UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2008.
 Or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT
 For the transition period from  to.
 No. 0-19028
(Commission file number)
 CCFNB BANCORP, INC.
  PENNSYLVANIA
(State or other jurisdiction of 
incorporation or organization)
    
    23-2254643
(I.R.S. Employer
Identification Number)232 East Street, Bloomsburg, PA
(Address of principal executive offices)
    
    17815
(Zip Code)
 (570) 784-4400
 þ o
 12b-2
 Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller reporting company þ
 o þ




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##### 



CCFNB Bancorp, Inc. and Subsidiary
Index to Quarterly Report on Form 10-Q
 PageNumberPart I Financial InformationItem1. Financial StatementsConsolidated Balance Sheet as of September 30,2008 (unaudited) and December 31, 2007
    
    2Consolidated Statement of Income (unaudited) for the Three and Nine months ended September 30, 2008 and 2007
    
    3Consolidated Statement of Cash Flows (unaudited) for the Nine Months ended September 30, 2008 and 2007
    
    4Notes to Consolidated Financial Statements (unaudited)
    
    5Report of Independent Registered Public Accounting Firm
    
    21Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    22Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    31Item 4. Controls and Procedures
    
    31Part II Other Information
    
    32Item 1. Legal Proceedings
    
    32Item 1A. Risk Factors
    
    32Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    32Item 3. Defaults Upon Senior Securities
    
    32Item 4. Submission of Matters to a Vote of Security Holders
    
    32Item 5. Other Information
    
    32Item 6. Exhibits
    
    33Signatures
    
    34Exhibits
    
    35




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##### 



Part I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
  
  (Unaudited)September 30,
    
    
    December 31,(In Thousands)
    
    2008
    
    
    2007ASSETSCash and due from banks
    
    $
    10,764
    
    
    $
    5,550Interest-bearing deposits in other banks
    
    
    348
    
    
    
    732Federal funds sold
    
    
    1,056
    
    
    
    7,119Total cash and cash equivalents
    
    
    12,168
    
    
    
    13,401Investment securities, available for sale, at fair value
    
    
    209,817
    
    
    
    57,686Loans,net of unearned income
    
    
    324,747
    
    
    
    161,460Less: Allowance for loan losses
    
    
    3,055
    
    
    
    1,437Loans, net
    
    
    321,692
    
    
    
    160,023Premises and equipment, net
    
    
    12,504
    
    
    
    5,087Accrued interest receivable
    
    
    2,802
    
    
    
    1,082Cash surrender value of bank-owned life insurance
    
    
    10,610
    
    
    
    7,077Investment in limited partnerships
    
    
    890
    
    
    
    Intangible Assets:Core deposit
    
    
    3,579
    
    
    
    Goodwill
    
    
    6,235
    
    
    
    Other assets
    
    
    1,944
    
    
    
    968TOTAL ASSETS
    
    $
    582,241
    
    
    $
    245,324LIABILITIESInterest-bearing deposits
    
    $
    385,672
    
    
    $
    151,544Noninterest-bearing deposits
    
    
    52,580
    
    
    
    19,394Total deposits
    
    
    438,252
    
    
    
    170,938Short-term borrowings
    
    
    68,838
    
    
    
    29,511Long-term borrowings
    
    
    9,134
    
    
    
    11,137Junior subordinate debentures
    
    
    3,126
    
    
    
    Accrued interest payable
    
    
    1,112
    
    
    
    475Other liabilities
    
    
    2,828
    
    
    
    1,636TOTAL LIABILITIES
    
    
    523,290
    
    
    
    213,697STOCKHOLDERS EQUITYCommon stock, par value $1.25 per share; authorized
5,000,000 shares; issued and outstanding 2,249,010 shares
in 2008 and 1,226,536 shares in 2007
    
    
    2,811
    
    
    
    1,533Surplus
    
    
    27,102
    
    
    
    2,271Retained earnings
    
    
    28,896
    
    
    
    27,679Accumulated other comprehensive income
    
    
    142
    
    
    
    144TOTAL STOCKHOLDERS EQUITY
    
    
    58,951
    
    
    
    31,627TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    582,241
    
    
    $
    245,324
  - 2 -




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##### 



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(In Thousands, Except Per Share Data)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007INTEREST AND DIVIDEND INCOMEInterest and fees on loans:Taxable
    
    $
    4,535
    
    
    $
    2,667
    
    
    $
    9,614
    
    
    $
    7,926Tax-exempt
    
    
    197
    
    
    
    132
    
    
    
    495
    
    
    
    363Interest and divedends on investment securities:Taxable
    
    
    1,967
    
    
    
    657
    
    
    
    3,220
    
    
    
    1,757Tax-exempt
    
    
    80
    
    
    
    44
    
    
    
    164
    
    
    
    141Dividend and other interest income
    
    
    39
    
    
    
    32
    
    
    
    88
    
    
    
    92Federal funds sold
    
    
    45
    
    
    
    138
    
    
    
    153
    
    
    
    412Deposits in other banks
    
    
    3
    
    
    
    48
    
    
    
    23
    
    
    
    136TOTAL INTEREST AND DIVIDEND INCOME
    
    
    6,866
    
    
    
    3,718
    
    
    
    13,757
    
    
    
    10,827INTEREST EXPENSEDeposits
    
    
    1,979
    
    
    
    1,038
    
    
    
    4,005
    
    
    
    3,016Short-term borrowings
    
    
    222
    
    
    
    406
    
    
    
    580
    
    
    
    1,108Long-term borrowings
    
    
    140
    
    
    
    168
    
    
    
    432
    
    
    
    502Junior subordinate debentures
    
    
    44
    
    
    
    
    
    
    
    44
    
    
    
    TOTAL INTEREST EXPENSE
    
    
    2,385
    
    
    
    1,612
    
    
    
    5,061
    
    
    
    4,626NET INTEREST INCOME
    
    
    4,481
    
    
    
    2,106
    
    
    
    8,696
    
    
    
    6,201PROVISION FOR LOAN LOSSES
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
    
    
    4,481
    
    
    
    2,106
    
    
    
    8,696
    
    
    
    6,171NON-INTEREST INCOMEService charges and fees
    
    
    317
    
    
    
    240
    
    
    
    797
    
    
    
    680Gain on sale of loans
    
    
    74
    
    
    
    60
    
    
    
    194
    
    
    
    124Bank-owned life insurance
    
    
    111
    
    
    
    74
    
    
    
    244
    
    
    
    217Investment center
    
    
    82
    
    
    
    68
    
    
    
    174
    
    
    
    339Trust department
    
    
    143
    
    
    
    50
    
    
    
    217
    
    
    
    132Other
    
    
    427
    
    
    
    81
    
    
    
    565
    
    
    
    230TOTAL NON-INTEREST INCOME
    
    
    1,154
    
    
    
    573
    
    
    
    2,191
    
    
    
    1,722NON-INTEREST EXPENSESalaries
    
    
    1,637
    
    
    
    723
    
    
    
    3,056
    
    
    
    2,224Employee benefits
    
    
    1,125
    
    
    
    212
    
    
    
    1,595
    
    
    
    660Occupancy
    
    
    240
    
    
    
    122
    
    
    
    496
    
    
    
    369Equipment
    
    
    361
    
    
    
    121
    
    
    
    583
    
    
    
    363State shares tax
    
    
    114
    
    
    
    77
    
    
    
    277
    
    
    
    236Professional services
    
    
    250
    
    
    
    84
    
    
    
    382
    
    
    
    213Directors fees
    
    
    55
    
    
    
    46
    
    
    
    152
    
    
    
    139Stationary and supplies
    
    
    99
    
    
    
    32
    
    
    
    153
    
    
    
    127Impairment loss on securities
    
    
    283
    
    
    
    
    
    
    
    283
    
    
    
    Other
    
    
    416
    
    
    
    295
    
    
    
    987
    
    
    
    900TOTAL NON-INTEREST EXPENSE
    
    
    4,580
    
    
    
    1,712
    
    
    
    7,964
    
    
    
    5,231INCOME BEFORE INCOME TAX PROVISION
    
    
    1,055
    
    
    
    967
    
    
    
    2,923
    
    
    
    2,662INCOME TAX PROVISION
    
    
    183
    
    
    
    249
    
    
    
    653
    
    
    
    675NET INCOME
    
    $
    872
    
    
    $
    718
    
    
    $
    2,270
    
    
    $
    1,987EARNINGS PER SHARE  BASIC AND DILUTED
    
    $
    0.43
    
    
    $
    0.58
    
    
    $
    1.51
    
    
    $
    1.61DIVIDENDS PER SHARE
    
    $
    0.24
    
    
    $
    0.21
    
    
    $
    0.66
    
    
    $
    0.61WEIGHTED AVERAGE SHARES OUTSTANDING
    
    
    2,056,686
    
    
    
    1,235,249
    
    
    
    1,503,955
    
    
    
    1,235,249
  - 3 -




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##### 



Nine Months EndedSeptember 30,(In Thousands)
    
    2008
    
    
    2007OPERATING ACTIVITIESNet Income
    
    $
    2,270
    
    
    $
    1,987Adjustments to reconcile net income to net cash
provided by operating activities:Provision for loan losses
    
    
    
    
    
    
    30Depreciation and amortization
    
    
    565
    
    
    
    307Employee stock purchase plan expense
    
    
    2
    
    
    
    2Impairment loss on securites
    
    
    283
    
    
    
    Amortization of investment security premiums
    
    
    217
    
    
    
    70Accretion of investment security discounts
    
    
    (36
    )
    
    
    (21
    )Deferred income taxes benefit
    
    
    (165
    )
    
    
    (55
    )Gain on sale of loans
    
    
    (194
    )
    
    
    (124
    )Proceeds from sale of mortgage loans
    
    
    11,194
    
    
    
    5,260Originations of mortgage loans held for resale
    
    
    (11,775
    )
    
    
    (5,167
    )Income from investment in insurance agency
    
    
    (18
    )
    
    
    (10
    )Increase in accrued interest receivable and other assets
    
    
    (617
    )
    
    
    (728
    )Increases in cash surrender value of bank-owned life insurance
    
    
    (275
    )
    
    
    (242
    )(Decrease) Increase in accrued interest payable, other expenses
and other liabilites
    
    
    (22
    )
    
    
    135Net cash provided by operating activities
    
    
    1,429
    
    
    
    1,444INVESTING ACTIVITIESInvestment securities available for sale:Purchases
    
    
    (48,283
    )
    
    
    (31,379
    )Proceeds from sales, maturities and redemptions
    
    
    34,380
    
    
    
    22,806Proceeds from redemption of regulatory stock
    
    
    1,387
    
    
    
    6Purchase of regulatory stock
    
    
    (1,825
    )
    
    
    (62
    )Net decrease in loans
    
    
    (412
    )
    
    
    (830
    )Acquisition of bank cash
    
    
    5,803
    
    
    
    Acquisition of bank premises and equipment
    
    
    (515
    )
    
    
    (440
    )Net cash used for investing activities
    
    
    (9,465
    )
    
    
    (9,899
    )FINANCING ACTIVITIESNet increase in deposits
    
    
    2,622
    
    
    
    3,271Net increase in short-term borrowings
    
    
    7,444
    
    
    
    8,056Repayment of long-term borrowings
    
    
    (2,003
    )
    
    
    (159
    )Acquisition of treasury stock
    
    
    (398
    )
    
    
    (499
    )Proceeds from issuance of common stock
    
    
    191
    
    
    
    181Cash dividends paid
    
    
    (1,053
    )
    
    
    (752
    )Net cash provided by financing activities
    
    
    6,803
    
    
    
    10,098NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    (1,233
    )
    
    
    1,643CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    13,401
    
    
    
    15,531CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    12,168
    
    
    $
    17,174SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATIONInterest paid
    
    $
    4,424
    
    
    $
    4,564Income taxes paid
    
    
    735
    
    
    
    644Loans transferred to other real estate owned
    
    
    242
    
    
    
    
  - 4 -




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CCFNB Bancorp, Inc. and Subsidiary
 
 Notes to Consolidated Financial Statements
 September 30, 2008
 NOTE 1  Summary of Significant Accounting Policies
  Principles of Consolidation
 ).
 Nature of Operations & Lines of Business
   Segment Reporting
   - 5 -




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Use of Estimates
  Investment Securities
    Loans
   Past Due Loans
 Non-Accrual Loans
 - 6 -




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Allowance for Loan Losses
    Derivatives
  Premises and Equipment
  - 7 -




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Mortgage Servicing Rights
  Other Real Estate Owned
  Bank Owned Life Insurance
  Investment in Limited Partnerships
  Investment in Insurance Agency
  - 8 -




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Junior Subordinated Debentures
  Intangible Asset  Goodwill
  Intangible Asset  Core Deposit
  - 9 -




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##### 



Remainder of 2008
    
    $
    168,0002009
    
    
    643,0002010
    
    
    576,0002011
    
    
    509,0002012
    
    
    442,0002013
    
    
    374,000Thereafter
    
    
    867,000Total
    
    $
    3,579,000
 Income Taxes
  Per Share Data
  Cash Flow Information
  Trust Assets and Income
  - 10 -




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Recent Accounting Pronouncements
     - 11 -




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- 12 -




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- 13 -




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##### 



Advertising Costs
  Reclassification
  NOTE 2  Allowance for Loan Losses
  (Amounts in Thousands)2008
    
    
    2007Balance, beginning of year
    
    $
    1,437
    
    
    $
    1,456Provision charged to operations
    
    
    
    
    
    
    30Allowance acquired
    
    
    1,683
    
    
    
    Loans charged-off
    
    
    (94
    )
    
    
    (59
    )Recoveries
    
    
    29
    
    
    
    33Balance, September 30
    
    $
    3,055
    
    
    $
    1,460
 - 14 -




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.
  NOTE 3  Short-Term Borrowings
  NOTE 4  Long-Term Borrowings
  NOTE 5  Deferred Compensation Plans
   - 15 -




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NOTE 6  Stockholders Equity
  (Amounts in Thousands, Except Common Share Data)AccumulatedOtherComprehensiveCommon
    
    
    Common
    
    
    
    
    
    
    Comprehensive
    
    
    Retained
    
    
    Income
    
    
    TreasuryShares
    
    
    Stock
    
    
    Surplus
    
    
    Income
    
    
    Earnings
    
    
    (Loss)
    
    
    Stock
    
    
    TotalBalance at January 1, 2008
    
    
    1,226,536
    
    
    $
    1,533
    
    
    $
    2,271
    
    
    
    
    
    
    $
    27,679
    
    
    $
    144
    
    
    $
    
    
    
    $
    31,627Comprehensive Income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    2,270
    
    
    
    2,270
    
    
    
    
    
    
    
    
    
    
    
    2,270Change in unrealized gain (loss)
on investment securities
available-for-sale net of
reclassification adjustment
and tax effects
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    (2
    )TOTAL COMPREHENSIVE
INCOME
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    2,268Par value of new shares issued
to acquire Columbia Financial
    
    
    1,030,286
    
    
    
    1,288
    
    
    
    25,026
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,314Issuance of 8,188 shares of
common stock under dividend
reinvestment and stock
purchase plans
    
    
    8,188
    
    
    
    10
    
    
    
    181
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    191Recognition of employee stock
purchase plan expense
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2Purchase of 16,000 shares of
treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (398
    )
    
    
    (398
    )Retirement of 16,000 shares of
treasury stock
    
    
    (16,000
    )
    
    
    (20
    )
    
    
    (378
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    398
    
    
    
    Cash dividends $.66 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,053
    )
    
    
    
    
    
    
    
    
    
    
    (1,053
    )Balance at September 30, 2008
    
    
    2,249,010
    
    
    $
    2,811
    
    
    $
    27,102
    
    
    
    
    
    
    $
    28,896
    
    
    $
    142
    
    
    $
    
    
    
    $
    58,951
 NOTE 7  Acquisition
  - 16 -




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##### 



(Amounts in thousands)Purchase price
    
    $
    26,316Carrying value of net assets acquired
    
    
    (17,855
    )Excess of purchase price over carrying value
of net assets acquired
    
    
    8,461Purchase accounting adjustments:Loans
    
    
    30Premises and equipment
    
    
    19Deposits
    
    
    1,235Junior subordinate debentures
    
    
    (1,517
    )Severance and related costs
    
    
    840Deferred taxes
    
    
    857Subtotal
    
    
    9,925Core deposit intangibles
    
    
    (3,690
    )Goodwill
    
    $
    6,235
  (Amounts in thousands)AssetsCash and cash equivalents
    
    $
    5,157Interest-bearing deposits in other banks
    
    
    129Federal funds sold
    
    
    517Investment securities
    
    
    138,257Loans, net of allowance for loan losses
    
    
    160,724Premises and equipment
    
    
    7,326Accrued interest receivable
    
    
    1,534Bank-owned life insurance
    
    
    3,258Investment in limited partnerships
    
    
    919Goodwill and other intangibles
    
    
    9,925Other assets
    
    
    119Total assets
    
    $
    327,865LiabilitiesDeposits
    
    $
    264,692Borrowings
    
    
    31,883Junior subordinate debenturs
    
    
    3,123Accrued interest payable
    
    
    764Other liabilities
    
    
    1,087Total liabilities
    
    $
    301,549Fair value of net assets acquired
    
    $
    26,316
 - 17 -




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##### 



Nine Months EndedSeptember 30,
    
    September 30,(Amounts in thousands, except per share amounts)
    
    2008
    
    2007Net interest income
    
    $
    13,975
    
    
    $
    13,334Provision for loan losses
    
    
    25
    
    
    
    255Net interest income after provision for loan losses
    
    
    13,950
    
    
    
    13,079Noninterest income
    
    
    3,604
    
    
    
    3,125Noninterest expense
    
    
    12,432
    
    
    
    12,560Income before income tax expense
    
    
    5,122
    
    
    
    3,644Income tax expense
    
    
    1,500
    
    
    
    832Net income
    
    $
    3,622
    
    
    $
    2,812Net Income per Common Share
    
    $
    1.61
    
    
    $
    1.24Average common shares outstanding
    
    
    2,252,228
    
    
    
    2,265,535
  NOTE 8  Financial Instruments with Off-Balance Sheet Risk and Concentrations of Credit Risk
   (Amounts in Thousands)September
    
    December30, 2008
    
    31, 2007Financial instruments whose contract amounts represent credit risk:Commitments to extend credit
    
    $
    62,334
    
    
    $
    20,492Financial standby letters of credit
    
    
    2,970
    
    
    
    756Performance standby letters of credit
    
    
    106
    
    
    
    923Dealer floor plans
    
    
    337
    
    
    
    66Loans for resale
    
    
    1,632
    
    
    
    418
 - 18 -




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##### 



NOTE 9  Fair Value Measurements
  Level I:
    
    Quoted prices are available in active markets for identical assets or liabilities as of
the reported date.Level II:
    
    Pricing inputs are other than quoted prices in active markets, which are either
directly or indirectly
observables as of the reported date. The nature of these assets and liabilities include
items for which quoted prices are available but traded less frequently, and
items that are fair valued using other financial instruments of which can be directly
observed.Level III:
    
    Assets and liabilities that have little or no pricing observability as of the
reported date. These items do not have two-way markets and are measured using managements best
estimate of fair value, where the inputs into determination of fair value require significant
management judgment or estimation.
  September 30, 2008(In Thousands)
    
    Level I
    
    Level II
    
    Level III
    
    TotalAssets:Investment Securities, available-for-sale
    
    $
    
    
    
    $
    209,817
    
    
    $
    
    
    
    $
    209,817
 - 19 -




---



##### 



NOTE 10  Managements Assertions and Comments Required to be Provided with Form 10Q Filing
    - 20 -




---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
       
 - 21 -




---



##### 



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Consolidated Summary of Operations
 At and For the NineMonthsEnded September 30,
    
    At and For the Years Ended December 31,2008
    
    
    2007
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Income and Expense:Interest income
    
    $
    13,757
    
    
    $
    10,827
    
    
    $
    14,483
    
    
    $
    13,202
    
    
    $
    11,442
    
    
    $
    10,843
    
    
    $
    11,221Interest expense
    
    
    5,061
    
    
    
    4,626
    
    
    
    6,185
    
    
    
    5,301
    
    
    
    4,131
    
    
    
    3,669
    
    
    
    4,366Net interest income
    
    
    8,696
    
    
    
    6,201
    
    
    
    8,298
    
    
    
    7,901
    
    
    
    7,311
    
    
    
    7,174
    
    
    
    6,855Provision for possible loan losses
    
    
    0
    
    
    
    30
    
    
    
    30
    
    
    
    175
    
    
    
    90
    
    
    
    140
    
    
    
    200Net interest income after loan loss
provision
    
    
    8,696
    
    
    
    6,171
    
    
    
    8,268
    
    
    
    7,726
    
    
    
    7,221
    
    
    
    7,034
    
    
    
    6,655Non-interest income
    
    
    2,191
    
    
    
    1,722
    
    
    
    2,305
    
    
    
    1,900
    
    
    
    1,713
    
    
    
    1,530
    
    
    
    1,508Non-interest expense
    
    
    7,964
    
    
    
    5,231
    
    
    
    7,038
    
    
    
    6,437
    
    
    
    6,077
    
    
    
    5,746
    
    
    
    5,409Income before income taxes
    
    
    2,923
    
    
    
    2,662
    
    
    
    3,535
    
    
    
    3,189
    
    
    
    2,857
    
    
    
    2,818
    
    
    
    2,754Income taxes
    
    
    653
    
    
    
    675
    
    
    
    888
    
    
    
    777
    
    
    
    631
    
    
    
    601
    
    
    
    591Net income
    
    $
    2,270
    
    
    $
    1,987
    
    
    $
    2,647
    
    
    $
    2,412
    
    
    $
    2,226
    
    
    $
    2,217
    
    
    $
    2,163Per Share: (1)Net income
    
    $
    1.51
    
    
    $
    1.61
    
    
    $
    2.15
    
    
    $
    1.93
    
    
    $
    1.76
    
    
    $
    1.74
    
    
    $
    1.69Cash dividends paid
    
    
    .66
    
    
    
    .61
    
    
    
    .82
    
    
    
    .78
    
    
    
    .74
    
    
    
    .70
    
    
    
    .66Average shares outstanding
    
    
    1,503,955
    
    
    
    1,235,249
    
    
    
    1,233,339
    
    
    
    1,249,844
    
    
    
    1,262,171
    
    
    
    1,267,718
    
    
    
    1,281,265Average Balance Sheet:Loans
    
    $
    205,486
    
    
    $
    160,038
    
    
    $
    160,348
    
    
    $
    158,554
    
    
    $
    150,065
    
    
    $
    147,348
    
    
    $
    149,485Investments
    
    
    98,444
    
    
    
    57,503
    
    
    
    58,553
    
    
    
    53,703
    
    
    
    54,943
    
    
    
    61,999
    
    
    
    58,152Other earning assets
    
    
    9,870
    
    
    
    14,362
    
    
    
    12,767
    
    
    
    7,621
    
    
    
    7,503
    
    
    
    5,705
    
    
    
    8,036Total assets
    
    
    313,800
    
    
    
    247,625
    
    
    
    248,476
    
    
    
    236,569
    
    
    
    230,081
    
    
    
    231,477
    
    
    
    230,975Deposits
    
    
    250,799
    
    
    
    170,489
    
    
    
    172,803
    
    
    
    167,024
    
    
    
    167,812
    
    
    
    172,028
    
    
    
    171,956Other interest-bearing liabilities
    
    
    46,279
    
    
    
    45,440
    
    
    
    42,770
    
    
    
    36,676
    
    
    
    32,253
    
    
    
    29,823
    
    
    
    29,772Stockholders equity
    
    
    39,602
    
    
    
    30,658
    
    
    
    31,003
    
    
    
    29,672
    
    
    
    28,789
    
    
    
    28,136
    
    
    
    27,223Balance Sheet Data:Loans
    
    $
    324,747
    
    
    $
    161,476
    
    
    $
    161,460
    
    
    $
    160,641
    
    
    $
    154,271
    
    
    $
    149,900
    
    
    $
    147,631Investments
    
    
    209,817
    
    
    
    62,159
    
    
    
    57,686
    
    
    
    53,486
    
    
    
    53,919
    
    
    
    61,834
    
    
    
    62,775Other earning assets
    
    
    12,168
    
    
    
    11,790
    
    
    
    13,401
    
    
    
    10,712
    
    
    
    6,239
    
    
    
    6,233
    
    
    
    6,882Total assets
    
    
    582,241
    
    
    
    254,202
    
    
    
    245,324
    
    
    
    241,920
    
    
    
    231,218
    
    
    
    235,377
    
    
    
    232,914Deposits
    
    
    438,252
    
    
    
    172,556
    
    
    
    170,938
    
    
    
    169,285
    
    
    
    164,847
    
    
    
    172,487
    
    
    
    171,786Other interest-bearing liabilities
    
    
    81,098
    
    
    
    48,504
    
    
    
    40,648
    
    
    
    40,607
    
    
    
    35,910
    
    
    
    30,080
    
    
    
    32,325Stockholders equity
    
    
    58,951
    
    
    
    31,228
    
    
    
    31,627
    
    
    
    30,248
    
    
    
    29,012
    
    
    
    28,506
    
    
    
    27,603Ratios: (2)Return on average assets
    
    
    .89
    %
    
    
    1.07
    %
    
    
    1.07
    %
    
    
    1.02
    %
    
    
    .97
    %
    
    
    .96
    %
    
    
    .94
    %Return on average equity
    
    
    7.64
    %
    
    
    8.64
    %
    
    
    8.54
    %
    
    
    8.13
    %
    
    
    7.73
    %
    
    
    7.88
    %
    
    
    7.95
    %Dividend payout ratio
    
    
    46.39
    %
    
    
    37.80
    %
    
    
    38.15
    %
    
    
    40.39
    %
    
    
    41.92
    %
    
    
    40.19
    %
    
    
    39.02
    %Average equity to average assets ratio
    
    
    11.68
    %
    
    
    12.38
    %
    
    
    12.89
    %
    
    
    12.54
    %
    
    
    12.51
    %
    
    
    12.17
    %
    
    
    11.79
    %
 
 (1)
    
    Per share data has been calculated on the weighted average number of shares outstanding.(2)
    
    The ratios for the nine-month period ending September 30, 2008 and 2007 are annualized.   - 22 -




---



##### 



Earnings Summary
       Net Interest Income
  - 23 -




---



##### 



ANALYSIS OF AVERAGE ASSETS, LIABILITIES AND CAPITAL EQUITY
AND
NET INTEREST INCOME ON A TAX EQUIVALENT BASIS
 AVERAGE BALANCES AND INTEREST RATESNine Months Ended
    
    
    Nine Months EndedSeptember 30, 2008
    
    
    September 30, 2007Average Balance
    
    
    Interest
    
    
    Average Rate
    
    
    Average Balance
    
    
    Interest
    
    
    Average Rate(In Thousands)
    
    (1)
    
    
    (2)
    
    
    
    
    
    
    (1)
    
    
    (2)Assets:Tax-exempt loans (3)
    
    $
    14,994
    
    
    $
    750
    
    
    
    6.68
    %
    
    $
    11,880
    
    
    $
    550
    
    
    
    6.19
    %All other loans
    
    
    190,492
    
    
    
    9,614
    
    
    
    6.74
    %
    
    
    148,158
    
    
    
    7,926
    
    
    
    7.15
    %Total loans
    
    
    205,486
    
    
    
    10,364
    
    
    
    6.74
    %
    
    
    160,038
    
    
    
    8,476
    
    
    
    7.08
    %Taxable investment securities
    
    
    93,239
    
    
    
    3,309
    
    
    
    4.73
    %
    
    
    53,489
    
    
    
    1,849
    
    
    
    4.61
    %Tax-exempt investment securities (3)
    
    
    5,205
    
    
    
    248
    
    
    
    6.35
    %
    
    
    4,014
    
    
    
    214
    
    
    
    7.11
    %Total securities
    
    
    98,444
    
    
    
    3,557
    
    
    
    4.82
    %
    
    
    57,503
    
    
    
    2,063
    
    
    
    4.78
    %Interest bearing deposits
    
    
    9,870
    
    
    
    176
    
    
    
    2.38
    %
    
    
    14,362
    
    
    
    548
    
    
    
    5.10
    %Total interest-earning assets
    
    
    313,800
    
    
    
    14,097
    
    
    
    6.00
    %
    
    
    231,903
    
    
    
    11,087
    
    
    
    6.39
    %Other assets
    
    
    25,220
    
    
    
    
    
    
    
    
    
    
    
    15,722Total assets
    
    $
    339,020
    
    
    
    
    
    
    
    
    
    
    $
    247,625Liabilities:Interest-bearing deposits
    
    $
    221,738
    
    
    
    4,005
    
    
    
    2.41
    %
    
    $
    152,137
    
    
    
    3,016
    
    
    
    2.65
    %Short-term borrowings
    
    
    35,684
    
    
    
    580
    
    
    
    2.17
    %
    
    
    34,302
    
    
    
    1,108
    
    
    
    4.32
    %Junior subordinate debt
    
    
    1,087
    
    
    
    44
    
    
    
    5.41
    %
    
    
    
    
    
    
    
    
    
    
    N/AOther borrowings
    
    
    9,508
    
    
    
    432
    
    
    
    6.07
    %
    
    
    11,138
    
    
    
    502
    
    
    
    6.03
    %Total interest-bearing liabilities
    
    
    268,017
    
    
    
    5,061
    
    
    
    2.52
    %
    
    
    197,577
    
    
    
    4,626
    
    
    
    3.13
    %Demand deposits
    
    
    29,061
    
    
    
    
    
    
    
    
    
    
    
    18,352Other liabilities
    
    
    2,340
    
    
    
    
    
    
    
    
    
    
    
    1,038Shareholders equity
    
    
    39,602
    
    
    
    
    
    
    
    
    
    
    
    30,658$
    339,020
    
    
    
    
    
    
    
    
    
    
    $
    247,625Interest rate spread (6)
    
    
    
    
    
    
    
    
    
    
    3.48
    %
    
    
    
    
    
    
    
    
    
    
    3.26
    %Net interest income/margin (4)(5)
    
    
    
    
    
    $
    9,036
    
    
    
    3.84
    %
    
    
    
    
    
    $
    6,461
    
    
    
    3.72
    %
 
 (1)
    
    Average volume information was computed using daily (or monthly) averages for interest earning
and bearing
accounts. Certain balance sheet items utilized quarter end balances for averages. Due to the
availability
of certain daily and monthly average balance information, certain reclassifications were made
to prior period amounts.(2)
    
    Interest on loans includes fee income.(3)
    
    Yield on tax-exempt obligations has been computed on a tax-equivalent basis.(4)
    
    Net interest margin is computed by dividing annualized net interest income by total interest
earning assets.(5)
    
    Interest and yield are presented on a tax-equivalent basis using 34 percent for 2008 and 2007.(6)
    
    Interest rate spread represents the difference between the average rate earned on
interest-earning assets and the average
rate paid on interest-bearing liabilities. - 24 -




---



##### 



For the Nine Months EndedSeptember 30,(In Thousands)
    
    2008
    
    
    2007Total interest income
    
    $
    13,757
    
    
    $
    10,827Total interest expense
    
    
    5,061
    
    
    
    4,626Net interest income
    
    
    8,696
    
    
    
    6,201Tax equivalent adjustment
    
    
    340
    
    
    
    260Net interest income (fully taxable equivalent)
    
    $
    9,036
    
    
    $
    6,461
  Nine Months Ended September 30,2008 vs 2007Increase (Decrease)Due to (1)(In Thousands)
    
    Volume
    
    
    Rate
    
    
    NetInterest income:Loans, tax-exempt
    
    $
    144
    
    
    $
    56
    
    
    $
    200Loans
    
    
    2,265
    
    
    
    (577
    )
    
    
    1,688Taxable investment securities
    
    
    1,374
    
    
    
    86
    
    
    
    1,460Tax-exempt investment securities
    
    
    63
    
    
    
    (29
    )
    
    
    34Interest bearing deposits
    
    
    (171
    )
    
    
    (201
    )
    
    
    (372
    )Total interest-earning assets
    
    
    3,675
    
    
    
    (665
    )
    
    
    3,010Interest expense:Interest -bearing deposits
    
    
    1,380
    
    
    
    (391
    )
    
    
    989Short-term borrowings
    
    
    45
    
    
    
    (573
    )
    
    
    (528
    )Junior subordinate debentures
    
    
    44
    
    
    
    
    
    
    
    44Long-term borrowings, FHLB
    
    
    (73
    )
    
    
    3
    
    
    
    (70
    )Total interest-bearing liabilities
    
    
    1,396
    
    
    
    (961
    )
    
    
    435Change in net interest income
    
    $
    2,279
    
    
    $
    296
    
    
    $
    2,575
 
 (1)
    
    Variances resulting from a combination of changes in volume and rates are allocated to the
categories in proportion to the absolute dollar amounts of the change in each category   - 25 -




---



##### 



Non-Interest Income
  Nine Months EndedSeptember 30,(Dollars in thousands)2008
    
    
    2007Service charges and fees
    
    $
    797
    
    
    $
    680Gain on sale of loans
    
    
    194
    
    
    
    124Bank-owned life insurance income
    
    
    244
    
    
    
    217Investment center
    
    
    174
    
    
    
    339Trust department
    
    
    217
    
    
    
    132Other
    
    
    565
    
    
    
    230Total
    
    $
    2,191
    
    
    $
    1,722
      Non-Interest Expense
  Nine Months EndedSeptember 30,2008
    
    
    2007(Dollars in Thousands)Salaries
    
    $
    3,056
    
    
    $
    2,224Employee benefits
    
    
    1,595
    
    
    
    660Occupancy
    
    
    496
    
    
    
    369Equipment
    
    
    583
    
    
    
    363State shares tax
    
    
    277
    
    
    
    236Professional services
    
    
    382
    
    
    
    213Directors fees
    
    
    152
    
    
    
    139Stationery and supplies
    
    
    153
    
    
    
    127Impairment loss on securities
    
    
    283
    
    
    
    0Other
    
    
    987
    
    
    
    900Total
    
    $
    7,964
    
    
    $
    5,231
 - 26 -




---



##### 



Income Taxes
  ASSET / LIABILITY MANAGEMENT
 Interest Rate Sensitivity
   - 27 -




---



##### 



Liquidity
   Less than 12 months
    
    12 months or more
    
    TotalDescription of Security
    
    
    
    
    
    Unrealized
    
    
    
    
    
    Unrealized
    
    
    
    
    
    Unrealized(Dollars in thousands)
    
    Fair Value
    
    Loss
    
    Fair Value
    
    Loss
    
    Fair Value
    
    LossObligations of U.S. Government
Corporations and Agencies:Mortgage backed
    
    $
    21,321
    
    
    $
    117
    
    
    $
    661
    
    
    $
    2
    
    
    $
    21,982
    
    
    $
    119Other
    
    
    43,333
    
    
    
    626
    
    
    
    0
    
    
    
    0
    
    
    
    43,333
    
    
    
    626Obligations of State and Political
Subdivisions
    
    
    7,006
    
    
    
    132
    
    
    
    0
    
    
    
    0
    
    
    
    7,006
    
    
    
    132Marketable Equity Securities
    
    
    710
    
    
    
    54
    
    
    
    179
    
    
    
    33
    
    
    
    889
    
    
    
    87Total
    
    $
    72,370
    
    
    $
    929
    
    
    $
    840
    
    
    $
    35
    
    
    $
    73,210
    
    
    $
    964
   Non-Performing Assets
  September 30, 2008
    
    
    December 31,2007Past due and non-accrual:Days 30  89
    
    $
    3,197
    
    
    $
    460Days 90 plus
    
    
    0
    
    
    
    80Non-accrual
    
    
    3,835
    
    
    
    77Total
    
    $
    7,032
    
    
    $
    617
  - 28 -




---



##### 



September 302008(Dollars inthousands)(1) Three months or less
    
    $
    6,303(2) Over three months through 12 months
    
    
    18,929(3) Over one year through three years
    
    
    44,253(4) Over three years through five years
    
    
    25,558(5) Over five years through 15 years
    
    
    50,930(6) Over 15 years
    
    
    5,164All loans and leases other than closed-end loans secured by first liens on 1-4 family residential
properties with a remaining maturity or repricing frequency of:(1) Three months or less
    
    
    36,496(2) Over three months through 12 months
    
    
    20,001(3) Over one year through three years
    
    
    36,615(4) Over three years through five years
    
    
    22,739(5) Over five years through 15 years
    
    
    46,039(6) Over 15 years
    
    
    7,398Sub-total
    
    
    320,425Add:
    
    Non-accrual loans not included above
    
    
    4,351Less:
    
    Unearned income
    
    
    (30
    )Total Loans and Leases
    
    $
    324,747
 Allowance for Loan Losses
     
 - 29 -




---



##### 



For the Nine MonthsEnded September 30,(Dollars in thousands)2008
    
    
    2007Average loans outstanding:
    
    $
    205,486
    
    
    $
    160,038Total loans at end of period
    
    
    324,747
    
    
    
    161,476Balance at beginning of period
    
    $
    1,437
    
    
    $
    1,456Allowance acquired
    
    
    1,683
    
    
    
    Total charge-offs
    
    
    (94
    )
    
    
    (59
    )Total recoveries ,
    
    
    29
    
    
    
    33Net charge-offs
    
    
    (65
    )
    
    
    (26
    )Provision for loan losses
    
    
    0
    
    
    
    30Balance at end of period
    
    $
    3,055
    
    
    $
    1,460Net charge-offs as a percent of average loans outstanding during period
    
    
    .03
    %
    
    
    .02
    %Allowance for loan losses as a percent of total loans
    
    
    .94
    %
    
    
    .90
    %
  Capital Adequacy
   September 30, 2008
    
    December 31, 2007Minimum
    
    
    
    
    
    MinimumCalculated
    
    Standard
    
    Calculated
    
    StandardRatios
    
    Ratios
    
    Ratios
    
    RatiosRisk Based Ratios:Tier I Capital to risk-weighted assets
    
    
    14.87
    %
    
    
    4.00
    %
    
    
    18.10
    %
    
    
    4.00
    %Total Qualifying Capital to risk-weighted assets
    
    
    15.76
    %
    
    
    8.00
    %
    
    
    18.93
    %
    
    
    8.00
    %
  September 30,
    
    December 31,2008
    
    2007Tier I Capital to average assets
    
    
    10.21
    %
    
    
    12.71
    %
   - 30 -




---



##### 



Item 3. Quantitative and qualitative disclosure about market risk
   
 Item 4. Controls and Procedures
    - 31 -




---



##### 



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 CCFNB BANCORP, INC.
ISSUER PURCHASES OF EQUITY SECURITIES
 NUMBER OF SHARESPURCHASED AS PART
    
    NUMBER OF SHARESOF PUBLICLY
    
    THAT MAY YET BENUMBER OF SHARES
    
    
    
    
    
    ANNOUNCED
    
    PURCHASED UNDERPERIOD
    
    PURCHASED
    
    PRICE PAID PER SHARE
    
    PROGRAM (1)
    
    THE PROGRAM07/01/08  07/31/08
    
    
    4,000
    
    
    $
    23.40
    
    
    
    4,000
    
    
    
    008/01/08  08/31/08
    
    
    0
    
    
    
    
    
    
    
    
    
    
    
    009/01/08  09/30/08
    
    
    0
    
    
    
    
    
    
    
    
    
    
    
    0TOTAL
    
    
    4,000
    
    
    
    
    
    
    
    4,000
 
 (1)
    
    This program was announced in 2003 and represents the second buy-back program. The
Board of Directors approved the purchase of 100,000 shares. There was no expiration date
associated with this program. 
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  - 32 -




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##### 



.
     
 Item 6. Exhibits and Reports on Form 8-K
   31.1
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer31.2
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer32
    
    Section 1350 Certification of Chief Executive Officer and Chief Financial Officer
 - 33 -




---



##### 



SIGNATURES
  CCFNB BANCORP, INC.

              (Registrant)By
    
    /s/ Lance O. Diehl

Lance O. DiehlPresident and CEODate: November 7, 2008By
    
    /s/ Shirley K. Alters

Shirley K. AltersChief Financial OfficerDate: November 7, 2008
 - 34 -