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, 2010.
 Or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to .
 No. 0-19028
  CCFNB BANCORP, INC.
  PENNSYLVANIA
    
    23-2254643(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification Number)232 East Street, Bloomsburg, PA
    

    17815(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code:
(570) 784-4400
 þ o
 o þ
  Large accelerated filer oAccelerated filer oNon-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
 Page NumberPart I Financial InformationItem1. Financial StatementsConsolidated Balance Sheets as of September 30, 2010 (unaudited) and December 31, 2009
    
    3Consolidated Statements of Income (unaudited) for the three and nine months ended September 30, 2010 and 2009
    
    4Consolidated Statement of Changes in Stockholders Equity (unaudited) for the nine months ended September 30, 2010 and 2009
    
    5Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2010 and 2009
    
    6Notes to Consolidated Financial Statements (unaudited)
    
    7Report of Independent Registered Public Accounting Firm
    
    22Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    23Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    33Item 4. Controls and Procedures
    
    33Part II Other Information
    
    33Item 1. Legal Proceedings
    
    33Item 1A. Risk Factors
    
    33Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    34Item 3. Defaults Upon Senior Securities
    
    34Item 5. Other Information
    
    34Item 6. Exhibits
    
    34Signatures
    
    35Exhibits
    
    36
 2




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##### 



PART I Financial Information
 Item 1. Financial Statements
 CCFNB Bancorp, Inc.
Consolidated Balance Sheets
 (Unaudited)September 30,
    
    
    December 31,(In Thousands)
    
    2010
    
    
    2009ASSETSCash and due from banks
    
    $
    9,306
    
    
    $
    10,751Interest-bearing deposits in other banks
    
    
    18,619
    
    
    
    116Federal funds sold
    
    
    3,108
    
    
    
    592Total cash and cash equivalents
    
    
    31,033
    
    
    
    11,459Investment securities, available for sale, at fair value
    
    
    204,063
    
    
    
    220,266Restricted securities, at cost
    
    
    3,168
    
    
    
    2,984Loans, net of unearned income
    
    
    340,307
    
    
    
    330,489Less: Allowance for loan losses
    
    
    4,574
    
    
    
    4,210Loans, net
    
    
    335,733
    
    
    
    326,279Premises and equipment, net
    
    
    12,280
    
    
    
    12,583Accrued interest receivable
    
    
    1,891
    
    
    
    2,006Cash surrender value of bank-owned life insurance
    
    
    11,822
    
    
    
    11,440Investment in limited partnerships
    
    
    1,648
    
    
    
    687Intangible Assets:Core deposit
    
    
    2,326
    
    
    
    2,768Goodwill
    
    
    7,937
    
    
    
    7,937Prepaid FDIC assessment
    
    
    1,628
    
    
    
    2,037Other assets
    
    
    2,259
    
    
    
    2,043TOTAL ASSETS
    
    $
    615,788
    
    
    $
    602,489LIABILITIESInterest-bearing deposits
    
    $
    408,790
    
    
    $
    406,554Noninterest-bearing deposits
    
    
    62,133
    
    
    
    55,734Total deposits
    
    
    470,923
    
    
    
    462,288Short-term borrowings
    
    
    62,517
    
    
    
    51,997Long-term borrowings
    
    
    6,124
    
    
    
    15,128Junior subordinate debentures
    
    
    4,640
    
    
    
    4,640Accrued interest payable
    
    
    674
    
    
    
    859Other liabilities
    
    
    3,159
    
    
    
    2,491TOTAL LIABILITIES
    
    
    548,037
    
    
    
    537,403STOCKHOLDERS EQUITYCommon stock, par value $1.25 per share; authorized
5,000,000 shares; issued 2,283,005 shares
in 2010 and 2,270,850 shares in 2009
    
    
    2,854
    
    
    
    2,838Surplus
    
    
    27,854
    
    
    
    27,539Retained earnings
    
    
    35,646
    
    
    
    32,723Accumulated other comprehensive income
    
    
    2,840
    
    
    
    2,523Treasury stock, at cost; 56,000 shares in 2010 and 22,500 shares
in 2009
    
    
    (1,443
    )
    
    
    (537
    )TOTAL STOCKHOLDERS EQUITY
    
    
    67,751
    
    
    
    65,086TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    615,788
    
    
    $
    602,489
  3




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##### 



CCFNB Bancorp, Inc.
Consolidated Statements of Income
(Unaudited)
 For the Three Months Ended September 30,
    
    
    For the Nine Months Ended September 30,(In Thousands, Except Per Share Data)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009INTEREST AND DIVIDEND INCOMEInterest and fees on loans:Taxable
    
    $
    4,648
    
    
    $
    4,682
    
    
    $
    14,081
    
    
    $
    14,086Tax-exempt
    
    
    251
    
    
    
    215
    
    
    
    694
    
    
    
    622Interest and dividends on investment
securities:Taxable
    
    
    1,604
    
    
    
    1,968
    
    
    
    5,142
    
    
    
    6,195Tax-exempt
    
    
    97
    
    
    
    123
    
    
    
    302
    
    
    
    315Dividend and other interest income
    
    
    10
    
    
    
    11
    
    
    
    31
    
    
    
    48Federal funds sold
    
    
    
    
    
    
    5
    
    
    
    1
    
    
    
    11Deposits in other banks
    
    
    14
    
    
    
    
    
    
    
    27
    
    
    
    1TOTAL INTEREST AND DIVIDEND INCOME
    
    
    6,624
    
    
    
    7,004
    
    
    
    20,278
    
    
    
    21,278INTEREST EXPENSEDeposits
    
    
    1,421
    
    
    
    1,842
    
    
    
    4,457
    
    
    
    5,775Short-term borrowings
    
    
    105
    
    
    
    95
    
    
    
    310
    
    
    
    254Long-term borrowings
    
    
    84
    
    
    
    175
    
    
    
    310
    
    
    
    462Junior subordinate debentures
    
    
    27
    
    
    
    28
    
    
    
    74
    
    
    
    104TOTAL INTEREST EXPENSE
    
    
    1,637
    
    
    
    2,140
    
    
    
    5,151
    
    
    
    6,595NET INTEREST INCOME
    
    
    4,987
    
    
    
    4,864
    
    
    
    15,127
    
    
    
    14,683PROVISION FOR LOAN LOSSES
    
    
    400
    
    
    
    310
    
    
    
    870
    
    
    
    530NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES
    
    
    4,587
    
    
    
    4,554
    
    
    
    14,257
    
    
    
    14,153NON-INTEREST INCOMEService charges and fees
    
    
    455
    
    
    
    427
    
    
    
    1,328
    
    
    
    1,251Gain on sale of loans
    
    
    454
    
    
    
    134
    
    
    
    758
    
    
    
    409Earnings on bank-owned life insurance
    
    
    102
    
    
    
    107
    
    
    
    325
    
    
    
    324Brokerage
    
    
    84
    
    
    
    83
    
    
    
    246
    
    
    
    190Trust
    
    
    168
    
    
    
    150
    
    
    
    507
    
    
    
    462Investment security losses
    
    
    
    
    
    
    (10
    )
    
    
    
    
    
    
    (71
    )Interchange fees
    
    
    216
    
    
    
    193
    
    
    
    624
    
    
    
    541Other
    
    
    304
    
    
    
    202
    
    
    
    686
    
    
    
    707TOTAL NON-INTEREST INCOME
    
    
    1,783
    
    
    
    1,286
    
    
    
    4,474
    
    
    
    3,813NON -INTEREST EXPENSESalaries
    
    
    1,627
    
    
    
    1,632
    
    
    
    4,791
    
    
    
    4,776Employee benefits
    
    
    526
    
    
    
    424
    
    
    
    1,424
    
    
    
    1,322Occupancy
    
    
    267
    
    
    
    249
    
    
    
    836
    
    
    
    810Furniture and equipment
    
    
    356
    
    
    
    319
    
    
    
    1,002
    
    
    
    944State shares tax
    
    
    142
    
    
    
    128
    
    
    
    418
    
    
    
    400Professional fees
    
    
    173
    
    
    
    172
    
    
    
    467
    
    
    
    447Directors fees
    
    
    71
    
    
    
    74
    
    
    
    203
    
    
    
    215FDIC assessments
    
    
    163
    
    
    
    105
    
    
    
    460
    
    
    
    543Telecommunications
    
    
    98
    
    
    
    84
    
    
    
    275
    
    
    
    263Amortization of core deposit intangible
    
    
    140
    
    
    
    156
    
    
    
    442
    
    
    
    492Automated teller machine and interchange
    
    
    144
    
    
    
    135
    
    
    
    412
    
    
    
    377Other
    
    
    420
    
    
    
    438
    
    
    
    1,378
    
    
    
    1,399TOTAL NON-INTEREST EXPENSE
    
    
    4,127
    
    
    
    3,916
    
    
    
    12,108
    
    
    
    11,988INCOME BEFORE IN COME TAX PROVISION
    
    
    2,243
    
    
    
    1,924
    
    
    
    6,623
    
    
    
    5,978INCOME TAX PROVISION
    
    
    557
    
    
    
    463
    
    
    
    1,736
    
    
    
    1,423NET INCOME
    
    $
    1,686
    
    
    $
    1,461
    
    
    $
    4,887
    
    
    $
    4,555EARNINGS PER SHARE
    
    $
    0.76
    
    
    $
    0.65
    
    
    $
    2.19
    
    
    $
    2.02CASH DIVIDENDS PER SHARE
    
    $
    0.30
    
    
    $
    0.27
    
    
    $
    0.88
    
    
    $
    0.75WEIGHTED AVERAGE SHARES OUTSTANDING
    
    
    2,228,836
    
    
    
    2,252,039
    
    
    
    2,235,114
    
    
    
    2,253,872
  4




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##### 



CCFNB Bancorp, Inc.
Consolidated Statements of Changes in Stockholders Equity
(Unaudited)
 AccumulatedCommon
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    TotalStock
    
    
    
    
    
    
    Retained
    
    
    Comprehensive
    
    
    Treasury
    
    
    Stockholders(In Thousands Except Per Share Data)
    
    Shares
    
    
    Amount
    
    
    Surplus
    
    
    Earnngs
    
    
    Income
    
    
    Stock
    
    
    EquityBalance, December 31, 2008
    
    
    2,253,080
    
    
    $
    2,816
    
    
    $
    27,173
    
    
    $
    29,164
    
    
    $
    1,622
    
    
    $
    
    
    
    $
    60,775Comprehensive Income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,555
    
    
    
    
    
    
    
    
    
    
    
    4,555Change in net unrealized gain on
investment securities available-for-sale,
net of reclassification adjustment and
tax effects.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,142
    
    
    
    
    
    
    
    1,142Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,697Common stock issuance under dividend
reinvestment and stock purchase plans
    
    
    13,900
    
    
    
    18
    
    
    
    265
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    283Recognition of employee stock purchase
plan expense
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5Purchase of treasury stock (12,500 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (273
    )
    
    
    (273
    )Cash dividends, ($0.75 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,689
    )
    
    
    
    
    
    
    
    
    
    
    (1,689
    )Balance, September 30, 2009
    
    
    2,266,980
    
    
    $
    2,834
    
    
    $
    27,443
    
    
    $
    32,030
    
    
    $
    2,764
    
    
    $
    (273
    )
    
    $
    64,798Balance, December 31, 2009
    
    
    2,270,850
    
    
    $
    2,838
    
    
    $
    27,539
    
    
    $
    32,723
    
    
    $
    2,523
    
    
    $
    (537
    )
    
    $
    65,086Comprehensive Income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,887
    
    
    
    
    
    
    
    
    
    
    
    4,887Change in net unrealized gain on
investment securities available-for-sale,
net of reclassification adjustment and
tax effects.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    317
    
    
    
    
    
    
    
    317Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,204Common stock issuance under dividend
reinvestment and stock purchase plans
    
    
    12,155
    
    
    
    16
    
    
    
    312
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    328Recognition of employee stock purchase
plan expense
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3Purchase of treasury stock (33,500 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (906
    )
    
    
    (906
    )Cash dividends, ($0.88 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,964
    )
    
    
    
    
    
    
    
    
    
    
    (1,964
    )Balance, September 30, 2010
    
    
    2,283,005
    
    
    $
    2,854
    
    
    $
    27,854
    
    
    $
    35,646
    
    
    $
    2,840
    
    
    $
    (1,443
    )
    
    $
    67,751
  5




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##### 



CCFNB Bancorp, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
 For The Nine Months Ended September 30,(In Thousands)
    
    2010
    
    
    2009OPERATING ACTIVITIESNet income
    
    $
    4,887
    
    
    $
    4,555Adjustments to reconcile net income to net cash
provided by operating activities:Provision for loan losses
    
    
    870
    
    
    
    530Depreciation and amortization of premises and equipment
    
    
    709
    
    
    
    766Amortization and accretion on investment securities
    
    
    663
    
    
    
    404Impairment loss on securities
    
    
    
    
    
    
    71Gain on sale of premises and equipment
    
    
    
    
    
    
    (185
    )Deferred income taxes (benefit) provision
    
    
    (260
    )
    
    
    119Gain on sale of loans
    
    
    (758
    )
    
    
    (547
    )Proceeds from sale of mortgage loans
    
    
    31,058
    
    
    
    22,638Originations of mortgage loans held for resale
    
    
    (31,482
    )
    
    
    (22,891
    )Loss on sale of other real estate
    
    
    11
    
    
    
    81Amortization of intangibles and invesment in limited partnerships
    
    
    565
    
    
    
    610Decrease in accrued interest receivable
    
    
    115
    
    
    
    299Increases in cash surrender value of bank-owned life insurance
    
    
    (382
    )
    
    
    (376
    )Decrease in accrued interest payable
    
    
    (185
    )
    
    
    (168
    )Other, net
    
    
    604
    
    
    
    (1,482
    )Net cash provided by operating activities
    
    
    6,415
    
    
    
    4,424INVESTING ACTIVITIESInvestment securities available for sale:Purchases
    
    
    (74,870
    )
    
    
    (91,271
    )Proceeds from sales, maturities and redemptions
    
    
    91,218
    
    
    
    71,340Proceeds from redemption of restricted securities
    
    
    
    
    
    
    Purchase of restricted securities
    
    
    (184
    )
    
    
    (817
    )Net increase in loans
    
    
    (9,442
    )
    
    
    (11,017
    )Proceeds from sale of premises and equipment
    
    
    
    
    
    
    1,294Proceeds from sale of other real estate owned
    
    
    318
    
    
    
    343Purchase of investment in limited partnership
    
    
    (1,084
    )
    
    
    Acquisition of premi ses and equipment
    
    
    (406
    )
    
    
    (1,329
    )Net cash provided by (used for) investing
activities
    
    
    5,550
    
    
    
    (31,457
    )FINANCING ACTIVITIESNet increase in deposits
    
    
    8,635
    
    
    
    8,349Net decrease in short-term borrowings
    
    
    10,520
    
    
    
    6,533Proceeds from long-term borrowings
    
    
    
    
    
    
    6,000Repayment of long-term borrowings
    
    
    (9,004
    )
    
    
    (4
    )Acquisition of treasury stock
    
    
    (906
    )
    
    
    (273
    )Proceeds from issuance of common stock
    
    
    328
    
    
    
    283Cash dividends paid
    
    
    (1,964
    )
    
    
    (1,689
    )Net cash provided by financing activities
    
    
    7,609
    
    
    
    19,199NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    19,574
    
    
    
    (7,834
    )CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    11,459
    
    
    
    15,485CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    31,033
    
    
    $
    7,651SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATIONInterest paid
    
    $
    5,336
    
    
    $
    6,763Income taxes paid
    
    
    1,816
    
    
    
    1,419Loans transferred to other real estate owned
    
    
    300
    
    
    
    432
  6




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##### 



CCFNB BANCORP, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  PRINCIPLES OF CONSOLIDATION
  NATURE OF OPERATIONS
   SEGMENT REPORTING
   USE OF ESTIMATES
  INVESTMENT SECURITIES
    7




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##### 



RESTRICTED SECURITIES
   LOANS
   Past Due Loans
 Non-Accrual Loans
 Impaired Loans
 Allowance for Loan Losses
   8




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##### 



PREMISES AND EQUIPMENT
  MORTGAGE SERVICING RIGHTS
  JUNIOR SUBORDINATE DEBENTURES
  INTANGIBLE ASSETS  GOODWILL
  INTANGIBLE ASSETS  CORE DEPOSIT
   For the Year Ended:Remainder of 2010
    
    $
    134,0002011
    
    
    509,0002012
    
    
    442,0002013
    
    
    374,0002014
    
    
    308,000Thereafter
    
    
    559,000Total
    
    $
    2,326,000
 9




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##### 



OTHER REAL ESTATE OWNED
  BANK OWNED LIFE INSURANCE
  INVESTMENTS IN LIMITED PARTNERSHIPS
  INVESTMENT IN INSURANCE AGENCY
  INCOME TAXES
  PER SHARE DATA
  CASH FLOW INFORMATION
  TREASURY STOCK
  TRUST ASSETS AND INCOME
  ACCUMULATED OTHER COMPREHENSIVE INCOME
  10




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##### 



ADVERTISING COSTS
  RECENT ACCOUNTING PRONOUNCEMENTS
 FASB ASC 105-10   The FASB Accounting Standards Codification and the Hierarchy of Generally
Accepted Accounting Principles
 FASB ASC 805 Business Combinations
  FASB ASC 810-10 Noncontrolling Interests in Consolidated Financial Statements, an Amendment of ARB 51
 FASB ASC 815-10 Disclosures about Derivative Instruments and Hedging Activities an amendment
of FASB Statement No. 133
 FASB ASC 855 Subsequent Events)
 11




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##### 



FASB ASC 860 Accounting for Transfers of Financial Assets an amendment of
FASB Statement No. 140
 FASB ASC 810-10 Amendments to FASB Interpretation No. 46 (R
 FASB ASC 715-20-50 Employers Disclosures about Postretirement Benefit Plan Assets
 FASB ASC 825-10-50  Interim
Disclosures about Fair Value of Financial Instruments
 FASB ASC 320-10 Recognition and Presentation of Other-Than-Temporary Impairments
 FASB ASC 820 , Determining Fair Value When the
Volume and Level of Activity for the Asset or iability Have Significantly Decreased and
Identifying Transactions That Are Not Orderly
 SAB 111 Other Than Temporary Impairment of Certain Investments in Debt and Equity Securities Recognition and Presentation of
Other-Than-Temporary Impairments
 SAB 112
 12




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##### 



FASB ASC 323 Equity Method
Investment Accounting Considerations
 FASB ASC 350 Accounting for Defensive
Intangible Assets
 FASB ASC 260-10 Determining Whether Instruments Granted in Share-Based
Payment Transactions are Participating Securities
 FASB ASC 820-10
 FASB ASC 820-10
 FASB ASC 505-20 
 13




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##### 



FASB ASC 810-10 
 FASB ASC 820-10-
 RECLASSIFICATIONS
  2. INVESTMENT SECURITIES AVAILABLE-FOR-SALE
  September 30, 2010Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair(In Thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueObligation of U.S.Government Corporations
and Agencies:Mortgage-backed
    
    $
    128,725
    
    
    $
    3,981
    
    
    $
    (99
    )
    
    $
    132,607Other
    
    
    58,524
    
    
    
    463
    
    
    
    
    
    
    
    58,987Obligations of state and political subdivisions
    
    
    10,339
    
    
    
    297
    
    
    
    
    
    
    
    10,636Total debt securities
    
    
    197,588
    
    
    
    4,741
    
    
    
    (99
    )
    
    
    202,230Marketable equity securities
    
    
    2,172
    
    
    
    48
    
    
    
    (387
    )
    
    
    1,833Total investment securities AFS
    
    $
    199,760
    
    
    $
    4,789
    
    
    $
    (486
    )
    
    $
    204,063
 December 31, 2009Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair(In Thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueObligation of U.S. Government Corporations and Agencies:Mortgage-backed
    
    $
    134,762
    
    
    $
    4,212
    
    
    $
    (118
    )
    
    $
    138,856Other
    
    
    68,323
    
    
    
    421
    
    
    
    (405
    )
    
    
    68,339Obligations of state and political subdivisions
    
    
    11,265
    
    
    
    116
    
    
    
    (7
    )
    
    
    11,374Total debt securities
    
    
    214,350
    
    
    
    4,749
    
    
    
    (530
    )
    
    
    218,569Marketable equity securities
    
    
    2,093
    
    
    
    41
    
    
    
    (437
    )
    
    
    1,697Total investment securities AFS
    
    $
    216,443
    
    
    $
    4,790
    
    
    $
    (967
    )
    
    $
    220,266
  14




---



##### 



WeightedAmortized
    
    
    Estimated
    
    
    Average(In Thousands)
    
    Cost
    
    
    Fair Value
    
    
    YieldDue in one year or less
    
    $
    2,113
    
    
    $
    2,146
    
    
    
    3.68
    %Due after one year to five years
    
    
    47,159
    
    
    
    47,455
    
    
    
    2.00
    %Due after five years to ten years
    
    
    27,631
    
    
    
    28,361
    
    
    
    3.78
    %Due after ten years
    
    
    122,857
    
    
    
    126,101
    
    
    
    3.99
    %Total
    
    $
    199,760
    
    
    $
    204,063
    September 30, 2010Less than Twelve Months
    
    
    Twelve Months or Greater
    
    
    TotalEstimated
    
    
    Gross
    
    
    Estimated
    
    
    Gross
    
    
    Estimated
    
    
    GrossFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized(In Thousands)
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesObligations of U.S.
Government
Corporations
and Agencies:Mortgage-backed
    
    $
    11,656
    
    
    $
    99
    
    
    $
    
    
    
    $
    
    
    
    $
    11,656
    
    
    $
    99Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Obligations of state
and political
subdivisions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total debt securities
    
    
    11,656
    
    
    
    99
    
    
    
    
    
    
    
    
    
    
    
    11,656
    
    
    
    99Equity securities
    
    
    548
    
    
    
    36
    
    
    
    782
    
    
    
    351
    
    
    
    1,330
    
    
    
    387Total
    
    $
    12,204
    
    
    $
    135
    
    
    $
    782
    
    
    $
    351
    
    
    $
    12,986
    
    
    $
    486
 December 31, 2009Less than Twelve Months
    
    
    Twelve Months or Greater
    
    
    TotalEstimated
    
    
    Gross
    
    
    Estimated
    
    
    Gross
    
    
    Estimated
    
    
    GrossFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized(In Thousands)
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesObligations of U.S.
Government Corp
orations
and Agencies:Mortgage-backed
    
    $
    8,105
    
    
    $
    117
    
    
    $
    51
    
    
    $
    1
    
    
    $
    8,156
    
    
    $
    118Other
    
    
    28,876
    
    
    
    405
    
    
    
    
    
    
    
    
    
    
    
    28,876
    
    
    
    405Obligations of state
and political
subdivisions
    
    
    1,856
    
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    1,856
    
    
    
    7Total debt securities
    
    
    38,837
    
    
    
    529
    
    
    
    51
    
    
    
    1
    
    
    
    38,888
    
    
    
    530Equity securities
    
    
    366
    
    
    
    159
    
    
    
    806
    
    
    
    278
    
    
    
    1,172
    
    
    
    437Total
    
    $
    39,203
    
    
    $
    688
    
    
    $
    857
    
    
    $
    279
    
    
    $
    40,060
    
    
    $
    967
 15




---



##### 



September 30, 2010(In Thousands)
    
    
    
    
    
    Gross
    
    Gross
    
    EstimatedAmortized
    
    Unrealized
    
    Unrealized
    
    FairAsset size($)
    
    Cost
    
    Gains
    
    Losses
    
    ValueUnder $1 Billion
    
    $
    493
    
    
    $
    20
    
    
    $
    (73
    )
    
    $
    440$1 to $5 Billion
    
    
    213
    
    
    
    2
    
    
    
    (31
    )
    
    
    184$6 to $100 billion
    
    
    780
    
    
    
    22
    
    
    
    (199
    )
    
    
    603Over $100 Billion
    
    
    686
    
    
    
    4
    
    
    
    (84
    )
    
    
    606$
    2,172
    
    
    $
    48
    
    
    $
    (387
    )
    
    $
    1,833
 September 30, 2010(In Thousands)
    
    
    
    
    
    Gross
    
    Gross
    
    EstimatedAmortized
    
    Unrealized
    
    Unrealized
    
    FairGeographic Region
    
    Cost
    
    Gains
    
    Losses
    
    ValueEastern U.S.
    
    $
    1,082
    
    
    $
    33
    
    
    $
    (200
    )
    
    $
    915Southeastern U.S.
    
    
    110
    
    
    
    
    
    
    
    (14
    )
    
    
    96Western U.S.
    
    
    53
    
    
    
    
    
    
    
    (7
    )
    
    
    46National
    
    
    927
    
    
    
    15
    
    
    
    (166
    )
    
    
    776$
    2,172
    
    
    $
    48
    
    
    $
    (387
    )
    
    $
    1,833
  3. ALLOWANCE FOR LOAN LOSSES
  16




---



##### 



(In Thousands)
    
    2010
    
    
    2009Balance, beginning of year
    
    $
    4,210
    
    
    $
    3,758Provision charged to operations
    
    
    870
    
    
    
    530Loans charged off
    
    
    (569
    )
    
    
    (375
    )Recoveries
    
    
    63
    
    
    
    21Balance, September 30,
    
    $
    4,574
    
    
    $
    3,934
  4. SHORT-TERM BORROWINGS
  5. LONG-TERM BORROWINGS
  6. DEFERRED COMPENSATION PLANS
  7. ACQUISITION
   (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
    
    
    853Deposits
    
    
    1,235Severance and related costs
    
    
    840Deferred taxes
    
    
    208Subtotal
    
    
    11,627Core deposit intangibles
    
    
    (3,690
    )Goodwill
    
    $
    7,937
  17




---



##### 



(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
    
    
    6,492Accrued interest receivable
    
    
    1,534Bank-owned life insurance
    
    
    3,462Investment in limited partnerships
    
    
    919Goodwill and other intangibles
    
    
    11,627Other assets
    
    
    564Total assets
    
    $
    329,382LiabilitiesDeposits
    
    $
    264,692Borrowings
    
    
    31,883Junior subordinate debentures
    
    
    4,640Accrued interest payable
    
    
    764Other liabilities
    
    
    1,087Total liabilities
    
    $
    303,066Fair value of net assets acquired
    
    $
    26,316
 8. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND CONCENTRATIONS OF CREDIT RISK
   (In Thousands)
    
    2010
    
    2009Financial instruments whose contract amounts represent credit risk:Commitments to extend credit
    
    $
    77,815
    
    
    $
    71,868Standby letters of credit
    
    
    3,435
    
    
    
    3,393Dealer floor plans
    
    
    1,049
    
    
    
    932Loans held for sale
    
    
    1,449
    
    
    
    267
   18




---



##### 



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 observable 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, 2010(In Thousands)
    
    Level I
    
    Level II
    
    Level III
    
    TotalAssets Measured on a Recurring Basis:Investment Securities, available-for-sale
    
    $
    1,833
    
    
    $
    202,230
    
    
    $
    
    
    
    $
    204,063
 December 31, 2009(In Thousands)
    
    Level I
    
    Level II
    
    Level III
    
    TotalAssets Measured on a Recurring Basis:Investment Securities, available-for-sale
    
    $
    1,697
    
    
    $
    218,569
    
    
    $
    
    
    
    $
    220,266
  September 30, 2010(In Thousands)
    
    Level I
    
    
    Level II
    
    
    Level III
    
    
    TotalAvailable for sale securitiesObligation of US Government AgenciesMortgage-backed
    
    $
    
    
    
    $
    58,987
    
    
    $
    
    
    
    $
    58,987Other
    
    
    
    
    
    
    132,607
    
    
    
    
    
    
    
    132,607Obligations of state and political
subdivisions
    
    
    
    
    
    
    10,636
    
    
    
    
    
    
    
    10,636Equity securities
    
    
    1,833
    
    
    
    
    
    
    
    
    
    
    
    1,833$
    1,833
    
    
    $
    202,230
    
    
    $
    
    
    
    $
    204,063
 19




---



##### 



December 31, 2009(In Thousands)
    
    Level I
    
    
    Level II
    
    
    Level III
    
    
    TotalAvailable for sale securitiesObligation of US Government AgenciesMortgage-backed
    
    $
    
    
    
    $
    138,856
    
    
    $
    
    
    
    $
    138,856Other
    
    
    
    
    
    
    68,339
    
    
    
    
    
    
    
    68,339Obligations of state and political
subdivisions
    
    
    
    
    
    
    11,374
    
    
    
    
    
    
    
    11,374Equity securities
    
    
    1,697
    
    
    
    
    
    
    
    
    
    
    
    1,697$
    1,697
    
    
    $
    218,569
    
    
    $
    
    
    
    $
    220,266
   September 30, 2010(In Thousands)
    
    Level I
    
    
    Level II
    
    
    Level III
    
    
    TotalAssets Measured on a
Non-recurri ng Basis:Impaired Loans
    
    $
    
    
    
    $
    4,562
    
    
    $
    
    
    
    $
    4,562Loans Held for Sale
    
    
    
    
    
    
    1,449
    
    
    
    
    
    
    
    1,449Mortgage Servicing Rights
    
    
    
    
    
    
    494
    
    
    
    
    
    
    
    494Other Real Estate Owned
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -$
    
    
    
    $
    6,505
    
    
    $
    
    
    
    $
    6,505
 December 31, 2009(In Thousands)
    
    Level I
    
    
    Level II
    
    
    Level III
    
    
    TotalAssets Measured on a
Non-recurring Basis:Impaired Loans
    
    $
    
    
    
    $
    4,839
    
    
    $
    
    
    
    $
    4,839Loans Held for Sale
    
    
    
    
    
    
    267
    
    
    
    
    
    
    
    267Mortgage Servicing Rights
    
    
    
    
    
    
    344
    
    
    
    
    
    
    
    344Other Real Estate Owned
    
    
    
    
    
    
    29
    
    
    
    
    
    
    
    29$
    
    
    
    $
    5,479
    
    
    $
    
    
    
    $
    5,479
 10.
ESTIMATED FAIR VALUES OF FINANCIAL INSTRUMENTS
   20




---



##### 



September 30, 2010
    
    
    December 31, 2009Carrying
    
    
    Estimated
    
    
    Carrying
    
    
    Estimated(In Thousands)
    
    Amount
    
    
    Fair Value
    
    
    Amount
    
    
    Fair ValueFinancial Assets:Cash and short-term instruments
    
    $
    31,033
    
    
    $
    31,033
    
    
    $
    11,459
    
    
    $
    11,459Investment securities
    
    
    204,063
    
    
    
    204,063
    
    
    
    220,266
    
    
    
    220,266Restricted securities
    
    
    3,168
    
    
    
    3,168
    
    
    
    2,984
    
    
    
    2,984Loans, net
    
    
    335,733
    
    
    
    344,286
    
    
    
    326,279
    
    
    
    329,726Cash surrender value of bank owned life
insurance
    
    
    11,822
    
    
    
    11,822
    
    
    
    11,440
    
    
    
    11,440Accrued interest receivable
    
    
    1,891
    
    
    
    1,891
    
    
    
    2,006
    
    
    
    2,006Financial Liabilities:Interest-bearing deposits
    
    
    408,790
    
    
    
    412,214
    
    
    
    406,554
    
    
    
    410,168Noninterest- bearing deposits
    
    
    62,133
    
    
    
    62,133
    
    
    
    55,734
    
    
    
    55,734Short-term borrowings
    
    
    62,517
    
    
    
    62,517
    
    
    
    51,997
    
    
    
    51,997Long-term borrowings
    
    
    6,124
    
    
    
    6,374
    
    
    
    15,128
    
    
    
    15,375Junior subordinate debentures
    
    
    4,640
    
    
    
    4,640
    
    
    
    4,640
    
    
    
    4,640Accrued interest payable
    
    
    674
    
    
    
    674
    
    
    
    859
    
    
    
    859Off-Balance Sheet Assets (Liabilities):Commitments to extend credit
    
    
    
    
    
    $
    77,815
    
    
    
    
    
    
    $
    71,868Standby letters of credit
    
    
    
    
    
    
    3,435
    
    
    
    
    
    
    
    3,393Dealer floor plans
    
    
    
    
    
    
    1,049
    
    
    
    
    
    
    
    932
                    21




---



##### 



11. MANAGEMENTS ASSERTIONS AND COMMENTS REQUIRED TO BE PROVIDED WITH FORM 10-Q FILING
   REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
      /s/ J. H. Williams & Co., LLPJ.H. Williams & Co., LLPKingston, Pennsylvania November 12, 2010 22




---



##### 



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 CAUTIONARY STATEMENT
  
    
    Our business and financial results are affected by business and economic
conditions, both generally and specifically in the Northcentral Pennsylvania market
in which we operate. In particular, our business and financial results may be
impacted by:
    
    Changes in interest rates and valuations in the debt, equity and other financial
markets.
    
    Disruptions in the liquidity and other functioning of financial markets,
including such disruptions in the market for real estate and other assets commonly
securing financial products.
    
    Actions by the Federal Reserve Board and other government agencies, including
those that impact money supply and market interest rates.
    
    Changes in our customers and suppliers performance in general and their
creditworthiness in particular.
    
    Changes in customer preferences and behavior, whether as a result of changing
business and economic conditions or other factors.
    
    Changes resulting from the newly enacted Dodd-Frank Wall Street Reform and
Consumer Protection Act and regulation rulemaking yet to occur.
    
    A continuation of recent turbulence in significant segments of the United States
and global financial markets, particularly if it worsens, could impact our
performance, both directly by affecting our revenues and the value of our assets and
liabilities and indirectly by affecting our customers and suppliers and the economy
generally.
    
    Our business and financial performance could be impacted as the financial
industry restructures in the current environment by changes in the competitive
landscape.
    
    Given current economic and financial market conditions, our forward-looking
financial statements are subject to the risk that these conditions will be
substantially different than we are currently expecting. These statements are based
on our current expectations that interest rates will remain low through 2010 with
continued wide market credit spreads and our view that national economic trends
currently point to a subdued recovery through the end of 2010.
    
    Legal and regulatory developments could have an impact on our ability to operate
our business or our financial condition or results of operations or our competitive
position or reputation. Reputational impacts, in turn, could affect matters such as
business generation and retention, our ability to attract and retain management,
liquidity and funding. These legal and regulatory developments could include: (a)
the unfavorable resolution of legal proceedings or regulatory and other governmental
inquiries; (b) increased litigation risk from recent regulatory and other
governmental developments; (c) the results of the regulatory examination process,
and regulators future use of supervisory and enforcement tools; (d) legislative and
regulatory reforms, including changes to laws and regulations involving tax,
pension, education and mortgage lending, the protection of confidential customer
information, and other aspects of the financial institution industry; and (e)
changes in accounting policies and principles.
    
    Our business and operating results are affected by our ability to identify and
effectively manage risks inherent in our businesses, including, where appropriate,
through the effective use of third-party insurance and capital management
techniques.
 23




---



##### 




    
    Our ability to anticipate and respond to technological changes can have an impact
on our ability to respond to customer needs and to meet competitive demands.
    
    Our ability to implement our business initiatives and strategies could affect our
financial performance over the next several years.
    
    Competition can have an impact on customer acquisition, growth and retention, as
well as on our credit spreads and product pricing, which can affect market share,
deposits and revenues.
    
    Our business and operating results can also be affected by widespread natural
disasters, terrorist activities or international hostilities, either as a result of
the impact on the economy and capital and other financial markets generally or on us
or on our customers and suppliers.
   RESULTS OF OPERATIONS
 NET INTEREST INCOME
 2010 vs. 2009
    24




---



##### 



AVERAGE BALANCE SHEET AND RATE ANALYSIS
NINE MONTHS ENDED SEPTEMBER 30,
 2010
    
    
    2009(In Thousands)
    
    Average Balance
    
    
    Interest
    
    
    Average Rate
    
    
    Average Balance
    
    
    Interest
    
    
    Average Rate(1)
    
    
    
    
    
    
    
    
    (1)ASSETS:Tax-exempt loans
    
    $
    22,009
    
    
    $
    1,052
    
    
    
    6.39
    %
    
    $
    19,684
    
    
    $
    834
    
    
    
    5.66
    %All other loans
    
    
    316,411
    
    
    
    14,080
    
    
    
    5.95
    %
    
    
    306,078
    
    
    
    14,086
    
    
    
    6.15
    %Total loans (2)(3)(4)
    
    
    338,420
    
    
    
    15,132
    
    
    
    5.98
    %
    
    
    325,762
    
    
    
    14,920
    
    
    
    6.12
    %Taxable securities
    
    
    195,499
    
    
    
    5,173
    
    
    
    3.53
    %
    
    
    184,914
    
    
    
    6,243
    
    
    
    4.50
    %Tax-exempt securitites (3)
    
    
    10,628
    
    
    
    457
    
    
    
    5.73
    %
    
    
    10,745
    
    
    
    422
    
    
    
    5.24
    %Total securities
    
    
    206,127
    
    
    
    5,630
    
    
    
    3.64
    %
    
    
    195,659
    
    
    
    6,665
    
    
    
    4.54
    %Federal funds sold
    
    
    1,363
    
    
    
    1
    
    
    
    0.10
    %
    
    
    9,883
    
    
    
    11
    
    
    
    0.15
    %Interest-bearing deposits
    
    
    16,268
    
    
    
    27
    
    
    
    0.22
    %
    
    
    551
    
    
    
    1
    
    
    
    0.24
    %Total interest-earning assets
    
    
    562,178
    
    
    
    20,790
    
    
    
    4.94
    %
    
    
    531,855
    
    
    
    21,597
    
    
    
    5.42
    %Other assets
    
    
    44,919
    
    
    
    
    
    
    
    
    
    
    
    44,599TOTAL ASSETS
    
    $
    607,097
    
    
    
    
    
    
    
    
    
    
    $
    576,454LIABILITIES:Savings
    
    $
    62,354
    
    
    
    180
    
    
    
    0.39
    %
    
    $
    56,307
    
    
    
    168
    
    
    
    0.40
    %Now deposits
    
    
    70,850
    
    
    
    74
    
    
    
    0.14
    %
    
    
    68,789
    
    
    
    75
    
    
    
    0.15
    %Money market deposits
    
    
    42,487
    
    
    
    245
    
    
    
    0.77
    %
    
    
    44,278
    
    
    
    353
    
    
    
    1.07
    %Time deposits
    
    
    235,624
    
    
    
    3,958
    
    
    
    2.25
    %
    
    
    226,875
    
    
    
    5,179
    
    
    
    3.05
    %Total deposits
    
    
    411,315
    
    
    
    4,457
    
    
    
    1.45
    %
    
    
    396,249
    
    
    
    5,775
    
    
    
    1.95
    %Short-term borrowings
    
    
    51,847
    
    
    
    310
    
    
    
    0.80
    %
    
    
    46,535
    
    
    
    254
    
    
    
    0.73
    %Long-term borrowings
    
    
    10,306
    
    
    
    310
    
    
    
    4.02
    %
    
    
    11,603
    
    
    
    462
    
    
    
    5.32
    %Junior subordinate debentures
    
    
    4,640
    
    
    
    74
    
    
    
    2.13
    %
    
    
    4,640
    
    
    
    104
    
    
    
    3.00
    %Total borrowings
    
    
    66,793
    
    
    
    694
    
    
    
    1.39
    %
    
    
    62,778
    
    
    
    820
    
    
    
    1.75
    %Total interest-bearing liabilities
    
    
    478,108
    
    
    
    5,151
    
    
    
    1.44
    %
    
    
    459,027
    
    
    
    6,595
    
    
    
    1.92
    %Demand deposits
    
    
    57,592
    
    
    
    
    
    
    
    
    
    
    
    51,004Other liabilities
    
    
    4,358
    
    
    
    
    
    
    
    
    
    
    
    3,656Stockholders equity
    
    
    67,039
    
    
    
    
    
    
    
    
    
    
    
    62,767TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY
    
    $
    607,097
    
    
    
    
    
    
    
    
    
    
    $
    576,454Interest rate spread (6)
    
    
    
    
    
    
    
    
    
    
    3.50
    %
    
    
    
    
    
    
    
    
    
    
    3.50
    %Net interest income/margin (5)
    
    
    
    
    
    $
    15,639
    
    
    
    3.72
    %
    
    
    
    
    
    $
    15,002
    
    
    
    3.77
    %
 
 (1)
    
    Average volume information was compared using daily (or monthly)
averages for interest-earning and bearing accounts. 
   Certain balance
sheet items utilized quarter-end balances for averages.(2)
    
    Interest on loans includes fee income.(3)
    
    Tax exempt interest revenue is shown on a tax-equivalent basis using a statutory federal
income tax rate of 34 percent for 2010 and 2009.(4)
    
    Non accrual loans have been included with loans for the purpose of analyzing net interest
earnings.(5)
    
    Net interest margin is computed by dividing annualized net interest income by total interest
earning assets.(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. 25




---



##### 



Reconcilement of Taxable Equivalent Net Interest Income
For the Nine Months Ended September 30,
 (In Thousands)
    
    2010
    
    
    2009Total interest income
    
    $
    20,278
    
    
    $
    21,278Total interest expense
    
    
    5,151
    
    
    
    6,595Net interest income
    
    
    15,127
    
    
    
    14,683Tax equivalent adjustment
    
    
    512
    
    
    
    319Net interest income(fully taxable equivalent)
    
    $
    15,639
    
    
    $
    15,002
 Rate/Volume Analysis
  Nine Months Ended September 30,2010 vs 2009Increase (Decrease) Due to(In Thousands)
    
    Volume
    
    
    Rate
    
    
    NetInterest income:Loans, tax-exempt
    
    $
    111
    
    
    $
    107
    
    
    $
    218Loans
    
    
    460
    
    
    
    (466
    )
    
    
    (6
    )Taxable investment securities
    
    
    280
    
    
    
    (1,350
    )
    
    
    (1,070
    )Tax-exempt investment securities
    
    
    (5
    )
    
    
    40
    
    
    
    35Federal funds sold
    
    
    (6
    )
    
    
    (4
    )
    
    
    (10
    )Interest bearing deposits
    
    
    26
    
    
    
    
    
    
    
    26Total interest-earning assets
    
    
    866
    
    
    
    (1,673
    )
    
    
    (807
    )Interest expense:Savings
    
    
    17
    
    
    
    (5
    )
    
    
    12NOW deposits
    
    
    2
    
    
    
    (3
    )
    
    
    (1
    )Money market deposits
    
    
    (10
    )
    
    
    (98
    )
    
    
    (108
    )Time deposits
    
    
    147
    
    
    
    (1,368
    )
    
    
    (1,221
    )Short-term borrowings
    
    
    32
    
    
    
    24
    
    
    
    56Long-term borrowings, FHLB
    
    
    (39
    )
    
    
    (113
    )
    
    
    (152
    )Junior subordinate debentures
    
    
    
    
    
    
    (30
    )
    
    
    (30
    )Total interest-bearing liabilities
    
    
    149
    
    
    
    (1,593
    )
    
    
    (1,444
    )Change in net interest income
    
    $
    717
    
    
    $
    (80
    )
    
    $
    637
 PROVISION FOR LOAN LOSSES
 2010 vs. 2009
  26




---



##### 



NON-INTEREST INCOME
 2010 vs. 2009
  For The Nine Months EndedSeptember 30, 2010
    
    September 30, 2009
    
    Change(In Thousands)
    
    Amount
    
    % Total
    
    Amount
    
    % Total
    
    Amount
    
    %Service charges and fees
    
    $
    1,328
    
    
    
    29.7
    %
    
    $
    1,251
    
    
    
    32.8
    %
    
    $
    77
    
    
    
    6.2
    %Gain on sale of loans
    
    
    758
    
    
    
    16.9
    
    
    
    409
    
    
    
    10.7
    
    
    
    349
    
    
    
    85.3Earnings on bank-owned life insurance
    
    
    325
    
    
    
    7.3
    
    
    
    324
    
    
    
    8.5
    
    
    
    1
    
    
    
    0.3Brokerage
    
    
    246
    
    
    
    5.5
    
    
    
    190
    
    
    
    5.0
    
    
    
    56
    
    
    
    29.5Trust
    
    
    507
    
    
    
    11.3
    
    
    
    462
    
    
    
    12.1
    
    
    
    45
    
    
    
    9.7Investment security losses
    
    
    
    
    
    
    
    
    
    
    (71
    )
    
    
    (1.9
    )
    
    
    71
    
    
    
    (100.0
    )Interchange fees
    
    
    624
    
    
    
    13.9
    
    
    
    541
    
    
    
    14.2
    
    
    
    83
    
    
    
    15.3Other
    
    
    686
    
    
    
    15.4
    
    
    
    707
    
    
    
    18.6
    
    
    
    (21
    )
    
    
    (3.0
    )Total non-interest income
    
    $
    4,474
    
    
    
    100.0
    %
    
    $
    3,813
    
    
    
    100.0
    %
    
    $
    661
    
    
    
    17.3
    %
 NON-INTEREST EXPENSE
 2010 vs. 2009
   27




---



##### 



For The Nine Months EndedSeptember 30, 2010
    
    September 30, 2009
    
    Change(In Thousands)
    
    Amount
    
    % Total
    
    Amount
    
    % Total
    
    Amount
    
    %Salaries
    
    $
    4,791
    
    
    
    39.5
    %
    
    $
    4,776
    
    
    
    39.8
    %
    
    $
    15
    
    
    
    0.3
    %Employee benefits
    
    
    1,424
    
    
    
    11.7
    
    
    
    1,322
    
    
    
    11.0
    
    
    
    102
    
    
    
    7.7Occupancy
    
    
    836
    
    
    
    6.9
    
    
    
    810
    
    
    
    6.8
    
    
    
    26
    
    
    
    3.2Furniture and equipment
    
    
    1,002
    
    
    
    8.3
    
    
    
    944
    
    
    
    7.9
    
    
    
    58
    
    
    
    6.1State shares tax
    
    
    418
    
    
    
    3.5
    
    
    
    400
    
    
    
    3.3
    
    
    
    18
    
    
    
    4.5Professional fees
    
    
    467
    
    
    
    3.9
    
    
    
    447
    
    
    
    3.7
    
    
    
    20
    
    
    
    4.5Directors fees
    
    
    203
    
    
    
    1.7
    
    
    
    215
    
    
    
    1.8
    
    
    
    (12
    )
    
    
    (5.6
    )FDIC assessments
    
    
    460
    
    
    
    3.8
    
    
    
    543
    
    
    
    4.5
    
    
    
    (83
    )
    
    
    (15.3
    )Telecommunications
    
    
    275
    
    
    
    2.3
    
    
    
    263
    
    
    
    2.2
    
    
    
    12
    
    
    
    4.6Amortization of core deposit intangible
    
    
    442
    
    
    
    3.7
    
    
    
    492
    
    
    
    4.1
    
    
    
    (50
    )
    
    
    (10.2
    )Automated teller machine and
interchange
    
    
    412
    
    
    
    3.4
    
    
    
    377
    
    
    
    3.1
    
    
    
    35
    
    
    
    9.3Other
    
    
    1,378
    
    
    
    11.3
    
    
    
    1,399
    
    
    
    11.8
    
    
    
    (21
    )
    
    
    (1.5
    )Total non-interest expense
    
    $
    12,108
    
    
    
    100.0
    %
    
    $
    11,988
    
    
    
    100.0
    %
    
    $
    120
    
    
    
    1.0
    %
 FINANCIAL CONDITION
    INVESTMENTS
  September 30, 2010EstimatedAmortized
    
    
    Fair(In Thousands)
    
    Cost
    
    
    ValueObligation of U.S. Government Corporations
and Agencies:Mortgage-backed
    
    $
    128,725
    
    
    $
    132,607Other
    
    
    58,524
    
    
    
    58,987Obligations of state and political subdivisions
    
    
    10,339
    
    
    
    10,636Total debt securities
    
    
    197,588
    
    
    
    202,230Marketable equity securities
    
    
    2,172
    
    
    
    1,833Total investment securities AFS
    
    $
    199,760
    
    
    $
    204,063
 28




---



##### 



December 31, 2009EstimatedAmortized
    
    
    Fair(In Thousands)
    
    Cost
    
    
    ValueObligation of U.S.Government Corporations
and Agencies:Mortgage-backed
    
    $
    134,762
    
    
    $
    138,856Other
    
    
    68,323
    
    
    
    68,339Obligations of state and political subdivisions
    
    
    11,265
    
    
    
    11,374Total debt securities
    
    
    214,350
    
    
    
    218,569Marketable equity securities
    
    
    2,093
    
    
    
    1,697Total investment securities AFS
    
    $
    216,443
    
    
    $
    220,266
 LOANS
   Change(In Thousands)
    
    September 30, 2010
    
    
    December 31, 2009
    
    
    Amount
    
    
    %Commercial, financial and
agricultural
    
    $
    37,871
    
    
    $
    37,642
    
    
    $
    229
    
    
    
    0.6
    %Tax-exempt
    
    
    22,367
    
    
    
    18,055
    
    
    
    4,312
    
    
    
    23.9Real estate
    
    
    257,326
    
    
    
    253,463
    
    
    
    3,863
    
    
    
    1.5Real estate construction
    
    
    15,475
    
    
    
    13,526
    
    
    
    1,949
    
    
    
    14.4Installment loans to individuals
    
    
    7,097
    
    
    
    7,725
    
    
    
    (628
    )
    
    
    (8.1
    )Add (deduct): Unearned discount
    
    
    (8
    )
    
    
    (15
    )
    
    
    7
    
    
    
    (46.7
    )Unamortized loan costs,
net of fees
    
    
    179
    
    
    
    93
    
    
    
    86
    
    
    
    92.5Gross loans
    
    $
    340,307
    
    
    $
    330,489
    
    
    $
    9,818
    
    
    
    3.0
    %
  September 30, 2010
    
    
    December 31, 2009Commercial, financial and
agricultural
    
    
    11.1
    %
    
    
    11.4
    %Tax-exempt
    
    
    6.6
    
    
    
    5.5Real estate
    
    
    75.7
    
    
    
    76.7Real estate construction
    
    
    4.5
    
    
    
    4.1Installment loans to individuals
    
    
    2.1
    
    
    
    2.3Gross loans
    
    
    100.0
    %
    
    
    100.0
    %
 ALLOWANCE FOR LOAN LOSSES
  29




---



##### 



For the Nine Months Ended September 30,(In Thousands)
    
    2010
    
    
    2009Average Loans Outstanding during
the period
    
    $
    338,420
    
    
    $
    325,762Balance, beginning of year
    
    $
    4,210
    
    
    $
    3,758Provision charged to operations
    
    
    870
    
    
    
    530Loans charged off:Commercial, financial, and agricultural
    
    
    (4
    )
    
    
    (114
    )Real estate mortgages
    
    
    (539
    )
    
    
    (233
    )Installment loans to indiviuals
    
    
    (26
    )
    
    
    (28
    )Recoveries:Commercial, financial, and agricultural
    
    
    33
    
    
    
    1Real estate mortgages
    
    
    12
    
    
    
    9Installment loans to indiviuals
    
    
    18
    
    
    
    11Balance, end of period
    
    $
    4,574
    
    
    $
    3,934Ratio of net charge-offs to Average loans
outstanding during the period
    
    
    0.15
    %
    
    
    0.11
    %
 NON-PERFORMING LOANS
   (In Thousands)
    
    September 30, 2010
    
    
    December 31, 2009Commercial, financial and agriculturalDays 30-89
    
    $
    659
    
    
    $
    14Days 90 plus
    
    
    
    
    
    
    Non-accrual
    
    
    41
    
    
    
    145Real estateDays 30-89
    
    
    1,317
    
    
    
    1,632Days 90 plus
    
    
    
    
    
    
    Non-accrual
    
    
    3,742
    
    
    
    4,216Installment loans to individualsDays 30-89
    
    
    51
    
    
    
    49Days 90 plus
    
    
    
    
    
    
    Non-accrual
    
    
    1
    
    
    
    $
    5,811
    
    
    $
    6,056Days 30-89
    
    $
    2,027
    
    
    $
    1,695Days 90 plus
    
    
    
    
    
    
    Non-accrual
    
    
    3,784
    
    
    
    4,361$
    5,811
    
    
    $
    6,056Restructured loans still accruing
    
    $
    320
    
    
    $
    323Other real estate owned
    
    $
    
    
    
    $
    29
 DEPOSITS
  30




---



##### 



.
  September 30, 2010
    
    December 31, 2009Average
    
    
    
    
    
    Average
    
    Change(In Thousands)
    
    Balance
    
    Rate
    
    Balance
    
    Rate
    
    Amount
    
    %Non-interest bearing
    
    $
    57,592
    
    
    
    
    %
    
    $
    51,908
    
    
    
    
    %
    
    $
    5,684
    
    
    
    11.0
    %Savings
    
    
    62,354
    
    
    
    0.39
    
    
    
    56,493
    
    
    
    0.40
    
    
    
    5,861
    
    
    
    10.4Now deposits
    
    
    70,850
    
    
    
    0.14
    
    
    
    68,650
    
    
    
    0.15
    
    
    
    2,200
    
    
    
    3.2Money market deposits
    
    
    42,487
    
    
    
    0.77
    
    
    
    43,906
    
    
    
    1.03
    
    
    
    (1,419
    )
    
    
    (3.2
    )Time deposits
    
    
    235,624
    
    
    
    2.25
    
    
    
    228,005
    
    
    
    2.94
    
    
    
    7,619
    
    
    
    3.3Total deposits
    
    $
    468,907
    
    
    
    1.27
    %
    
    $
    448,962
    
    
    
    1.67
    %
    
    $
    19,945
    
    
    
    4.4
    %
 BORROWED FUNDS
   September 30, 2010
    
    December 31, 2009
    
    Change(In Thousands)
    
    Amount
    
    % Total
    
    Amount
    
    % Total
    
    Amount
    
    %Short-term borrowings:Securities sold under agreement to repurchase
    
    $
    50,212
    
    
    
    75.2
    %
    
    $
    47,873
    
    
    
    72.6
    %
    
    $
    2,339
    
    
    
    4.9
    %Short-term borrowings, FHLB
    
    
    1,034
    
    
    
    1.5
    
    
    
    352
    
    
    
    0.5
    
    
    
    682
    
    
    
    193.8U.S. Treasury tax and loan notes
    
    
    601
    
    
    
    0.9
    
    
    
    601
    
    
    
    0.9
    
    
    
    
    
    
    
    Total short-term borrowings
    
    
    51,847
    
    
    
    77.6
    %
    
    
    48,826
    
    
    
    74.0
    %
    
    
    3,021
    
    
    
    6.2Long-term borrowings, FHLB
    
    
    10,306
    
    
    
    15.4
    
    
    
    12,492
    
    
    
    19.0
    
    
    
    (2,186
    )
    
    
    (17.5
    )Junior subordinate debentures
    
    
    4,640
    
    
    
    7.0
    
    
    
    4,640
    
    
    
    7.0
    
    
    
    
    
    
    
    Total borrowed funds
    
    $
    66,793
    
    
    
    100.0
    %
    
    $
    65,958
    
    
    
    100.0
    %
    
    $
    835
    
    
    
    1.3
    %
 LIQUIDITY
   CAPITAL RESOURCES
    31




---



##### 



2010
    
    2009(In Thousands)
    
    Amount
    
    Ratio
    
    Amount
    
    RatioTotal Capital
(to Risk-weighted Assets)Actual
    
    $
    63,431
    
    
    
    18.2
    %
    
    $
    60,322
    
    
    
    17.6
    %For Capital Adequacy Purposes
    
    
    27,937
    
    
    
    8.0
    
    
    
    27,394
    
    
    
    8.0To Be Well-Capitalized
    
    
    34,921
    
    
    
    10.0
    
    
    
    34,243
    
    
    
    10.0Tier I Capital
(to Risk-weighted Assets)Actual
    
    $
    59,064
    
    
    
    16.9
    %
    
    $
    56,102
    
    
    
    16.4
    %For Capital Adequacy Purposes
    
    
    13,968
    
    
    
    4.0
    
    
    
    13,697
    
    
    
    4.0To Be Well-Capitalized
    
    
    20,953
    
    
    
    6.0
    
    
    
    20,546
    
    
    
    6.0Tier I Capital
(to Average Assets)Actual
    
    $
    59,064
    
    
    
    9.9
    %
    
    $
    56,102
    
    
    
    9.8
    %For Capital Adequacy Purposes
    
    
    23,873
    
    
    
    4.0
    
    
    
    22,861
    
    
    
    4.0To Be Well-Capitalized
    
    
    29,842
    
    
    
    5.0
    
    
    
    28,577
    
    
    
    5.0
  INTEREST RATE RISK MANAGEMENT
        32




---



##### 



Item 3. Quantitative and Qualitative Disclosures about Market Risk
   Item 4. Controls and Procedures
    PART II Other Information
 Item 1. Legal Proceedings
  Item 1A. Risk Factors
     33




---



##### 



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 Total
    
    Average
    
    Total Number of
    
    Maximum Number (orNumber of
    
    Price Paid
    
    Shares (or Units)
    
    Approximate Dollar Value)Shares (or
    
    per Share
    
    Purchased as Part of
    
    of Shares (or Units) thatUnits)
    
    (or Units)
    
    Publicly Announced
    
    May Yet Be PurchasedPeriod
    
    Purchased
    
    Purchased
    
    Plans or Programs (1)
    
    Under the Plans or ProgramsMonth #1 (July 1 - July 31, 2010)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    154,500Month #2 (August 1 - August 31, 2010)
    
    
    3,500
    
    
    $
    27.00
    
    
    
    3,500
    
    
    
    151,000Month #3 (September 1 - September
30, 2010)
    
    
    7,000
    
    
    $
    26.60
    
    
    
    7,000
    
    
    
    144,000
 
 (1)
    
    This program was announced in 2009 and represents the third buy-back program. The
Board of Directors approved the purchase of 200,000 shares. There was no expiration date
associated with this program.  Item 3. Defaults Upon Senior Securities
  Item 5. Other Information
  Item 6. Exhibits
 3.1.1
    
    Amended and Restated Articles of Incorporation-incorporated by reference to Registrants
Current Report on Form 10-K, dated May 9, 2005, filed with the Commission on May 10, 2005.3.2
    
    Amended Bylaws-incorporated by reference to Registrants Annual Report on Form 10-K, filed
with the commission on March 26, 2010.31.1
    
    Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer31.2
    
    Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer32
    
    Section 906 Certification of Principal Executive Officer and Principal Financial Officer
 34




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##### 



SIGNATURES
  CCFNB BANCORP, INC.
(Registrant)By
    /s/ Lance O. DiehlLance O. DiehlPresident and CEO
(Principal Executive Officer)Date: November 12, 2010By
    /s/ Jeffrey T. ArnoldJeffrey T. Arnold, CPA, CIAChief Financial Officer and Treasurer
(Principal Financial Officer)Date: November 12, 2010 35