Citizens & Northern : Fourth Quarter 2022 Unaudited Financial Information

Exhibit 99.1

Contact: Charity Frantz

January 26, 2023570-724-0225

[e-mail]

C&N DECLARES DIVIDEND AND ANNOUNCES FOURTH QUARTER 2022 UNAUDITED FINANCIAL RESULTS FOR IMMEDIATE RELEASE:

Wellsboro, PA - Citizens & Northern Corporation ("C&N") (NASDAQ: CZNC) announced its most recent dividend declaration and its unaudited, consolidated financial results for the three-month and annual periods ended December 31, 2022.

Dividend Declared and Unaudited Financial Information

On January 19, 2023, C&N's Board of Directors declared a regular quarterly cash dividend of $0.28 per share. The dividend is payable on February 14, 2023 to shareholders of record as of February 3, 2023.

Highlights related to C&N's fourth quarter and December 31, 2022 year-to-date unaudited U.S. GAAP earnings results as compared to the third quarter 2022 and fourth quarter of 2021 are presented below.

Fourth Quarter 2022 as Compared to Third Quarter 2022

Net income was $7,779,000, or $0.50 per diluted share, for the fourth quarter 2022 as compared to $4,455,000, or $0.29 per diluted share, in the third quarter 2022.

• Net interest income totaled $22,292,000 in the fourth quarter 2022, up $1,413,000 from the third quarter 2022. The net interest margin was 3.89% in the fourth quarter 2022, up from 3.69% in the third quarter
  2022. The net interest rate spread increased 0.16%, as the average yield on earning assets increased 0.33% to 4.51%, while the average rate on interest-bearing liabilities increased 0.17% to 0.89%. Average deposits increased $28,563,000 (1.4% or 5.7% annualized) and average loans outstanding increased $24,920,000 (1.5% or 6.0% annualized).
• The provision for loan losses was $2,262,000 in the fourth quarter 2022, down $1,532,000 from the third quarter 2022 provision of $3,794,000. The fourth quarter 2022 provision included net charge-offs of $1,817,000, an increase of $26,000 in specific allowances and an increase of $419,000 in the collectively determined portion of the allowance. C&N recorded partial charge-offs of $1,782,000 in the fourth quarter 2022 and $2,160,000 in the third quarter 2022 on a commercial real estate secured participation loan to a borrower in the health care industry with a recorded investment (principal balance, net of partial charge- offs) of $2,654,000 at December 31, 2022. The charge-offs resulted from the borrower's default due to deterioration in financial performance. The recorded investment in the loan at December 31, 2022 reflects the impact of a settlement agreement reached with the borrower.
• Noninterest income of $6,110,000 in the fourth quarter 2022 increased $459,000 from the third quarter
  2022 amount. Significant variances included the following:
• • Other noninterest income of $1,033,000 increased $411,000 from the third quarter 2022, including income from interest rate swap fees on commercial loans of $276,000, dividend income from Federal Home Loan Bank stock increasing $50,000 and unrealized appreciation on a marketable equity security of $40,000.

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• • Service charges on deposit accounts of $1,357,000 increased $252,000 from the third quarter 2022. In the third quarter 2022, C&N recorded accrued refunds of consumer overdraft fees totaling $290,000 as the result of updated regulatory guidance on certain overdraft fees.
  • Brokerage and insurance revenue of $507,000 decreased $189,000 from the third quarter 2022, due to lower volume of new transactions.
  • Net gains from sales of loans of $24,000 decreased $107,000 from the third quarter 2022, reflecting a reduction in volume of residential mortgage loans sold.
• Noninterest expense of $16,587,000 in the fourth quarter 2022 decreased $856,000 from the third quarter
  2022 amount. Significant variances included the following:
• • Salaries and employee benefits expense of $10,135,000 decreased $691,000 from the third quarter 2022, including a decrease in stock-based and incentive compensation expense of $774,000 consistent with an updated comparison of C&N's earnings performance to that of defined peer groups, partially offset by an increase in health care expense of $118,000 due to higher claims on
    C&N's partially self-insured plan.
  • Net occupancy and equipment expense of $1,316,000 decreased $182,000 from the third quarter 2022, including a decrease in depreciation expense of $163,000. Accelerated depreciation expense resulting from the closure of two branches in November 2022 totaled $81,000 in the fourth quarter 2022 compared to $248,000 in the third quarter 2022.
• The income tax provision was $1,773,000, or 18.6% of pre-tax income for the fourth quarter 2022, up from $858,000, or 16.1% of pre-tax income for the third quarter 2022. The increase in income tax provision reflected the increase in pre-tax income of $4,239,000 for the quarter.

Fourth Quarter 2022 as Compared to Fourth Quarter 2021

Fourth quarter 2022 net income was $7,779,000, or $0.50 per diluted share, as compared to $7,308,000, or $0.46 per diluted share, in the fourth quarter 2021. Significant variances were as follows:

• Fourth quarter 2022 net interest income of $22,292,000 was $2,576,000 higher than the fourth quarter 2021 total. The net interest margin was 3.89% in the fourth quarter 2022, up from 3.65% in the fourth quarter 2021. The net interest rate spread increased 0.10%, as the average yield on earning assets increased 0.58% to 4.51%, and the average rate on interest-bearing liabilities increased 0.48% to 0.89%. Total interest and fees on loans increased $3,666,000 in the fourth quarter 2022 over the total for the fourth quarter 2021, despite a reduction of $1,585,000 in interest and fees on loans originated under the U.S. Small Business Administration (SBA) Paycheck Protection Program (PPP). Average outstanding loans increased $144.8 million, despite a reduction in average PPP loans of $39.0 million. Average loans, excluding PPP loans, were up $183.8 million in the fourth quarter 2022 over the fourth quarter 2021, an increase of 12.1%. Average total deposits increased $93.9 million (4.9%).
• The provision for loan losses was $2,262,000 in the fourth quarter 2022, up $1,134,000 from $1,128,000 in the fourth quarter 2021. As noted above, the provision in the fourth quarter 2022 included the impact of recognizing a partial charge-off of $1,782,000 on a commercial real estate secured participation loan. In comparison, the fourth quarter 2021 provision included a net charge of $148,000 related to specific loans (net charge-offs of $291,000 offset by a net decrease in specific allowances on loans of $143,000), and an increase of $980,000 in the collectively determined portion of the allowance.
• Noninterest income of $6,110,000 in the fourth quarter 2022 decreased $306,000 from the fourth quarter
  2021 amount. Significant variances included the following:

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• • Net gains from sales of loans of $24,000 decreased $618,000 from the fourth quarter 2021, reflecting a reduction in volume of residential mortgage loans sold.
  • Trust revenue of $1,749,000 decreased $231,000 from the fourth quarter 2021, reflecting the impact of market value depreciation of assets under management.
  • Other noninterest income of $1,033,000 increased $290,000 from the fourth quarter 2021, including income from interest rate swap fees on commercial loans of $276,000.
  • Interchange revenue from debit card transactions of $1,098,000 increased $97,000 from the fourth quarter 2021, reflecting increases in transaction volumes.
• Noninterest expense of $16,587,000 in the fourth quarter 2022 increased $569,000 from the fourth quarter
  2021 amount. Significant variances included the following:
• • Salaries and employee benefits of $10,135,000 increased $353,000 from the fourth quarter 2021, including an increase in base salaries expense of $1,016,000. In addition to the impact of merit- based salary increases, the number of employees increased, reflecting expansion of the Southcentral PA market with the opening of an office in Lancaster as well as additions to staffing for information technology (IT), human resources and other functions. In total, the number of full-time equivalent employees (FTEs) increased by 14 (3.5%) to 415 in the fourth quarter 2022 as compared to the fourth quarter 2021. Total cash and stock-based compensation expense decreased $696,000 consistent with an updated comparison of C&N's earnings performance to that of defined peer groups.
  • Data processing and telecommunications of $1,744,000 increased $183,000 from the fourth quarter 2021, including the impact of increases in software licensing and maintenance costs as well as costs related to enhancements of data management capabilities.
• The income tax provision was $1,773,000, or 18.6% of pre-tax income for the fourth quarter 2022, up from $1,677,000, or 18.7% of pre-tax income for the fourth quarter 2021. The increase in income tax provision reflected the increase in pre-tax income of $567,000.

Year Ended December 31, 2022 as Compared to Year Ended December 31, 2021

Net income for the year ended December 31, 2022 was $26,618,000, or $1.71 per diluted share, while net income for the year ended December 31, 2021 was $30,554,000 or $1.92 per diluted share. Significant variances were as follows:

• For the year ended December 31, 2022, net interest income of $83,128,000 was up $5,189,000 over the 2021 total. The net interest margin increased to 3.77% in 2022 from 3.69% in 2021. The net interest spread increased 0.02%, as the average yield on earning assets increased 0.20% to 4.19% and the average rate on interest-bearing liabilities increased 0.18% to 0.62%. Interest income from available-for-sale debt securities, on a fully taxable-equivalent basis, increased $3,610,000 in 2022 as compared to 2021, as the average balance (at amortized cost) of available-for-sale debt securities increased $168.2 million. Total interest and fees on loans increased $4,289,000 in 2022 as compared to 2021. Interest and fees on loans included $1,852,000 in 2022 and $231,000 from repayments received on purchased credit impaired loans in excess of previous carrying amounts. Total interest and fees from PPP loans were $958,000 in 2022, a decrease of $5,572,000 from the 2021 total of $6,530,000. Accretion and amortization of purchase accounting adjustments had a net positive impact on net interest income of $1,621,000 in 2022 as compared to a net positive impact of $2,659,000 in 2021. Average outstanding loans increased $31.3 million, despite a reduction in average PPP loans of $89.2 million. Average loans, excluding PPP loans, were up $120.6 million (8.0%) in 2022 as compared to 2021. Average total deposits increased $75.0 million (3.9%) in 2022 as compared to 2021.

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• For the year ended December 31, 2022, the provision for loan losses was $7,255,000, an increase in expense of $3,594,000 as compared to $3,661,000 recorded in the year ended December 31, 2021. The provision for 2022 includes $3,890,000 related to specific loans (net charge-offs of $4,177,000 and net decrease in specific allowances on loans of $287,000), an increase of $3,036,000 in the collectively determined portion of the allowance and a $329,000 increase in the unallocated portion. In comparison, the provision for loan losses in 2021 includes $1,324,000 related to specific loans (net charge-offs of $1,509,000 and a decrease in specific allowances on loans of $185,000), an increase of $2,251,000 in the collectively determined portion of the allowance and an $86,000 increase in the unallocated portion.
• Noninterest income of $24,412,000 for the year ended December 31, 2022, decreased $1,445,000 from the total for the year ended December 31, 2021. Significant variances included the following:
• • Net gains from sales of loans of $757,000 decreased $2,671,000 reflecting a reduction in volume of residential mortgage loans sold.
  • Trust revenue of $6,994,000 decreased $240,000 reflecting the impact of market value depreciation of assets under management.
  • Brokerage and insurance revenue of $2,291,000 increased $431,000 due to commissions on higher transaction volumes for the year.
  • Service charges on deposit accounts of $5,019,000 increased $386,000 as the volume of consumer and business overdraft and other activity increased partially offset by the impact of refunds resulting from updated regulatory guidance on certain consumer overdraft fees.
  • Interchange revenue from debit card transactions of $4,148,000 increased $293,000, reflecting an increase in transaction volumes.
  • Loan servicing fees, net of $960,000 increased $266,000, reflecting growth in volume of residential mortgage loans sold with servicing retained. Further, the fair value of servicing rights increased $126,000 in 2022 as compared to a decrease of $68,000 in 2021 mainly due to changes in assumptions related to prepayments of mortgage loans.
  • Other noninterest income of $3,699,000 increased $119,000, including increases in income from interest rate swap fees on commercial loans of $268,000, credit card interchange income of $107,000 and dividend income from Federal Home Loan Bank stock of $83,000. Offsetting decreases include a $147,000 reduction in income from title agencies and an increase in unrealized fair value depreciation on a marketable equity security of $83,000.
• Noninterest expense of $67,955,000 for the year ended December 31, 2022 increased $5,483,000 from the
  2021 total. Significant variances included the following:
• • Salaries and employee benefits of $41,833,000 increased $4,230,000, including an increase in base salaries expense of $3.8 million reflecting merit-based salary increases and an increase in number of personnel related to expansion of the Southcentral PA market with the opening of an office in Lancaster. Additional increases include an increase in health care expense of $658,000 due to higher claims on C&N's partially self-insured plan, $327,000 related to savings, retirement and pension plan contribution expenses, $249,000 related to payroll taxes and $131,000 due to a lower portion of payroll costs capitalized (added to the carrying value of loans) due to the higher volume of PPP loans originated in 2021. Decreases include a reduction in estimated cash and stock-based incentive compensation expense of $822,000 consistent with a comparison of C&N's earnings performance to that of defined peer groups and a reduction in severance expense of $232,000.

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• • Data processing and telecommunications of $6,806,000 increased $903,000, including the impact of increases in software licensing and maintenance costs as well as costs related to enhancements of data management capabilities.
  • Net occupancy and equipment expense of $5,533,000 increased $549,000, including accelerated depreciation expense of $329,000 related to the closure of two branches in November 2022.
  • Automated teller machine and interchange expense increased $168,000 reflecting increased volume of activity.
  • Professional fees of $1,601,000 decreased $238,000, mainly due to decreases in recruiting services and PPP loan processing-related professional fees.
  • Other noninterest expense decreased $134,000. Within this category, significant variances included the following:
  • • There was a net reduction in other operational losses of $348,000 in 2022 as compared to expense of $199,000 in 2021. In 2022, there was a reduction in expense resulting from abatement of Trust Department tax compliance penalties for which expense was recorded in 2020 and a favorable outcome on appeal of a Trust Department state tax reporting matter for which expense was also recorded in 2020.
    • There was a reduction in expense related to credit losses on off balance sheet exposures related to residential mortgage loans sold of $172,000 in 2022 as compared to a provision for credit losses of $135,000 in 2021.
    • The allowance for SBA claim adjustments decreased, reflecting more favorable claim results than previously estimated, resulting in a reduction in expense of $367,000 in 2022 as compared to a reduction in expense of $236,000 in 2021.
    • Travel and entertainment expenses totaled $457,000 in 2022, an increase of $236,000 over 2021, as the volume of travel and related costs for meetings with customers and internal meetings increased.
• The income tax provision of $5,732,000, or 17.7% of pre-tax income for the year ended December 31, 2022, decreased $1,401,000 from $7,133,000, or 18.9% of pre-tax income for the year ended December 31, 2021. The lower provision in 2022 includes the impact of a reduction in pre-tax income. The lower effective tax rate in 2022 includes the impact of higher tax-exempt interest as a percentage of pre-tax income, a larger permanent difference (deduction) related to restricted stock compensation and the benefit of a $340,000 reduction in expense from the reversal of tax penalties being non-deductible.

Other Information:

Changes in other unaudited financial information are as follows:

• Total assets amounted to $2,454,307,000 at December 31, 2022, up from $2,400,180,000 at September 30, 2022 and up from $2,327,648,000 at December 31, 2021.
• Cash & due from banks totaled $55,048,000 at December 31, 2022, down from $64,044,000 at September 30, 2022 and $104,948,000 at December 31, 2021. The decrease in cash reflects the deployment of otherwise excess cash to available-for-sale securities and loans to enhance net interest income.
• The amortized cost of available-for-sale debt securities increased to $561,794,000 at December 31, 2022 from $559,837,000 at September 30, 2022 and $511,592,000 at December 31, 2022. The fair value of available-for-sale debt securities at December 31, 2022 was lower than amortized cost basis by $63,761,000, or 11.3%. In comparison, the aggregate unrealized loss position was $71,857,000 (12.8%) at September 30, 2022 and there was an unrealized gain of $6,087,000 (1.2%) at December 31, 2021. The unrealized decrease in fair value of the portfolio in 2022 has resulted from an increase in interest rates. Management reviewed the available-for-sale debt securities as of

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