		77
Total	$	13,778	$	51,036	$	206,807	$	271,621	$	139,375	$	214,581	$	79,303	$	433,259

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.

26

The allowance for loan losses was $7,889,000 at December 31, 2015, up from $7,336,000 at December 31, 2014. As shown in Table X, specific allowances on impaired loans totaled $820,000 at December 31, 2015, which was $51,000 higher than the total of specific allowances on impaired loans at December 31, 2014. Table X also shows the collectively determined component of the allowance for commercial loans was $371,000 higher and for residential mortgages was $122,000 higher at December 31, 2015 than at December 31, 2014. The increase in loans outstanding had the effect of increasing the collectively determined portion of the allowance for loan losses, as the Corporation’s net charge-off experience and qualitative data used in the December 31, 2015 allowance calculations were comparable to the December 31, 2014 data.

The provision for loan losses is determined based on the amount required in order to maintain an appropriate allowance for loan losses in light of all factors considered. The provision for loan losses by segment for 2015, 2014 and 2013 is as follows:

(In Thousands)
	2015			2014			2013
Residential mortgage	$	(19	)	$	250		$	559
Commercial		816			227			1,507
Consumer		16			2			24
Unallocated		32			(3	)		(43	)
Total	$	845		$	476		$	2,047

The provision for loan losses was $845,000 in 2015, in comparison to $476,000 in 2014 and $2,047,000 in 2013. As shown in Table XII, the average provision for loan losses for the five-year period ended December 31, 2015 was $674,000. 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 2015, the provision for loan losses related to the commercial segment was $816,000, as compared to $227,000 in 2014 and $1,507,000 in 2013. The increase in the provision for the commercial segment in 2015 as compared to 2014 includes the effects of the increase in the collectively determined allowance due to loan growth, as previously described. The provision for the commercial segment in 2015 also reflects the establishment of an allowance of $595,000 on a multi-family residential loan with a balance of $987,000 at December 31, 2015, partially offset by the effects of a recovery of $208,000 on loans charged-off in prior years. In 2014, the provision for the commercial segment included the effects of increases as compared to 2013 in average net charge-offs (based on historical experience over the previous thirty-six months) and qualitative factors used to estimate a portion of the collectively determined allowance, partially offset by lower loan balances, while the 2013 provision related to the commercial segment included a provision of $1,552,000 from the establishment of an allowance on loans to one borrower.

In 2015, the $19,000 credit for loan losses in the residential mortgage segment relates primarily to an adjustment to a specific allowance related to one loan relationship, partially offset by the effects of the previously described increase in the collectively determined allowance due to loan growth. In 2014, the provision for the residential mortgage segment was $250,000 as compared to $559,000 in 2013, reflecting the effect of lower loans outstanding.

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). Table XI shows total impaired loans of $9,774,000 at December 31, 2015, down $2,342,000 from the corresponding amount at December 31, 2014 of $12,316,000. Table XI shows that total impaired loans at December 31, 2013 was significantly higher than the corresponding amounts at December 31, 2011 and 2012, and that the amount of impaired loans (as well as nonperforming loans as reflected in the table) decreased in 2014 and again in 2015. The increase in impaired and nonaccrual loans outstanding in 2013, and the subsequent decrease in 2014 and 2015, included the effects of changes in the outstanding balance of large loans to two commercial entities. For one of the credits for which there was a loan balance of $1,815,000 and an allowance of $211,000 at December 31, 2014 and $72,000 at December 31, 2013, the Corporation acquired the commercial property that had collateralized the loan through foreclosure and sold the property, resulting in no remaining loan balance and a charge-off of $115,000 in 2015. For the other large commercial relationship, as described in the following paragraph, during the second quarter 2014, the Corporation recorded a charge-off of $1,486,000 related to a restructuring, which has reduced the outstanding balance of loans to this commercial entity to $4,997,000 at December 31, 2015.

27

As shown in Table XI, loans classified as TDRs decreased to $6,364,000 at December 31, 2015 from $7,195,000 at December 31, 2014. The reduction in outstanding TDRs in 2015 includes the effect of pay-offs received on loans secured by farmland. The balance of TDRs at December 31, 2014 had increased from $4,175,000 at December 31, 2013, mainly due to a restructuring agreement with one commercial borrower. The Corporation entered into a forbearance agreement with this commercial borrower which includes a reduction in monthly payment amounts over a fifteen-month period. At the end of the fifteen-month period, the monthly payment amounts would revert to the original amounts, unless the forbearance agreement is extended or the payment requirements are otherwise modified. In July 2015, the forbearance agreement was extended for twelve months. The Corporation recorded a charge-off of $1,486,000 in the second quarter 2014 as a result of these modifications, as the payment amounts based on the forbearance agreement are not sufficient to fully amortize the contractual amount of principal outstanding on the loans. The amount of the charge-off was determined based on the excess of the contractual principal due over the present value of the payment amounts provided for in the forbearance agreement, assuming the revised payment amounts would continue until maturity, at the contractual interest rates.

Table XI reflects total loans past due 30-89 days and still accruing interest at December 31, 2015 of $7,057,000, down slightly from the December 31, 2014 total of $7,121,000. Total loans past due 90 days ormore and still in accrual status increased to $3,229,000 at December 31, 2015 from $2,843,000 at December 31, 2014 mainly due to increased past due 1-4 family residential mortgages. 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 2011-2015, 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, 2015. 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.

TABLE IX - ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES

(In Thousands)	Years Ended December 31,
	2015			2014			2013			2012			2011
Balance, beginning of year	$	7,336		$	8,663		$	6,857		$	7,705		$	9,107
Charge-offs:
Residential mortgage		(217	)		(327	)		(95	)		(552	)		(100	)
Commercial		(251	)		(1,715	)		(459	)		(498	)		(1,189	)
Consumer		(94	)		(97	)		(117	)		(171	)		(157	)
Total charge-offs		(562	)		(2,139	)		(671	)		(1,221	)		(1,446	)
Recoveries:
Residential mortgage		1			25			24			18			3
Commercial		214			264			348			8			255
Consumer		55			47			58			59			71
Total recoveries		270			336			430			85			329
Net charge-offs		(292	)		(1,803	)		(241	)		(1,136	)		(1,117	)
Provision (credit) for loan losses		845			476			2,047			288			(285	)
Balance, end of period	$	7,889		$	7,336		$	8,663		$	6,857		$	7,705
Net charge-offs as a % of average loans		0.04	%		0.29	%		0.04	%		0.16	%		0.16	%

28

TABLE X - COMPONENTS OF THE ALLOWANCE FOR LOAN LOSSES

(In Thousands)

	As of December 31,
	2015		2014		2013		2012		2011
ASC 310 - Impaired loans	$	820	$	769	$	2,333	$	623	$	1,126
ASC 450 - Collective segments:
Commercial		3,103		2,732		2,583		2,594		2,811
Residential mortgage		3,417		3,295		3,156		3,011		3,130
Consumer		122		145		193		188		204
Unallocated		427		395		398		441		434
Total Allowance	$	7,889	$	7,336	$	8,663	$	6,857	$	7,705

TABLE XI - PAST DUE AND IMPAIRED LOANS, NONPERFORMING ASSETS

AND TROUBLED DEBT RESTRUCTURINGS (TDRs)

(In Thousands)

	As of December 31,
	2015			2014			2013			2012			2011
Impaired loans with a valuation allowance	$	1,933		$	3,241		$	9,889		$	2,710		$	3,433
Impaired loans without a valuation allowance		8,041			9,075			6,432			4,719			4,431
Total impaired loans	$	9,974		$	12,316		$	16,321		$	7,429		$	7,864
Total loans past due 30-89 days and still accruing	$	7,057		$	7,121		$	8,305		$	7,756		$	7,898
Nonperforming assets:
Total nonaccrual loans	$	11,517		$	12,610		$	14,934		$	7,353		$	7,197
Total loans past due 90 days or more and still accruing		3,229			2,843			3,131			2,311			1,267
Total nonperforming loans		14,746			15,453			18,065			9,664			8,464
Foreclosed assets held for sale (real estate)		1,260			1,189			892			879			1,235
Total nonperforming assets	$	16,006		$	16,642		$	18,957		$	10,543		$	9,699
Loans subject to troubled debt restructurings (TDRs):
Performing	$	1,186		$	1,807		$	3,267		$	906		$	1,064
Nonperforming		5,178			5,388			908			1,155			2,413
Total TDRs	$	6,364		$	7,195		$	4,175		$	2,061		$	3,477
Total nonperforming loans as a % of loans		2.09	%		2.45	%		2.80	%		1.41	%		1.19	%
Total nonperforming assets as a % of assets		1.31	%		1.34	%		1.53	%		0.82	%		0.73	%
Allowance for loan losses as a % of total loans		1.12	%		1.16	%		1.34	%		1.00	%		1.09	%
Allowance for loan losses as a % of nonperforming loans		53.50	%		47.47	%		47.95	%		70.95	%		91.03	%

29

TABLE XII - FIVE-YEAR HISTORY OF LOAN LOSSES

(In Thousands)

	2015			2014			2013			2012			2011			Average
Average gross loans	$	657,727		$	627,753		$	656,495		$	700,241		$	714,421		$	671,327
Year-end gross loans		704,880			630,545			644,303			683,910			708,315			674,391
Year-end allowance for loan losses		7,889			7,336			8,663			6,857			7,705			7,690
Year-end nonaccrual loans		11,517			12,610			14,934			7,353			7,197			10,722
Year-end loans 90 days or more past due and still accruing		3,229			2,843			3,131			2,311			1,267			2,556
Net charge-offs		292			1,803			241			1,136			1,117			918
Provision (credit) for loan losses		845			476			2,047			288			(285	)		674
Earnings coverage of charge-offs		56			9			77			20			21			21
Allowance coverage of charge-offs		27			4			36			6			7			8
Net charge-offs as a % of provision (credit) for loan losses		34.56	%		378.78	%		11.77	%		394.44	%		-391.93	%		136.20	%
Net charge-offs as a % of average gross loans		0.04	%		0.29	%		0.04	%		0.16	%		0.16	%		0.14	%
Net income		16,471			17,086			18,594			22,705			23,368			19,645

CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS

Table XIII presents the Corporation’s significant fixed and determinable contractual obligations as of December 31, 2015 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	$	124,562	$	73,596	$	23,515	$	11	$	221,684
Short-term borrowings:
Federal Home Loan Bank of Pittsburgh		48,581		0		0		0		48,581
Customer repurchase agreements		4,915		0		0		0		4,915
Long-term borrowings:
Federal Home Loan Bank of Pittsburgh		57		10,010		0		1,700		11,767
Repurchase agreements		0		27,000		0		0		27,000
Total	$	178,115	$	110,606	$	23,515	$	1,711	$	313,947

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 $713,931,000 at December 31, 2015.

The Corporation’s operating lease and other commitments at December 31, 2015 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, 2015, the Corporation maintained overnight interest-bearing deposits with the Federal Reserve Bank of Philadelphia and other correspondent banks totaling $18,603,000.

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.

30

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 $20,039,000 at December 31, 2015.

The Corporation’s outstanding, available, and total credit facilities at December 31, 2015 and December 31, 2014 are as follows:

	Outstanding				Available				Total Credit
(In Thousands)	Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,
	2015		2014		2015		2014		2015		2014
Federal Home Loan Bank of Pittsburgh	$	60,348	$	12,060	$	262,361	$	311,007	$	322,709	$	323,067
Federal Reserve Bank Discount Window		0		0		19,606		25,367		19,606		25,367
Other correspondent banks		0		0		45,000		45,000		45,000		45,000
Total credit facilities	$	60,348	$	12,060	$	326,967	$	381,374	$	387,315	$	393,434

At December 31, 2015, the Corporation’s outstanding credit facilities with the Federal Home Loan Bank of Pittsburgh consisted of overnight borrowings of $23,500,000, short-term borrowings of $25,081,000, and long-term borrowings with a total amount of $11,767,000. At December 31, 2014, the Corporation’s outstanding credit facilities with the Federal Home Loan Bank of Pittsburgh consisted of long-term borrowings with a total amount of $12,060,000. Additional information regarding borrowed funds is included in Note 12 to the consolidated financial statements.

Additionally, the Corporation uses repurchase agreements placed with brokers to borrow funds secured by investment assets and “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, 2015, the carrying value of available-for-sale securities in excess of amounts required to meet pledging or repurchase agreement obligations was $255,527,000.

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, 2015 and 2014, the Corporation’s and Bank’s capital ratios are well in excess of regulatory capital requirements.

In July 2013, the federal regulatory authorities issued a new capital rule based, in part, on revisions developed by the Basel Committee on Banking Supervision to the Basel capital framework (Basel III). The Corporation and C&N Bank are subject to the new rule on January 1, 2015. Generally, the new rule implements higher minimum capital requirements, revises the definition of regulatory capital components and related calculations, adds a new common equity tier 1 capital ratio, implements a new capital conservation buffer, increases the risk weighting for past due loans and provides a transition period for several aspects of the new rule.

31

A summarized comparison of the existing capital requirements with requirements under the new rule is as follows:

	Current General
	Risk-Based
	Capital Rule	New Capital Rule
Minimum regulatory capital ratios:
Common equity tier 1 capital/ risk-weighted assets (RWA)	N/A	4.5%
Tier 1 capital / RWA	4%	6%
Total capital / RWA	8%	8%
Tier 1 capital / Average assets (Leverage ratio)	4%	4%
Capital buffers:
Capital conservation buffer	N/A	2.5% of RWA; composed of common equity tier 1 capital
Prompt correction action levels - Common equity tier 1 capital ratio:
Well capitalized	N/A	³6.5%
Adequately capitalized	N/A	³4.5%
Undercapitalized	N/A	<4.5%
Significantly undercapitalized	N/A	<3%
Prompt correction action levels - Tier 1 capital ratio:
Well capitalized	³6%	³8%
Adequately capitalized	³4%	³6%
Undercapitalized	<4%	<6%
Significantly undercapitalized	<3%	<4%
Prompt correction action levels - Total capital ratio:
Well capitalized	³10%	³10%
Adequately capitalized	³8%	³8%
Undercapitalized	<8%	<8%
Significantly undercapitalized	<6%	<6%
Prompt correction action levels - Leverage ratio:
Well capitalized	³5%	³5%
Adequately capitalized	³4%	³4%
Undercapitalized	<4%	<4%
Significantly undercapitalized	<3%	<3%
Prompt correction action levels - Critically undercapitalized:
Tangible equity to total assets	≤2%	≤2%

32

The new capital rule provides that, in order to avoid limitations on capital distributions, including dividend payments and certain discretionary bonus payments to executive officers, a banking organization must hold a capital conservation buffer composed of common equity tier 1 capital above its minimum risk-based capital requirements. The buffer is measured relative to risk-weighted assets. Phase-in of the capital conservation buffer requirements will begin January 1, 2016. The transition schedule for new ratios, including the capital conservation buffer, is as follows:

	As of January 1:
	2015			2016			2017			2018			2019
Minimum common equity tier 1 capital ratio		4.5	%		4.5	%		4.5	%		4.5	%		4.5	%
Common equity tier 1 capital conservation buffer		N/A			0.625	%		1.25	%		1.875	%		2.5	%
Minimum common equity tier 1 capital ratio plus capital conservation buffer		4.5	%		5.125	%		5.75	%		6.375	%		7.0	%
Phase-in of most deductions from common equity tier 1 capital		40	%		60	%		80	%		100	%		100	%
Minimum tier 1 capital ratio		6.0	%		6.0	%		6.0	%		6.0	%		6.0	%
Minimum tier 1 capital ratio plus capital conservation buffer		N/A			6.625	%		7.25	%		7.875	%		8.5	%
Minimum total capital ratio		8.0	%		8.0	%		8.0	%		8.0	%		8.0	%
Minimum total capital ratio plus capital conservation buffer		N/A			8.625	%		9.25	%		9.875	%		10.5	%

As fully phased in, a banking organization with a buffer greater than 2.5% would not be subject to additional limits on dividend payments or discretionary bonus payments; however, a banking organization with a buffer less than 2.5% would be subject to increasingly stringent limitations as the buffer approaches zero. The new rule also prohibits a banking organization from making dividend payments or discretionary bonus payments if its eligible retained income is negative in that quarter and its capital conservation buffer ratio was less than 2.5% as of the beginning of that quarter. Eligible net income is defined as net income for the four calendar quarters preceding the current calendar quarter, net of any distributions and associated tax effects not already reflected in net income. A summary of payout restrictions based on the capital conservation buffer is as follows:

Capital Conservation Buffer	Maximum Payout
(as a % of risk-weighted assets)	(as a % of eligible retained income)
Greater than 2.5%	No payout limitation applies
≤2.5% and >1.875%	60%
≤1.875% and >1.25%	40%
≤1.25% and >0.625%	20%
≤0.625%	0%

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.

Management expects the Corporation and C&N Bank to maintain capital levels that exceed the regulatory standards for well-capitalized institutions for the next 12 months and for the foreseeable future. Planned capital expenditures are not expected to have a significantly detrimental effect on capital ratios.

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 (losses) on available-for-sale securities, net of deferred income tax, amounted to $2,493,000 at December 31, 2015, $5,281,000 at December 31, 2014 and ($1,004,000) at December 31, 2013. Changes in accumulated other comprehensive income (loss) 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, 2015.

33

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 related to defined benefit plans, net of deferred income tax, was $35,000 at December 31, 2015, $79,000 at December 31, 2014 and $11,000 at December 31, 2013.

COMPREHENSIVE INCOME

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 or overfunded defined benefit plans.

Comprehensive Income totaled $13,639,000 in 2015 as compared to $23,439,000 in 2014 and $6,598,000 in 2013. In 2015, Comprehensive Income included: (1) Net Income of $16,471,000, which was $615,000 lower than in 2014 and $2,123,000 lower than in 2013; (2) Other Comprehensive Loss from unrealized losses on available-for-sale securities, net of deferred income tax, of ($2,788,000) as compared to Other Comprehensive Income of $6,285,000 in 2014 and Other Comprehensive Loss of $12,572,000 in 2013; and (3) Other Comprehensive Loss from defined benefit plans of $44,000 in 2015 as compared to Other Comprehensive Income of $68,000 in 2014 and Other Comprehensive Income of $576,000 in 2013. Fluctuations in interest rates significantly affected fair values of available-for-sale securities in 2013 through 2015, and accordingly have an effect on Other Comprehensive Income (Loss) in each year.

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 maintained through mid-December 2015. On December 16, 2015, the Federal Reserve raised their target for the federal funds rate to 0.25% to 0.50%. This decision was based on data available that suggested economic activity had been expanding at a moderate pace. This included an increase in household spending, business fixed investments increasing, and an improvement in labor market conditions. Also, throughout this period, 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. Beginning in late 2013, the Federal Reserve began reducing the amount of securities purchased under its asset purchase program and then ended the program in October 2014, though still reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and continued to roll over maturing Treasury securities at auction. The Federal Reserve maintained their commitment to this policy in their December 16, 2015 statement and anticipates doing so until normalization of the level of the federal funds rate is well under way.

Despite the current low short-term rate environment, 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.

34

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 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 100-400 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.

Table XIV, which follows this discussion, is based on the results of calculations performed using the simulation model as of December 31, 2015 and October 31, 2014. The table shows that as of the respective dates, the changes in net interest income and changes in market value were within the policy limits in all scenarios.

35

TABLE XIV - THE EFFECT OF HYPOTHETICAL CHANGES IN INTEREST RATES

December 31, 2015 Data

(In Thousands)

Period Ending December 31, 2016

Basis Point	Interest		Interest		Net Interest		NII			NII
Change in Rates	Income		Expense		Income (NII)		% Change			Risk Limit
+400	$	52,181	$	21,985	$	30,196		-20.8	%		25.0	%
+300		49,687		17,282		32,405		-15.0	%		20.0	%
+200		47,136		12,659		34,477		-9.6	%		15.0	%
+100		44,546		8,109		36,437		-4.4	%		10.0	%
0		41,835		3,715		38,120		0.0	%		0.0	%
-100		39,116		3,171		35,945		-5.7	%		10.0	%
-200		37,417		3,168		34,249		-10.2	%		15.0	%
-300		36,838		3,168		33,670		-11.7	%		20.0	%
-400		36,689		3,168		33,521		-12.1	%		25.0	%

Market Value of Portfolio Equity at December 31, 2015

	Present		Present			Present
Basis Point	Value		Value			Value
Change in Rates	Equity		% Change			Risk Limit
+400	$	167,741		-24.4	%		50.0	%
+300		179,772		-18.9	%		45.0	%
+200		193,823		-12.6	%		35.0	%
+100		207,803		-6.3	%		25.0	%
0		221,750		0.0	%		0.0	%
-100		223,517		0.8	%		25.0	%
-200		225,185		1.5	%		35.0	%
-300		250,353		12.9	%		45.0	%
-400		286,210		29.1	%		50.0	%

October 31, 2014 Data

(In Thousands)

Period Ending October 31, 2015

Basis Point	Interest		Interest		Net Interest		NII			NII
Change in Rates	Income		Expense		Income (NII)		% Change			Risk Limit
+400	$	55,351	$	23,123	$	32,228		-20.3	%		25.0	%
+300		52,975		18,223		34,752		-14.1	%		20.0	%
+200		50,546		13,618		36,928		-8.7	%		15.0	%
+100		47,977		9,330		38,647		-4.4	%		10.0	%
0		45,478		5,043		40,435		0.0	%		0.0	%
-100		42,869		4,794		38,075		-5.8	%		10.0	%
-200		41,095		4,729		36,366		-10.1	%		15.0	%
-300		40,123		4,707		35,416		-12.4	%		20.0	%
-400		39,998		4,707		35,291		-12.7	%		25.0	%

Market Value of Portfolio Equity at October 31, 2014

	Present		Present			Present
Basis Point	Value		Value			Value
Change in Rates	Equity		% Change			Risk Limit
+400	$	176,447		-24.4	%		50.0	%
+300		189,184		-18.9	%		45.0	%
+200		203,838		-12.6	%		35.0	%
+100		218,314		-6.4	%		25.0	%
0		233,255		0.0	%		0.0	%
-100		232,818		-0.2	%		25.0	%
-200		232,294		-0.4	%		35.0	%
-300		251,791		7.9	%		45.0	%
-400		288,059		23.5	%		50.0	%

36

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 had no other-than-temporary impairment losses related to bank stocks in 2015 or 2014.

Equity securities held as of December 31, 2015 and 2014 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, 2015.

TABLE XV - EQUITY SECURITIES RISK

(In Thousands)

	Dec. 31,			Dec. 31,
	2015			2014
Cost	$	1,680		$	5,605
Fair Value		2,386			8,654
Hypothetical 10% Decline In Market Value		(239	)		(865	)
Hypothetical 20% Decline In Market Value		(477	)		(1,731	)

37

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share and Per Share Data)

	December 31,			December 31,
	2015			2014
ASSETS
Cash and due from banks:
Noninterest-bearing	$	14,710		$	14,812
Interest-bearing		21,351			21,235
Total cash and due from banks		36,061			36,047
Available-for-sale securities, at fair value		420,290			516,807
Loans held for sale		280			0
Loans receivable		704,880			630,545
Allowance for loan losses		(7,889	)		(7,336	)
Loans, net		696,991			623,209
Bank-owned life insurance		20,764			22,119
Accrued interest receivable		3,768			3,908
Bank premises and equipment, net		15,406			16,256
Foreclosed assets held for sale		1,260			1,189
Deferred tax asset, net		3,115			1,668
Intangible asset - Core deposit intangibles		30			52
Intangible asset - Goodwill		11,942			11,942
Other assets		13,510			8,766
TOTAL ASSETS	$	1,223,417		$	1,241,963
LIABILITIES
Deposits:
Noninterest-bearing	$	211,041		$	212,439
Interest-bearing		724,574			755,550
Total deposits		935,615			967,989
Short-term borrowings		53,496			5,537
Long-term borrowings		38,767			73,060
Accrued interest and other liabilities		8,052			7,015
TOTAL LIABILITIES		1,035,930			1,053,601
STOCKHOLDERS' EQUITY
Preferred stock, $1,000 par value; authorized 30,000 shares; $1,000 liquidation preference per share; no shares issued at December 31, 2015 and December 31, 2014		0			0
Common stock, par value $1.00 per share; authorized 20,000,000 shares in 2015 and 2014; issued 12,655,171 at December 31, 2015 and December 31, 2014; outstanding 12,180,623 at December 31, 2015 and 12,279,980 December 31, 2014		12,655			12,655
Paid-in capital		71,654			71,541
Retained earnings		109,454			105,550
Treasury stock, at cost; 474,548 shares at December 31, 2015 and 375,191 shares at
December 31, 2014		(8,804	)		(6,744	)
Sub-total		184,959			183,002
Accumulated other comprehensive income:
Unrealized gain on available-for-sale securities		2,493			5,281
Defined benefit plans gain		35			79
Total accumulated other comprehensive income		2,528			5,360
TOTAL STOCKHOLDERS' EQUITY		187,487			188,362
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	$	1,223,417		$	1,241,963

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

38

Consolidated Statements of Income	Years Ended December 31,
(In Thousands Except Per Share Data)
	2015			2014			2013
INTEREST INCOME
Interest and fees on loans	$	31,311		$	32,127		$	35,484
Interest on balances with depository institutions		93			125			105
Interest on loans to political subdivisions		1,668			1,403			1,381
Interest on mortgages held for sale		16			16			54
Income from available-for-sale securities:
Taxable		7,303			7,721			6,810
Tax-exempt		3,844			4,310			4,785
Dividends		284			307			295
Total interest and dividend income		44,519			46,009			48,914
INTEREST EXPENSE
Interest on deposits		1,924			2,163			2,703
Interest on short-term borrowings		32			9			9
Interest on long-term borrowings		2,646			2,950			3,053
Total interest expense		4,602			5,122			5,765
Net interest income		39,917			40,887			43,149
Provision for loan losses		845			476			2,047
Net interest income after provision for loan losses		39,072			40,411			41,102
OTHER INCOME
Service charges on deposit accounts		4,864			5,025			5,246
Service charges and fees		494			538			597
Trust and financial management revenue		4,626			4,490			4,087
Brokerage revenue		839			901			784
Insurance commissions, fees and premiums		109			118			170
Interchange revenue from debit card transactions		1,935			1,959			1,941
Net gains from sale of loans		735			768			1,969
(Decrease) increase in fair value of servicing rights		(162	)		(27	)		67
Increase in cash surrender value of life insurance		386			376			399
Net (loss) gain from premises and equipment		(1	)		8			(16	)
Other operating income		1,579			1,264			1,207
Sub-total		15,404			15,420			16,451
Total other-than-temporary impairment losses on available-for-sale securities		0			0			(25	)
Portion of (gain) recognized in other comprehensive loss (before taxes)		0			0			0
Net impairment losses recognized in earnings		0			0			(25	)
Realized gains on available-for-sale securities, net		2,861			1,104			1,743
Total other income		18,265			16,524			18,169
OTHER EXPENSES
Salaries and wages		14,682			15,121			14,206
Pensions and other employee benefits		4,420			4,769			4,150
Occupancy expense, net		2,574			2,628			2,473
Furniture and equipment expense		1,860			1,859			1,948
FDIC Assessments		603			600			604
Pennsylvania shares tax		1,174			1,350			1,402
Professional fees		538			699			1,534
Automated teller machine and interchange expense		988			924			1,020
Software subscriptions		876			784			836
Loss on prepayment of debt		2,573			0			1,023
Other operating expense		5,241			5,423			5,298
Total other expenses		35,529			34,157			34,494
Income before income tax provision		21,808			22,778			24,777
Income tax provision		5,337			5,692			6,183
NET INCOME	$	16,471		$	17,086		$	18,594
NET INCOME PER SHARE - BASIC	$	1.35		$	1.38		$	1.51
NET INCOME PER SHARE - DILUTED	$	1.35		$	1.38		$	1.50

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

39

Consolidated Statements of Comprehensive Income

(In Thousands)

	Years Ended December 31,
	2015			2014			2013
Net income	$	16,471		$	17,086		$	18,594
Unrealized (losses) gains on available-for-sale securities:
Unrealized holding (losses) gains on available-for-sale securities		(1,429	)		10,774			(17,623	)
Reclassification adjustment for gains realized in income		(2,861	)		(1,104	)		(1,718	)
Other comprehensive (loss) gain on available-for-sale securities		(4,290	)		9,670			(19,341	)
Unfunded pension and postretirement obligations:
Changes from plan amendments and actuarial gains and losses included in accumulated other comprehensive (loss) gain		(135	)		(79	)		885
Amortization of net transition obligation, prior service cost, net actuarial loss and loss on settlement included in net periodic benefit cost		67			184			2
Other comprehensive (loss) gain on unfunded retirement obligations		(68	)		105			887
Other comprehensive (loss) income before income tax		(4,358	)		9,775			(18,454	)
Income tax related to other comprehensive loss (income)		1,526			(3,422	)		6,458
Net other comprehensive (loss) income		(2,832	)		6,353			(11,996	)
Comprehensive income	$	13,639		$	23,439		$	6,598

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

40

Consolidated Statements of Changes in Stockholders' Equity

(In Thousands Except Share and Per Share Data)

																Accumulated
																Other
	Common			Treasury			Common			Paid-in			Retained			Comprehensive			Treasury
	Shares			Shares			Stock			Capital			Earnings			Income			Stock			Total
Balance, January 1, 2013		12,525,411			251,376		$	12,525		$	68,622		$	94,839		$	11,003		$	(4,203	)	$	182,786
Net income														18,594									18,594
Other comprehensive loss, net																	(11,996	)					(11,996	)
Cash dividends declared on common stock, $1.00 per share														(12,343	)								(12,343	)
Shares issued for dividend reinvestment Plan		71,129						71			1,356												1,427
Shares issued from treasury related to exercise of stock options					(10,656	)					5									179			184
Restricted stock granted					(37,886	)					(633	)								633			0
Forfeiture of restricted stock					3,643						61									(61	)		0
Stock-based compensation expense											696												696
Tax effect of stock option exercises											(2	)											(2	)
Tax benefit from employee benefit plan														126									126
Balance, December 31, 2013		12,596,540			206,477			12,596			70,105			101,216			(993	)		(3,452	)		179,472
Net income														17,086									17,086
Other comprehensive income, net																	6,353						6,353
Cash dividends declared on common stock, $1.04 per share														(12,889	)								(12,889	)
Shares issued for dividend reinvestment Plan		59,498			(18,473	)		60			1,069									368			1,497
Treasury stock purchased					208,300															(4,002	)		(4,002	)
Shares issued from treasury related to exercise of stock options		(867	)		(11,860	)		(1	)		(64	)								188			123
Restricted stock granted					(16,711	)					(279	)								279			0
Forfeiture of restricted stock					7,458						125									(125	)		0
Stock-based compensation expense											565												565
Tax benefit from dividends on restricted stock											(1	)											(1	)
Tax effect of stock option exercises											21												21
Tax benefit from employee benefit plan														137									137
Balance, December 31, 2014		12,655,171			375,191			12,655			71,541			105,550			5,360			(6,744	)		188,362
Net income														16,471									16,471
Other comprehensive loss, net																	(2,832	)					(2,832	)
Cash dividends declared on common stock, $1.04 per share														(12,710	)								(12,710	)
Shares issued for dividend reinvestment Plan					(73,810	)					86									1,379			1,465
Treasury stock purchased					226,900															(4,415	)		(4,415	)
Shares issued from treasury and redeemed related to exercise of stock options					(22,435	)					(27	)								408			381
Restricted stock granted					(34,800	)					(627	)								627			0
Forfeiture of restricted stock					3,502						59									(59	)		0
Stock-based compensation expense											606												606
Tax effect of stock option exercises											(6	)											(6	)
Tax benefit from dividends on restricted stock											22												22
Tax benefit from employee benefit plan														143									143
Balance, December 31, 2015		12,655,171			474,548		$	12,655		$	71,654		$	109,454		$	2,528		$	(8,804	)	$	187,487

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

41

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

	Years Ended December 31,
	2015			2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	16,471		$	17,086		$	18,594
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		845			476			2,047
Realized gains on available-for-sale securities, net		(2,861	)		(1,104	)		(1,718	)
Loss on prepayment of debt		2,573			0			1,023
Realized (gain) loss on foreclosed assets		(84	)		(136	)		71
Loss (gain)  on disposition of premises and equipment		1			(8	)		16
Depreciation expense		1,888			1,940			2,020
Accretion and amortization on securities, net		1,562			1,375			1,836
Accretion and amortization on loans and deposits, net		(21	)		(27	)		(32	)
Decrease (increase) in fair value of servicing rights		162			27			(67	)
Increase in cash surrender value of life insurance		(386	)		(376	)		(399	)
Gain on life insurance benefits		(212	)		0			0
Stock-based compensation		606			565			696
Amortization of core deposit intangibles		22			35			51
Deferred income taxes		79			1,254			1,839
Gains on sales of loans, net		(735	)		(768	)		(1,969	)
Origination of loans for sale		(21,823	)		(21,680	)		(58,427	)
Proceeds from sales of loans		22,101			22,317			62,436
(Increase) decrease in accrued interest receivable and other assets		(1,697	)		1,395			3,234
Increase (decrease) in accrued interest payable and other liabilities		1,195			(90	)		(679	)
Net Cash Provided by Operating Activities		19,686			22,281			30,572
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of certificates of deposit		1,780			2,560			480
Purchase of certificates of deposit		(100	)		(960	)		(1,688	)
Proceeds from sales of available-for-sale securities		44,504			56,269			25,500
Proceeds from calls and maturities of available-for-sale securities		89,159			78,101			97,123
Purchase of available-for-sale securities		(40,363	)		(158,894	)		(152,163	)
Redemption of Federal Home Loan Bank of Pittsburgh stock		5,029			2,804			2,680
Purchase of Federal Home Loan Bank of Pittsburgh stock		(8,102	)		(602	)		(1,624	)
Net (increase) decrease in loans		(77,129	)		10,317			39,059
Proceeds from bank-owned life insurance		1,953			0			0
Purchase of premises and equipment		(1,039	)		(801	)		(801	)
Proceeds from disposition of premises and equipment		0			43			42
Purchase of investment in limited liability company		0			0			(147	)
Return of principal on limited liability entity investments		181			173			164
Proceeds from sale of foreclosed assets		2,536			1,504			255
Net Cash Provided by (Used in) Investing Activities		18,409			(9,486	)		8,880
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase in deposits		(32,374	)		13,473			(51,590	)
Net increase (decrease) in short-term borrowings		47,959			(17,848	)		17,818
Repayments of long-term borrowings		(36,866	)		(278	)		(11,497	)
Purchase of treasury stock		(4,415	)		(4,002	)		0
Sale of treasury stock		381			123			184
Tax benefit from compensation plans		159			157			124
Common dividends paid		(11,245	)		(11,392	)		(10,916	)
Net Cash Used in Financing Activities		(36,401	)		(19,767	)		(55,877	)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		1,694			(6,972	)		(16,425	)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		31,619			38,591			55,016
CASH AND CASH EQUIVALENTS, END OF YEAR	$	33,313		$	31,619		$	38,591
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Assets acquired through foreclosure of real estate loans	$	2,523		$	1,665		$	339
Accrued purchase of available-for-sale securities	$	0		$	226		$	0
Interest paid	$	4,636		$	5,138		$	5,782
Income taxes paid	$	4,827		$	4,432		$	4,213

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

42

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. 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 (“U.S. GAAP”). 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) assessment of impaired securities to determine whether or not the securities are other-than-temporarily impaired, (4) valuation of deferred tax assets and (5) 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.

43

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, 2015 and 2014, 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.

44

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 thirty-six months), 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 57% at December 31, 2015) are 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 reductions in required payments, an extension of a loan’s stated maturity date or a temporary reduction in interest rate. Non-accrual troubled debt restructurings may be 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.

45

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 2015, 2014, and 2013 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 $1,296,000 at December 31, 2015 and $1,281,000 at December 31, 2014.

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. Tax benefits from investments in limited partnerships that have qualified for federal low-income tax credits are recognized as a reduction in the provision for income tax over the term of the investment using the effective yield method. 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 January 2014, the FASB issued ASU 2014-01, Accounting for Investments in Qualified Affordable Housing Projects. This Update provides guidance on accounting for investments in flow-through limited liability entities that qualify for the federal low-income housing tax credit. Prior to ASU 2014-01, under U.S. GAAP, a reporting entity that invests in a qualified affordable housing project could elect to account for that investment using the effective yield method if certain conditions are met, or alternatively, the investment would be accounted for under either the equity method or the cost method. Generally, investors in qualified affordable housing project investments expect to receive all of their return through the receipt of tax credits and tax deductions from operating losses, and use of the effective yield method results in recognition of the return as a reduction of income tax expense over the period of the investment. The amendments in this Update modify the conditions that a reporting entity must meet to be eligible to use a method other than the equity or cost methods to account for investments in qualified affordable housing projects. Additionally, the amendments introduce new recurring disclosure requirements about investments in qualified affordable housing projects. The amendments in this Update became effective for the Corporation for annual and interim periods beginning in the first quarter 2015, and are to be applied retrospectively. Information concerning the Corporation’s investments in qualified affordable housing projects is provided in Note 14 to these consolidated financial statements.

46

In January 2014, the FASB issued ASU 2014-04, Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure. The objective of the amendments in this Update is to reduce diversity among reporting entities by clarifying when an in substance foreclosure occurs. The amendments in this Update clarify that an in substance foreclosure occurs, and a creditor is considered to have received physical possession of residential real property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, the amendments require interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to the requirements of the applicable jurisdiction. An entity can elect to adopt the amendments in this Update using either a modified retrospective transition method or a prospective transition method. Under the modified retrospective transition method, an entity would record a cumulative-effect adjustment to residential consumer mortgage loans and foreclosed residential real estate properties existing as of the beginning of the annual period for which the amendments are effective. For prospective transition, an entity would apply the amendments to all instances of an entity receiving physical possession of residential real estate property collateralizing consumer mortgage loans that occur after the date of adoption. Early adoption is permitted. The amendments in this Update became effective for the Corporation for annual and interim periods beginning in the first quarter 2015. The Corporation has applied the amendments to its accounting and reporting practices prospectively in the first quarter 2015. Disclosures required by this Update are provided in Note 8 to these consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which provides a principles-based framework for revenue recognition that supersedes virtually all previously issued revenue recognition guidance under U.S. GAAP. Additionally, the ASU requires improved disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. The core principle of the five-step revenue recognition framework is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015 the FASB issued ASU 2015-14, which deferred the effective date of the revenue recognition standard by a year, making it applicable for the Corporation in the first quarter 2018 and for the annual period ending December 31, 2018. The amendments should be applied either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the amendments recognized at the date of initial application. The Corporation is in the process of evaluating the potential impact of adopting the amendments, including determining which transition method to apply.

In June 2014, the FASB issued ASU 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. In addition to various other amendments that will affect accounting and disclosures for transactions in which the Corporation has not engaged to date, this Update requires expanded disclosures for repurchase agreements that are accounted for as secured borrowings, including: (1) a disaggregation of the gross obligation by the class of collateral pledged, (2) the remaining contractual tenor of the agreements and (3) a discussion of the potential risks associated with the agreements and the related collateral pledged, including obligations arising from a decline in the fair value of the collateral pledged and how those risks are managed. The expanded disclosure requirements associated with repurchase agreements are effective for the Corporation for annual and interim periods beginning in the second quarter 2015. Information concerning the Corporation’s repurchase agreements is provided in Note 12 to these consolidated financial statements.

In August 2014, the FASB issued ASU 2014-14, Receivables – Troubled Debt Restructuring by Creditors, which requires that a mortgage loan be derecognized and that a separate other receivable be recognized upon foreclosure if the following conditions are met: (1) the loan has a government guarantee that is not separable from the loan before foreclosure, (2) at the time of foreclosure, the creditor has the intent to convey the real estate property to the guarantor and make a claim on the guarantee, and the creditor has the ability to recover under the claim and (3) at the time of foreclosure, any amount of the claim that is determined on the basis of the fair value of the real estate is fixed. The amendments in this Update became effective for the Corporation for annual and interim periods beginning in the first quarter 2015, and the impact of the amendment was not significant to the Corporation.

47

In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Liabilities. This makes significant changes in U.S. GAAP related to certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The changes provided for in this Update that are applicable to the Corporation are as follows: (1) require equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; however, an entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer; (2) for equity investments without readily determinable fair values, require a qualitative assessment to identify impairment, and if a qualitative assessment indicates that impairment exists, requiring an entity to measure the investment at fair value; (3) eliminate the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; (4) require public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (5) require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments (at December 31, 2015 and 2014, the Corporation has no liabilities for which the fair value measurement option has been elected); (6) require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; and (7) clarify that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. The amendments in this Update will become effective for the Corporation for annual and interim periods beginning in the first quarter 2018. With limited exceptions, early adoption of the amendments in this Update is not permitted. Amendments are to be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values should be applied prospectively.

3. COMPREHENSIVE INCOME

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 (loss) income. The components of other comprehensive (loss) income, and the related tax effects, are as follows:

(In Thousands)	Before-Tax			Income Tax			Net-of-Tax
	Amount			Effect			Amount
2015
Unrealized losses on available-for-sale securities:
Unrealized holding losses on available-for-sale securities	$	(1,429	)	$	500		$	(929	)
Reclassification adjustment for (gains) realized in income		(2,861	)		1,002			(1,859	)
Other comprehensive loss on available-for-sale securities		(4,290	)		1,502			(2,788	)
Unfunded pension and postretirement obligations:
Changes from plan amendments and actuarial gains and losses included in other comprehensive income		(135	)		47			(88	)
Amortization of net transition obligation, prior service cost, net actuarial loss and loss on settlement included in net periodic benefit cost		67			(23	)		44
Other comprehensive loss on unfunded retirement obligations		(68	)		24			(44	)
Total other comprehensive loss	$	(4,358	)	$	1,526		$	(2,832	)

(In Thousands)	Before-Tax			Income Tax			Net-of-Tax
	Amount			Effect			Amount
2014
Unrealized gains on available-for-sale securities:
Unrealized holding gains on available-for-sale securities	$	10,774		$	(3,771	)	$	7,003
Reclassification adjustment for (gains) realized in income		(1,104	)		386			(718	)
Other comprehensive income on available-for-sale securities		9,670			(3,385	)		6,285
Unfunded pension and postretirement obligations:
Changes from plan amendments and actuarial gains and losses included in other comprehensive income		(79	)		28			(51	)
Amortization of net transition obligation, prior service cost, net actuarial loss and loss on settlement included in net periodic benefit cost		184			(65	)		119
Other comprehensive income on unfunded retirement obligations		105			(37	)		68
Total other comprehensive income	$	9,775		$	(3,422	)	$	6,353

48

(In Thousands)	Before-Tax			Income Tax			Net-of-Tax
	Amount			Effect			Amount
2013
Unrealized (losses) on available-for-sale securities:
Unrealized holding losses on available-for-sale securities	$	(17,623	)	$	6,168		$	(11,455	)
Reclassification adjustment for (gains) realized in income		(1,718	)		601			(1,117	)
Other comprehensive loss on available-for-sale securities		(19,341	)		6,769			(12,572	)
Unfunded pension and postretirement obligations:
Changes from plan amendments and actuarial gains and losses included in other comprehensive income		885			(310	)		575
Amortization of net transition obligation, prior service cost and net actuarial loss included in net periodic benefit cost		2			(1	)		1
Other comprehensive income on unfunded retirement obligations		887			(311	)		576
Total other comprehensive loss	$	(18,454	)	$	6,458		$	(11,996	)

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

(In Thousands)	Unrealized			Unfunded			Accumulated
	Holding Gains			Pension and			Other
	(Losses)			Postretirement			Comprehensive
	on Securities			Obligations			Income
2015
Balance, beginning of period	$	5,281		$	79		$	5,360
Other comprehensive loss before reclassifications		(929	)		(88	)		(1,017	)
Amounts reclassified from accumulated other comprehensive income		(1,859	)		44			(1,815	)
Other comprehensive loss		(2,788	)		(44	)		(2,832	)
Balance, end of period	$	2,493		$	35		$	2,528
2014
Balance, beginning of period	$	(1,004	)	$	11		$	(993	)
Other comprehensive income before reclassifications		7,003			(51	)		6,952
Amounts reclassified from accumulated other comprehensive income		(718	)		119			(599	)
Other comprehensive income		6,285			68			6,353
Balance, end of period	$	5,281		$	79		$	5,360
2013
Balance, beginning of period	$	11,568		$	(565	)	$	11,003
Other comprehensive (loss) income before reclassifications		(11,455	)		575			(10,880	)
Amounts reclassified from accumulated other comprehensive loss		(1,117	)		1			(1,116	)
Other comprehensive (loss) income		(12,572	)		576			(11,996	)
Balance, end of period	$	(1,004	)	$	11		$	(993	)

49

Items reclassified out of each component of other comprehensive income are as follows:

For the Year Ended December 31, 2015
(In Thousands)
	Reclassified from
Details about Accumulated Other	Accumulated Other			Affected Line Item in the Consolidated
Comprehensive Income Components	Comprehensive Income			Statements of Income
Unrealized gains and losses on available-for-sale securities	$	(2,861	)	Realized gains on available-for-sale securities, net
		1,002		Income tax provision
		(1,859	)	Net of tax
Amortization of defined benefit pension and postretirement items:
Prior service cost		(31	)	Pensions and other employee benefits
Actuarial loss		11		Pensions and other employee benefits
Loss on settlement		87		Pensions and other employee benefits
		67		Total before tax
		(23	)	Income tax provision
		44		Net of tax
Total reclassifications for the period	$	(1,815	)

For the Year Ended December 31, 2014
(In Thousands)
	Reclassified from
Details about Accumulated Other	Accumulated Other			Affected Line Item in the Consolidated
Comprehensive Income Components	Comprehensive Income			Statements of Income
Unrealized gains and losses on available-for-sale securities	$	(1,104	)	Realized gains on available-for-sale securities, net
		386		Income tax provision
		(718	)	Net of tax
Amortization of defined benefit pension and postretirement items:
Prior service cost		(31	)	Pensions and other employee benefits
Actuarial loss		19		Pensions and other employee benefits
Loss on settlement		196		Pensions and other employee benefits
		184		Total before tax
		(65	)	Income tax provision
		119		Net of tax
Total reclassifications for the period	$	(599	)

For the Year Ended December 31, 2013
(In Thousands)
	Reclassified from
Details about Accumulated Other	Accumulated Other			Affected Line Item in the Consolidated
Comprehensive Income Components	Comprehensive Income			Statements of Income
Unrealized gains and losses on available-for-sale Securities	$	25		Total other-than-temporary impairment losses on available-for-sale securities
		(1,743	)	Realized gains on available-for-sale securities, net
		(1,718	)	Total before tax
		601		Income tax provision
		(1,117	)	Net of tax
Amortization of defined benefit pension and postretirement items:
Prior service cost		(31	)	Pensions and other employee benefits
Actuarial loss		33		Pensions and other employee benefits
		2		Total before tax
		(1	)	Income tax provision
		1		Net of tax
Total reclassifications for the period	$	(1,116	)

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
2015
Earnings per share – basic	$	16,471,000		12,211,941		$	1.35
Dilutive effect of potential common stock arising from stock options:
Exercise of outstanding stock options				210,402
Hypothetical share repurchase at $20.04				(188,570	)
Earnings per share – diluted	$	16,471,000		12,233,773		$	1.35
2014
Earnings per share – basic	$	17,086,000		12,390,067		$	1.38
Dilutive effect of potential common stock arising from stock options:
Exercise of outstanding stock options				224,015
Hypothetical share repurchase at $19.41				(202,032	)
Earnings per share – diluted	$	17,086,000		12,412,050		$	1.38
2013
Earnings per share – basic	$	18,594,000		12,352,383		$	1.51
Dilutive effect of potential common stock arising from stock options:
Exercise of outstanding stock options				250,236
Hypothetical share repurchase at $19.86				(219,829	)
Earnings per share – diluted	$	18,594,000		12,382,790		$	1.50

Stock options that were anti-dilutive were excluded from net income per share calculations. Weighted-average common shares available from anti-dilutive instruments totaled 61,590 shares in 2015, 151,310 shares in 2014 and 88,521 shares in 2013.

5. CASH AND DUE FROM BANKS

Cash and due from banks at December 31, 2015 and 2014 include the following:

(In thousands)	Dec. 31,		Dec. 31,
	2015		2014
Cash and cash equivalents	$	33,313	$	31,619
Certificates of deposit		2,748		4,428
Total cash and due from banks	$	36,061	$	36,047

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.

51

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 $15,327,000 at December 31, 2015 and $16,853,000 at December 31, 2014.

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, 2015 and 2014, assets measured at fair value and the valuation methods used are as follows:

			December 31, 2015
	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	$	10,483	$	0		$	10,483
Obligations of states and political subdivisions:
Tax-exempt		0		107,757		0			107,757
Taxable		0		34,597		0			34,597
Mortgage-backed securities		0		73,343		0			73,343
Collateralized mortgage obligations, Issued by U.S. Government agencies		0		191,715		0			191,715
Collateralized debt obligations		0		9		0			9
Total debt securities		0		417,904		0			417,904
Marketable equity securities		2,386		0		0			2,386
Total available-for-sale securities		2,386		417,904		0			420,290
Servicing rights		0		0		1,296			1,296
Total recurring fair value measurements	$	2,386	$	417,904	$	1,296		$	421,586
Nonrecurring fair value measurements
Impaired loans with a valuation allowance	$	0	$	0	$	1,933		$	1,933
Valuation allowance		0		0		(820	)		(820	)
Impaired loans, net		0		0		1,113			1,113
Foreclosed assets held for sale		0		0		1,260			1,260
Total nonrecurring fair value measurements	$	0	$	0	$	2,373		$	2,373

52

			December 31, 2014
	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	$	26,676	$	0		$	26,676
Obligations of states and political subdivisions:
Tax-exempt		0		124,839		0			124,839
Taxable		0		33,878		0			33,878
Mortgage-backed securities		0		83,903		0			83,903
Collateralized mortgage obligations, Issued by U.S. Government agencies		0		238,823		0			238,823
Collateralized debt obligations		0		34		0			34
Total debt securities		0		508,153		0			508,153
Marketable equity securities		8,654		0		0			8,654
Total available-for-sale securities		8,654		508,153		0			516,807
Servicing rights		0		0		1,281			1,281
Total recurring fair value measurements	$	8,654	$	508,153	$	1,281		$	518,088
Nonrecurring fair value measurements
Impaired loans with a valuation allowance	$	0	$	0	$	3,241		$	3,241
Valuation allowance		0		0		(769	)		(769	)
Impaired loans, net		0		0		2,472			2,472
Foreclosed assets held for sale		0		0		1,189			1,189
Total nonrecurring fair value measurements	$	0	$	0	$	3,661		$	3,661

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, 2015 and 2014 for servicing rights assets measured using unobservable inputs (Level 3 methodologies) on a recurring basis:

53

	Fair Value at
	12/31/15		Valuation	Unobservable	Method or Value As of
Asset	(In Thousands)		Technique	Input(s)	12/31/15
Servicing rights	$	1,296	Discounted cash flow	Discount rate		10.00	%	Rate used through modeling period
				Loan prepayment speeds		146.00	%	Weighted-average PSA
				Servicing fees		0.25	%	of loan balances
						4.00	%	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 at
	12/31/14		Valuation	Unobservable	Method or Value As of
Asset	(In Thousands)		Technique	Input(s)	12/31/14
Servicing rights	$	1,281	Discounted cash flow	Discount rate		10.00	%	Rate used through modeling period
				Loan prepayment speeds		156.00	%	Weighted-average PSA
				Servicing fees		0.25	%	of loan balances
						4.00	%	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

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:

	Years Ended December 31,
	2015			2014
(In Thousands)	Servicing			Servicing
	Rights			Rights
Balance, beginning of period	$	1,281		$	1,123
Issuances of servicing rights		177			185
Unrealized losses included in earnings		(162	)		(27	)
Balance, end of period	$	1,296		$	1,281

54

	Year Ended December 31, 2013
	Pooled Trust			Pooled Trust
	Preferred			Preferred
	Securities -			Securities -
(In Thousands)	Senior			Mezzanine			Servicing
	Tranches			Tranches			Rights		Total
Balance, beginning of period	$	1,613		$	0		$	605	$	2,218
Issuances of servicing rights		0			0			451		451
Accretion and amortization, net		(2	)		0			0		(2	)
Proceeds from sales and calls		(1,636	)		(571	)		0		(2,207	)
Realized gains, net		23			571			0		594
Unrealized gains included in earnings		0			0			67		67
Unrealized gains included in other comprehensive income		2			0			0		2
Balance, end of period	$	0		$	0		$	1,123	$	1,123

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. 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.

At December 31, 2015 and 2014, quantitative information regarding significant techniques and inputs used for nonrecurring fair value measurements using unobservable inputs (Level 3 methodologies) are as follows:

(In Thousands, Except									Value at
Percentages)			Valuation						12/31/15
	Balance at		Allowance at		Fair Value at		Valuation	Unobservable	(Weighted
Asset	12/31/15		12/31/15		12/31/15		Technique	Inputs	Average)
Impaired loans:
Residential mortgage loans - first liens	$	42	$	1	$	41	Sales comparison	Discount to appraised value		31	%
Commercial:
Commercial loans secured by real estate		317		97		220	Sales comparison	Discount to appraised value		46	%
Commercial and industrial		75		75		0	Sales comparison	Discount to appraised value		31	%
Loans secured by farmland		512		52		460	Sales comparison	Discount to appraised value		49	%
Multi-family (5 or more) residential		987		595		392	Sales comparison	Discount to appraised value		41	%
Total impaired loans	$	1,933	$	820	$	1,113
Foreclosed assets held for sale - real estate:
Residential (1-4 family)	$	556	$	0	$	556	Sales comparison	Discount to appraised value		32	%
Land		704		0		704	Sales comparison	Discount to appraised value		29	%
Total foreclosed assets held for sale	$	1,260	$	0	$	1,260

55

(In Thousands, Except									Value at
Percentages)			Valuation						12/31/14
	Balance at		Allowance at		Fair Value at		Valuation	Unobservable	(Weighted
Asset	12/31/14		12/31/14		12/31/14		Technique	Inputs	Average)
Impaired loans:
Residential mortgage loans - first liens	$	715	$	358	$	357	Sales comparison	Discount to appraised value		36	%
Commercial:
Commercial loans secured by real estate		16		16		0	Sales comparison	Discount to appraised value		42	%
Commercial and industrial		150		82		68	Sales comparison	Discount to appraised value		21	%
Commercial construction and land		1,815		211		1,604	Sales comparison	Discount to appraised value		30	%
Loans secured by farmland		545		102		443	Sales comparison	Discount to appraised value		40	%
Total impaired loans	$	3,241	$	769	$	2,472
Foreclosed assets held for sale - real estate:
Residential (1-4 family)	$	306	$	0	$	306	Sales comparison	Discount to appraised value		42	%
Commercial property		159		0		159	Sales comparison	Discount to appraised value		23	%
Land		724		0		724	Sales comparison	Discount to appraised value		29	%
Total foreclosed assets held for sale	$	1,189	$	0	$	1,189

No other-than-temporary impairment losses on securities valued using Level 3 methodologies were recorded in 2015, 2014 or 2013.

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 Original or 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-rate 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 at December 31, 2015 and 2014. 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.

56

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, 2015				December 31, 2014
	Method(s)	Carrying		Fair		Carrying		Fair
	Used	Amount		Value		Amount		Value
Financial assets:
Cash and cash equivalents	Level 1	$	33,313	$	33,313	$	31,619	$	31,619
Certificates of deposit	Level 2		2,748		2,752		4,428		4,443
Available-for-sale securities	See Above		420,290		420,290		516,807		516,807
Restricted equity securities (included in Other Assets)	Level 2		4,657		4,657		1,584		1,584
Loans held for sale	Level 2		280		280		0		0
Loans, net	Level 3		696,991		685,552		623,209		629,267
Accrued interest receivable	Level 2		3,768		3,768		3,908		3,908
Servicing rights	Level 3		1,296		1,296		1,281		1,281
Financial liabilities:
Deposits with no stated maturity	Level 2		713,931		713,931		729,052		729,052
Time deposits	Level 2		221,684		221,891		238,937		239,712
Short-term borrowings	Level 2		53,496		53,398		5,537		5,473
Long-term borrowings	Level 2		38,767		40,166		73,060		78,866
Accrued interest payable	Level 2		70		70		104		104

57

7. SECURITIES

Amortized cost and fair value of available-for-sale securities at December 31, 2015 and 2014 are summarized as follows:

			December 31, 2015
			Gross		Gross
			Unrealized		Unrealized
	Amortized		Holding		Holding			Fair
(In Thousands)	Cost		Gains		Losses			Value
Obligations of U.S. Government agencies	$	10,663	$	12	$	(192	)	$	10,483
Obligations of states and political subdivisions:
Tax-exempt		103,414		4,365		(22	)		107,757
Taxable		34,317		381		(101	)		34,597
Mortgage-backed securities		73,227		486		(370	)		73,343
Collateralized mortgage obligations, Issued by U.S. Government agencies		193,145		623		(2,053	)		191,715
Collateralized debt obligations:		9		0		0			9
Total debt securities		414,775		5,867		(2,738	)		417,904
Marketable equity securities		1,680		706		0			2,386
Total	$	416,455	$	6,573	$	(2,738	)	$	420,290

			December 31, 2014
			Gross		Gross
			Unrealized		Unrealized
	Amortized		Holding		Holding			Fair
(In Thousands)	Cost		Gains		Losses			Value
Obligations of U.S. Government agencies	$	27,221	$	38	$	(583	)	$	26,676
Obligations of states and political subdivisions:
Tax-exempt		120,086		5,134		(381	)		124,839
Taxable		33,637		415		(174	)		33,878
Mortgage-backed securities		82,479		1,493		(69	)		83,903
Collateralized mortgage obligations, Issued by U.S. Government agencies		239,620		1,239		(2,036	)		238,823
Collateralized debt obligations:		34		0		0			34
Total debt securities		503,077		8,319		(3,243	)		508,153
Marketable equity securities		5,605		3,058		(9	)		8,654
Total	$	508,682	$	11,377	$	(3,252	)	$	516,807

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, 2015 and 2014:

December 31, 2015	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	$	0	$	0		$	7,850	$	(192	)	$	7,850	$	(192	)
Obligations of states and political subdivisions:
Tax-exempt		5,200		(19	)		216		(3	)		5,416		(22	)
Taxable		10,605		(60	)		2,910		(41	)		13,515		(101	)
Mortgage-backed securities		38,764		(295	)		3,503		(75	)		42,267		(370	)
Collateralized mortgage obligations, Issued by U.S. Government agencies		88,355		(648	)		49,273		(1,405	)		137,628		(2,053	)
Total temporarily impaired available-for-sale securities	$	142,924	$	(1,022	)	$	63,752	$	(1,716	)	$	206,676	$	(2,738	)

58

December 31, 2014	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	$	0	$	0		$	24,020	$	(583	)	$	24,020	$	(583	)
Obligations of states and political subdivisions:
Tax-exempt		11,898		(289	)		6,991		(92	)		18,889		(381	)
Taxable		4,240		(22	)		9,159		(152	)		13,399		(174	)
Mortgage-backed securities		0		0			4,160		(69	)		4,160		(69	)
Collateralized mortgage obligations, Issued by U.S. Government agencies		58,812		(396	)		60,897		(1,640	)		119,709		(2,036	)
Total debt securities		74,950		(707	)		105,227		(2,536	)		180,177		(3,243	)
Marketable equity securities		134		(9	)		0		0			134		(9	)
Total temporarily impaired available-for-sale securities	$	75,084	$	(716	)	$	105,227	$	(2,536	)	$	180,311	$	(3,252	)

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)
	2015			2014			2013
Gross realized gains from sales	$	2,972		$	1,328		$	1,918
Gross realized losses from sales		(111	)		(224	)		(175	)
Losses from OTTI Impairment		0			0			(25	)
Net realized gains	$	2,861		$	1,104		$	1,718
Income tax provision related to net realized gains	$	1,002		$	386		$	601

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, 2015. 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	$	9,087	$	9,154
Due from one year through five years		60,639		61,664
Due from five years through ten years		45,173		46,227
Due after ten years		33,504		35,801
Subtotal		148,403		152,846
Mortgage-backed securities		73,227		73,343
Collateralized mortgage obligations, Issued by U.S. Government agencies		193,145		191,715
Total	$	414,775	$	417,904

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 $228,616,000 at December 31, 2015 and $369,945,000 at December 31, 2014 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.

59

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

(In Thousands)
	2015		2014		2013
Marketable equity securities (bank stocks)	$	0	$	0	$	(25	)

A summary of information management considered in evaluating debt and equity securities for OTTI at December 31, 2015 is provided below.

Debt Securities

At December 31, 2015 and 2014, 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, 2015 to be temporary.

Equity Securities

The Corporation’s marketable equity securities at December 31, 2015 and 2014 consisted exclusively of stocks of banking companies. The Corporation recognized no other-than-temporary impairment losses related to bank stocks in 2015 or 2014. In 2013, the Corporation recognized an other-than-temporary impairment loss related to a bank stock of $25,000. Management evaluates recognition of other-than-temporary impairment losses based on review of the issuers’ published financial results to determine if recovery of the Corporation’s cost basis within the foreseeable future is uncertain. At December 31, 2015, the Corporation held no stocks with an unrealized loss.

Realized gains from sales of bank stocks totaled $2,220,000 in 2015, $363,000 in 2014, and $1,018,000 in 2013.

C&N Bank is a member of the Federal Home Loan Bank of Pittsburgh (FHLB-Pittsburgh), which is one of 11 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 $4,527,000 at December 31, 2015 and $1,454,000 at December 31, 2014. The Corporation evaluated its holding of FHLB-Pittsburgh stock for impairment and deemed the stock to not be impaired at December 31, 2015 and December 31, 2014. 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.

60

8. LOANS

Loans outstanding at December 31, 2015 and 2014 are summarized as follows:

Summary of Loans by Type
(In Thousands)	Dec. 31,			Dec. 31,
	2015			2014
Residential mortgage:
Residential mortgage loans - first liens	$	304,783		$	291,882
Residential mortgage loans - junior liens		21,146			21,166
Home equity lines of credit		39,040			36,629
1-4 Family residential construction		21,121			16,739
Total residential mortgage		386,090			366,416
Commercial:
Commercial loans secured by real estate		154,779			145,878
Commercial and industrial		75,196			50,157
Political subdivisions		40,007			17,534
Commercial construction and land		5,122			6,938
Loans secured by farmland		7,019			7,916
Multi-family (5 or more) residential		9,188			8,917
Agricultural loans		4,671			3,221
Other commercial loans		12,152			13,334
Total commercial		308,134			253,895
Consumer		10,656			10,234
Total		704,880			630,545
Less: allowance for loan losses		(7,889	)		(7,336	)
Loans, net	$	696,991		$	623,209

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, 2015.

61

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

Year Ended December 31, 2015	Dec. 31,										Dec. 31,
(In Thousands)	2014 Balance		Charge-offs			Recoveries		Provision (Credit)			2015 Balance
Allowance for Loan Losses:
Residential mortgage:
Residential mortgage loans - first liens	$	2,941	$	(175	)	$	1	$	(122	)	$	2,645
Residential mortgage loans - junior liens		176		(42	)		0		85			219
Home equity lines of credit		322		0			0		25			347
1-4 Family residential construction		214		0			0		(7	)		207
Total residential mortgage		3,653		(217	)		1		(19	)		3,418
Commercial:
Commercial loans secured by real estate		1,758		(115	)		208		88			1,939
Commercial and industrial		688		(21	)		6		308			981
Political subdivisions		0		0			0		0			0
Commercial construction and land		283		(115	)		0		(110	)		58
Loans secured by farmland		165		0			0		(59	)		106
Multi-family (5 or more) residential		87		0			0		588			675
Agricultural loans		31		0			0		14			45
Other commercial loans		131		0			0		(13	)		118
Total commercial		3,143		(251	)		214		816			3,922
Consumer		145		(94	)		55		16			122
Unallocated		395		0			0		32			427
Total Allowance for Loan Losses	$	7,336	$	(562	)	$	270	$	845		$	7,889

Year Ended December 31, 2014
(In Thousands)	Dec. 31,										Dec. 31,
	2013							Provision			2014
	Balance		Charge-offs			Recoveries		(Credit)			Balance
Allowance for Loan Losses:
Residential mortgage:
Residential mortgage loans - first liens	$	2,974	$	(164	)	$	25	$	106		$	2,941
Residential mortgage loans - junior liens		294		(101	)		0		(17	)	$	176
Home equity lines of credit		269		(62	)		0		115		$	322
1-4 Family residential construction		168		0			0		46		$	214
Total residential mortgage		3,705		(327	)		25		250			3,653
Commercial:
Commercial loans secured by real estate		3,123		(1,521	)		250		(94	)		1,758
Commercial and industrial		591		(24	)		9		112			688
Political subdivisions		0		0			0		0			0
Commercial construction and land		267		(170	)		5		181			283
Loans secured by farmland		115		0			0		50			165
Multi-family (5 or more) residential		103		0			0		(16	)		87
Agricultural loans		30		0			0		1			31
Other commercial loans		138		0			0		(7	)		131
Total commercial		4,367		(1,715	)		264		227			3,143
Consumer		193		(97	)		47		2			145
Unallocated		398		0			0		(3	)		395
Total Allowance for Loan Losses	$	8,663	$	(2,139	)	$	336	$	476		$	7,336

62

Year Ended December 31, 2013
(In Thousands)	Dec. 31,										Dec. 31,
	2012							Provision			2013
	Balance		Charge-offs			Recoveries		(Credit)			Balance
Allowance for Loan Losses:
Residential mortgage:
Residential mortgage loans - first liens	$	2,619	$	(84	)	$	24	$	415		$	2,974
Residential mortgage loans - junior liens		247		0			0		47			294
Home equity lines of credit		255		0			0		14			269
1-4 Family residential construction		96		(11	)		0		83			168
Total residential mortgage		3,217		(95	)		24		559			3,705
Commercial:
Commercial loans secured by real estate		1,930		(169	)		344		1,018			3,123
Commercial and industrial		581		(286	)		4		292			591
Political subdivisions		0		0			0		0			0
Commercial construction and land		234		(4	)		0		37			267
Loans secured by farmland		129		0			0		(14	)		115
Multi-family (5 or more) residential		67		0			0		36			103
Agricultural loans		27		0			0		3			30
Other commercial loans		3		0			0		135			138
Total commercial		2,971		(459	)		348		1,507			4,367
Consumer		228		(117	)		58		24			193
Unallocated		441		0			0		(43	)		398
Total Allowance for Loan Losses	$	6,857	$	(671	)	$	430	$	2,047		$	8,663

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.

63

The following tables summarize the aggregate credit quality classification of outstanding loans by risk rating as of December 31, 2015 and 2014:

December 31, 2015
(In Thousands)			Special
	Pass		Mention		Substandard		Doubtful		Total
Residential Mortgage:
Residential mortgage loans - first liens	$	295,302	$	407	$	9,007	$	67	$	304,783
Residential mortgage loans - junior liens		20,558		185		403		0		21,146
Home equity lines of credit		38,071		543		426		0		39,040
1-4 Family residential construction		21,104		17		0		0		21,121
Total residential mortgage		375,035		1,152		9,836		67		386,090
Commercial:
Commercial loans secured by real estate		140,381		5,862		8,536		0		154,779
Commercial and Industrial		71,225		2,106		1,737		128		75,196
Political subdivisions		40,007		0		0		0		40,007
Commercial construction and land		4,957		60		105		0		5,122
Loans secured by farmland		5,084		483		1,432		20		7,019
Multi-family (5 or more) residential		7,943		0		1,245		0		9,188
Agricultural loans		4,655		0		16		0		4,671
Other commercial loans		12,073		0		79		0		12,152
Total commercial		286,325		8,511		13,150		148		308,134
Consumer		10,490		21		145		0		10,656
Totals	$	671,850	$	9,684	$	23,131	$	215	$	704,880

December 31, 2014
(In Thousands)			Special
	Pass		Mention		Substandard		Doubtful		Total
Residential Mortgage:
Residential mortgage loans - first liens	$	280,094	$	1,246	$	10,464	$	78	$	291,882
Residential mortgage loans - junior liens		20,502		112		552		0		21,166
Home equity lines of credit		35,935		294		400		0		36,629
1-4 Family residential construction		16,719		20		0		0		16,739
Total residential mortgage		353,250		1,672		11,416		78		366,416
Commercial:
Commercial loans secured by real estate		133,204		2,775		9,899		0		145,878
Commercial and Industrial		41,751		7,246		1,042		118		50,157
Political subdivisions		17,534		0		0		0		17,534
Commercial construction and land		4,650		266		2,022		0		6,938
Loans secured by farmland		5,990		433		1,468		25		7,916
Multi-family (5 or more) residential		8,629		288		0		0		8,917
Agricultural loans		3,196		0		25		0		3,221
Other commercial loans		13,248		86		0		0		13,334
Total commercial		228,202		11,094		14,456		143		253,895
Consumer		10,095		22		117		0		10,234
Totals	$	591,547	$	12,788	$	25,989	$	221	$	630,545

64

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, 2015 and 2014.

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, 2015 and 2014:

December 31, 2015	Loans:						Allowance for Loan Losses:
(In Thousands)
	Individually		Collectively				Individually		Collectively
	Evaluated		Evaluated		Totals		Evaluated		Evaluated		Totals
Residential mortgage:
Residential mortgage loans - first liens	$	884	$	303,899	$	304,783	$	1	$	2,644	$	2,645
Residential mortgage loans - junior liens		74		21,072		21,146		0		219		219
Home equity lines of credit		0		39,040		39,040		0		347		347
1-4 Family residential construction		0		21,121		21,121		0		207		207
Total residential mortgage		958		385,132		386,090		1		3,417		3,418
Commercial:
Commercial loans secured by real estate		6,262		148,517		154,779		97		1,842		1,939
Commercial and industrial		324		74,872		75,196		75		906		981
Political subdivisions		0		40,007		40,007		0		0		0
Commercial construction and land		0		5,122		5,122		0		58		58
Loans secured by farmland		1,427		5,592		7,019		52		54		106
Multi-family (5 or more) residential		987		8,201		9,188		595		80		675
Agricultural loans		16		4,655		4,671		0		45		45
Other commercial loans		0		12,152		12,152		0		118		118
Total commercial		9,016		299,118		308,134		819		3,103		3,922
Consumer		0		10,656		10,656		0		122		122
Unallocated												427
Total	$	9,974	$	694,906	$	704,880	$	820	$	6,642	$	7,889

65

December 31, 2014	Loans:						Allowance for Loan Losses:
(In Thousands)
	Individually		Collectively				Individually		Collectively
	Evaluated		Evaluated		Totals		Evaluated		Evaluated		Totals
Residential mortgage:
Residential mortgage loans - first liens	$	1,665	$	290,217	$	291,882	$	358	$	2,583	$	2,941
Residential mortgage loans - junior liens		17		21,149		21,166		0		176		176
Home equity lines of credit		0		36,629		36,629		0		322		322
1-4 Family residential construction		0		16,739		16,739		0		214		214
Total residential mortgage		1,682		364,734		366,416		358		3,295		3,653
Commercial:
Commercial loans secured by real estate		6,537		139,341		145,878		16		1,742		1,758
Commercial and industrial		663		49,494		50,157		82		606		688
Political subdivisions		0		17,534		17,534		0		0		0
Commercial construction and land		1,939		4,999		6,938		211		72		283
Loans secured by farmland		1,470		6,446		7,916		102		63		165
Multi-family (5 or more) residential		0		8,917		8,917		0		87		87
Agricultural loans		25		3,196		3,221		0		31		31
Other commercial loans		0		13,334		13,334		0		131		131
Total commercial		10,634		243,261		253,895		411		2,732		3,143
Consumer		0		10,234		10,234		0		145		145
Unallocated												395
Total	$	12,316	$	618,229	$	630,545	$	769	$	6,172	$	7,336

Summary information related to impaired loans as of December 31, 2015 and 2014 is as follows:

(In Thousands)	December 31, 2015						December 31, 2014
	Unpaid						Unpaid
	Principal		Recorded		Related		Principal		Recorded		Related
	Balance		Investment		Allowance		Balance		Investment		Allowance
With no related allowance recorded:
Residential mortgage loans - first liens	$	842	$	842	$	0	$	950	$	950	$	0
Residential mortgage loans - junior liens		74		74		0		17		17		0
Commercial loans secured by real estate		7,580		5,945		0		8,062		6,521		0
Commercial and industrial		249		249		0		513		513		0
Commercial construction and land		0		0		0		124		124		0
Loans secured by farmland		915		915		0		925		925		0
Agricultural loans		16		16		0		25		25		0
Total with no related allowance recorded		9,676		8,041		0		10,616		9,075		0
With a related allowance recorded:
Residential mortgage loans - first liens		42		42		1		715		715		358
Commercial loans secured by real estate		317		317		97		16		16		16
Commercial and industrial		75		75		75		150		150		82
Commercial construction and land		0		0		0		1,815		1,815		211
Loans secured by farmland		512		512		52		545		545		102
Multi-family (5 or more) residential		987		987		595		0		0		0
Total with a related allowance recorded		1,933		1,933		820		3,241		3,241		769
Total	$	11,609	$	9,974	$	820	$	13,857	$	12,316	$	769

66

The average balance of impaired loans and interest income recognized on impaired loans is as follows:

							Interest Income Recognized on
	Average Investment in Impaired Loans						Impaired Loans on a Cash Basis
(In Thousands)	Year Ended December 31,						Year Ended December 31,
	2015		2014		2013		2015		2014		2013
Residential mortgage:
Residential mortgage loans - first lien	$	2,206	$	4,272	$	3,334	$	86	$	81	$	199
Residential mortgage loans - junior lien		64		168		245		4		3		17
Total residential mortgage		2,270		4,440		3,579		90		84		216
Commercial:
Commercial loans secured by real estate		6,357		7,192		2,931		380		469		90
Commercial and industrial		438		877		941		20		37		35
Commercial construction and land		40		395		999		0		9		14
Loans secured by farmland		1,459		1,413		1,171		103		101		66
Multi-family (5 or more) residential		790		0		22		0		0		2
Agricultural loans		21		41		43		3		3		3
Total commercial		9,105		9,918		6,107		506		619		210
Consumer		0		1		4		0		0		0
Total	$	11,375	$	14,359	$	9,690	$	596	$	703	$	426

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, 2015				December 31, 2014
	Past Due				Past Due
	90+ Days and				90+ Days and
	Accruing		Nonaccrual		Accruing		Nonaccrual
Residential mortgage:
Residential mortgage loans - first liens	$	2,381	$	3,044	$	1,989	$	3,440
Residential mortgage loans - junior liens		79		0		82		50
Home equity lines of credit		130		0		49		22
Total residential mortgage		2,590		3,044		2,120		3,512
Commercial:
Commercial loans secured by real estate		503		5,730		653		5,804
Commercial and industrial		65		313		5		379
Commercial construction and land		0		0		35		1,915
Loans secured by farmland		0		1,427		0		951
Multi-family  (5 or more) residential		0		987		0		0
Agricultural loans		0		16		0		25
Total commercial		568		8,473		693		9,074
Consumer		71		0		30		24
Totals	$	3,229	$	11,517	$	2,843	$	12,610

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

67

The tables below present a summary of the contractual aging of loans as of December 31, 2015 and 2014:

	As of December 31, 2015								As of December 31, 2014
	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	$	294,703	$	6,156	$	3,924	$	304,783	$	282,766	$	5,443	$	3,673	$	291,882
Residential mortgage loans - junior liens		20,816		251		79		21,146		20,853		190		123		21,166
Home equity lines of credit		38,581		329		130		39,040		36,300		258		71		36,629
1-4 Family residential construction		21,121		0		0		21,121		16,739		0		0		16,739
Total residential mortgage		375,221		6,736		4,133		386,090		356,658		5,891		3,867		366,416
Commercial:
Commercial loans secured by real estate		153,427		108		1,244		154,779		143,713		883		1,282		145,878
Commercial and industrial		75,002		118		76		75,196		49,994		43		120		50,157
Political subdivisions		40,007		0		0		40,007		17,534		0		0		17,534
Commercial construction and land		5,018		104		0		5,122		4,897		91		1,950		6,938
Loans secured by farmland		5,970		223		826		7,019		6,811		254		851		7,916
Multi-family (5 or more) residential		8,201		0		987		9,188		8,720		197		0		8,917
Agricultural loans		4,642		13		16		4,671		3,105		91		25		3,221
Other commercial loans		12,152		0		0		12,152		13,334		0		0		13,334
Total commercial		304,419		566		3,149		308,134		248,108		1,559		4,228		253,895
Consumer		10,537		48		71		10,656		10,164		40		30		10,234
Totals	$	690,177	$	7,350	$	7,353	$	704,880	$	614,930	$	7,490	$	8,125	$	630,545

Nonaccrual loans are included in the contractual aging immediately above. A summary of the contractual aging of nonaccrual loans at December 31, 2015 and 2014 is as follows:

	Current &
(In Thousands)	Past Due		Past Due		Past Due
	Less than		30-89		90+
	30 Days		Days		Days		Total
December 31, 2015 Nonaccrual Totals	$	7,100	$	293	$	4,124	$	11,517
December 31, 2014 Nonaccrual Totals	$	6,959	$	369	$	5,282	$	12,610

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, 2015 and 2014 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, 2015 Totals	$	1,186	$	0	$	81	$	5,097	$	6,364
December 31, 2014 Totals	$	1,725	$	82	$	0	$	5,388	$	7,195

68

A summary of TDRs that occurred during 2015, 2014 and 2013 is as follows:

Year Ended December 31, 2015		Pre-		Post-
(Balances in Thousands)		Modification		Modification
	Number	Outstanding		Outstanding
	of	Recorded		Recorded
	Contracts	Investment		Investment
Residential mortgage:
Residential mortgage loans - first liens	2	$	298	$	298
Residential mortgage loans - junior liens	1		32		32
Consumer	1		30		30

Year Ended December 31, 2014		Pre-		Post-
(Balances in Thousands)		Modification		Modification
	Number	Outstanding		Outstanding
	of	Recorded		Recorded
	Contracts	Investment		Investment
Residential mortgage,
Residential mortgage loans - first liens	3	$	150	$	150
Commercial:
Commercial loans secured by real estate	5		6,679		5,193
Commercial and industrial	1		80		80

Year Ended December 31, 2013		Pre-		Post-
(Balances in Thousands)		Modification		Modification
	Number	Outstanding		Outstanding
	of	Recorded		Recorded
	Contracts	Investment		Investment
Residential mortgage:
Residential mortgage loans - first liens	6	$	677	$	677
Residential mortgage loans - junior liens	3		102		102
Commercial:
Commercial loans secured by real estate	2		866		866
Commercial and industrial	3		701		701
Loans secured by farmland	4		512		512
Agricultural loans	1		13		13
Consumer	1		6		6

The TDRs that occurred in 2015 related to residential mortgage loans – first liens that included an extended maturity date and a reduction in interest rate on one contract and a reduced payment amount on one contract. The TDR related to a residential mortgage – junior lien included a lowered interest rate and reduced payment amount. The TDR related to the consumer loan included a lowered interest rate and reduced payment amount. There was no allowance for loan losses on these loans at December 31, 2015, and no change in the allowance for loan losses resulting from these TDRs.

The TDRs that occurred in 2014 related to residential mortgage loans that included a reduction in payment amount on one contract, an interest only period on one contract and a reduction in interest rate and payment on one contract. The TDRs related to commercial loans in the period ended December 31, 2014 relate to six contracts associated with one relationship. The Corporation entered into a forbearance agreement with this commercial borrower which includes a reduction in monthly payment amounts over a fifteen-month period. At the end of the fifteen-month period, the monthly payment amounts would revert to the original amounts, unless the forbearance agreement is extended or the payment requirements are otherwise modified. In July 2015, the forbearance agreement was extended for twelve months. The Corporation recorded a charge-off of $1,486,000 in the second quarter 2014 as a result of these modifications, as the payment amounts based on the forbearance agreement are not sufficient to fully amortize the contractual amount of principal outstanding on the loans. The amount of the charge-off was determined based on the excess of the contractual principal due over the present value of the payment amounts provided for in the forbearance agreement, assuming the revised payment amounts would continue until maturity, at the contractual interest rates. After the effect of the $1,486,000 charge-off related to loans to one commercial borrower described above, there was no allowance for loan losses on loans to that borrower at December 31, 2015 and 2014, while the allowance on the loans amounted to $1,552,000 at December 31, 2013. There were no other changes in the allowance for loan losses related to TDRs that occurred during the year ended December 31, 2014.

69

The TDRs in 2013 included interest only payments for an extended period of time on fourteen contracts, extensions of the final maturity date on three contracts, reduction in interest rate on two contracts, and reduction in payment amount for one year on one contract. There was no allowance for loan losses on these loans at December 31, 2013 and no change in the allowance for loan losses resulting from these TDRs in the year ended December 31, 2013.

For 2015, 2014 and 2013, defaults on loans for which modifications considered to be TDRs were entered into within the previous 12 months are summarized as follows:

	Number
	of	Recorded
	Contracts	Investment
Year Ended December 31, 2015
(Balances in Thousands)
Residential mortgage:
Residential mortgage loans - first liens	1	$	32

	Number
	of	Recorded
	Contracts	Investment
Year Ended December 31, 2014
(Balances in Thousands)
Residential mortgage,
Residential mortgage loans - first liens	3	$	257
Residential mortgage loans - junior liens	1		62
Commercial,
Commercial loans secured by real estate	1		429
Commercial construction and land	1		25
Loans secured by farmland	4		490
Agricultural loans	1		13

	Number
	of	Recorded
	Contracts	Investment
Year Ended December 31, 2013
(Balances in Thousands)
Residential mortgage,
Residential mortgage loans - first liens	1	$	85
Commercial:
Commercial loans secured by real estate	2		588
Commercial construction and land	1		110
Agricultural	1		13

The events of default in 2015 in the table listed above resulted from the borrower’s failure to make timely payments after reduced payment amount for a period of six months on the first lien residential mortgage. There was no allowance for loan losses recorded on this loan at December 31, 2015.

The events of default in 2014 in the table listed above included the borrowers’ failure to make timely payments under the following circumstances: (1) for one customer relationship including one of the first lien Residential mortgages, the junior lien Residential mortgage, the Loans secured by farmland and the Agricultural loan, monthly payments of interest only were missed; however, in the fourth quarter 2014, the total principal balance of all of the loans except one of the Loans secured by farmland were fully paid off, and the balance on that loan was paid down to a balance at December 31, 2014 of $75,000 and at December 31, 2015 of $69,000; (2) for one of the Residential mortgage loans, monthly payments were missed after the interest rate and monthly payment amount had been reduced; (3) for one of the Residential mortgage loans and the Commercial loan secured by real estate, monthly payments of interest only were missed; and (4) for the Commercial construction and land loan, a monthly payment was missed after the term of the loan had been extended. There were no allowances for loan losses recorded on these loans at December 31, 2014.

70

The events of default in 2013 in the table above included the borrowers’ failure to make timely payments under the following circumstances: (1) for the Residential mortgage loan, the monthly payment amount had been reduced; (2) for the two Commercial loans secured by real estate, monthly payments of interest only were missed; (3) for the Commercial construction and land loan, a monthly payment was missed after the term of the loan had been extended; and (4) for the Agricultural loan, payment at maturity was not made on a loan that had been in interest only status. There were no adjustments to the allowance for loan losses in 2013 as a result of these events of default.

At December 31, 2015 and 2014, 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. 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, 2015 and 2014 for loans for which an event of default had occurred subsequent to restructuring.

At December 31, 2015, the carrying amount of foreclosed residential real estate properties held as a result of obtaining physical possession (included in Foreclosed assets held for sale in the consolidated balance sheet) was $555,000.

At December 31, 2015, the recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process was $1,173,000.

9. BANK PREMISES AND EQUIPMENT

Bank premises and equipment are summarized as follows:

(In Thousands)	December 31,
	2015			2014
Land	$	2,818		$	2,818
Buildings and improvements		27,092			26,973
Furniture and equipment		17,922			17,412
Construction in progress		243			98
Total		48,075			47,301
Less: accumulated depreciation		(32,669	)		(31,045	)
Net	$	15,406		$	16,256

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

(In Thousands)	2015		2014		2013
Occupancy expense	$	954	$	998	$	1,022
Furniture and equipment expense		934		942		998
Total	$	1,888	$	1,940	$	2,020

10. INTANGIBLE ASSETS

There were no changes in the carrying amount of goodwill in 2015 and 2014. The balance in goodwill was $11,942,000 at December 31, 2015 and 2014. The Corporation did not complete any acquisitions in 2015 or 2014.

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, 2015, 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, 2015.

Information related to the core deposit intangibles is as follows:

	December 31,
(In Thousands)	2015			2014
Gross amount	$	2,034		$	2,034
Less: accumulated amortization		(2,004	)		(1,982	)
Net	$	30		$	52

71

Amortization expense was $22,000 in 2015, $35,000 in 2014 and $51,000 in 2013. The amount of amortization expense to be recognized each of the ensuing five years is not significant.

11. DEPOSITS

At December 31, 2015, the scheduled maturities of time deposits are as follows:

(In Thousands)
2016	$	124,562
2017		53,985
2018		19,611
2019		10,091
2020		13,424
Thereafter		11
	$	221,684

Included in interest-bearing deposits are time deposits in the amount of $100,000 or more. As of December 31, 2015, 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	$	35,167
Over 3 months through 12 months		9,330
Over 1 year through 3 years		12,358
Over 3 years		8,248
Total	$	65,103

Interest expense from time deposits of $100,000 or more amounted to $482,000 in 2015, $563,000 in 2014, and $721,000 in 2013.

12. BORROWED FUNDS

Short-term borrowings include the following:
(In Thousands)	Dec. 31		Dec. 31
	2015		2014
FHLB-Pittsburgh borrowings	$	48,581	$	0
Customer repurchase agreements		4,915		5,537
Total short-term borrowings	$	53,496	$	5,537

Short-term borrowings from FHLB - Pittsburgh are as follows:
(In Thousands)	Dec. 31		Dec. 31
	2015		2014
Overnight borrowing	$	23,500	$	0
Other short-term advances		25,081		0
Total short-term FHLB-Pittsburgh borrowings	$	48,581	$	0

The weighted average interest rate on total short-term borrowings outstanding was 0.60% at December 31, 2015 and 0.10% at December 31, 2014. The maximum amount of total short-term borrowings outstanding at any month-end was $53,496,000 in 2015, $7,919,000 in 2014 and $23,385,000 in 2013.

The Corporation had available credit with other correspondent banks totaling $45,000,000 at December 31, 2015 and 2014. These lines of credit are primarily unsecured. No amounts were outstanding at December 31, 2015 or December 31, 2014.

The Corporation has a line of credit with the Federal Reserve Bank of Philadelphia’s Discount Window. At December 31, 2015, the Corporation had available credit in the amount of $19,606,000 on this line with no outstanding advances. At December 31, 2014 the Corporation had available credit in the amount of $25,367,000 on this line with no outstanding advances. As collateral for this line, the Corporation has pledged available-for-sale securities with the carrying value of $20,039,000 at December 31, 2015 and $26,092,000 at December 31, 2014.

72

The FHLB-Pittsburgh loan facility is collateralized by qualifying loans secured by real estate with a book value totaling $450,883,000 at December 31, 2015 and $446,780,000 at December 31, 2014. Also, the FHLB-Pittsburgh loan facility requires 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 $4,527,000 at December 31, 2015 and $1,454,000 at December 31, 2014. The Corporation’s total credit facility with FHLB-Pittsburgh was $322,709,000 at December 31, 2015, including an unused (available) amount of $262,361,000. At December 31, 2014, the Corporation’s total credit facility with FHLB-Pittsburgh was $323,067,000, including an unused (available) amount of $311,007,000.

At December 31, 2015, the overnight borrowing from FHLB-Pittsburgh of $23,500,000 had an interest rate of 0.43%, and the other short-term advances included 12 advances of $2,090,000 each maturing monthly throughout 2016, with a weighted average interest rate of 0.86% and rates ranging from 0.54% to 1.052%.

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 weighted average rate paid by the Corporation on customer repurchase agreements was 0.10% at December 31, 2015 and December 31, 2014. The carrying value of the underlying securities was $12,613,000 at December 31, 2015 and $15,229,000 at December 31, 2014.

LONG-TERM BORROWINGS
Long-term borrowings are as follows:
(In Thousands)	Dec. 31		Dec. 31
	2015		2014
FHLB-Pittsburgh borrowings	$	11,767	$	12,060
Repurchase agreements		27,000		61,000
Total long-term borrowings	$	38,767	$	73,060

Long-term borrowings from FHLB - Pittsburgh are as follows:
(In Thousands)	Dec. 31		Dec. 31
	2015		2014
Loan maturing in 2016 with a rate of 6.86%	$	57	$	107
Loan maturing in 2017 with a rate of 6.83%		10		16
Loan maturing in 2017 with a rate of 3.81%		10,000		10,000
Loan maturing in 2020 with a rate of 4.79%		821		987
Loan maturing in 2025 with a rate of 4.91%		879		950
Total long-term FHLB-Pittsburgh borrowings	$	11,767	$	12,060

Repurchase agreements included in long-term borrowings are as follows:
(In Thousands)	Dec. 31		Dec. 31
	2015		2014
Agreement maturing in 2017 with a rate of 3.595%	$	27,000	$	27,000
Agreement maturing in 2017 with a rate of 4.265%		0		34,000
Total long-term repurchase agreements	$	27,000	$	61,000

In 2015, the Corporation incurred losses totaling $2,573,000 on prepayment of $34,000,000 of the agreement with an interest rate of 4.265%. In 2013, the Corporation incurred a loss of $1,023,000 on prepayment of the agreement with an interest rate of 3.595%.

“Repurchase Dates,” as defined in the Master Repurchase Agreement between the Corporation and the broker-dealer, occur quarterly on or about the 20^th of each March, June, September and December until the “Final Repurchase Date” (as defined) on December 20, 2017. The Corporation pays interest, and each of the borrowings is putable by the issuer, on each Repurchase Date. The Final Repurchase Date is the effective maturity date of the borrowings.

Securities sold under repurchase agreements were delivered to the broker-dealer who is the counter-party to the transactions. The broker-dealer may have sold, loaned or otherwise disposed of such securities to other parties in the normal course of their operations, and has agreed to resell to the Corporation substantially identical securities at the maturities of the agreements. The Master Repurchase Agreement between the Corporation and the broker-dealer provides that the Agreement constitutes a “netting contract,” as defined; however, the Corporation and the broker-dealer have no other obligations to one another and accordingly, no netting has occurred.

73

The carrying value of the underlying securities was $33,780,000 at December 31, 2015 and $70,982,000 at December 31, 2014, as detailed in the following table:

(In Thousands)	December 31,		December 31,
	2015		2014
Mortgage-backed securities	$	15,772	$	24,114
Collateralized mortgage obligations, Issued by U.S. Government agencies		18,008		46,868
Total	$	33,780	$	70,982

Two of the more significant risks associated with the repurchase agreements are as follows:

· The borrowings are putable at quarterly intervals by the issuer. Accordingly, if interest rates were to rise to a sufficient level, the issuer would be expected to require the Corporation to pay off the borrowings. In this circumstance, the Corporation would be required to obtain new borrowings at a higher interest rate than the existing repurchase agreements or utilize cash from other sources to pay off the borrowings. If sales of available-for-sale securities were used to generate cash to pay off the borrowings, the value of such securities would be expected to have fallen, which could result in the Corporation recognizing a loss.

· As principal pay-downs of mortgage backed securities and CMOs occur, the Corporation must have available, unencumbered assets or purchase a sufficient amount of assets with credit quality suitable to the broker-dealer to replace the amounts being paid off. Since pre-payments of mortgages typically increase as interest rates fall, the Corporation may be required to purchase additional assets at times when market rates are lower than the rates paid on the borrowings.

Average daily repurchase agreement borrowings amounted to $54,304,000 in 2015, $61,000,000 in 2014 and $62,630,000 in 2013. The maximum amounts of outstanding borrowings under repurchase agreements with broker-dealers were $61,000,000 in 2015, $61,000,000 in 2014 and $68,000,000 in 2013. The weighted average interest rate on repurchase agreements was 3.99% in 2015, 4.02% in 2014 and 4.01% in 2013.

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. Effective January 1, 2013, this plan was amended so that full-time employees no longer accrue service time toward the Corporation-subsidized portion of the medical benefits. The plan was also amended effective January 1, 2013 to change some of the age and length-of-service requirements for participants to receive some of the benefits provided under the plan. This plan contains a cost-sharing feature, which causes participants to pay for all future increases in costs related to benefit coverage. Accordingly, actuarial assumptions related to health care cost trend rates do not significantly affect the liability balance at December 31, 2015 and December 31, 2014, 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.

74

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

(In Thousands)

	Pension:						Postretirement:
	2015			2014			2015			2014
CHANGE IN BENEFIT OBLIGATION:
Benefit obligation at beginning of year	$	1,085		$	1,733		$	1,378		$	1,391
Service cost		0			0			38			34
Interest cost		36			73			57			57
Plan participants' contributions		0			0			203			198
Actuarial (gain) loss		(46	)		76			120			(48	)
Benefits paid		(16	)		(16	)		(257	)		(254	)
Settlement of plan obligation		(337	)		(781	)		0			0
Benefit obligation at end of year	$	722		$	1,085		$	1,539		$	1,378
CHANGE IN PLAN ASSETS:
Fair value of plan assets at beginning of year	$	1,208		$	1,968		$	0		$	0
Actual return on plan assets		(16	)		37			0			0
Employer contribution		0			0			54			56
Plan participants' contributions		0			0			203			198
Benefits paid		(16	)		(16	)		(257	)		(254	)
Settlement of plan obligation		(337	)		(781	)		0			0
Fair value of plan assets at end of year	$	839		$	1,208		$	0		$	0
Funded status at end of year	$	117		$	123		$	(1,539	)	$	(1,378	)

In 2015, there was a distribution from the plan of $337,000, or 32% of the plan’s total accumulated benefit obligation prior to the distribution. The Corporation recognized a loss of $87,000 (included in net periodic benefit cost) in 2015 as a result of this settlement. In 2014, there was a distribution from the plan of $781,000, or 42% of the plan’s total accumulated benefit obligation prior to the distribution. The Corporation recognized a loss of $196,000 (included in net periodic benefit cost) in 2014 as a result of this settlement.

At December 31, 2015 and 2014, the following pension plan and postretirement plan asset and liability amounts were recognized in the consolidated balance sheet:

Assets and liabilities:
(In Thousands)	Pension:				Postretirement:
	2015		2014		2015		2014
Other assets	$	117	$	123
Accrued interest and other liabilities					$	1,539	$	1,378

At December 31, 2015 and 2014, the following items included in accumulated other comprehensive income had not been recognized as components of expense:

Items not yet recognized as a component of net periodic benefit cost:
(In Thousands)	Pension:				Postretirement:
	2015		2014		2015			2014
Prior service cost	$	0	$	0	$	(371	)	$	(402	)
Net actuarial loss		186		269		131			11
Total	$	186	$	269	$	(240	)	$	(391	)

75

For the defined benefit pension plan, amortization of the net actuarial loss is expected to be $10,000 in 2016. For the postretirement plan, the estimated amount of prior service cost that will be amortized from accumulated other comprehensive income into net periodic benefit cost in 2016 is a reduction in expense of $31,000, and no net actuarial loss is expected to be amortized in 2016.

The accumulated benefit obligation for the defined benefit pension plan was $722,000 at December 31, 2015 and $1,085,000 at December 31, 2014.

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

(In Thousands)	Pension:									Postretirement:
	2015			2014			2013			2015			2014			2013
Service  cost	$	0		$	0		$	0		$	38		$	34		$	41
Interest cost		36			73			71			57			57			55
Expected return on plan assets		(45	)		(88	)		(90	)		0			0			0
Amortization of prior service cost		0			0			0			(31	)		(31	)		(31	)
Recognized net actuarial loss		11			19			32			0			0			1
Loss on settlement		87			196			0			0			0			0
Total net periodic benefit cost	$	89		$	200		$	13		$	64		$	60		$	66

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

	Pension:									Postretirement:
	2015			2014			2013			2015			2014			2013
Citizens Trust Company Retirement Plan and postretirement plan:
Discount rate		3.75	%		4.50	%		4.00	%		4.00	%		4.00	%		4.00	%
Expected return on plan assets		5.31	%		5.31	%		5.31	%		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, 2015 and 2014 are as follows:

	Pension:						Postretirement:
	2015			2014			2015			2014
Discount rate		4.30	%		3.75	%		4.25	%		4.00	%
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
2016	$	250	$	92
2017		15		96
2018		14		102
2019		39		105
2020		13		110
2021-2025		214		550

No estimated minimum contribution to the defined benefit pension plan is required in 2016, 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.

76

The fair values of pension plan assets at December 31, 2015 and 2014 are as follows:

	2015			2014
Cash and cash equivalents		2	%		3	%
Debt securities		38	%		37	%
Equity securities		46	%		47	%
Alternative funds		14	%		13	%
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, 2015, the targeted asset allocation for the pension plan was 46% equity securities, 38% debt securities, 14% alternative assets, and 2% cash. At December 31, 2014, the targeted asset allocation for the pension plan was 26% equity securities, 61% debt securities, 11% alternative assets and 2% cash. 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 $609,000 in 2015, $595,000 in 2014 and $557,000 in 2013.

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, 2015 and 2014, 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 410,004 shares of Corporation stock at December 31, 2015 and 409,197 shares at December 31, 2014, all of which had been allocated to Plan participants. The Corporation’s contributions to the ESOP totaled $522,000 in 2015, $512,000 in 2014 and $509,000 in 2013.

The Corporation has a nonqualified supplemental deferred compensation arrangement with its key officers. Charges to operating expense for officers’ supplemental deferred compensation were $167,000 in 2015, $138,000 in 2014 and $186,000 in 2013.

In December 2015, the Corporation established an additional nonqualified deferred compensation plan that allows selected officers, beginning in 2016, the option to defer receipt of cash compensation, including base salary and any cash bonuses or other cash incentives. This nonqualified deferred compensation plan does not provide for Corporation contributions.

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. Historically through December 31, 2015, all awards made under this Plan have consisted of Incentive Stock Options or restricted stock. Incentive Stock Options 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. Restricted stock awards issued under the Stock Incentive Plan vest ratably over terms ranging from 3-4 years. Restricted stock awards in 2015 included the following: (1) a total of 20,298 shares to employees, vesting over a four-year term, with vesting contingent upon the Corporation meeting an annual return on average equity (“ROAE”) performance ratio, as defined; (2) a total of 2,198 shares to employees, vesting over a four-year term, with vesting dependent on satisfactory performance; and (3) an award to the Chief Executive Officer of 5,174 shares, vesting over a three-year term, with vesting dependent on satisfactory performance. Most of the restricted stock awards issued under this Plan in 2015, 2014 and 2013 include a condition that 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 2015, 2014 and 2013 plan years. For 2015 and 2014 restricted stock awards to individuals who are substantially involved in mortgage lending, vesting is not dependent on the Corporation’s ROAE. There are 294,275 shares available for issuance under the Stock Incentive Plan as of December 31, 2015.

77

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. In 2015, a total of 7,130 restricted shares were granted under the Independent Directors Stock Incentive Plan, vesting over a term of one year. Restricted stock awards granted under the Independent Directors Stock Incentive Plan in 2014 and 2013 vest ratably over 3 years. There are 29,702 shares available for issuance under the Independent Directors Stock Incentive Plan as of December 31, 2015.

There were no stock options granted in 2015. The Corporation recorded stock option expense in 2014 and 2013 based on estimated fair value calculated using the Black-Scholes-Merton option-pricing model with the following assumptions:

	2014			2013
Volatility		39	%		41	%
Expected option lives		8 Years			8 Years
Risk-free interest rate		2.85	%		1.60	%
Dividend yield		4.33	%		3.69	%

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 8-year period to estimate future levels of volatility and dividend yield for the 2014 and 2013 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)	2015		2014		2013
Stock options	$	0	$	153	$	242
Restricted stock		606		412		454
Total	$	606	$	565	$	696

A summary of stock option activity is presented below:

	2015					2014					2013
				Weighted					Weighted					Weighted
				Average					Average					Average
				Exercise					Exercise					Exercise
	Shares			Price		Shares			Price		Shares			Price
Outstanding, beginning of year		316,157		$	19.05		358,176		$	19.03		337,670		$	19.08
Granted		0					39,027		$	20.45		64,050		$	19.21
Exercised		(29,557	)	$	17.56		(50,415	)	$	17.57		(10,656	)	$	17.22
Forfeited		(20,211	)	$	19.76		(16,424	)	$	20.03		(14,135	)	$	20.13
Expired		(17,903	)	$	27.00		(14,207	)	$	26.59		(18,753	)	$	20.73
Outstanding, end of year		248,486		$	18.59		316,157		$	19.05		358,176		$	19.03
Options exercisable at year-end		248,486		$	18.59		316,157		$	19.05		358,176		$	19.03
Weighted-average fair value of options granted					N/A				$	5.50				$	5.56
Weighted-average fair value of options forfeited				$	4.86				$	4.89				$	3.77

The weighted-average remaining contractual term of outstanding stock options at December 31, 2015 was 4.6 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 2015) was $629,000 at December 31, 2015. The total intrinsic value of options exercised was $77,000 in 2015, $90,000 in 2014 and $29,000 in 2013.

78

The following summarizes non-vested restricted stock activity for the year ended December 31, 2015:

	Restricted Stock
				Weighted
				Average
	Number			Grant Date
	of Shares			Fair Value
Outstanding, December 31, 2014		52,436		$	19.34
Granted		34,800		$	20.63
Vested		(21,522	)	$	19.16
Forfeited		(3,502	)	$	20.08
Outstanding, December 31, 2015		62,212		$	20.10

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, 2015, there was $645,000 total unrecognized compensation costs related to restricted stock, which is expected to be recognized over a weighted average period of 1.7 years.

In the first two months of 2016, the Corporation awarded 27,593 shares of restricted stock under the Stock Incentive Plan and 6,606 shares of restricted stock under the Independent Directors Stock Incentive Plans. The 2016 restricted stock awards under the Stock Incentive Plan vest ratably over three years, and vesting for 8,645 of the restricted shares depends on the Corporation meeting a ROAE target each year. The 2016 restricted stock issued under the Independent Directors Stock Incentive Plan vests over one year. Total estimated stock-based compensation for 2016 is $651,000. The restricted stock awards made in the first two months of 2016 are not included in the tables above.

The Corporation has issued shares from treasury stock for almost all stock option exercises through December 31, 2015. Management does not anticipate that stock repurchases will be necessary to accommodate stock option exercises in 2016.

14. INCOME TAXES

The net deferred tax asset at December 31, 2015 and 2014 represents the following temporary difference components:

	December 31,		December 31,
(In Thousands)	2015		2014
Deferred tax assets:
Net realized losses on securities	$	69	$	144
Allowance for loan losses		2,761		2,568
Credit for alternative minimum tax paid		0		537
Other deferred tax assets		2,634		2,595
Total deferred tax assets		5,464		5,844
Deferred tax liabilities:
Unrealized holding gains on securities		1,342		2,844
Defined benefit plans - ASC 835		19		43
Bank premises and equipment		869		1,134
Core deposit intangibles		11		18
Other deferred tax liabilities		108		137
Total deferred tax liabilities		2,349		4,176
Deferred tax asset, net	$	3,115	$	1,668

The provision for income taxes includes the following:

(In thousands)	2015		2014		2013
Currently payable	$	5,097	$	4,280	$	4,125
Tax expense resulting from allocations of certain tax benefits to equity or as a
reduction in other assets		161		158		219
Deferred		79		1,254		1,839
Total provision	$	5,337	$	5,692	$	6,183

79

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

(Amounts in thousands)	2015						2014						2013
	Amount			%			Amount			%			Amount			%
Expected provision	$	7,633			35.00		$	7,972			35.00		$	8,672			35.00
Tax-exempt interest income		(1,914	)		(8.78	)		(1,982	)		(8.70	)		(2,137	)		(8.62	)
Nondeductible interest expense		51			0.23			56			0.25			60			0.24
Dividends received deduction		(75	)		(0.34	)		(79	)		(0.35	)		(76	)		(0.31	)
Increase in cash surrender value of life insurance		(135	)		(0.62	)		(132	)		(0.58	)		(140	)		(0.57	)
Employee stock option compensation		0			0.00			41			0.18			67			0.27
Tax benefit from limited partnership investment		(80	)		(0.37	)		(83	)		(0.36	)		(85	)		(0.34	)
Other, net		(143	)		(0.66	)		(101	)		(0.44	)		(178	)		(0.72	)
Effective income tax provision	$	5,337			24.47		$	5,692			24.99		$	6,183			24.95

The Corporation has investments in three limited partnerships that manage affordable housing projects that have qualified for the federal low-income housing tax credit. The Corporation’s expected return from these investments is based on the receipt of tax credits and tax benefits from deductions of operating losses. The Corporation uses the effective yield method to account for these investments, with the benefits recognized as a reduction of the provision for income taxes. For two of the three limited partnership investments, the tax credits have been received in full in prior years, and the Corporation has fully realized the benefits of the credits and amortized its initial investments in the partnerships. The most recent affordable housing project was completed in 2013, and the Corporation received tax credits in 2013 and 2014 and expects to continue to receive tax credits annually through 2022. The carrying amount of the Corporation’s investment is $812,000 at December 31, 2015 and $906,000 at December 31, 2014 (included in Other Assets in the consolidated balance sheets). For 2015, the estimated amount of tax credits and other tax benefits to be received is $158,000 and the amount recognized as a reduction of the provision for income taxes is $80,000. In 2014, the Corporation received tax credits and other tax benefits totaling $159,000, and recognized a reduction of the provision for income tax of $83,000. In 2013, the Corporation received tax credits and other tax benefits totaling $160,000, and recognized a reduction of the provision for income tax of $85,000.

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 2011.

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 2015	$	12,023	$	52	$	(808	)	$	(1,021	)	$	10,246
12 directors, 8 executive officers 2014		12,547		188		(1,358	)		646			12,023
11 directors, 8 executive officers 2013		14,125		1,110		(2,723	)		35			12,547

In the table above, other changes represent net changes in the balance of existing lines of credit and transfers in and out of the related party category.

Deposits from related parties held by the Corporation amounted to $3,194,000 at December 31, 2015 and $3,203,000 at December 31, 2014.

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.

80

Financial instruments whose contract amounts represent credit risk at December 31, 2015 and 2014 are as follows:

(In Thousands)	2015		2014
Commitments to extend credit	$	156,407	$	143,863
Standby letters of credit		13,340		13,415

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, 2015 and 2014.

Standby letters of credit as of December 31, 2015 expire as follows:

	Amount
Year of Expiration		(In Thousands)
2016	$	10,767
2017		371
2019		40
2021 and Thereafter		2,162
Total	$	13,340

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.

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 capital, Tier I capital (as defined in the regulations) and Common equity Tier 1 capital (as defined) to risk-weighted assets (as defined) and of Tier I capital (as defined) to average assets (as defined). Management believes, as of December 31, 2015 and 2014, that the Corporation and C&N Bank meet all capital adequacy requirements to which they are subject.

81

To be categorized as well capitalized, an institution must maintain minimum total risk based, Tier I risk based, Common equity 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:

(Dollars in Thousands)											Minimum To Be Well
						Minimum					Capitalized Under
						Capital					Prompt Corrective
	Actual					Requirement					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
December 31, 2015:
Total capital to risk-weighted assets:
Consolidated	$	181,216		24.40	%	$	59,424		³8	%	$	74,281		³10	%
C&N Bank		161,187		21.83	%		59,058		³8	%		73,823		³10	%
Tier 1 capital to risk-weighted assets:
Consolidated		173,009		23.29	%		29,712		³6	%		59,424		³8	%
C&N Bank		153,298		20.77	%		29,529		³6	%		59,058		³8	%
Common equity tier 1 capital to risk-weighted assets:
Consolidated		173,009		23.29	%		29,712		³4.5	%		48,282		³6.5	%
C&N Bank		153,298		20.77	%		29,529		³4.5	%		47,985		³6.5	%
Tier 1 capital to average assets:
Consolidated		173,009		14.31	%		48,355		³4	%		60,444		³5	%
C&N Bank		153,298		12.81	%		47,861		³4	%		59,826		³5	%
December 31, 2014:
Total capital to risk-weighted assets:
Consolidated	$	179,588		27.60	%	$	52,051		³8	%		n/a		n/a
C&N Bank		156,420		24.33	%		51,442		³8	%	$	64,303		³10	%
Tier 1 capital to risk-weighted assets:
Consolidated		170,880		26.26	%		26,026		³4	%		n/a		n/a
C&N Bank		149,055		23.18	%		25,721		³4	%		38,582		³6	%
Tier 1 capital to average assets:
Consolidated		170,880		13.89	%		49,224		³4	%		n/a		n/a
C&N Bank		149,055		12.22	%		48,798		³4	%		60,998		³5	%

In July 2013, the federal regulatory authorities issued a new capital rule based, in part, on revisions developed by the Basel Committee on Banking Supervision to the Basel capital framework (Basel III). The Corporation and C&N Bank became subject to the new rule effective January 1, 2015. Generally, the new rule implements higher minimum capital requirements, revises the definition of regulatory capital components and related calculations, adds a new common equity tier 1 capital ratio, implements a new capital conservation buffer, increases the risk weighting for past due loans and provides a transition period for several aspects of the new rule.

82

The current (new) capital rule provides that, in order to avoid limitations on capital distributions, including dividend payments and certain discretionary bonus payments to executive officers, a banking organization must hold a capital conservation buffer composed of common equity tier 1 capital above its minimum risk-based capital requirements. The buffer is measured relative to risk-weighted assets. Phase-in of the capital conservation buffer requirements will begin January 1, 2016. The transition schedule for new ratios, including the capital conservation buffer, is as follows:

	As of January 1:
	2015			2016			2017			2018			2019
Minimum common equity tier 1 capital ratio		4.5	%		4.5	%		4.5	%		4.5	%		4.5	%
Common equity tier 1 capital conservation buffer		N/A			0.625	%		1.25	%		1.875	%		2.5	%
Minimum common equity tier 1 capital ratio plus capital conservation buffer		4.5	%		5.125	%		5.75	%		6.375	%		7.0	%
Phase-in of most deductions from common equity tier 1 capital		40	%		60	%		80	%		100	%		100	%
Minimum tier 1 capital ratio		6.0	%		6.0	%		6.0	%		6.0	%		6.0	%
Minimum tier 1 capital ratio plus capital
conservation buffer		N/A			6.625	%		7.25	%		7.875	%		8.5	%
Minimum total capital ratio		8.0	%		8.0	%		8.0	%		8.0	%		8.0	%
Minimum total capital ratio plus capital
conservation buffer		N/A			8.625	%		9.25	%		9.875	%		10.5	%

As fully phased in, a banking organization with a buffer greater than 2.5% would not be subject to additional limits on dividend payments or discretionary bonus payments; however, a banking organization with a buffer less than 2.5% would be subject to increasingly stringent limitations as the buffer approaches zero. The new rule also prohibits a banking organization from making dividend payments or discretionary bonus payments if its eligible retained income is negative in that quarter and its capital conservation buffer ratio was less than 2.5% as of the beginning of that quarter. Eligible net income is defined as net income for the four calendar quarters preceding the current calendar quarter, net of any distributions and associated tax effects not already reflected in net income. A summary of payout restrictions based on the capital conservation buffer is as follows:

Capital Conservation Buffer	Maximum Payout
(as a % of risk-weighted assets)	(as a % of eligible retained income)
Greater than 2.5%		No payout limitation applies
≤2.5% and >1.875%		60	%
≤1.875% and >1.25%		40	%
≤1.25% and >0.625%		20	%
≤0.625%		0	%

Banking regulators limit the amount of dividends that may be paid by C&N Bank to the Corporation. Retained earnings against which dividends may be paid without prior approval of the banking regulators amounted to approximately $87,471,000 at December 31, 2015, 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 $15,733,000 at December 31, 2015.

83

19. PARENT COMPANY ONLY

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

CONDENSED BALANCE SHEET	December 31,
(In Thousands)	2015		2014
ASSETS
Cash	$	5,847	$	9,624
Investment in subsidiaries:
Citizens & Northern Bank		167,277		164,551
Citizens & Northern Investment Corporation		10,966		10,822
Bucktail Life Insurance Company		3,392		3,336
Other assets		24		36
TOTAL ASSETS	$	187,506	$	188,369
LIABILITIES AND STOCKHOLDERS' EQUITY
Other liabilities	$	19	$	7
Stockholders' equity		187,487		188,362
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	187,506	$	188,369

CONDENSED INCOME STATEMENT
(In Thousands)	2015			2014			2013
Dividends from Citizens & Northern Bank	$	11,569		$	22,608		$	11,108
Expenses		(234	)		(112	)		(108	)
Income before equity in undistributed income of subsidiaries		11,335			22,496			11,000
Equity in undistributed income (loss) of subsidiaries		5,136			(5,410	)		7,594
NET INCOME	$	16,471		$	17,086		$	18,594

CONDENSED STATEMENT OF CASH FLOWS
(In Thousands)
	2015			2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	16,471		$	17,086		$	18,594
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in undistributed net (income) loss  of
subsidiaries		(5,136	)		5,410			(7,594	)
Decrease (increase)  in other assets		12			(36	)		7
Increase in other liabilities		12			1			0
Net Cash Provided by Operating Activities		11,359			22,461			11,007
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of treasury stock		381			123			184
Tax benefit from compensation plans, net		143			137			127
Purchase of treasury stock		(4,415	)		(4,002	)		0
Dividends paid		(11,245	)		(11,392	)		(10,916	)
Net Cash (Used in) Financing Activities		(15,136	)		(15,134	)		(10,605	)
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(3,777	)		7,327			402
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		9,624			2,297			1,895
CASH AND CASH EQUIVALENTS, END OF YEAR	$	5,847		$	9,624		$	2,297

84

20. SUMMARY OF QUARTERLY CONSOLIDATED FINANCIAL DATA (Unaudited)

The following table presents summarized quarterly financial data for 2015 and 2014:

(In Thousands Except Per Share Data) (Unaudited)
	2015 Quarter Ended
	Mar. 31,		June 30,		Sept. 30,		Dec. 31,
Interest income	$	11,163	$	11,186	$	11,134	$	11,036
Interest expense		1,213		1,176		1,126		1,087
Net interest income		9,950		10,010		10,008		9,949
Provision for loan losses		3		221		302		319
Net interest income after provision for loan losses		9,947		9,789		9,706		9,630
Other income		3,487		3,962		3,961		3,994
Net gains on available-for-sale securities		74		932		79		1,776
Loss on prepayment of borrowings		0		910		0		1,663
Other expenses		8,464		7,964		8,117		8,411
Income before income tax provision		5,044		5,809		5,629		5,326
Income tax provision		1,229		1,452		1,395		1,261
Net income	$	3,815	$	4,357	$	4,234	$	4,065
Net income per share – basic	$	0.31	$	0.36	$	0.35	$	0.33
Net income per share – diluted	$	0.31	$	0.36	$	0.35	$	0.33

	2014 Quarter Ended
	Mar. 31,			June 30,		Sept. 30,		Dec. 31,
Interest income	$	11,406		$	11,563	$	11,572	$	11,468
Interest expense		1,288			1,290		1,287		1,257
Net interest income		10,118			10,273		10,285		10,211
(Credit) provision for loan losses		(311	)		446		218		123
Net interest income after (credit) provision for loan losses		10,429			9,827		10,067		10,088
Other income		3,751			3,980		3,887		3,802
Net gains on available-for-sale securities		31			103		760		210
Other expenses		8,524			8,347		9,036		8,250
Income before income tax provision		5,687			5,563		5,678		5,850
Income tax provision		1,399			1,400		1,411		1,482
Net income	$	4,288		$	4,163	$	4,267	$	4,368
Net income per share – basic	$	0.35		$	0.33	$	0.34	$	0.36
Net income per share – diluted	$	0.34		$	0.33	$	0.34	$	0.35

85

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, 2015 and 2014 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, 2015. 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, 2015 and 2014, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2015 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, 2015, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 18, 2016 expressed an unqualified opinion.

/s/ Baker Tilly Virchow Krause, LLP

Williamsport, Pennsylvania

February 18, 2016

86

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 effective 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 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. The Corporation’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 Corporation’s assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Corporation are being made only in accordance with authorizations of the Corporation’s management and directors; and (3) provide reasonable assurance regarding prevention, or timely detection and correction of unauthorized acquisition, use or disposition of the Corporation’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect and correct 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 and procedures may deteriorate.

The Corporation’s management assessed the effectiveness of the Corporation’s internal control over financial reporting as of December 31, 2015, based on the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control – Integrated Framework (2013). Based on that assessment, we concluded that, as of December 31, 2015, the Corporation’s internal control over financial reporting is effective based on the criteria established in Internal Control – Integrated Framework (2013).

Baker Tilly Virchow Krause, LLP, 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, 2015. That report appears below.

February 18, 2016	By:	/s/ J. Bradley Scovill
Date		President and Chief Executive Officer
February 18, 2016	By:	/s/ Mark A. Hughes
Date		Treasurer and Chief Financial Officer

87

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, 2015, based on criteria established in Internal Control-Integrated Framework (2013) 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 accounting principles generally accepted in the United States of America. 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.

88

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 & Northern Corporation and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control – Integrated Framework (2013) 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 18, 2016 expressed an unqualified opinion.

/s/  Baker Tilly Virchow Krause, LLP

Williamsport, Pennsylvania

February 18, 2016

89

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 2015 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 11, 2016 for the annual meeting of stockholders to be held on April 21, 2016.

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 11, 2016 for the annual meeting of stockholders to be held on April 21, 2016.

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 11, 2016 for the annual meeting of stockholders to be held on April 21, 2016.

“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 deposit balances 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 11, 2016 for the annual meeting of stockholders to be held on April 21, 2016.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information concerning services provided by the Corporation’s independent auditor Baker Tilly Virchow Krause LLP , 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 11, 2016 for the annual meeting of stockholders to be held on April 21, 2016.

90

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	86
Financial Statements:
Consolidated Balance Sheets - December 31, 2015 and 2014	38
Consolidated Statements of Income - Years Ended December 31, 2015, 2014 and 2013	39
Consolidated Statements of Comprehensive Income - Years Ended December 31, 2015, 2014 and 2013	40
Consolidated Statements of Changes in Stockholders' Equity - Years Ended December 31, 2015, 2014 and 2013	41
Consolidated Statements of Cash Flows - Years Ended December 31, 2015, 2014 and 2013	42
Notes to Consolidated Financial Statements	43-85

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

2. Plan of acquisition, reorganization, arrangement, liquidation or succession	Not applicable
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 Restricted Stock agreement dated January 5, 2016 between the Corporation and Executive Officers pursuant to the Citizens & Northern Corporation Stock Incentive Plan	Filed herewith
10.2 Form of Restricted Stock agreement dated January 5, 2016 between the Corporation and certain non-executive officers pursuant to the Citizens & Northern Corporation Stock Incentive Plan	Filed herewith
10.3 Form of Restricted Stock agreement dated January 5, 2016 between the Corporation and its independent directors pursuant to the Citizens & Northern Corporation Independent Directors Stock Incentive Plan	Filed herewith
10.4 Form of Restricted Stock agreement dated February 2, 2016 between the Corporation and J. Bradley Scovill pursuant to the Citizens & Northern Corporation Stock Incentive Plan	Filed herewith

91

10.5 2016 Annual Performance Incentive Award Plan	Filed herewith
10.6 2016 Annual Performance Incentive Award Plan - Mortgage Lenders	Filed herewith
10.7 Employment agreement dated March 2, 2015 between the Corporation and J. Bradley Scovill	Incorporated by reference to Exhibit 10.1 filed with Corporation’s Form 8-K on February 9, 2015
10.8 Employment agreement dated September 19, 2013 between the Corporation and Mark A. Hughes	Incorporated by reference to Exhibit 10.2 filed with Corporation’s Form 8-K on September 19, 2013
10.9 Employment agreement dated September 19, 2013 between the Corporation and Harold F. Hoose, III	Incorporated by reference to Exhibit 10.3 filed with Corporation’s Form 8-K on September 19, 2013
10.10 Employment agreement dated September 19, 2013 between the Corporation and Deborah E. Scott	Incorporated by reference to Exhibit 10.4 filed with Corporation’s Form 8-K on September 19, 2013
10.11 Form of Indemnification Agreement dated February 11, 2015 between the Corporation and Stan R. Dunsmore	Incorporated by reference to Exhibit 10.9 filed with Corporation’s Form 10-K on February 26, 2015
10.12 Form of Indemnification Agreement dated January 2, 2013 between the Corporation and Shelley L. D'Haene	Incorporated by reference to Exhibit 10.5 filed with Corporation’s Form 10-K on February 21, 2013
10.13 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
10.14 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 Corporation’s 10-K on March 11, 2005
10.15 Change in Control Agreement dated March 17, 2015 between the Corporation and Stan R. Dunsmore	Incorporated by reference to Exhibit 10.1 filed with Corporation’s Form 10-Q on May 8, 2015
10.16 Change in Control Agreement dated January 2, 2013 between the Corporation and Shelley L. D'Haene	Incorporated by reference to Exhibit 10.7 filed with Corporation’s Form 10-K on February 21, 2013
10.17 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
10.18  Change in Control Agreement dated January 20, 2005 Between the Corporation and John M. Reber	Filed herewith
10.19 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
10.20 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
10.21 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
10.22 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
10.23 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

92

10.24 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
10.25 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.
10.26 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 “Pages within Investor Relations,” “Corporate Governance Policies,” 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. Consent of Independent Registered Public Accounting Firm	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 11, 2016	Filed herewith
100. XBRL-related documents	Not applicable
101. Interactive data file	Filed herewith

93

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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 indicated.

By: /s/ J. Bradley Scovill

President and Chief Executive Officer

Date: February 18, 2016

By: /s/ Mark A. Hughes

Treasurer and Principal Accounting Officer

Date: February 18, 2016

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 18, 2016		Date: February 18, 2016
/s/	Jan E. Fisher	/s/	J. Bradley Scovill
	Jan E. Fisher		J. Bradley Scovill
	Date: February 18, 2016		Date: February 18, 2016
/s/	R. Bruce Haner	/s/	Leonard Simpson
	R. Bruce Haner		Leonard Simpson
	Date: February 18, 2016		Date: February 18, 2016
/s/	Susan E. Hartley	/s/	James E. Towner
	Susan E. Hartley		James E. Towner
	Date: February 18, 2016		Date: February 18, 2016
/s/	Leo F. Lambert	/s/	Ann M. Tyler
	Leo F. Lambert		Ann M. Tyler
	Date: February 18, 2016		Date:  February 18, 2016
/s/	Terry L. Lehman	/s/	Frank G. Pellegrino
	Terry L. Lehman		Frank G. Pellegrino
	Date: February 18, 2016		Date: February 18, 2016

EX-10.1

Exhibit 10.1

CITIZENS & NORTHERN CORPORATION

1995 STOCK INCENTIVE PLAN (As Amended)

RESTRICTED STOCK AGREEMENT – EXECUTIVE OFFICER

RESTRICTED STOCK AGREEMENT dated as of the 5^th day of January, 2016, by and between Citizens & Northern Corporation (the "Corporation") and _____________________, 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 of the Corporation's common stock and hereby grants such Restricted Shares.

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 without such legend shall be issued to the Recipient.

4. Release and Lapse of Restricted Shares. The release of restrictions or expiration of restricted shares awarded under this agreement shall occur over a period of three years. On each anniversary date of this award, one-sixth of the total shares will be distributed based on the Recipient’s satisfactory performance of his or her job. Additionally, on each anniversary date of this award, one-sixth of the total shares will be distributed based on the Recipient’s satisfactory performance of his or her job and the Corporation’s attainment of an earnings-based performance standard. The performance standard will be based on the Corporation achieving Return on Average Equity (ROAE) with a percent ranking of at least 50% of the ROAE achieved by a defined peer group of bank holding companies, herein defined, for the four consecutive calendar quarters ending with the third quarter of each calendar year following the Award Date. All Restricted Shares not distributed due to the Recipient’s unsatisfactory performance of his or her job or due to the Corporation failing to achieve an ROAE with a percent ranking of at least 50% of that of the defined peer group shall expire and revert back to the Corporation as of the anniversary date on which such determinations are made. 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 all publicly traded Commercial Banks and Thrifts headquartered in New Jersey, New York, Ohio and Pennsylvania with total assets of $750 million to $3.5 billion as of the end of the four consecutive calendar quarters ending with the third quarter of each calendar year following the Award Date.

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 Restricted Stock Agreement may be amended or modified at any time by an instrument in writing signed by the parties hereto.

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

By
	/s/ J. Bradley Scovill
	J. Bradley Scovill - 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 -

EX-10.2

Exhibit 10.2

CITIZENS & NORTHERN CORPORATION

1995 STOCK INCENTIVE PLAN (As Amended)

RESTRICTED STOCK AGREEMENT – NON-EXECUTIVE OFFICER

RESTRICTED STOCK AGREEMENT dated as of the 5^th day of January, 2016, by and between Citizens & Northern Corporation (the "Corporation") and ___________________, 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 of the Corporation's common stock and hereby grants such Restricted Shares.

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 without such legend shall be issued to the Recipient.

4. Release and Lapse of Restricted Shares. The release of restrictions or expiration of restricted shares awarded under this agreement shall occur over a period of three years. On each anniversary date of this award, 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. All Restricted Shares not distributed due to the Recipient’s unsatisfactory performance of his or her job shall expire and revert back to the Corporation as of the anniversary date on which such determinations are made. 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.

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 Restricted Stock Agreement may be amended or modified at any time by an instrument in writing signed by the parties hereto.

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

By
	/s/ J. Bradley Scovill
	J. Bradley Scovill – 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 -

EX-10.3

Exhibit 10.3

CITIZENS & NORTHERN CORPORATION

INDEPENDENT DIRECTORS STOCK INCENTIVE PLAN

RESTRICTED STOCK AGREEMENT

A total of Seven Hundred Thirty Four (734) 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 5, 2016 to ___________________ (herein the “Director”), subject in all respects to the terms and provisions of the Citizens & Northern Corporation Independent Directors Stock Incentive Plan (herein the “Plan”), dated April 17, 2001 and amended 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 on January 5, 2017, except as provided for in the Plan or described in the following section of this Agreement titled “Change in Control.”

CHANGE IN CONTROL

All Awards of 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), the full lapse of any restrictions on shares of Restricted Stock shall occur immediately prior to the consummation of such transaction; (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 (upon the occurrence of the events described in clause (b) or (c)), the full vesting and lapse of any restrictions on shares of Restricted Stock shall occur.

Dated: January 5, 2016

CITIZENS & NORTHERN CORPORATION
BY		/s/ J. Bradley Scovill
ATTEST:	J. Bradley Scovill - President & CEO

/s/ Kimberly N. Battin

Kimberly N. Battin, 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 Award subject to all the terms and provisions of the Plan.

Dated: _________________________
	_____________________________, Director

EX-10.4

Exhibit 10.4

CITIZENS & NORTHERN CORPORATION

1995 STOCK INCENTIVE PLAN (As Amended)

RESTRICTED STOCK AGREEMENT – EXECUTIVE OFFICER

RESTRICTED STOCK AGREEMENT dated as of the 2nd day of February, 2016, by and between Citizens & Northern Corporation (the "Corporation") and J. Bradley Scovill, 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, 177 Restricted Shares of the Corporation's common stock and hereby grants such Restricted Shares.

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 without such legend shall be issued to the Recipient.

4. Release and Lapse of Restricted Shares. The release of restrictions or expiration of restricted shares awarded under this agreement shall occur over a period of three years. On each anniversary date of this award, one-sixth of the total shares will be distributed based on the Recipient’s satisfactory performance of his or her job. Additionally, on each anniversary date of this award, one-sixth of the total shares will be distributed based on the Recipient’s satisfactory performance of his or her job and the Corporation’s attainment of an earnings-based performance standard. The performance standard will be based on the Corporation achieving Return on Average Equity (ROAE) with a percent ranking of at least 50% of the ROAE achieved by a defined peer group of bank holding companies, herein defined, for the four consecutive calendar quarters ending with the third quarter of each calendar year following the Award Date. All Restricted Shares not distributed due to the Recipient’s unsatisfactory performance of his or her job or due to the Corporation failing to achieve an ROAE with a percent ranking of at least 50% of that of the defined peer group shall expire and revert back to the Corporation as of the anniversary date on which such determinations are made. 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 all publicly traded Commercial Banks and Thrifts headquartered in New Jersey, New York, Ohio and Pennsylvania with total assets of $750 million to $3.5 billion as of the end of the four consecutive calendar quarters ending with the third quarter of each calendar year following the Award Date.

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 Restricted Stock Agreement may be amended or modified at any time by an instrument in writing signed by the parties hereto.

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

By
	/s/ J. Bradley Scovill
	J. Bradley Scovill - 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.
	/s/ J. Bradley Scovill
	Recipient – J. Bradley Scovill

EX-10.5

Exhibit 10.5

 

2016 Annual Performance Incentive Award Plan (*)

Part I: Plan Administration

Section 1: Purpose of the Plan

The purpose of the Performance Incentive Award Plan ("the Plan") is to provide variable compensation to those employees in key positions who attain and sustain consistently high levels of performance by meeting and exceeding goals and expectations that contribute to the success, profitability, and return to the shareholders of Citizens & Northern Corporation and affiliated Employer(s). The Plan is designed to support operational objectives and financial goals as defined by the long-range and short-range strategic and financial Plans. Additionally, the Plan is designed to provide a component of the management compensation package essential to retaining and attracting quality employees to key positions that contribute significantly to the bank’s financial performance. A key position for the purpose of this plan is a job role that is typically, within the community banking and financial services industries, eligible for performance-based incentive compensation.

Section 2: General Description

There are three components of the Plan: (1) corporate performance; (2) unit/functional performance; and (3) individual performance. The corporate performance component will be subject to the Corporation’s attainment of financial goals relative to a defined peer group. Further, in order for a participant to earn the corporate performance component, the participant must attain at least the threshold performance level for the aggregate of composite unit/functional and individual goals. The individual performance component will be subject to an evaluation of the participants’ overall contributions to the “team”. To earn the individual component, the participant must attain at least the threshold performance level.

The unit/functional component is based on the attainment of pre-established goals by the participant and often a team of participants in a given business unit, e.g., retail branch system, commercial lending team. Depending upon the participant’s function, attainment of goals for the participant’s region also may be evaluated to determine a portion of the unit/functional bonus. For example, a Community Office Manager’s unit/functional component goals for deposit growth, loan growth, non-interest income growth, FTE management, et cetera could be a combination of group performances by the Retail Unit as a whole and individual achievement by the manager in his/her own territory/office. To receive the unit/functional bonus payout, the participant must achieve at least the threshold level. Even after attaining at least the Threshold performance, the plan permits the participant’s supervisor or the executive officer for the participant’s area to recommend no bonus payout, or a reduced amount (Corporate, Unit/Functional or Individual) if aspects of the participant’s performance are deemed unsatisfactory.

(*) Employees who are actively engaged in interviewing residential real estate mortgage applicants, processing the applications and closing the loans are excluded from this plan. The Corporation has a separate incentive award plan for such employees.

The Plan protects shareholders' interests by requiring that the goals established will enhance bottom line performance while not encouraging excessive risk-taking and that a minimum level of performance is achieved before any incentive award can be made. At the same time the Plan provides management with a means to retain and attract top performers who increase the organization’s financial performance by attaining their performance goals. The Plan requires that management perform an annual assessment and establishment of goals and provides a performance review and measurement system. The Plan requires management to consider non-financial goals designed to improve operational and risk management effectiveness, as well as financial goals, as appropriate for each participant’s position. The Plan permits future inclusion of additional positions during a Plan year, if the need arises.

The calculation of the bonus to be distributed to the Plan participants, and the incentive formulas, are constructed to provide awards consistent with strong corporate financial performance and the participant’s exceptional performance in his/her unit/functional area. The incentive formulas ensure a level of incentive award that is competitive with comparable positions and job levels in similar financial institutions, thus enabling Citizens & Northern to attract, retain, and motivate high-performing personnel and support continued growth and profitability. The determination of the bonus payable is described in Part II of this Plan.

The Plan is established to augment regular salary and benefit programs already in existence. The Incentive Plan is not meant to be a substitute for salary increases but supplemental to salary and as stated earlier, a reward for “exceptional" performance.

The Plan has been developed to recognize that the amount of incentive bonus award attainable by key executives should vary depending upon the executive’s position with the company and the competitive levels of incentive bonus for those positions within the banking and financial service industry. Thus threshold, target and maximum Incentive Opportunities are established for each position.

Section 3: Other Payment Conditions

Termination for Reasons Other Than Death, Permanent Disability or Retirement – In the event of termination of employment for reasons other than death, permanent disability or retirement, the participant, at the discretion of the committee, may forfeit all unpaid incentive awards.

The Compensation Committee of the Board, and management, reserve the right to deny or modify an award to any participant. Such action may be due to, but not limited to, the failure of the participant to properly perform during the Plan year. Economic or other circumstances and considerations may dictate that incentive bonuses be reduced or eliminated in any given year. Accordingly, the Board of Directors may amend, alter or terminate the Plan at any time.

In the event a participant becomes disabled for a period greater than two (2) weeks, any salary continuation as a result of the Corporation’s short and long-term disability programs will not be included in the base salary used for the incentive bonus calculation.

Page 2 of 6

Section 4: Administration of the Plan

Throughout this Plan, reference to the actions and authority of the Compensation Committee of the Board of Directors ("the Committee") also presumes that the Committee will recommend, and the board of directors will approve or disapprove, final disposition of all matters pertaining to administration of the Plan. The Committee, with board approval, has the responsibility to interpret, administer, and amend the Plan as necessary. The recommendations of the Committee as approved by the board, affecting the construction, interpretation, and administration of the Plan shall be final and binding on all parties, including the Corporation, its subsidiaries and employees.

At or before the beginning of each Plan year, the Committee will review and may revise the operating rules. Performance targets the Incentive Bonus Plan Performance Matrix, and the Incentive Opportunity levels for corporate, individual and unit/functional awards for attaining those targets may be changed in order to emphasize specific goals and objectives of the Plan and to maintain a competitive incentive program. However, it is expected that the Plan will require modification only when significant changes in the organization, goals, personnel, or performance occur. The Chief Executive Officer shall be the Plan czar with the power to control and oversee proper administration of the Plan, and may recommend to the Committee proposed changes to the operating rules. Additionally, the Committee may engage a third party expert to review and amend the plan.

An individual or individuals designated by the Chief Executive Officer will perform the computation of incentive awards. Maintenance of participant payment records shall be the responsibility of the Human Resource Director.

Finally, the committee, with board approval, may exclude extraordinary occurrences, which could affect the performance awards, either positively or negatively, but are by their nature outside the significant influence of Plan participants. The characteristics of such extraordinary occurrences are generally that they involve the senior management and the board of directors in:

· The original decision to take some action.

· Mission-driven strategic Initiatives that sacrifice short-term income for long-term gain.

· Issues most related to a restructuring of assets, or unusual expense or income realization.

Extraordinary occurrences may be excluded when calculating performance results to ensure that the best interests of the shareholders are protected and are not brought into conflict with the intent of the Plan. When and if extraordinary occurrences are excluded from the calculation of corporate performance measures, they should also be excluded in calculating the bonus.

Section 5: Plan Participants

Executive management shall select and recommend for participation in the Plan employees in those job positions that are responsible for directing, implementing and performing functions that have a significant influence on the profitability and operational performance of the bank (key employees). Those job positions which are selected for participation in the Plan will be in positions that normally include an incentive bonus component in the compensation package offered by similar financial institutions.

Page 3 of 6

At or before the beginning of each Plan year, the Committee shall review the recommendations of management on the selection of those positions eligible for participation in the Plan for that year. Management shall recommend the Incentive Bonus Plan Performance Matrix for the year. Additionally, management shall recommend a threshold, target and maximum Incentive Opportunity percentage of base salary for each position. Participants shall be notified of their eligibility as soon as selection is completed and the board of directors has adopted the Plan. The Committee shall review and recommend the inclusion of participants to the full board for their approval.

Positions and thus participants may be added during the Plan year at the discretion of management and the Committee, and the incentive award will be prorated from date of entry into the Plan.

Section 6: Payment of Individual Incentive Compensation Awards

Within 60 days following the end of the Plan year and as soon as the participant’s performance has been evaluated and the financial and operating results are known, participants will receive their incentive payment as determined by the Incentive Bonus Plan Performance Matrix.

Section 7: Incentive Compensation Plan Operating Rules

Before the beginning of each Plan year, the Committee may review and revise, if deemed appropriate, Part II: Operating Rules of the Plan for the year then beginning. The operating rules shall include the following:

a) Identification of positions selected for participation in the Plan

b) The method for determining the amount of the total bonus to be paid to Plan participants, including the Incentive Bonus Plan Performance Matrix.

c) Schedules and formulas for determining the amount of the incentive compensation awards to Plan participants for the Plan year then beginning, including threshold, target and maximum performance measures and the percentage of bonus award determined by corporate, functional/unit and individual performances. Participants will be informed at or before the Plan year of the manner in which performance will be evaluated.

d) Other administrative and procedural rules, which the committee considers appropriate.

After approval by the Committee and the board of directors, management shall, as soon as practical, inform each of the participants of the operating rules for the Plan year then beginning.

Page 4 of 6

Section 8: Performance Progress Reporting

Semi-annually the Plan czar will be responsible for communicating attainment of corporate goals during the course of the Plan year. Participants and their direct supervisors will meet periodically to review their performance relative to the established unit/functional and individual goals.

Section 9: Amendment or Termination of Plan

The committee, with concurrence of the board of directors, may terminate, amend, or modify this Plan at any time. The termination, amendment, or modification of the Plan may affect a participant's right to unpaid incentive compensation awards under this Plan.

Section 10: Other Considerations

Recoupment-  Amounts allocated or paid pursuant to this Plan shall be subject to recovery by the Corporation under any claw back, recovery, recoupment or similar policy hereafter adopted by the Corporation, whether in connection with Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, as amended from time to time, or otherwise, whether or not required by law.

Active Employment Contingency- Except in the case of a retirement, if a participant voluntarily terminates his or her employment with the Corporation or Bank prior to the date of bonus payout, the bonus will be forfeited.

Right of Assignment - No right or interest of any participant in the Plan shall be assignable or transferable, or subject to any lien, directly, by operation of law, or otherwise, including levy, garnishment, attachment, pledge, or bankruptcy.

Right of Employment - The participation in or the receipt of an award under this Plan shall not guarantee any employee any right to continued employment; the right to dismiss any employee is specifically reserved to the organization. The receipt of an award for any one year shall not guarantee an employee the right to receive an award for any subsequent year.

Change of Position – If a participant transfers to another position in the organization that is not included in the Incentive Compensation Plan, they will cease being a Plan participant. At the time of the position change a determination will be made as to whether the participant will be eligible for a bonus for the period during which they were a participant.

Withholding for Taxes - The organization shall have the right to deduct from all payments under this Plan any federal, state or local taxes required by law to be withheld with respect to such payments.

Salary - Salary is defined as base earnings for the year, which includes any increase in weekly rate of pay but not including any referral awards, brokerage or insurance commissions, golden nugget payments, taxable fringe benefits or prior bonus payments.

Board Prerogatives – It will be the right of the Board of Directors to amend, alter and/or terminate the plan in its sole discretion at any time.

Page 5 of 6

Part II: Operating Rules

Section l: General

The following Incentive Compensation Plan Operating Rules will be in effect during 2016 and until revised. These operating rules are subject to change by the Committee before the start of the Plan year, with the approval of the board of directors. It is anticipated that the rules for 2016 will be revised only if significant changes occur in organization, operations, industry compensation practices, or other pertinent factors.

Section 2: Corporate Performance Component - Incentive Bonus Plan Performance Matrix for 2016

The corporate performance component of the Incentive Bonus is calculated based on comparison of C&N’s Return on Average Equity (ROAE) to that of a Peer Group. The chart below will determine the Incentive Opportunity percentage of base salary from which the corporate performance component of a participant’s bonus would be paid:

C&N's	Corporate
Percent	Award as
ROAE Rank	% of
vs Peer	Target
25		33	%
30		46.4	%
35		59.8	%
40		73.2	%
45		86.6	%
50		100	%
55		110.0	%
60		120.0	%
65		130.0	%
70		140.0	%
75		150	%
80		150	%
85		150	%
90		150	%
95		150	%
100		150	%
>100		150	%

****************************************************************

*The Peer Group shall include all publicly traded commercial banks and thrifts within NJ, NY, OH and PA with total assets between $750 million and $3.5 Billion.

Page 6 of 6

EX-10.6

Exhibit 10.6

2016 Annual Performance Incentive Award Plan – Mortgage Lenders

Section 1: Purpose of the Plan

The purpose of the Performance Incentive Award Plan ("the Plan") is to provide variable compensation to Citizens & Northern employees who are actively engaged in interviewing residential real estate applicants, processing the applications and closing the loans. The Plan is designed to reward mortgage lending employees who attain and sustain consistently high levels of performance by meeting and exceeding defined goals and to provide a component of the compensation package essential to retaining and attracting quality employees in mortgage lending positions. Incentive awards are not directly tied to Company/mortgage business profits nor the terms of the closed-end mortgage transaction or a proxy for a transaction term. The expense of the plan is incorporated into the Company’s operating budget. The objective is to align the interests of these employees with the interests of the Company in obtaining superior performance results while being in compliance with the SAFE Act and 12 CFR Part 1026.36 (Regulation Z).

Section 2: General Description

There are two components of the Plan: (1) unit/functional performance; and (2) individual performance. The individual performance component will be subject to an evaluation of the participants’ overall contributions to the “team”. To earn the individual component, the participant must attain at least the threshold performance level.The unit/functional component is based on the attainment of pre-established goals by the applicable branch or mortgage lending business unit,. To receive the unit/functional bonus payout, the participant must achieve at least the threshold level.

In addition to goals based on production, the Plan requires management to consider non-financial goals designed to improve operational and risk management effectiveness, as appropriate for each participant’s position. The Plan permits future inclusion of additional positions during a Plan year, if the need arises.

The incentive formulas ensure a level of incentive award that is competitive with comparable positions and job levels in similar financial institutions, thus enabling Citizens & Northern to attract, retain, and motivate high-performing mortgage lending employees.

The Plan is established to augment regular salary and benefit programs already in existence. The Incentive Plan is not meant to be a substitute for salary increases but supplemental to salary and as stated earlier, a reward for “exceptional" performance.

The Plan has been developed to recognize that the amount of incentive bonus award attainable by key mortgage lending employees should vary depending upon the employee’s position with the company and the competitive levels of incentive bonus for those positions within the banking and financial service industry. Thus threshold, target and maximum Incentive Opportunities are established for each position.

Section 3: Other Payment Conditions

Termination for Reasons Other Than Death, Permanent Disability or Retirement – In the event of termination of employment for reasons other than death, permanent disability or retirement, the participant, at the discretion of the committee, may forfeit all unpaid incentive awards.

In the event a participant becomes disabled for a period greater than two (2) weeks, any salary continuation as a result of the Corporation’s short and long-term disability programs will not be included in the base salary used for the incentive bonus calculation.

Section 4: Administration of the Plan

Throughout this Plan, reference to the actions and authority of the Compensation Committee of the Board of Directors ("the Committee") presumes that the Committee will recommend, and the board of directors will approve or disapprove, final disposition of all matters pertaining to administration of the Plan. The Committee, with board approval, has the responsibility to interpret, administer, and amend the Plan as necessary. The recommendations of the Committee as approved by the board, affecting the construction, interpretation, and administration of the Plan shall be final and binding on all parties, including the Corporation, its subsidiaries and employees.

At or before the beginning of each Plan year, the Committee will review and may revise the operating rules. The Incentive Opportunity levels for individual and unit/functional awards for attaining those targets may be changed in order to maintain a competitive incentive program. However, it is expected that the Plan will require modification only when significant changes in the organization, goals, personnel, or performance occur. The Chief Executive Officer shall be the Plan czar with the power to control and oversee proper administration of the Plan, and may recommend to the Committee proposed changes to the operating rules. Additionally, the Committee may engage a third party expert to review and amend the plan.

An individual or individuals designated by the Chief Executive Officer will perform the computation of incentive awards. Maintenance of participant payment records shall be the responsibility of the Human Resource Director.

Section 5: Plan Participants

Executive management shall select and recommend for participation in the Plan employees in those job positions that are responsible for mortgage lending functions. Those job positions which are selected for participation in the Plan will be in positions that normally include an incentive bonus component in the compensation package offered by similar financial institutions.

Page 2 of 4

At or before the beginning of each Plan year, the Committee shall review the recommendations of management on the selection of those positions eligible for participation in the Plan for that year. Additionally, management shall recommend a threshold, target and maximum Incentive Opportunity percentage of base salary for each position. Participants shall be notified of their eligibility as soon as selection is completed and the board of directors has adopted the Plan. The Committee shall review and recommend the inclusion of participants to the full board for their approval.

Positions and thus participants may be added during the Plan year at the discretion of management and the Committee, and the incentive award will be prorated from date of entry into the Plan.

Section 6: Payment of Individual Incentive Compensation Awards

Within 60 days following the end of the Plan year and as soon as the participant’s performance has been evaluated, participants will receive their incentive payment.

Section 7: Incentive Compensation Plan Operating Rules

Before the beginning of each Plan year, the Committee may review and revise, if deemed appropriate, the operating rules of the Plan for the year then beginning. The operating rules shall include the following:

a) Identification of positions selected for participation in the Plan

b) The method for determining the amount of the total bonus to be paid to Plan participants.

c) Schedules and formulas for determining the amount of the incentive compensation awards to Plan participants for the Plan year then beginning, including threshold, target and maximum performance measures and the percentage of bonus award determined by functional/unit and individual performances. Participants will be informed at or before the Plan year of the manner in which performance will be evaluated.

d) Other administrative and procedural rules, which the Committee considers appropriate.

After approval by the Committee and the board of directors, management shall, as soon as practical, inform each of the participants of the operating rules for the Plan year then beginning.

Section 8: Performance Progress Reporting

Participants and their direct supervisors will meet periodically to review their performance relative to the established unit/functional and individual goals.

Page 3 of 4

Section 9: Amendment or Termination of Plan

The Committee, with concurrence of the board of directors, may terminate, amend, or modify this Plan at any time. The termination, amendment, or modification of the Plan will not affect a participant's right to unpaid incentive compensation awards under this Plan.

Section 10: Other Considerations

Recoupment-  Amounts allocated or paid pursuant to this Plan shall be subject to recovery by the Corporation under any claw back, recovery, recoupment or similar policy hereafter adopted by the Corporation, whether in connection with Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, as amended from time to time, or otherwise, whether or not required by law.

Active Employment Contingency- Except in the case of a retirement, if a participant voluntarily is not actively employed by the Corporation prior to the date of bonus payout, the bonus will be forfeited.

Right of Assignment - No right or interest of any participant in the Plan shall be assignable or transferable, or subject to any lien, directly, by operation of law, or otherwise, including levy, garnishment, attachment, pledge, or bankruptcy.

Right of Employment - The participation in or the receipt of an award under this Plan shall not guarantee any employee any right to continued employment; the right to dismiss any employee is specifically reserved to the organization. The receipt of an award for any one year shall not guarantee an employee the right to receive an award for any subsequent year.

Change of Position – If a participant transfers to another position in the organization that is not included in the Incentive Compensation Plan, they will cease being a Plan participant. At the time of the position change a determination will be made as to whether the participant will be eligible for a bonus for the period during which they were a participant.

Withholding for Taxes - The organization shall have the right to deduct from all payments under this Plan any federal, state or local taxes required by law to be withheld with respect to such payments.

Salary - Salary is defined as base earnings for the year, which includes any increase in weekly rate of pay but not including any referral awards, brokerage or insurance commissions, golden nugget payments, taxable fringe benefits or prior bonus payments.

Board Prerogatives – It will be the right of the Board of Directors to amend, alter and/or terminate the plan in its sole discretion at any time. Any Incentive Bonus earned by the Participant at the time of amendment, alteration and/or termination shall remain due and payable as stated.

Page 4 of 4

EX-10.18

EXHIBIT 10.18

CHANGE IN CONTROL AGREEMENT

THIS CHANGE IN CONTROL AGREEMENT (“Agreement”) is entered into as of the 20th day of January, 2005, by and among CITIZENS & NORTHERN CORPORATION, a Pennsylvania corporation (the “Corporation”), CITIZENS & NORTHERN BANK, a Pennsylvania bank (the “Bank”), and JOHN M. REBER, 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, 2005; 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:	/s/John M.Reber
Printed Name:	JOHN M. REBER
Address:	755 Brown Road
	Wellsboro, PA 16901
Date:	1/27/05

CORPORATION:
CITIZENS & NORTHERN CORPORATION
By:	/s/Craig G. Litchfield
Title:	Chairman, President and CEO
Date:	1/26/05

	BANK:
	CITIZENS & NORTHERN BANK
	By:	/s/Craig G. Litchfield
	Title:	Chairman, President and CEO
	Date:	1/26/05
By:

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 18, 2016, relating to the consolidated financial statements and the effectiveness of Citizens & Northern Corporation and subsidiaries’ internal control over financial reporting, which appear in this Form 10-K.

/s/ Baker Tilley Virchow Krause, LLP

Williamsport, Pennsylvania

February 18, 2016

EX-31.1

Exhibit 31.1

CERTIFICATION

I, J. Bradley Scovill, 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 18, 2016	By: /s/ J. Bradley Scovill
Date	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Mark A. Hughes, 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 control 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 18, 2016	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, 2015, 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 18, 2016	By: /s/ J. Bradley Scovill
Date	President and Chief Executive Officer
February 18, 2016	By: /s/ Mark A. Hughes
Date	Treasurer and Chief Financial Officer

EX-99.1

Exhibit 99.1

Committed to our communities, our local families and businesses, our employees and our shareholders living our values every day CITIZENS & NORTHERN CORPORATION 2015 Annual Highlights  

living our values every day On the cover Inside this report In March of 2015 Citizens & Northern Bank launched its Giving Back, Giving Together Community Involvement Initiative. By Giving Together as employees of Citizens & Northern Bank we were able to raise more than $50,000 in support of 22 local food pantries in our communities. In addition, 6,583 food items were collected during quarterly food drives in our offices and our employees volunteered at food pantries 111 times. Throughout this year's Annual Highlights we'll share remarks from our customers, employees and community organizations. We wanted to know why they bank at, partner with and work for C&N and if they feel we live our values. Their answers were so gratifying we wanted to share them with you. Also throughout the year, C&N contributed thousands of dollars to other local non-profit organizations. This dedication to the communities we serve is just a part of how the C&N team lives our values - every day. "Everything showed an amazing amount of teamwork" This year, Citizens & Northern Bank took huge strides in fighting hunger in their communities. After meeting with a few staff members, I realized that I was working with an engaged, enthusiastic and committed group of individuals, that would make any endeavor a success! We were able to bring more awareness to the hunger issues in our communities through the campaign they ran throughout their service territory. We also were incredibly grateful for their food and financial donations. Citizens & Northern Bank certainly lives up to their values. Everything that was done this year for the Central Pennsylvania Food Bank showed an amazing amount of teamwork. Jamie Caputo, Development and Community Relations Director - Northern Tier, Central PA Food Bank Jamie Caputo, left, of the Central PA Food Bank and Liz: Johnson, Regional Community Office Manager, Sayre, ready a box of donated items lor distribution. Member FDIC teamwork excellence respect responsibility and accountability integrity client-focus fun 

living our values every day Citizens & Northern Bank customers have come to expect more from us than just a transaction. As Your Bank for a Lifetime, it's our mission to create value through lifelong relationships with our neighbors. Managing your finances should be a rewarding, trouble-free experience... so you can spend less time making a living, and more time making a life. "Banking with C&N gives me peace of mind" My many years of just personal banking at C&N have been great. Now several years of my association with the Trust* department (Marla and Brian) have been excellent as well. They are the team that I have come to know and respect all the while recognizing there are many others backing them who I don't know. Banking with C&N gives me peace of mind. I knew I had trustworthy individuals working with me, advising me, yet allowing my input to be considered. I have never had a moment of doubt that they had my best welfare in mind and have been treated with true respect each time we meet. Kay Hoag 50-year customer "C&N helped me reach my goals for my business" I have found exemplary conduct and attitude among all the loan officers at the Athens branch. Ginger in particular is a joy to do business with and follows through in a very timely fashion with everything she says. I do business with C&N bank because it is comprised of local people who understand, can sympathize with, and will work to help you resolve your problems and meet your goals. Opening a user friendly and affordable business account and establishing a business relationship through which I could secure a business loan in the future helped me reach my goals for my business. Daniel J. Rossiter, Jr., Owner Custom Stocks and Steel, Athens 'Some products are not FDIC insured or guaranteed, not a deposit or other obligation of the bank, not guaranteed by the bank and are subject to investment risk, including possible loss of the principal amount invested and are not insured by any other federal government agency. teamwork excellence respect responsibility and accountability integrity client-focus fun [1]  

living our values every day A Message from Our President J. Bradley Scovill President and CEO 2015 was a year of alignment and progress at C&N. Your Company produced very solid financial results in an environment where the continuing themes of modest economic growth, persistently low interest rates, and increasing regulation were complemented by major upheaval in the energy markets, a political/budget impasse in the state of Pennsylvania, and the early stages of a very unusual presidential election cycle. While all of these issues affect us in some way, the impact of advancing technology on delivery of financial services and new types of competition is providing opportunities and challenges for our bank and industry. Citizens & Northern Bank's Net income for the year was $16.5 million compared to $17.1 million in 2014. Earnings per share were $1.35 and $1.38 for the same periods. Return on average equity for 2015 was 8.72% and return on average assets was 1.32%, very strong measures relative to our peers in the industry. Earnings per share fell by 2% in 2015 as compared to 2014. While net interest income declined by 2.4%, strong loan growth provided some support and we prepaid a substantial portion of high cost borrowings during the year that will enhance the margin going forward. The provision for loan losses increased nearly 80% in order to support loan growth, although overall credit quality remains strong. Non margin revenues were essentially flat in most categories, but remain very strong relative to peer performance. Core noninterest expenses decreased by 3.5% primarily due to reductions in salaries and employee benefits. Finally, we booked securities gains of $2.9 million that were substantially offset by losses of $2.6 million resulting from the previously mentioned prepayment of high cost borrowings. On the balance sheet, total assets declined by 1.5% due to a 3.3% reduction in deposits. There was a significant shift in our asset mix as the growth in loans was funded by a reduction in the volume of investment securities. While these changes create a more profitable mix in the near term, we plan to fund loan growth with a renewed emphasis on deposit gathering moving forward. Capital remains very strong and provides us with the capacity to support our plans for growth and expansion. Capital remains very strong and provides us with the capacity to support our plans for growth and expansion. CZNC stock ended the year at $21.00, an increase of 1.6% for the year. CZNC stock ended the year at $21.00 an increase of 1.6% for the year, and dividends per share were $1.04 producing a yield of 4.95% on the December 31, 2015 market price. Additionally, we made progress on the 5% share repurchase plan that was announced in July 2014. At year-end, a total of 435,200 of the 622,500 shares approved under the plan had been repurchased at an average price of $19.34 per share. We will continue to focus on efforts that position the stock to be fairly valued for our current and future investors. President's message continued Page 3 [2] teamwork excellence respect responsibility and accountability integrity client-focus fun  

living our values every day A Message from Our President Continued from Page 2 "Your Bank for a Lifetime" is the tagline we use in branding C&N and it reflects the mission of our company which is "Creating Value Through Lifelong Relationships". We have a combination of banking and wealth management skills that are unique in our market and that position us to deliver on this promise. Our team of experienced professionals use our scale and strong capital base to provide you with sophisticated solutions to your financial needs and grow the organization. While in recent years our growth has stalled, 2015 was a year of progress as we focused our efforts on re-energizing and aligning the C&N Team to drive profitable growth. Throughout the year, we built and maintained momentum in expanding customer relationships as evidenced by loan growth totaling $74 million, which included increases in all loan categories. Each new loan involves a customer relationship that can be enhanced by the value delivered through our team of professional bankers and wealth managers. To reinforce this focus, our entire Team is engaged in implementing a sales/relationship management system that aligns all business activities to deliver value for our customers. We believe that this model will improve our ability to drive revenue growth across all business lines. Inherent in this alignment is investment in technology that contributes to an improved customer experience and enhanced productivity. We completed work on a new website that was rolled out late January 2016. This site now serves as the foundation for enhancing on-line services moving forward that will simplify and provide greater access to our customers. This access will connect with in-branch, call center, and mobile delivery channels as we coordinate our "high touch" experience with the "high tech" tools that our customers increasingly demand. To be successful, we are making substantial investments in equipping our people with the skills required to bring value to each customer relationship. The environment and industry remain very dynamic and requires that each member of the Team is developing their capabilities. The pace of change continues to accelerate and is reflected by a renewed sense of urgency at C&N. We have a very engaged staff that is excited by the opportunities that are open to the Team moving forward. Finally, we remain committed to the values that serve as the foundation for building relationships both inside C&N and with our communities, customers, and shareholders. Teamwork, Excellence, Respect, Responsibility and Accountability, Integrity, Client-focus and Having Fun, are part of the daily conversation at C&N. The results of our "Giving Back, Giving Together" initiative for 2015 to support the local food banks throughout our markets were outstanding. Not only because we collectively raised over $50,000 to help meet the need, but we also established many relationships throughout our communities that will endure. We will be working to support volunteer emergency services in a similar fashion during 2016. As you read this Annual Review, note how our Mission and Values come together to create valued relationships with our customers as we work to become their "Bank for a Lifetime". We made great progress during 2015 with this mission, helping our customers, and positioning C&N to pursue profitable growth in a very dynamic industry. We will continue to invest and align everything we do to create value for customers and our Team, and are confident in our capacity to create long term value for our shareholders. We thank our shareholders for your investment and ongoing support. "Your Bank for a Lifetime" is the tagline we use in branding C&N and it reflects the mission of our company which is "Creating Value Through Lifelong Relationships". We have a combination of banking and wealth management skills that are unique in our market and that positions us to deliver on this promise." teamwork excellence respect responsibility and accountability integrity client-focus fun [3]  

living our values every day Five Year Comparison NET INCOME in thousands CASH DIVIDENDS DECLARED DEPOSITS in thousands PER SHARE 2015 $16,471 2015 1.04 2015 $935,615 2014 $17,086 2014 1.04 2014 8967,989 2013 $18,594 2013 1.00 2013 $954,516 2012 $22,705 2012 0.84 2012 $1,006,106 2011 $23,368 2011 0.58 2011 $1,018,206 GROSS LOANS In thousands TOTAL ASSETS in thousands TOTAL SHAREHOLDERS' EQUITY in thousands 2015 $704,880 2015 $1,223,417 2015 $187,487 2014 $630,545 2014 $1,241,963 2014 $188,362 2013 $644,303 2013 $1,237,695 2013 $179,472 2012 $683,910 2012 $1,286,907 2012 $182,786 2011 $708,315 2011 $1,323,735 2011 $167,385 Total Return Performance Period Ending Index 12/31/10 12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 C&N Corp 100.00 128.69 137.49 157.68 166.63 178.31 Russell 2000 100.00 95.82 111.49 154.78 162.35 155.18 CZNC Peer 100.00 93.86 112 37 140.86 154.64 162.21 Group Index* *CZNC Peer Group Index (Pennsylvania Bank and Thrift Companies with Total Assets between $700M-$2B as of 9/30/2015). This graph was obtained from SNL Financial LC, Charlottesville VA ©2016 This chart compares 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, 2010 and ended December 31, 2015. 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. A listing of companies comprising the peer group is provided in the Corporation's Annual Report on Form 10-K. [4] teamwork excellence respect responsibility and accountability integrity client-focus fun

living our values every day Our Corporate Profile Citizens & Northern Corporation is a bank holding company with assets of approximately $1.2 billion and is headquartered in Wellsboro, PA. Banking services are provided by its subsidiary, Citizens & Northern Bank, from 26 banking offices in Bradford, Cameron, Lycoming, McKean, Potter, Sullivan and Tioga Counties in Pennsylvania and Steuben County in New York. Investment products are offered through C&N Investment Services and insurance products are offered by C&N Financial Services Corp. Trust services are offered by Citizens & Northern Bank through the C&N Trust and Financial Management Group. Citizens & Northern stock trades on the NASDAQ Capital Market Securities under the symbol CZNC. Our Corporate Officers J. Bradley Scovill President and CEO Mark A. Hughes Treasurer Kimberly N. Battin Corporate Secretary "C&N captured our vision and mission" When Endless Mountain Music Festival was first founded in 2005, we opened our checking account with C&N Bank. It was that initial partnership that helped the festival grow from a 12 member orchestra to a 60 member orchestra that we are proud to showcase each summer. Partnering with C&N was easy because they captured the festival's vision and mission to enrich the cultural, educational and economic life of the region. The festival was able to grow from six concerts in 2006 to sixteen concerts in sixteen days by 2015. This is a direct result of the financial impact that Citizens & Northern Bank has given to EMMF over the past ten years. Because of C&N's financial support, we are able to strengthen our educational outreach programs and perform full orchestra concerts. We were able to impact over 2,000 students and senior citizens through educational programs. Cindy Long, Executive Director Endless Mountain Music Festival teamwork excellence respect responsibility and accountability integrity client-focus fun [5]  

living our values every day 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 NASDAQ Capital Market Securities with the trading symbol CZNC. The following tables show the approximate high and low sales price of the common stock during 2015 and 2014. 2015 High Low Dividend declared per Quarter First Quarter $21.50 $19.01 $0.26 Second Quarter $21.17 $19.16 $0.26 Third Quarter $20.73 $19.25 $0.26 Fourth Quarter $21.45 $19.07 $0.26 2014 High Low Dividend declared per Quarter First Quarter $20.74 $18.19 $0.26 Second Quarter $20.10 $17.94 $0.26 Third Quarter $20.10 $18.50 $0.26 Fourth Quarter $21.49 $18.83 $0.26 "We're very happy with C&N and the services they provide" Lucille Gale Knapp, who was once a resident of Galeton, established the William and L. R. Gale Community Foundation also known as the Galeton Foundation in 1988. I have worked with Brian Tevlin, Marla McIlvain and Mike Charles and many of the other Trust employees over the years. We've worked on scholarships, gas leases, IRS 501(c) (3) IRS applications, and tax issues and have been impressed by the good service we've received. Over the years we've been approached to change banks but we're very happy with C&N and the expertise and services they provide. Henry Lush, Gale Foundation *Some products are not FDIC insured or guaranteed, not a deposit or other obligation of the bank, not guaranteed by the bank and are subject to investment risk, including possible loss of the principal amount invested and are not insured by any other federal government agency. [6] teamwork excellence respect responsibility and accountability integrity client-focus fun  

living our values every day Common Stock and Per Share Data (Per common share) 2015 2014 2013 2012 2011 Basic earnings per share $1.35 $1.38 $1.51 $1.86 $1.92 Diluted earnings per share 1.35 1.38 1.50 1.85 1.92 Cash dividends per share 1.04 1.04 1.00 0.84 0.58 Book value per share at period end 15.39 15.34 14.49 14.89 13.77 Tangible book value at period end 14.41 14.36 13.51 13.91 12.77 Weighted average common shares outstanding - basic 12,211,941 12,390,067 12,352,383 12,235,748 12,162,045 Weighted average common shares outstanding - diluted 12,233,773 12,412,050 12,382,790 12,260,208 12,166,768 Balance sheet at year-end (In thousands) 2015 2014 2013 2012 2011 Available-for-sale securities $420,290 $516,807 $482,658 $472,577 $481,685 Gross loans 704,880 630,545 644,303 683,910 708,315 Allowance for loan losses 7,889 7,336 8,663 6,857 7,705 Total Assets 1,223,417 1,241,963 1,237,695 1,286,907 1,323,735 Deposits 935,615 967,989 954,516 1,006,106 1,018,206 Borrowings 92,263 78,597 96,723 89,379 130,313 Stockholders' equity 187,487 188,362 179,472 182,786 167,385 Common shares outstanding 12,180,623 12,279,980 12,390,063 12,274,035 12,155,529 "We have been impressed by the good service" We chose C&N Bank over the competition because of their great service. Their employees are always positive with quick replies and helpful, reliable information. C&N created a 401(K) plan for our business creating a smoother and better environment for our staff. We would recommend C&N Bank for their excellent service and the quality of their staff. C&N lives up to its values every day. Dave Murdock and Dave Schall, co-owners Keystone Leather, Williamsport *Some products arc not FDIC insured or guaranteed, not a deposit or other obligation of the bank, not guaranteed by the bank and are subject to investment risk, including possible loss of the principal amount invested and are not insured by any other federal government agency. teamwork excellence respect responsibility and accountability integrity client-focus fun [7]  

living our values every day Five-year summary of operations Income statement (in thousands) As of or for the year ended December 31, 2015 2014 2013 2012 2011 Interest and fee income $44,519 $46,009 $48,914 $56,632 $61,256 Interest expense 4,602 5,122 5,765 9,031 13,556 Net interest income 39,917 40,887 43,149 47,601 47,700 Provision (credit) for loan losses 845 476 2,047 288 (285) Net interest income after provision (credit) for loan losses 39,072 40,411 41,102 47,313 47,985 Noninterest income excluding securities gains 15,404 15,420 16,451 16,383 13,897 Net impairment losses recognized In earnings from available-for-sale securities 0 0 (25) (67) 0 Net realized gains on available-for-sale securities 2,861 1,104 1,743 2,749 2,216 Loss on prepayment of debt 2,573 0 1,023 2,333 0 Noninterest expense excluding loss on prepayment of debt 32,956 34,157 33,471 32,914 32,016 Income before income tax provision 21,808 22,778 24,777 31,131 32,082 Income tax provision 5,337 5,692 6,183 8,426 8,714 Net income 16,471 17,086 18,594 22,705 23,368 U.S. Treasury preferred dividends 0 0 0 0 0 Net income available to common shareholders $16,471 $17,086 $18,594 $22,705 $23,368 "We were treated as valued customers" We value your customer service and willingness to help us at any time. Stacey Sickler, mortgage lender for Citizens & Northern, has devoted much time and effort throughout the years to help us reach many of our financial goals. Citizens & Northern has provided us with excellent service and more importantly tendered to our individual needs. We were treated as valued customers. Through the help of Citizens & Northern, we were able to build the home of our dreams and pay off all of our student loans. We were also provided with the opportunity to lower our percentage rates for our home mortgage loan decreasing the amount of years on our mortgage. This is a bank that will care about your needs and listen to your dreams. It is a bank that you can trust and will help you make good financial decisions for your family. Brett and Tiffany Owen [8] teamwork excellence respect responsibility and accountability integrity client-focus fun  

living our values every day Five-year summary of operations As of or for the year ended December 31, Average balance sheet (in thousands) 2015 2014 2013 2012 2011 Total assets $1,243,209 $1,239,897 $1,237,096 $1,305,163 $1,313,445 Earning assets 1,159,298 1,155,401 1,145,340 1,199,538 1,208,584 Gross loans 657,727 627,753 656,495 700,241 714,421 Deposits 968,201 965,418 964,031 1,008,469 1,001,125 Stockholders' equity 188,905 185,469 181,412 175,822 152,718 Key Ratios Return on average assets 1.32% 1.38% 1.50% 1.74% 1.78% Return on average equity 8.72% 9.21 % 10.25% 12.91 % 15.30% Average equity to average assets 15.19% 14.96% 14.66% 13.47% 11.63% Net interest margin (1) 3.69% 3.80% 4.05% 4.26% 4.22% Efficiency (2) 56.60% 57.59% 53.27% 48.82% 49.37% Cash dividends as a percentage of diluted earnings per share 77.04% 75.36% 66.67% 45.41 % 30.21% Tier 1 leverage 14.31% 13.89% 13.78% 12.53% 10.93% her 1 risk-based capital 23.40% 26.26% 25.15% 22.86% 19.95% Total risk-based capital 24.45% 27.60% 26.60% 24.01% 21.17% Tangible common equity/tangible assets 14.49% 14.34% 13.66% 13.39% 11.84% Nonperforming assets/total assets 1.31 % 1.34% 1.53% 0.82% 0.73% Nonperforming loans/total loans 2.09% 2.45% 2.80% 1.41% 1.19% Allowance for loan losses/total loans 1.12% 1.16% 1.34% 1.00% 1.09% Net charge-offs/average loans 0.04% 0.29% 0.04% 0.16% 0.16% (1) Rates of return on tax-exempt securities and loans are calculated on a fully-taxable equivalent basis. (2) The efficiency ratio is calculated by dividing: (a) total noninterest expense excluding losses from prepayment of debt, by (b) 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 or losses. teamwork excellence respect responsibility and accountability integrity client-focus fun [9]  

living our values every day Quarterly financial data The following table presents summarized financial data for 2015 and 2014 (unaudited, in thousands, except per share) 2015 quarter ended March 31 June 30 Sept. 30 Dec. 31 Interest Income $11,163 $11,186 $11,134 $11,036 Interest expense 1,213 1,176 1,126 1,087 Net interest income 9,950 10,010 10,008 9,949 Provision for loan losses 3 221 302 319 Net interest income after provision for loan losses 9,947 9,789 9,706 9,630 Other income 3,487 3,962 3,961 3,994 Net gains on available-for-sale securities 74 932 79 1,776 Loss on prepayment of borrovvings 0 910 0 1,663 Other expenses 8,464 7,964 8,117 8,411 Income before income tax provision 5,044 5,809 5,629 5,326 Income tax provision 1,229 1,452 1,395 1,261 Net Income $3,815 $4,357 $4,423 $4,065 Net Income per share - basic $ 0.31 $ 0.36 S 0.35 $ 0.33 Net income per share - diluted $ 0.31 $ 0.36 $ 0.35 $ 0.33 2014 quarter ended March 31 June 30 Sept. 30 Dec. 31 Interest income $11,406 $11,563 $11,572 $11,468 Interest expense 1,288 1,290 1,287 1,257 Net interest income 10,118 10,273 10,285 10,211 (Credit) Provision for loan losses (311) 446 218 123 Net interest income after (credit) provision for loan losses 10,429 9,827 10,067 10,088 Other income 3,751 3,980 3,887 3,802 Net gains on available-for-sale securities 31 103 760 210 Other expenses 8,524 8,347 9,036 8,250 Income before income tax provision 5,687 5,563 5,678 5,850 Income tax provision 1,399 1,400 1,411 1,482 Net income $4,288 $4,163 $4,267 $4,368 Net income per share - basic $ 0.35 $ 0.33 $ 0.34 $ 0.36 Net income per share - diluted $ 0.34 $ 0.33 $ 0.34 $ 0.35 [10] teamwork excellence respect responsibility and accountability integrity client-focus fun

living our values every day Trust and Financial Management Group Five-Year Comparison (in thousands) 2015 2014 2013 2012 2011 Assets $814,788 $825,918 $796,115 $707,912 $634,782 Revenue 4,626 4,490 4,087 3,847 3,472 The composition of Trust assets under management as of Dec. 31, 2015, 2014 and 2013 follow: Accounts (in thousands) 2015 2014 2013 Pension/profit sharing $339,953 $345,772 $325,413 Investment management 211,645 211,699 196,544 Trusts 1 66,433 171,934 173,429 Custody 92,451 92,236 94,642 Estates 1,874 2,344 4,159 Guardianships 2,432 1,933 1,928 Total $814,788 $825,918 $796,115 Investments (in thousands) 2015 2014 2013 Mutual funds $458,942 $456,375 $426,816 Stocks 167,098 178,636 165,766 Bonds 88,471 95,674 101,107 Savings and Money Market funds 90,038 85,629 93,545 Miscellaneous 7,216 6,588 6,639 Real estate 2,827 2,810 1,814 Mortgages 196 206 428 Total $814,788 $825,918 $796,115 "We feel that we are "people" to C&N" We started banking with C&N with our first home loan in 2009 with Kelly Fasse, C&N mortgage lender. We eventually transferred our personal banking to C&N due to how comfortable we felt with the bank and the attention to detail we noticed with every question and transaction we had involving anybody at C&N. We now work with Linda Gordner for our current home loan. Linda has been wonderful answering all of our questions promptly and continuing our confidence in C&N. Angela and Tyler Rhone teamwork excellence respect responsibility and accountability integrity client-focus fun [11]  

living our values every day 2015 Board of Directors Citizens & Northern Corporation Citizens & Northern Bank Leo F. Lambert, Chairman President/GM, Fitzpatrick & Lambert, Inc. Dennis F. Beardslee Owner, Terrace Lanes Bowling Center Jan E. Fisher Executive Vice President/COO Susquehanna Health System R. Bruce Haner Retired auto buyer for new car dealers Susan E. Hartley Attorney At Law Edward H. Owlett, Ill President and CEO, Putnam Company J. Bradley Scovill President and CEO Leonard Simpson Attorney At Law and Sullivan County District Attorney James E. Towner Retired General Manager, The Scranton Times Ann M. Tyler CPA, Ann M. Tyler CPA 2015 Executive Team J. Bradley Scovill President and CEO Shelley L. D'Haene EVP and Senior Operations Officer Stan Dunsmore EVP and Chief Credit Officer Harold F. Hoose, Ill EVP and Director of Lending Division Mark A. Hughes EVP and Director of Finance Division John M. Reber EVP and Director of Risk Management Thomas L. Rudy, Jr. EVP and Director of Branch Delivery Deborah E. Scott EVP and Director of Trust Division “I like to create a true win-win relationship” I didn't choose C&N Bank for any one particular reason; it was really a combination of several reasons. Price was certainly important, but definitely not more important than delivery, service and quality. When I do business I like to create a true win-win relationship. It's all but impossible to create a win-win relationship if you're focused solely on price. C&N is definitely competitive. They have to be, but they shine delivering the whole package. A few years ago I had an opportunity to start a business that I was quite confident could be a great investment. The catch was that it was going to take significant capital and I needed it quickly. My C&N relationship managers didn't hold back. They asked the tough questions that needed to be asked. I value their input. The bottom line was we worked together to manage the risk and get me the capital I needed; another win-win for me and C&N Bank. Tony Mosso, Owner, Automax, Wellsboro [12] teamwork excellence respect responsibility and accountability integrity client-focus fun  

living our values every day 2015 Advisory Boards We thank our Advisory Board members who give us valuable insight into the communities we serve. Athens/Sayre/East Smithfield Warren J. Croft, Max P. Gannon, Jr., L. Joseph Tomasso, Jr. Canisteo/Hornell William Hatch Coudersport/Emporium/Port Allegany Peter Fragale, Patrice D. Lavavasseur, Edwin M. Schott, Robert C. Smith, Edwin W. Tompkins Ill. Dushore/Laporte Ronald A. Gutosky, William B. Saxe. Elkland/Knoxville/Tioga Brian Bicksler, Mark R. Howe, John C. Kenyon, Leisa L. LaVancher, Mary C. Owlett, William W. Roosa. Mansfield/Wellsboro Donald R. Abplanalp, Craig Eccher, Scott Lewis, Lawrence B. Mansfield. Ralston/Liberty Lawrence J. Connolly, Stephen L. Davis, Ronald W. Roan, James H. Route, Jr., Ray E. Wheeland. Jersey Shore/Muncy/Old Lycoming/South Williamsport/Williamsport Thomas F. Charles, John M. Confer, Thomas D. Hess, Roger D. Jarrett, Daniel K. Mathers, Frank G. Pellegrino, David Schall, Louis Terry Waldman. Towanda/Monroeton/Wysox/Troy Gary Baker, James A. Bowen, Robert L. Fulmer, James E. Parks, Mark W. Smith, Evan S. Williams Ill. "I appreciated the kindness shown to me" I initially chose Citizens & Northern Bank on the recommendation of my realtor. While price was important, service was equally so. At the time of a deep personal loss and being alone, Stacy Elliott of the Old Lycoming Township branch of C&N Bank was very kind and helpful in guiding me through the process of obtaining my mortgage. Thank you Stacy! Kenneth Staib teamwork excellence respect responsibility and accountability integrity client-focus fun [13] 

living our values every day 2015 Retirements We said goodbye to five C&N employees who retired in 2015. Together they had 73 years of service to Citizens & Northern. Barbara Clinger Customer Service Representative 21 years Susan Gardner Customer Service Representative 10 years George Raup EVP/ Chief Information Officer 36 years James Seltzer Resource Recovery Officer4.7 years Paula Vogt Customer Transaction Specialist 2 years 2015 Service Awards Last year Citizens & Northern employees were recognized for more than 600 years of service to the financial institution. Employees were honored at luncheons hosted by the President and CEO. 40 Years Nola Gross, Community Office Manager, Coudersport 35 Years Joan Rohe, Staff Accountant, Towanda Mark Miller, MIS Network Administrator, Wellsboro Teresa Mitchell, Staff Accountant, Wellsboro 25 Years Brenda Whiteley, Mortgage Loan Sales Officer, Dushore Kathleen Heimbach, Business Development Sales Officer, Troy Lynn Errico, Accounts Payable Specialist, Wellsboro 20 Years Joanna Mason, Customer Service Representative, Emporium Karen Blackwell, Quality Control Specialist, Wellsboro Kimberlea Whiting, Mortgage Loan Sales Officer, Emporium 15 Years Courtney Baker, Community Office Manager, Ralston Dawn Shoemaker, Customer Service Representative, Dushore Denise Mattison, Deposit Operations Representative, Wellsboro Janelle Tombs, Credit Analyst Team Leader, Wellsboro Janice Wilcox, MIS PC Technician, Wellsboro Janis Bartlett, Customer Service Representative, Muncy Jennifer Schultz, Trust Account Administrator, Sayre Laura Losinger, Customer Service Specialist, Knoxville Mark Hughes, Director of Finance Division, Wellsboro Melanie Kellogg, Customer Service Representative, Athens Michael Wetzel, Senior Commercial Loan Sales Officer, Coudersport Philip Prough, Director Financial Services Delivery, Wellsboro Roberta Dieffenbach, Customer Transaction Specialist, Wellsboro Ruth Wilkinson, New Employee & HR Technician, Wellsboro Stacey Keener, Customer Service Representative, Sayre Thomas Rudy, Director Branch Delivery, Wellsboro 10 Years Amy Haskins, Customer Service Representative, Knoxville Anna Phelps, Customer Service Representative, Liberty Bonnie Hargarther, Staff Auditor, Wellsboro Brandi Nowakowski, Loan Processor - Collateral Specialist, Wellsboro Brian Tevlin, Regional Manager of Financial Services Delivery, Wellsboro Carol Ellenberger, Customer Service Representative, Canisteo Christina Merwine, Compliance Officer, Wellsboro Cody Bowen, Trainer, Wellsboro Ellen Black, Customer Transaction Specialist, Ralston Kevin Dougherty, Senior Commercial Loan Sales Officer, Sayre Linda Macensky, Community Office Manager, Wellsboro Marlene King, Customer Transaction Specilaist, Knoxville Samantha Pecynski Deposit Operations Specialist, Wellsboro Sara Jennings, Trust Administrative Assistant, Sayre Stacy Elliott, Regional Community Office Manager, Old Lycoming [14] teamwork excellence respect responsibility and accountability integrity client-focus fun  

living our values every day Contact Information On the Web www.cnbankpa.com Client Contact Center 877-838-2517 Internet Banking 877-838-2517 Telephone Banking 877-622-5526 C&N Financial Services Wellsboro 866-ASK-CNFS Coudersport 814-274-1929 Trust and Financial Management Group Wellsboro 800-487-8784 Sayre 888-760-8192 Towanda 888-987-8784 Williamsport 866-732-7213 Canisteo 607-698-4295 Coudersport 814-274-1929 Facebook www.facebook.com/citizensandnorthernbank Stockholder Inquiries A copy of the Corporation's annual Report Form 10-K for the year ended December 31, 2015, as required to be filed with the Securities and Exchange Commission, will be furnished to any stockholder without charge upon written request to the Corporation's treasurer at our principal office at P.O. Box 58, Wellsboro, PA 16901. The information is also available through the Citizens & Northern Bank website at www.cnbankpa.com and the website of the Securities and Exchange Commission at www.sec.gov. This statement has not been reviewed or confirmed for accuracy or relevance by the Federal Deposit Insurance Corporation. Investor Information The annual Meeting of Shareholders will be held at the Deane Center, 104 Main Street in Wellsboro, PA at 2:00 p.m. Thursday, April 21, 2016. General shareholder inquiries should be sent to Citizens & Northern Corporation, 90-92 Main Street, P.O. Box 58, Wellsboro, PA 16901. Our Stock Transfer Agent is American Stock Transfer & Trust Company, 59 Maiden Lane, Plaza Level, New York, NY 10038. Telephone: 800-278-4353. Our independent auditors are Baker -Tilly Virchow Krause, LLP, 400 Market Street, Williamsport, PA 17701. "C&N helped our business grow" Bruce Smithgall was our partner prior to his joining C&N. When we had the need to consult with an expert, we thought of him immediately. We were ready to expand our business and needed someone we could trust and help us through the process. We knew who to call. We expanded our business to a total of 4 states, added staffing, invested in more robust systems and technology, built new buildings. Our business was able to grow with the help of Bruce and C&N. Jim Fetter, President, Muncy Machine & Tool Co. teamwork excellence respect responsibility and accountability integrity client-focus fun [15]  

living our values every day Our Offices Athens 428 South Main Street Canisteo 3 Main Street Coudersport 10 North Main Street Dushore 111 West Main Street East Smithfield 563 Main Street Elkland 104 West Main Street Emporium 135 East Fourth Street Hornell 6250 County Route 64 Jersey Shore 230 Railroad Street Knoxville 102 East Main Street Laporte 514 Main Street Liberty 4534 Williamson Trail Mansfield 1085 South Main Street Monroeton 612 James Monroe Avenue Muncy 3461 Route 405 Highway Old Lycoming 1510 Dewey Avenue Port Allegany 100 Maple Street Ralston 24 Thompson Street Sayre 1827 Elmira Street South Williamsport 2 East Mountain Avenue Tioga 41 North Main Street Towanda 428 Main Street Troy 64 Elmira Street Wellsboro 90-92 Main Street Williamsport 130 Court Street Wysox 1467 Golden Mile Road Toll-free: 877-838-2517 Our Client Contact Center is available to help you Monday-Thursday 8:00 a.m.-5:00 p.m.; Friday 8:00 a.m. - 6:00 p.m. and Saturday 8:00 a.m.-noon. "I chose C&N because of its services; I stay because of its people" Gimmicks do not draw my attention; service does. My banking needs are numerous, specific, and sometimes complicated. When I evaluated C&N Bank nearly a decade ago toward its potential to meet my banking needs, here is what I found: Convenient locations. Check. Weekend hours. Check. Drive-through banking. Check. Widely available ATM services. Check. Online banking. Check. Electronic monthly statements. Check. Fast, efficient loan-application processing. Check. Friendly, capable people. Check, check. More important, though, are the congenial and helpful C&N Bank employees whom I have met at my local C&N branch. Ginger, Mel, Sheila, Beth, and all of the other capable and efficient C&N Bank employees with whom I have interacted over the years are also knowledgeable, reliable, and supportive. We even share an occasional story and a laugh. I chose C&N Bank because of its services; I stay because of its people. Theodore F. Them, MD,MS,PhD,MPH,FACOEM, Athens [16] teamwork excellence respect responsibility and accountability integrity client-focus fun  

living our values every day "My passion is doing what's right for people" One of the primary motivating factors that prompted me to pursue financial advising as a career was my strong belief in giving unbiased financial advice regardless of whether it generated maximum revenue to my employer or me. As a young man I had seen my family adversely affected by a particular life insurance agent, and I was pretty sure her advice was strictly driven by how much money she would make. In my tenure at C&N, I have never once had anyone attempt to quell that passion to do what is right for people. In fact, that passion is shared by everyone. For my team "superior service" means getting to know our clients, understanding what is truly important to them, and helping them put a plan together to accomplish those very personal desires. Larry Alderson, Regional Manager of Financial Services Delivery - Sayre "We all strive to work as a team" Every time I come to work I am a part of a team. I have two branches that depend on me to do my job so that they can do theirs. That is one of the nice things about working for Citizens & Northern Bank, we all strive to work as a team. We all have different strengths which we can call upon to do the best for our clients and make us successful. Penny Barr, Regional Community Office Manager Port Allegany “I am proud to be a member of C&N every day” I enjoy the people that I work with, the opportunities that we have for personal career development and the teamwork involved in helping to grow the bank and be successful. I also enjoy helping small businesses grow their companies and being a trusted advisor to assist them with exceeding their goals. The bank has a great group of employees who are devoted to making C&N the Only Bank You Need by providing superior customer service and helping our clients out in any way possible. Ryan Satalin Senior Commercial Loan Sales Officer - Wellsboro teamwork excellence respect responsibility and accountability integrity client-focus fun  

Committed to our communities, our local families and businesses, our employees and our shareholders living our values every day CITIZENS & NORTHERN CORPORATION 2015 Annual Highlights

XML

Document And Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2015	Feb. 12, 2016	Jun. 30, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	CITIZENS & NORTHERN CORP
Trading Symbol	cznc
Document Type	10-K
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		12,151,108
Entity Public Float			$ 244,570,133
Amendment Flag	false
Entity Central Index Key	0000810958
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Accelerated Filer
Entity Well-known Seasoned Issuer	No
Document Period End Date	Dec. 31, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	FY

XML

Consolidated Balance Sheets - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Cash and due from banks:
Noninterest-bearing	$ 14,710,000	$ 14,812,000
Interest-bearing	21,351,000	21,235,000
Total cash and due from banks	36,061,000	36,047,000
Available-for-sale securities, at fair value	420,290,000	516,807,000
Loans held for sale	280,000	0
Loans receivable	704,880,000	630,545,000
Allowance for loan losses	(7,889,000)	(7,336,000)
Loans, net	696,991,000	623,209,000
Bank-owned life insurance	20,764,000	22,119,000
Accrued interest receivable	3,768,000	3,908,000
Bank premises and equipment, net	15,406,000	16,256,000
Foreclosed assets held for sale	1,260,000	1,189,000
Deferred tax asset, net	3,115,000	1,668,000
Intangible asset - Core deposit intangibles	30,000	52,000
Intangible asset - Goodwill	11,942,000	11,942,000
Other assets	13,510,000	8,766,000
TOTAL ASSETS	1,223,417,000	1,241,963,000
Deposits:
Noninterest-bearing	211,041,000	212,439,000
Interest-bearing	724,574,000	755,550,000
Total deposits	935,615,000	967,989,000
Short-term borrowings	53,496,000	5,537,000
Long-term borrowings	38,767,000	73,060,000
Accrued interest and other liabilities	8,052,000	7,015,000
TOTAL LIABILITIES	1,035,930,000	1,053,601,000
STOCKHOLDERS' EQUITY
Preferred stock, $1,000 par value; authorized 30,000 shares; $1,000 liquidation preference per share; no shares issued at December 31, 2015 and December 31, 2014	0	0
Common stock, par value $1.00 per share; authorized 20,000,000 shares in 2015 and 2014; issued 12,655,171 at December 31, 2015 and December 31, 2014; outstanding 12,180,623 at December 31, 2015 and 12,279,980 December 31, 2014	12,655,000	12,655,000
Paid-in capital	71,654,000	71,541,000
Retained earnings	109,454,000	105,550,000
Treasury stock, at cost; 474,548 shares at December 31, 2015 and 375,191 shares at December 31, 2014	(8,804,000)	(6,744,000)
Sub-total	184,959,000	183,002,000
Accumulated other comprehensive income:
Unrealized gain on available-for-sale securities	2,493,000	5,281,000
Defined benefit plans gain	35,000	79,000
Total accumulated other comprehensive income	2,528,000	5,360,000
TOTAL STOCKHOLDERS' EQUITY	187,487,000	188,362,000
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	$ 1,223,417,000	$ 1,241,963,000

XML

Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Preferred stock, par value (in Dollars per share)	$ 1,000	$ 1,000
Preferred stock, authorized shares	30,000	30,000
Preferred stock, liquidation preference per share (in Dollars per share)	$ 1,000	$ 1,000
Preferred stock, shares issued (in Dollars)	$ 0	$ 0
Common stock, par value (in Dollars per share)	$ 1.00	$ 1.00
Common stock, authorized shares	20,000,000	20,000,000
Common stock, issued shares	12,655,171	12,655,171
Common stock, outstanding shares	12,180,623	12,279,980
Treasury stock, shares	474,548	375,191

XML

Consolidated Statements of Income - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Interest and fees on loans	$ 31,311,000	$ 32,127,000	$ 35,484,000
Interest on balances with depository institutions	93,000	125,000	105,000
Interest on loans to political subdivisions	1,668,000	1,403,000	1,381,000
Interest on mortgages held for sale	16,000	16,000	54,000
Income from available-for-sale securities:
Taxable	7,303,000	7,721,000	6,810,000
Tax-exempt	3,844,000	4,310,000	4,785,000
Dividends	284,000	307,000	295,000
Total interest and dividend income	44,519,000	46,009,000	48,914,000
INTEREST EXPENSE
Interest on deposits	1,924,000	2,163,000	2,703,000
Interest on short-term borrowings	32,000	9,000	9,000
Interest on long-term borrowings	2,646,000	2,950,000	3,053,000
Total interest expense	4,602,000	5,122,000	5,765,000
Net interest income	39,917,000	40,887,000	43,149,000
Provision for loan losses	845,000	476,000	2,047,000
Net interest income after provision for loan losses	39,072,000	40,411,000	41,102,000
OTHER INCOME
Service charges on deposit accounts	4,864,000	5,025,000	5,246,000
Service charges and fees	494,000	538,000	597,000
Trust and financial management revenue	4,626,000	4,490,000	4,087,000
Brokerage revenue	839,000	901,000	784,000
Insurance commissions, fees and premiums	109,000	118,000	170,000
Interchange revenue from debit card transactions	1,935,000	1,959,000	1,941,000
Net gains from sale of loans	735,000	768,000	1,969,000
(Decrease) increase in fair value of servicing rights	(162,000)	(27,000)	67,000
Increase in cash surrender value of life insurance	386,000	376,000	399,000
Net (loss) gain from premises and equipment	(1,000)	8,000	(16,000)
Other operating income	1,579,000	1,264,000	1,207,000
Sub-total	15,404,000	15,420,000	16,451,000
Total other-than-temporary impairment losses on available-for-sale securities	0	0	(25,000)
Portion of (gain) recognized in other comprehensive loss (before taxes)	0	0	0
Net impairment losses recognized in earnings	0	0	(25,000)
Realized gains on available-for-sale securities, net	2,861,000	1,104,000	1,743,000
Total other income	18,265,000	16,524,000	18,169,000
OTHER EXPENSES
Salaries and wages	14,682,000	15,121,000	14,206,000
Pensions and other employee benefits	4,420,000	4,769,000	4,150,000
Occupancy expense, net	2,574,000	2,628,000	2,473,000
Furniture and equipment expense	1,860,000	1,859,000	1,948,000
FDIC Assessments	603,000	600,000	604,000
Pennsylvania shares tax	1,174,000	1,350,000	1,402,000
Professional fees	538,000	699,000	1,534,000
Automated teller machine and interchange expense	988,000	924,000	1,020,000
Software subscriptions	876,000	784,000	836,000
Loss on prepayment of debt	2,573,000	0	1,023,000
Other operating expense	5,241,000	5,423,000	5,298,000
Total other expenses	35,529,000	34,157,000	34,494,000
Income before income tax provision	21,808,000	22,778,000	24,777,000
Income tax provision	5,337,000	5,692,000	6,183,000
NET INCOME	$ 16,471,000	$ 17,086,000	$ 18,594,000
NET INCOME PER SHARE - BASIC (in Dollars per share)	$ 1.35	$ 1.38	$ 1.51
NET INCOME PER SHARE - DILUTED (in Dollars per share)	$ 1.35	$ 1.38	$ 1.50

XML

Consolidated Statements of Comprehensive Income - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Net income	$ 16,471,000	$ 17,086,000	$ 18,594,000
Unrealized (losses) gains on available-for-sale securities:
Unrealized holding (losses) gains on available-for-sale securities	(1,429,000)	10,774,000	(17,623,000)
Reclassification adjustment for gains realized in income	(2,861,000)	(1,104,000)	(1,718,000)
Other comprehensive (loss) gain on available-for-sale securities	(4,290,000)	9,670,000	(19,341,000)
Unfunded pension and postretirement obligations:
Changes from plan amendments and actuarial gains and losses included in accumulated other comprehensive (loss) gain	(135,000)	(79,000)	885,000
Amortization of net transition obligation, prior service cost, net actuarial loss and loss on settlement included in net periodic benefit cost	67,000	184,000	2,000
Other comprehensive (loss) gain on unfunded retirement obligations	(68,000)	105,000	887,000
Other comprehensive (loss) income before income tax	(4,358,000)	9,775,000	(18,454,000)
Income tax related to other comprehensive loss (income)	1,526,000	(3,422,000)	6,458,000
Net other comprehensive (loss) income	(2,832,000)	6,353,000	(11,996,000)
Comprehensive income	$ 13,639,000	$ 23,439,000	$ 6,598,000

XML

Consolidated Statements of Changes in Stockholders' Equity - USD ($)	Common Stock [Member]	Treasury Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Total
Balance, January 1, 2013 at Dec. 31, 2012	$ 12,525,000	$ (4,203,000)	$ 68,622,000	$ 94,839,000	$ 11,003,000	$ 182,786,000
Balance, January 1, 2013 (in Shares) at Dec. 31, 2012	12,525,411	251,376
Balance at Dec. 31, 2013	$ 12,596,000	$ (3,452,000)	70,105,000	101,216,000	(993,000)	179,472,000
Balance (in Shares) at Dec. 31, 2013	12,596,540	206,477
Net income				18,594,000		18,594,000
Other comprehensive income (loss), net					(11,996,000)	(11,996,000)
Cash dividends declared on common stock				(12,343,000)		(12,343,000)
Shares issued for dividend reinvestment plan	$ 71,000		1,356,000			1,427,000
Shares issued for dividend reinvestment plan (in Shares)	71,129
Shares issued from treasury related to exercise of stock options		$ 179,000	5,000			184,000
Shares issued from treasury related to exercise of stock options (in Shares)		(10,656)
Restricted stock granted		$ 633,000	(633,000)			0
Restricted stock granted (in Shares)		(37,886)
Forfeiture of restricted stock		$ (61,000)	61,000			0
Forfeiture of restricted stock (in Shares)		3,643
Stock-based compensation expense			696,000			696,000
Tax effect of stock option exercises			(2,000)			(2,000)
Tax benefit from employee benefit plan				126,000		126,000
Balance at Dec. 31, 2014	$ 12,655,000	$ (6,744,000)	71,541,000	105,550,000	5,360,000	188,362,000
Balance (in Shares) at Dec. 31, 2014	12,655,171	375,191
Net income				17,086,000		17,086,000
Other comprehensive income (loss), net					6,353,000	6,353,000
Cash dividends declared on common stock				(12,889,000)		(12,889,000)
Shares issued for dividend reinvestment plan	$ 60,000	$ 368,000	1,069,000			1,497,000
Shares issued for dividend reinvestment plan (in Shares)	59,498	(18,473)
Treasury stock purchased		$ (4,002,000)				(4,002,000)
Treasury stock purchased (in Shares)		208,300
Shares issued from treasury related to exercise of stock options	$ (1,000)	$ 188,000	(64,000)			123,000
Shares issued from treasury related to exercise of stock options (in Shares)	(867)	(11,860)
Restricted stock granted		$ 279,000	(279,000)			0
Restricted stock granted (in Shares)		(16,711)
Forfeiture of restricted stock		$ (125,000)	125,000			0
Forfeiture of restricted stock (in Shares)		7,458
Stock-based compensation expense			565,000			565,000
Tax benefit from dividends on restricted stock			(1,000)			(1,000)
Tax effect of stock option exercises			21,000			21,000
Tax benefit from employee benefit plan				137,000		137,000
Balance at Dec. 31, 2015	$ 12,655,000	$ (8,804,000)	71,654,000	109,454,000	2,528,000	187,487,000
Balance (in Shares) at Dec. 31, 2015	12,655,171	474,548
Net income				16,471,000		16,471,000
Other comprehensive income (loss), net					$ (2,832,000)	(2,832,000)
Cash dividends declared on common stock				(12,710,000)		(12,710,000)
Shares issued for dividend reinvestment plan		$ 1,379,000	86,000			1,465,000
Shares issued for dividend reinvestment plan (in Shares)		(73,810)
Treasury stock purchased		$ (4,415,000)				(4,415,000)
Treasury stock purchased (in Shares)		226,900
Shares issued from treasury related to exercise of stock options		$ 408,000	(27,000)			381,000
Shares issued from treasury related to exercise of stock options (in Shares)		(22,435)
Restricted stock granted		$ 627,000	(627,000)			0
Restricted stock granted (in Shares)		(34,800)
Forfeiture of restricted stock		$ (59,000)	59,000			0
Forfeiture of restricted stock (in Shares)		3,502
Stock-based compensation expense			606,000			606,000
Tax benefit from dividends on restricted stock			22,000			22,000
Tax effect of stock option exercises			$ (6,000)			(6,000)
Tax benefit from employee benefit plan				$ 143,000		$ 143,000

XML

Consolidated Statements of Changes in Stockholders' Equity (Parentheticals) - $ / shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Common stock, dividends, per share	$ 1.04	$ 1.04	$ 1.00

XML

Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 16,471,000	$ 17,086,000	$ 18,594,000
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	845,000	476,000	2,047,000
Realized gains on available-for-sale securities, net	(2,861,000)	(1,104,000)	(1,718,000)
Loss on prepayment of debt	2,573,000	0	1,023,000
Realized (gain) loss on foreclosed assets	(84,000)	(136,000)	71,000
Loss (gain) on disposition of premises and equipment	1,000	(8,000)	16,000
Depreciation expense	1,888,000	1,940,000	2,020,000
Accretion and amortization on securities, net	1,562,000	1,375,000	1,836,000
Accretion and amortization on loans and deposits, net	(21,000)	(27,000)	(32,000)
Decrease (increase) in fair value of servicing rights	162,000	27,000	(67,000)
Increase in cash surrender value of life insurance	(386,000)	(376,000)	(399,000)
Gain on life insurance benefits	(212,000)	0	0
Stock-based compensation	606,000	565,000	696,000
Amortization of core deposit intangibles	22,000	35,000	51,000
Deferred income taxes	79,000	1,254,000	1,839,000
Gains on sales of loans, net	(735,000)	(768,000)	(1,969,000)
Origination of loans for sale	(21,823,000)	(21,680,000)	(58,427,000)
Proceeds from sales of loans	22,101,000	22,317,000	62,436,000
(Increase) decrease in accrued interest receivable and other assets	(1,697,000)	1,395,000	3,234,000
Increase (decrease) in accrued interest payable and other liabilities	1,195,000	(90,000)	(679,000)
Net Cash Provided by Operating Activities	19,686,000	22,281,000	30,572,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of certificates of deposit	1,780,000	2,560,000	480,000
Purchase of certificates of deposit	(100,000)	(960,000)	(1,688,000)
Proceeds from sales of available-for-sale securities	44,504,000	56,269,000	25,500,000
Proceeds from calls and maturities of available-for-sale securities	89,159,000	78,101,000	97,123,000
Purchase of available-for-sale securities	(40,363,000)	(158,894,000)	(152,163,000)
Redemption of Federal Home Loan Bank of Pittsburgh stock	5,029,000	2,804,000	2,680,000
Purchase of Federal Home Loan Bank of Pittsburgh stock	(8,102,000)	(602,000)	(1,624,000)
Net (increase) decrease in loans	(77,129,000)	10,317,000	39,059,000
Proceeds from bank-owned life insurance	1,953,000	0	0
Purchase of premises and equipment	(1,039,000)	(801,000)	(801,000)
Proceeds from disposition of premises and equipment	0	43,000	42,000
Purchase of investment in limited liability company	0	0	(147,000)
Return of principal on limited liability entity investments	181,000	173,000	164,000
Proceeds from sale of foreclosed assets	2,536,000	1,504,000	255,000
Net Cash Provided by (Used in) Investing Activities	18,409,000	(9,486,000)	8,880,000
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase in deposits	(32,374,000)	13,473,000	(51,590,000)
Net increase (decrease) in short-term borrowings	47,959,000	(17,848,000)	17,818,000
Repayments of long-term borrowings	(36,866,000)	(278,000)	(11,497,000)
Purchase of treasury stock	(4,415,000)	(4,002,000)	0
Sale of treasury stock	381,000	123,000	184,000
Tax benefit from compensation plans	159,000	157,000	124,000
Common dividends paid	(11,245,000)	(11,392,000)	(10,916,000)
Net Cash Used in Financing Activities	(36,401,000)	(19,767,000)	(55,877,000)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	1,694,000	(6,972,000)	(16,425,000)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR	31,619,000	38,591,000	55,016,000
CASH AND CASH EQUIVALENTS, END OF YEAR	33,313,000	31,619,000	38,591,000
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Assets acquired through foreclosure of real estate loans	2,523,000	1,665,000	339,000
Accrued purchase of available-for-sale securities	0	226,000	0
Interest paid	4,636,000	5,138,000	5,782,000
Income taxes paid	$ 4,827,000	$ 4,432,000	$ 4,213,000

XML

Note 1 - Nature of Operations and Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2015

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

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. 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 (“U.S. GAAP”). 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) assessment of impaired securities to determine whether or not the securities are other-than-temporarily impaired, (4) valuation of deferred tax assets and (5) 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, 2015 and 2014, 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 thirty-six months), 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 57% at December 31, 2015) are 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 reductions in required payments, an extension of a loan’s stated maturity date or a temporary reduction in interest rate. Non-accrual troubled debt restructurings may be 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 2015, 2014, and 2013 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 $1,296,000 at December 31, 2015 and $1,281,000 at December 31, 2014.

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. Tax benefits from investments in limited partnerships that have qualified for federal low-income tax credits are recognized as a reduction in the provision for income tax over the term of the investment using the effective yield method. 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.

XML

Note 2 - Recent Accounting Pronouncements

12 Months Ended

Dec. 31, 2015

Accounting Changes and Error Corrections [Abstract]

Accounting Changes and Error Corrections [Text Block]

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 January 2014, the FASB issued ASU 2014-01, Accounting for Investments in Qualified Affordable Housing Projects. This Update provides guidance on accounting for investments in flow-through limited liability entities that qualify for the federal low-income housing tax credit. Prior to ASU 2014-01, under U.S. GAAP, a reporting entity that invests in a qualified affordable housing project could elect to account for that investment using the effective yield method if certain conditions are met, or alternatively, the investment would be accounted for under either the equity method or the cost method. Generally, investors in qualified affordable housing project investments expect to receive all of their return through the receipt of tax credits and tax deductions from operating losses, and use of the effective yield method results in recognition of the return as a reduction of income tax expense over the period of the investment. The amendments in this Update modify the conditions that a reporting entity must meet to be eligible to use a method other than the equity or cost methods to account for investments in qualified affordable housing projects. Additionally, the amendments introduce new recurring disclosure requirements about investments in qualified affordable housing projects. The amendments in this Update became effective for the Corporation for annual and interim periods beginning in the first quarter 2015, and are to be applied retrospectively. Information concerning the Corporation’s investments in qualified affordable housing projects is provided in Note 14 to these consolidated financial statements.

In January 2014, the FASB issued ASU 2014-04, Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure. The objective of the amendments in this Update is to reduce diversity among reporting entities by clarifying when an in substance foreclosure occurs. The amendments in this Update clarify that an in substance foreclosure occurs, and a creditor is considered to have received physical possession of residential real property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, the amendments require interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to the requirements of the applicable jurisdiction. An entity can elect to adopt the amendments in this Update using either a modified retrospective transition method or a prospective transition method. Under the modified retrospective transition method, an entity would record a cumulative-effect adjustment to residential consumer mortgage loans and foreclosed residential real estate properties existing as of the beginning of the annual period for which the amendments are effective. For prospective transition, an entity would apply the amendments to all instances of an entity receiving physical possession of residential real estate property collateralizing consumer mortgage loans that occur after the date of adoption. Early adoption is permitted. The amendments in this Update became effective for the Corporation for annual and interim periods beginning in the first quarter 2015. The Corporation has applied the amendments to its accounting and reporting practices prospectively in the first quarter 2015. Disclosures required by this Update are provided in Note 8 to these consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which provides a principles-based framework for revenue recognition that supersedes virtually all previously issued revenue recognition guidance under U.S. GAAP. Additionally, the ASU requires improved disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. The core principle of the five-step revenue recognition framework is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015 the FASB issued ASU 2015-14, which deferred the effective date of the revenue recognition standard by a year, making it applicable for the Corporation in the first quarter 2018 and for the annual period ending December 31, 2018. The amendments should be applied either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the amendments recognized at the date of initial application. The Corporation is in the process of evaluating the potential impact of adopting the amendments, including determining which transition method to apply.

In June 2014, the FASB issued ASU 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. In addition to various other amendments that will affect accounting and disclosures for transactions in which the Corporation has not engaged to date, this Update requires expanded disclosures for repurchase agreements that are accounted for as secured borrowings, including: (1) a disaggregation of the gross obligation by the class of collateral pledged, (2) the remaining contractual tenor of the agreements and (3) a discussion of the potential risks associated with the agreements and the related collateral pledged, including obligations arising from a decline in the fair value of the collateral pledged and how those risks are managed. The expanded disclosure requirements associated with repurchase agreements are effective for the Corporation for annual and interim periods beginning in the second quarter 2015. Information concerning the Corporation’s repurchase agreements is provided in Note 12 to these consolidated financial statements.

In August 2014, the FASB issued ASU 2014-14, Receivables – Troubled Debt Restructuring by Creditors, which requires that a mortgage loan be derecognized and that a separate other receivable be recognized upon foreclosure if the following conditions are met: (1) the loan has a government guarantee that is not separable from the loan before foreclosure, (2) at the time of foreclosure, the creditor has the intent to convey the real estate property to the guarantor and make a claim on the guarantee, and the creditor has the ability to recover under the claim and (3) at the time of foreclosure, any amount of the claim that is determined on the basis of the fair value of the real estate is fixed. The amendments in this Update became effective for the Corporation for annual and interim periods beginning in the first quarter 2015, and the impact of the amendment was not significant to the Corporation.

In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Liabilities. This makes significant changes in U.S. GAAP related to certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The changes provided for in this Update that are applicable to the Corporation are as follows: (1) require equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; however, an entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer; (2) for equity investments without readily determinable fair values, require a qualitative assessment to identify impairment, and if a qualitative assessment indicates that impairment exists, requiring an entity to measure the investment at fair value; (3) eliminate the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; (4) require public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (5) require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments (at December 31, 2015 and 2014, the Corporation has no liabilities for which the fair value measurement option has been elected); (6) require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; and (7) clarify that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. The amendments in this Update will become effective for the Corporation for annual and interim periods beginning in the first quarter 2018. With limited exceptions, early adoption of the amendments in this Update is not permitted. Amendments are to be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values should be applied prospectively.

XML

Note 3 - Comprehensive Income

12 Months Ended

Dec. 31, 2015

Disclosure Text Block [Abstract]

Comprehensive Income (Loss) Note [Text Block]

3. COMPREHENSIVE INCOME

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 (loss) income. The components of other comprehensive (loss) income, and the related tax effects, are as follows:

(In Thousands)	Before-Tax			Income Tax			Net-of-Tax
	Amount			Effect			Amount
2015
Unrealized losses on available-for-sale securities:
Unrealized holding losses on available-for-sale securities	$	(1,429	)	$	500		$	(929	)
Reclassification adjustment for (gains) realized in income		(2,861	)		1,002			(1,859	)
Other comprehensive loss on available-for-sale securities		(4,290	)		1,502			(2,788	)
Unfunded pension and postretirement obligations:
Changes from plan amendments and actuarial gains and losses included in other comprehensive income		(135	)		47			(88	)
Amortization of net transition obligation, prior service cost, net actuarial loss and loss on settlement included in net periodic benefit cost		67			(23	)		44
Other comprehensive loss on unfunded retirement obligations		(68	)		24			(44	)
Total other comprehensive loss	$	(4,358	)	$	1,526		$	(2,832	)

(In Thousands)	Before-Tax			Income Tax			Net-of-Tax
	Amount			Effect			Amount
2014
Unrealized gains on available-for-sale securities:
Unrealized holding gains on available-for-sale securities	$	10,774		$	(3,771	)	$	7,003
Reclassification adjustment for (gains) realized in income		(1,104	)		386			(718	)
Other comprehensive income on available-for-sale securities		9,670			(3,385	)		6,285
Unfunded pension and postretirement obligations:
Changes from plan amendments and actuarial gains and losses included in other comprehensive income		(79	)		28			(51	)
Amortization of net transition obligation, prior service cost, net actuarial loss and loss on settlement included in net periodic benefit cost		184			(65	)		119
Other comprehensive income on unfunded retirement obligations		105			(37	)		68
Total other comprehensive income	$	9,775		$	(3,422	)	$	6,353

(In Thousands)	Before-Tax			Income Tax			Net-of-Tax
	Amount			Effect			Amount
2013
Unrealized (losses) on available-for-sale securities:
Unrealized holding losses on available-for-sale securities	$	(17,623	)	$	6,168		$	(11,455	)
Reclassification adjustment for (gains) realized in income		(1,718	)		601			(1,117	)
Other comprehensive loss on available-for-sale securities		(19,341	)		6,769			(12,572	)
Unfunded pension and postretirement obligations:
Changes from plan amendments and actuarial gains and losses included in other comprehensive income		885			(310	)		575
Amortization of net transition obligation, prior service cost and net actuarial loss included in net periodic benefit cost		2			(1	)		1
Other comprehensive income on unfunded retirement obligations		887			(311	)		576
Total other comprehensive loss	$	(18,454	)	$	6,458		$	(11,996	)

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

(In Thousands)	Unrealized			Unfunded			Accumulated
	Holding Gains			Pension and			Other
	(Losses)			Postretirement			Comprehensive
	on Securities			Obligations			Income
2015
Balance, beginning of period	$	5,281		$	79		$	5,360
Other comprehensive loss before reclassifications		(929	)		(88	)		(1,017	)
Amounts reclassified from accumulated other comprehensive income		(1,859	)		44			(1,815	)
Other comprehensive loss		(2,788	)		(44	)		(2,832	)
Balance, end of period	$	2,493		$	35		$	2,528
2014
Balance, beginning of period	$	(1,004	)	$	11		$	(993	)
Other comprehensive income before reclassifications		7,003			(51	)		6,952
Amounts reclassified from accumulated other comprehensive income		(718	)		119			(599	)
Other comprehensive income		6,285			68			6,353
Balance, end of period	$	5,281		$	79		$	5,360
2013
Balance, beginning of period	$	11,568		$	(565	)	$	11,003
Other comprehensive (loss) income before reclassifications		(11,455	)		575			(10,880	)
Amounts reclassified from accumulated other comprehensive loss		(1,117	)		1			(1,116	)
Other comprehensive (loss) income		(12,572	)		576			(11,996	)
Balance, end of period	$	(1,004	)	$	11		$	(993	)

Items reclassified out of each component of other comprehensive income are as follows:

For the Year Ended December 31, 2015
(In Thousands)
Details about Accumulated Other Comprehensive Income Components	Reclassified from Accumulated Other Comprehensive Income			Affected Line Item in the Consolidated Statements of Income
Unrealized gains and losses on available-for-sale securities	$	(2,861	)	Realized gains on available-for-sale securities, net
		1,002		Income tax provision
		(1,859	)	Net of tax
Amortization of defined benefit pension and postretirement items:
Prior service cost		(31	)	Pensions and other employee benefits
Actuarial loss		11		Pensions and other employee benefits
Loss on settlement		87		Pensions and other employee benefits
		67		Total before tax
		(23	)	Income tax provision
		44		Net of tax
Total reclassifications for the period	$	(1,815	)

For the Year Ended December 31, 2014
(In Thousands)
Details about Accumulated Other  Comprehensive Income Components	Reclassified from Accumulated Other Comprehensive Income			Affected Line Item in the Consolidated Statements of Income
Unrealized gains and losses on available-for-sale securities	$	(1,104	)	Realized gains on available-for-sale securities, net
		386		Income tax provision
		(718	)	Net of tax
Amortization of defined benefit pension and postretirement items:
Prior service cost		(31	)	Pensions and other employee benefits
Actuarial loss		19		Pensions and other employee benefits
Loss on settlement		196		Pensions and other employee benefits
		184		Total before tax
		(65	)	Income tax provision
		119		Net of tax
Total reclassifications for the period	$	(599	)

For the Year Ended December 31, 2013
(In Thousands)
Details about Accumulated Other Comprehensive Income Components	Reclassified from Accumulated Other Comprehensive Income			Affected Line Item in the Consolidated Statements of Income
Unrealized gains and losses on available-for-sale Securities	$	25		Total other-than-temporary impairment losses on
				available-for-sale securities
		(1,743	)	Realized gains on available-for-sale securities, net
		(1,718	)	Total before tax
		601		Income tax provision
		(1,117	)	Net of tax
Amortization of defined benefit pension and postretirement items:
Prior service cost		(31	)	Pensions and other employee benefits
Actuarial loss		33		Pensions and other employee benefits
		2		Total before tax
		(1	)	Income tax provision
		1		Net of tax
Total reclassifications for the period	$	(1,116	)

XML

Note 4 - Per Share Data

12 Months Ended

Dec. 31, 2015

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

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
2015
Earnings per share – basic	$	16,471,000		12,211,941		$	1.35
Dilutive effect of potential common stock arising from stock options:
Exercise of outstanding stock options				210,402
Hypothetical share repurchase at $20.04				(188,570	)
Earnings per share – diluted	$	16,471,000		12,233,773		$	1.35
2014
Earnings per share – basic	$	17,086,000		12,390,067		$	1.38
Dilutive effect of potential common stock arising from stock options:
Exercise of outstanding stock options				224,015
Hypothetical share repurchase at $19.41				(202,032	)
Earnings per share – diluted	$	17,086,000		12,412,050		$	1.38
2013
Earnings per share – basic	$	18,594,000		12,352,383		$	1.51
Dilutive effect of potential common stock arising from stock options:
Exercise of outstanding stock options				250,236
Hypothetical share repurchase at $19.86				(219,829	)
Earnings per share – diluted	$	18,594,000		12,382,790		$	1.50

Stock options that were anti-dilutive were excluded from net income per share calculations. Weighted-average common shares available from anti-dilutive instruments totaled 61,590 shares in 2015, 151,310 shares in 2014 and 88,521 shares in 2013.

XML

Note 5 - Cash and Due from Banks

12 Months Ended

Dec. 31, 2015

Cash and Cash Equivalents [Abstract]

Cash and Cash Equivalents Disclosure [Text Block]

5. CASH AND DUE FROM BANKS

Cash and due from banks at December 31, 2015 and 2014 include the following:

(In thousands)
	Dec. 31, 2015		Dec. 31, 2014
Cash and cash equivalents	$	33,313	$	31,619
Certificates of deposit		2,748		4,428
Total cash and due from banks	$	36,061	$	36,047

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 $15,327,000 at December 31, 2015 and $16,853,000 at December 31, 2014.

XML

Note 6 - Fair Value Measurements and Fair Values of Financial Instruments

12 Months Ended

Dec. 31, 2015

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

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, 2015 and 2014, assets measured at fair value and the valuation methods used are as follows:

			December 31, 2015
	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	$	10,483	$	0		$	10,483
Obligations of states and political subdivisions:
Tax-exempt		0		107,757		0			107,757
Taxable		0		34,597		0			34,597
Mortgage-backed securities		0		73,343		0			73,343
Collateralized mortgage obligations, Issued by U.S. Government agencies		0		191,715		0			191,715
Collateralized debt obligations		0		9		0			9
Total debt securities		0		417,904		0			417,904
Marketable equity securities		2,386		0		0			2,386
Total available-for-sale securities		2,386		417,904		0			420,290
Servicing rights		0		0		1,296			1,296
Total recurring fair value measurements	$	2,386	$	417,904	$	1,296		$	421,586
Nonrecurring fair value measurements
Impaired loans with a valuation allowance	$	0	$	0	$	1,933		$	1,933
Valuation allowance		0		0		(820	)		(820	)
Impaired loans, net		0		0		1,113			1,113
Foreclosed assets held for sale		0		0		1,260			1,260
Total nonrecurring fair value measurements	$	0	$	0	$	2,373		$	2,373

			December 31, 2014
	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	$	26,676	$	0		$	26,676
Obligations of states and political subdivisions:
Tax-exempt		0		124,839		0			124,839
Taxable		0		33,878		0			33,878
Mortgage-backed securities		0		83,903		0			83,903
Collateralized mortgage obligations, Issued by U.S. Government agencies		0		238,823		0			238,823
Collateralized debt obligations		0		34		0			34
Total debt securities		0		508,153		0			508,153
Marketable equity securities		8,654		0		0			8,654
Total available-for-sale securities		8,654		508,153		0			516,807
Servicing rights		0		0		1,281			1,281
Total recurring fair value measurements	$	8,654	$	508,153	$	1,281		$	518,088
Nonrecurring fair value measurements
Impaired loans with a valuation allowance	$	0	$	0	$	3,241		$	3,241
Valuation allowance		0		0		(769	)		(769	)
Impaired loans, net		0		0		2,472			2,472
Foreclosed assets held for sale		0		0		1,189			1,189
Total nonrecurring fair value measurements	$	0	$	0	$	3,661		$	3,661

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, 2015 and 2014 for servicing rights assets measured using unobservable inputs (Level 3 methodologies) on a recurring basis:

Asset	Fair Value at 12/31/15   (In Thousands)		Valuation Technique	Unobservable  Input(s)				Method or Value As of  12/31/15
Servicing rights	$	1,296	Discounted cash flow	Discount rate		10.00	%	Rate used through modeling period
				Loan prepayment speeds		146.00	%	Weighted-average PSA
				Servicing fees		0.25	%	of loan balances
						4.00	%	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

Asset	Fair Value at 12/31/14 (In Thousands)		Valuation Technique	Unobservable Input(s)				Method or Value As of 12/31/14
Servicing rights	$	1,281	Discounted cash flow	Discount rate		10.00	%	Rate used through modeling period
				Loan prepayment speeds		156.00	%	Weighted-average PSA
				Servicing fees		0.25	%	of loan balances
						4.00	%	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

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:

	Years Ended December 31,
	2015			2014
(In Thousands)	Servicing			Servicing
	Rights			Rights
Balance, beginning of period	$	1,281		$	1,123
Issuances of servicing rights		177			185
Unrealized losses included in earnings		(162	)		(27	)
Balance, end of period	$	1,296		$	1,281

	Year Ended December 31, 2013
	Pooled Trust			Pooled Trust
	Preferred			Preferred
	Securities -			Securities -
(In Thousands)	Senior			Mezzanine			Servicing
	Tranches			Tranches			Rights		Total
Balance, beginning of period	$	1,613		$	0		$	605	$	2,218
Issuances of servicing rights		0			0			451		451
Accretion and amortization, net		(2	)		0			0		(2	)
Proceeds from sales and calls		(1,636	)		(571	)		0		(2,207	)
Realized gains, net		23			571			0		594
Unrealized gains included in earnings		0			0			67		67
Unrealized gains included in other comprehensive income		2			0			0		2
Balance, end of period	$	0		$	0		$	1,123	$	1,123

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. 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.

At December 31, 2015 and 2014, quantitative information regarding significant techniques and inputs used for nonrecurring fair value measurements using unobservable inputs (Level 3 methodologies) are as follows:

(In Thousands, Except									Value at
Percentages)			Valuation						12/31/15
	Balance at		Allowance at		Fair Value at		Valuation	Unobservable	(Weighted
Asset	12/31/15		12/31/15		12/31/15		Technique	Inputs	Average)
Impaired loans:
Residential mortgage loans - first liens	$	42	$	1	$	41	Sales comparison	Discount to appraised value		31	%
Commercial:
Commercial loans secured by real estate		317		97		220	Sales comparison	Discount to appraised value		46	%
Commercial and industrial		75		75		0	Sales comparison	Discount to appraised value		31	%
Loans secured by farmland		512		52		460	Sales comparison	Discount to appraised value		49	%
Multi-family (5 or more) residential		987		595		392	Sales comparison	Discount to appraised value		41	%
Total impaired loans	$	1,933	$	820	$	1,113
Foreclosed assets held for sale - real estate:
Residential (1-4 family)	$	556	$	0	$	556	Sales comparison	Discount to appraised value		32	%
Land		704		0		704	Sales comparison	Discount to appraised value		29	%
Total foreclosed assets held for sale	$	1,260	$	0	$	1,260

(In Thousands, Except									Value at
Percentages)			Valuation						12/31/14
	Balance at		Allowance at		Fair Value at		Valuation	Unobservable	(Weighted
Asset	12/31/14		12/31/14		12/31/14		Technique	Inputs	Average)
Impaired loans:
Residential mortgage loans - first liens	$	715	$	358	$	357	Sales comparison	Discount to appraised value		36	%
Commercial:
Commercial loans secured by real estate		16		16		0	Sales comparison	Discount to appraised value		42	%
Commercial and industrial		150		82		68	Sales comparison	Discount to appraised value		21	%
Commercial construction and land		1,815		211		1,604	Sales comparison	Discount to appraised value		30	%
Loans secured by farmland		545		102		443	Sales comparison	Discount to appraised value		40	%
Total impaired loans	$	3,241	$	769	$	2,472
Foreclosed assets held for sale - real estate:
Residential (1-4 family)	$	306	$	0	$	306	Sales comparison	Discount to appraised value		42	%
Commercial property		159		0		159	Sales comparison	Discount to appraised value		23	%
Land		724		0		724	Sales comparison	Discount to appraised value		29	%
Total foreclosed assets held for sale	$	1,189	$	0	$	1,189

No other-than-temporary impairment losses on securities valued using Level 3 methodologies were recorded in 2015, 2014 or 2013. 

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 Original or 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-rate 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 at December 31, 2015 and 2014. 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, 2015				December 31, 2014
	Method(s)	Carrying		Fair		Carrying		Fair
	Used	Amount		Value		Amount		Value
Financial assets:
Cash and cash equivalents	Level 1	$	33,313	$	33,313	$	31,619	$	31,619
Certificates of deposit	Level 2		2,748		2,752		4,428		4,443
Available-for-sale securities	See Above		420,290		420,290		516,807		516,807
Restricted equity securities (included in Other Assets)	Level 2		4,657		4,657		1,584		1,584
Loans held for sale	Level 2		280		280		0		0
Loans, net	Level 3		696,991		685,552		623,209		629,267
Accrued interest receivable	Level 2		3,768		3,768		3,908		3,908
Servicing rights	Level 3		1,296		1,296		1,281		1,281
Financial liabilities:
Deposits with no stated maturity	Level 2		713,931		713,931		729,052		729,052
Time deposits	Level 2		221,684		221,891		238,937		239,712
Short-term borrowings	Level 2		53,496		53,398		5,537		5,473
Long-term borrowings	Level 2		38,767		40,166		73,060		78,866
Accrued interest payable	Level 2		70		70		104		104

XML

Note 7 - Securities

12 Months Ended

Dec. 31, 2015

Investments, Debt and Equity Securities [Abstract]

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

7. SECURITIES

Amortized cost and fair value of available-for-sale securities at December 31, 2015 and 2014 are summarized as follows:

			December 31, 2015
			Gross		Gross
			Unrealized		Unrealized
	Amortized		Holding		Holding			Fair
(In Thousands)	Cost		Gains		Losses			Value
Obligations of U.S. Government agencies	$	10,663	$	12	$	(192	)	$	10,483
Obligations of states and political subdivisions:
Tax-exempt		103,414		4,365		(22	)		107,757
Taxable		34,317		381		(101	)		34,597
Mortgage-backed securities		73,227		486		(370	)		73,343
Collateralized mortgage obligations, Issued by U.S. Government agencies		193,145		623		(2,053	)		191,715
Collateralized debt obligations:		9		0		0			9
Total debt securities		414,775		5,867		(2,738	)		417,904
Marketable equity securities		1,680		706		0			2,386
Total	$	416,455	$	6,573	$	(2,738	)	$	420,290

			December 31, 2014
			Gross		Gross
			Unrealized		Unrealized
	Amortized		Holding		Holding			Fair
(In Thousands)	Cost		Gains		Losses			Value
Obligations of U.S. Government agencies	$	27,221	$	38	$	(583	)	$	26,676
Obligations of states and political subdivisions:
Tax-exempt		120,086		5,134		(381	)		124,839
Taxable		33,637		415		(174	)		33,878
Mortgage-backed securities		82,479		1,493		(69	)		83,903
Collateralized mortgage obligations, Issued by U.S. Government agencies		239,620		1,239		(2,036	)		238,823
Collateralized debt obligations:		34		0		0			34
Total debt securities		503,077		8,319		(3,243	)		508,153
Marketable equity securities		5,605		3,058		(9	)		8,654
Total	$	508,682	$	11,377	$	(3,252	)	$	516,807

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, 2015 and 2014:

December 31, 2015	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	$	0	$	0		$	7,850	$	(192	)	$	7,850	$	(192	)
Obligations of states and political subdivisions:
Tax-exempt		5,200		(19	)		216		(3	)		5,416		(22	)
Taxable		10,605		(60	)		2,910		(41	)		13,515		(101	)
Mortgage-backed securities		38,764		(295	)		3,503		(75	)		42,267		(370	)
Collateralized mortgage obligations, Issued by U.S. Government agencies		88,355		(648	)		49,273		(1,405	)		137,628		(2,053	)
Total temporarily impaired available-for-sale securities	$	142,924	$	(1,022	)	$	63,752	$	(1,716	)	$	206,676	$	(2,738	)

December 31, 2014	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	$	0	$	0		$	24,020	$	(583	)	$	24,020	$	(583	)
Obligations of states and political subdivisions:
Tax-exempt		11,898		(289	)		6,991		(92	)		18,889		(381	)
Taxable		4,240		(22	)		9,159		(152	)		13,399		(174	)
Mortgage-backed securities		0		0			4,160		(69	)		4,160		(69	)
Collateralized mortgage obligations, Issued by U.S. Government agencies		58,812		(396	)		60,897		(1,640	)		119,709		(2,036	)
Total debt securities		74,950		(707	)		105,227		(2,536	)		180,177		(3,243	)
Marketable equity securities		134		(9	)		0		0			134		(9	)
Total temporarily impaired available-for-sale securities	$	75,084	$	(716	)	$	105,227	$	(2,536	)	$	180,311	$	(3,252	)

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)
	2015			2014			2013
Gross realized gains from sales	$	2,972		$	1,328		$	1,918
Gross realized losses from sales		(111	)		(224	)		(175	)
Losses from OTTI Impairment		0			0			(25	)
Net realized gains	$	2,861		$	1,104		$	1,718
Income tax provision related to net realized gains	$	1,002		$	386		$	601

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, 2015. 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	$	9,087	$	9,154
Due from one year through five years		60,639		61,664
Due from five years through ten years		45,173		46,227
Due after ten years		33,504		35,801
Subtotal		148,403		152,846
Mortgage-backed securities		73,227		73,343
Collateralized mortgage obligations, Issued by U.S. Government agencies		193,145		191,715
Total	$	414,775	$	417,904

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 $228,616,000 at December 31, 2015 and $369,945,000 at December 31, 2014 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)
	2015		2014		2013
Marketable equity securities (bank stocks)	$	0	$	0	$	(25	)

A summary of information management considered in evaluating debt and equity securities for OTTI at December 31, 2015 is provided below.

Debt Securities

At December 31, 2015 and 2014, 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, 2015 to be temporary.

Equity Securities

The Corporation’s marketable equity securities at December 31, 2015 and 2014 consisted exclusively of stocks of banking companies. The Corporation recognized no other-than-temporary impairment losses related to bank stocks in 2015 or 2014. In 2013, the Corporation recognized an other-than-temporary impairment loss related to a bank stock of $25,000. Management evaluates recognition of other-than-temporary impairment losses based on review of the issuers’ published financial results to determine if recovery of the Corporation’s cost basis within the foreseeable future is uncertain. At December 31, 2015, the Corporation held no stocks with an unrealized loss.

Realized gains from sales of bank stocks totaled $2,220,000 in 2015, $363,000 in 2014, and $1,018,000 in 2013.

C&N Bank is a member of the Federal Home Loan Bank of Pittsburgh (FHLB-Pittsburgh), which is one of 11 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 $4,527,000 at December 31, 2015 and $1,454,000 at December 31, 2014. The Corporation evaluated its holding of FHLB-Pittsburgh stock for impairment and deemed the stock to not be impaired at December 31, 2015 and December 31, 2014. 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.

XML

Note 8 - Loans

12 Months Ended

Dec. 31, 2015

Receivables [Abstract]

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

8. LOANS

Loans outstanding at December 31, 2015 and 2014 are summarized as follows:

Summary of Loans by Type
(In Thousands)	Dec. 31,			Dec. 31,
	2015			2014
Residential mortgage:
Residential mortgage loans - first liens	$	304,783		$	291,882
Residential mortgage loans - junior liens		21,146			21,166
Home equity lines of credit		39,040			36,629
1-4 Family residential construction		21,121			16,739
Total residential mortgage		386,090			366,416
Commercial:
Commercial loans secured by real estate		154,779			145,878
Commercial and industrial		75,196			50,157
Political subdivisions		40,007			17,534
Commercial construction and land		5,122			6,938
Loans secured by farmland		7,019			7,916
Multi-family (5 or more) residential		9,188			8,917
Agricultural loans		4,671			3,221
Other commercial loans		12,152			13,334
Total commercial		308,134			253,895
Consumer		10,656			10,234
Total		704,880			630,545
Less: allowance for loan losses		(7,889	)		(7,336	)
Loans, net	$	696,991		$	623,209

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, 2015.

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

Year Ended December 31, 2015
(In Thousands)	Dec. 31, 2014 Balance		Charge-offs			Recoveries		Provision (Credit)			Dec. 31, 2015 Balance
Allowance for Loan Losses:
Residential mortgage:
Residential mortgage loans - first liens	$	2,941	$	(175	)	$	1	$	(122	)	$	2,645
Residential mortgage loans - junior liens		176		(42	)		0		85			219
Home equity lines of credit		322		0			0		25			347
1-4 Family residential construction		214		0			0		(7	)		207
Total residential mortgage		3,653		(217	)		1		(19	)		3,418
Commercial:
Commercial loans secured by real estate		1,758		(115	)		208		88			1,939
Commercial and industrial		688		(21	)		6		308			981
Political subdivisions		0		0			0		0			0
Commercial construction and land		283		(115	)		0		(110	)		58
Loans secured by farmland		165		0			0		(59	)		106
Multi-family (5 or more) residential		87		0			0		588			675
Agricultural loans		31		0			0		14			45
Other commercial loans		131		0			0		(13	)		118
Total commercial		3,143		(251	)		214		816			3,922
Consumer		145		(94	)		55		16			122
Unallocated		395		0			0		32			427
Total Allowance for Loan Losses	$	7,336	$	(562	)	$	270	$	845		$	7,889

Year Ended December 31, 2014
(In Thousands)
	Dec. 31, 2013							Provision			Dec. 31, 2014
	Balance		Charge-offs			Recoveries		(Credit)			Balance
Allowance for Loan Losses:
Residential mortgage:
Residential mortgage loans - first liens	$	2,974	$	(164	)	$	25	$	106		$	2,941
Residential mortgage loans - junior liens		294		(101	)		0		(17	)	$	176
Home equity lines of credit		269		(62	)		0		115		$	322
1-4 Family residential construction		168		0			0		46		$	214
Total residential mortgage		3,705		(327	)		25		250			3,653
Commercial:
Commercial loans secured by real estate		3,123		(1,521	)		250		(94	)		1,758
Commercial and industrial		591		(24	)		9		112			688
Political subdivisions		0		0			0		0			0
Commercial construction and land		267		(170	)		5		181			283
Loans secured by farmland		115		0			0		50			165
Multi-family (5 or more) residential		103		0			0		(16	)		87
Agricultural loans		30		0			0		1			31
Other commercial loans		138		0			0		(7	)		131
Total commercial		4,367		(1,715	)		264		227			3,143
Consumer		193		(97	)		47		2			145
Unallocated		398		0			0		(3	)		395
Total Allowance for Loan Losses	$	8,663	$	(2,139	)	$	336	$	476		$	7,336

Year Ended December 31, 2013
(In Thousands)
	Dec. 31, 2012							Provision			Dec. 31, 2013
	Balance		Charge-offs			Recoveries		(Credit)			Balance
Allowance for Loan Losses:
Residential mortgage:
Residential mortgage loans - first liens	$	2,619	$	(84	)	$	24	$	415		$	2,974
Residential mortgage loans - junior liens		247		0			0		47			294
Home equity lines of credit		255		0			0		14			269
1-4 Family residential construction		96		(11	)		0		83			168
Total residential mortgage		3,217		(95	)		24		559			3,705
Commercial:
Commercial loans secured by real estate		1,930		(169	)		344		1,018			3,123
Commercial and industrial		581		(286	)		4		292			591
Political subdivisions		0		0			0		0			0
Commercial construction and land		234		(4	)		0		37			267
Loans secured by farmland		129		0			0		(14	)		115
Multi-family (5 or more) residential		67		0			0		36			103
Agricultural loans		27		0			0		3			30
Other commercial loans		3		0			0		135			138
Total commercial		2,971		(459	)		348		1,507			4,367
Consumer		228		(117	)		58		24			193
Unallocated		441		0			0		(43	)		398
Total Allowance for Loan Losses	$	6,857	$	(671	)	$	430	$	2,047		$	8,663

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, 2015 and 2014:

December 31, 2015
(In Thousands)			Special
	Pass		Mention		Substandard		Doubtful		Total
Residential Mortgage:
Residential mortgage loans - first liens	$	295,302	$	407	$	9,007	$	67	$	304,783
Residential mortgage loans - junior liens		20,558		185		403		0		21,146
Home equity lines of credit		38,071		543		426		0		39,040
1-4 Family residential construction		21,104		17		0		0		21,121
Total residential mortgage		375,035		1,152		9,836		67		386,090
Commercial:
Commercial loans secured by real estate		140,381		5,862		8,536		0		154,779
Commercial and Industrial		71,225		2,106		1,737		128		75,196
Political subdivisions		40,007		0		0		0		40,007
Commercial construction and land		4,957		60		105		0		5,122
Loans secured by farmland		5,084		483		1,432		20		7,019
Multi-family (5 or more) residential		7,943		0		1,245		0		9,188
Agricultural loans		4,655		0		16		0		4,671
Other commercial loans		12,073		0		79		0		12,152
Total commercial		286,325		8,511		13,150		148		308,134
Consumer		10,490		21		145		0		10,656
Totals	$	671,850	$	9,684	$	23,131	$	215	$	704,880

December 31, 2014
(In Thousands)			Special
	Pass		Mention		Substandard		Doubtful		Total
Residential Mortgage:
Residential mortgage loans - first liens	$	280,094	$	1,246	$	10,464	$	78	$	291,882
Residential mortgage loans - junior liens		20,502		112		552		0		21,166
Home equity lines of credit		35,935		294		400		0		36,629
1-4 Family residential construction		16,719		20		0		0		16,739
Total residential mortgage		353,250		1,672		11,416		78		366,416
Commercial:
Commercial loans secured by real estate		133,204		2,775		9,899		0		145,878
Commercial and Industrial		41,751		7,246		1,042		118		50,157
Political subdivisions		17,534		0		0		0		17,534
Commercial construction and land		4,650		266		2,022		0		6,938
Loans secured by farmland		5,990		433		1,468		25		7,916
Multi-family (5 or more) residential		8,629		288		0		0		8,917
Agricultural loans		3,196		0		25		0		3,221
Other commercial loans		13,248		86		0		0		13,334
Total commercial		228,202		11,094		14,456		143		253,895
Consumer		10,095		22		117		0		10,234
Totals	$	591,547	$	12,788	$	25,989	$	221	$	630,545

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, 2015 and 2014.

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, 2015 and 2014:

December 31, 2015	Loans:						Allowance for Loan Losses:
(In Thousands)
	Individually		Collectively				Individually		Collectively
	Evaluated		Evaluated		Totals		Evaluated		Evaluated		Totals
Residential mortgage:
Residential mortgage loans - first liens	$	884	$	303,899	$	304,783	$	1	$	2,644	$	2,645
Residential mortgage loans - junior liens		74		21,072		21,146		0		219		219
Home equity lines of credit		0		39,040		39,040		0		347		347
1-4 Family residential construction		0		21,121		21,121		0		207		207
Total residential mortgage		958		385,132		386,090		1		3,417		3,418
Commercial:
Commercial loans secured by real estate		6,262		148,517		154,779		97		1,842		1,939
Commercial and industrial		324		74,872		75,196		75		906		981
Political subdivisions		0		40,007		40,007		0		0		0
Commercial construction and land		0		5,122		5,122		0		58		58
Loans secured by farmland		1,427		5,592		7,019		52		54		106
Multi-family (5 or more) residential		987		8,201		9,188		595		80		675
Agricultural loans		16		4,655		4,671		0		45		45
Other commercial loans		0		12,152		12,152		0		118		118
Total commercial		9,016		299,118		308,134		819		3,103		3,922
Consumer		0		10,656		10,656		0		122		122
Unallocated												427
Total	$	9,974	$	694,906	$	704,880	$	820	$	6,642	$	7,889

December 31, 2014	Loans:						Allowance for Loan Losses:
(In Thousands)
	Individually		Collectively				Individually		Collectively
	Evaluated		Evaluated		Totals		Evaluated		Evaluated		Totals
Residential mortgage:
Residential mortgage loans - first liens	$	1,665	$	290,217	$	291,882	$	358	$	2,583	$	2,941
Residential mortgage loans - junior liens		17		21,149		21,166		0		176		176
Home equity lines of credit		0		36,629		36,629		0		322		322
1-4 Family residential construction		0		16,739		16,739		0		214		214
Total residential mortgage		1,682		364,734		366,416		358		3,295		3,653
Commercial:
Commercial loans secured by real estate		6,537		139,341		145,878		16		1,742		1,758
Commercial and industrial		663		49,494		50,157		82		606		688
Political subdivisions		0		17,534		17,534		0		0		0
Commercial construction and land		1,939		4,999		6,938		211		72		283
Loans secured by farmland		1,470		6,446		7,916		102		63		165
Multi-family (5 or more) residential		0		8,917		8,917		0		87		87
Agricultural loans		25		3,196		3,221		0		31		31
Other commercial loans		0		13,334		13,334		0		131		131
Total commercial		10,634		243,261		253,895		411		2,732		3,143
Consumer		0		10,234		10,234		0		145		145
Unallocated												395
Total	$	12,316	$	618,229	$	630,545	$	769	$	6,172	$	7,336

Summary information related to impaired loans as of December 31, 2015 and 2014 is as follows:

(In Thousands)	December 31, 2015						December 31, 2014
	Unpaid						Unpaid
	Principal		Recorded		Related		Principal		Recorded		Related
	Balance		Investment		Allowance		Balance		Investment		Allowance
With no related allowance recorded:
Residential mortgage loans - first liens	$	842	$	842	$	-	$	950	$	950	$	-
Residential mortgage loans - junior liens		74		74		-		17		17		-
Commercial loans secured by real estate		7,580		5,945		-		8,062		6,521		-
Commercial and industrial		249		249		-		513		513		-
Commercial construction and land		0		0		-		124		124		-
Loans secured by farmland		915		915		-		925		925		-
Agricultural loans		16		16		-		25		25		-
Total with no related allowance recorded		9,676		8,041		-		10,616		9,075		-
With a related allowance recorded:
Residential mortgage loans - first liens		42		42		1		715		715		358
Commercial loans secured by real estate		317		317		97		16		16		16
Commercial and industrial		75		75		75		150		150		82
Commercial construction and land		0		0		0		1,815		1,815		211
Loans secured by farmland		512		512		52		545		545		102
Multi-family (5 or more) residential		987		987		595		0		0		0
Total with a related allowance recorded		1,933		1,933		820		3,241		3,241		769
Total	$	11,609	$	9,974	$	820	$	13,857	$	12,316	$	769

The average balance of impaired loans and interest income recognized on impaired loans is as follows:

							Interest Income Recognized on
	Average Investment in Impaired Loans						Impaired Loans on a Cash Basis
(In Thousands)	Year Ended December 31,						Year Ended December 31,
	2015		2014		2013		2015		2014		2013
Residential mortgage:
Residential mortgage loans - first lien	$	2,206	$	4,272	$	3,334	$	86	$	81	$	199
Residential mortgage loans - junior lien		64		168		245		4		3		17
Total residential mortgage		2,270		4,440		3,579		90		84		216
Commercial:
Commercial loans secured by real estate		6,357		7,192		2,931		380		469		90
Commercial and industrial		438		877		941		20		37		35
Commercial construction and land		40		395		999		0		9		14
Loans secured by farmland		1,459		1,413		1,171		103		101		66
Multi-family (5 or more) residential		790		0		22		0		0		2
Agricultural loans		21		41		43		3		3		3
Total commercial		9,105		9,918		6,107		506		619		210
Consumer		0		1		4		0		0		0
Total	$	11,375	$	14,359	$	9,690	$	596	$	703	$	426

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, 2015				December 31, 2014
	Past Due				Past Due
	90+ Days and				90+ Days and
	Accruing		Nonaccrual		Accruing		Nonaccrual
Residential mortgage:
Residential mortgage loans - first liens	$	2,381	$	3,044	$	1,989	$	3,440
Residential mortgage loans - junior liens		79		0		82		50
Home equity lines of credit		130		0		49		22
Total residential mortgage		2,590		3,044		2,120		3,512
Commercial:
Commercial loans secured by real estate		503		5,730		653		5,804
Commercial and industrial		65		313		5		379
Commercial construction and land		0		0		35		1,915
Loans secured by farmland		0		1,427		0		951
Multi-family (5 or more) residential		0		987		0		0
Agricultural loans		0		16		0		25
Total commercial		568		8,473		693		9,074
Consumer		71		0		30		24
Totals	$	3,229	$	11,517	$	2,843	$	12,610

The amounts shown in the table immediately above include loans classified as troubled debt restructurings (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, 2015 and 2014:

	As of December 31, 2015								As of December 31, 2014
	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	$	294,703	$	6,156	$	3,924	$	304,783	$	282,766	$	5,443	$	3,673	$	291,882
Residential mortgage loans - junior liens		20,816		251		79		21,146		20,853		190		123		21,166
Home equity lines of credit		38,581		329		130		39,040		36,300		258		71		36,629
1-4 Family residential construction		21,121		0		0		21,121		16,739		0		0		16,739
Total residential mortgage		375,221		6,736		4,133		386,090		356,658		5,891		3,867		366,416
Commercial:
Commercial loans secured by real estate		153,427		108		1,244		154,779		143,713		883		1,282		145,878
Commercial and industrial		75,002		118		76		75,196		49,994		43		120		50,157
Political subdivisions		40,007		0		0		40,007		17,534		0		0		17,534
Commercial construction and land		5,018		104		0		5,122		4,897		91		1,950		6,938
Loans secured by farmland		5,970		223		826		7,019		6,811		254		851		7,916
Multi-family (5 or more) residential		8,201		0		987		9,188		8,720		197		0		8,917
Agricultural loans		4,642		13		16		4,671		3,105		91		25		3,221
Other commercial loans		12,152		0		0		12,152		13,334		0		0		13,334
Total commercial		304,419		566		3,149		308,134		248,108		1,559		4,228		253,895
Consumer		10,537		48		71		10,656		10,164		40		30		10,234
Totals	$	690,177	$	7,350	$	7,353	$	704,880	$	614,930	$	7,490	$	8,125	$	630,545

Nonaccrual loans are included in the contractual aging immediately above. A summary of the contractual aging of nonaccrual loans at December 31, 2015 and 2014 is as follows:

	Current &
(In Thousands)	Past Due		Past Due		Past Due
	Less than		30-89		90+
	30 Days		Days		Days		Total
December 31, 2015 Nonaccrual Totals	$	7,100	$	293	$	4,124	$	11,517
December 31, 2014 Nonaccrual Totals	$	6,959	$	369	$	5,282	$	12,610

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, 2015 and 2014 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, 2015 Totals	$	1,186	$	0	$	81	$	5,097	$	6,364
December 31, 2014 Totals	$	1,725	$	82	$	0	$	5,388	$	7,195

A summary of TDRs that occurred during 2015, 2014 and 2013 is as follows:

Year Ended December 31, 2015			Pre-		Post-
(Balances in Thousands)			Modification		Modification
	Number		Outstanding		Outstanding
	of		Recorded		Recorded
	Contracts		Investment		Investment
Residential mortgage:
Residential mortgage loans - first liens		2	$	298	$	298
Residential mortgage loans - junior liens		1		32		32
Consumer		1		30		30

Year Ended December 31, 2014			Pre-		Post-
(Balances in Thousands)			Modification		Modification
	Number		Outstanding		Outstanding
	of		Recorded		Recorded
	Contracts		Investment		Investment
Residential mortgage, Residential mortgage loans - first liens		3	$	150	$	150
Commercial:
Commercial loans secured by real estate		5		6,679		5,193
Commercial and industrial		1		80		80

Year Ended December 31, 2013			Pre-		Post-
(Balances in Thousands)			Modification		Modification
	Number		Outstanding		Outstanding
	of		Recorded		Recorded
	Contracts		Investment		Investment
Residential mortgage:
Residential mortgage loans - first liens		6	$	677	$	677
Residential mortgage loans - junior liens		3		102		102
Commercial:
Commercial loans secured by real estate		2		866		866
Commercial and industrial		3		701		701
Loans secured by farmland		4		512		512
Agricultural loans		1		13		13
Consumer		1		6		6

The TDRs that occurred in 2015 related to residential mortgage loans – first liens that included an extended maturity date and a reduction in interest rate on one contract and a reduced payment amount on one contract. The TDR related to a residential mortgage – junior lien included a lowered interest rate and reduced payment amount. The TDR related to the consumer loan included a lowered interest rate and reduced payment amount. There was no allowance for loan losses on these loans at December 31, 2015, and no change in the allowance for loan losses resulting from these TDRs.

The TDRs that occurred in 2014 related to residential mortgage loans that included a reduction in payment amount on one contract, an interest only period on one contract and a reduction in interest rate and payment on one contract. The TDRs related to commercial loans in the period ended December 31, 2014 relate to six contracts associated with one relationship. The Corporation entered into a forbearance agreement with this commercial borrower which includes a reduction in monthly payment amounts over a fifteen-month period. At the end of the fifteen-month period, the monthly payment amounts would revert to the original amounts, unless the forbearance agreement is extended or the payment requirements are otherwise modified. In July 2015, the forbearance agreement was extended for twelve months. The Corporation recorded a charge-off of $1,486,000 in the second quarter 2014 as a result of these modifications, as the payment amounts based on the forbearance agreement are not sufficient to fully amortize the contractual amount of principal outstanding on the loans. The amount of the charge-off was determined based on the excess of the contractual principal due over the present value of the payment amounts provided for in the forbearance agreement, assuming the revised payment amounts would continue until maturity, at the contractual interest rates. After the effect of the $1,486,000 charge-off related to loans to one commercial borrower described above, there was no allowance for loan losses on loans to that borrower at December 31, 2015 and 2014, while the allowance on the loans amounted to $1,552,000 at December 31, 2013. There were no other changes in the allowance for loan losses related to TDRs that occurred during the year ended December 31, 2014.

The TDRs in 2013 included interest only payments for an extended period of time on fourteen contracts, extensions of the final maturity date on three contracts, reduction in interest rate on two contracts, and reduction in payment amount for one year on one contract. There was no allowance for loan losses on these loans at December 31, 2013 and no change in the allowance for loan losses resulting from these TDRs in the year ended December 31, 2013.

For 2015, 2014 and 2013, defaults on loans for which modifications considered to be TDRs were entered into within the previous 12 months are summarized as follows:

	Number
	of		Recorded
	Contracts		Investment
Year Ended December 31, 2015
(Balances in Thousands)
Residential mortgage:
Residential mortgage loans - first liens		1	$	32

	Number
	of		Recorded
	Contracts		Investment
Year Ended December 31, 2014
(Balances in Thousands)
Residential mortgage, Residential mortgage loans - first liens		3	$	257
Residential mortgage loans - junior liens		1		62
Commercial, Commercial loans secured by real estate		1		429
Commercial construction and land		1		25
Loans secured by farmland		4		490
Agricultural loans		1		13

	Number
	of		Recorded
	Contracts		Investment
Year Ended December 31, 2013
(Balances in Thousands)
Residential mortgage, Residential mortgage loans - first liens		1	$	85
Commercial:
Commercial loans secured by real estate		2		588
Commercial construction and land		1		110
Agricultural		1		13

The events of default in 2015 in the table listed above resulted from the borrower’s failure to make timely payments after reduced payment amount for a period of six months on the first lien residential mortgage. There was no allowance for loan losses recorded on this loan at December 31, 2015.

The events of default in 2014 in the table listed above included the borrowers’ failure to make timely payments under the following circumstances: (1) for one customer relationship including one of the first lien Residential mortgages, the junior lien Residential mortgage, the Loans secured by farmland and the Agricultural loan, monthly payments of interest only were missed; however, in the fourth quarter 2014, the total principal balance of all of the loans except one of the Loans secured by farmland were fully paid off, and the balance on that loan was paid down to a balance at December 31, 2014 of $75,000 and at December 31, 2015 of $69,000; (2) for one of the Residential mortgage loans, monthly payments were missed after the interest rate and monthly payment amount had been reduced; (3) for one of the Residential mortgage loans and the Commercial loan secured by real estate, monthly payments of interest only were missed; and (4) for the Commercial construction and land loan, a monthly payment was missed after the term of the loan had been extended. There were no allowances for loan losses recorded on these loans at December 31, 2014.

The events of default in 2013 in the table above included the borrowers’ failure to make timely payments under the following circumstances: (1) for the Residential mortgage loan, the monthly payment amount had been reduced; (2) for the two Commercial loans secured by real estate, monthly payments of interest only were missed; (3) for the Commercial construction and land loan, a monthly payment was missed after the term of the loan had been extended; and (4) for the Agricultural loan, payment at maturity was not made on a loan that had been in interest only status. There were no adjustments to the allowance for loan losses in 2013 as a result of these events of default.

At December 31, 2015 and 2014, 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. 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, 2015 and 2014 for loans for which an event of default had occurred subsequent to restructuring.

At December 31, 2015, the carrying amount of foreclosed residential real estate properties held as a result of obtaining physical possession (included in Foreclosed assets held for sale in the consolidated balance sheet) was $555,000.

At December 31, 2015, the recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process was $1,173,000.

XML

Note 9 - Bank Premises and Equipment

12 Months Ended

Dec. 31, 2015

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

9. BANK PREMISES AND EQUIPMENT

Bank premises and equipment are summarized as follows:

(In Thousands)	December 31,
	2015			2014
Land	$	2,818		$	2,818
Buildings and improvements		27,092			26,973
Furniture and equipment		17,922			17,412
Construction in progress		243			98
Total		48,075			47,301
Less: accumulated depreciation		(32,669	)		(31,045	)
Net	$	15,406		$	16,256

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

(In Thousands)	2015		2014		2013
Occupancy expense	$	954	$	998	$	1,022
Furniture and equipment expense		934		942		998
Total	$	1,888	$	1,940	$	2,020

XML

Note 10 - Intangible Assets

12 Months Ended

Dec. 31, 2015

Disclosure Text Block [Abstract]

Intangible Assets Disclosure [Text Block]

10. INTANGIBLE ASSETS

There were no changes in the carrying amount of goodwill in 2015 and 2014. The balance in goodwill was $11,942,000 at December 31, 2015 and 2014. The Corporation did not complete any acquisitions in 2015 or 2014.

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, 2015, 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, 2015.

Information related to the core deposit intangibles is as follows:

	December 31,
(In Thousands)	2015			2014
Gross amount	$	2,034		$	2,034
Less: accumulated amortization		(2,004	)		(1,982	)
Net	$	30		$	52

Amortization expense was $22,000 in 2015, $35,000 in 2014 and $51,000 in 2013. The amount of amortization expense to be recognized each of the ensuing five years is not significant.

XML

Note 11 - Deposits

12 Months Ended

Dec. 31, 2015

Disclosure Text Block [Abstract]

Deposit Liabilities Disclosures [Text Block]

11. DEPOSITS

At December 31, 2015, the scheduled maturities of time deposits are as follows:

(In Thousands)
2016	$	124,562
2017		53,985
2018		19,611
2019		10,091
2020		13,424
Thereafter		11
	$	221,684

Included in interest-bearing deposits are time deposits in the amount of $100,000 or more. As of December 31, 2015, 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	$	35,167
Over 3 months through 12 months		9,330
Over 1 year through 3 years		12,358
Over 3 years		8,248
Total	$	65,103

Interest expense from time deposits of $100,000 or more amounted to $482,000 in 2015, $563,000 in 2014, and $721,000 in 2013.

XML

Note 12 - Borrowed Funds

12 Months Ended

Dec. 31, 2015

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

12. BORROWED FUNDS

Short-term borrowings include the following:
(In Thousands)	Dec. 31		Dec. 31
	2015		2014
FHLB-Pittsburgh borrowings	$	48,581	$	0
Customer repurchase agreements		4,915		5,537
Total short-term borrowings	$	53,496	$	5,537

Short-term borrowings from FHLB - Pittsburgh are as follows:
(In Thousands)	Dec. 31		Dec. 31
	2015		2014
Overnight borrowing	$	23,500	$	0
Other short-term advances		25,081		0
Total short-term FHLB-Pittsburgh borrowings	$	48,581	$	0

The weighted average interest rate on total short-term borrowings outstanding was 0.60% at December 31, 2015 and 0.10% at December 31, 2014. The maximum amount of total short-term borrowings outstanding at any month-end was $53,496,000 in 2015, $7,919,000 in 2014 and $23,385,000 in 2013.

The Corporation had available credit with other correspondent banks totaling $45,000,000 at December 31, 2015 and 2014. These lines of credit are primarily unsecured. No amounts were outstanding at December 31, 2015 or December 31, 2014.

The Corporation has a line of credit with the Federal Reserve Bank of Philadelphia’s Discount Window. At December 31, 2015, the Corporation had available credit in the amount of $19,606,000 on this line with no outstanding advances. At December 31, 2014 the Corporation had available credit in the amount of $25,367,000 on this line with no outstanding advances. As collateral for this line, the Corporation has pledged available-for-sale securities with the carrying value of $20,039,000 at December 31, 2015 and $26,092,000 at December 31, 2014.

The FHLB-Pittsburgh loan facility is collateralized by qualifying loans secured by real estate with a book value totaling $450,883,000 at December 31, 2015 and $446,780,000 at December 31, 2014. Also, the FHLB-Pittsburgh loan facility requires 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 $4,527,000 at December 31, 2015 and $1,454,000 at December 31, 2014. The Corporation’s total credit facility with FHLB-Pittsburgh was $322,709,000 at December 31, 2015, including an unused (available) amount of $262,361,000. At December 31, 2014, the Corporation’s total credit facility with FHLB-Pittsburgh was $323,067,000, including an unused (available) amount of $311,007,000.

At December 31, 2015, the overnight borrowing from FHLB-Pittsburgh of $23,500,000 had an interest rate of 0.43%, and the other short-term advances included 12 advances of $2,090,000 each maturing monthly throughout 2016, with a weighted average interest rate of 0.86% and rates ranging from 0.54% to 1.052%.

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 weighted average rate paid by the Corporation on customer repurchase agreements was 0.10% at December 31, 2015 and December 31, 2014. The carrying value of the underlying securities was $12,613,000 at December 31, 2015 and $15,229,000 at December 31, 2014.

LONG-TERM BORROWINGS
Long-term borrowings are as follows:
(In Thousands)	Dec. 31		Dec. 31
	2015		2014
FHLB-Pittsburgh borrowings	$	11,767	$	12,060
Repurchase agreements		27,000		61,000
Total long-term borrowings	$	38,767	$	73,060

Long-term borrowings from FHLB - Pittsburgh are as follows:
(In Thousands)	Dec. 31		Dec. 31
	2015		2014
Loan maturing in 2016 with a rate of 6.86%	$	57	$	107
Loan maturing in 2017 with a rate of 6.83%		10		16
Loan maturing in 2017 with a rate of 3.81%		10,000		10,000
Loan maturing in 2020 with a rate of 4.79%		821		987
Loan maturing in 2025 with a rate of 4.91%		879		950
Total long-term FHLB-Pittsburgh borrowings	$	11,767	$	12,060

Repurchase agreements included in long-term borrowings are as follows:
(In Thousands)	Dec. 31		Dec. 31
	2015		2014
Agreement maturing in 2017 with a rate of 3.595%	$	27,000	$	27,000
Agreement maturing in 2017 with a rate of 4.265%		0		34,000
Total long-term repurchase agreements	$	27,000	$	61,000

In 2015, the Corporation incurred losses totaling $2,573,000 on prepayment of $34,000,000 of the agreement with an interest rate of 4.265%. In 2013, the Corporation incurred a loss of $1,023,000 on prepayment of the agreement with an interest rate of 3.595%.   

“Repurchase Dates,” as defined in the Master Repurchase Agreement between the Corporation and the broker-dealer, occur quarterly on or about the 20^th of each March, June, September and December until the “Final Repurchase Date” (as defined) on December 20, 2017. The Corporation pays interest, and each of the borrowings is putable by the issuer, on each Repurchase Date. The Final Repurchase Date is the effective maturity date of the borrowings.

Securities sold under repurchase agreements were delivered to the broker-dealer who is the counter-party to the transactions. The broker-dealer may have sold, loaned or otherwise disposed of such securities to other parties in the normal course of their operations, and has agreed to resell to the Corporation substantially identical securities at the maturities of the agreements. The Master Repurchase Agreement between the Corporation and the broker-dealer provides that the Agreement constitutes a “netting contract,” as defined; however, the Corporation and the broker-dealer have no other obligations to one another and accordingly, no netting has occurred.

The carrying value of the underlying securities was $33,780,000 at December 31, 2015 and $70,982,000 at December 31, 2014, as detailed in the following table:

(In Thousands)	December 31,		December 31,
	2015		2014
Mortgage-backed securities	$	15,772	$	24,114
Collateralized mortgage obligations, Issued by U.S. Government agencies		18,008		46,868
Total	$	33,780	$	70,982

Two of the more significant risks associated with the repurchase agreements are as follows:

● The borrowings are putable at quarterly intervals by the issuer. Accordingly, if interest rates were to rise to a sufficient level, the issuer would be expected to require the Corporation to pay off the borrowings. In this circumstance, the Corporation would be required to obtain new borrowings at a higher interest rate than the existing repurchase agreements or utilize cash from other sources to pay off the borrowings. If sales of available-for-sale securities were used to generate cash to pay off the borrowings, the value of such securities would be expected to have fallen, which could result in the Corporation recognizing a loss.

● As principal pay-downs of mortgage backed securities and CMOs occur, the Corporation must have available, unencumbered assets or purchase a sufficient amount of assets with credit quality suitable to the broker-dealer to replace the amounts being paid off. Since pre-payments of mortgages typically increase as interest rates fall, the Corporation may be required to purchase additional assets at times when market rates are lower than the rates paid on the borrowings.

Average daily repurchase agreement borrowings amounted to $54,304,000 in 2015, $61,000,000 in 2014 and $62,630,000 in 2013. The maximum amounts of outstanding borrowings under repurchase agreements with broker-dealers were $61,000,000 in 2015, $61,000,000 in 2014 and $68,000,000 in 2013. The weighted average interest rate on repurchase agreements was 3.99% in 2015, 4.02% in 2014 and 4.01% in 2013.

XML

Note 13 - Employee and Postretirement Benefit Plans

12 Months Ended

Dec. 31, 2015

Compensation and Retirement Disclosure [Abstract]

Pension and Other Postretirement Benefits Disclosure [Text Block]

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. Effective January 1, 2013, this plan was amended so that full-time employees no longer accrue service time toward the Corporation-subsidized portion of the medical benefits. The plan was also amended effective January 1, 2013 to change some of the age and length-of-service requirements for participants to receive some of the benefits provided under the plan. This plan contains a cost-sharing feature, which causes participants to pay for all future increases in costs related to benefit coverage. Accordingly, actuarial assumptions related to health care cost trend rates do not significantly affect the liability balance at December 31, 2015 and December 31, 2014, 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:
	2015			2014			2015			2014
CHANGE IN BENEFIT OBLIGATION:
Benefit obligation at beginning of year	$	1,085		$	1,733		$	1,378		$	1,391
Service cost		0			0			38			34
Interest cost		36			73			57			57
Plan participants' contributions		0			0			203			198
Actuarial (gain) loss		(46	)		76			120			(48	)
Benefits paid		(16	)		(16	)		(257	)		(254	)
Settlement of plan obligation		(337	)		(781	)		0			0
Benefit obligation at end of year	$	722		$	1,085		$	1,539		$	1,378
CHANGE IN PLAN ASSETS:
Fair value of plan assets at beginning of year	$	1,208		$	1,968		$	0		$	0
Actual return on plan assets		(16	)		37			0			0
Employer contribution		0			0			54			56
Plan participants' contributions		0			0			203			198
Benefits paid		(16	)		(16	)		(257	)		(254	)
Settlement of plan obligation		(337	)		(781	)		0			0
Fair value of plan assets at end of year	$	839		$	1,208		$	0		$	0
Funded status at end of year	$	117		$	123		$	(1,539	)	$	(1,378	)

In 2015, there was a distribution from the plan of $337,000, or 32% of the plan’s total accumulated benefit obligation prior to the distribution. The Corporation recognized a loss of $87,000 (included in net periodic benefit cost) in 2015 as a result of this settlement. In 2014, there was a distribution from the plan of $781,000, or 42% of the plan’s total accumulated benefit obligation prior to the distribution. The Corporation recognized a loss of $196,000 (included in net periodic benefit cost) in 2014 as a result of this settlement.

At December 31, 2015 and 2014, the following pension plan and postretirement plan asset and liability amounts were recognized in the consolidated balance sheet:

Assets and liabilities:
(In Thousands)	Pension:				Postretirement:
	2015		2014		2015		2014
Other assets	$	117	$	123
Accrued interest and other liabilities					$	1,539	$	1,378

At December 31, 2015 and 2014, the following items included in accumulated other comprehensive income had not been recognized as components of expense:

Items not yet recognized as a component of net periodic benefit cost:
(In Thousands)	Pension:				Postretirement:
	2015		2014		2015			2014
Prior service cost	$	0	$	0	$	(371	)	$	(402	)
Net actuarial loss		186		269		131			11
Total	$	186	$	269	$	(240	)	$	(391	)

For the defined benefit pension plan, amortization of the net actuarial loss is expected to be $10,000 in 2016. For the postretirement plan, the estimated amount of prior service cost that will be amortized from accumulated other comprehensive income into net periodic benefit cost in 2016 is a reduction in expense of $31,000, and no net actuarial loss is expected to be amortized in 2016.

The accumulated benefit obligation for the defined benefit pension plan was $722,000 at December 31, 2015 and $1,085,000 at December 31, 2014.

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

(In Thousands)	Pension:									Postretirement:
	2015			2014			2013			2015			2014			2013
Service cost	$	0		$	0		$	0		$	38		$	34		$	41
Interest cost		36			73			71			57			57			55
Expected return on plan assets		(45	)		(88	)		(90	)		0			0			0
Amortization of prior service cost		0			0			0			(31	)		(31	)		(31	)
Recognized net actuarial loss		11			19			32			0			0			1
Loss on settlement		87			196			0			0			0			0
Total net periodic benefit cost	$	89		$	200		$	13		$	64		$	60		$	66

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

	Pension:									Postretirement:
	2015			2014			2013			2015			2014			2013
Citizens Trust Company Retirement Plan and postretirement plan:
Discount rate		3.75	%		4.50	%		4.00	%		4.00	%		4.00	%		4.00	%
Expected return on plan assets		5.31	%		5.31	%		5.31	%		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, 2015 and 2014 are as follows:

	Pension:						Postretirement:
	2015			2014			2015			2014
Discount rate		4.30	%		3.75	%		4.25	%		4.00	%
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
2016	$	250	$	92
2017		15		96
2018		14		102
2019		39		105
2020		13		110
2021-2025		214		550

No estimated minimum contribution to the defined benefit pension plan is required in 2016, 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, 2015 and 2014 are as follows:

	2015			2014
Cash and cash equivalents		2	%		3	%
Debt securities		38	%		37	%
Equity securities		46	%		47	%
Alternative funds		14	%		13	%
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, 2015, the targeted asset allocation for the pension plan was 46% equity securities, 38% debt securities, 14% alternative assets, and 2% cash. At December 31, 2014, the targeted asset allocation for the pension plan was 26% equity securities, 61% debt securities, 11% alternative assets and 2% cash. 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 $609,000 in 2015, $595,000 in 2014 and $557,000 in 2013.

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, 2015 and 2014, 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 410,004 shares of Corporation stock at December 31, 2015 and 409,197 shares at December 31, 2014, all of which had been allocated to Plan participants. The Corporation’s contributions to the ESOP totaled $522,000 in 2015, $512,000 in 2014 and $509,000 in 2013.

The Corporation has a nonqualified supplemental deferred compensation arrangement with its key officers. Charges to operating expense for officers’ supplemental deferred compensation were $167,000 in 2015, $138,000 in 2014 and $186,000 in 2013.

In December 2015, the Corporation established an additional nonqualified deferred compensation plan that allows selected officers, beginning in 2016, the option to defer receipt of cash compensation, including base salary and any cash bonuses or other cash incentives. This nonqualified deferred compensation plan does not provide for Corporation contributions.

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. Historically through December 31, 2015, all awards made under this Plan have consisted of Incentive Stock Options or restricted stock. Incentive Stock Options 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. Restricted stock awards issued under the Stock Incentive Plan vest ratably over terms ranging from 3-4 years. Restricted stock awards in 2015 included the following: (1) a total of 20,298 shares to employees, vesting over a four-year term, with vesting contingent upon the Corporation meeting an annual return on average equity (“ROAE”) performance ratio, as defined; (2) a total of 2,198 shares to employees, vesting over a four-year term, with vesting dependent on satisfactory performance; and (3) an award to the Chief Executive Officer of 5,174 shares, vesting over a three-year term, with vesting dependent on satisfactory performance. Most of the restricted stock awards issued under this Plan in 2015, 2014 and 2013 include a condition that 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 2015, 2014 and 2013 plan years. For 2015 and 2014 restricted stock awards to individuals who are substantially involved in mortgage lending, vesting is not dependent on the Corporation’s ROAE. There are 294,275 shares available for issuance under the Stock Incentive Plan as of December 31, 2015.

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. In 2015, a total of 7,130 restricted shares were granted under the Independent Directors Stock Incentive Plan, vesting over a term of one year. Restricted stock awards granted under the Independent Directors Stock Incentive Plan in 2014 and 2013 vest ratably over 3 years. There are 29,702 shares available for issuance under the Independent Directors Stock Incentive Plan as of December 31, 2015.

There were no stock options granted in 2015. The Corporation recorded stock option expense in 2014 and 2013 based on estimated fair value calculated using the Black-Scholes-Merton option-pricing model with the following assumptions:

	2014			2013
Volatility		39	%		41	%
Expected option lives (Years)		8			8
Risk-free interest rate		2.85	%		1.60	%
Dividend yield		4.33	%		3.69	%

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 8-year period to estimate future levels of volatility and dividend yield for the 2014 and 2013 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)	2015		2014		2013
Stock options	$	0	$	153	$	242
Restricted stock		606		412		454
Total	$	606	$	565	$	696

A summary of stock option activity is presented below:

	2015					2014					2013
				Weighted					Weighted					Weighted
				Average					Average					Average
				Exercise					Exercise					Exercise
	Shares			Price		Shares			Price		Shares			Price
Outstanding, beginning of year		316,157		$	19.05		358,176		$	19.03		337,670		$	19.08
Granted		0					39,027		$	20.45		64,050		$	19.21
Exercised		(29,557	)	$	17.56		(50,415	)	$	17.57		(10,656	)	$	17.22
Forfeited		(20,211	)	$	19.76		(16,424	)	$	20.03		(14,135	)	$	20.13
Expired		(17,903	)	$	27.00		(14,207	)	$	26.59		(18,753	)	$	20.73
Outstanding, end of year		248,486		$	18.59		316,157		$	19.05		358,176		$	19.03
Options exercisable at year-end		248,486		$	18.59		316,157		$	19.05		358,176		$	19.03
Weighted-average fair value of options granted					N/A				$	5.50				$	5.56
Weighted-average fair value of options forfeited				$	4.86				$	4.89				$	3.77

The weighted-average remaining contractual term of outstanding stock options at December 31, 2015 was 4.6 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 2015) was $629,000 at December 31, 2015. The total intrinsic value of options exercised was $77,000 in 2015, $90,000 in 2014 and $29,000 in 2013.

The following summarizes non-vested restricted stock activity for the year ended December 31, 2015:

	Restricted Stock
				Weighted
				Average
	Number			Grant Date
	of Shares			Fair Value
Outstanding, December 31, 2014		52,436		$	19.34
Granted		34,800		$	20.63
Vested		(21,522	)	$	19.16
Forfeited		(3,502	)	$	20.08
Outstanding, December 31, 2015		62,212		$	20.10

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, 2015, there was $645,000 total unrecognized compensation costs related to restricted stock, which is expected to be recognized over a weighted average period of 1.7 years.

In the first two months of 2016, the Corporation awarded 27,593 shares of restricted stock under the Stock Incentive Plan and 6,606 shares of restricted stock under the Independent Directors Stock Incentive Plans. The 2016 restricted stock awards under the Stock Incentive Plan vest ratably over three years, and vesting for 8,645 of the restricted shares depends on the Corporation meeting a ROAE target each year. The 2016 restricted stock issued under the Independent Directors Stock Incentive Plan vests over one year. Total estimated stock-based compensation for 2016 is $651,000. The restricted stock awards made in the first two months of 2016 are not included in the tables above.

The Corporation has issued shares from treasury stock for almost all stock option exercises through December 31, 2015. Management does not anticipate that stock repurchases will be necessary to accommodate stock option exercises in 2016.

XML

Note 14 - Income Taxes

12 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

14. INCOME TAXES

The net deferred tax asset at December 31, 2015 and 2014 represents the following temporary difference components:

	December 31,		December 31,
(In Thousands)	2015		2014
Deferred tax assets:
Net realized losses on securities	$	69	$	144
Allowance for loan losses		2,761		2,568
Credit for alternative minimum tax paid		0		537
Other deferred tax assets		2,634		2,595
Total deferred tax assets		5,464		5,844
Deferred tax liabilities:
Unrealized holding gains on securities		1,342		2,844
Defined benefit plans - ASC 835		19		43
Bank premises and equipment		869		1,134
Core deposit intangibles		11		18
Other deferred tax liabilities		108		137
Total deferred tax liabilities		2,349		4,176
Deferred tax asset, net	$	3,115	$	1,668

The provision for income taxes includes the following:

(In thousands)	2015		2014		2013
Currently payable	$	5,097	$	4,280	$	4,125
Tax expense resulting from allocations of certain tax benefits to equity or as a reduction in other assets		161		158		219
Deferred		79		1,254		1,839
Total provision	$	5,337	$	5,692	$	6,183

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

(Amounts in thousands)	2015						2014						2013
	Amount			%			Amount			%			Amount			%
Expected provision	$	7,633			35.00		$	7,972			35.00		$	8,672			35.00
Tax-exempt interest income		(1,914	)		(8.78	)		(1,982	)		(8.70	)		(2,137	)		(8.62	)
Nondeductible interest expense		51			0.23			56			0.25			60			0.24
Dividends received deduction		(75	)		(0.34	)		(79	)		(0.35	)		(76	)		(0.31	)
Increase in cash surrender value of life insurance		(135	)		(0.62	)		(132	)		(0.58	)		(140	)		(0.57	)
Employee stock option compensation		0			0.00			41			0.18			67			0.27
Tax benefit from limited partnership investment		(80	)		(0.37	)		(83	)		(0.36	)		(85	)		(0.34	)
Other, net		(143	)		(0.66	)		(101	)		(0.44	)		(178	)		(0.72	)
Effective income tax provision	$	5,337			24.47		$	5,692			24.99		$	6,183			24.95

The Corporation has investments in three limited partnerships that manage affordable housing projects that have qualified for the federal low-income housing tax credit. The Corporation’s expected return from these investments is based on the receipt of tax credits and tax benefits from deductions of operating losses. The Corporation uses the effective yield method to account for these investments, with the benefits recognized as a reduction of the provision for income taxes. For two of the three limited partnership investments, the tax credits have been received in full in prior years, and the Corporation has fully realized the benefits of the credits and amortized its initial investments in the partnerships. The most recent affordable housing project was completed in 2013, and the Corporation received tax credits in 2013 and 2014 and expects to continue to receive tax credits annually through 2022. The carrying amount of the Corporation’s investment is $812,000 at December 31, 2015 and $906,000 at December 31, 2014 (included in Other Assets in the consolidated balance sheets). For 2015, the estimated amount of tax credits and other tax benefits to be received is $158,000 and the amount recognized as a reduction of the provision for income taxes is $80,000. In 2014, the Corporation received tax credits and other tax benefits totaling $159,000, and recognized a reduction of the provision for income tax of $83,000. In 2013, the Corporation received tax credits and other tax benefits totaling $160,000, and recognized a reduction of the provision for income tax of $85,000.

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 2011.

XML

Note 15 - Related Party Transactions

12 Months Ended

Dec. 31, 2015

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

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 2015	$	12,023	$	52	$	(808	)	$	(1,021	)	$	10,246
12 directors, 8 executive officers 2014		12,547		188		(1,358	)		646			12,023
11 directors, 8 executive officers 2013		14,125		1,110		(2,723	)		35			12,547

In the table above, other changes represent net changes in the balance of 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 $3,194,000 at December 31, 2015 and $3,203,000 at December 31, 2014.

XML

Note 16 - Off-balance Sheet Risk

12 Months Ended

Dec. 31, 2015

Disclosure Text Block Supplement [Abstract]

Supplemental Balance Sheet Disclosures [Text Block]

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, 2015 and 2014 are as follows:

(In Thousands)	2015		2014
Commitments to extend credit	$	156,407	$	143,863
Standby letters of credit		13,340		13,415

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, 2015 and 2014.

Standby letters of credit as of December 31, 2015 expire as follows:

	Amount
Year of Expiration	(In Thousands)
2016	$	10,767
2017		371
2019		40
2021 and Thereafter		2,162
Total	$	13,340

XML

Note 17 - Contingencies

12 Months Ended

Dec. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

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.

XML

Note 18 - Regulatory Matters

12 Months Ended

Dec. 31, 2015

Disclosure Text Block [Abstract]

Regulatory Capital Requirements under Banking Regulations [Text Block]

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.

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 capital, Tier I capital (as defined in the regulations) and Common equity Tier 1 capital (as defined) to risk-weighted assets (as defined) and of Tier I capital (as defined) to average assets (as defined). Management believes, as of December 31, 2015 and 2014, 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, Common equity 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:

(Dollars in Thousands)											Minimum To Be Well
						Minimum					Capitalized Under
						Capital					Prompt Corrective
	Actual					Requirement					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
December 31, 2015:
Total capital to risk-weighted assets:
Consolidated	$	181,216		24.40	%	$	59,424		>8	%	$	74,281		>10	%
C&N Bank		161,187		21.83	%		59,058		>8	%		73,823		>10	%
Tier 1 capital to risk-weighted assets:
Consolidated		173,009		23.29	%		29,712		>6	%		59,424		>8	%
C&N Bank		153,298		20.77	%		29,529		>6	%		59,058		>8	%
Common equity tier 1 capital to risk-weighted assets:
Consolidated		173,009		23.29	%		29,712		>4.5	%		48,282		>6.5	%
C&N Bank		153,298		20.77	%		29,529		>4.5	%		47,985		>6.5	%
Tier 1 capital to average assets:
Consolidated		173,009		14.31	%		48,355		>4	%		60,444		>5	%
C&N Bank		153,298		12.81	%		47,861		>4	%		59,826		>5	%
December 31, 2014:
Total capital to risk-weighted assets:
Consolidated	$	179,588		27.60	%	$	52,051		>8	%		n/a		n/a
C&N Bank		156,420		24.33	%		51,442		>8	%	$	64,303		>10	%
Tier 1 capital to risk-weighted assets:
Consolidated		170,880		26.26	%		26,026		>4	%		n/a		n/a
C&N Bank		149,055		23.18	%		25,721		>4	%		38,582		>6	%
Tier 1 capital to average assets:
Consolidated		170,880		13.89	%		49,224		>4	%		n/a		n/a
C&N Bank		149,055		12.22	%		48,798		>4	%		60,998		>5	%

In July 2013, the federal regulatory authorities issued a new capital rule based, in part, on revisions developed by the Basel Committee on Banking Supervision to the Basel capital framework (Basel III). The Corporation and C&N Bank became subject to the new rule effective January 1, 2015. Generally, the new rule implements higher minimum capital requirements, revises the definition of regulatory capital components and related calculations, adds a new common equity tier 1 capital ratio, implements a new capital conservation buffer, increases the risk weighting for past due loans and provides a transition period for several aspects of the new rule.

The current (new) capital rule provides that, in order to avoid limitations on capital distributions, including dividend payments and certain discretionary bonus payments to executive officers, a banking organization must hold a capital conservation buffer composed of common equity tier 1 capital above its minimum risk-based capital requirements. The buffer is measured relative to risk-weighted assets. Phase-in of the capital conservation buffer requirements will begin January 1, 2016. The transition schedule for new ratios, including the capital conservation buffer, is as follows:

	As of January 1:
	2015			2016			2017			2018			2019
Minimum common equity tier 1 capital ratio		4.5	%		4.5	%		4.5	%		4.5	%		4.5	%
Common equity tier 1 capital conservation buffer		N/A			0.625	%		1.25	%		1.875	%		2.5	%
Minimum common equity tier 1 capital ratio plus capital conservation buffer		4.5	%		5.125	%		5.75	%		6.375	%		7.0	%
Phase-in of most deductions from common equity tier 1 capital		40	%		60	%		80	%		100	%		100	%
Minimum tier 1 capital ratio		6.0	%		6.0	%		6.0	%		6.0	%		6.0	%
Minimum tier 1 capital ratio plus capital conservation buffer		N/A			6.625	%		7.25	%		7.875	%		8.5	%
Minimum total capital ratio		8.0	%		8.0	%		8.0	%		8.0	%		8.0	%
Minimum total capital ratio plus capital conservation buffer		N/A			8.625	%		9.25	%		9.875	%		10.5	%

As fully phased in, a banking organization with a buffer greater than 2.5% would not be subject to additional limits on dividend payments or discretionary bonus payments; however, a banking organization with a buffer less than 2.5% would be subject to increasingly stringent limitations as the buffer approaches zero. The new rule also prohibits a banking organization from making dividend payments or discretionary bonus payments if its eligible retained income is negative in that quarter and its capital conservation buffer ratio was less than 2.5% as of the beginning of that quarter. Eligible net income is defined as net income for the four calendar quarters preceding the current calendar quarter, net of any distributions and associated tax effects not already reflected in net income. A summary of payout restrictions based on the capital conservation buffer is as follows:

Capital Conservation Buffer	Maximum Payout
(as a % of risk-weighted assets)	(as a % of eligible retained income)
Greater than 2.5%	No payout limitation applies
≤2.5% and >1.875%	60%
≤1.875% and >1.25%	40%
≤1.25% and >0.625%	20%
≤0.625%	0%

Banking regulators limit the amount of dividends that may be paid by C&N Bank to the Corporation. Retained earnings against which dividends may be paid without prior approval of the banking regulators amounted to approximately $87,471,000 at December 31, 2015, 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 $15,733,000 at December 31, 2015.

XML

Note 19 - Parent Company Only

12 Months Ended

Dec. 31, 2015

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Financial Information of Parent Company Only Disclosure [Text Block]

19. PARENT COMPANY ONLY

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

CONDENSED BALANCE SHEET	December 31,
(In Thousands)	2015		2014
ASSETS
Cash	$	5,847	$	9,624
Investment in subsidiaries:
Citizens & Northern Bank		167,277		164,551
Citizens & Northern Investment Corporation		10,966		10,822
Bucktail Life Insurance Company		3,392		3,336
Other assets		24		36
TOTAL ASSETS	$	187,506	$	188,369
LIABILITIES AND STOCKHOLDERS' EQUITY
Other liabilities	$	19	$	7
Stockholders' equity		187,487		188,362
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	187,506	$	188,369

CONDENSED INCOME STATEMENT
(In Thousands)	2015			2014			2013
Dividends from Citizens & Northern Bank	$	11,569		$	22,608		$	11,108
Expenses		(234	)		(112	)		(108	)
Income before equity in undistributed income of subsidiaries		11,335			22,496			11,000
Equity in undistributed income (loss) of subsidiaries		5,136			(5,410	)		7,594
NET INCOME	$	16,471		$	17,086		$	18,594

CONDENSED STATEMENT OF CASH FLOWS
(In Thousands)
	2015			2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	16,471		$	17,086		$	18,594
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in undistributed net (income) loss of subsidiaries		(5,136	)		5,410			(7,594	)
Decrease (increase) in other assets		12			(36	)		7
Increase in other liabilities		12			1			0
Net Cash Provided by Operating Activities		11,359			22,461			11,007
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of treasury stock		381			123			184
Tax benefit from compensation plans, net		143			137			127
Purchase of treasury stock		(4,415	)		(4,002	)		0
Dividends paid		(11,245	)		(11,392	)		(10,916	)
Net Cash (Used in) Financing Activities		(15,136	)		(15,134	)		(10,605	)
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(3,777	)		7,327			402
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		9,624			2,297			1,895
CASH AND CASH EQUIVALENTS, END OF YEAR	$	5,847		$	9,624		$	2,297

XML

Note 20 - Summary of Quarterly Consolidated Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2015

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Information [Text Block]

20. SUMMARY OF QUARTERLY CONSOLIDATED FINANCIAL DATA (Unaudited)

The following table presents summarized quarterly financial data for 2015 and 2014:

(In Thousands Except Per Share Data) (Unaudited)
	2015 Quarter Ended
	Mar. 31,		June 30,		Sept. 30,		Dec. 31,
Interest income	$	11,163	$	11,186	$	11,134	$	11,036
Interest expense		1,213		1,176		1,126		1,087
Net interest income		9,950		10,010		10,008		9,949
Provision for loan losses		3		221		302		319
Net interest income after provision for loan losses		9,947		9,789		9,706		9,630
Other income		3,487		3,962		3,961		3,994
Net gains on available-for-sale securities		74		932		79		1,776
Loss on prepayment of borrowings		0		910		0		1,663
Other expenses		8,464		7,964		8,117		8,411
Income before income tax provision		5,044		5,809		5,629		5,326
Income tax provision		1,229		1,452		1,395		1,261
Net income	$	3,815	$	4,357	$	4,234	$	4,065
Net income per share – basic	$	0.31	$	0.36	$	0.35	$	0.33
Net income per share – diluted	$	0.31	$	0.36	$	0.35	$	0.33

	2014 Quarter Ended
	Mar. 31,			June 30,		Sept. 30,		Dec. 31,
Interest income	$	11,406		$	11,563	$	11,572	$	11,468
Interest expense		1,288			1,290		1,287		1,257
Net interest income		10,118			10,273		10,285		10,211
(Credit) provision for loan losses		(311	)		446		218		123
Net interest income after (credit) provision for loan losses		10,429			9,827		10,067		10,088
Other income		3,751			3,980		3,887		3,802
Net gains on available-for-sale securities		31			103		760		210
Other expenses		8,524			8,347		9,036		8,250
Income before income tax provision		5,687			5,563		5,678		5,850
Income tax provision		1,399			1,400		1,411		1,482
Net income	$	4,288		$	4,163	$	4,267	$	4,368
Net income per share – basic	$	0.35		$	0.33	$	0.34	$	0.36
Net income per share – diluted	$	0.34		$	0.33	$	0.34	$	0.35

XML

Accounting Policies, by Policy (Policies)

12 Months Ended

Dec. 31, 2015

Accounting Policies [Abstract]

Consolidation, Policy [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. All material intercompany balances and transactions have been eliminated in consolidation.

Nature of Operations Policy [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 [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 (“U.S. GAAP”). 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) assessment of impaired securities to determine whether or not the securities are other-than-temporarily impaired, (4) valuation of deferred tax assets and (5) valuation of obligations from defined benefit plans

Marketable Securities, Policy [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.

Finance, Loan and Lease Receivables, Held-for-sale, Policy [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.

Finance, Loans and Leases Receivable, Policy [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.

Loans and Leases Receivable, Allowance for Loan Losses Policy [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, 2015 and 2014, 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 thirty-six months), 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 57% at December 31, 2015) are 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 reductions in required payments, an extension of a loan’s stated maturity date or a temporary reduction in interest rate. Non-accrual troubled debt restructurings may be 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.

Property, Plant and Equipment, Policy [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 or Disposal of Long-Lived Assets, Policy [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 Expense, Policy [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 2015, 2014, and 2013 was not significant.

Finance, Loan and Lease Receivables, Held for Investments, Foreclosed Assets Policy [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.

Goodwill and Intangible Assets, Policy [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.

Transfers and Servicing of Financial Assets, Policy [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 $1,296,000 at December 31, 2015 and $1,281,000 at December 31, 2014.

Income Tax, Policy [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. Tax benefits from investments in limited partnerships that have qualified for federal low-income tax credits are recognized as a reduction in the provision for income tax over the term of the investment using the effective yield method. The Corporation includes income tax penalties in the provision for income tax. The Corporation has no accrued interest related to unrecognized tax benefits.

Compensation Related Costs, Policy [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 Credit Exposure, Policy [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 and Cash Equivalents, Policy [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.

XML

Note 3 - Comprehensive Income (Tables)

12 Months Ended

Dec. 31, 2015

Disclosure Text Block [Abstract]

Comprehensive Income (Loss) [Table Text Block]

(In Thousands)	Before-Tax			Income Tax			Net-of-Tax
	Amount			Effect			Amount
2015
Unrealized losses on available-for-sale securities:
Unrealized holding losses on available-for-sale securities	$	(1,429	)	$	500		$	(929	)
Reclassification adjustment for (gains) realized in income		(2,861	)		1,002			(1,859	)
Other comprehensive loss on available-for-sale securities		(4,290	)		1,502			(2,788	)
Unfunded pension and postretirement obligations:
Changes from plan amendments and actuarial gains and losses included in other comprehensive income		(135	)		47			(88	)
Amortization of net transition obligation, prior service cost, net actuarial loss and loss on settlement included in net periodic benefit cost		67			(23	)		44
Other comprehensive loss on unfunded retirement obligations		(68	)		24			(44	)
Total other comprehensive loss	$	(4,358	)	$	1,526		$	(2,832	)

(In Thousands)	Before-Tax			Income Tax			Net-of-Tax
	Amount			Effect			Amount
2014
Unrealized gains on available-for-sale securities:
Unrealized holding gains on available-for-sale securities	$	10,774		$	(3,771	)	$	7,003
Reclassification adjustment for (gains) realized in income		(1,104	)		386			(718	)
Other comprehensive income on available-for-sale securities		9,670			(3,385	)		6,285
Unfunded pension and postretirement obligations:
Changes from plan amendments and actuarial gains and losses included in other comprehensive income		(79	)		28			(51	)
Amortization of net transition obligation, prior service cost, net actuarial loss and loss on settlement included in net periodic benefit cost		184			(65	)		119
Other comprehensive income on unfunded retirement obligations		105			(37	)		68
Total other comprehensive income	$	9,775		$	(3,422	)	$	6,353

(In Thousands)	Before-Tax			Income Tax			Net-of-Tax
	Amount			Effect			Amount
2013
Unrealized (losses) on available-for-sale securities:
Unrealized holding losses on available-for-sale securities	$	(17,623	)	$	6,168		$	(11,455	)
Reclassification adjustment for (gains) realized in income		(1,718	)		601			(1,117	)
Other comprehensive loss on available-for-sale securities		(19,341	)		6,769			(12,572	)
Unfunded pension and postretirement obligations:
Changes from plan amendments and actuarial gains and losses included in other comprehensive income		885			(310	)		575
Amortization of net transition obligation, prior service cost and net actuarial loss included in net periodic benefit cost		2			(1	)		1
Other comprehensive income on unfunded retirement obligations		887			(311	)		576
Total other comprehensive loss	$	(18,454	)	$	6,458		$	(11,996	)

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

(In Thousands)	Unrealized			Unfunded			Accumulated
	Holding Gains			Pension and			Other
	(Losses)			Postretirement			Comprehensive
	on Securities			Obligations			Income
2015
Balance, beginning of period	$	5,281		$	79		$	5,360
Other comprehensive loss before reclassifications		(929	)		(88	)		(1,017	)
Amounts reclassified from accumulated other comprehensive income		(1,859	)		44			(1,815	)
Other comprehensive loss		(2,788	)		(44	)		(2,832	)
Balance, end of period	$	2,493		$	35		$	2,528
2014
Balance, beginning of period	$	(1,004	)	$	11		$	(993	)
Other comprehensive income before reclassifications		7,003			(51	)		6,952
Amounts reclassified from accumulated other comprehensive income		(718	)		119			(599	)
Other comprehensive income		6,285			68			6,353
Balance, end of period	$	5,281		$	79		$	5,360
2013
Balance, beginning of period	$	11,568		$	(565	)	$	11,003
Other comprehensive (loss) income before reclassifications		(11,455	)		575			(10,880	)
Amounts reclassified from accumulated other comprehensive loss		(1,117	)		1			(1,116	)
Other comprehensive (loss) income		(12,572	)		576			(11,996	)
Balance, end of period	$	(1,004	)	$	11		$	(993	)

Reclassification out of Accumulated Other Comprehensive Income [Table Text Block]

For the Year Ended December 31, 2015
(In Thousands)
Details about Accumulated Other Comprehensive Income Components	Reclassified from Accumulated Other Comprehensive Income			Affected Line Item in the Consolidated Statements of Income
Unrealized gains and losses on available-for-sale securities	$	(2,861	)	Realized gains on available-for-sale securities, net
		1,002		Income tax provision
		(1,859	)	Net of tax
Amortization of defined benefit pension and postretirement items:
Prior service cost		(31	)	Pensions and other employee benefits
Actuarial loss		11		Pensions and other employee benefits
Loss on settlement		87		Pensions and other employee benefits
		67		Total before tax
		(23	)	Income tax provision
		44		Net of tax
Total reclassifications for the period	$	(1,815	)

For the Year Ended December 31, 2014
(In Thousands)
Details about Accumulated Other  Comprehensive Income Components	Reclassified from Accumulated Other Comprehensive Income			Affected Line Item in the Consolidated Statements of Income
Unrealized gains and losses on available-for-sale securities	$	(1,104	)	Realized gains on available-for-sale securities, net
		386		Income tax provision
		(718	)	Net of tax
Amortization of defined benefit pension and postretirement items:
Prior service cost		(31	)	Pensions and other employee benefits
Actuarial loss		19		Pensions and other employee benefits
Loss on settlement		196		Pensions and other employee benefits
		184		Total before tax
		(65	)	Income tax provision
		119		Net of tax
Total reclassifications for the period	$	(599	)

For the Year Ended December 31, 2013
(In Thousands)
Details about Accumulated Other Comprehensive Income Components	Reclassified from Accumulated Other Comprehensive Income			Affected Line Item in the Consolidated Statements of Income
Unrealized gains and losses on available-for-sale Securities	$	25		Total other-than-temporary impairment losses on
				available-for-sale securities
		(1,743	)	Realized gains on available-for-sale securities, net
		(1,718	)	Total before tax
		601		Income tax provision
		(1,117	)	Net of tax
Amortization of defined benefit pension and postretirement items:
Prior service cost		(31	)	Pensions and other employee benefits
Actuarial loss		33		Pensions and other employee benefits
		2		Total before tax
		(1	)	Income tax provision
		1		Net of tax
Total reclassifications for the period	$	(1,116	)

XML

Note 4 - Per Share Data (Tables)

12 Months Ended

Dec. 31, 2015

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

			Weighted-
			Average			Earnings
	Net		Common			Per
	Income		Shares			Share
2015
Earnings per share – basic	$	16,471,000		12,211,941		$	1.35
Dilutive effect of potential common stock arising from stock options:
Exercise of outstanding stock options				210,402
Hypothetical share repurchase at $20.04				(188,570	)
Earnings per share – diluted	$	16,471,000		12,233,773		$	1.35
2014
Earnings per share – basic	$	17,086,000		12,390,067		$	1.38
Dilutive effect of potential common stock arising from stock options:
Exercise of outstanding stock options				224,015
Hypothetical share repurchase at $19.41				(202,032	)
Earnings per share – diluted	$	17,086,000		12,412,050		$	1.38
2013
Earnings per share – basic	$	18,594,000		12,352,383		$	1.51
Dilutive effect of potential common stock arising from stock options:
Exercise of outstanding stock options				250,236
Hypothetical share repurchase at $19.86				(219,829	)
Earnings per share – diluted	$	18,594,000		12,382,790		$	1.50

XML

Note 5 - Cash and Due from Banks (Tables)

12 Months Ended

Dec. 31, 2015

Cash and Cash Equivalents [Abstract]

Schedule of Cash and Cash Equivalents [Table Text Block]

(In thousands)
	Dec. 31, 2015		Dec. 31, 2014
Cash and cash equivalents	$	33,313	$	31,619
Certificates of deposit		2,748		4,428
Total cash and due from banks	$	36,061	$	36,047

XML

Note 6 - Fair Value Measurements and Fair Values of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2015

Note 6 - Fair Value Measurements and Fair Values of Financial Instruments (Tables) [Line Items]

Fair Value, by Balance Sheet Grouping [Table Text Block]

			December 31, 2015
	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	$	10,483	$	0		$	10,483
Obligations of states and political subdivisions:
Tax-exempt		0		107,757		0			107,757
Taxable		0		34,597		0			34,597
Mortgage-backed securities		0		73,343		0			73,343
Collateralized mortgage obligations, Issued by U.S. Government agencies		0		191,715		0			191,715
Collateralized debt obligations		0		9		0			9
Total debt securities		0		417,904		0			417,904
Marketable equity securities		2,386		0		0			2,386
Total available-for-sale securities		2,386		417,904		0			420,290
Servicing rights		0		0		1,296			1,296
Total recurring fair value measurements	$	2,386	$	417,904	$	1,296		$	421,586
Nonrecurring fair value measurements
Impaired loans with a valuation allowance	$	0	$	0	$	1,933		$	1,933
Valuation allowance		0		0		(820	)		(820	)
Impaired loans, net		0		0		1,113			1,113
Foreclosed assets held for sale		0		0		1,260			1,260
Total nonrecurring fair value measurements	$	0	$	0	$	2,373		$	2,373

			December 31, 2014
	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	$	26,676	$	0		$	26,676
Obligations of states and political subdivisions:
Tax-exempt		0		124,839		0			124,839
Taxable		0		33,878		0			33,878
Mortgage-backed securities		0		83,903		0			83,903
Collateralized mortgage obligations, Issued by U.S. Government agencies		0		238,823		0			238,823
Collateralized debt obligations		0		34		0			34
Total debt securities		0		508,153		0			508,153
Marketable equity securities		8,654		0		0			8,654
Total available-for-sale securities		8,654		508,153		0			516,807
Servicing rights		0		0		1,281			1,281
Total recurring fair value measurements	$	8,654	$	508,153	$	1,281		$	518,088
Nonrecurring fair value measurements
Impaired loans with a valuation allowance	$	0	$	0	$	3,241		$	3,241
Valuation allowance		0		0		(769	)		(769	)
Impaired loans, net		0		0		2,472			2,472
Foreclosed assets held for sale		0		0		1,189			1,189
Total nonrecurring fair value measurements	$	0	$	0	$	3,661		$	3,661

Fair Value Inputs, Assets, Quantitative Information [Table Text Block]

Asset	Fair Value at 12/31/15   (In Thousands)		Valuation Technique	Unobservable  Input(s)				Method or Value As of  12/31/15
Servicing rights	$	1,296	Discounted cash flow	Discount rate		10.00	%	Rate used through modeling period
				Loan prepayment speeds		146.00	%	Weighted-average PSA
				Servicing fees		0.25	%	of loan balances
						4.00	%	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

Asset	Fair Value at 12/31/14 (In Thousands)		Valuation Technique	Unobservable Input(s)				Method or Value As of 12/31/14
Servicing rights	$	1,281	Discounted cash flow	Discount rate		10.00	%	Rate used through modeling period
				Loan prepayment speeds		156.00	%	Weighted-average PSA
				Servicing fees		0.25	%	of loan balances
						4.00	%	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

(In Thousands, Except									Value at
Percentages)			Valuation						12/31/15
	Balance at		Allowance at		Fair Value at		Valuation	Unobservable	(Weighted
Asset	12/31/15		12/31/15		12/31/15		Technique	Inputs	Average)
Impaired loans:
Residential mortgage loans - first liens	$	42	$	1	$	41	Sales comparison	Discount to appraised value		31	%
Commercial:
Commercial loans secured by real estate		317		97		220	Sales comparison	Discount to appraised value		46	%
Commercial and industrial		75		75		0	Sales comparison	Discount to appraised value		31	%
Loans secured by farmland		512		52		460	Sales comparison	Discount to appraised value		49	%
Multi-family (5 or more) residential		987		595		392	Sales comparison	Discount to appraised value		41	%
Total impaired loans	$	1,933	$	820	$	1,113
Foreclosed assets held for sale - real estate:
Residential (1-4 family)	$	556	$	0	$	556	Sales comparison	Discount to appraised value		32	%
Land		704		0		704	Sales comparison	Discount to appraised value		29	%
Total foreclosed assets held for sale	$	1,260	$	0	$	1,260

(In Thousands, Except									Value at
Percentages)			Valuation						12/31/14
	Balance at		Allowance at		Fair Value at		Valuation	Unobservable	(Weighted
Asset	12/31/14		12/31/14		12/31/14		Technique	Inputs	Average)
Impaired loans:
Residential mortgage loans - first liens	$	715	$	358	$	357	Sales comparison	Discount to appraised value		36	%
Commercial:
Commercial loans secured by real estate		16		16		0	Sales comparison	Discount to appraised value		42	%
Commercial and industrial		150		82		68	Sales comparison	Discount to appraised value		21	%
Commercial construction and land		1,815		211		1,604	Sales comparison	Discount to appraised value		30	%
Loans secured by farmland		545		102		443	Sales comparison	Discount to appraised value		40	%
Total impaired loans	$	3,241	$	769	$	2,472
Foreclosed assets held for sale - real estate:
Residential (1-4 family)	$	306	$	0	$	306	Sales comparison	Discount to appraised value		42	%
Commercial property		159		0		159	Sales comparison	Discount to appraised value		23	%
Land		724		0		724	Sales comparison	Discount to appraised value		29	%
Total foreclosed assets held for sale	$	1,189	$	0	$	1,189

Fair Value Measurements, Recurring and Nonrecurring [Table Text Block]

(In Thousands)	Valuation	December 31, 2015				December 31, 2014
	Method(s)	Carrying		Fair		Carrying		Fair
	Used	Amount		Value		Amount		Value
Financial assets:
Cash and cash equivalents	Level 1	$	33,313	$	33,313	$	31,619	$	31,619
Certificates of deposit	Level 2		2,748		2,752		4,428		4,443
Available-for-sale securities	See Above		420,290		420,290		516,807		516,807
Restricted equity securities (included in Other Assets)	Level 2		4,657		4,657		1,584		1,584
Loans held for sale	Level 2		280		280		0		0
Loans, net	Level 3		696,991		685,552		623,209		629,267
Accrued interest receivable	Level 2		3,768		3,768		3,908		3,908
Servicing rights	Level 3		1,296		1,296		1,281		1,281
Financial liabilities:
Deposits with no stated maturity	Level 2		713,931		713,931		729,052		729,052
Time deposits	Level 2		221,684		221,891		238,937		239,712
Short-term borrowings	Level 2		53,496		53,398		5,537		5,473
Long-term borrowings	Level 2		38,767		40,166		73,060		78,866
Accrued interest payable	Level 2		70		70		104		104

Reporting Period 2014 and 2015 [Member]

Note 6 - Fair Value Measurements and Fair Values of Financial Instruments (Tables) [Line Items]

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

	Years Ended December 31,
	2015			2014
(In Thousands)	Servicing			Servicing
	Rights			Rights
Balance, beginning of period	$	1,281		$	1,123
Issuances of servicing rights		177			185
Unrealized losses included in earnings		(162	)		(27	)
Balance, end of period	$	1,296		$	1,281

Reporting Period 2013 [Member]

Note 6 - Fair Value Measurements and Fair Values of Financial Instruments (Tables) [Line Items]

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

	Year Ended December 31, 2013
	Pooled Trust			Pooled Trust
	Preferred			Preferred
	Securities -			Securities -
(In Thousands)	Senior			Mezzanine			Servicing
	Tranches			Tranches			Rights		Total
Balance, beginning of period	$	1,613		$	0		$	605	$	2,218
Issuances of servicing rights		0			0			451		451
Accretion and amortization, net		(2	)		0			0		(2	)
Proceeds from sales and calls		(1,636	)		(571	)		0		(2,207	)
Realized gains, net		23			571			0		594
Unrealized gains included in earnings		0			0			67		67
Unrealized gains included in other comprehensive income		2			0			0		2
Balance, end of period	$	0		$	0		$	1,123	$	1,123

XML

Note 7 - Securities (Tables)

12 Months Ended

Dec. 31, 2015

Investments, Debt and Equity Securities [Abstract]

Available-for-sale Securities [Table Text Block]

			December 31, 2015
			Gross		Gross
			Unrealized		Unrealized
	Amortized		Holding		Holding			Fair
(In Thousands)	Cost		Gains		Losses			Value
Obligations of U.S. Government agencies	$	10,663	$	12	$	(192	)	$	10,483
Obligations of states and political subdivisions:
Tax-exempt		103,414		4,365		(22	)		107,757
Taxable		34,317		381		(101	)		34,597
Mortgage-backed securities		73,227		486		(370	)		73,343
Collateralized mortgage obligations, Issued by U.S. Government agencies		193,145		623		(2,053	)		191,715
Collateralized debt obligations:		9		0		0			9
Total debt securities		414,775		5,867		(2,738	)		417,904
Marketable equity securities		1,680		706		0			2,386
Total	$	416,455	$	6,573	$	(2,738	)	$	420,290

			December 31, 2014
			Gross		Gross
			Unrealized		Unrealized
	Amortized		Holding		Holding			Fair
(In Thousands)	Cost		Gains		Losses			Value
Obligations of U.S. Government agencies	$	27,221	$	38	$	(583	)	$	26,676
Obligations of states and political subdivisions:
Tax-exempt		120,086		5,134		(381	)		124,839
Taxable		33,637		415		(174	)		33,878
Mortgage-backed securities		82,479		1,493		(69	)		83,903
Collateralized mortgage obligations, Issued by U.S. Government agencies		239,620		1,239		(2,036	)		238,823
Collateralized debt obligations:		34		0		0			34
Total debt securities		503,077		8,319		(3,243	)		508,153
Marketable equity securities		5,605		3,058		(9	)		8,654
Total	$	508,682	$	11,377	$	(3,252	)	$	516,807

Schedule of Unrealized Loss on Investments [Table Text Block]

December 31, 2015	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	$	0	$	0		$	7,850	$	(192	)	$	7,850	$	(192	)
Obligations of states and political subdivisions:
Tax-exempt		5,200		(19	)		216		(3	)		5,416		(22	)
Taxable		10,605		(60	)		2,910		(41	)		13,515		(101	)
Mortgage-backed securities		38,764		(295	)		3,503		(75	)		42,267		(370	)
Collateralized mortgage obligations, Issued by U.S. Government agencies		88,355		(648	)		49,273		(1,405	)		137,628		(2,053	)
Total temporarily impaired available-for-sale securities	$	142,924	$	(1,022	)	$	63,752	$	(1,716	)	$	206,676	$	(2,738	)

December 31, 2014	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	$	0	$	0		$	24,020	$	(583	)	$	24,020	$	(583	)
Obligations of states and political subdivisions:
Tax-exempt		11,898		(289	)		6,991		(92	)		18,889		(381	)
Taxable		4,240		(22	)		9,159		(152	)		13,399		(174	)
Mortgage-backed securities		0		0			4,160		(69	)		4,160		(69	)
Collateralized mortgage obligations, Issued by U.S. Government agencies		58,812		(396	)		60,897		(1,640	)		119,709		(2,036	)
Total debt securities		74,950		(707	)		105,227		(2,536	)		180,177		(3,243	)
Marketable equity securities		134		(9	)		0		0			134		(9	)
Total temporarily impaired available-for-sale securities	$	75,084	$	(716	)	$	105,227	$	(2,536	)	$	180,311	$	(3,252	)

Realized Gain (Loss) on Investments [Table Text Block]

(In Thousands)
	2015			2014			2013
Gross realized gains from sales	$	2,972		$	1,328		$	1,918
Gross realized losses from sales		(111	)		(224	)		(175	)
Losses from OTTI Impairment		0			0			(25	)
Net realized gains	$	2,861		$	1,104		$	1,718
Income tax provision related to net realized gains	$	1,002		$	386		$	601

Investments Classified by Contractual Maturity Date [Table Text Block]

	Amortized		Fair
(In Thousands)	Cost		Value
Due in one year or less	$	9,087	$	9,154
Due from one year through five years		60,639		61,664
Due from five years through ten years		45,173		46,227
Due after ten years		33,504		35,801
Subtotal		148,403		152,846
Mortgage-backed securities		73,227		73,343
Collateralized mortgage obligations, Issued by U.S. Government agencies		193,145		191,715
Total	$	414,775	$	417,904

Other than Temporary Impairment, Credit Losses Recognized in Earnings [Table Text Block]

(In Thousands)
	2015		2014		2013
Marketable equity securities (bank stocks)	$	0	$	0	$	(25	)

XML

Note 8 - Loans (Tables)

12 Months Ended

Dec. 31, 2015

Note 8 - Loans (Tables) [Line Items]

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

Summary of Loans by Type
(In Thousands)	Dec. 31,			Dec. 31,
	2015			2014
Residential mortgage:
Residential mortgage loans - first liens	$	304,783		$	291,882
Residential mortgage loans - junior liens		21,146			21,166
Home equity lines of credit		39,040			36,629
1-4 Family residential construction		21,121			16,739
Total residential mortgage		386,090			366,416
Commercial:
Commercial loans secured by real estate		154,779			145,878
Commercial and industrial		75,196			50,157
Political subdivisions		40,007			17,534
Commercial construction and land		5,122			6,938
Loans secured by farmland		7,019			7,916
Multi-family (5 or more) residential		9,188			8,917
Agricultural loans		4,671			3,221
Other commercial loans		12,152			13,334
Total commercial		308,134			253,895
Consumer		10,656			10,234
Total		704,880			630,545
Less: allowance for loan losses		(7,889	)		(7,336	)
Loans, net	$	696,991		$	623,209

Allowance for Credit Losses on Financing Receivables [Table Text Block]

Year Ended December 31, 2015
(In Thousands)	Dec. 31, 2014 Balance		Charge-offs			Recoveries		Provision (Credit)			Dec. 31, 2015 Balance
Allowance for Loan Losses:
Residential mortgage:
Residential mortgage loans - first liens	$	2,941	$	(175	)	$	1	$	(122	)	$	2,645
Residential mortgage loans - junior liens		176		(42	)		0		85			219
Home equity lines of credit		322		0			0		25			347
1-4 Family residential construction		214		0			0		(7	)		207
Total residential mortgage		3,653		(217	)		1		(19	)		3,418
Commercial:
Commercial loans secured by real estate		1,758		(115	)		208		88			1,939
Commercial and industrial		688		(21	)		6		308			981
Political subdivisions		0		0			0		0			0
Commercial construction and land		283		(115	)		0		(110	)		58
Loans secured by farmland		165		0			0		(59	)		106
Multi-family (5 or more) residential		87		0			0		588			675
Agricultural loans		31		0			0		14			45
Other commercial loans		131		0			0		(13	)		118
Total commercial		3,143		(251	)		214		816			3,922
Consumer		145		(94	)		55		16			122
Unallocated		395		0			0		32			427
Total Allowance for Loan Losses	$	7,336	$	(562	)	$	270	$	845		$	7,889

Year Ended December 31, 2014
(In Thousands)
	Dec. 31, 2013							Provision			Dec. 31, 2014
	Balance		Charge-offs			Recoveries		(Credit)			Balance
Allowance for Loan Losses:
Residential mortgage:
Residential mortgage loans - first liens	$	2,974	$	(164	)	$	25	$	106		$	2,941
Residential mortgage loans - junior liens		294		(101	)		0		(17	)	$	176
Home equity lines of credit		269		(62	)		0		115		$	322
1-4 Family residential construction		168		0			0		46		$	214
Total residential mortgage		3,705		(327	)		25		250			3,653
Commercial:
Commercial loans secured by real estate		3,123		(1,521	)		250		(94	)		1,758
Commercial and industrial		591		(24	)		9		112			688
Political subdivisions		0		0			0		0			0
Commercial construction and land		267		(170	)		5		181			283
Loans secured by farmland		115		0			0		50			165
Multi-family (5 or more) residential		103		0			0		(16	)		87
Agricultural loans		30		0			0		1			31
Other commercial loans		138		0			0		(7	)		131
Total commercial		4,367		(1,715	)		264		227			3,143
Consumer		193		(97	)		47		2			145
Unallocated		398		0			0		(3	)		395
Total Allowance for Loan Losses	$	8,663	$	(2,139	)	$	336	$	476		$	7,336

Year Ended December 31, 2013
(In Thousands)
	Dec. 31, 2012							Provision			Dec. 31, 2013
	Balance		Charge-offs			Recoveries		(Credit)			Balance
Allowance for Loan Losses:
Residential mortgage:
Residential mortgage loans - first liens	$	2,619	$	(84	)	$	24	$	415		$	2,974
Residential mortgage loans - junior liens		247		0			0		47			294
Home equity lines of credit		255		0			0		14			269
1-4 Family residential construction		96		(11	)		0		83			168
Total residential mortgage		3,217		(95	)		24		559			3,705
Commercial:
Commercial loans secured by real estate		1,930		(169	)		344		1,018			3,123
Commercial and industrial		581		(286	)		4		292			591
Political subdivisions		0		0			0		0			0
Commercial construction and land		234		(4	)		0		37			267
Loans secured by farmland		129		0			0		(14	)		115
Multi-family (5 or more) residential		67		0			0		36			103
Agricultural loans		27		0			0		3			30
Other commercial loans		3		0			0		135			138
Total commercial		2,971		(459	)		348		1,507			4,367
Consumer		228		(117	)		58		24			193
Unallocated		441		0			0		(43	)		398
Total Allowance for Loan Losses	$	6,857	$	(671	)	$	430	$	2,047		$	8,663

Financing Receivable Credit Quality Indicators [Table Text Block]

December 31, 2015
(In Thousands)			Special
	Pass		Mention		Substandard		Doubtful		Total
Residential Mortgage:
Residential mortgage loans - first liens	$	295,302	$	407	$	9,007	$	67	$	304,783
Residential mortgage loans - junior liens		20,558		185		403		0		21,146
Home equity lines of credit		38,071		543		426		0		39,040
1-4 Family residential construction		21,104		17		0		0		21,121
Total residential mortgage		375,035		1,152		9,836		67		386,090
Commercial:
Commercial loans secured by real estate		140,381		5,862		8,536		0		154,779
Commercial and Industrial		71,225		2,106		1,737		128		75,196
Political subdivisions		40,007		0		0		0		40,007
Commercial construction and land		4,957		60		105		0		5,122
Loans secured by farmland		5,084		483		1,432		20		7,019
Multi-family (5 or more) residential		7,943		0		1,245		0		9,188
Agricultural loans		4,655		0		16		0		4,671
Other commercial loans		12,073		0		79		0		12,152
Total commercial		286,325		8,511		13,150		148		308,134
Consumer		10,490		21		145		0		10,656
Totals	$	671,850	$	9,684	$	23,131	$	215	$	704,880

December 31, 2014
(In Thousands)			Special
	Pass		Mention		Substandard		Doubtful		Total
Residential Mortgage:
Residential mortgage loans - first liens	$	280,094	$	1,246	$	10,464	$	78	$	291,882
Residential mortgage loans - junior liens		20,502		112		552		0		21,166
Home equity lines of credit		35,935		294		400		0		36,629
1-4 Family residential construction		16,719		20		0		0		16,739
Total residential mortgage		353,250		1,672		11,416		78		366,416
Commercial:
Commercial loans secured by real estate		133,204		2,775		9,899		0		145,878
Commercial and Industrial		41,751		7,246		1,042		118		50,157
Political subdivisions		17,534		0		0		0		17,534
Commercial construction and land		4,650		266		2,022		0		6,938
Loans secured by farmland		5,990		433		1,468		25		7,916
Multi-family (5 or more) residential		8,629		288		0		0		8,917
Agricultural loans		3,196		0		25		0		3,221
Other commercial loans		13,248		86		0		0		13,334
Total commercial		228,202		11,094		14,456		143		253,895
Consumer		10,095		22		117		0		10,234
Totals	$	591,547	$	12,788	$	25,989	$	221	$	630,545

Impaired Financing Receivable by Portfolio Segment [Table Text Block]

December 31, 2015	Loans:						Allowance for Loan Losses:
(In Thousands)
	Individually		Collectively				Individually		Collectively
	Evaluated		Evaluated		Totals		Evaluated		Evaluated		Totals
Residential mortgage:
Residential mortgage loans - first liens	$	884	$	303,899	$	304,783	$	1	$	2,644	$	2,645
Residential mortgage loans - junior liens		74		21,072		21,146		0		219		219
Home equity lines of credit		0		39,040		39,040		0		347		347
1-4 Family residential construction		0		21,121		21,121		0		207		207
Total residential mortgage		958		385,132		386,090		1		3,417		3,418
Commercial:
Commercial loans secured by real estate		6,262		148,517		154,779		97		1,842		1,939
Commercial and industrial		324		74,872		75,196		75		906		981
Political subdivisions		0		40,007		40,007		0		0		0
Commercial construction and land		0		5,122		5,122		0		58		58
Loans secured by farmland		1,427		5,592		7,019		52		54		106
Multi-family (5 or more) residential		987		8,201		9,188		595		80		675
Agricultural loans		16		4,655		4,671		0		45		45
Other commercial loans		0		12,152		12,152		0		118		118
Total commercial		9,016		299,118		308,134		819		3,103		3,922
Consumer		0		10,656		10,656		0		122		122
Unallocated												427
Total	$	9,974	$	694,906	$	704,880	$	820	$	6,642	$	7,889

December 31, 2014	Loans:						Allowance for Loan Losses:
(In Thousands)
	Individually		Collectively				Individually		Collectively
	Evaluated		Evaluated		Totals		Evaluated		Evaluated		Totals
Residential mortgage:
Residential mortgage loans - first liens	$	1,665	$	290,217	$	291,882	$	358	$	2,583	$	2,941
Residential mortgage loans - junior liens		17		21,149		21,166		0		176		176
Home equity lines of credit		0		36,629		36,629		0		322		322
1-4 Family residential construction		0		16,739		16,739		0		214		214
Total residential mortgage		1,682		364,734		366,416		358		3,295		3,653
Commercial:
Commercial loans secured by real estate		6,537		139,341		145,878		16		1,742		1,758
Commercial and industrial		663		49,494		50,157		82		606		688
Political subdivisions		0		17,534		17,534		0		0		0
Commercial construction and land		1,939		4,999		6,938		211		72		283
Loans secured by farmland		1,470		6,446		7,916		102		63		165
Multi-family (5 or more) residential		0		8,917		8,917		0		87		87
Agricultural loans		25		3,196		3,221		0		31		31
Other commercial loans		0		13,334		13,334		0		131		131
Total commercial		10,634		243,261		253,895		411		2,732		3,143
Consumer		0		10,234		10,234		0		145		145
Unallocated												395
Total	$	12,316	$	618,229	$	630,545	$	769	$	6,172	$	7,336

Impaired Financing Receivables [Table Text Block]

(In Thousands)	December 31, 2015						December 31, 2014
	Unpaid						Unpaid
	Principal		Recorded		Related		Principal		Recorded		Related
	Balance		Investment		Allowance		Balance		Investment		Allowance
With no related allowance recorded:
Residential mortgage loans - first liens	$	842	$	842	$	-	$	950	$	950	$	-
Residential mortgage loans - junior liens		74		74		-		17		17		-
Commercial loans secured by real estate		7,580		5,945		-		8,062		6,521		-
Commercial and industrial		249		249		-		513		513		-
Commercial construction and land		0		0		-		124		124		-
Loans secured by farmland		915		915		-		925		925		-
Agricultural loans		16		16		-		25		25		-
Total with no related allowance recorded		9,676		8,041		-		10,616		9,075		-
With a related allowance recorded:
Residential mortgage loans - first liens		42		42		1		715		715		358
Commercial loans secured by real estate		317		317		97		16		16		16
Commercial and industrial		75		75		75		150		150		82
Commercial construction and land		0		0		0		1,815		1,815		211
Loans secured by farmland		512		512		52		545		545		102
Multi-family (5 or more) residential		987		987		595		0		0		0
Total with a related allowance recorded		1,933		1,933		820		3,241		3,241		769
Total	$	11,609	$	9,974	$	820	$	13,857	$	12,316	$	769

Schedule of Additional Information on Impaired Loans [Table Text Block]

							Interest Income Recognized on
	Average Investment in Impaired Loans						Impaired Loans on a Cash Basis
(In Thousands)	Year Ended December 31,						Year Ended December 31,
	2015		2014		2013		2015		2014		2013
Residential mortgage:
Residential mortgage loans - first lien	$	2,206	$	4,272	$	3,334	$	86	$	81	$	199
Residential mortgage loans - junior lien		64		168		245		4		3		17
Total residential mortgage		2,270		4,440		3,579		90		84		216
Commercial:
Commercial loans secured by real estate		6,357		7,192		2,931		380		469		90
Commercial and industrial		438		877		941		20		37		35
Commercial construction and land		40		395		999		0		9		14
Loans secured by farmland		1,459		1,413		1,171		103		101		66
Multi-family (5 or more) residential		790		0		22		0		0		2
Agricultural loans		21		41		43		3		3		3
Total commercial		9,105		9,918		6,107		506		619		210
Consumer		0		1		4		0		0		0
Total	$	11,375	$	14,359	$	9,690	$	596	$	703	$	426

Schedule of Financing Receivables, Non Accrual Status [Table Text Block]

(In Thousands)	December 31, 2015				December 31, 2014
	Past Due				Past Due
	90+ Days and				90+ Days and
	Accruing		Nonaccrual		Accruing		Nonaccrual
Residential mortgage:
Residential mortgage loans - first liens	$	2,381	$	3,044	$	1,989	$	3,440
Residential mortgage loans - junior liens		79		0		82		50
Home equity lines of credit		130		0		49		22
Total residential mortgage		2,590		3,044		2,120		3,512
Commercial:
Commercial loans secured by real estate		503		5,730		653		5,804
Commercial and industrial		65		313		5		379
Commercial construction and land		0		0		35		1,915
Loans secured by farmland		0		1,427		0		951
Multi-family (5 or more) residential		0		987		0		0
Agricultural loans		0		16		0		25
Total commercial		568		8,473		693		9,074
Consumer		71		0		30		24
Totals	$	3,229	$	11,517	$	2,843	$	12,610

Past Due Financing Receivables [Table Text Block]

	As of December 31, 2015								As of December 31, 2014
	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	$	294,703	$	6,156	$	3,924	$	304,783	$	282,766	$	5,443	$	3,673	$	291,882
Residential mortgage loans - junior liens		20,816		251		79		21,146		20,853		190		123		21,166
Home equity lines of credit		38,581		329		130		39,040		36,300		258		71		36,629
1-4 Family residential construction		21,121		0		0		21,121		16,739		0		0		16,739
Total residential mortgage		375,221		6,736		4,133		386,090		356,658		5,891		3,867		366,416
Commercial:
Commercial loans secured by real estate		153,427		108		1,244		154,779		143,713		883		1,282		145,878
Commercial and industrial		75,002		118		76		75,196		49,994		43		120		50,157
Political subdivisions		40,007		0		0		40,007		17,534		0		0		17,534
Commercial construction and land		5,018		104		0		5,122		4,897		91		1,950		6,938
Loans secured by farmland		5,970		223		826		7,019		6,811		254		851		7,916
Multi-family (5 or more) residential		8,201		0		987		9,188		8,720		197		0		8,917
Agricultural loans		4,642		13		16		4,671		3,105		91		25		3,221
Other commercial loans		12,152		0		0		12,152		13,334		0		0		13,334
Total commercial		304,419		566		3,149		308,134		248,108		1,559		4,228		253,895
Consumer		10,537		48		71		10,656		10,164		40		30		10,234
Totals	$	690,177	$	7,350	$	7,353	$	704,880	$	614,930	$	7,490	$	8,125	$	630,545

Contractual Aging of Nonaccrual Loans [Table Text Block]

	Current &
(In Thousands)	Past Due		Past Due		Past Due
	Less than		30-89		90+
	30 Days		Days		Days		Total
December 31, 2015 Nonaccrual Totals	$	7,100	$	293	$	4,124	$	11,517
December 31, 2014 Nonaccrual Totals	$	6,959	$	369	$	5,282	$	12,610

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, 2015 Totals	$	1,186	$	0	$	81	$	5,097	$	6,364
December 31, 2014 Totals	$	1,725	$	82	$	0	$	5,388	$	7,195

Schedule of Troubled Debt Restructurings With Subsequent Default [Table Text Block]

	Number
	of		Recorded
	Contracts		Investment
Year Ended December 31, 2015
(Balances in Thousands)
Residential mortgage:
Residential mortgage loans - first liens		1	$	32

	Number
	of		Recorded
	Contracts		Investment
Year Ended December 31, 2014
(Balances in Thousands)
Residential mortgage, Residential mortgage loans - first liens		3	$	257
Residential mortgage loans - junior liens		1		62
Commercial, Commercial loans secured by real estate		1		429
Commercial construction and land		1		25
Loans secured by farmland		4		490
Agricultural loans		1		13

	Number
	of		Recorded
	Contracts		Investment
Year Ended December 31, 2013
(Balances in Thousands)
Residential mortgage, Residential mortgage loans - first liens		1	$	85
Commercial:
Commercial loans secured by real estate		2		588
Commercial construction and land		1		110
Agricultural		1		13

Troubled Debt Restructuring [Member]

Note 8 - Loans (Tables) [Line Items]

Troubled Debt Restructurings on Financing Receivables [Table Text Block]

Year Ended December 31, 2015			Pre-		Post-
(Balances in Thousands)			Modification		Modification
	Number		Outstanding		Outstanding
	of		Recorded		Recorded
	Contracts		Investment		Investment
Residential mortgage:
Residential mortgage loans - first liens		2	$	298	$	298
Residential mortgage loans - junior liens		1		32		32
Consumer		1		30		30

Year Ended December 31, 2014			Pre-		Post-
(Balances in Thousands)			Modification		Modification
	Number		Outstanding		Outstanding
	of		Recorded		Recorded
	Contracts		Investment		Investment
Residential mortgage, Residential mortgage loans - first liens		3	$	150	$	150
Commercial:
Commercial loans secured by real estate		5		6,679		5,193
Commercial and industrial		1		80		80

Year Ended December 31, 2013			Pre-		Post-
(Balances in Thousands)			Modification		Modification
	Number		Outstanding		Outstanding
	of		Recorded		Recorded
	Contracts		Investment		Investment
Residential mortgage:
Residential mortgage loans - first liens		6	$	677	$	677
Residential mortgage loans - junior liens		3		102		102
Commercial:
Commercial loans secured by real estate		2		866		866
Commercial and industrial		3		701		701
Loans secured by farmland		4		512		512
Agricultural loans		1		13		13
Consumer		1		6		6

XML

Note 9 - Bank Premises and Equipment (Tables)

12 Months Ended

Dec. 31, 2015

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment [Table Text Block]

(In Thousands)	December 31,
	2015			2014
Land	$	2,818		$	2,818
Buildings and improvements		27,092			26,973
Furniture and equipment		17,922			17,412
Construction in progress		243			98
Total		48,075			47,301
Less: accumulated depreciation		(32,669	)		(31,045	)
Net	$	15,406		$	16,256

Schedule of Depreciation Expense Table [Text Block]

(In Thousands)	2015		2014		2013
Occupancy expense	$	954	$	998	$	1,022
Furniture and equipment expense		934		942		998
Total	$	1,888	$	1,940	$	2,020

XML

Note 10 - Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2015

Disclosure Text Block [Abstract]

Schedule of Finite-Lived Intangible Assets [Table Text Block]

	December 31,
(In Thousands)	2015			2014
Gross amount	$	2,034		$	2,034
Less: accumulated amortization		(2,004	)		(1,982	)
Net	$	30		$	52

XML

Note 11 - Deposits (Tables)

12 Months Ended

Dec. 31, 2015

Disclosure Text Block [Abstract]

Scheduled Maturities of Time Deposits [Table Text Block]

(In Thousands)
2016	$	124,562
2017		53,985
2018		19,611
2019		10,091
2020		13,424
Thereafter		11
	$	221,684

Schedule of Remaining Maturities of Time Deposits in Excess of 100000 [Table Text Block]

(In Thousands)
Three months or less	$	35,167
Over 3 months through 12 months		9,330
Over 1 year through 3 years		12,358
Over 3 years		8,248
Total	$	65,103

XML

Note 12 - Borrowed Funds (Tables)

12 Months Ended

Dec. 31, 2015

Debt Disclosure [Abstract]

Schedule of Short-term Debt [Table Text Block]

Short-term borrowings include the following:
(In Thousands)	Dec. 31		Dec. 31
	2015		2014
FHLB-Pittsburgh borrowings	$	48,581	$	0
Customer repurchase agreements		4,915		5,537
Total short-term borrowings	$	53,496	$	5,537

Short-term borrowings from FHLB - Pittsburgh are as follows:
(In Thousands)	Dec. 31		Dec. 31
	2015		2014
Overnight borrowing	$	23,500	$	0
Other short-term advances		25,081		0
Total short-term FHLB-Pittsburgh borrowings	$	48,581	$	0

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

LONG-TERM BORROWINGS
Long-term borrowings are as follows:
(In Thousands)	Dec. 31		Dec. 31
	2015		2014
FHLB-Pittsburgh borrowings	$	11,767	$	12,060
Repurchase agreements		27,000		61,000
Total long-term borrowings	$	38,767	$	73,060

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

Long-term borrowings from FHLB - Pittsburgh are as follows:
(In Thousands)	Dec. 31		Dec. 31
	2015		2014
Loan maturing in 2016 with a rate of 6.86%	$	57	$	107
Loan maturing in 2017 with a rate of 6.83%		10		16
Loan maturing in 2017 with a rate of 3.81%		10,000		10,000
Loan maturing in 2020 with a rate of 4.79%		821		987
Loan maturing in 2025 with a rate of 4.91%		879		950
Total long-term FHLB-Pittsburgh borrowings	$	11,767	$	12,060

Repurchase agreements included in long-term borrowings are as follows:
(In Thousands)	Dec. 31		Dec. 31
	2015		2014
Agreement maturing in 2017 with a rate of 3.595%	$	27,000	$	27,000
Agreement maturing in 2017 with a rate of 4.265%		0		34,000
Total long-term repurchase agreements	$	27,000	$	61,000

Schedule of Underlying Assets of Repurchase Agreements when Amount of Repurchase Agreements Exceeds 10 Percent of Assets [Table Text Block]

(In Thousands)	December 31,		December 31,
	2015		2014
Mortgage-backed securities	$	15,772	$	24,114
Collateralized mortgage obligations, Issued by U.S. Government agencies		18,008		46,868
Total	$	33,780	$	70,982

XML

Note 13 - Employee and Postretirement Benefit Plans (Tables)

12 Months Ended

Dec. 31, 2015

Note 13 - Employee and Postretirement Benefit Plans (Tables) [Line Items]

Schedule of Net Funded Status [Table Text Block]

	Pension:						Postretirement:
	2015			2014			2015			2014
CHANGE IN BENEFIT OBLIGATION:
Benefit obligation at beginning of year	$	1,085		$	1,733		$	1,378		$	1,391
Service cost		0			0			38			34
Interest cost		36			73			57			57
Plan participants' contributions		0			0			203			198
Actuarial (gain) loss		(46	)		76			120			(48	)
Benefits paid		(16	)		(16	)		(257	)		(254	)
Settlement of plan obligation		(337	)		(781	)		0			0
Benefit obligation at end of year	$	722		$	1,085		$	1,539		$	1,378
CHANGE IN PLAN ASSETS:
Fair value of plan assets at beginning of year	$	1,208		$	1,968		$	0		$	0
Actual return on plan assets		(16	)		37			0			0
Employer contribution		0			0			54			56
Plan participants' contributions		0			0			203			198
Benefits paid		(16	)		(16	)		(257	)		(254	)
Settlement of plan obligation		(337	)		(781	)		0			0
Fair value of plan assets at end of year	$	839		$	1,208		$	0		$	0
Funded status at end of year	$	117		$	123		$	(1,539	)	$	(1,378	)

Schedule of Amounts Recognized in Balance Sheet [Table Text Block]

Assets and liabilities:
(In Thousands)	Pension:				Postretirement:
	2015		2014		2015		2014
Other assets	$	117	$	123
Accrued interest and other liabilities					$	1,539	$	1,378

Schedule of Amounts Recognized in Other Comprehensive Income (Loss) [Table Text Block]

Items not yet recognized as a component of net periodic benefit cost:
(In Thousands)	Pension:				Postretirement:
	2015		2014		2015			2014
Prior service cost	$	0	$	0	$	(371	)	$	(402	)
Net actuarial loss		186		269		131			11
Total	$	186	$	269	$	(240	)	$	(391	)

Schedule of Defined Benefit Plans Disclosures [Table Text Block]

(In Thousands)	Pension:									Postretirement:
	2015			2014			2013			2015			2014			2013
Service cost	$	0		$	0		$	0		$	38		$	34		$	41
Interest cost		36			73			71			57			57			55
Expected return on plan assets		(45	)		(88	)		(90	)		0			0			0
Amortization of prior service cost		0			0			0			(31	)		(31	)		(31	)
Recognized net actuarial loss		11			19			32			0			0			1
Loss on settlement		87			196			0			0			0			0
Total net periodic benefit cost	$	89		$	200		$	13		$	64		$	60		$	66

Schedule of Expected Benefit Payments [Table Text Block]

(In Thousands)	Pension		Postretirement
2016	$	250	$	92
2017		15		96
2018		14		102
2019		39		105
2020		13		110
2021-2025		214		550

Schedule of Allocation of Plan Assets [Table Text Block]

	2015			2014
Cash and cash equivalents		2	%		3	%
Debt securities		38	%		37	%
Equity securities		46	%		47	%
Alternative funds		14	%		13	%
Total		100	%		100	%

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

	2014			2013
Volatility		39	%		41	%
Expected option lives (Years)		8			8
Risk-free interest rate		2.85	%		1.60	%
Dividend yield		4.33	%		3.69	%

Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Table Text Block]

(In Thousands)	2015		2014		2013
Stock options	$	0	$	153	$	242
Restricted stock		606		412		454
Total	$	606	$	565	$	696

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

	2015					2014					2013
				Weighted					Weighted					Weighted
				Average					Average					Average
				Exercise					Exercise					Exercise
	Shares			Price		Shares			Price		Shares			Price
Outstanding, beginning of year		316,157		$	19.05		358,176		$	19.03		337,670		$	19.08
Granted		0					39,027		$	20.45		64,050		$	19.21
Exercised		(29,557	)	$	17.56		(50,415	)	$	17.57		(10,656	)	$	17.22
Forfeited		(20,211	)	$	19.76		(16,424	)	$	20.03		(14,135	)	$	20.13
Expired		(17,903	)	$	27.00		(14,207	)	$	26.59		(18,753	)	$	20.73
Outstanding, end of year		248,486		$	18.59		316,157		$	19.05		358,176		$	19.03
Options exercisable at year-end		248,486		$	18.59		316,157		$	19.05		358,176		$	19.03
Weighted-average fair value of options granted					N/A				$	5.50				$	5.56
Weighted-average fair value of options forfeited				$	4.86				$	4.89				$	3.77

Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity [Table Text Block]

	Restricted Stock
				Weighted
				Average
	Number			Grant Date
	of Shares			Fair Value
Outstanding, December 31, 2014		52,436		$	19.34
Granted		34,800		$	20.63
Vested		(21,522	)	$	19.16
Forfeited		(3,502	)	$	20.08
Outstanding, December 31, 2015		62,212		$	20.10

Used to Determine Net Periodic Benefit Cost [Member]

Note 13 - Employee and Postretirement Benefit Plans (Tables) [Line Items]

Schedule of Defined Benefit Plans Disclosures [Table Text Block]

	Pension:									Postretirement:
	2015			2014			2013			2015			2014			2013
Citizens Trust Company Retirement Plan and postretirement plan:
Discount rate		3.75	%		4.50	%		4.00	%		4.00	%		4.00	%		4.00	%
Expected return on plan assets		5.31	%		5.31	%		5.31	%		N/A			N/A			N/A
Rate of compensation increase		N/A			N/A			N/A			N/A			N/A			N/A

Used to Determine Benefit Obligation [Member]

Note 13 - Employee and Postretirement Benefit Plans (Tables) [Line Items]

Schedule of Assumptions Used [Table Text Block]

	Pension:						Postretirement:
	2015			2014			2015			2014
Discount rate		4.30	%		3.75	%		4.25	%		4.00	%
Rate of compensation increase		N/A			N/A			N/A			N/A

XML

Note 14 - Income Taxes (Tables)

12 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

	December 31,		December 31,
(In Thousands)	2015		2014
Deferred tax assets:
Net realized losses on securities	$	69	$	144
Allowance for loan losses		2,761		2,568
Credit for alternative minimum tax paid		0		537
Other deferred tax assets		2,634		2,595
Total deferred tax assets		5,464		5,844
Deferred tax liabilities:
Unrealized holding gains on securities		1,342		2,844
Defined benefit plans - ASC 835		19		43
Bank premises and equipment		869		1,134
Core deposit intangibles		11		18
Other deferred tax liabilities		108		137
Total deferred tax liabilities		2,349		4,176
Deferred tax asset, net	$	3,115	$	1,668

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

(In thousands)	2015		2014		2013
Currently payable	$	5,097	$	4,280	$	4,125
Tax expense resulting from allocations of certain tax benefits to equity or as a reduction in other assets		161		158		219
Deferred		79		1,254		1,839
Total provision	$	5,337	$	5,692	$	6,183

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

(Amounts in thousands)	2015						2014						2013
	Amount			%			Amount			%			Amount			%
Expected provision	$	7,633			35.00		$	7,972			35.00		$	8,672			35.00
Tax-exempt interest income		(1,914	)		(8.78	)		(1,982	)		(8.70	)		(2,137	)		(8.62	)
Nondeductible interest expense		51			0.23			56			0.25			60			0.24
Dividends received deduction		(75	)		(0.34	)		(79	)		(0.35	)		(76	)		(0.31	)
Increase in cash surrender value of life insurance		(135	)		(0.62	)		(132	)		(0.58	)		(140	)		(0.57	)
Employee stock option compensation		0			0.00			41			0.18			67			0.27
Tax benefit from limited partnership investment		(80	)		(0.37	)		(83	)		(0.36	)		(85	)		(0.34	)
Other, net		(143	)		(0.66	)		(101	)		(0.44	)		(178	)		(0.72	)
Effective income tax provision	$	5,337			24.47		$	5,692			24.99		$	6,183			24.95

XML

Note 15 - Related Party Transactions (Tables)

12 Months Ended

Dec. 31, 2015

Related Party Transactions [Abstract]

Schedule of Related Party Transactions [Table Text Block]

(In Thousands)	Beginning		New					Other			Ending
	Balance		Loans		Repayments			Changes			Balance
11 directors, 7 executive officers 2015	$	12,023	$	52	$	(808	)	$	(1,021	)	$	10,246
12 directors, 8 executive officers 2014		12,547		188		(1,358	)		646			12,023
11 directors, 8 executive officers 2013		14,125		1,110		(2,723	)		35			12,547

XML

Note 16 - Off-balance Sheet Risk (Tables)

12 Months Ended

Dec. 31, 2015

Note 16 - Off-balance Sheet Risk (Tables) [Line Items]

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

(In Thousands)	2015		2014
Commitments to extend credit	$	156,407	$	143,863
Standby letters of credit		13,340		13,415

Standby Letters of Credit [Member]

Note 16 - Off-balance Sheet Risk (Tables) [Line Items]

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

	Amount
Year of Expiration	(In Thousands)
2016	$	10,767
2017		371
2019		40
2021 and Thereafter		2,162
Total	$	13,340

XML

Note 18 - Regulatory Matters (Tables)

12 Months Ended

Dec. 31, 2015

Disclosure Text Block [Abstract]

Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations [Table Text Block]

(Dollars in Thousands)											Minimum To Be Well
						Minimum					Capitalized Under
						Capital					Prompt Corrective
	Actual					Requirement					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
December 31, 2015:
Total capital to risk-weighted assets:
Consolidated	$	181,216		24.40	%	$	59,424		>8	%	$	74,281		>10	%
C&N Bank		161,187		21.83	%		59,058		>8	%		73,823		>10	%
Tier 1 capital to risk-weighted assets:
Consolidated		173,009		23.29	%		29,712		>6	%		59,424		>8	%
C&N Bank		153,298		20.77	%		29,529		>6	%		59,058		>8	%
Common equity tier 1 capital to risk-weighted assets:
Consolidated		173,009		23.29	%		29,712		>4.5	%		48,282		>6.5	%
C&N Bank		153,298		20.77	%		29,529		>4.5	%		47,985		>6.5	%
Tier 1 capital to average assets:
Consolidated		173,009		14.31	%		48,355		>4	%		60,444		>5	%
C&N Bank		153,298		12.81	%		47,861		>4	%		59,826		>5	%
December 31, 2014:
Total capital to risk-weighted assets:
Consolidated	$	179,588		27.60	%	$	52,051		>8	%		n/a		n/a
C&N Bank		156,420		24.33	%		51,442		>8	%	$	64,303		>10	%
Tier 1 capital to risk-weighted assets:
Consolidated		170,880		26.26	%		26,026		>4	%		n/a		n/a
C&N Bank		149,055		23.18	%		25,721		>4	%		38,582		>6	%
Tier 1 capital to average assets:
Consolidated		170,880		13.89	%		49,224		>4	%		n/a		n/a
C&N Bank		149,055		12.22	%		48,798		>4	%		60,998		>5	%

Regulatory Capital Requirements Under Banking Regulations, Transition Schedule for New Ratios [Table Text Block]

	As of January 1:
	2015			2016			2017			2018			2019
Minimum common equity tier 1 capital ratio		4.5	%		4.5	%		4.5	%		4.5	%		4.5	%
Common equity tier 1 capital conservation buffer		N/A			0.625	%		1.25	%		1.875	%		2.5	%
Minimum common equity tier 1 capital ratio plus capital conservation buffer		4.5	%		5.125	%		5.75	%		6.375	%		7.0	%
Phase-in of most deductions from common equity tier 1 capital		40	%		60	%		80	%		100	%		100	%
Minimum tier 1 capital ratio		6.0	%		6.0	%		6.0	%		6.0	%		6.0	%
Minimum tier 1 capital ratio plus capital conservation buffer		N/A			6.625	%		7.25	%		7.875	%		8.5	%
Minimum total capital ratio		8.0	%		8.0	%		8.0	%		8.0	%		8.0	%
Minimum total capital ratio plus capital conservation buffer		N/A			8.625	%		9.25	%		9.875	%		10.5	%

Regulatory Capital Requirements, Payout Restrictions Based on Capital Conservation Buffer [Table Text Block]

Capital Conservation Buffer	Maximum Payout
(as a % of risk-weighted assets)	(as a % of eligible retained income)
Greater than 2.5%	No payout limitation applies
≤2.5% and >1.875%	60%
≤1.875% and >1.25%	40%
≤1.25% and >0.625%	20%
≤0.625%	0%

XML

Note 19 - Parent Company Only (Tables)

12 Months Ended

Dec. 31, 2015

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Balance Sheet [Table Text Block]

CONDENSED BALANCE SHEET	December 31,
(In Thousands)	2015		2014
ASSETS
Cash	$	5,847	$	9,624
Investment in subsidiaries:
Citizens & Northern Bank		167,277		164,551
Citizens & Northern Investment Corporation		10,966		10,822
Bucktail Life Insurance Company		3,392		3,336
Other assets		24		36
TOTAL ASSETS	$	187,506	$	188,369
LIABILITIES AND STOCKHOLDERS' EQUITY
Other liabilities	$	19	$	7
Stockholders' equity		187,487		188,362
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	187,506	$	188,369

Condensed Income Statement [Table Text Block]

CONDENSED INCOME STATEMENT
(In Thousands)	2015			2014			2013
Dividends from Citizens & Northern Bank	$	11,569		$	22,608		$	11,108
Expenses		(234	)		(112	)		(108	)
Income before equity in undistributed income of subsidiaries		11,335			22,496			11,000
Equity in undistributed income (loss) of subsidiaries		5,136			(5,410	)		7,594
NET INCOME	$	16,471		$	17,086		$	18,594

Condensed Cash Flow Statement [Table Text Block]

CONDENSED STATEMENT OF CASH FLOWS
(In Thousands)
	2015			2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	16,471		$	17,086		$	18,594
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in undistributed net (income) loss of subsidiaries		(5,136	)		5,410			(7,594	)
Decrease (increase) in other assets		12			(36	)		7
Increase in other liabilities		12			1			0
Net Cash Provided by Operating Activities		11,359			22,461			11,007
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of treasury stock		381			123			184
Tax benefit from compensation plans, net		143			137			127
Purchase of treasury stock		(4,415	)		(4,002	)		0
Dividends paid		(11,245	)		(11,392	)		(10,916	)
Net Cash (Used in) Financing Activities		(15,136	)		(15,134	)		(10,605	)
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(3,777	)		7,327			402
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		9,624			2,297			1,895
CASH AND CASH EQUIVALENTS, END OF YEAR	$	5,847		$	9,624		$	2,297

XML

Note 20 - Summary of Quarterly Consolidated Financial Data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2015

Quarterly Financial Information Disclosure [Abstract]

Schedule of Quarterly Financial Information [Table Text Block]

(In Thousands Except Per Share Data) (Unaudited)
	2015 Quarter Ended
	Mar. 31,		June 30,		Sept. 30,		Dec. 31,
Interest income	$	11,163	$	11,186	$	11,134	$	11,036
Interest expense		1,213		1,176		1,126		1,087
Net interest income		9,950		10,010		10,008		9,949
Provision for loan losses		3		221		302		319
Net interest income after provision for loan losses		9,947		9,789		9,706		9,630
Other income		3,487		3,962		3,961		3,994
Net gains on available-for-sale securities		74		932		79		1,776
Loss on prepayment of borrowings		0		910		0		1,663
Other expenses		8,464		7,964		8,117		8,411
Income before income tax provision		5,044		5,809		5,629		5,326
Income tax provision		1,229		1,452		1,395		1,261
Net income	$	3,815	$	4,357	$	4,234	$	4,065
Net income per share – basic	$	0.31	$	0.36	$	0.35	$	0.33
Net income per share – diluted	$	0.31	$	0.36	$	0.35	$	0.33

	2014 Quarter Ended
	Mar. 31,			June 30,		Sept. 30,		Dec. 31,
Interest income	$	11,406		$	11,563	$	11,572	$	11,468
Interest expense		1,288			1,290		1,287		1,257
Net interest income		10,118			10,273		10,285		10,211
(Credit) provision for loan losses		(311	)		446		218		123
Net interest income after (credit) provision for loan losses		10,429			9,827		10,067		10,088
Other income		3,751			3,980		3,887		3,802
Net gains on available-for-sale securities		31			103		760		210
Other expenses		8,524			8,347		9,036		8,250
Income before income tax provision		5,687			5,563		5,678		5,850
Income tax provision		1,399			1,400		1,411		1,482
Net income	$	4,288		$	4,163	$	4,267	$	4,368
Net income per share – basic	$	0.35		$	0.33	$	0.34	$	0.36
Net income per share – diluted	$	0.34		$	0.33	$	0.34	$	0.35

XML

Note 1 - Nature of Operations and Summary of Significant Accounting Policies (Details)	12 Months Ended
	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)	Dec. 31, 2012 USD ($)
Note 1 - Nature of Operations and Summary of Significant Accounting Policies (Details) [Line Items]
Number of Reportable Segments	1
Financing Receivable, Allowance for Credit Losses	$ 7,889,000	$ 7,336,000	$ 8,663,000	$ 6,857,000
Unrecognized Tax Benefits, Interest on Income Taxes Accrued	0
Other Assets [Member]
Note 1 - Nature of Operations and Summary of Significant Accounting Policies (Details) [Line Items]
Servicing Asset	1,296,000	1,281,000
Unfunded Loan Commitment [Member]
Note 1 - Nature of Operations and Summary of Significant Accounting Policies (Details) [Line Items]
Financing Receivable, Allowance for Credit Losses	$ 0	$ 0
Commercial Loan [Member]
Note 1 - Nature of Operations and Summary of Significant Accounting Policies (Details) [Line Items]
Loans Receivable Secured By Real Estate Percentage	57.00%

XML

Note 3 - Comprehensive Income (Details) - Components of Other Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Unrealized losses on available-for-sale securities:
Unrealized holding gains (losses) on available-for-sale securities, before tax amount	$ (1,429)	$ 10,774	$ (17,623)
Unrealized holding gains (losses) on available-for-sale securities, income tax effect	500	(3,771)	6,168
Unrealized holding gains (losses) on available-for-sale securities, net of tax amount	(929)	7,003	(11,455)
Reclassification adjustment for (gains) realized in income, before tax amount	(2,861)	(1,104)	(1,718)
Reclassification adjustment for (gains) realized in income, income tax effect	1,002	386	601
Reclassification adjustment for (gains) realized in income, net of tax amount	(1,859)	(718)	(1,117)
Other comprehensive gain on available-for-sale securities, before tax amount	(4,290)	9,670	(19,341)
Other comprehensive gain on available-for-sale securities, income tax effect	1,502	(3,385)	6,769
Other comprehensive gain on available-for-sale securities, net of tax amount	(2,788)	6,285	(12,572)
Unfunded pension and postretirement obligations:
Changes from plan amendments and actuarial gains and losses included in other comprehensive income, before tax amount	(135)	(79)	885
Changes from plan amendments and actuarial gains and losses included in other comprehensive income, income tax effect	47	28	(310)
Changes from plan amendments and actuarial gains and losses included in other comprehensive income, net of tax amount	(88)	(51)	575
Amortization of net transition obligation, prior service cost and net actuarial loss included in net periodic benefit cost, before tax amount	67	184	2
Amortization of net transition obligation, prior service cost and net actuarial loss included in net periodic benefit cost, income tax effect	(23)	(65)	(1)
Amortization of net transition obligation, prior service cost and net actuarial loss included in net periodic benefit cost, net of tax amount	44	119	1
Other comprehensive (loss) gain on unfunded retirement obligations, before tax amount	(68)	105	887
Other comprehensive gain on unfunded retirement obligations, income tax effect	24	(37)	(311)
Other comprehensive gain on unfunded retirement obligations, net of tax amount	(44)	68	576
Total other comprehensive gain, before tax amount	(4,358)	9,775	(18,454)
Total other comprehensive gain, income tax effect	1,526	(3,422)	6,458
Net other comprehensive income (loss)	$ (2,832)	$ 6,353	$ (11,996)

XML

Note 3 - Comprehensive Income (Details) - Changes in the Components of Accumulated Other Comprehensive Income - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
2015
Balance, beginning of period	$ 5,360
Other comprehensive income (loss)	(2,832)	$ 6,353	$ (11,996)
Balance, end of period	2,528	5,360
Accumulated Net Investment Gain (Loss) Attributable to Parent [Member]
2015
Balance, beginning of period	5,281	(1,004)	11,568
Other comprehensive income (loss)	(929)	7,003	(11,455)
Amounts reclassified from accumulated other comprehensive income	(1,859)	(718)	(1,117)
Other comprehensive income (loss)	(2,788)	6,285	(12,572)
Balance, end of period	2,493	5,281	(1,004)
Accumulated Defined Benefit Plans Adjustment Attributable to Parent [Member]
2015
Balance, beginning of period	79	11	(565)
Other comprehensive income (loss)	(88)	(51)	575
Amounts reclassified from accumulated other comprehensive income	44	119	1
Other comprehensive income (loss)	(44)	68	576
Balance, end of period	35	79	11
AOCI Attributable to Parent [Member]
2015
Balance, beginning of period	5,360	(993)	11,003
Other comprehensive income (loss)	(1,017)	6,952	(10,880)
Amounts reclassified from accumulated other comprehensive income	(1,815)	(599)	(1,116)
Other comprehensive income (loss)	(2,832)	6,353	(11,996)
Balance, end of period	$ 2,528	$ 5,360	$ (993)

XML

Note 3 - Comprehensive Income (Details) - Amounts Reclassified Out of Each Component of OCI - USD ($)	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Realized gains and losses on available-for-sale securities									$ (2,861,000)	$ (1,104,000)	$ (1,743,000)
Income tax provision									5,337,000	5,692,000	6,183,000
Net income	$ 4,065,000	$ 4,234,000	$ 4,357,000	$ 3,815,000	$ 4,368,000	$ 4,267,000	$ 4,163,000	$ 4,288,000	16,471,000	17,086,000	18,594,000
Unrealized gains and losses on available-for-sale Securities									0	0	0
Amortization of defined benefit pension and postretirement items:
Loss on settlement									87,000
Total before tax	$ 5,326,000	$ 5,629,000	$ 5,809,000	$ 5,044,000	$ 5,850,000	$ 5,678,000	$ 5,563,000	$ 5,687,000	21,808,000	22,778,000	24,777,000
Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Net income									(1,815,000)	(599,000)	(1,116,000)
Reclassification out of Accumulated Other Comprehensive Income [Member] | Accumulated Net Investment Gain (Loss) Attributable to Parent [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Realized gains and losses on available-for-sale securities									(2,861,000)	(1,104,000)	(1,743,000)
Income tax provision									1,002,000	386,000	601,000
Net income									(1,859,000)	(718,000)	(1,117,000)
Unrealized gains and losses on available-for-sale Securities											25,000
Amortization of defined benefit pension and postretirement items:
Total before tax											(1,718,000)
Reclassification out of Accumulated Other Comprehensive Income [Member] | Accumulated Defined Benefit Plans Adjustment Attributable to Parent [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items]
Income tax provision									(23,000)	(65,000)	(1,000)
Net income									44,000	119,000	1,000
Amortization of defined benefit pension and postretirement items:
Prior service cost									(31,000)	(31,000)	(31,000)
Actuarial loss									11,000	19,000	33,000
Loss on settlement									87,000	196,000
Total before tax									$ 67,000	$ 184,000	$ 2,000

XML

Note 4 - Per Share Data (Details) - shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Equity Option [Member]
Note 4 - Per Share Data (Details) [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	61,590	151,310	88,521

XML

Note 4 - Per Share Data (Details) - Net Income Per Share - USD ($)	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
2015
Earnings per share – basic (in Dollars)	$ 4,065,000	$ 4,234,000	$ 4,357,000	$ 3,815,000	$ 4,368,000	$ 4,267,000	$ 4,163,000	$ 4,288,000	$ 16,471,000	$ 17,086,000	$ 18,594,000
Earnings per share – basic									12,211,941	12,390,067	12,352,383
Earnings per share – basic (in Dollars per share)	$ 0.33	$ 0.35	$ 0.36	$ 0.31	$ 0.36	$ 0.34	$ 0.33	$ 0.35	$ 1.35	$ 1.38	$ 1.51
Dilutive effect of potential common stock arising from stock options:
Exercise of outstanding stock options									210,402	224,015	250,236
Hypothetical share repurchase									(188,570)	(202,032)	(219,829)
Earnings per share – diluted (in Dollars)	$ 4,065,000	$ 4,234,000	$ 4,357,000	$ 3,815,000	$ 4,368,000	$ 4,267,000	$ 4,163,000	$ 4,288,000	$ 16,471,000	$ 17,086,000	$ 18,594,000
Earnings per share – diluted									12,233,773	12,412,050	12,382,790
Earnings per share – diluted (in Dollars per share)									$ 1.35	$ 1.38	$ 1.50

XML

Note 4 - Per Share Data (Details) - Net Income Per Share (Parentheticals) - $ / shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Net Income Per Share [Abstract]
Hypothetical share repurchase	$ 20.04	$ 19.41	$ 19.86

XML

Note 5 - Cash and Due from Banks (Details) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Cash and Cash Equivalents [Abstract]
Restricted Cash and Cash Equivalents, Current	$ 15,327,000	$ 16,853,000

XML

Note 5 - Cash and Due from Banks (Details) - Cash and Due From Banks - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Cash and Due from Banks [Abstract]
Cash and cash equivalents	$ 33,313	$ 31,619
Certificates of deposit	2,748	4,428
Total cash and due from banks	$ 36,061	$ 36,047

XML

Note 6 - Fair Value Measurements and Fair Values of Financial Instruments (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Fair Value Disclosures [Abstract]
Other than Temporary Impairment Losses, Investments, Portion Recognized in Earnings, Net	$ 0	$ 0	$ 0

XML

Note 6 - Fair Value Measurements and Fair Values of Financial Instruments (Details) - Assets Measured at Fair Value - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	$ 420,290	$ 516,807
Obligations of states and political subdivisions:
Total recurring fair value measurements	1,296
Nonrecurring fair value measurements
Impaired loans with a valuation allowance	1,933	3,241
Valuation allowance	(820)	(769)
Impaired loans, net	1,933	3,241
US Government Agencies Debt Securities [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	10,483	26,676
Obligations of States and Political Subdivisions, Tax-exempt [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	107,757	124,839
Obligations of States and Political Subdivisions, Taxable [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	34,597	33,878
Collateralized Mortgage Backed Securities [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	73,343	83,903
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	191,715	238,823
Collateralized Debt Obligations [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	9	34
Debt Securities [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	417,904	508,153
Equity Securities [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	2,386	8,654
Estimate of Fair Value Measurement [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	420,290	516,807
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Recurring [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	420,290	516,807
Obligations of states and political subdivisions:
Servicing rights	1,296	1,281
Total recurring fair value measurements	421,586	518,088
Estimate of Fair Value Measurement [Member] | Fair Value, Measurements, Nonrecurring [Member]
Nonrecurring fair value measurements
Impaired loans with a valuation allowance	1,933	3,241
Valuation allowance	(820)	(769)
Impaired loans, net	1,113	2,472
Foreclosed assets held for sale	1,260	1,189
Total nonrecurring fair value measurements	2,373	3,661
Estimate of Fair Value Measurement [Member] | US Government Agencies Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	10,483	26,676
Estimate of Fair Value Measurement [Member] | Obligations of States and Political Subdivisions, Tax-exempt [Member] | Fair Value, Measurements, Recurring [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	107,757	124,839
Estimate of Fair Value Measurement [Member] | Obligations of States and Political Subdivisions, Taxable [Member] | Fair Value, Measurements, Recurring [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	34,597	33,878
Estimate of Fair Value Measurement [Member] | Collateralized Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	73,343	83,903
Estimate of Fair Value Measurement [Member] | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member] | Fair Value, Measurements, Recurring [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	191,715	238,823
Estimate of Fair Value Measurement [Member] | Collateralized Debt Obligations [Member] | Fair Value, Measurements, Recurring [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	9	34
Estimate of Fair Value Measurement [Member] | Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	417,904	508,153
Estimate of Fair Value Measurement [Member] | Equity Securities [Member] | Fair Value, Measurements, Recurring [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	2,386	8,654
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	2,386	8,654
Obligations of states and political subdivisions:
Servicing rights	0	0
Total recurring fair value measurements	2,386	8,654
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Nonrecurring fair value measurements
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
Fair Value, Inputs, Level 1 [Member] | US Government Agencies Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	0	0
Fair Value, Inputs, Level 1 [Member] | Obligations of States and Political Subdivisions, Tax-exempt [Member] | Fair Value, Measurements, Recurring [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	0	0
Fair Value, Inputs, Level 1 [Member] | Obligations of States and Political Subdivisions, Taxable [Member] | Fair Value, Measurements, Recurring [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	0	0
Fair Value, Inputs, Level 1 [Member] | Collateralized Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	0	0
Fair Value, Inputs, Level 1 [Member] | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member] | Fair Value, Measurements, Recurring [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	0	0
Fair Value, Inputs, Level 1 [Member] | Collateralized Debt Obligations [Member] | Fair Value, Measurements, Recurring [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	0	0
Fair Value, Inputs, Level 1 [Member] | Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	0	0
Fair Value, Inputs, Level 1 [Member] | Equity Securities [Member] | Fair Value, Measurements, Recurring [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	2,386	8,654
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	417,904	508,153
Obligations of states and political subdivisions:
Servicing rights	0	0
Total recurring fair value measurements	417,904	508,153
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Nonrecurring fair value measurements
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
Fair Value, Inputs, Level 2 [Member] | US Government Agencies Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	10,483	26,676
Fair Value, Inputs, Level 2 [Member] | Obligations of States and Political Subdivisions, Tax-exempt [Member] | Fair Value, Measurements, Recurring [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	107,757	124,839
Fair Value, Inputs, Level 2 [Member] | Obligations of States and Political Subdivisions, Taxable [Member] | Fair Value, Measurements, Recurring [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	34,597	33,878
Fair Value, Inputs, Level 2 [Member] | Collateralized Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	73,343	83,903
Fair Value, Inputs, Level 2 [Member] | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member] | Fair Value, Measurements, Recurring [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	191,715	238,823
Fair Value, Inputs, Level 2 [Member] | Collateralized Debt Obligations [Member] | Fair Value, Measurements, Recurring [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	9	34
Fair Value, Inputs, Level 2 [Member] | Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	417,904	508,153
Fair Value, Inputs, Level 2 [Member] | Equity Securities [Member] | Fair Value, Measurements, Recurring [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	0	0
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	0	0
Obligations of states and political subdivisions:
Servicing rights	1,296	1,281
Total recurring fair value measurements	1,296	1,281
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Nonrecurring fair value measurements
Impaired loans with a valuation allowance	1,933	3,241
Valuation allowance	(820)	(769)
Impaired loans, net	1,113	2,472
Foreclosed assets held for sale	1,260	1,189
Total nonrecurring fair value measurements	2,373	3,661
Fair Value, Inputs, Level 3 [Member] | US Government Agencies Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	0	0
Fair Value, Inputs, Level 3 [Member] | Obligations of States and Political Subdivisions, Tax-exempt [Member] | Fair Value, Measurements, Recurring [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	0	0
Fair Value, Inputs, Level 3 [Member] | Obligations of States and Political Subdivisions, Taxable [Member] | Fair Value, Measurements, Recurring [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	0	0
Fair Value, Inputs, Level 3 [Member] | Collateralized Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	0	0
Fair Value, Inputs, Level 3 [Member] | Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member] | Fair Value, Measurements, Recurring [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	0	0
Fair Value, Inputs, Level 3 [Member] | Collateralized Debt Obligations [Member] | Fair Value, Measurements, Recurring [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	0	0
Fair Value, Inputs, Level 3 [Member] | Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	0	0
Fair Value, Inputs, Level 3 [Member] | Equity Securities [Member] | Fair Value, Measurements, Recurring [Member]
AVAILABLE-FOR-SALE SECURITIES:
Available-for-sale securities	$ 0	$ 0

XML

Note 6 - Fair Value Measurements and Fair Values of Financial Instruments (Details) - Valuation Techniques and the Unobservable Inputs Used in Determining Fair Value - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair value	$ 1,296,000
Discount rate	10.00%
Weighted-average PSA	146.00%	156.00%
Discount rate	10.00%
Impaired loans	$ 9,974,000	$ 12,316,000
Valuation allowance	$ 820,000	769,000
Discount rate	10.00%
Impaired Loans [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair value	$ 1,113,000	2,472,000
Impaired loans	1,933,000	3,241,000
Valuation allowance	820,000	769,000
Fair value	1,113,000	2,472,000
Foreclosed Assets Held-for-Sale [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair value	1,260,000	1,189,000
Fair value	1,260,000	1,189,000
Foreclosed assets held for sale	1,260,000	1,189,000
Valuation allowance	$ 0	0
Income Approach Valuation Technique [Member] | Servicing Rights Asset [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair value		$ 1,281,000
Discount rate		10.00%
Servicing fees of loan balances	0.25%	0.25%
Servicing fees of payments are late	4.00%	4.00%
Late fees assessed	5.00%	5.00%
Miscellaneous fees per account per month	$ 1.94	$ 1.94
Monthly servicing cost per account	6.00	6.00
Additional monthly servicing cost per loan on loans more than 30 days delinquent	$ 24.00	$ 24.00
Of loans more than 30 days delinquent	1.50%	1.50%
Annual increase in servicing costs	3.00%	3.00%
Discount rate		10.00%
Discount rate		10.00%
Market Approach Valuation Technique [Member] | Land [Member] | Foreclosed Assets Held-for-Sale [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Discount rate	29.00%	29.00%
Fair value	$ 704,000	$ 724,000
Discount rate	29.00%	29.00%
Fair value	$ 704,000	$ 724,000
Discount rate	29.00%	29.00%
Foreclosed assets held for sale	$ 704,000	$ 724,000
Valuation allowance	$ 0	$ 0
Residential Portfolio Segment [Member] | Market Approach Valuation Technique [Member] | Foreclosed Assets Held-for-Sale [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Discount rate	32.00%	42.00%
Fair value	$ 556,000	$ 306,000
Discount rate	32.00%	42.00%
Fair value	$ 556,000	$ 306,000
Discount rate	32.00%	42.00%
Foreclosed assets held for sale	$ 556,000	$ 306,000
Valuation allowance	0	0
Residential Portfolio Segment [Member] | Senior Lien [Member] | Real Estate Loan [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Valuation allowance	$ 1,000	$ 358,000
Residential Portfolio Segment [Member] | Senior Lien [Member] | Market Approach Valuation Technique [Member] | Real Estate Loan [Member] | Impaired Loans [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Discount rate	31.00%	36.00%
Fair value	$ 41,000	$ 357,000
Discount rate	31.00%	36.00%
Impaired loans	$ 42,000	$ 715,000
Valuation allowance	1,000	358,000
Fair value	$ 41,000	$ 357,000
Discount rate	31.00%	36.00%
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Valuation allowance	$ 75,000	$ 82,000
Commercial Portfolio Segment [Member] | Loans Secured by Farmland [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Valuation allowance	52,000	102,000
Commercial Portfolio Segment [Member] | Multi-family (5 or more) Residential [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Valuation allowance	$ 595,000	$ 0
Commercial Portfolio Segment [Member] | Market Approach Valuation Technique [Member] | Foreclosed Assets Held-for-Sale [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Discount rate		23.00%
Fair value		$ 159,000
Discount rate		23.00%
Fair value		$ 159,000
Discount rate		23.00%
Foreclosed assets held for sale		$ 159,000
Valuation allowance		$ 0
Commercial Portfolio Segment [Member] | Market Approach Valuation Technique [Member] | Real Estate Loan [Member] | Impaired Loans [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Discount rate	46.00%	42.00%
Fair value	$ 220,000	$ 0
Discount rate	46.00%	42.00%
Impaired loans	$ 317,000	$ 16,000
Valuation allowance	97,000	16,000
Fair value	$ 220,000	$ 0
Discount rate	46.00%	42.00%
Commercial Portfolio Segment [Member] | Market Approach Valuation Technique [Member] | Commercial and Industrial [Member] | Impaired Loans [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Discount rate	31.00%	21.00%
Fair value	$ 0	$ 68,000
Discount rate	31.00%	21.00%
Impaired loans	$ 75,000	$ 150,000
Valuation allowance	75,000	82,000
Fair value	$ 0	$ 68,000
Discount rate	31.00%	21.00%
Commercial Portfolio Segment [Member] | Market Approach Valuation Technique [Member] | Loans Secured by Farmland [Member] | Impaired Loans [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Discount rate	49.00%	40.00%
Fair value	$ 460,000	$ 443,000
Discount rate	49.00%	40.00%
Impaired loans	$ 512,000	$ 545,000
Valuation allowance	52,000	102,000
Fair value	$ 460,000	$ 443,000
Discount rate	49.00%	40.00%
Commercial Portfolio Segment [Member] | Market Approach Valuation Technique [Member] | Multi-family (5 or more) Residential [Member] | Impaired Loans [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Discount rate	41.00%
Fair value	$ 392,000
Discount rate	41.00%
Impaired loans	$ 987,000
Valuation allowance	595,000
Fair value	$ 392,000
Discount rate	41.00%
Commercial Portfolio Segment [Member] | Market Approach Valuation Technique [Member] | Construction Loans [Member] | Impaired Loans [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Discount rate		30.00%
Fair value		$ 1,604,000
Discount rate		30.00%
Impaired loans		$ 1,815,000
Valuation allowance		211,000
Fair value		$ 1,604,000
Discount rate		30.00%

XML

Note 6 - Fair Value Measurements and Fair Values of Financial Instruments (Details) - Reconciliation of Activity for Level 3 Assets Measured at Fair Value on a Recurring Basis - Fair Value, Inputs, Level 3 [Member] - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance, beginning of period		$ 1,123	$ 2,218
Issuances of servicing rights			451
Unrealized losses included in earnings			67
Balance, end of period			1,123
Servicing Rights Asset [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance, beginning of period	$ 1,281	1,123
Issuances of servicing rights	177	185
Unrealized losses included in earnings	(162)	(27)
Balance, end of period	$ 1,296	$ 1,281	$ 1,123

XML

Note 6 - Fair Value Measurements and Fair Values of Financial Instruments (Details) - Reconciliation of Activity for Level 3 Assets Measured at Fair Value on a Recurring Basis - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Accretion and amortization, net									$ (1,562)	$ (1,375)	$ (1,836)
Realized gains, net	$ 1,776	$ 79	$ 932	$ 74	$ 210	$ 760	$ 103	$ 31	$ 2,861	1,104	1,718
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance, beginning of period								1,123		1,123	2,218
Issuances of servicing rights											451
Accretion and amortization, net											(2)
Proceeds from sales and calls											(2,207)
Realized gains, net											594
Unrealized gains included in earnings											67
Unrealized gains included in other comprehensive income											2
Balance, end of period											1,123
Fair Value, Inputs, Level 3 [Member] | Pooled Trust Preferred Securities Senior Tranches [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance, beginning of period								0		0	1,613
Issuances of servicing rights											0
Accretion and amortization, net											(2)
Proceeds from sales and calls											(1,636)
Realized gains, net											23
Unrealized gains included in earnings											0
Unrealized gains included in other comprehensive income											2
Balance, end of period											0
Fair Value, Inputs, Level 3 [Member] | Pooled Trust Preferred Securities Mezzanine Tranches [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance, beginning of period								0		0	0
Issuances of servicing rights											0
Accretion and amortization, net											0
Proceeds from sales and calls											(571)
Realized gains, net											571
Unrealized gains included in earnings											0
Unrealized gains included in other comprehensive income											0
Balance, end of period											0
Fair Value, Inputs, Level 3 [Member] | Servicing Rights Asset [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance, beginning of period								$ 1,123		$ 1,123	605
Issuances of servicing rights											451
Accretion and amortization, net											0
Proceeds from sales and calls											0
Realized gains, net											0
Unrealized gains included in earnings											67
Unrealized gains included in other comprehensive income											0
Balance, end of period											$ 1,123

XML

Note 6 - Fair Value Measurements and Fair Values of Financial Instruments (Details) - Estimated Fair Values, and Related Carrying Amounts, of the Financial Instruments - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Financial assets:
Cash and cash equivalents	$ 33,313	$ 31,619	$ 38,591	$ 55,016
Certificates of deposit	2,748	4,428
Available-for-sale securities	420,290	516,807
Loans held for sale	280	0
Loans, net	696,991	623,209
Accrued interest receivable	3,768	3,908
Financial liabilities:
Time deposits	221,684
Short-term borrowings	53,496	5,537
Long-term borrowings	38,767	73,060
Reported Value Measurement [Member]
Financial assets:
Available-for-sale securities	420,290	516,807
Estimate of Fair Value Measurement [Member]
Financial assets:
Available-for-sale securities	420,290	516,807
Fair Value, Inputs, Level 1 [Member] | Reported Value Measurement [Member]
Financial assets:
Cash and cash equivalents	33,313	31,619
Fair Value, Inputs, Level 1 [Member] | Estimate of Fair Value Measurement [Member]
Financial assets:
Cash and cash equivalents	33,313	31,619
Fair Value, Inputs, Level 2 [Member] | Reported Value Measurement [Member]
Financial assets:
Certificates of deposit	2,748	4,428
Restricted equity securities (included in Other Assets)	4,657	1,584
Loans held for sale	280	0
Accrued interest receivable	3,768	3,908
Financial liabilities:
Deposits with no stated maturity	713,931	729,052
Time deposits	221,684	238,937
Short-term borrowings	53,496	5,537
Long-term borrowings	38,767	73,060
Accrued interest payable	70	104
Fair Value, Inputs, Level 2 [Member] | Estimate of Fair Value Measurement [Member]
Financial assets:
Certificates of deposit	2,752	4,443
Restricted equity securities (included in Other Assets)	4,657	1,584
Loans held for sale	280	0
Accrued interest receivable	3,768	3,908
Financial liabilities:
Deposits with no stated maturity	713,931	729,052
Time deposits	221,891	239,712
Short-term borrowings	53,398	5,473
Long-term borrowings	40,166	78,866
Accrued interest payable	70	104
Fair Value, Inputs, Level 3 [Member] | Reported Value Measurement [Member]
Financial assets:
Loans, net	696,991	623,209
Servicing rights	1,296	1,281
Fair Value, Inputs, Level 3 [Member] | Estimate of Fair Value Measurement [Member]
Financial assets:
Loans, net	685,552	629,267
Servicing rights	$ 1,296	$ 1,281

XML

Note 7 - Securities (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Note 7 - Securities (Details) [Line Items]
Available-for-sale Securities Pledged as Collateral	$ 228,616,000	$ 369,945,000
Other than Temporary Impairment Losses, Investments, Available-for-sale Securities	0	0	$ 25,000
Available-for-sale Equity Securities, Accumulated Gross Unrealized Loss, before Tax	0
Available-for-sale Securities, Gross Realized Gains	2,972,000	1,328,000	1,918,000
Marketable Equity Securities [Member]
Note 7 - Securities (Details) [Line Items]
Other than Temporary Impairment Losses, Investments, Available-for-sale Securities			25,000
Bank Stocks [Member]
Note 7 - Securities (Details) [Line Items]
Available-for-sale Securities, Gross Realized Gains	2,220,000	363,000	$ 1,018,000
Federal Home Loan Bank of Pittsburgh [Member] | Other Assets [Member]
Note 7 - Securities (Details) [Line Items]
Federal Home Loan Bank Stock	4,527,000	1,454,000
Federal Home Loan Bank of Pittsburgh [Member] | FHLB Stock [Member]
Note 7 - Securities (Details) [Line Items]
Other than Temporary Impairment Losses, Investments	$ 0	$ 0

XML

Note 7 - Securities (Details) - Available-for-sale Securities - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, amortized cost	$ 416,455	$ 508,682
Available-for-sale securities, gross unrealized holding gains	6,573	11,377
Available-for-sale securities, gross unrealized holding losses	(2,738)	(3,252)
Available-for-sale securities, fair value	420,290	516,807
US Government Agencies Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, amortized cost	10,663	27,221
Available-for-sale securities, gross unrealized holding gains	12	38
Available-for-sale securities, gross unrealized holding losses	(192)	(583)
Available-for-sale securities, fair value	10,483	26,676
Obligations of States and Political Subdivisions, Tax-exempt [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, amortized cost	103,414	120,086
Available-for-sale securities, gross unrealized holding gains	4,365	5,134
Available-for-sale securities, gross unrealized holding losses	(22)	(381)
Available-for-sale securities, fair value	107,757	124,839
Obligations of States and Political Subdivisions, Taxable [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, amortized cost	34,317	33,637
Available-for-sale securities, gross unrealized holding gains	381	415
Available-for-sale securities, gross unrealized holding losses	(101)	(174)
Available-for-sale securities, fair value	34,597	33,878
Collateralized Mortgage Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, amortized cost	73,227	82,479
Available-for-sale securities, gross unrealized holding gains	486	1,493
Available-for-sale securities, gross unrealized holding losses	(370)	(69)
Available-for-sale securities, fair value	73,343	83,903
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, amortized cost	193,145	239,620
Available-for-sale securities, gross unrealized holding gains	623	1,239
Available-for-sale securities, gross unrealized holding losses	(2,053)	(2,036)
Available-for-sale securities, fair value	191,715	238,823
Collateralized Debt Obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, amortized cost	9	34
Available-for-sale securities, gross unrealized holding gains	0	0
Available-for-sale securities, gross unrealized holding losses	0	0
Available-for-sale securities, fair value	9	34
Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, amortized cost	414,775	503,077
Available-for-sale securities, gross unrealized holding gains	5,867	8,319
Available-for-sale securities, gross unrealized holding losses	(2,738)	(3,243)
Available-for-sale securities, fair value	417,904	508,153
Equity Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale securities, amortized cost	1,680	5,605
Available-for-sale securities, gross unrealized holding gains	706	3,058
Available-for-sale securities, gross unrealized holding losses	0	(9)
Available-for-sale securities, fair value	$ 2,386	$ 8,654

XML

Note 7 - Securities (Details) - Available-for-sale Securities With Unrealized Loss Positions - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Note 7 - Securities (Details) - Available-for-sale Securities With Unrealized Loss Positions [Line Items]
Available-for-sale securities with unrealized loss positions, less than 12 months, fair value	$ 142,924	$ 75,084
Available-for-sale securities with unrealized loss positions, less than 12 months, unrealized losses	(1,022)	(716)
Available-for-sale securities with unrealized loss positions, 12 months or more, fair value	63,752	105,227
Available-for-sale securities with unrealized loss positions, 12 months or more, unrealized losses	(1,716)	(2,536)
Available-for-sale securities with unrealized loss positions, fair value	206,676	180,311
Available-for-sale securities with unrealized loss positions, unrealized losses	(2,738)	(3,252)
US Government Agencies Debt Securities [Member]
Note 7 - Securities (Details) - Available-for-sale Securities With Unrealized Loss Positions [Line Items]
Available-for-sale securities with unrealized loss positions, less than 12 months, fair value	0	0
Available-for-sale securities with unrealized loss positions, less than 12 months, unrealized losses	0	0
Available-for-sale securities with unrealized loss positions, 12 months or more, fair value	7,850	24,020
Available-for-sale securities with unrealized loss positions, 12 months or more, unrealized losses	(192)	(583)
Available-for-sale securities with unrealized loss positions, fair value	7,850	24,020
Available-for-sale securities with unrealized loss positions, unrealized losses	(192)	(583)
Obligations of States and Political Subdivisions, Tax-exempt [Member]
Note 7 - Securities (Details) - Available-for-sale Securities With Unrealized Loss Positions [Line Items]
Available-for-sale securities with unrealized loss positions, less than 12 months, fair value	5,200	11,898
Available-for-sale securities with unrealized loss positions, less than 12 months, unrealized losses	(19)	(289)
Available-for-sale securities with unrealized loss positions, 12 months or more, fair value	216	6,991
Available-for-sale securities with unrealized loss positions, 12 months or more, unrealized losses	(3)	(92)
Available-for-sale securities with unrealized loss positions, fair value	5,416	18,889
Available-for-sale securities with unrealized loss positions, unrealized losses	(22)	(381)
Obligations of States and Political Subdivisions, Taxable [Member]
Note 7 - Securities (Details) - Available-for-sale Securities With Unrealized Loss Positions [Line Items]
Available-for-sale securities with unrealized loss positions, less than 12 months, fair value	10,605	4,240
Available-for-sale securities with unrealized loss positions, less than 12 months, unrealized losses	(60)	(22)
Available-for-sale securities with unrealized loss positions, 12 months or more, fair value	2,910	9,159
Available-for-sale securities with unrealized loss positions, 12 months or more, unrealized losses	(41)	(152)
Available-for-sale securities with unrealized loss positions, fair value	13,515	13,399
Available-for-sale securities with unrealized loss positions, unrealized losses	(101)	(174)
Equity Securities [Member]
Note 7 - Securities (Details) - Available-for-sale Securities With Unrealized Loss Positions [Line Items]
Available-for-sale securities with unrealized loss positions, less than 12 months, fair value	38,764	134
Available-for-sale securities with unrealized loss positions, less than 12 months, unrealized losses	(295)	(9)
Available-for-sale securities with unrealized loss positions, 12 months or more, fair value	3,503	0
Available-for-sale securities with unrealized loss positions, 12 months or more, unrealized losses	(75)	0
Available-for-sale securities with unrealized loss positions, fair value	42,267	134
Available-for-sale securities with unrealized loss positions, unrealized losses	(370)	(9)
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Note 7 - Securities (Details) - Available-for-sale Securities With Unrealized Loss Positions [Line Items]
Available-for-sale securities with unrealized loss positions, less than 12 months, fair value	88,355	58,812
Available-for-sale securities with unrealized loss positions, less than 12 months, unrealized losses	(648)	(396)
Available-for-sale securities with unrealized loss positions, 12 months or more, fair value	49,273	60,897
Available-for-sale securities with unrealized loss positions, 12 months or more, unrealized losses	(1,405)	(1,640)
Available-for-sale securities with unrealized loss positions, fair value	137,628	119,709
Available-for-sale securities with unrealized loss positions, unrealized losses	$ (2,053)	(2,036)
Collateralized Mortgage Backed Securities [Member]
Note 7 - Securities (Details) - Available-for-sale Securities With Unrealized Loss Positions [Line Items]
Available-for-sale securities with unrealized loss positions, less than 12 months, fair value		0
Available-for-sale securities with unrealized loss positions, less than 12 months, unrealized losses		0
Available-for-sale securities with unrealized loss positions, 12 months or more, fair value		4,160
Available-for-sale securities with unrealized loss positions, 12 months or more, unrealized losses		(69)
Available-for-sale securities with unrealized loss positions, fair value		4,160
Available-for-sale securities with unrealized loss positions, unrealized losses		(69)
Debt Securities [Member]
Note 7 - Securities (Details) - Available-for-sale Securities With Unrealized Loss Positions [Line Items]
Available-for-sale securities with unrealized loss positions, less than 12 months, fair value		74,950
Available-for-sale securities with unrealized loss positions, less than 12 months, unrealized losses		(707)
Available-for-sale securities with unrealized loss positions, 12 months or more, fair value		105,227
Available-for-sale securities with unrealized loss positions, 12 months or more, unrealized losses		(2,536)
Available-for-sale securities with unrealized loss positions, fair value		180,177
Available-for-sale securities with unrealized loss positions, unrealized losses		$ (3,243)

XML

Note 7 - Securities (Details) - Gross Realized Gains and Losses from Available-for-sale Securities - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Gross Realized Gains and Losses from Available-for-sale Securities [Abstract]
Gross realized gains from sales									$ 2,972	$ 1,328	$ 1,918
Gross realized losses from sales									(111)	(224)	(175)
Losses from OTTI Impairment									0	0	(25)
Net realized gains	$ 1,776	$ 79	$ 932	$ 74	$ 210	$ 760	$ 103	$ 31	2,861	1,104	1,718
Income tax provision related to net realized gains									$ 1,002	$ 386	$ 601

XML

Note 7 - Securities (Details) - Available-for-sale Debt Securities by Contractual Maturity $ in Thousands	Dec. 31, 2015 USD ($)
Note 7 - Securities (Details) - Available-for-sale Debt Securities by Contractual Maturity [Line Items]
Due in one year or less	$ 9,087
Due in one year or less	9,154
Due from one year through five years	60,639
Due from one year through five years	61,664
Due from five years through ten years	45,173
Due from five years through ten years	46,227
Due after ten years	33,504
Due after ten years	35,801
Subtotal	148,403
Subtotal	152,846
Total	414,775
Total	417,904
Collateralized Mortgage Obligations [Member]
Note 7 - Securities (Details) - Available-for-sale Debt Securities by Contractual Maturity [Line Items]
Available-for-sale debt securities, amortized cost	73,227
Available-for-sale debt securities, fair value	73,343
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Note 7 - Securities (Details) - Available-for-sale Debt Securities by Contractual Maturity [Line Items]
Available-for-sale debt securities, amortized cost	193,145
Available-for-sale debt securities, fair value	$ 191,715

XML

Note 7 - Securities (Details) - Net Impairment Losses Recognized in Earnings - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Marketable Equity Securities [Member]
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Marketable equity securities (bank stocks)	$ 0	$ 0	$ (25)

XML

Note 8 - Loans (Details)	1 Months Ended	3 Months Ended		12 Months Ended
	Jul. 31, 2015	Dec. 31, 2014 USD ($)	Jun. 30, 2014 USD ($)	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)
Note 8 - Loans (Details) [Line Items]
Financing Receivable, Modifications, Number of Contracts				1
Allowance for Credit Losses, Change in Method of Calculating Impairment		$ 0		$ 0	$ 0	$ 0
Repossessed Assets		1,189,000		1,260,000	$ 1,189,000
Mortgage Loans in Process of Foreclosure, Amount				1,173,000
Residential Portfolio Segment [Member] | Real Estate Loan [Member]
Note 8 - Loans (Details) [Line Items]
Repossessed Assets				$ 555,000
Commercial Portfolio Segment [Member]
Note 8 - Loans (Details) [Line Items]
Allowance for Credit Losses, Change in Method of Calculating Impairment						$ 0
Commercial Portfolio Segment [Member] | Real Estate Loan [Member]
Note 8 - Loans (Details) [Line Items]
Financing Receivable, Modifications, Number of Contracts					5	2
Financing Receivable, Modifications, Subsequent Default, Number of Contracts					1	2
Interest Only Period [Member] | Residential Portfolio Segment [Member] | Real Estate Loan [Member]
Note 8 - Loans (Details) [Line Items]
Financing Receivable, Modifications, Number of Contracts					1
Interest Only Period [Member] | Commercial Portfolio Segment [Member]
Note 8 - Loans (Details) [Line Items]
Financing Receivable, Modifications, Number of Contracts						14
Reduction in Payment [Member] | Commercial Portfolio Segment [Member]
Note 8 - Loans (Details) [Line Items]
Financing Receivable, Modifications, Number of Contracts			1		6	1
Allowance for Credit Losses, Change in Method of Calculating Impairment		$ 0	$ 0		$ 0	$ 1,552,000
Financing Receivable, Modification, Reduced Payment Period	12 months			15 months
Financing Receivables, Impaired, Troubled Debt Restructuring, Write-down			$ 1,486,000
Reduction in Payment Amount and Interest Rate [Member] | Residential Portfolio Segment [Member] | Real Estate Loan [Member]
Note 8 - Loans (Details) [Line Items]
Financing Receivable, Modifications, Number of Contracts					1
Extended Maturity [Member] | Commercial Portfolio Segment [Member]
Note 8 - Loans (Details) [Line Items]
Financing Receivable, Modifications, Number of Contracts						3
Contractual Interest Rate Reduction [Member] | Commercial Portfolio Segment [Member]
Note 8 - Loans (Details) [Line Items]
Financing Receivable, Modifications, Number of Contracts						2
Senior Lien [Member] | Residential Portfolio Segment [Member] | Real Estate Loan [Member]
Note 8 - Loans (Details) [Line Items]
Financing Receivable, Modifications, Number of Contracts				2	3	6
Allowance for Credit Losses, Change in Method of Calculating Impairment				$ 0
Allowance for Loan and Lease Losses, Period Increase (Decrease)				$ 0
Financing Receivable, Modifications, Subsequent Default, Number of Contracts				1	3	1
Senior Lien [Member] | Interest Only Period [Member] | Residential Portfolio Segment [Member] | Real Estate Loan [Member]
Note 8 - Loans (Details) [Line Items]
Financing Receivable, Modifications, Number of Contracts				1
Senior Lien [Member] | Reduction in Payment [Member] | Residential Portfolio Segment [Member] | Real Estate Loan [Member]
Note 8 - Loans (Details) [Line Items]
Financing Receivable, Modifications, Number of Contracts				1	1
Junior Lien [Member] | Residential Portfolio Segment [Member] | Real Estate Loan [Member]
Note 8 - Loans (Details) [Line Items]
Financing Receivable, Modifications, Number of Contracts				1		3
Financing Receivable, Modifications, Subsequent Default, Number of Contracts					1
Loans Receivable [Member] | Credit Availability Concentration Risk [Member]
Note 8 - Loans (Details) [Line Items]
Concentration Risk, Percentage				0.00%
Payments of Interest Only Missed [Member] | Residential Portfolio Segment [Member] | Loans Secured by Farmland [Member] | Real Estate Loan [Member]
Note 8 - Loans (Details) [Line Items]
Financing Receivable, Modifications, Subsequent Default, Number of Contracts				1
Payments of Interest Only Missed [Member] | Residential Portfolio Segment [Member] | Agricultural Loans [Member] | Real Estate Loan [Member]
Note 8 - Loans (Details) [Line Items]
Financing Receivable, Modifications, Subsequent Default, Number of Contracts					1
Payments of Interest Only Missed [Member] | Commercial Portfolio Segment [Member] | Real Estate Loan [Member]
Note 8 - Loans (Details) [Line Items]
Financing Receivable, Modifications, Number of Contracts						2
Payments of Interest Only Missed [Member] | Senior Lien [Member] | Residential Portfolio Segment [Member] | Real Estate Loan [Member]
Note 8 - Loans (Details) [Line Items]
Financing Receivable, Modifications, Subsequent Default, Number of Contracts					1
Payments of Interest Only Missed [Member] | Junior Lien [Member] | Residential Portfolio Segment [Member] | Real Estate Loan [Member]
Note 8 - Loans (Details) [Line Items]
Financing Receivable, Modifications, Subsequent Default, Number of Contracts		1
Subsequent Default [Member]
Note 8 - Loans (Details) [Line Items]
Allowance for Credit Losses, Change in Method of Calculating Impairment		$ 0		$ 0	$ 0
Financing Receivable, Modifications, Recorded Investment		75,000		69,000	75,000
Subsequent Default [Member] | Real Estate Loan [Member]
Note 8 - Loans (Details) [Line Items]
Allowance for Credit Losses, Change in Method of Calculating Impairment		$ 0			$ 0
Minimum [Member]
Note 8 - Loans (Details) [Line Items]
Financing Receivable, Individually Evaluated for Impairment, Threshold With Extension of Credit				200,000
Financing Receivable, Individually Evaluated for Impairment, Estimated Loss Trigger				100,000
Maximum [Member]
Note 8 - Loans (Details) [Line Items]
Financing Receivable, Individually Evaluated for Impairment, Threshold With Estimated Loss				$ 200,000

XML

Note 8 - Loans (Details) - Loans Receivable - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	$ 704,880	$ 630,545
Less: allowance for loan losses	(7,889)	(7,336)
Loans, net	696,991	623,209
Residential Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	386,090	366,416
Residential Portfolio Segment [Member] | Home Equity Line of Credit1 [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	39,040	36,629
Residential Portfolio Segment [Member] | Construction Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	21,121	16,739
Residential Portfolio Segment [Member] | Senior Lien [Member] | Real Estate Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	304,783	291,882
Residential Portfolio Segment [Member] | Junior Lien [Member] | Real Estate Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	21,146	21,166
Commercial Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	308,134	253,895
Commercial Portfolio Segment [Member] | Real Estate Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	154,779	145,878
Commercial Portfolio Segment [Member] | Construction Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	5,122	6,938
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	75,196	50,157
Commercial Portfolio Segment [Member] | Political Subdivisions [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	40,007	17,534
Commercial Portfolio Segment [Member] | Loans Secured by Farmland [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	7,019	7,916
Commercial Portfolio Segment [Member] | Multi-family (5 or more) Residential [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	9,188	8,917
Commercial Portfolio Segment [Member] | Agricultural Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	4,671	3,221
Commercial Portfolio Segment [Member] | Other Commercial Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	12,152	13,334
Consumer Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable	$ 10,656	$ 10,234

XML

Note 8 - Loans (Details) - Allowance for Loan Losses - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Residential mortgage:
Allowance foran losses				$ 7,336				$ 8,663	$ 7,336	$ 8,663	$ 6,857
Allowance foran losses, charge-offs									(562)	(2,139)	(671)
Allowance foran losses, recoveries									270	336	430
Allowance foran losses, provision (credit)	$ 319	$ 302	$ 221	3	$ 123	$ 218	$ 446	(311)	845	476	2,047
Allowance foran losses	7,889				7,336				7,889	7,336	8,663
Residential Portfolio Segment [Member]
Residential mortgage:
Allowance foran losses				3,653				3,705	3,653	3,705	3,217
Allowance foran losses, charge-offs									(217)	(327)	(95)
Allowance foran losses, recoveries									1	25	24
Allowance foran losses, provision (credit)									(19)	250	559
Allowance foran losses	3,418				3,653				3,418	3,653	3,705
Residential Portfolio Segment [Member] | Home Equity Loan [Member]
Residential mortgage:
Allowance foran losses				322				269	322	269	255
Allowance foran losses, charge-offs									0	(62)	0
Allowance foran losses, recoveries									0	0	0
Allowance foran losses, provision (credit)									25	115	14
Allowance foran losses	347				322				347	322	269
Residential Portfolio Segment [Member] | Family 1-4 Residential Construction [Member]
Residential mortgage:
Allowance foran losses				214				168	214	168	96
Allowance foran losses, charge-offs									0	0	(11)
Allowance foran losses, recoveries									0	0	0
Allowance foran losses, provision (credit)									(7)	46	83
Allowance foran losses	207				214				207	214	168
Residential Portfolio Segment [Member] | Senior Lien [Member] | Real Estate Loan [Member]
Residential mortgage:
Allowance foran losses				2,941				2,974	2,941	2,974	2,619
Allowance foran losses, charge-offs									(175)	(164)	(84)
Allowance foran losses, recoveries									1	25	24
Allowance foran losses, provision (credit)									(122)	106	415
Allowance foran losses	2,645				2,941				2,645	2,941	2,974
Residential Portfolio Segment [Member] | Junior Lien [Member] | Real Estate Loan [Member]
Residential mortgage:
Allowance foran losses				176				294	176	294	247
Allowance foran losses, charge-offs									(42)	(101)	0
Allowance foran losses, recoveries									0	0	0
Allowance foran losses, provision (credit)									85	(17)	47
Allowance foran losses	219				176				219	176	294
Commercial Portfolio Segment [Member]
Residential mortgage:
Allowance foran losses				3,143				4,367	3,143	4,367	2,971
Allowance foran losses, charge-offs									(251)	(1,715)	(459)
Allowance foran losses, recoveries									214	264	348
Allowance foran losses, provision (credit)									816	227	1,507
Allowance foran losses	3,922				3,143				3,922	3,143	4,367
Commercial Portfolio Segment [Member] | Real Estate Loan [Member]
Residential mortgage:
Allowance foran losses				1,758				3,123	1,758	3,123	1,930
Allowance foran losses, charge-offs									(115)	(1,521)	(169)
Allowance foran losses, recoveries									208	250	344
Allowance foran losses, provision (credit)									88	(94)	1,018
Allowance foran losses	1,939				1,758				1,939	1,758	3,123
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Residential mortgage:
Allowance foran losses				688				591	688	591	581
Allowance foran losses, charge-offs									(21)	(24)	(286)
Allowance foran losses, recoveries									6	9	4
Allowance foran losses, provision (credit)									308	112	292
Allowance foran losses	981				688				981	688	591
Commercial Portfolio Segment [Member] | Political Subdivisions [Member]
Residential mortgage:
Allowance foran losses				0				0	0	0	0
Allowance foran losses, charge-offs									0	0	0
Allowance foran losses, recoveries									0	0	0
Allowance foran losses, provision (credit)									0	0	0
Allowance foran losses	0				0				0	0	0
Commercial Portfolio Segment [Member] | Commercial Construction and Land [Member]
Residential mortgage:
Allowance foran losses				283				267	283	267	234
Allowance foran losses, charge-offs									(115)	(170)	(4)
Allowance foran losses, recoveries									0	5	0
Allowance foran losses, provision (credit)									(110)	181	37
Allowance foran losses	58				283				58	283	267
Commercial Portfolio Segment [Member] | Loans Secured by Farmland [Member]
Residential mortgage:
Allowance foran losses				165				115	165	115	129
Allowance foran losses, charge-offs									0	0	0
Allowance foran losses, recoveries									0	0	0
Allowance foran losses, provision (credit)									(59)	50	(14)
Allowance foran losses	106				165				106	165	115
Commercial Portfolio Segment [Member] | Multi-family (5 or more) Residential [Member]
Residential mortgage:
Allowance foran losses				87				103	87	103	67
Allowance foran losses, charge-offs									0	0	0
Allowance foran losses, recoveries									0	0	0
Allowance foran losses, provision (credit)									588	(16)	36
Allowance foran losses	675				87				675	87	103
Commercial Portfolio Segment [Member] | Agricultural Loans [Member]
Residential mortgage:
Allowance foran losses				31				30	31	30	27
Allowance foran losses, charge-offs									0	0	0
Allowance foran losses, recoveries									0	0	0
Allowance foran losses, provision (credit)									14	1	3
Allowance foran losses	45				31				45	31	30
Commercial Portfolio Segment [Member] | Other Commercial Loans [Member]
Residential mortgage:
Allowance foran losses				131				138	131	138	3
Allowance foran losses, charge-offs									0	0	0
Allowance foran losses, recoveries									0	0	0
Allowance foran losses, provision (credit)									(13)	(7)	135
Allowance foran losses	118				131				118	131	138
Consumer Portfolio Segment [Member]
Residential mortgage:
Allowance foran losses				145				193	145	193	228
Allowance foran losses, charge-offs									(94)	(97)	(117)
Allowance foran losses, recoveries									55	47	58
Allowance foran losses, provision (credit)									16	2	24
Allowance foran losses	122				145				122	145	193
Unallocated Financing Receivables [Member]
Residential mortgage:
Allowance foran losses				$ 395				$ 398	395	398	441
Allowance foran losses, charge-offs									0	0	0
Allowance foran losses, recoveries									0	0	0
Allowance foran losses, provision (credit)									32	(3)	(43)
Allowance foran losses	$ 427				$ 395				$ 427	$ 395	$ 398

XML

Note 8 - Loans (Details) - Outstanding Loans by Risk Rating - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Residential Mortgage:
Loans receivable	$ 704,880	$ 630,545
Pass [Member]
Residential Mortgage:
Loans receivable	671,850	591,547
Special Mention [Member]
Residential Mortgage:
Loans receivable	9,684	12,788
Substandard [Member]
Residential Mortgage:
Loans receivable	23,131	25,989
Doubtful [Member]
Residential Mortgage:
Loans receivable	215	221
Residential Portfolio Segment [Member]
Residential Mortgage:
Loans receivable	386,090	366,416
Residential Portfolio Segment [Member] | Pass [Member]
Residential Mortgage:
Loans receivable	375,035	353,250
Residential Portfolio Segment [Member] | Special Mention [Member]
Residential Mortgage:
Loans receivable	1,152	1,672
Residential Portfolio Segment [Member] | Substandard [Member]
Residential Mortgage:
Loans receivable	9,836	11,416
Residential Portfolio Segment [Member] | Doubtful [Member]
Residential Mortgage:
Loans receivable	67	78
Residential Portfolio Segment [Member] | Home Equity Loan [Member]
Residential Mortgage:
Loans receivable	39,040	36,629
Residential Portfolio Segment [Member] | Home Equity Loan [Member] | Pass [Member]
Residential Mortgage:
Loans receivable	38,071	35,935
Residential Portfolio Segment [Member] | Home Equity Loan [Member] | Special Mention [Member]
Residential Mortgage:
Loans receivable	543	294
Residential Portfolio Segment [Member] | Home Equity Loan [Member] | Substandard [Member]
Residential Mortgage:
Loans receivable	426	400
Residential Portfolio Segment [Member] | Home Equity Loan [Member] | Doubtful [Member]
Residential Mortgage:
Loans receivable	0	0
Residential Portfolio Segment [Member] | Construction Loans [Member]
Residential Mortgage:
Loans receivable	21,121	16,739
Residential Portfolio Segment [Member] | Construction Loans [Member] | Pass [Member]
Residential Mortgage:
Loans receivable	21,104	16,719
Residential Portfolio Segment [Member] | Construction Loans [Member] | Special Mention [Member]
Residential Mortgage:
Loans receivable	17	20
Residential Portfolio Segment [Member] | Construction Loans [Member] | Substandard [Member]
Residential Mortgage:
Loans receivable	0	0
Residential Portfolio Segment [Member] | Construction Loans [Member] | Doubtful [Member]
Residential Mortgage:
Loans receivable	0	0
Residential Portfolio Segment [Member] | Senior Lien [Member] | Real Estate Loan [Member]
Residential Mortgage:
Loans receivable	304,783	291,882
Residential Portfolio Segment [Member] | Senior Lien [Member] | Real Estate Loan [Member] | Pass [Member]
Residential Mortgage:
Loans receivable	295,302	280,094
Residential Portfolio Segment [Member] | Senior Lien [Member] | Real Estate Loan [Member] | Special Mention [Member]
Residential Mortgage:
Loans receivable	407	1,246
Residential Portfolio Segment [Member] | Senior Lien [Member] | Real Estate Loan [Member] | Substandard [Member]
Residential Mortgage:
Loans receivable	9,007	10,464
Residential Portfolio Segment [Member] | Senior Lien [Member] | Real Estate Loan [Member] | Doubtful [Member]
Residential Mortgage:
Loans receivable	67	78
Residential Portfolio Segment [Member] | Junior Lien [Member] | Real Estate Loan [Member]
Residential Mortgage:
Loans receivable	21,146	21,166
Residential Portfolio Segment [Member] | Junior Lien [Member] | Real Estate Loan [Member] | Pass [Member]
Residential Mortgage:
Loans receivable	20,558	20,502
Residential Portfolio Segment [Member] | Junior Lien [Member] | Real Estate Loan [Member] | Special Mention [Member]
Residential Mortgage:
Loans receivable	185	112
Residential Portfolio Segment [Member] | Junior Lien [Member] | Real Estate Loan [Member] | Substandard [Member]
Residential Mortgage:
Loans receivable	403	552
Residential Portfolio Segment [Member] | Junior Lien [Member] | Real Estate Loan [Member] | Doubtful [Member]
Residential Mortgage:
Loans receivable	0	0
Commercial Portfolio Segment [Member]
Residential Mortgage:
Loans receivable	308,134	253,895
Commercial Portfolio Segment [Member] | Pass [Member]
Residential Mortgage:
Loans receivable	286,325	228,202
Commercial Portfolio Segment [Member] | Special Mention [Member]
Residential Mortgage:
Loans receivable	8,511	11,094
Commercial Portfolio Segment [Member] | Substandard [Member]
Residential Mortgage:
Loans receivable	13,150	14,456
Commercial Portfolio Segment [Member] | Doubtful [Member]
Residential Mortgage:
Loans receivable	148	143
Commercial Portfolio Segment [Member] | Real Estate Loan [Member]
Residential Mortgage:
Loans receivable	154,779	145,878
Commercial Portfolio Segment [Member] | Real Estate Loan [Member] | Pass [Member]
Residential Mortgage:
Loans receivable	140,381	133,204
Commercial Portfolio Segment [Member] | Real Estate Loan [Member] | Special Mention [Member]
Residential Mortgage:
Loans receivable	5,862	2,775
Commercial Portfolio Segment [Member] | Real Estate Loan [Member] | Substandard [Member]
Residential Mortgage:
Loans receivable	8,536	9,899
Commercial Portfolio Segment [Member] | Real Estate Loan [Member] | Doubtful [Member]
Residential Mortgage:
Loans receivable	0	0
Commercial Portfolio Segment [Member] | Construction Loans [Member]
Residential Mortgage:
Loans receivable	5,122	6,938
Commercial Portfolio Segment [Member] | Construction Loans [Member] | Pass [Member]
Residential Mortgage:
Loans receivable	4,957	4,650
Commercial Portfolio Segment [Member] | Construction Loans [Member] | Special Mention [Member]
Residential Mortgage:
Loans receivable	60	266
Commercial Portfolio Segment [Member] | Construction Loans [Member] | Substandard [Member]
Residential Mortgage:
Loans receivable	105	2,022
Commercial Portfolio Segment [Member] | Construction Loans [Member] | Doubtful [Member]
Residential Mortgage:
Loans receivable	0	0
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Residential Mortgage:
Loans receivable	75,196	50,157
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member] | Pass [Member]
Residential Mortgage:
Loans receivable	71,225	41,751
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member] | Special Mention [Member]
Residential Mortgage:
Loans receivable	2,106	7,246
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member] | Substandard [Member]
Residential Mortgage:
Loans receivable	1,737	1,042
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member] | Doubtful [Member]
Residential Mortgage:
Loans receivable	128	118
Commercial Portfolio Segment [Member] | Political Subdivisions [Member]
Residential Mortgage:
Loans receivable	40,007	17,534
Commercial Portfolio Segment [Member] | Political Subdivisions [Member] | Pass [Member]
Residential Mortgage:
Loans receivable	40,007	17,534
Commercial Portfolio Segment [Member] | Political Subdivisions [Member] | Special Mention [Member]
Residential Mortgage:
Loans receivable	0	0
Commercial Portfolio Segment [Member] | Political Subdivisions [Member] | Substandard [Member]
Residential Mortgage:
Loans receivable	0	0
Commercial Portfolio Segment [Member] | Political Subdivisions [Member] | Doubtful [Member]
Residential Mortgage:
Loans receivable	0	0
Commercial Portfolio Segment [Member] | Loans Secured by Farmland [Member]
Residential Mortgage:
Loans receivable	7,019	7,916
Commercial Portfolio Segment [Member] | Loans Secured by Farmland [Member] | Pass [Member]
Residential Mortgage:
Loans receivable	5,084	5,990
Commercial Portfolio Segment [Member] | Loans Secured by Farmland [Member] | Special Mention [Member]
Residential Mortgage:
Loans receivable	483	433
Commercial Portfolio Segment [Member] | Loans Secured by Farmland [Member] | Substandard [Member]
Residential Mortgage:
Loans receivable	1,432	1,468
Commercial Portfolio Segment [Member] | Loans Secured by Farmland [Member] | Doubtful [Member]
Residential Mortgage:
Loans receivable	20	25
Commercial Portfolio Segment [Member] | Multi-family (5 or more) Residential [Member]
Residential Mortgage:
Loans receivable	9,188	8,917
Commercial Portfolio Segment [Member] | Multi-family (5 or more) Residential [Member] | Pass [Member]
Residential Mortgage:
Loans receivable	7,943	8,629
Commercial Portfolio Segment [Member] | Multi-family (5 or more) Residential [Member] | Special Mention [Member]
Residential Mortgage:
Loans receivable	0	288
Commercial Portfolio Segment [Member] | Multi-family (5 or more) Residential [Member] | Substandard [Member]
Residential Mortgage:
Loans receivable	1,245	0
Commercial Portfolio Segment [Member] | Multi-family (5 or more) Residential [Member] | Doubtful [Member]
Residential Mortgage:
Loans receivable	0	0
Commercial Portfolio Segment [Member] | Agricultural Loans [Member]
Residential Mortgage:
Loans receivable	4,671	3,221
Commercial Portfolio Segment [Member] | Agricultural Loans [Member] | Pass [Member]
Residential Mortgage:
Loans receivable	4,655	3,196
Commercial Portfolio Segment [Member] | Agricultural Loans [Member] | Special Mention [Member]
Residential Mortgage:
Loans receivable	0	0
Commercial Portfolio Segment [Member] | Agricultural Loans [Member] | Substandard [Member]
Residential Mortgage:
Loans receivable	16	25
Commercial Portfolio Segment [Member] | Agricultural Loans [Member] | Doubtful [Member]
Residential Mortgage:
Loans receivable	0	0
Commercial Portfolio Segment [Member] | Other Commercial Loans [Member]
Residential Mortgage:
Loans receivable	12,152	13,334
Commercial Portfolio Segment [Member] | Other Commercial Loans [Member] | Pass [Member]
Residential Mortgage:
Loans receivable	12,073	13,248
Commercial Portfolio Segment [Member] | Other Commercial Loans [Member] | Special Mention [Member]
Residential Mortgage:
Loans receivable	0	86
Commercial Portfolio Segment [Member] | Other Commercial Loans [Member] | Substandard [Member]
Residential Mortgage:
Loans receivable	79	0
Commercial Portfolio Segment [Member] | Other Commercial Loans [Member] | Doubtful [Member]
Residential Mortgage:
Loans receivable	0	0
Consumer Portfolio Segment [Member]
Residential Mortgage:
Loans receivable	10,656	10,234
Consumer Portfolio Segment [Member] | Pass [Member]
Residential Mortgage:
Loans receivable	10,490	10,095
Consumer Portfolio Segment [Member] | Special Mention [Member]
Residential Mortgage:
Loans receivable	21	22
Consumer Portfolio Segment [Member] | Substandard [Member]
Residential Mortgage:
Loans receivable	145	117
Consumer Portfolio Segment [Member] | Doubtful [Member]
Residential Mortgage:
Loans receivable	$ 0	$ 0

XML

Note 8 - Loans (Details) - Loan Balances and Allowance for Loan Losses for Each Impairment Method - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Residential mortgage:
Loans receivable: individually evaluated	$ 9,974	$ 12,316
Loans receivable: collectively evaluated	694,906	618,229
Loans receivable	704,880	630,545
Allowance for loan losses: individually evaluated	820	769
Allowance for loan losses: collectively evaluated	6,642	6,172
Allowance for loan losses	7,889	7,336	$ 8,663	$ 6,857
Residential Portfolio Segment [Member]
Residential mortgage:
Loans receivable: individually evaluated	958	1,682
Loans receivable: collectively evaluated	385,132	364,734
Loans receivable	386,090	366,416
Allowance for loan losses: individually evaluated	1	358
Allowance for loan losses: collectively evaluated	3,417	3,295
Allowance for loan losses	3,418	3,653	3,705	3,217
Residential Portfolio Segment [Member] | Home Equity Loan [Member]
Residential mortgage:
Loans receivable: individually evaluated	0	0
Loans receivable: collectively evaluated	39,040	36,629
Loans receivable	39,040	36,629
Allowance for loan losses: individually evaluated	0	0
Allowance for loan losses: collectively evaluated	347	322
Allowance for loan losses	347	322	269	255
Residential Portfolio Segment [Member] | Construction Loans [Member]
Residential mortgage:
Loans receivable: individually evaluated	0	0
Loans receivable: collectively evaluated	21,121	16,739
Loans receivable	21,121	16,739
Allowance for loan losses: individually evaluated	0	0
Allowance for loan losses: collectively evaluated	207	214
Allowance for loan losses	207	214
Residential Portfolio Segment [Member] | Senior Lien [Member] | Real Estate Loan [Member]
Residential mortgage:
Loans receivable: individually evaluated	884	1,665
Loans receivable: collectively evaluated	303,899	290,217
Loans receivable	304,783	291,882
Allowance for loan losses: individually evaluated	1	358
Allowance for loan losses: collectively evaluated	2,644	2,583
Allowance for loan losses	2,645	2,941	2,974	2,619
Residential Portfolio Segment [Member] | Junior Lien [Member] | Real Estate Loan [Member]
Residential mortgage:
Loans receivable: individually evaluated	74	17
Loans receivable: collectively evaluated	21,072	21,149
Loans receivable	21,146	21,166
Allowance for loan losses: individually evaluated	0	0
Allowance for loan losses: collectively evaluated	219	176
Allowance for loan losses	219	176	294	247
Commercial Portfolio Segment [Member]
Residential mortgage:
Loans receivable: individually evaluated	9,016	10,634
Loans receivable: collectively evaluated	299,118	243,261
Loans receivable	308,134	253,895
Allowance for loan losses: individually evaluated	819	411
Allowance for loan losses: collectively evaluated	3,103	2,732
Allowance for loan losses	3,922	3,143	4,367	2,971
Commercial Portfolio Segment [Member] | Real Estate Loan [Member]
Residential mortgage:
Loans receivable: individually evaluated	6,262	6,537
Loans receivable: collectively evaluated	148,517	139,341
Loans receivable	154,779	145,878
Allowance for loan losses: individually evaluated	97	16
Allowance for loan losses: collectively evaluated	1,842	1,742
Allowance for loan losses	1,939	1,758	3,123	1,930
Commercial Portfolio Segment [Member] | Construction Loans [Member]
Residential mortgage:
Loans receivable: individually evaluated	0	1,939
Loans receivable: collectively evaluated	5,122	4,999
Loans receivable	5,122	6,938
Allowance for loan losses: individually evaluated	0	211
Allowance for loan losses: collectively evaluated	58	72
Allowance for loan losses	58	283
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Residential mortgage:
Loans receivable: individually evaluated	324	663
Loans receivable: collectively evaluated	74,872	49,494
Loans receivable	75,196	50,157
Allowance for loan losses: individually evaluated	75	82
Allowance for loan losses: collectively evaluated	906	606
Allowance for loan losses	981	688	591	581
Commercial Portfolio Segment [Member] | Political Subdivisions [Member]
Residential mortgage:
Loans receivable: individually evaluated	0	0
Loans receivable: collectively evaluated	40,007	17,534
Loans receivable	40,007	17,534
Allowance for loan losses: individually evaluated	0	0
Allowance for loan losses: collectively evaluated	0	0
Allowance for loan losses	0	0	0	0
Commercial Portfolio Segment [Member] | Loans Secured by Farmland [Member]
Residential mortgage:
Loans receivable: individually evaluated	1,427	1,470
Loans receivable: collectively evaluated	5,592	6,446
Loans receivable	7,019	7,916
Allowance for loan losses: individually evaluated	52	102
Allowance for loan losses: collectively evaluated	54	63
Allowance for loan losses	106	165	115	129
Commercial Portfolio Segment [Member] | Multi-family (5 or more) Residential [Member]
Residential mortgage:
Loans receivable: individually evaluated	987	0
Loans receivable: collectively evaluated	8,201	8,917
Loans receivable	9,188	8,917
Allowance for loan losses: individually evaluated	595	0
Allowance for loan losses: collectively evaluated	80	87
Allowance for loan losses	675	87	103	67
Commercial Portfolio Segment [Member] | Agricultural Loans [Member]
Residential mortgage:
Loans receivable: individually evaluated	16	25
Loans receivable: collectively evaluated	4,655	3,196
Loans receivable	4,671	3,221
Allowance for loan losses: individually evaluated	0	0
Allowance for loan losses: collectively evaluated	45	31
Allowance for loan losses	45	31	30	27
Commercial Portfolio Segment [Member] | Other Commercial Loans [Member]
Residential mortgage:
Loans receivable: individually evaluated	0	0
Loans receivable: collectively evaluated	12,152	13,334
Loans receivable	12,152	13,334
Allowance for loan losses: individually evaluated	0	0
Allowance for loan losses: collectively evaluated	118	131
Allowance for loan losses	118	131	138	3
Consumer Portfolio Segment [Member]
Residential mortgage:
Loans receivable: individually evaluated	0	0
Loans receivable: collectively evaluated	10,656	10,234
Loans receivable	10,656	10,234
Allowance for loan losses: individually evaluated	0	0
Allowance for loan losses: collectively evaluated	122	145
Allowance for loan losses	122	145	193	228
Unallocated Financing Receivables [Member]
Residential mortgage:
Allowance for loan losses	$ 427	$ 395	$ 398	$ 441

XML

Note 8 - Loans (Details) - Impaired Loans - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
With no related allowance recorded:
Unpaid principal balance with no allowance	$ 9,676	$ 10,616
Recorded investment with no allowance	8,041	9,075
With a related allowance recorded:
Unpaid principal balance with an allowance	1,933	3,241
Recorded investment with an allowance	1,933	3,241
Related allowance	820	769
Total	11,609	13,857
Total	9,974	12,316
Total	820	769
Residential Portfolio Segment [Member] | Senior Lien [Member] | Real Estate Loan [Member]
With no related allowance recorded:
Unpaid principal balance with no allowance	842	950
Recorded investment with no allowance	842	950
With a related allowance recorded:
Unpaid principal balance with an allowance	42	715
Recorded investment with an allowance	42	715
Related allowance	1	358
Total	1	358
Residential Portfolio Segment [Member] | Junior Lien [Member] | Real Estate Loan [Member]
With no related allowance recorded:
Unpaid principal balance with no allowance	74	17
Recorded investment with no allowance	74	17
With a related allowance recorded:
Unpaid principal balance with an allowance	317	16
Recorded investment with an allowance	317	16
Related allowance	97	16
Total	97	16
Commercial Portfolio Segment [Member] | Real Estate Loan [Member]
With no related allowance recorded:
Unpaid principal balance with no allowance	7,580	8,062
Recorded investment with no allowance	5,945	6,521
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
With no related allowance recorded:
Unpaid principal balance with no allowance	249	513
Recorded investment with no allowance	249	513
With a related allowance recorded:
Unpaid principal balance with an allowance	75	150
Recorded investment with an allowance	75	150
Related allowance	75	82
Total	75	82
Commercial Portfolio Segment [Member] | Commercial Construction and Land [Member]
With no related allowance recorded:
Unpaid principal balance with no allowance	0	124
Recorded investment with no allowance	0	124
With a related allowance recorded:
Unpaid principal balance with an allowance	0	1,815
Recorded investment with an allowance	0	1,815
Related allowance	0	211
Total	0	211
Commercial Portfolio Segment [Member] | Loans Secured by Farmland [Member]
With no related allowance recorded:
Unpaid principal balance with no allowance	915	925
Recorded investment with no allowance	915	925
With a related allowance recorded:
Unpaid principal balance with an allowance	512	545
Recorded investment with an allowance	512	545
Related allowance	52	102
Total	52	102
Commercial Portfolio Segment [Member] | Agricultural Loans [Member]
With no related allowance recorded:
Unpaid principal balance with no allowance	16	25
Recorded investment with no allowance	16	25
Commercial Portfolio Segment [Member] | Multi-family (5 or more) Residential [Member]
With a related allowance recorded:
Unpaid principal balance with an allowance	987	0
Recorded investment with an allowance	987	0
Related allowance	595	0
Total	$ 595	$ 0

XML

Note 8 - Loans (Details) - Average Balance of Impaired Loans and Income Recognized on Impaired Loans - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Residential mortgage:
Average investment in impaired loans	$ 11,375	$ 14,359	$ 9,690
Interest income recognized on impaired loans	596	703	426
Residential Portfolio Segment [Member]
Residential mortgage:
Average investment in impaired loans	2,270	4,440	3,579
Interest income recognized on impaired loans	90	84	216
Residential Portfolio Segment [Member] | Senior Lien [Member] | Real Estate Loan [Member]
Residential mortgage:
Average investment in impaired loans	2,206	4,272	3,334
Interest income recognized on impaired loans	86	81	199
Residential Portfolio Segment [Member] | Junior Lien [Member] | Real Estate Loan [Member]
Residential mortgage:
Average investment in impaired loans	64	168	245
Interest income recognized on impaired loans	4	3	17
Commercial Portfolio Segment [Member]
Residential mortgage:
Average investment in impaired loans	9,105	9,918	6,107
Interest income recognized on impaired loans	506	619	210
Commercial Portfolio Segment [Member] | Real Estate Loan [Member]
Residential mortgage:
Average investment in impaired loans	6,357	7,192	2,931
Interest income recognized on impaired loans	380	469	90
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Residential mortgage:
Average investment in impaired loans	438	877	941
Interest income recognized on impaired loans	20	37	35
Commercial Portfolio Segment [Member] | Commercial Construction and Land [Member]
Residential mortgage:
Average investment in impaired loans	40	395	999
Interest income recognized on impaired loans	0	9	14
Commercial Portfolio Segment [Member] | Loans Secured by Farmland [Member]
Residential mortgage:
Average investment in impaired loans	1,459	1,413	1,171
Interest income recognized on impaired loans	103	101	66
Commercial Portfolio Segment [Member] | Multi-family (5 or more) Residential [Member]
Residential mortgage:
Average investment in impaired loans	790	0	22
Interest income recognized on impaired loans	0	0	2
Commercial Portfolio Segment [Member] | Agricultural Loans [Member]
Residential mortgage:
Average investment in impaired loans	21	41	43
Interest income recognized on impaired loans	3	3	3
Consumer Portfolio Segment [Member]
Residential mortgage:
Average investment in impaired loans	0	1	4
Interest income recognized on impaired loans	$ 0	$ 0	$ 0

XML

Note 8 - Loans (Details) - Nonaccrual Loans and Loans Past Due Ninety Days or More and Still Accruing - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Note 8 - Loans (Details) - Nonaccrual Loans and Loans Past Due Ninety Days or More and Still Accruing [Line Items]
Loans past due 90+ days and accruing	$ 3,229	$ 2,843
Nonaccrual loans	11,517	12,610
Real Estate Loan [Member]
Note 8 - Loans (Details) - Nonaccrual Loans and Loans Past Due Ninety Days or More and Still Accruing [Line Items]
Loans past due 90+ days and accruing	503	653
Nonaccrual loans	5,730	5,804
Commercial and Industrial [Member]
Note 8 - Loans (Details) - Nonaccrual Loans and Loans Past Due Ninety Days or More and Still Accruing [Line Items]
Loans past due 90+ days and accruing	65	5
Nonaccrual loans	313	379
Construction Loans [Member]
Note 8 - Loans (Details) - Nonaccrual Loans and Loans Past Due Ninety Days or More and Still Accruing [Line Items]
Loans past due 90+ days and accruing	0	35
Nonaccrual loans	0	1,915
Loans Secured by Farmland [Member]
Note 8 - Loans (Details) - Nonaccrual Loans and Loans Past Due Ninety Days or More and Still Accruing [Line Items]
Loans past due 90+ days and accruing	0	0
Nonaccrual loans	1,427	951
Multi-family (5 or more) Residential [Member]
Note 8 - Loans (Details) - Nonaccrual Loans and Loans Past Due Ninety Days or More and Still Accruing [Line Items]
Loans past due 90+ days and accruing	0	0
Nonaccrual loans	987	0
Agricultural Loans [Member]
Note 8 - Loans (Details) - Nonaccrual Loans and Loans Past Due Ninety Days or More and Still Accruing [Line Items]
Loans past due 90+ days and accruing	0	0
Nonaccrual loans	16	25
Residential Portfolio Segment [Member]
Note 8 - Loans (Details) - Nonaccrual Loans and Loans Past Due Ninety Days or More and Still Accruing [Line Items]
Loans past due 90+ days and accruing	2,590	2,120
Nonaccrual loans	3,044	3,512
Residential Portfolio Segment [Member] | Home Equity Line of Credit1 [Member]
Note 8 - Loans (Details) - Nonaccrual Loans and Loans Past Due Ninety Days or More and Still Accruing [Line Items]
Loans past due 90+ days and accruing	130	49
Nonaccrual loans	0	22
Residential Portfolio Segment [Member] | Senior Lien [Member] | Real Estate Loan [Member]
Note 8 - Loans (Details) - Nonaccrual Loans and Loans Past Due Ninety Days or More and Still Accruing [Line Items]
Loans past due 90+ days and accruing	2,381	1,989
Nonaccrual loans	3,044	3,440
Residential Portfolio Segment [Member] | Junior Lien [Member] | Real Estate Loan [Member]
Note 8 - Loans (Details) - Nonaccrual Loans and Loans Past Due Ninety Days or More and Still Accruing [Line Items]
Loans past due 90+ days and accruing	79	82
Nonaccrual loans	0	50
Commercial Portfolio Segment [Member]
Note 8 - Loans (Details) - Nonaccrual Loans and Loans Past Due Ninety Days or More and Still Accruing [Line Items]
Loans past due 90+ days and accruing	568	693
Nonaccrual loans	8,473	9,074
Consumer Portfolio Segment [Member]
Note 8 - Loans (Details) - Nonaccrual Loans and Loans Past Due Ninety Days or More and Still Accruing [Line Items]
Loans past due 90+ days and accruing	71	30
Nonaccrual loans	$ 0	$ 24

XML

Note 8 - Loans (Details) - Contractual Aging of Loans - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	$ 704,880	$ 630,545
Financing Receivables, 1 to 29 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	690,177	614,930
Financing Receivables, 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	7,350	7,490
Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	7,353	8,125
Residential Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	386,090	366,416
Residential Portfolio Segment [Member] | Financing Receivables, 1 to 29 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	375,221	356,658
Residential Portfolio Segment [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	6,736	5,891
Residential Portfolio Segment [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	4,133	3,867
Residential Portfolio Segment [Member] | Home Equity Line of Credit1 [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	39,040	36,629
Residential Portfolio Segment [Member] | Home Equity Line of Credit1 [Member] | Financing Receivables, 1 to 29 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	38,581	36,300
Residential Portfolio Segment [Member] | Home Equity Line of Credit1 [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	329	258
Residential Portfolio Segment [Member] | Home Equity Line of Credit1 [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	130	71
Residential Portfolio Segment [Member] | Construction Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	21,121	16,739
Residential Portfolio Segment [Member] | Construction Loans [Member] | Financing Receivables, 1 to 29 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	21,121	16,739
Residential Portfolio Segment [Member] | Construction Loans [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	0	0
Residential Portfolio Segment [Member] | Construction Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	0	0
Residential Portfolio Segment [Member] | Senior Lien [Member] | Real Estate Loan [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	304,783	291,882
Residential Portfolio Segment [Member] | Senior Lien [Member] | Real Estate Loan [Member] | Financing Receivables, 1 to 29 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	294,703	282,766
Residential Portfolio Segment [Member] | Senior Lien [Member] | Real Estate Loan [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	6,156	5,443
Residential Portfolio Segment [Member] | Senior Lien [Member] | Real Estate Loan [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	3,924	3,673
Residential Portfolio Segment [Member] | Junior Lien [Member] | Real Estate Loan [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	21,146	21,166
Residential Portfolio Segment [Member] | Junior Lien [Member] | Real Estate Loan [Member] | Financing Receivables, 1 to 29 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	20,816	20,853
Residential Portfolio Segment [Member] | Junior Lien [Member] | Real Estate Loan [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	251	190
Residential Portfolio Segment [Member] | Junior Lien [Member] | Real Estate Loan [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	79	123
Commercial Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	308,134	253,895
Commercial Portfolio Segment [Member] | Financing Receivables, 1 to 29 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	304,419	248,108
Commercial Portfolio Segment [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	566	1,559
Commercial Portfolio Segment [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	3,149	4,228
Commercial Portfolio Segment [Member] | Real Estate Loan [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	154,779	145,878
Commercial Portfolio Segment [Member] | Real Estate Loan [Member] | Financing Receivables, 1 to 29 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	153,427	143,713
Commercial Portfolio Segment [Member] | Real Estate Loan [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	108	883
Commercial Portfolio Segment [Member] | Real Estate Loan [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	1,244	1,282
Commercial Portfolio Segment [Member] | Construction Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	5,122	6,938
Commercial Portfolio Segment [Member] | Construction Loans [Member] | Financing Receivables, 1 to 29 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	5,018	4,897
Commercial Portfolio Segment [Member] | Construction Loans [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	104	91
Commercial Portfolio Segment [Member] | Construction Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	0	1,950
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	75,196	50,157
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member] | Financing Receivables, 1 to 29 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	75,002	49,994
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	118	43
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	76	120
Commercial Portfolio Segment [Member] | Political Subdivisions [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	40,007	17,534
Commercial Portfolio Segment [Member] | Political Subdivisions [Member] | Financing Receivables, 1 to 29 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	40,007	17,534
Commercial Portfolio Segment [Member] | Political Subdivisions [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	0	0
Commercial Portfolio Segment [Member] | Political Subdivisions [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	0	0
Commercial Portfolio Segment [Member] | Loans Secured by Farmland [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	7,019	7,916
Commercial Portfolio Segment [Member] | Loans Secured by Farmland [Member] | Financing Receivables, 1 to 29 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	5,970	6,811
Commercial Portfolio Segment [Member] | Loans Secured by Farmland [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	223	254
Commercial Portfolio Segment [Member] | Loans Secured by Farmland [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	826	851
Commercial Portfolio Segment [Member] | Multi-family (5 or more) Residential [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	9,188	8,917
Commercial Portfolio Segment [Member] | Multi-family (5 or more) Residential [Member] | Financing Receivables, 1 to 29 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	8,201	8,720
Commercial Portfolio Segment [Member] | Multi-family (5 or more) Residential [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	0	197
Commercial Portfolio Segment [Member] | Multi-family (5 or more) Residential [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	987	0
Commercial Portfolio Segment [Member] | Agricultural Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	4,671	3,221
Commercial Portfolio Segment [Member] | Agricultural Loans [Member] | Financing Receivables, 1 to 29 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	4,642	3,105
Commercial Portfolio Segment [Member] | Agricultural Loans [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	13	91
Commercial Portfolio Segment [Member] | Agricultural Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	16	25
Commercial Portfolio Segment [Member] | Other Commercial Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	12,152	13,334
Commercial Portfolio Segment [Member] | Other Commercial Loans [Member] | Financing Receivables, 1 to 29 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	12,152	13,334
Commercial Portfolio Segment [Member] | Other Commercial Loans [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	0	0
Commercial Portfolio Segment [Member] | Other Commercial Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	0	0
Consumer Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	10,656	10,234
Consumer Portfolio Segment [Member] | Financing Receivables, 1 to 29 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	10,537	10,164
Consumer Portfolio Segment [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	48	40
Consumer Portfolio Segment [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans past due	$ 71	$ 30

XML

Note 8 - Loans (Details) - Contractual Aging of Nonaccrual Loans - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Note 8 - Loans (Details) - Contractual Aging of Nonaccrual Loans [Line Items]
Loans current and past due	$ 11,517	$ 12,610
Nonaccrual Loans [Member]
Note 8 - Loans (Details) - Contractual Aging of Nonaccrual Loans [Line Items]
Loans current and past due	11,517	12,610
Nonaccrual Loans [Member] | Financing Receivables, 1 to 29 Days Past Due [Member]
Note 8 - Loans (Details) - Contractual Aging of Nonaccrual Loans [Line Items]
Loans current and past due	7,100	6,959
Nonaccrual Loans [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Note 8 - Loans (Details) - Contractual Aging of Nonaccrual Loans [Line Items]
Loans current and past due	293	369
Nonaccrual Loans [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Note 8 - Loans (Details) - Contractual Aging of Nonaccrual Loans [Line Items]
Loans current and past due	$ 4,124	$ 5,282

XML

Note 8 - Loans (Details) - Aging of Troubled Debt Restructings - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Financing Receivable, Modifications [Line Items]
Troubled debt restructurings, current & past due	$ 704,880	$ 630,545
Troubled debt restructurings, nonaccrual	11,517	12,610
Financing Receivables, 1 to 29 Days Past Due [Member]
Financing Receivable, Modifications [Line Items]
Troubled debt restructurings, current & past due	690,177	614,930
Financing Receivables, 30 to 89 Days Past Due [Member]
Financing Receivable, Modifications [Line Items]
Troubled debt restructurings, current & past due	7,350	7,490
Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Modifications [Line Items]
Troubled debt restructurings, current & past due	7,353	8,125
Troubled Debt Restructuring [Member]
Financing Receivable, Modifications [Line Items]
Troubled debt restructurings, current & past due	6,364	7,195
Troubled debt restructurings, nonaccrual	5,097	5,388
Troubled Debt Restructuring [Member] | Financing Receivables, 1 to 29 Days Past Due [Member]
Financing Receivable, Modifications [Line Items]
Troubled debt restructurings, current & past due	1,186	1,725
Troubled Debt Restructuring [Member] | Financing Receivables, 30 to 89 Days Past Due [Member]
Financing Receivable, Modifications [Line Items]
Troubled debt restructurings, current & past due	0	82
Troubled Debt Restructuring [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Modifications [Line Items]
Troubled debt restructurings, current & past due	$ 81	$ 0

XML

Note 8 - Loans (Details) - Troubled Debt Restructurings $ in Thousands	12 Months Ended
	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)
Financing Receivable, Modifications [Line Items]
Troubled debt restructurings, number of contracts	1
Troubled debt restructurings, pre-modification outstanding recorded investment	$ 30
Troubled debt restructurings, post-modification outstanding recorded investment	$ 30
Residential Portfolio Segment [Member] | Senior Lien [Member] | Real Estate Loan [Member]
Financing Receivable, Modifications [Line Items]
Troubled debt restructurings, number of contracts	2	3	6
Troubled debt restructurings, pre-modification outstanding recorded investment	$ 298	$ 150	$ 677
Troubled debt restructurings, post-modification outstanding recorded investment	$ 298	$ 150	$ 677
Residential Portfolio Segment [Member] | Junior Lien [Member] | Real Estate Loan [Member]
Financing Receivable, Modifications [Line Items]
Troubled debt restructurings, number of contracts	1		3
Troubled debt restructurings, pre-modification outstanding recorded investment	$ 32		$ 102
Troubled debt restructurings, post-modification outstanding recorded investment	$ 32		$ 102
Commercial Portfolio Segment [Member] | Real Estate Loan [Member]
Financing Receivable, Modifications [Line Items]
Troubled debt restructurings, number of contracts		5	2
Troubled debt restructurings, pre-modification outstanding recorded investment		$ 6,679	$ 866
Troubled debt restructurings, post-modification outstanding recorded investment		$ 5,193	$ 866
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Financing Receivable, Modifications [Line Items]
Troubled debt restructurings, number of contracts		1	3
Troubled debt restructurings, pre-modification outstanding recorded investment		$ 80	$ 701
Troubled debt restructurings, post-modification outstanding recorded investment		$ 80	$ 701
Commercial Portfolio Segment [Member] | Loans Secured by Farmland [Member]
Financing Receivable, Modifications [Line Items]
Troubled debt restructurings, number of contracts			4
Troubled debt restructurings, pre-modification outstanding recorded investment			$ 512
Troubled debt restructurings, post-modification outstanding recorded investment			$ 512
Commercial Portfolio Segment [Member] | Agricultural Loans [Member]
Financing Receivable, Modifications [Line Items]
Troubled debt restructurings, number of contracts			1
Troubled debt restructurings, pre-modification outstanding recorded investment			$ 13
Troubled debt restructurings, post-modification outstanding recorded investment			$ 13
Consumer Portfolio Segment [Member]
Financing Receivable, Modifications [Line Items]
Troubled debt restructurings, number of contracts			1
Troubled debt restructurings, pre-modification outstanding recorded investment			$ 6
Troubled debt restructurings, post-modification outstanding recorded investment			$ 6

XML

Note 8 - Loans (Details) - Defaults on Loans with Previous Modifications $ in Thousands	12 Months Ended
	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)
Residential Portfolio Segment [Member] | Senior Lien [Member] | Real Estate Loan [Member]
Note 8 - Loans (Details) - Defaults on Loans with Previous Modifications [Line Items]
Troubled debt restructuring defaults, number of contracts	1	3	1
Troubled debt restructuring defaults, recorded investment	$ 32	$ 257	$ 85
Residential Portfolio Segment [Member] | Junior Lien [Member] | Real Estate Loan [Member]
Note 8 - Loans (Details) - Defaults on Loans with Previous Modifications [Line Items]
Troubled debt restructuring defaults, number of contracts		1
Troubled debt restructuring defaults, recorded investment		$ 62
Commercial Portfolio Segment [Member] | Real Estate Loan [Member]
Note 8 - Loans (Details) - Defaults on Loans with Previous Modifications [Line Items]
Troubled debt restructuring defaults, number of contracts		1	2
Troubled debt restructuring defaults, recorded investment		$ 429	$ 588
Commercial Portfolio Segment [Member] | Construction Loans [Member]
Note 8 - Loans (Details) - Defaults on Loans with Previous Modifications [Line Items]
Troubled debt restructuring defaults, number of contracts		1	1
Troubled debt restructuring defaults, recorded investment		$ 25	$ 110
Commercial Portfolio Segment [Member] | Loans Secured by Farmland [Member]
Note 8 - Loans (Details) - Defaults on Loans with Previous Modifications [Line Items]
Troubled debt restructuring defaults, number of contracts		4
Troubled debt restructuring defaults, recorded investment		$ 490
Commercial Portfolio Segment [Member] | Agricultural Loans [Member]
Note 8 - Loans (Details) - Defaults on Loans with Previous Modifications [Line Items]
Troubled debt restructuring defaults, number of contracts		1	1
Troubled debt restructuring defaults, recorded investment		$ 13	$ 13

XML

Note 9 - Bank Premises and Equipment (Details) - Bank Premises and Equipment - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Property, Plant and Equipment [Line Items]
Property, plant, and equipment	$ 48,075	$ 47,301
Less: accumulated depreciation	(32,669)	(31,045)
Net	15,406	16,256
Land [Member]
Property, Plant and Equipment [Line Items]
Property, plant, and equipment	2,818	2,818
Building and Building Improvements [Member]
Property, Plant and Equipment [Line Items]
Property, plant, and equipment	27,092	26,973
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property, plant, and equipment	17,922	17,412
Construction in Progress [Member]
Property, Plant and Equipment [Line Items]
Property, plant, and equipment	$ 243	$ 98

XML

Note 9 - Bank Premises and Equipment (Details) - Depreciation Expense - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Note 9 - Bank Premises and Equipment (Details) - Depreciation Expense [Line Items]
Depreciation expense	$ 1,888	$ 1,940	$ 2,020
Occupancy Expense [Member]
Note 9 - Bank Premises and Equipment (Details) - Depreciation Expense [Line Items]
Depreciation expense	954	998	1,022
Furniture and Fixtures Expense [Member]
Note 9 - Bank Premises and Equipment (Details) - Depreciation Expense [Line Items]
Depreciation expense	$ 934	$ 942	$ 998

XML

Note 10 - Intangible Assets (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Disclosure Text Block [Abstract]
Goodwill, Period Increase (Decrease)	$ 0	$ 0
Goodwill	11,942,000	11,942,000
Goodwill, Acquired During Period	0	0
Amortization of Intangible Assets	$ 22,000	$ 35,000	$ 51,000

XML

Note 10 - Intangible Assets (Details) - Core Deposit Intangibles - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Core Deposit Intangibles [Abstract]
Gross amount	$ 2,034	$ 2,034
Less: accumulated amortization	(2,004)	(1,982)
Net	$ 30	$ 52

XML

Note 11 - Deposits (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Disclosure Text Block [Abstract]
Interest Expense, Time Deposits, $100,000 or More	$ 482,000	$ 563,000	$ 721,000

XML

Note 11 - Deposits (Details) - Scheduled Maturities of Time Deposits $ in Thousands	Dec. 31, 2015 USD ($)
Scheduled Maturities of Time Deposits [Abstract]
2016	$ 124,562
2017	53,985
2018	19,611
2019	10,091
2020	13,424
Thereafter	11
	$ 221,684

XML

Note 11 - Deposits (Details) - Remaining Maturities of Time Deposits In Excess of $100,000 $ in Thousands	Dec. 31, 2015 USD ($)
Remaining Maturities of Time Deposits In Excess of $100,000 [Abstract]
Three months or less	$ 35,167
Over 3 months through 12 months	9,330
Over 1 year through 3 years	12,358
Over 3 years	8,248
Total	$ 65,103

XML

Note 12 - Borrowed Funds (Details) - USD ($)	3 Months Ended				12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Note 12 - Borrowed Funds (Details) [Line Items]
Short-term Debt, Weighted Average Interest Rate	0.60%				0.60%	0.10%
Line of Credit Facility, Maximum Month-end Outstanding Amount					$ 53,496,000	$ 7,919,000	$ 23,385,000
Available-for-sale Securities Pledged as Collateral	$ 228,616,000				228,616,000	369,945,000
Short-term Debt	53,496,000				53,496,000	5,537,000
Carrying Value of Securities Sold under Repurchase Agreements and Deposits Received for Securities Loaned	12,613,000				12,613,000	15,229,000
Gains (Losses) on Extinguishment of Debt	(1,663,000)	$ 0	$ (910,000)	$ 0	(2,573,000)	0	(1,023,000)
Repayments of Long-term Debt					36,866,000	278,000	$ 11,497,000
Securities Sold under Agreements to Repurchase, Asset	$ 33,780,000				$ 33,780,000	$ 70,982,000
Repurchase Agreements [Member]
Note 12 - Borrowed Funds (Details) [Line Items]
Debt, Weighted Average Interest Rate	3.99%				3.99%	4.02%	4.01%
Short-term Debt, Average Outstanding Amount					$ 54,304,000	$ 61,000,000	$ 62,630,000
Other Short-term Debt [Member]
Note 12 - Borrowed Funds (Details) [Line Items]
Short-term Debt, Weighted Average Interest Rate	0.86%				0.86%
Short-term Debt	$ 2,090,000				$ 2,090,000
Number of Short-term Advances	12				12
Securities Sold under Agreements to Repurchase [Member]
Note 12 - Borrowed Funds (Details) [Line Items]
Short-term Debt	$ 4,915,000				$ 4,915,000	$ 5,537,000
Debt, Weighted Average Interest Rate	0.10%				0.10%	0.10%
Repurchase Agreement Maturing in 2017 with a Rate of 4.265% [Member]
Note 12 - Borrowed Funds (Details) [Line Items]
Debt Instrument, Interest Rate, Stated Percentage	4.265%				4.265%	4.265%
Gains (Losses) on Extinguishment of Debt					$ (2,573,000)
Repayments of Long-term Debt					$ 34,000,000
Prepaid Debt, Weighted Average Interest Rate	4.265%				4.265%
Repurchase Agreement Maturing in 2017 with a Rate of 3.595% [Member]
Note 12 - Borrowed Funds (Details) [Line Items]
Debt Instrument, Interest Rate, Stated Percentage	3.595%				3.595%	3.595%
Gain (Loss) on Repurchase of Debt Instrument							$ (1,023,000)
Other Correspondent Banks [Member]
Note 12 - Borrowed Funds (Details) [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	$ 45,000,000				$ 45,000,000	$ 45,000,000
Long-term Line of Credit	0				0	0
Federal Reserve Bank of Philadelphia [Member]
Note 12 - Borrowed Funds (Details) [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	19,606,000				19,606,000	25,367,000
Long-term Line of Credit	0				0	0
Available-for-sale Securities Pledged as Collateral	20,039,000				20,039,000	26,092,000
Federal Home Loan Bank of Pittsburgh [Member]
Note 12 - Borrowed Funds (Details) [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity	322,709,000				322,709,000	323,067,000
Federal Home Loan Bank, Advances, General Debt Obligations, Disclosures, Collateral Pledged	450,883,000				450,883,000	446,780,000
Line of Credit Facility, Remaining Borrowing Capacity	262,361,000				262,361,000	311,007,000
Short-term Debt	48,581,000				48,581,000	0
Federal Home Loan Bank of Pittsburgh [Member] | Overnight Borrowings [Member]
Note 12 - Borrowed Funds (Details) [Line Items]
Short-term Debt	$ 23,500,000				$ 23,500,000	0
Debt Instrument, Interest Rate, Stated Percentage	0.43%				0.43%
Federal Home Loan Bank of Pittsburgh [Member] | Other Short-term Debt [Member]
Note 12 - Borrowed Funds (Details) [Line Items]
Short-term Debt	$ 25,081,000				$ 25,081,000	0
Federal Home Loan Bank of Pittsburgh [Member] | Other Assets [Member]
Note 12 - Borrowed Funds (Details) [Line Items]
Federal Home Loan Bank Stock	$ 4,527,000				$ 4,527,000	1,454,000
Repurchase Agreement Maturing in 2017 with a Rate of 3.595% [Member]
Note 12 - Borrowed Funds (Details) [Line Items]
Prepaid Debt, Weighted Average Interest Rate							3.595%
Minimum [Member] | Other Short-term Debt [Member]
Note 12 - Borrowed Funds (Details) [Line Items]
Debt Instrument, Interest Rate, Stated Percentage	0.54%				0.54%
Maximum [Member]
Note 12 - Borrowed Funds (Details) [Line Items]
Securities Sold under Agreements to Repurchase, Asset	$ 61,000,000				$ 61,000,000	$ 61,000,000	$ 68,000,000
Maximum [Member] | Other Short-term Debt [Member]
Note 12 - Borrowed Funds (Details) [Line Items]
Debt Instrument, Interest Rate, Stated Percentage	1.052%				1.052%

XML

Note 12 - Borrowed Funds (Details) - Short-term Borrowings - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Short-term Debt [Line Items]
Short-term debt	$ 53,496,000	$ 5,537,000
Securities Sold under Agreements to Repurchase [Member]
Short-term Debt [Line Items]
Short-term debt	4,915,000	5,537,000
Other Short-term Debt [Member]
Short-term Debt [Line Items]
Short-term debt	2,090,000
Federal Home Loan Bank of Pittsburgh [Member]
Short-term Debt [Line Items]
Short-term debt	48,581,000	0
Federal Home Loan Bank of Pittsburgh [Member] | Federal Home Loan Bank Advances [Member]
Short-term Debt [Line Items]
Short-term debt	48,581,000	0
Federal Home Loan Bank of Pittsburgh [Member] | Overnight Borrowings [Member]
Short-term Debt [Line Items]
Short-term debt	23,500,000	0
Federal Home Loan Bank of Pittsburgh [Member] | Other Short-term Debt [Member]
Short-term Debt [Line Items]
Short-term debt	$ 25,081,000	$ 0

XML

Note 12 - Borrowed Funds (Details) - Long-term Borrowings - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Debt Instrument [Line Items]
Long-term borrowings	$ 38,767	$ 73,060
Federal Home Loan Bank Advances [Member]
Debt Instrument [Line Items]
Long-term borrowings	11,767	12,060
Repurchase Agreements [Member]
Debt Instrument [Line Items]
Long-term borrowings	$ 27,000	$ 61,000

XML

Note 12 - Borrowed Funds (Details) - Long-term Borrowing Maturities - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Note 12 - Borrowed Funds (Details) - Long-term Borrowing Maturities [Line Items]
Repurchase agreements	$ 38,767	$ 73,060
Repurchase Agreement Maturing in 2017 with a Rate of 3.595% [Member]
Note 12 - Borrowed Funds (Details) - Long-term Borrowing Maturities [Line Items]
Repurchase agreements	27,000	27,000
Repurchase Agreement Maturing in 2017 with a Rate of 4.265% [Member]
Note 12 - Borrowed Funds (Details) - Long-term Borrowing Maturities [Line Items]
Repurchase agreements	0	34,000
Repurchase Agreements [Member]
Note 12 - Borrowed Funds (Details) - Long-term Borrowing Maturities [Line Items]
Repurchase agreements	27,000	61,000
Federal Home Loan Bank of Pittsburgh [Member]
Note 12 - Borrowed Funds (Details) - Long-term Borrowing Maturities [Line Items]
Long-term borrowings from FHLB - Pittsburgh	11,767	12,060
Federal Home Loan Bank of Pittsburgh [Member] | Federal Home Loan Bank Borrowings Loan Maturing in 2016 With Rate of 6.86% [Member]
Note 12 - Borrowed Funds (Details) - Long-term Borrowing Maturities [Line Items]
Long-term borrowings from FHLB - Pittsburgh	57	107
Federal Home Loan Bank of Pittsburgh [Member] | Federal Home Loan Bank Borrowings Loan Maturing in 2017 With Rate of 6.83% [Member]
Note 12 - Borrowed Funds (Details) - Long-term Borrowing Maturities [Line Items]
Long-term borrowings from FHLB - Pittsburgh	10	16
Federal Home Loan Bank of Pittsburgh [Member] | Federal Home Loan Bank Borrowings Loan Maturing in 2017 With Rate of 3.81% [Member]
Note 12 - Borrowed Funds (Details) - Long-term Borrowing Maturities [Line Items]
Long-term borrowings from FHLB - Pittsburgh	10,000	10,000
Federal Home Loan Bank of Pittsburgh [Member] | Federal Home Loan Bank Borrowings Loan Maturing in 2020 With Rate of 4.79% [Member]
Note 12 - Borrowed Funds (Details) - Long-term Borrowing Maturities [Line Items]
Long-term borrowings from FHLB - Pittsburgh	821	987
Federal Home Loan Bank of Pittsburgh [Member] | Federal Home Loan Bank Borrowings Loan Maturing in 2025 With Rate of 4.91% [Member]
Note 12 - Borrowed Funds (Details) - Long-term Borrowing Maturities [Line Items]
Long-term borrowings from FHLB - Pittsburgh	$ 879	$ 950

XML

Note 12 - Borrowed Funds (Details) - Long-term Borrowing Maturities (Parentheticals)	Dec. 31, 2015	Dec. 31, 2014
Repurchase Agreement Maturing in 2017 with a Rate of 3.595% [Member]
Note 12 - Borrowed Funds (Details) - Long-term Borrowing Maturities (Parentheticals) [Line Items]
Rate	3.595%	3.595%
Repurchase Agreement Maturing in 2017 with a Rate of 4.265% [Member]
Note 12 - Borrowed Funds (Details) - Long-term Borrowing Maturities (Parentheticals) [Line Items]
Rate	4.265%	4.265%
Federal Home Loan Bank of Pittsburgh [Member] | Federal Home Loan Bank Borrowings Loan Maturing in 2016 With Rate of 6.86% [Member]
Note 12 - Borrowed Funds (Details) - Long-term Borrowing Maturities (Parentheticals) [Line Items]
Rate	6.86%	6.86%
Federal Home Loan Bank of Pittsburgh [Member] | Federal Home Loan Bank Borrowings Loan Maturing in 2017 With Rate of 6.83% [Member]
Note 12 - Borrowed Funds (Details) - Long-term Borrowing Maturities (Parentheticals) [Line Items]
Rate	6.83%	6.83%
Federal Home Loan Bank of Pittsburgh [Member] | Federal Home Loan Bank Borrowings Loan Maturing in 2017 With Rate of 3.81% [Member]
Note 12 - Borrowed Funds (Details) - Long-term Borrowing Maturities (Parentheticals) [Line Items]
Rate	3.81%	3.81%
Federal Home Loan Bank of Pittsburgh [Member] | Federal Home Loan Bank Borrowings Loan Maturing in 2020 With Rate of 4.79% [Member]
Note 12 - Borrowed Funds (Details) - Long-term Borrowing Maturities (Parentheticals) [Line Items]
Rate	4.79%	4.79%
Federal Home Loan Bank of Pittsburgh [Member] | Federal Home Loan Bank Borrowings Loan Maturing in 2025 With Rate of 4.91% [Member]
Note 12 - Borrowed Funds (Details) - Long-term Borrowing Maturities (Parentheticals) [Line Items]
Rate	4.91%	4.91%

XML

Note 12 - Borrowed Funds (Details) - Underlying Securities - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Assets Sold under Agreements to Repurchase [Line Items]
Underlying securities	$ 33,780,000	$ 70,982,000
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Underlying securities	15,772,000	24,114,000
Collateralized Mortgage Obligations [Member]
Assets Sold under Agreements to Repurchase [Line Items]
Underlying securities	$ 18,008,000	$ 46,868,000

XML

Note 13 - Employee and Postretirement Benefit Plans (Details)	2 Months Ended	12 Months Ended
	Feb. 29, 2016 USD ($) shares	Dec. 31, 2015 USD ($) shares	Dec. 31, 2014 USD ($) shares	Dec. 31, 2013 USD ($) shares
Note 13 - Employee and Postretirement Benefit Plans (Details) [Line Items]
Defined Benefit Plan, Settlements, Benefit Obligation		$ 337,000
Defined Benefit Plan Benefits Paid Percentage of Benefit Obligation		32.00%
Defined Benefit Plan, Recognized Net Gain (Loss) Due to Settlements		$ (87,000)
Pension and Other Postretirement Benefit Contributions		$ 609,000	$ 595,000	$ 557,000
Employee Stock Ownership Plan (ESOP), Diversification Feature, Age Requirement		55
Deferred Compensation Arrangement with Individual, Requisite Service Period		10 years
Employee Stock Ownership Plan ESOP Diversification Feature Percentage		50.00%
Employee Stock Ownership Plan ESOP Policy Diversification Feature Term		6 years
EmployeeStockOwnershipPlanESOPSharesRepurchased (in Shares) | shares		0	0
Employee Stock Ownership Plan (ESOP), Shares in ESOP (in Shares) | shares		410,004	409,197
Employee Stock Ownership Plan (ESOP), Cash Contributions to ESOP		$ 522,000	$ 512,000	509,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term		4 years 219 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value		$ 629,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Intrinsic Value		77,000	90,000	29,000
Allocated Share-based Compensation Expense		606,000	565,000	696,000
Pension Plan [Member]
Note 13 - Employee and Postretirement Benefit Plans (Details) [Line Items]
Defined Benefit Plan, Settlements, Benefit Obligation		337,000	$ 781,000
Defined Benefit Plan Benefits Paid Percentage of Benefit Obligation			42.00%
Defined Benefit Plan, Recognized Net Gain (Loss) Due to Settlements		(87,000)	$ (196,000)	0
Defined Benefit Plan, Future Amortization of Gain (Loss)		(10,000)
Defined Benefit Plan, Accumulated Benefit Obligation		722,000	1,085,000
Other Postretirement Benefit Plan [Member]
Note 13 - Employee and Postretirement Benefit Plans (Details) [Line Items]
Defined Benefit Plan, Settlements, Benefit Obligation		0	0
Defined Benefit Plan, Recognized Net Gain (Loss) Due to Settlements		0	0	0
Defined Benefit Plan, Future Amortization of Gain (Loss)		0
Defined Benefit Plan, Future Amortization of Prior Service Cost (Credit)		31,000
Supplemental Employee Retirement Plan [Member]
Note 13 - Employee and Postretirement Benefit Plans (Details) [Line Items]
Officers' Compensation		$ 167,000	$ 138,000	186,000
Scenario, Forecast [Member]
Note 13 - Employee and Postretirement Benefit Plans (Details) [Line Items]
Allocated Share-based Compensation Expense	$ 651,000
Equity Securities [Member]
Note 13 - Employee and Postretirement Benefit Plans (Details) [Line Items]
Defined Benefit Plan, Target Plan Asset Allocations		46.00%	26.00%
Debt Securities [Member]
Note 13 - Employee and Postretirement Benefit Plans (Details) [Line Items]
Defined Benefit Plan, Target Plan Asset Allocations		38.00%	61.00%
Alternative Funds [Member]
Note 13 - Employee and Postretirement Benefit Plans (Details) [Line Items]
Defined Benefit Plan, Target Plan Asset Allocations		14.00%	11.00%
Cash and Cash Equivalents [Member]
Note 13 - Employee and Postretirement Benefit Plans (Details) [Line Items]
Defined Benefit Plan, Target Plan Asset Allocations		2.00%	2.00%
Employee Stock Option [Member]
Note 13 - Employee and Postretirement Benefit Plans (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in Shares) | shares		34,800
Allocated Share-based Compensation Expense		$ 0	$ 153,000	242,000
Restricted Stock [Member]
Note 13 - Employee and Postretirement Benefit Plans (Details) [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized		$ 645,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition		1 year 255 days
Allocated Share-based Compensation Expense		$ 606,000	$ 412,000	$ 454,000
Stock Incentive Plan [Member]
Note 13 - Employee and Postretirement Benefit Plans (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in Shares) | shares		850,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in Shares) | shares		294,275
Stock Incentive Plan [Member] | Employee Stock Option [Member]
Note 13 - Employee and Postretirement Benefit Plans (Details) [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, Expiration Period		10 years
Stock Incentive Plan [Member] | Restricted Stock [Member]
Note 13 - Employee and Postretirement Benefit Plans (Details) [Line Items]
Share Based Compensation Arrangement by Share Based Payment Award Contingent Vesting Shares (in Shares) | shares		20,298
Stock Incentive Plan [Member] | Restricted Stock [Member] | Subsequent Event [Member]
Note 13 - Employee and Postretirement Benefit Plans (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	3 years
Share Based Compensation Arrangement by Share Based Payment Award Contingent Vesting Shares (in Shares) | shares	8,645
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in Shares) | shares	27,593
Stock Incentive Plan [Member] | Performance Shares [Member]
Note 13 - Employee and Postretirement Benefit Plans (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in Shares) | shares		2,198
Stock Incentive Plan [Member] | Performance Shares [Member] | Chief Executive Officer [Member]
Note 13 - Employee and Postretirement Benefit Plans (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in Shares) | shares		5,174
Independent Directors Stock Incentive Plan [Member]
Note 13 - Employee and Postretirement Benefit Plans (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in Shares) | shares		135,000
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period		10 years
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in Shares) | shares				29,702
Independent Directors Stock Incentive Plan [Member] | Restricted Stock [Member]
Note 13 - Employee and Postretirement Benefit Plans (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period		1 year	3 years	3 years
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in Shares) | shares		7,130
Independent Directors Stock Incentive Plan [Member] | Restricted Stock [Member] | Subsequent Event [Member]
Note 13 - Employee and Postretirement Benefit Plans (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	1 year
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in Shares) | shares	6,606
Minimum [Member] | Stock Incentive Plan [Member] | Restricted Stock [Member]
Note 13 - Employee and Postretirement Benefit Plans (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period		3 years
Maximum [Member] | Stock Incentive Plan [Member] | Restricted Stock [Member]
Note 13 - Employee and Postretirement Benefit Plans (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period		4 years

XML

Note 13 - Employee and Postretirement Benefit Plans (Details) - Funded Status of Defined Benefit Plans - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2015
CHANGE IN BENEFIT OBLIGATION:
Settlement of plan obligation	$ (337,000)
Pension Plan [Member]
CHANGE IN BENEFIT OBLIGATION:
Benefit obligation at beginning of year	1,085,000	$ 1,733,000
Service cost	0	0	$ 0
Interest cost	36,000	73,000	71,000
Plan participants' contributions	0	0
Actuarial (gain) loss	(46,000)	76,000
Benefits paid	(16,000)	(16,000)
Settlement of plan obligation	(337,000)	(781,000)
Benefit obligation at end of year	722,000	1,085,000	1,733,000
CHANGE IN PLAN ASSETS:
Fair value of plan assets at beginning of year	1,208,000	1,968,000
Actual return on plan assets	(16,000)	37,000
Employer contribution	0	0
Plan participants' contributions	0	0
Benefits paid	(16,000)	(16,000)
Settlement of plan obligation	(337,000)	(781,000)
Fair value of plan assets at end of year	1,208,000	1,968,000	1,968,000	$ 839,000
Funded status at end of year	117,000	123,000
Other Postretirement Benefit Plan [Member]
CHANGE IN BENEFIT OBLIGATION:
Benefit obligation at beginning of year	1,378,000	1,391,000
Service cost	38,000	34,000	41,000
Interest cost	57,000	57,000	55,000
Plan participants' contributions	203,000	198,000
Actuarial (gain) loss	120,000	(48,000)
Benefits paid	(257,000)	(254,000)
Settlement of plan obligation	0	0
Benefit obligation at end of year	1,539,000	1,378,000	1,391,000
CHANGE IN PLAN ASSETS:
Fair value of plan assets at beginning of year	0	0
Actual return on plan assets	0	0
Employer contribution	54,000	56,000
Plan participants' contributions	203,000	198,000
Benefits paid	(257,000)	(254,000)
Settlement of plan obligation	0	0
Fair value of plan assets at end of year	0	0	$ 0	$ 0
Funded status at end of year	$ (1,539,000)	$ (1,378,000)

XML

Note 13 - Employee and Postretirement Benefit Plans (Details) - Plan Assets and liabilities - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Pension Plan [Member]
Note 13 - Employee and Postretirement Benefit Plans (Details) - Plan Assets and liabilities [Line Items]
Other assets	$ 117	$ 123
Other Postretirement Benefit Plan [Member]
Note 13 - Employee and Postretirement Benefit Plans (Details) - Plan Assets and liabilities [Line Items]
Accrued interest and other liabilities	$ 1,539	$ 1,378

XML

Note 13 - Employee and Postretirement Benefit Plans (Details) - Items Included in Accumulated Other Comprehensive Income - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Note 13 - Employee and Postretirement Benefit Plans (Details) - Items Included in Accumulated Other Comprehensive Income [Line Items]
Total	$ (35)	$ (79)
Pension Plan [Member]
Note 13 - Employee and Postretirement Benefit Plans (Details) - Items Included in Accumulated Other Comprehensive Income [Line Items]
Prior service cost	0	0
Net actuarial loss	186	269
Total	186	269
Other Postretirement Benefit Plan [Member]
Note 13 - Employee and Postretirement Benefit Plans (Details) - Items Included in Accumulated Other Comprehensive Income [Line Items]
Prior service cost	(371)	(402)
Net actuarial loss	131	11
Total	$ (240)	$ (391)

XML

Note 13 - Employee and Postretirement Benefit Plans (Details) - Net Periodic Benefit Costs - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Defined Benefit Plan Disclosure [Line Items]
Loss on settlement	$ 87,000
Pension Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Service cost	0	$ 0	$ 0
Interest cost	36,000	73,000	71,000
Expected return on plan assets	(45,000)	(88,000)	(90,000)
Amortization of prior service cost	0	0	0
Recognized net actuarial loss	11,000	19,000	32,000
Loss on settlement	87,000	196,000	0
Total net periodic benefit cost	89,000	200,000	13,000
Other Postretirement Benefit Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Service cost	38,000	34,000	41,000
Interest cost	57,000	57,000	55,000
Expected return on plan assets	0	0	0
Amortization of prior service cost	(31,000)	(31,000)	(31,000)
Recognized net actuarial loss	0	0	1,000
Loss on settlement	0	0	0
Total net periodic benefit cost	$ 64,000	$ 60,000	$ 66,000

XML

Note 13 - Employee and Postretirement Benefit Plans (Details) - Assumptions Used to Determine Net Periodic Benefit Cost	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Pension Plan [Member]
Citizens Trust Company Retirement Plan and postretirement plan:
Discount rate	3.75%	4.50%	4.00%
Expected return on plan assets	5.31%	5.31%	5.31%
Rate of compensation increase
Other Postretirement Benefit Plan [Member]
Citizens Trust Company Retirement Plan and postretirement plan:
Discount rate	4.00%	4.00%	4.00%
Expected return on plan assets
Rate of compensation increase

XML

Note 13 - Employee and Postretirement Benefit Plans (Details) - Assumptions Used to Determine Benefit Obligations	Dec. 31, 2015	Dec. 31, 2014
Pension Plan [Member]
Note 13 - Employee and Postretirement Benefit Plans (Details) - Assumptions Used to Determine Benefit Obligations [Line Items]
Discount rate	4.30%	3.75%
Rate of compensation increase
Other Postretirement Benefit Plan [Member]
Note 13 - Employee and Postretirement Benefit Plans (Details) - Assumptions Used to Determine Benefit Obligations [Line Items]
Discount rate	4.25%	4.00%
Rate of compensation increase

XML

Note 13 - Employee and Postretirement Benefit Plans (Details) - Estimated Future Benefit Payments $ in Thousands	Dec. 31, 2015 USD ($)
Pension Plan [Member]
Note 13 - Employee and Postretirement Benefit Plans (Details) - Estimated Future Benefit Payments [Line Items]
2016	$ 250
2017	15
2018	14
2019	39
2020	13
2021-2025	214
Other Postretirement Benefit Plan [Member]
Note 13 - Employee and Postretirement Benefit Plans (Details) - Estimated Future Benefit Payments [Line Items]
2016	92
2017	96
2018	102
2019	105
2020	110
2021-2025	$ 550

XML

Note 13 - Employee and Postretirement Benefit Plans (Details) - The Fair Values of Pension Plan Assets	Dec. 31, 2015	Dec. 31, 2014
Note 13 - Employee and Postretirement Benefit Plans (Details) - The Fair Values of Pension Plan Assets [Line Items]
Weighted average asset allocation	100.00%	100.00%
Cash and Cash Equivalents [Member]
Note 13 - Employee and Postretirement Benefit Plans (Details) - The Fair Values of Pension Plan Assets [Line Items]
Weighted average asset allocation	2.00%	3.00%
Debt Securities [Member]
Note 13 - Employee and Postretirement Benefit Plans (Details) - The Fair Values of Pension Plan Assets [Line Items]
Weighted average asset allocation	38.00%	37.00%
Equity Securities [Member]
Note 13 - Employee and Postretirement Benefit Plans (Details) - The Fair Values of Pension Plan Assets [Line Items]
Weighted average asset allocation	46.00%	47.00%
Alternative Funds [Member]
Note 13 - Employee and Postretirement Benefit Plans (Details) - The Fair Values of Pension Plan Assets [Line Items]
Weighted average asset allocation	14.00%	13.00%

XML

Note 13 - Employee and Postretirement Benefit Plans (Details) - Stock Option Fair Value Assumptions	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Stock Option Fair Value Assumptions [Abstract]
Volatility	39.00%	41.00%
Expected option lives (Years)	8 years	8 years
Risk-free interest rate	2.85%	1.60%
Dividend yield	4.33%	3.69%

XML

Note 13 - Employee and Postretirement Benefit Plans (Details) - Stock-Based Compensation Expense - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation	$ 606	$ 565	$ 696
Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation	0	153	242
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation	$ 606	$ 412	$ 454

XML

Note 13 - Employee and Postretirement Benefit Plans (Details) - Stock Option Activity - $ / shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Stock Option Activity [Abstract]
Outstanding, beginning of year (in Shares)	316,157	358,176	337,670
Outstanding, beginning of year	$ 19.05	$ 19.03	$ 19.08
Granted (in Shares)	0	39,027	64,050
Granted		$ 20.45	$ 19.21
Exercised (in Shares)	(29,557)	(50,415)	(10,656)
Exercised	$ 17.56	$ 17.57	$ 17.22
Forfeited (in Shares)	(20,211)	(16,424)	(14,135)
Forfeited	$ 19.76	$ 20.03	$ 20.13
Expired (in Shares)	(17,903)	(14,207)	(18,753)
Expired	$ 27.00	$ 26.59	$ 20.73
Outstanding, end of year (in Shares)	248,486	316,157	358,176
Outstanding, end of year	$ 18.59	$ 19.05	$ 19.03
Options exercisable at year-end (in Shares)	248,486	316,157	358,176
Options exercisable at year-end	$ 18.59	$ 19.05	$ 19.03
Weighted-average fair value of options granted		5.50	5.56
Weighted-average fair value of options forfeited	$ 4.86	$ 4.89	$ 3.77

XML

Note 13 - Employee and Postretirement Benefit Plans (Details) - Non-Vested Stock Options and Restricted Stock Activity - Employee Stock Option [Member]	12 Months Ended
	Dec. 31, 2015 $ / shares shares
Note 13 - Employee and Postretirement Benefit Plans (Details) - Non-Vested Stock Options and Restricted Stock Activity [Line Items]
Outstanding, December 31, 2014 | shares	52,436
Outstanding, December 31, 2014 | $ / shares	$ 19.34
Granted | shares	34,800
Granted | $ / shares	$ 20.63
Vested | shares	(21,522)
Vested | $ / shares	$ 19.16
Forfeited | shares	(3,502)
Forfeited | $ / shares	$ 20.08
Outstanding, December 31, 2015 | shares	62,212
Outstanding, December 31, 2015 | $ / shares	$ 20.10

XML

Note 14 - Income Taxes (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Note 14 - Income Taxes (Details) [Line Items]
Income Tax Credits and Adjustments	$ 158,000	$ 159,000	$ 160,000
Income Tax Expense (Benefit) Increase (Decrease)	80,000	83,000	$ 85,000
Unrecognized Tax Benefits	0
Other Assets [Member]
Note 14 - Income Taxes (Details) [Line Items]
Amortization Method Qualified Affordable Housing Project Investments	$ 812,000	$ 906,000

XML

Note 14 - Income Taxes (Details) - Net Deferred Tax Assets - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Deferred tax assets:
Net realized losses on securities	$ 69	$ 144
Allowance for loan losses	2,761	2,568
Credit for alternative minimum tax paid	0	537
Other deferred tax assets	2,634	2,595
Total deferred tax assets	5,464	5,844
Deferred tax liabilities:
Unrealized holding gains on securities	1,342	2,844
Defined benefit plans - ASC 835	19	43
Bank premises and equipment	869	1,134
Core deposit intangibles	11	18
Other deferred tax liabilities	108	137
Total deferred tax liabilities	2,349	4,176
Deferred tax asset, net	$ 3,115	$ 1,668

XML

Note 14 - Income Taxes (Details) - Provision for Income Taxes - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Provision for Income Taxes [Abstract]
Currently payable	$ 1,261	$ 1,395	$ 1,452	$ 1,229	$ 1,482	$ 1,411	$ 1,400	$ 1,399	$ 5,097	$ 4,280	$ 4,125
Tax expense resulting from allocations of certain tax benefits to equity or as a reduction in other assets									161	158	219
Deferred									79	1,254	1,839
Total provision									$ 5,337	$ 5,692	$ 6,183

XML

Note 14 - Income Taxes (Details) - Reconciliation of Income Tax - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Reconciliation of Income Tax [Abstract]
Expected provision	$ 7,633	$ 7,972	$ 8,672
Expected provision	35.00%	35.00%	35.00%
Tax-exempt interest income	$ (1,914)	$ (1,982)	$ (2,137)
Tax-exempt interest income	(8.78%)	(8.70%)	(8.62%)
Nondeductible interest expense	$ 51	$ 56	$ 60
Nondeductible interest expense	0.23%	0.25%	0.24%
Dividends received deduction	$ (75)	$ (79)	$ (76)
Dividends received deduction	(0.34%)	(0.35%)	(0.31%)
Increase in cash surrender value of life insurance	$ (135)	$ (132)	$ (140)
Increase in cash surrender value of life insurance	(0.62%)	(0.58%)	(0.57%)
Employee stock option compensation	$ 0	$ 41	$ 67
Employee stock option compensation	0.00%	0.18%	0.27%
Tax benefit from limited partnership investment	$ (80)	$ (83)	$ (85)
Tax benefit from limited partnership investment	(0.37%)	(0.36%)	(0.34%)
Other, net	$ (143)	$ (101)	$ (178)
Other, net	(0.66%)	(0.44%)	(0.72%)
Effective income tax provision	$ 5,337	$ 5,692	$ 6,183
Effective income tax provision	24.47%	24.99%	24.95%

XML

Note 15 - Related Party Transactions (Details) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Related Party Transactions [Abstract]
Related Party Deposit Liabilities	$ 3,194,000	$ 3,203,000

XML

Note 15 - Related Party Transactions (Details) - Related Party Loans - Management [Member] - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Related Party Transaction [Line Items]
Beginning balance	$ 12,023	$ 12,547	$ 14,125
New loans	52	188	1,110
Repayments	(808)	(1,358)	(2,723)
Other changes	(1,021)	646	35
Ending balance	$ 10,246	$ 12,023	$ 12,547

XML

Note 16 - Off-balance Sheet Risk (Details) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Disclosure Text Block Supplement [Abstract]
Letters of Credit Outstanding, Amount	$ 0	$ 0

XML

Note 16 - Off-balance Sheet Risk (Details) - Financial Instruments Whose Contract Amounts Represent Credit Risk - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Commitments to Extend Credit [Member]
Concentration Risk [Line Items]
Credit risk financial instrument	$ 156,407	$ 143,863
Standby Letters of Credit [Member]
Concentration Risk [Line Items]
Credit risk financial instrument	$ 13,340	$ 13,415

XML

Note 16 - Off-balance Sheet Risk (Details) - Standby Letters of Credit Expirations $ in Thousands	Dec. 31, 2015 USD ($)
Standby Letters of Credit Expirations [Abstract]
2016	$ 10,767
2017	371
2019	40
2021 and Thereafter	2,162
Total	$ 13,340

XML

Note 18 - Regulatory Matters (Details)	Dec. 31, 2015 USD ($)
Disclosure Text Block [Abstract]
Capital Conservation Buffer	2.50%
Retained Earnings, Unappropriated	$ 87,471,000
Tangible Capital to Tangible Assets	10.00%
Tangible Capital	$ 15,733,000

XML

Note 18 - Regulatory Matters (Details) - Capital Amounts and Ratios - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014
Total capital to risk-weighted assets:
Total capital to risk-weighted assets - minimum capital requirement ratio	8.00%
Tier 1 capital to risk-weighted assets:
Tier 1 capital to risk-weighted assets - minimum capital requirement ratio	6.00%
Common equity tier 1 capital to risk-weighted assets:
Common equity tier 1 capital to risk-weighted assets - minimum capital requirement ratio	4.50%
Consolidated Entities [Member]
Total capital to risk-weighted assets:
Total capital to risk-weighted assets - actual amount	$ 181,216	$ 179,588
Total capital to risk-weighted assets - actual ratio	24.40%	27.60%
Total capital to risk-weighted assets - minimum capital requirement amount	$ 59,424	$ 52,051
Total capital to risk-weighted assets - minimum to be well capitalized under prompt corrective action provisions amount	74,281
Tier 1 capital to risk-weighted assets:
Tier 1 capital to risk-weighted assets - actual amount	$ 173,009	$ 170,880
Tier 1 capital to risk-weighted assets - actual ratio	23.29%	26.26%
Tier 1 capital to risk-weighted assets - minimum capital requirement amount	$ 29,712	$ 26,026
Tier 1 capital to risk-weighted assets - minimum to be well capitalized under prompt corrective action provisions amount	59,424
Common equity tier 1 capital to risk-weighted assets:
Common equity tier 1 capital to risk-weighted assets - actual amount	$ 173,009
Common equity tier 1 capital to risk-weighted assets - actual ratio	23.29%
Common equity tier 1 capital to risk-weighted assets - minimum capital requirement amount	$ 29,712
Common equity tier 1 capital to risk-weighted assets - minimum to be well capitalized under prompt corrective action provisions amount	48,282
Tier 1 capital to average assets:
Tier 1 capital to average assets - actual amount	$ 173,009	$ 170,880
Tier 1 capital to average assets - actual ratio	14.31%	13.89%
Tier 1 capital to average assets - minimum capital requirement amount	$ 48,355	$ 49,224
Tier 1 capital to average assets - minimum to be well capitalized under prompt corrective action provisions amount	60,444
Citizens and Northern Bank [Member]
Total capital to risk-weighted assets:
Total capital to risk-weighted assets - actual amount	$ 161,187	$ 156,420
Total capital to risk-weighted assets - actual ratio	21.83%	24.33%
Total capital to risk-weighted assets - minimum capital requirement amount	$ 59,058	$ 51,442
Total capital to risk-weighted assets - minimum to be well capitalized under prompt corrective action provisions amount	73,823	64,303
Tier 1 capital to risk-weighted assets:
Tier 1 capital to risk-weighted assets - actual amount	$ 153,298	$ 149,055
Tier 1 capital to risk-weighted assets - actual ratio	20.77%	23.18%
Tier 1 capital to risk-weighted assets - minimum capital requirement amount	$ 29,529	$ 25,721
Tier 1 capital to risk-weighted assets - minimum to be well capitalized under prompt corrective action provisions amount	59,058	38,582
Common equity tier 1 capital to risk-weighted assets:
Common equity tier 1 capital to risk-weighted assets - actual amount	$ 153,298
Common equity tier 1 capital to risk-weighted assets - actual ratio	20.77%
Common equity tier 1 capital to risk-weighted assets - minimum capital requirement amount	$ 29,529
Common equity tier 1 capital to risk-weighted assets - minimum to be well capitalized under prompt corrective action provisions amount	47,985
Tier 1 capital to average assets:
Tier 1 capital to average assets - actual amount	$ 153,298	$ 149,055
Tier 1 capital to average assets - actual ratio	12.81%	12.22%
Tier 1 capital to average assets - minimum capital requirement amount	$ 47,861	$ 48,798
Tier 1 capital to average assets - minimum to be well capitalized under prompt corrective action provisions amount	$ 59,826	$ 60,998
Greater Than or Equal To [Member] | Consolidated Entities [Member]
Total capital to risk-weighted assets:
Total capital to risk-weighted assets - minimum capital requirement ratio	8.00%	8.00%
Total capital to risk-weighted assets - minimum to be well capitalized under prompt corrective action provisions ratio	10.00%
Tier 1 capital to risk-weighted assets:
Tier 1 capital to risk-weighted assets - minimum capital requirement ratio	6.00%	4.00%
Tier 1 capital to risk-weighted assets - minimum to be well capitalized under prompt corrective action provisions ratio	8.00%
Common equity tier 1 capital to risk-weighted assets:
Common equity tier 1 capital to risk-weighted assets - minimum capital requirement ratio	4.50%
Common equity tier 1 capital to risk-weighted assets - minimum to be well capitalized under prompt corrective action provisions ratio	6.50%
Tier 1 capital to average assets:
Tier 1 capital to average assets - minimum capital requirement ratio	4.00%	4.00%
Tier 1 capital to average assets - minimum to be well capitalized under prompt corrective action provisions ratio	5.00%
Greater Than or Equal To [Member] | Citizens and Northern Bank [Member]
Total capital to risk-weighted assets:
Total capital to risk-weighted assets - minimum capital requirement ratio	8.00%	8.00%
Total capital to risk-weighted assets - minimum to be well capitalized under prompt corrective action provisions ratio	10.00%	10.00%
Tier 1 capital to risk-weighted assets:
Tier 1 capital to risk-weighted assets - minimum capital requirement ratio	6.00%	4.00%
Tier 1 capital to risk-weighted assets - minimum to be well capitalized under prompt corrective action provisions ratio	8.00%	6.00%
Common equity tier 1 capital to risk-weighted assets:
Common equity tier 1 capital to risk-weighted assets - minimum capital requirement ratio	4.50%
Common equity tier 1 capital to risk-weighted assets - minimum to be well capitalized under prompt corrective action provisions ratio	6.50%
Tier 1 capital to average assets:
Tier 1 capital to average assets - minimum capital requirement ratio	4.00%	4.00%
Tier 1 capital to average assets - minimum to be well capitalized under prompt corrective action provisions ratio	5.00%	5.00%

XML

Note 18 - Regulatory Matters (Details) - Transition Schedule for New Ratios, Including the Capital Conservation Buffer	Dec. 31, 2015
Note 18 - Regulatory Matters (Details) - Transition Schedule for New Ratios, Including the Capital Conservation Buffer [Line Items]
Minimum common equity tier 1 capital ratio	4.50%
Common equity tier 1 capital conservation buffer	2.50%
Minimum common equity tier 1 capital ratio plus capital conservation buffer	4.50%
Phase-in of most deductions from common equity tier 1 capital	40.00%
Minimum tier 1 capital ratio	6.00%
Minimum total capital ratio	8.00%
Phased-in Beginning 2016 [Member]
Note 18 - Regulatory Matters (Details) - Transition Schedule for New Ratios, Including the Capital Conservation Buffer [Line Items]
Minimum common equity tier 1 capital ratio	4.50%
Common equity tier 1 capital conservation buffer	0.625%
Minimum common equity tier 1 capital ratio plus capital conservation buffer	5.125%
Phase-in of most deductions from common equity tier 1 capital	60.00%
Minimum tier 1 capital ratio	6.00%
Minimum tier 1 capital ratio plus capital conservation buffer	6.625%
Minimum total capital ratio	8.00%
Minimum total capital ratio plus capital conservation buffer	8.625%
Phased-in Beginning 2017 [Member]
Note 18 - Regulatory Matters (Details) - Transition Schedule for New Ratios, Including the Capital Conservation Buffer [Line Items]
Minimum common equity tier 1 capital ratio	4.50%
Common equity tier 1 capital conservation buffer	1.25%
Minimum common equity tier 1 capital ratio plus capital conservation buffer	5.75%
Phase-in of most deductions from common equity tier 1 capital	80.00%
Minimum tier 1 capital ratio	6.00%
Minimum tier 1 capital ratio plus capital conservation buffer	7.25%
Minimum total capital ratio	8.00%
Minimum total capital ratio plus capital conservation buffer	9.25%
Phased-in Beginning 2018 [Member]
Note 18 - Regulatory Matters (Details) - Transition Schedule for New Ratios, Including the Capital Conservation Buffer [Line Items]
Minimum common equity tier 1 capital ratio	4.50%
Common equity tier 1 capital conservation buffer	1.875%
Minimum common equity tier 1 capital ratio plus capital conservation buffer	6.375%
Phase-in of most deductions from common equity tier 1 capital	100.00%
Minimum tier 1 capital ratio	6.00%
Minimum tier 1 capital ratio plus capital conservation buffer	7.875%
Minimum total capital ratio	8.00%
Minimum total capital ratio plus capital conservation buffer	9.875%
Phased-in Beginning 2019 [Member]
Note 18 - Regulatory Matters (Details) - Transition Schedule for New Ratios, Including the Capital Conservation Buffer [Line Items]
Minimum common equity tier 1 capital ratio	4.50%
Common equity tier 1 capital conservation buffer	2.50%
Minimum common equity tier 1 capital ratio plus capital conservation buffer	7.00%
Phase-in of most deductions from common equity tier 1 capital	100.00%
Minimum tier 1 capital ratio	6.00%
Minimum tier 1 capital ratio plus capital conservation buffer	8.50%
Minimum total capital ratio	8.00%
Minimum total capital ratio plus capital conservation buffer	10.50%

XML

Note 18 - Regulatory Matters (Details) - Payout Restrictions Based on the Capital Conservation Buffer	Dec. 31, 2015
Range One [Member]
Note 18 - Regulatory Matters (Details) - Payout Restrictions Based on the Capital Conservation Buffer [Line Items]
Maximum Payout	60.00%
Range Two [Member]
Note 18 - Regulatory Matters (Details) - Payout Restrictions Based on the Capital Conservation Buffer [Line Items]
Maximum Payout	40.00%
Range Three [Member]
Note 18 - Regulatory Matters (Details) - Payout Restrictions Based on the Capital Conservation Buffer [Line Items]
Maximum Payout	20.00%
Range Four [Member]
Note 18 - Regulatory Matters (Details) - Payout Restrictions Based on the Capital Conservation Buffer [Line Items]
Maximum Payout	0.00%

XML

Note 18 - Regulatory Matters (Details) - Payout Restrictions Based on the Capital Conservation Buffer (Parentheticals)	Dec. 31, 2015
Range One [Member]
Note 18 - Regulatory Matters (Details) - Payout Restrictions Based on the Capital Conservation Buffer (Parentheticals) [Line Items]
Capital Conservation Buffer, High	2.50%
Capital Conservation Buffer, Low	1.875%
Range Two [Member]
Note 18 - Regulatory Matters (Details) - Payout Restrictions Based on the Capital Conservation Buffer (Parentheticals) [Line Items]
Capital Conservation Buffer, High	1.875%
Capital Conservation Buffer, Low	1.25%
Range Three [Member]
Note 18 - Regulatory Matters (Details) - Payout Restrictions Based on the Capital Conservation Buffer (Parentheticals) [Line Items]
Capital Conservation Buffer, High	1.25%
Capital Conservation Buffer, Low	0.625%
Range Four [Member]
Note 18 - Regulatory Matters (Details) - Payout Restrictions Based on the Capital Conservation Buffer (Parentheticals) [Line Items]
Capital Conservation Buffer, High	0.00%
Capital Conservation Buffer, Low	0.625%

XML

Note 19 - Parent Company Only (Details) - Condensed Balance Sheet - USD ($) $ in Thousands	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Investment in subsidiaries:
Other assets	$ 13,510	$ 8,766
TOTAL ASSETS	1,223,417	1,241,963
LIABILITIES AND STOCKHOLDERS' EQUITY
Other liabilities	8,052	7,015
Stockholders' equity	187,487	188,362	$ 179,472	$ 182,786
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	1,223,417	1,241,963
Parent Company [Member]
ASSETS
Cash	5,847	9,624
Investment in subsidiaries:
Other assets	24	36
TOTAL ASSETS	187,506	188,369
LIABILITIES AND STOCKHOLDERS' EQUITY
Other liabilities	19	7
Stockholders' equity	187,487	188,362
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	187,506	188,369
Citizens and Northern Bank [Member] | Parent Company [Member]
Investment in subsidiaries:
Equity method investment	167,277	164,551
Citizens and Northern Investment Corporation [Member] | Parent Company [Member]
Investment in subsidiaries:
Equity method investment	10,966	10,822
Bucktail Life Insurance Company [Member | Parent Company [Member]
Investment in subsidiaries:
Equity method investment	$ 3,392	$ 3,336

XML

Note 19 - Parent Company Only (Details) - Condensed Income Statement - USD ($)	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Condensed Income Statements, Captions [Line Items]
Dividends from Citizens & Northern Bank									$ 284,000	$ 307,000	$ 295,000
Income before equity in undistributed income of subsidiaries	$ 5,326,000	$ 5,629,000	$ 5,809,000	$ 5,044,000	$ 5,850,000	$ 5,678,000	$ 5,563,000	$ 5,687,000	21,808,000	22,778,000	24,777,000
NET INCOME	$ 4,065,000	$ 4,234,000	$ 4,357,000	$ 3,815,000	$ 4,368,000	$ 4,267,000	$ 4,163,000	$ 4,288,000	16,471,000	17,086,000	18,594,000
Parent Company [Member]
Condensed Income Statements, Captions [Line Items]
Dividends from Citizens & Northern Bank									11,569,000	22,608,000	11,108,000
Expenses									(234,000)	(112,000)	(108,000)
Income before equity in undistributed income of subsidiaries									11,335,000	22,496,000	11,000,000
Equity in undistributed income (loss) of subsidiaries									5,136,000	(5,410,000)	7,594,000
NET INCOME									$ 16,471,000	$ 17,086,000	$ 18,594,000

XML

Note 19 - Parent Company Only (Details) - Condensed Statement of Cash Flows - USD ($)	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 4,065,000	$ 4,234,000	$ 4,357,000	$ 3,815,000	$ 4,368,000	$ 4,267,000	$ 4,163,000	$ 4,288,000	$ 16,471,000	$ 17,086,000	$ 18,594,000
Adjustments to reconcile net income to net cash provided by operating activities:
Decrease (increase) in other assets									(1,697,000)	1,395,000	3,234,000
Increase in other liabilities									1,195,000	(90,000)	(679,000)
Net Cash Provided by Operating Activities									19,686,000	22,281,000	30,572,000
CASH FLOWS FROM FINANCING ACTIVITIES:
Tax benefit from compensation plans, net									159,000	157,000	124,000
Purchase of treasury stock									(4,415,000)	(4,002,000)	0
Dividends paid									(11,245,000)	(11,392,000)	(10,916,000)
Net Cash (Used in) Financing Activities									(36,401,000)	(19,767,000)	(55,877,000)
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS									1,694,000	(6,972,000)	(16,425,000)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR				31,619,000				38,591,000	31,619,000	38,591,000	55,016,000
CASH AND CASH EQUIVALENTS, END OF YEAR	33,313,000				31,619,000				33,313,000	31,619,000	38,591,000
Parent Company [Member]
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income									16,471,000	17,086,000	18,594,000
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in undistributed net (income) loss of subsidiaries									(5,136,000)	5,410,000	(7,594,000)
Decrease (increase) in other assets									12,000	(36,000)	7,000
Increase in other liabilities									12,000	1,000	0
Net Cash Provided by Operating Activities									11,359,000	22,461,000	11,007,000
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of treasury stock									381,000	123,000	184,000
Tax benefit from compensation plans, net									143,000	137,000	127,000
Purchase of treasury stock									(4,415,000)	(4,002,000)	0
Dividends paid									(11,245,000)	(11,392,000)	(10,916,000)
Net Cash (Used in) Financing Activities									(15,136,000)	(15,134,000)	(10,605,000)
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS									(3,777,000)	7,327,000	402,000
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR				$ 9,624,000				$ 2,297,000	9,624,000	2,297,000	1,895,000
CASH AND CASH EQUIVALENTS, END OF YEAR	$ 5,847,000				$ 9,624,000				$ 5,847,000	$ 9,624,000	$ 2,297,000

XML

Note 20 - Summary of Quarterly Consolidated Financial Data (Unaudited) (Details) - Quarterly Financial Data - USD ($)	3 Months Ended								12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Quarterly Financial Data [Abstract]
Interest income	$ 11,036,000	$ 11,134,000	$ 11,186,000	$ 11,163,000	$ 11,468,000	$ 11,572,000	$ 11,563,000	$ 11,406,000	$ 44,519,000	$ 46,009,000	$ 48,914,000
Interest expense	1,087,000	1,126,000	1,176,000	1,213,000	1,257,000	1,287,000	1,290,000	1,288,000	4,602,000	5,122,000	5,765,000
Net interest income	9,949,000	10,008,000	10,010,000	9,950,000	10,211,000	10,285,000	10,273,000	10,118,000	39,917,000	40,887,000	43,149,000
(Credit) provision for loan losses	319,000	302,000	221,000	3,000	123,000	218,000	446,000	(311,000)	845,000	476,000	2,047,000
Net interest income after (credit) provision for loan losses	9,630,000	9,706,000	9,789,000	9,947,000	10,088,000	10,067,000	9,827,000	10,429,000	39,072,000	40,411,000	41,102,000
Other income	3,994,000	3,961,000	3,962,000	3,487,000	3,802,000	3,887,000	3,980,000	3,751,000
Net gains on available-for-sale securities	1,776,000	79,000	932,000	74,000	210,000	760,000	103,000	31,000	2,861,000	1,104,000	1,718,000
Loss on prepayment of borrowings	1,663,000	0	910,000	0					2,573,000	0	1,023,000
Other expenses	8,411,000	8,117,000	7,964,000	8,464,000	8,250,000	9,036,000	8,347,000	8,524,000	5,241,000	5,423,000	5,298,000
Income before income tax provision	5,326,000	5,629,000	5,809,000	5,044,000	5,850,000	5,678,000	5,563,000	5,687,000	21,808,000	22,778,000	24,777,000
Income tax provision	1,261,000	1,395,000	1,452,000	1,229,000	1,482,000	1,411,000	1,400,000	1,399,000	5,097,000	4,280,000	4,125,000
Net income available to common shareholders	$ 4,065,000	$ 4,234,000	$ 4,357,000	$ 3,815,000	$ 4,368,000	$ 4,267,000	$ 4,163,000	$ 4,288,000	$ 16,471,000	$ 17,086,000	$ 18,594,000
Net income per share – basic (in Dollars per share)	$ 0.33	$ 0.35	$ 0.36	$ 0.31	$ 0.36	$ 0.34	$ 0.33	$ 0.35	$ 1.35	$ 1.38	$ 1.51
Net income per share – diluted (in Dollars per share)	$ 0.33	$ 0.35	$ 0.36	$ 0.31	$ 0.35	$ 0.34	$ 0.33	$ 0.34