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 March 31, 2010.
 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
    
    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 o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
  o þ




---



##### 



CCFNB Bancorp, Inc. and Subsidiary
Index to Quarterly Report on Form 10-Q
 Page NumberPart I Financial InformationItem 1. Financial StatementsConsolidated Balance Sheets as of March 31, 2010 (unaudited) and December 31, 2009
    
    
    3Consolidated Statements of Income (unaudited) for the three months ended March 31,
    
    
    42010 and 2009Consolidated Statement of Changes in Stockholders Equity (unaudited) for the
    
    
    5three months ended March 31, 2010 and 2009Consolidated Statements of Cash Flows (unaudited) for the three months ended March
    
    
    631, 2010 and 2009Notes to Consolidated Financial Statements (unaudited)
    
    
    7Report of Independent Registered Public Accounting Firm
    
    
    23Item 2. Managements Discussion and Analysis of Financial Condition and Results
    
    
    24of OperationsItem 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    34Item 4. Controls and Procedures
    
    
    34Part II Other Information
    
    
    34Item 1. Legal Proceedings
    
    
    34Item 1A. Risk Factors
    
    
    34Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    34Item 3. Defaults Upon Senior Securities
    
    
    35Item 5. Other Information
    
    
    35Item 6. Exhibits
    
    
    35Signatures
    
    
    35Exhibits
    
    
    36
 2




---



##### 



PART I Financial Information
 Item 1. Financial Statements
 CCFNB Bancorp, Inc.  Consolidated Balance Sheets
 (Unaudited)March 31,
    
    
    December 31,(In Thousands)
    
    2010
    
    
    2009ASSETSCash and due from banks
    
    $
    25,247
    
    
    $
    10,751Interest-bearing deposits in other banks
    
    
    72
    
    
    
    116Federal funds sold
    
    
    1,043
    
    
    
    592Total cash and cash equivalents
    
    
    26,362
    
    
    
    11,459Investment securities, available for sale, at fair value
    
    
    200,568
    
    
    
    220,266Restricted securities, at cost
    
    
    3,168
    
    
    
    2,984Loans,net of unearned income
    
    
    336,944
    
    
    
    330,489Less: Allowance for loan losses
    
    
    3,986
    
    
    
    4,210Loans, net
    
    
    332,958
    
    
    
    326,279Premises and equipment, net
    
    
    12,508
    
    
    
    12,583Accrued interest receivable
    
    
    1,903
    
    
    
    2,006Cash surrender value of bank-owned life insurance
    
    
    11,581
    
    
    
    11,440Investment in limited partnerships
    
    
    646
    
    
    
    687Intangible Assets:Core deposit
    
    
    2,617
    
    
    
    2,768Goodwill
    
    
    7,937
    
    
    
    7,937Prepaid FDIC assessment
    
    
    1,902
    
    
    
    2,037Other assets
    
    
    3,934
    
    
    
    2,043TOTAL
ASSETS
    
    $
    606,084
    
    
    $
    602,489LIABILITIESInterest-bearing deposits
    
    $
    412,393
    
    
    $
    406,554Noninterest-bearing deposits
    
    
    55,863
    
    
    
    55,734Total deposits
    
    
    468,256
    
    
    
    462,288Short-term borrowings
    
    
    49,250
    
    
    
    51,997Long-term borrowings
    
    
    10,127
    
    
    
    15,128Junior subordinate debentures
    
    
    4,640
    
    
    
    4,640Accrued interest payable
    
    
    763
    
    
    
    859Other liabilities
    
    
    7,085
    
    
    
    2,491TOTAL
LIABILITIES
    
    
    540,121
    
    
    
    537,403STOCKHOLDERS
EQUITYCommon stock, par value $1.25 per share; authorized
5,000,000 shares; issued 2,274,990 shares
in 2010 and 2,270,850 shares in 2009
    
    
    2,844
    
    
    
    2,838Surplus
    
    
    27,646
    
    
    
    27,539Retained earnings
    
    
    33,613
    
    
    
    32,723Accumulated other comprehensive income
    
    
    2,871
    
    
    
    2,523Treasury stock, at cost; 40,000 shares in 2010 and 22,500 shares
in 2009
    
    
    (1,011
    )
    
    
    (537
    )TOTAL
STOCKHOLDERS EQUITY
    
    
    65,963
    
    
    
    65,086TOTAL
LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    606,084
    
    
    $
    602,489
  3




---



##### 



CCFNB Bancorp, In c.
Consolidated Statements of Income
(Unaudited)
 For the Three Months Ended March 31,(In Thousands, Except Per Share Data)
    
    2010
    
    
    2009INTEREST AND DIVIDEND INCOMEInterest and fees on loans:Taxable
    
    $
    4,677
    
    
    $
    4,733Tax-exempt
    
    
    212
    
    
    
    203Interest and
dividends on investment securities:Taxable
    
    
    1,861
    
    
    
    2,212Tax-exempt
    
    
    105
    
    
    
    87Dividend and other interest income
    
    
    10
    
    
    
    26Federal funds sold
    
    
    1
    
    
    
    5Deposits in other banks
    
    
    2
    
    
    
    TOTAL INTEREST AND DIVIDEND INCOME
    
    
    6,868
    
    
    
    7,266INTEREST EXPENSEDeposits
    
    
    1,537
    
    
    
    2,013Short-term borrowings
    
    
    106
    
    
    
    81Long-term borrowings
    
    
    125
    
    
    
    137Junior subordinate debentures
    
    
    23
    
    
    
    42TOTAL INTEREST EXPENSE
    
    
    1,791
    
    
    
    2,273NET INTEREST INCOME
    
    
    5,077
    
    
    
    4,993PROVISION FOR LOAN LOSSES
    
    
    310
    
    
    
    60NET
INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
    
    
    4,767
    
    
    
    4,933NON-INTEREST INCOMEService charges and fees
    
    
    426
    
    
    
    398Gain on sale of loans
    
    
    130
    
    
    
    96Earnings on bank-owned life insurance
    
    
    116
    
    
    
    103Brokerage
    
    
    89
    
    
    
    56Trust
    
    
    171
    
    
    
    152Interchange fees
    
    
    195
    
    
    
    164Other
    
    
    171
    
    
    
    197TOTAL NON-INTEREST INCOME
    
    
    1,298
    
    
    
    1,166NON-INTEREST EXPENSESalaries
    
    
    1,576
    
    
    
    1,601Employee benefits
    
    
    471
    
    
    
    434Occupancy
    
    
    293
    
    
    
    307Furniture and equipment
    
    
    311
    
    
    
    323State shares tax
    
    
    133
    
    
    
    143Professional fees
    
    
    145
    
    
    
    167Directors fees
    
    
    67
    
    
    
    71FD IC assessments
    
    
    147
    
    
    
    74Telecommunications
    
    
    96
    
    
    
    86Amortization of core deposit intangible
    
    
    151
    
    
    
    168Automated teller machine and interchange
    
    
    130
    
    
    
    127Other
    
    
    455
    
    
    
    467TOTAL NON-INTEREST EXPENSE
    
    
    3,975
    
    
    
    3,968INCOME BEFORE INCOME TAX PROVISION
    
    
    2,090
    
    
    
    2,131INCOME TAX PROVISION
    
    
    550
    
    
    
    588NET INCOME
    
    $
    1,540
    
    
    $
    1,543EARNINGS PER SHARE
    
    $
    0.69
    
    
    $
    0 .69CASH DIVIDENDS PER SHARE
    
    $
    0.29
    
    
    $
    0 .24WEIGHTED AVERAGE SHARES OUTSTANDING
    
    
    2,243,439
    
    
    
    2,254,044
  4




---



##### 



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 (Loss)
    
    
    Stock
    
    
    EquityBalance,
December 31, 2008
    
    
    2,253,080
    
    
    $
    2,816
    
    
    $
    27,173
    
    
    $
    29,164
    
    
    $
    1,622
    
    
    $
    
    
    
    $
    60,775Comprehensive Income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,543
    
    
    
    
    
    
    
    
    
    
    
    1,543Change in net
unrealized gain on
investment
securities
available-for-sale,
net of
reclassification
adjustment and
tax effects.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25
    
    
    
    
    
    
    
    25Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,568Common stock issuance
under dividend
reinvestment and
stock purchase
plans
    
    
    4,866
    
    
    
    6
    
    
    
    81
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    87Recognition of
employee stock
purchase plan expense
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2Cash dividends, ($0.24
per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (540
    )
    
    
    
    
    
    
    
    
    
    
    (540
    )Balance, March 31, 2009
    
    
    2,257,946
    
    
    $
    2,822
    
    
    $
    27,256
    
    
    $
    30,167
    
    
    $
    1,647
    
    
    $
    
    
    
    $
    61,892Balance,
December 31, 2009
    
    
    2,270,850
    
    
    $
    2,838
    
    
    $
    27,539
    
    
    $
    32,723
    
    
    $
    2,523
    
    
    $
    (537
    )
    
    $
    65,086Comprehensive Income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,540
    
    
    
    
    
    
    
    
    
    
    
    1,540Change in net
unrealized gain on
investment
securities
available-for-sale,
net of
reclassification
adjustment and
tax effects.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    348
    
    
    
    
    
    
    
    348Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,888Common stock issuance
under dividend
reinvestment and
stock purchase
plans
    
    
    4,140
    
    
    
    6
    
    
    
    106
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    112Recognition of
employee stock
purchase plan expense
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Purchase of treasury
stock (17,500 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (474
    )
    
    
    (474
    )Cash dividends, ($0.29
per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (650
    )
    
    
    
    
    
    
    
    
    
    
    (650
    )Balance, March 31, 2010
    
    
    2,274,990
    
    
    $
    2,844
    
    
    $
    27,646
    
    
    $
    33,613
    
    
    $
    2,871
    
    
    $
    (1,011
    )
    
    $
    65,963
  5




---



##### 



CCFNB Bancorp, Inc.  Consolidated Statements of Cash Flows
(Unaudited)
 For The Three Months Ended March 31,(In Thousands)
    
    2010
    
    
    2009OPERATING ACTIVITIESNet income
    
    $
    1,540
    
    
    $
    1,543Adjustments
to reconcile net income to net cash provided by operating activities:Provision for loan losses
    
    
    310
    
    
    
    60Depreciation and amortization of premises and equipment
    
    
    233
    
    
    
    259Amortization and accretion on investment securities
    
    
    242
    
    
    
    22Loss on sale of premises and equipment
    
    
    
    
    
    
    (69
    )Deferred income taxes benefit
    
    
    44
    
    
    
    133Gain on sale of loans
    
    
    (130
    )
    
    
    (96
    )Proceeds from sale of mortgage loans
    
    
    4,561
    
    
    
    5,183Originations of mortgage loans held for resale
    
    
    (4,815
    )
    
    
    (5,124
    )Amortization
of intangibles and invesment in limited partnerships
    
    
    192
    
    
    
    207Decrease in accrued interest receivable
    
    
    103
    
    
    
    132Increases in
cash surrender value of bank-owned life insurance
    
    
    (141
    )
    
    
    (122
    )Decrease in accrued interest payable
    
    
    (96
    )
    
    
    (94
    )Other, net
    
    
    (1,085
    )
    
    
    216Net cash provided by operating activities
    
    
    958
    
    
    
    2,250INVESTING ACTIVITIESInvestment securities available for sale:Purchases
    
    
    (5,118
    )
    
    
    (30,806
    )Proceeds from sales, maturities and redemptions
    
    
    29,102
    
    
    
    31,171Proceeds from redemption of restricted securities
    
    
    
    
    
    
    Purchase of restricted securities
    
    
    (184
    )
    
    
    (817
    )Net increase in loans
    
    
    (6,905
    )
    
    
    (5,534
    )Proceeds from sale of premises and equipment
    
    
    
    
    
    
    916Proceeds from sale of other real estate owned
    
    
    
    
    
    
    220Acquisition of premises and equipment
    
    
    (158
    )
    
    
    (392
    )Net cash provided by (used for) investing activities
    
    
    16,737
    
    
    
    (5,242
    )FINANCING ACTIVITIESNet increase in deposits
    
    
    5,968
    
    
    
    12,939Net increase in short-term borrowings
    
    
    (2,747
    )
    
    
    (13,523
    )Repayment of long-term borrowings
    
    
    (5,001
    )
    
    
    (2
    )Acquisition of treasury stock
    
    
    (474
    )
    
    
    Proceeds from issuance of common stock
    
    
    112
    
    
    
    87Cash dividends paid
    
    
    (650
    )
    
    
    (540
    )Net cash used for financing activities
    
    
    (2,792
    )
    
    
    (1,039
    )NET DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    14,903
    
    
    
    (4,031
    )CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    11,459
    
    
    
    15,485CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    26,362
    
    
    $
    11,454SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATIONInterest paid
    
    $
    1,887
    
    
    $
    2,367Income taxes paid
    
    
    99
    
    
    
    103Loans transferred to other real estate owned
    
    
    300
    
    
    
    524
  6




---



##### 



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




---



##### 



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




---



##### 



PREMISES AND EQUIPMENT
  MORTGAGE SERVICING RIGHTS
  JUNIOR SUBORDINATE DEBENTURES
  INTANGIBLE ASSETS  GOODWILL
  INTANGIBLE
ASSETS  CORE DEPOSIT
   For the Year Ended:Remainder of 2010
    
    $
    425,0002011
    
    
    509,0002012
    
    
    442,0002013
    
    
    374,0002014
    
    
    308,000Thereafter
    
    
    559,000Total
    
    $
    2,617,000
 OTHER REAL ESTATE OWNED
  9




---



##### 



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




---



##### 



ADVERTISING COSTS
  SUBSEQUENT EVENTS
  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




---



##### 



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
 12




---



##### 



SAB 112
 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




---



##### 



FASB ASC 810-10 
 FASB ASC 820-10-
 RECLASSIFICATIONS
  2. INVESTMENT SECURITIES AVAILABLE-FOR-SALE
  March 31, 2010Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair(In Thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueObligation of U.S. Government Corporations
and Agencies:Mortgage-backed
    
    $
    126,809
    
    
    $
    4,142
    
    
    $
    (77
    )
    
    $
    130,874Other
    
    
    57,042
    
    
    
    413
    
    
    
    (90
    )
    
    
    57,365Obligations of state and political sub divisions
    
    
    10,231
    
    
    
    137
    
    
    
    
    
    
    
    10,368Total debt securities
    
    
    194,082
    
    
    
    4,692
    
    
    
    (167
    )
    
    
    198,607Marketable equity securities
    
    
    2,136
    
    
    
    106
    
    
    
    (281
    )
    
    
    1,961Total investment securities AFS
    
    $
    196,218
    
    
    $
    4,798
    
    
    $
    (448
    )
    
    $
    200,568
 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 sub divisions
    
    
    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
    
    $
    833
    
    
    $
    843
    
    
    
    3.49
    %Due after one year to five years
    
    
    47,105
    
    
    
    47,385
    
    
    
    3.00
    %Due after five years to ten years
    
    
    28,664
    
    
    
    29,352
    
    
    
    4.70
    %Due after ten years
    
    
    119,616
    
    
    
    122,988
    
    
    
    4.38
    %Total
    
    $
    196,218
    
    
    $
    200,568
    March 31 , 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
    
    $
    8,385
    
    
    $
    77
    
    
    $
    
    
    
    $
    
    
    
    $
    8,385
    
    
    $
    77Other
    
    
    17,908
    
    
    
    90
    
    
    
    
    
    
    
    
    
    
    
    17,908
    
    
    
    90Obligations of state and political sub divisions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total debt securities
    
    
    26,293
    
    
    
    167
    
    
    
    
    
    
    
    
    
    
    
    26,293
    
    
    
    167Equity securities
    
    
    669
    
    
    
    76
    
    
    
    553
    
    
    
    205
    
    
    
    1,222
    
    
    
    281Total
    
    $
    26,962
    
    
    $
    243
    
    
    $
    553
    
    
    $
    205
    
    
    $
    27,515
    
    
    $
    448
 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 Corporations
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




---



##### 



March 31, 2010Gross
    
    
    Gross
    
    
    Estimated(In Thousands)
    
    Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairAsset size($)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueUnder $1 Billion
    
    $
    457
    
    
    $
    10
    
    
    $
    (60
    )
    
    $
    407$1 to $5 Billion
    
    
    213
    
    
    
    
    
    
    
    (42
    )
    
    
    171$6 to $100 billion
    
    
    780
    
    
    
    41
    
    
    
    (150
    )
    
    
    671Over $100 Billion
    
    
    686
    
    
    
    55
    
    
    
    (29
    )
    
    
    712$
    2,136
    
    
    $
    106
    
    
    $
    (281
    )
    
    $
    1,961
 March 31, 2010Gross
    
    
    Gross
    
    
    Estimated(In Thousands)
    
    Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairGeographic Region
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueEastern U.S.
    
    $
    1,046
    
    
    $
    24
    
    
    $
    (183
    )
    
    $
    887Southeastern U.S.
    
    
    110
    
    
    
    12
    
    
    
    (3
    )
    
    
    119Western U.S.
    
    
    53
    
    
    
    
    
    
    
    (6
    )
    
    
    47National
    
    
    927
    
    
    
    70
    
    
    
    (89
    )
    
    
    908$
    2,136
    
    
    $
    106
    
    
    $
    (281
    )
    
    $
    1,961
  16




---



##### 



3. ALLOWANCE FOR LOAN LOSSES
  (In Thousands)
    
    2010
    
    
    2009Balance, beginning of year
    
    $
    4,209
    
    
    $
    3,758Provision charged to operations
    
    
    310
    
    
    
    60Loans charged off
    
    
    (539
    )
    
    
    (77
    )Recoveries
    
    
    6
    
    
    
    12Balance, March 31,
    
    $
    3,986
    
    
    $
    3,753
  4. SHORT-TERM BORROWINGS
  5. LONG-TERM BORROWINGS
  6. DEFERRED COMPENSATION PLANS
  7. ACQUISITION
   17




---



##### 



(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
  (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
   18




---



##### 



(In Thousands)
    
    2010
    
    
    2009Financial instruments whose contract amounts represent credit risk:Commitments to extend credit
    
    $
    75,345
    
    
    $
    71,868Standby letters of credit
    
    
    3,142
    
    
    
    3,393Dealer floor plans
    
    
    1,080
    
    
    
    932Loans held for sale
    
    
    651
    
    
    
    267
     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.
  March 31, 2010(In Thousands)
    
    Level I
    
    
    Level II
    
    
    Level III
    
    
    TotalAssets Measured on a Recurring Basis:Investment Securities, available-for-sale
    
    $
    1,961
    
    
    $
    198,607
    
    
    $
    
    
    
    $
    200,568
 19




---



##### 



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
  March 31, 2010(In Thousands)
    
    Level I
    
    
    Level II
    
    
    Level III
    
    
    TotalAvailable for sale securitiesObligation of US Government AgenciesMortgage-backed
    
    $
    
    
    
    $
    130,874
    
    
    $
    
    
    
    $
    130,874Other
    
    
    
    
    
    
    57,365
    
    
    
    
    
    
    
    57,365Obligations
of state and political subdivisions
    
    
    
    
    
    
    10,368
    
    
    
    
    
    
    
    10,368Equity securities
    
    
    1,961
    
    
    
    
    
    
    
    
    
    
    
    1,961$
    1,961
    
    
    $
    198,607
    
    
    $
    
    
    
    $
    200,568
 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
   March 31, 2010(In Thousands)
    
    Level I
    
    
    Level II
    
    

Level III
    
    
    TotalAssets Measured on a Non-recurring Basis:Impaired Loans
    
    $
    
    
    
    $
    3,878
    
    
    $
    
    
    
    $
    3,878Loans Held for Sale
    
    
    
    
    
    
    651
    
    
    
    
    
    
    
    651Mortgage Servicing Rights
    
    
    
    
    
    
    364
    
    
    
    
    
    
    
    364Other Real Estate Owned
    
    
    
    
    
    
    329
    
    
    
    
    
    
    
    329$
    
    
    
    $
    5,222
    
    
    $
    
    
    
    $
    5,222
 20




---



##### 



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
   March 31, 2010
    
    December 31, 2009Carrying
    
    Estimated
    
    Carrying
    
    Estimated(In Thousands)
    
    Amount
    
    Fair Value
    
    Amount
    
    Fair ValueFinancial Assets:Cash and short-term instruments
    
    $
    26,362
    
    
    $
    26,362
    
    
    $
    11,459
    
    
    $
    11,459Investment securities
    
    
    200,568
    
    
    
    200,568
    
    
    
    220,266
    
    
    
    220,266Restricted securities
    
    
    3,168
    
    
    
    3,168
    
    
    
    2,984
    
    
    
    2,984Loans, net
    
    
    332,958
    
    
    
    339,006
    
    
    
    326,279
    
    
    
    329,726Cash surrender value of bank owned life insurance
    
    
    11,581
    
    
    
    11,581
    
    
    
    11,440
    
    
    
    11,440Accrued interest receivable
    
    
    1,903
    
    
    
    1,903
    
    
    
    2,006
    
    
    
    2,006Financial Liabilities:Interest- bearing deposits
    
    
    412,393
    
    
    
    416,003
    
    
    
    406,554
    
    
    
    410,168Noninterest- bearing deposits
    
    
    55,863
    
    
    
    55,863
    
    
    
    55,734
    
    
    
    55,734Short-term borrowings
    
    
    49,250
    
    
    
    49,250
    
    
    
    51,997
    
    
    
    51,997Long-term borrowings
    
    
    10,127
    
    
    
    10,266
    
    
    
    15,128
    
    
    
    15,375Junior subordinate debentures
    
    
    4,640
    
    
    
    4,640
    
    
    
    4,640
    
    
    
    4,640Accrued interest payable
    
    
    763
    
    
    
    763
    
    
    
    859
    
    
    
    859Off-Balance Sheet Assets (Liabilities):Commitments to extend credit
    
    
    
    
    
    $
    75,345
    
    
    
    
    
    
    $
    71,868Standby letters of credit
    
    
    
    
    
    
    3,142
    
    
    
    
    
    
    
    3,393Dealer floor plans
    
    
    
    
    
    
    1,080
    
    
    
    
    
    
    
    932
        21




---



##### 



11. MANAGEMENTS ASSERTIONS AND COMMENTS REQUIRED TO BE PROVIDED WITH FORM 10Q
FILING
   22




---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
       
 23




---



##### 



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 Emergency Economic Stabilization Act of
2008.
    
    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.
 24




---



##### 




    
    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
    25




---



##### 



AVERAGE BALANCE SHEET AND RATE ANALYSIS
THREE MONTHS ENDED MARCH 31,
 2010
    
    

2009(In Thousands)
    
    Average Balance
    
    
    Interest
    
    
    Average Rate
    
    
    Average Balance
    
    
    Interest
    
    
    Average Rate(1)
    
    
    
    
    
    
    
    
    
    
    (1)ASSETS:Tax-exempt loans
    
    $
    20,251
    
    
    $
    321
    
    
    
    6.43
    %
    
    $
    19,891
    
    
    $
    308
    
    
    
    6.28
    %All other loans
    
    
    314,504
    
    
    
    4,678
    
    
    
    6.03
    %
    
    
    303,855
    
    
    
    4,733
    
    
    
    6.32
    %Total loans (2)(3)(4)
    
    
    334,755
    
    
    
    4,999
    
    
    
    6.06
    %
    
    
    323,746
    
    
    
    5,041
    
    
    
    6.31
    %Taxable securities
    
    
    204,375
    
    
    
    1,871
    
    
    
    3.66
    %
    
    
    180,892
    
    
    
    2,238
    
    
    
    4.95
    %Tax-exempt securitites (3)
    
    
    10,965
    
    
    
    159
    
    
    
    5.80
    %
    
    
    9,351
    
    
    
    132
    
    
    
    5.65
    %Total securities
    
    
    215,340
    
    
    
    2,030
    
    
    
    3.77
    %
    
    
    190,243
    
    
    
    2,370
    
    
    
    4.98
    %Federal funds sold
    
    
    857
    
    
    
    
    
    
    
    0.00
    %
    
    
    10,722
    
    
    
    5
    
    
    
    0.19
    %Interest-bearing deposits
    
    
    5,799
    
    
    
    2
    
    
    
    0.14
    %
    
    
    573
    
    
    
    1
    
    
    
    0.71
    %Total interest-earning assets
    
    
    556,751
    
    
    
    7,031
    
    
    
    5.10
    %
    
    
    525,284
    
    
    
    7,417
    
    
    
    5.70
    %Other assets
    
    
    46,202
    
    
    
    
    
    
    
    
    
    
    
    44,292TOTAL ASSETS
    
    $
    602,953
    
    
    
    
    
    
    
    
    
    
    $
    569,576LIABILITIES:Savings
    
    $
    58,920
    
    
    
    58
    
    
    
    0.40
    %
    
    $
    55,231
    
    
    
    54
    
    
    
    0.40
    %Now deposits
    
    
    72,100
    
    
    
    26
    
    
    
    0.15
    %
    
    
    69,265
    
    
    
    26
    
    
    
    0.15
    %Money market deposits
    
    
    42,609
    
    
    
    81
    
    
    
    0.77
    %
    
    
    42,289
    
    
    
    127
    
    
    
    1.22
    %Time deposits
    
    
    234,970
    
    
    
    1,372
    
    
    
    2.37
    %
    
    
    227,652
    
    
    
    1,806
    
    
    
    3.22
    %Total deposits
    
    
    408,599
    
    
    
    1,537
    
    
    
    1.53
    %
    
    
    394,437
    
    
    
    2,013
    
    
    
    2.07
    %Short-term borrowings
    
    
    52,727
    
    
    
    106
    
    
    
    0.82
    %
    
    
    46,623
    
    
    
    81
    
    
    
    0.70
    %Long-term borrowings
    
    
    11,850
    
    
    
    125
    
    
    
    4.28
    %
    
    
    9,132
    
    
    
    137
    
    
    
    6.08
    %Junior subordinate debentures
    
    
    4,640
    
    
    
    23
    
    
    
    2.01
    %
    
    
    4,640
    
    
    
    42
    
    
    
    3.67
    %Total borrowings
    
    
    69,217
    
    
    
    254
    
    
    
    1.49
    %
    
    
    60,395
    
    
    
    260
    
    
    
    1.75
    %Total interest-bearing liabilities
    
    
    477,816
    
    
    
    1,791
    
    
    
    1.52
    %
    
    
    454,832
    
    
    
    2,273
    
    
    
    2.03
    %Demand deposits
    
    
    54,948
    
    
    
    
    
    
    
    
    
    
    
    49,751Other liabilities
    
    
    3,956
    
    
    
    
    
    
    
    
    
    
    
    3,385Stockholders equity
    
    
    66,233
    
    
    
    
    
    
    
    
    
    
    
    61,608TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    602,953
    
    
    
    
    
    
    
    
    
    
    $
    569,576Interest rate spread (6)
    
    
    
    
    
    
    
    
    
    
    3.58
    %
    
    
    
    
    
    
    
    
    
    
    3.67
    %Net interest income/margin (5)
    
    
    
    
    
    $
    5,240
    
    
    
    3.80
    %
    
    
    
    
    
    $
    5,144
    
    
    
    3.95
    %
 
 (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)
    
    Nonaccrual 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. 26




---



##### 



Reconcilement of Taxable Equivalent Net Interest Income
For the Three Months Ended March 31,
 (In Thousands)
    
    2010
    
    
    2009Total interest income
    
    $
    6,868
    
    
    $
    7,266Total interest expense
    
    
    1,791
    
    
    
    2,273Net interest income
    
    
    5,077
    
    
    
    4,993Tax equivalent adjustment
    
    
    163
    
    
    
    151Net interest income(fully taxable equivalent)
    
    $
    5,240
    
    
    $
    5,144
 Rate/Volume Analysis
  Three Months Ended March 31,2010 vs 2009Increase (Decrease)Due to(In Thousands)
    
    Volume
    
    
    Rate
    
    
    NetInterest income:Loans, tax-exempt
    
    $
    6
    
    
    $
    7
    
    
    $
    13Loans
    
    
    158
    
    
    
    (213
    )
    
    
    (55
    )Taxable investment securities
    
    
    215
    
    
    
    (582
    )
    
    
    (367
    )Tax-exempt investment securities
    
    
    23
    
    
    
    4
    
    
    
    27Federal funds sold
    
    
    (5
    )
    
    
    
    
    
    
    (5
    )Interest bearing deposits
    
    
    2
    
    
    
    (1
    )
    
    
    1Total interest-earning assets
    
    
    399
    
    
    
    (785
    )
    
    
    (386
    )Interest expense:Savings
    
    
    4
    
    
    
    
    
    
    
    4NOW deposits
    
    
    1
    
    
    
    (1
    )
    
    
    Money market deposits
    
    
    1
    
    
    
    (47
    )
    
    
    (46
    )Time deposits
    
    
    43
    
    
    
    (477
    )
    
    
    (434
    )Short-term borrowings
    
    
    12
    
    
    
    13
    
    
    
    25Long-term borrowings, FHLB
    
    
    29
    
    
    
    (41
    )
    
    
    (12
    )Junior subordinate debentures
    
    
    
    
    
    
    (19
    )
    
    
    (19
    )Total interest-bearing liabilities
    
    
    90
    
    
    
    (572
    )
    
    
    (482
    )Change in net interest income
    
    $
    309
    
    
    $
    (213
    )
    
    $
    96
 PROVISION FOR LOAN LOSSES
 2010 vs. 2009
  27




---



##### 



NON-INTEREST INCOME
 2010 vs. 2009
  For The Three Months EndedMarch 31, 2010
    
    March 31, 2009
    
    Change(In Thousands)
    
    Amount
    
    % Total
    
    Amount
    
    % Total
    
    Amount
    
    %Service charges and fees
    
    $
    426
    
    
    
    32.8
    %
    
    $
    398
    
    
    
    34.1
    %
    
    $
    28
    
    
    
    7.0
    %Gain on sale of loans
    
    
    130
    
    
    
    10.0
    
    
    
    96
    
    
    
    8.2
    
    
    
    34
    
    
    
    35.4Earnings on bank-owned life insurance
    
    
    116
    
    
    
    8.9
    
    
    
    103
    
    
    
    8.8
    
    
    
    13
    
    
    
    12.6Brokerage and insurance
    
    
    89
    
    
    
    6.9
    
    
    
    56
    
    
    
    4.8
    
    
    
    33
    
    
    
    58.9Trust
    
    
    171
    
    
    
    13.2
    
    
    
    152
    
    
    
    13.0
    
    
    
    19
    
    
    
    12.5Interchange fees
    
    
    195
    
    
    
    15.0
    
    
    
    164
    
    
    
    14.2
    
    
    
    31
    
    
    
    18.9Other
    
    
    171
    
    
    
    13.2
    
    
    
    197
    
    
    
    16.9
    
    
    
    (26
    )
    
    
    (13.2
    )Total non-interest income
    
    $
    1,298
    
    
    
    100.0
    %
    
    $
    1,166
    
    
    
    100.0
    %
    
    $
    132
    
    
    
    11.3
    %
 NON-INTEREST EXPENSE
 2010 vs. 2009
   28




---



##### 



For The Three Months EndedMarch 31, 2010
    
    March 31, 2009
    
    Change(In Thousands)
    
    Amount
    
    % Total
    
    Amount
    
    % Total
    
    Amount
    
    %Salaries
    
    $
    1,576
    
    
    
    39.7
    %
    
    $
    1,601
    
    
    
    40.4
    %
    
    $
    (25
    )
    
    
    (1.6
    )%Employee benefits
    
    
    471
    
    
    
    11.8
    
    
    
    434
    
    
    
    10.9
    
    
    
    37
    
    
    
    8.5Occupancy
    
    
    293
    
    
    
    7.4
    
    
    
    307
    
    
    
    7.7
    
    
    
    (14
    )
    
    
    (4.6
    )Furniture and equipment
    
    
    311
    
    
    
    7.8
    
    
    
    323
    
    
    
    8.1
    
    
    
    (12
    )
    
    
    (3.7
    )State shares tax
    
    
    133
    
    
    
    3.3
    
    
    
    143
    
    
    
    3.6
    
    
    
    (10
    )
    
    
    (7.0
    )Professional fees
    
    
    145
    
    
    
    3.6
    
    
    
    167
    
    
    
    4.2
    
    
    
    (22
    )
    
    
    (13.2
    )Directors fees
    
    
    67
    
    
    
    1.7
    
    
    
    71
    
    
    
    1.8
    
    
    
    (4
    )
    
    
    (5.6
    )FDIC assessments
    
    
    147
    
    
    
    3.7
    
    
    
    74
    
    
    
    1.9
    
    
    
    73
    
    
    
    98.6Telecommunications
    
    
    96
    
    
    
    2.4
    
    
    
    86
    
    
    
    2.2
    
    
    
    10
    
    
    
    11.6Amortization of core deposit intangible
    
    
    151
    
    
    
    3.8
    
    
    
    168
    
    
    
    4.2
    
    
    
    (17
    )
    
    
    (10.1
    )Automated teller machine and interchange
    
    
    130
    
    
    
    3.3
    
    
    
    127
    
    
    
    3.2
    
    
    
    3
    
    
    
    2.4Other
    
    
    455
    
    
    
    11.5
    
    
    
    467
    
    
    
    11.8
    
    
    
    (12
    )
    
    
    (2.6
    )Total non-interest expense
    
    $
    3,975
    
    
    
    100.0
    %
    
    $
    3,968
    
    
    
    100.0
    %
    
    $
    7
    
    
    
    0.2
    %
 FINANCIAL CONDITION
    INVESTMENTS
  March 31, 2010EstimatedAmortized
    
    
    Fair(In Thousands)
    
    Cost
    
    
    ValueObligation of U.S.Government Corporations
and Agencies:Mortgage-backed
    
    $
    126,809
    
    
    $
    130,874Other
    
    
    57,042
    
    
    
    57,365Obligations of state and political subdivisions
    
    
    10,231
    
    
    
    10,368Total debt securities
    
    
    194,082
    
    
    
    198,607Marketable equity securities
    
    
    2,136
    
    
    
    1,961Total investment securities AFS
    
    $
    196,218
    
    
    $
    200,568
 29




---



##### 



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)
    
    March 31, 2010
    
    
    December 31, 2009
    
    
    Amount
    
    
    %Commercial, financial and agricultural
    
    $
    41,972
    
    
    $
    37,642
    
    
    $
    4,330
    
    
    
    11.5
    %Tax-exempt
    
    
    19,202
    
    
    
    18,055
    
    
    
    1,147
    
    
    
    6.4Real estate
    
    
    246,537
    
    
    
    253,463
    
    
    
    (6,926
    )
    
    
    (2.7
    )Real estate construction
    
    
    21,772
    
    
    
    13,526
    
    
    
    8,246
    
    
    
    61.0Installment loans to individuals
    
    
    7,357
    
    
    
    7,725
    
    
    
    (368
    )
    
    
    (4.8
    )Add (deduct): Unearned discount
    
    
    (12
    )
    
    
    (15
    )
    
    
    3
    
    
    
    (20.0
    )Unamortized loan costs, net of fees
    
    
    116
    
    
    
    93
    
    
    
    23
    
    
    
    24.7Gross loans
    
    $
    336,944
    
    
    $
    330,489
    
    
    $
    6,455
    
    
    
    2.0
    %
  March 31, 2010
    
    
    December 31, 2009Commercial, financial and agricultural
    
    
    12.4
    %
    
    
    11.4
    %Tax-exempt
    
    
    5.7
    
    
    
    5.5Real estate
    
    
    73.2
    
    
    
    76.7Real estate construction
    
    
    6.5
    
    
    
    4.1Installment loans to individuals
    
    
    2.2
    
    
    
    2.3Gross loans
    
    
    100.0
    %
    
    
    100.0
    %
 ALLOWANCE FOR LOAN LOSSES
  30




---



##### 



For the Three Months Ended March 31,(In Thousands)
    
    2010
    
    
    2009Average Loans Outstanding during
the period
    
    $
    334,755
    
    
    $
    323,746Balance, beginning of year
    
    $
    4,210
    
    
    $
    3,758Provision charged to operations
    
    
    310
    
    
    
    60Loans charged off:Commercial, financial, and agricultural
    
    
    
    
    
    
    (67
    )Real estate mortgages
    
    
    (536
    )
    
    
    Installment loans to indiviuals
    
    
    (4
    )
    
    
    (10
    )Recoveries:Commercial, financial, and agricultural
    
    
    1
    
    
    
    Real estate mortgages
    
    
    1
    
    
    
    7Installment loans to indiviuals
    
    
    4
    
    
    
    5Balance, end of period
    
    $
    3,986
    
    
    $
    3,753Net charge-offs to Average loans
outstanding during the period
    
    
    -0.16
    %
    
    
    -0.02
    %
 NON-PERFORMING LOANS
   (In Thousands)
    
    March 31, 2010
    
    
    December 31, 2009Commercial, financial and agriculturalDays 30-89
    
    $
    102
    
    
    $
    14Days 90 plus
    
    
    
    
    
    
    Non-accrual
    
    
    143
    
    
    
    145Real estateDays 30-89
    
    
    1,355
    
    
    
    1,632Days 90 plus
    
    
    
    
    
    
    Non-accrual
    
    
    3,581
    
    
    
    4,216Installment loans to individualsDays 30-89
    
    
    47
    
    
    
    49Days 90 plus
    
    
    
    
    
    
    Non-accrual
    
    
    
    
    
    
    $
    5,228
    
    
    $
    6,056Days 30-89
    
    $
    1,504
    
    
    $
    1,695Days 90 plus
    
    
    
    
    
    
    Non-accrual
    
    
    3,724
    
    
    
    4,361$
    5,228
    
    
    $
    6,056Restructured loans still accruing
    
    $
    322
    
    
    $
    323Other real estate owned
    
    $
    329
    
    
    $
    29
 DEPOSITS
  31




---



##### 



.
  March 31, 2010
    
    December 31, 2009Average
    
    
    
    
    
    Average
    
    Change(In Thousands)
    
    Balance
    
    Rate
    
    Balance
    
    Rate
    
    Amount
    
    %Non-interest bearing
    
    $
    54,948
    
    
    
    
    %
    
    $
    51,908
    
    
    
    
    %
    
    $
    3,040
    
    
    
    5.9
    %Savings
    
    
    58,920
    
    
    
    0.40
    
    
    
    56,493
    
    
    
    0.40
    
    
    
    2,427
    
    
    
    4.3Now deposits
    
    
    72,100
    
    
    
    0.15
    
    
    
    68,650
    
    
    
    0.15
    
    
    
    3,450
    
    
    
    5.0Money market deposits
    
    
    42,609
    
    
    
    0.77
    
    
    
    43,906
    
    
    
    1.03
    
    
    
    (1,297
    )
    
    
    (3.0
    )Time deposits
    
    
    234,970
    
    
    
    2.37
    
    
    
    228,005
    
    
    
    2.94
    
    
    
    6,965
    
    
    
    3.1Total deposits
    
    $
    463,547
    
    
    
    1.35
    %
    
    $
    448,962
    
    
    
    1.67
    %
    
    $
    14,585
    
    
    
    3.2
    %
 BORROWED FUNDS
  March 31, 2010
    
    December 31, 2009
    
    Change(In Thousands)
    
    Amount
    
    % Total
    
    Amount
    
    % Total
    
    Amount
    
    %Short-term borrowings:Securities sold under agreement to repurchase
    
    $
    49,043
    
    
    
    70.9
    %
    
    $
    47,873
    
    
    
    72.6
    %
    
    $
    1,170
    
    
    
    2.4
    %Short-term borrowings, FHLB
    
    
    3,134
    
    
    
    4.5
    
    
    
    352
    
    
    
    0.5
    
    
    
    2,782
    
    
    
    790.3U.S. Treasury tax and loan notes
    
    
    550
    
    
    
    0.8
    
    
    
    601
    
    
    
    0.9
    
    
    
    (51
    )
    
    
    (8.5
    )Total short-term borrowings
    
    
    52,727
    
    
    
    76.2
    %
    
    
    48,826
    
    
    
    74.0
    %
    
    
    3,901
    
    
    
    8.0Long-term borrowings, FHLB
    
    
    11,850
    
    
    
    17.1
    
    
    
    12,492
    
    
    
    18.9
    
    
    
    (642
    )
    
    
    (5.1
    )Junior subordinate debentures
    
    
    4,640
    
    
    
    6.7
    
    
    
    4,640
    
    
    
    7.0
    
    
    
    
    
    
    
    Total borrowed funds
    
    $
    69,217
    
    
    
    100.0
    %
    
    $
    65,958
    
    
    
    100.0
    %
    
    $
    3,259
    
    
    
    4.9
    %
 LIQUIDITY
   CAPITAL RESOURCES
   32




---



##### 



2010
    
    2009(In Thousands)
    
    Amount
    
    Ratio
    
    Amount
    
    RatioTotal Capital
(to Risk-weighted Assets)Actual
    
    $
    61,059
    
    
    
    17.3
    %
    
    $
    60,322
    
    
    
    17.6
    %For Capital Adequacy Purposes
    
    
    28,184
    
    
    
    8.0
    
    
    
    27,394
    
    
    
    8.0To Be Well-Capitalized
    
    
    35,230
    
    
    
    10.0
    
    
    
    34,243
    
    
    
    10.0Tier I Capital
(to Risk-weighted Assets)Actual
    
    $
    57,062
    
    
    
    16.2
    %
    
    $
    56,102
    
    
    
    16.4
    %For Capital Adequacy Purposes
    
    
    14,092
    
    
    
    4.0
    
    
    
    13,697
    
    
    
    4.0To Be Well-Capitalized
    
    
    21,138
    
    
    
    6.0
    
    
    
    20,546
    
    
    
    6.0Tier I Capital
(to Average Assets)Actual
    
    $
    57,062
    
    
    
    9.6
    %
    
    $
    56,102
    
    
    
    9.8
    %For Capital Adequacy Purposes
    
    
    23,696
    
    
    
    4.0
    
    
    
    22,861
    
    
    
    4.0To Be Well-Capitalized
    
    
    29,620
    
    
    
    5.0
    
    
    
    28,577
    
    
    
    5.0
  INTEREST RATE RISK MANAGEMENT
        33




---



##### 



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
  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 (January 1 - January 31, 2010)
    
    
    4,600
    
    
    $
    26.75
    
    
    
    4,600
    
    
    
    172,900Month #2 (February 1 - February 28, 2010)
    
    
    2,500
    
    
    
    26.75
    
    
    
    2,500
    
    
    
    170,400Month #3 (March 1 - March 31, 2010)
    
    
    10,400
    
    
    
    27.25
    
    
    
    10,400
    
    
    
    160,000
 
 (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. 34




---



##### 



Item 3. Defaults Upon Senior Securities
  Item 5. Other Information
  Item 6. Exhibits
 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 906 Certification of Chief Executive Officer and Chief Financial Officer
 SIGNATURES
  CCFNB BANCORP, INC.
(Registrant)By
    /s/ Lance O. DiehlLance O. DiehlPresident and CEO
(Principal Executive Officer)
Date: May 12, 2010By
    /s/ Jeffrey T. ArnoldJeffrey T. Arnold, CPA, CIAChief Financial Officer and Treasurer
(Principal Financial Officer)
(Principal Accounting Officer)
Date:  May  12, 2010 35