0001104659-26-024613
SEC filingCitizens & Northern Corporation reported net income of $23.4 million for FY 2025, a decrease from $26.0 million in FY 2024. Earnings per common share (basic and diluted) were $1.46, down from $1.69 in the prior year. The decline was primarily driven by $7.9 million in pre-tax merger-related expenses associated with the acquisition of Susquehanna Community Financial, Inc., completed on October 1, 2025. Excluding these expenses, adjusted net income was $29.8 million, or $1.85 per diluted share. Key financial drivers included a 16.0% increase in fully taxable-equivalent net interest income to $92.7 million, supported by a higher net interest margin of 3.61% and loan growth from the acquisition. Noninterest income grew 5.6% to $30.9 million, while noninterest expense, excluding merger costs, increased 7.8% to $80.0 million. The provision for credit losses increased to $6.1 million from $2.2 million, reflecting portfolio growth and qualitative factor adjustments. Total assets grew to $3.13 billion, up from $2.61 billion at the end of FY 2024, largely due to the Susquehanna merger.
Citizens & Northern Corporation's FY 2025 financial results were significantly shaped by its acquisition of Susquehanna Community Financial, Inc., completed on October 1, 2025. Reported net income was $23.4 million, a decrease of $2.5 million (9.8%) from the $26.0 million earned in FY 2024. Earnings per common share (basic and diluted) were $1.46, down from $1.69. This decline is directly attributable to $7.9 million in pre-tax merger-related expenses incurred in 2025. Management provides a non-GAAP adjusted net income figure, which excludes these merger costs (net of tax), of $29.8 million, or $1.85 per diluted share, representing an increase over the prior year's GAAP net income. The Susquehanna merger contributed approximately $6.3 million in total revenues and $2.4 million in net income (excluding merger expenses) for the three-month post-acquisition period in 2025. Key income statement drivers included strong growth in net interest income, partially offset by higher provisions for credit losses and increased operating expenses.
The Corporation's primary revenue source is net interest income, which totaled $91.9 million on a GAAP basis for FY 2025, an increase of $12.7 million (16.1%) from $79.1 million in FY 2024. On a fully taxable-equivalent basis (a non-GAAP measure), net interest income was $92.7 million, up 16.0%. This growth was driven by a 7.3% increase in average total loans to $2.02 billion and an 8.3% increase in average total deposits to $2.23 billion, both bolstered by the Susquehanna acquisition. The net interest margin improved to 3.61% from 3.30% in the prior year, as the average yield on earning assets increased 13 basis points to 5.45% while the average rate on interest-bearing liabilities decreased 25 basis points to 2.48%. Total interest and dividend income was $139.2 million. Noninterest income totaled $30.9 million, an increase of $1.6 million (5.6%) from FY 2024. Key contributors included trust revenue ($8.2 million, up 3.6%), service charges on deposit accounts ($6.0 million, up 1.9%), interchange revenue from debit card transactions ($4.6 million, up 8.1%), and other noninterest income ($5.6 million, up 7.8%). The Susquehanna acquisition contributed $665,000 to noninterest income.
Profitability metrics were impacted by the one-time merger costs. Income before income tax provision was $28.6 million, down from $31.9 million in FY 2024. The pre-tax margin (pre-tax income as a percentage of total revenue) is not a standard banking metric disclosed. The provision for credit losses was $6.1 million, a significant increase from $2.2 million in the prior year. This increase included the impact of establishing an allowance for credit losses on acquired loans from Susquehanna and increases related to changes in qualitative factors within the loan portfolio. The allowance for credit losses (ACL) increased to $31.0 million, or 1.32% of loans receivable, at December 31, 2025, compared to $20.0 million, or 1.06%, at the end of FY 2024. Net charge-offs were $1.6 million, or 0.08% of average loans receivable, consistent with 0.09% in the prior year. Noninterest expense, excluding merger-related costs, was $80.0 million, an increase of $5.8 million (7.8%) from FY 2024, driven by the Susquehanna acquisition and increases in salaries and employee benefits. The effective income tax rate was 18.2%, down slightly from 18.6% in FY 2024.
Net cash provided by operating activities was $32.0 million for FY 2025. Cash flows from investing activities provided a net $0.2 million, which included $5.8 million from the Susquehanna business combination and significant activity in the available-for-sale debt securities portfolio (purchases of $134.0 million and proceeds from sales/maturities of $194.0 million). Cash flows from financing activities used $111.1 million, primarily due to a net decrease in deposits of $30.4 million, repayments of long-term FHLB advances of $44.5 million, and common dividends paid of $16.3 million. Consequently, cash and cash equivalents decreased by $78.9 million during the year, ending at $44.7 million. The consolidated balance sheet reflects the impact of the acquisition. Total assets increased 20.0% to $3.13 billion. Loans receivable, net of allowance, were $2.32 billion, up from $1.88 billion. Available-for-sale debt securities were $506.6 million at fair value. Total deposits were $2.56 billion, with noninterest-bearing deposits comprising $531.4 million. Total borrowed funds (short-term and long-term) were $154.6 million. Total stockholders' equity was $341.7 million, up from $275.3 million, boosted by the stock issuance for the Susquehanna merger.
Management's discussion highlights risks and uncertainties, including those related to the integration of the Susquehanna acquisition. The Corporation notes that integration efforts may divert management attention and cause a loss of business momentum. Success in Susquehanna's geographic market will require attracting and retaining key personnel. Other forward-looking risks cited include changes in monetary policy and interest rates, general economic conditions, potential adverse developments in the banking industry, credit losses, legislative/regulatory changes, increased competition, technological changes, and cybersecurity risks. The Corporation does not provide specific quantitative financial guidance for future periods. The strategic priority evident from the acquisition is to create additional scale in central Pennsylvania, further diversify the loan portfolio and funding base, and increase resiliency and efficiency. The pro forma unaudited information suggests that, had the merger occurred at the start of 2024, net income for 2025 (adjusted for merger costs) would have been approximately $31.9 million.