In the news release, CITIZENS FINANCIAL SERVICES, INC. REPORTS
UNAUDITED FULL YEAR AND FOURTH QUARTER 2023 FINANCIAL RESULTS,
issued 30-Jan-2024 by CITIZENS
FINANCIAL SERVICES, INC. over PR Newswire, two earnings tables
titled "CONSOLIDATED SUMMARY OF LOANS BY TYPE; NON-PERFORMING
ASSETS; and ALLOWANCE FOR CREDIT LOSSES" and "Reconciliation of
GAAP and Non-GAAP Financial Measures" were omitted from the release
as incorrectly transmitted by PR Newswire. The complete, corrected
release follows:
CITIZENS FINANCIAL SERVICES, INC. REPORTS UNAUDITED FULL YEAR AND
FOURTH QUARTER 2023 FINANCIAL RESULTS
MANSFIELD, Pa., Jan. 30,
2024 /PRNewswire/ -- Citizens Financial Services,
Inc. (Nasdaq: CZFS), parent company of First Citizens Community
Bank, released today its unaudited consolidated financial results
for the three months and year ended December
31, 2023.
Highlights
- During the fourth quarter of 2023, we continued to integrate
the assets and employees acquired as part of the acquisition of HV
Bancorp, Inc. ("HVB") into the Company. We continue to be excited
by the opportunities these markets and individuals represent for
the Company. The acquisition of HVB in the first half of 2023
contributed significant growth to net interest income in the second
half of 2023. Merger and acquisitions costs for 2023 total
$9.3 million. The provision for
credit losses on non-purchase credit deteriorated loans (the "NPC
Provision") was $4.6 million for
2023.
- Net income was $17.8 million for
2023, which is $11.3 million, or
38.7% lower than 2022's net income due to the one-time merger and
acquisition costs and the NPC Provision. The effective tax
rate for 2023 was 17.2% compared to 18.1% in 2022.
- Net income was $7.5 million for
the three months ended December 31,
2023, which is 4.3% lower than the net income for 2022's
comparable period. The effective tax rate for the three months
ended December 31, 2023 was 18.3%
compared to 18.8% in the comparable period in 2022.
- Net interest income before the provision for credit losses was
$80.3 million for 2023, an increase
of $8.1 million, or 11.3%, over
2022.
- Return on average equity for the three months (annualized) and
the year ended December 31, 2023 was
9.93% and 6.52% compared to 13.58% and 12.98% for the three months
(annualized) and the year ended December 31,
2022, respectively. If the death benefits received from life
insurance on a former employee, the one-time costs associated with
the acquisition and the NPC Provision are excluded, the return on
average equity for the year ended December
31, 2023 and 2022 would have been 10.52% and 13.11%,
respectively (1).
- Return on average tangible equity (non-GAAP) for the three
months (annualized) and the year ended December 31, 2023 was 14.00% and 8.47% compared
to 15.80% and 15.20% for the three months (annualized) and the year
ended December 31, 2022,
respectively. If the death benefits received from life insurance on
a former employee, the one-time costs associated with the
acquisition and the NPC Provision are excluded, the return on
average tangible equity for 2023 and 2022 would have been 13.67%
and 15.36%, respectively. (1)
- Return on average assets for the three months (annualized) and
the year ended December 31, 2023 was
1.00% and 0.66% compared to 1.34% and 1.29% for the three months
(annualized) and the year ended December 31,
2022, respectively. If the death benefits received from life
insurance on a former employee, the one-time costs associated with
the acquisition and the NPC Provision are excluded, the return on
average assets for 2023 and 2022 would have been 1.07% and 1.30%,
respectively (1).
2023 Compared to 2022
- For 2023, net income totaled $17,811,000 which compares to net income of
$29,060,000 for 2022, a decrease of
$11,249,000. Basic and diluted
earnings per share of $4.06 for 2023
compares to $7.25 for 2022.
Return on equity 2023 and 2022 was 6.52% and 12.98%, while return
on assets was 0.66% and 1.29%, respectively. If the death benefits
received from life insurance on a former employee, the one-time
costs associated with the acquisition and the NPC Provision are
excluded, basic earnings per share, the annualized return on
average equity and average assets for 2023 would be $6.56, 10.52% and 1.07%, respectively, compared
to $7.32, 13.11% and 1.30%,
respectively for 2022. (1)
- Net interest income before the provision for credit loss for
2023 totaled $80,260,000 compared to
$72,134,000 for 2022, resulting in an
increase of $8,126,000, or
11.3%. Average interest earning assets increased $382.4 million 2023 compared to 2022, primarily
due to the HVB acquisition. Average loans increased $410.7 million while average investment
securities increased $3.0 million.
The yield on interest earning assets increased 1.14% to 5.07%,
while the cost of interest-bearing liabilities increased 165 basis
points to 2.34% due to the rise in market interest rates and
competitive pressure. The tax effected net interest margin for 2023
was 3.21% compared to 3.41% for 2022.
- The provision for credit losses for 2023 was $5,528,000 compared to $1,683,000 for 2022, an increase of $3,845,000. As a result of the acquisition,
the Company recorded a $4.6 million
provision for credit losses for loans acquired that did not have
any credit deterioration at the time of acquisition. Excluding the
impact of the acquisition, the provision would have decreased
$746,000 when comparing 2023 to 2022
with the decrease being attributable to lower loan growth in 2023
compared to 2022.
- Total non-interest income was $11,605,000 for 2023, which is $1,867,000 more than the non-interest income of
$9,738,000 for 2022. The primary
driver was revenues associated with the HVB acquisition, which
includes additional service charge revenue, earnings on bank owned
life insurance and gains on loans sold. In addition to the earnings
on bank owned life insurance obtained as part of the acquisition,
the Company received $195,000 of
death benefits upon the passing of a former employee.
- Total non-interest expenses for 2023 totaled $64,822,000 compared to $44,694,000 for 2022, which is an increase of
$20,128,000, or 45.0%. The primary
driver of the increase is the merger and acquisition costs of
completing the HVB acquisition that total $9,269,000 for 2023 compared to $292,000 for 2022. Merger and acquisitions costs
for the merger with HVB include professional and consulting fees,
printing, travel, contract termination payments and
severance-related expenses. Salary and benefit costs increased
$7,153,000 due to an additional 47.8
FTEs due to the acquisition, merit increases for 2023 as well as an
increase in health insurance costs of $1,093,000. The increases in occupancy and
furniture and fixtures was due to the acquisition and additional
branches as part of it. Due to growth that occurred in 2022 and the
acquisition, FDIC insurance expense increased $799,000.
- The provision for income taxes decreased $2,731,000 when comparing 2023 to 2022 as a
result of a decrease in income before income tax of $13,980,000 primarily due to the one-time merger
costs.
Three Months Ended December 31,
2023 Compared to December 31,
2022
- For the three months ended December 31,
2023, net income totaled $7,540,000 which compares to net income of
$7,875,000 for the comparable period
of 2022, a decrease of $335,000. Basic and diluted earnings per
share of $1.60 for the three months
ended December 31, 2023 compares to
$1.97 for the 2022 comparable period.
Annualized return on equity for the three months ended December 31, 2023 and 2022 was 9.93% and 13.58%,
while annualized return on assets was 1.00% and 1.34%,
respectively. If the one-time costs associated with the acquisition
are excluded, basic earnings per share, the annualized return on
average equity and average assets for 2022 would have been
$2.04, 14.08% and 1.39%,
respectively. (1)
- Net interest income before the provision for credit loss for
the three months ended December 31,
2023 totaled $21,855,000
compared to $19,297,000 for the three
months ended December 31, 2022,
resulting in an increase of $2,558,000, or 13.3%. Average interest earning
assets increased $556.2 million for
the three months ended December 31,
2023 compared to the same period last year as a result of
the HVB acquisition. Average loans increased $572.7 million while average investment
securities decreased $19.8 million.
The tax effected net interest margin for the three months ended
September 30, 2023 was 3.13% compared
to 3.46% for the same period last year, which was impacted by the
increase in the average cost on interest bearing liabilities of 172
basis points, to 2.89%.
- The provision for credit losses for the three months ended
December 31, 2023 was $200,000 compared to $258,000 for the three months ended December 31, 2022, a decrease of $58,000. The decrease in the provision is due to
lower loan growth in the fourth quarter of 2023 compared to the
same period in 2022.
- Total non-interest income was $3,489,000 for the three months ended
December 31, 2023, which is
$1,178,000 more than for the
comparable period last year. The primary driver was the
impact of the acquisition, which increased service charge revenue,
gains on loans sold and earnings on bank owned life insurance. In
addition, we recognized a gain on the equity security portfolio in
the fourth quarter of 2023 due to market conditions compared to a
loss in the comparable period of 2022.
- Total non-interest expenses for the three months ended
December 31, 2023 totaled
$15,920,000 compared to $11,649,000 for the same period last year, which
is an increase of $4,271,000.
Salaries and benefits increased $2.5
million due to an increase in headcount of 85 FTEs as a
result of the acquisition. The increases in occupancy and furniture
and fixtures was due to the acquisition and additional branches as
part of it. Due to the acquisition, FDIC insurance expense
increased $239,000. Other expenses
increased due to increases in the Delaware franchise tax, contributions,
appraisal and credit bureau fees, and travel and entertainments
costs associated with the southeast Pennsylvania and Delaware markets.
- The provision for income taxes decreased $142,000 when comparing the three months ended
December 31, 2023 to the same period
in 2022 as a result of a decrease in income before income tax of
$477,000. The effective tax
rate was 18.3% and 18.8% for the three months ended December 31, 2023 and 2022, respectively.
Balance Sheet and Other Information:
- At December 31, 2023, total
assets were $2.98 billion, compared
to $2.33 billion at December 31, 2022. The loan to deposit ratio as
of December 31, 2023 was 96.87%
compared to 93.54% as of December 31,
2022.
- Available for sale securities of $417.6
million at December 31, 2023
decreased $21.9 million from
December 31, 2022. As part of the HVB
acquisition, $79.2 million of
available for sale securities were acquired, of which $76.1 million were sold prior to June 30, 2023. The yield on the investment
portfolio increased from 1.90% to 2.20% on a tax equivalent
basis.
- Net loans as of December 31, 2023
totaled $2.23 billion and increased
$521.2 million from December 31, 2022 as a result of the acquisition.
Excluding the acquisition, loans would have increased $44.0 million during 2023.
- Non-performing loans totaled $12.7
million at December 31, 2023,
which is an increase of $5.6 million
compared to December 31, 2022. The
majority of the increase is attributable to loans acquired as part
of the HVB acquisition. At December 31,
2023, $3.2 million of loans
acquired as part of the HVB acquisition are considered non-accrual.
The remaining increase is attributable to one commercial
relationship. Loans past due 30-89 days total $10.5 million as of December 31, 2023 compared to $3.3 million as of December 31, 2023. Of the $7.1 million increase, $6.6 million relate to loans acquired as part of
the HVB acquisition.
- The allowance for credit losses - loans totaled $21,153,000 at December
31, 2023 which is an increase of $2,601,000 from December
31, 2022 and is due to the acquisition and the
implementation of the CECL accounting standard effective
January 1, 2023. The impact of the
acquisition was an increase of $6.3
million, of which $4.6 million
was in provision with the remaining $1.7
million due to purchase credit deteriorated ("PCD") loans.
The impact of adopting CECL was a decrease of $3.3 million in the allowance for credit losses –
loans. Loan recoveries and charge-offs were $49,000 and $1,329,000, respectively, for 2023. Of the
$1,329,000 charge-off, $1,104,000 was related to loans acquired as part
of the acquisition that were fully reserved at the time of the
acquisition. A majority of the remaining charge-off was also
related to a loan acquired as part of the acquisition that filed
for bankruptcy subsequent to the acquisition. A provision for
credit losses – loans of $901,000 was
recorded during 2023. The allowance as a percent of total loans was
0.94% as of December 31, 2023 and
1.08% as of December 31, 2022.
- Deposits increased $477.3 million
from December 31, 2022, to
$2.32 billion at December 31, 2023, due to the acquisition, which
increased deposits by $533.4 million.
Excluding the acquisition, deposits decreased $56.1 million. With the rise in market interest
rates, competition for deposits has increased. Additionally, we
have numerous state and political organizations as customers who
utilized funds during the first half of 2023 for various projects
and bond payments. At December 31,
2023, the Bank estimates that balances held by customers in
excess of the FDIC insurance limit ($250,000 per insured account) totaled
$1.09 billion, or 46.7% of the Bank's
total deposits. Included in this balance are balances held through
Intrafi, which provides customers with FDIC insurance
coverage by placing customer funds with insured banks within the
Intrafi network, as well as deposits collateralized by securities
(almost exclusively municipal deposits), which together total
$512.8 million, or 22.1% of the
Bank's total deposits, as of December 31,
2023.
- Stockholders' equity totaled $279.7
million at December 31, 2023,
compared to $200.1 million at
December 31, 2022, an increase of
$79.5 million. The increase was
attributable to issuing 693,858 shares with a value of $60.1 million as part of the acquisition and net
income for 2023 totaling $17.8
million, offset by net cash dividends for 2023 totaling
$8.5 million, net treasury stock
activity of $181,000 and an increase
of $1.8 million attributable to the
CECL adjustment made effective January 1,
2023. As a result of changes in market interest rates
impacting the fair value of investment securities and swaps,
accumulated other comprehensive loss decreased $8.2 million from December
31, 2022.
Dividend Declared
On December 5, 2023, the Board of
Directors declared a cash dividend of $0.49 per share, which was paid on December 29, 2023 to shareholders of record at
the close of business on December 15,
2023. The quarterly cash dividend is an increase of 3.1%
over the regular cash dividend of $0.475 per share declared one year ago, as
adjusted for the 1% stock dividend declared in June 2023.
Citizens Financial Services, Inc. has nearly 1,900 shareholders,
the majority of whom reside in markets where its offices are
located.
Note: This press release may contain forward-looking
statements as defined in the Private Securities Litigation Reform
Act of 1995. These statements are not historical facts;
rather, they are statements based on the Company's current
expectations regarding its business strategies and their intended
results and its future performance. Forward-looking
statements are preceded by terms such as "expects," "believes,"
"anticipates," "intends" and similar expressions.
Forward-looking statements are not guarantees of future
performance. Numerous risks and uncertainties could cause or
contribute to the Company's actual results, performance and
achievements to be materially different from those expressed or
implied by the forward-looking statements. Factors that may cause
or contribute to these differences include, without limitation,
changes in general economic conditions, including changes in market
interest rates and changes in monetary and fiscal policies of the
federal government; legislative and regulatory changes; and other
factors disclosed periodically in the Company's filings with the
Securities and Exchange Commission. Because of the risks and
uncertainties inherent in forward-looking statements, readers are
cautioned not to place undue reliance on them, whether included in
this press release or made elsewhere periodically by the Company or
on its behalf. The Company assumes no obligation to update
any forward-looking statements except as may be required by
applicable law or regulation.
(1) See reconciliation of GAAP and non-GAAP measures at the end
of the press release
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CITIZENS FINANCIAL
SERVICES, INC.
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CONSOLIDATED
FINANCIAL HIGHLIGHTS
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(UNAUDITED)
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(Dollars in
thousands, except per share data)
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|
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As of or For
The
|
As of or For
The
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Three Months
Ended
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Year Ended
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December 31,
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December 31,
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2023
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2022
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2023
|
2022
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Income and
Performance Ratios
|
|
|
|
|
|
Net Income
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$
7,540
|
$
7,875
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$
17,811
|
$
29,060
|
|
Return on average
assets (annualized)
|
1.00 %
|
1.34 %
|
0.66 %
|
1.29 %
|
|
Return on average
equity (annualized)
|
9.93 %
|
13.58 %
|
6.52 %
|
12.98 %
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Return on average
tangible equity (annualized) (a)
|
14.00 %
|
15.80 %
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8.47 %
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15.20 %
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Net interest margin
(tax equivalent)(a)
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3.13 %
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3.46 %
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3.21 %
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3.41 %
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Earnings per share -
basic (b)
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$
1.60
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$
1.97
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$
4.06
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$
7.25
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Earnings per share -
diluted (b)
|
$
1.60
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$
1.97
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$
4.06
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$
7.25
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Cash dividends paid per
share (b)
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$
0.490
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$
0.475
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$
1.941
|
$
1.882
|
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Number of shares used
in computation - basic (b)
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4,700,130
|
4,005,189
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4,382,573
|
4,008,931
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Number of shares used
in computation - diluted (b)
|
4,700,131
|
4,005,304
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4,382,573
|
4,008,931
|
|
|
|
|
|
|
|
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Asset
quality
|
|
|
|
|
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Allowance for credit
losses - loans
|
$
21,153
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$
18,552
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Non-performing
assets
|
$
13,177
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$
7,488
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Allowance for credit
losses - loans/total loans
|
0.94 %
|
1.08 %
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Non-performing assets
to total loans
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0.59 %
|
0.43 %
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Annualized net
charge-offs to total loans
|
0.09 %
|
0.00 %
|
0.06 %
|
0.03 %
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|
|
|
|
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Equity
|
|
|
|
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Book value per share
(b)
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$
64.70
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$
58.17
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Tangible Book value per
share (a) (b)
|
$
45.71
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$
50.03
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Market Value (Last
reported trade of month)
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$
64.72
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$
76.72
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Common shares
outstanding
|
4,706,994
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3,971,209
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Other
|
|
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Average Full Time
Equivalent Employees
|
395.3
|
310.0
|
357.7
|
309.9
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Loan to Deposit
Ratio
|
96.87 %
|
93.54 %
|
|
|
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Trust assets under
management
|
$
167,894
|
$
150,005
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|
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Brokerage assets under
management
|
$
329,446
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$
283,548
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Balance Sheet
Highlights
|
December
31,
|
December 31,
|
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|
|
2023
|
2022
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|
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Assets
|
$
2,975,321
|
$ 2,333,393
|
|
|
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Investment
securities
|
419,539
|
441,714
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|
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|
Loans (net of unearned
income)
|
2,248,836
|
1,724,999
|
|
|
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Allowance for credit
losses - loans
|
21,153
|
18,552
|
|
|
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Deposits
|
2,321,481
|
1,844,208
|
|
|
|
Stockholders'
Equity
|
279,666
|
200,147
|
|
|
|
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(a) See
reconcilation of GAAP and Non-GAAP measures at the end of the press
release
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(b) Prior period
amounts were adjusted to reflect stock dividends.
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CITIZENS FINANCIAL
SERVICES, INC.
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CONSOLIDATED BALANCE
SHEET
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(UNAUDITED)
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December
31,
|
December 31,
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(in thousands except
share data)
|
2023
|
2022
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ASSETS:
|
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Cash and due from
banks:
|
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Noninterest-bearing
|
$
37,733
|
$
24,814
|
|
Interest-bearing
|
15,085
|
1,397
|
|
Total cash and cash
equivalents
|
52,818
|
26,211
|
|
|
|
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Interest bearing time
deposits with other banks
|
4,070
|
6,055
|
|
|
|
|
Equity
securities
|
1,938
|
2,208
|
|
|
|
|
Available-for-sale
securities
|
417,601
|
439,506
|
|
|
|
|
Loans held for
sale
|
9,379
|
725
|
|
|
|
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Loans (net of allowance
for credit losses - loans: $21,153 at December 31,
2023;
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|
|
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$18,552 at December 31, 2022)
|
2,227,683
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1,706,447
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Premises and
equipment
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21,384
|
17,619
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Accrued interest
receivable
|
11,043
|
7,332
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Goodwill
|
85,758
|
31,376
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Bank owned life
insurance
|
49,897
|
39,355
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Other
intangibles
|
3,650
|
1,272
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Fair value of
derivative instruments - asset
|
13,687
|
16,599
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Deferred tax
asset
|
17,339
|
12,886
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Other assets
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59,074
|
25,802
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TOTAL
ASSETS
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$
2,975,321
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$ 2,333,393
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LIABILITIES:
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Deposits:
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Noninterest-bearing
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$
523,784
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$
396,260
|
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Interest-bearing
|
1,797,697
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1,447,948
|
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Total
deposits
|
2,321,481
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1,844,208
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Borrowed
funds
|
322,036
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257,278
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Accrued interest
payable
|
4,298
|
1,232
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|
Fair value of
derivative instruments - liability
|
7,922
|
9,726
|
|
Other
liabilities
|
39,918
|
20,802
|
|
TOTAL
LIABILITIES
|
2,695,655
|
2,133,246
|
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STOCKHOLDERS'
EQUITY:
|
|
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|
Preferred Stock $1.00
par value; authorized
|
|
|
|
3,000,000
shares; none issued in 2023 or 2022
|
-
|
-
|
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Common stock
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|
|
|
$1.00 par value;
authorized 25,000,000 shares at December 31, 2023, and
2022:
|
|
|
issued
5,160,754 at December 31, 2023 and 4,427,687 at December 31,
2022
|
5,161
|
4,428
|
|
Additional paid-in
capital
|
143,233
|
80,911
|
|
Retained
earnings
|
172,975
|
164,922
|
|
Accumulated other
comprehensive loss
|
(24,911)
|
(33,141)
|
|
Treasury stock, at
cost: 453,760 at December 31, 2023 and 456,478
shares
|
|
|
|
at December 31,
2022
|
(16,792)
|
(16,973)
|
|
TOTAL STOCKHOLDERS'
EQUITY
|
279,666
|
200,147
|
|
TOTAL LIABILITIES
AND
|
|
|
|
STOCKHOLDERS' EQUITY
|
$
2,975,321
|
$ 2,333,393
|
|
CITIZENS FINANCIAL
SERVICES, INC.
|
|
|
|
|
|
CONSOLIDATED
STATEMENT OF INCOME
|
|
|
|
|
|
(UNAUDITED)
|
|
|
|
|
|
Three Months
Ended
|
Year
Ended
|
|
December
31,
|
December
31,
|
|
(in thousands,
except share and per share data)
|
2023
|
2022
|
2023
|
2022
|
|
INTEREST
INCOME:
|
|
|
|
|
|
Interest and fees on
loans
|
$
35,637
|
$
21,829
|
$ 116,075
|
$ 74,265
|
|
Interest-bearing
deposits with banks
|
274
|
67
|
736
|
400
|
|
Investment
securities:
|
|
|
|
|
|
Taxable
|
1,663
|
1,565
|
6,636
|
5,615
|
|
Nontaxable
|
535
|
624
|
2,264
|
2,454
|
|
Dividends
|
403
|
267
|
1,407
|
623
|
|
TOTAL INTEREST
INCOME
|
38,512
|
24,352
|
127,118
|
83,357
|
|
INTEREST
EXPENSE:
|
|
|
|
|
|
Deposits
|
12,180
|
2,847
|
31,699
|
7,316
|
|
Borrowed
funds
|
4,477
|
2,208
|
15,159
|
3,907
|
|
TOTAL INTEREST
EXPENSE
|
16,657
|
5,055
|
46,858
|
11,223
|
|
NET INTEREST
INCOME
|
21,855
|
19,297
|
80,260
|
72,134
|
|
Provision for credit
losses
|
200
|
258
|
937
|
1,683
|
|
Provision for credit
losses - acquisition day 1 non-PCD
|
-
|
-
|
4,591
|
-
|
|
NET INTEREST INCOME
AFTER
|
|
|
|
|
|
PROVISION FOR CREDIT LOSSES
|
21,655
|
19,039
|
74,732
|
70,451
|
|
NON-INTEREST
INCOME:
|
|
|
|
|
|
Service
charges
|
1,443
|
1,265
|
5,639
|
5,346
|
|
Trust
|
181
|
183
|
764
|
803
|
|
Brokerage and
insurance
|
495
|
467
|
1,924
|
1,895
|
|
Gains on loans
sold
|
778
|
17
|
1,452
|
258
|
|
Equity security gains
(losses), net
|
79
|
(49)
|
(144)
|
(247)
|
|
Available for sale
security losses, net
|
-
|
(8)
|
(51)
|
(14)
|
|
Earnings on bank owned
life insurance
|
313
|
217
|
1,254
|
852
|
|
Other
|
200
|
219
|
767
|
845
|
|
TOTAL NON-INTEREST
INCOME
|
3,489
|
2,311
|
11,605
|
9,738
|
|
NON-INTEREST
EXPENSES:
|
|
|
|
|
|
Salaries and employee
benefits
|
9,392
|
6,873
|
34,990
|
27,837
|
|
Occupancy
|
1,253
|
811
|
4,123
|
3,138
|
|
Furniture and
equipment
|
254
|
149
|
822
|
565
|
|
Professional
fees
|
688
|
320
|
1,962
|
1,641
|
|
FDIC insurance
expense
|
475
|
236
|
1,475
|
676
|
|
Pennsylvania shares
tax
|
(310)
|
(110)
|
583
|
907
|
|
Amortization of
intangibles
|
154
|
36
|
373
|
156
|
|
Software
expenses
|
510
|
377
|
1,784
|
1,446
|
|
ORE expenses
(income)
|
40
|
142
|
166
|
17
|
|
Merger and acquisition
expenses
|
-
|
292
|
9,269
|
292
|
|
Other
|
3,464
|
2,523
|
9,275
|
8,019
|
|
TOTAL NON-INTEREST
EXPENSES
|
15,920
|
11,649
|
64,822
|
44,694
|
|
Income before provision
for income taxes
|
9,224
|
9,701
|
21,515
|
35,495
|
|
Provision for income
tax expense
|
1,684
|
1,826
|
3,704
|
6,435
|
|
NET
INCOME
|
$
7,540
|
$
7,875
|
$
17,811
|
$ 29,060
|
|
|
|
|
|
|
PER COMMON SHARE
DATA:
|
|
|
|
|
|
Net Income -
Basic
|
$
1.60
|
$
1.97
|
$
4.06
|
$
7.25
|
|
Net Income -
Diluted
|
$
1.60
|
$
1.97
|
$
4.06
|
$
7.25
|
|
Cash Dividends
Paid
|
$
0.490
|
$
0.475
|
$
1.941
|
$
1.882
|
|
|
|
|
|
|
Number of shares used
in computation - basic
|
4,700,130
|
4,005,189
|
4,382,573
|
4,008,931
|
|
Number of shares used
in computation - diluted
|
4,700,131
|
4,005,304
|
4,382,573
|
4,008,931
|
|
CITIZENS FINANCIAL
SERVICES, INC.
|
|
|
|
|
|
|
QUARTERLY CONDENSED,
CONSOLIDATED INCOME (LOSS) STATEMENT INFORMATION
|
|
|
(UNAUDITED)
|
|
|
|
|
|
|
(in thousands,
except per share data)
|
|
Three Months
Ended,
|
|
|
|
Dec
31,
|
Sept 30,
|
June 30,
|
March 31,
|
Dec 31,
|
|
2023
|
2023
|
2023
|
2023
|
2022
|
|
Interest
income
|
$
38,512
|
$
36,689
|
$
26,810
|
$
25,107
|
$
24,352
|
|
Interest
expense
|
16,657
|
14,285
|
8,889
|
7,027
|
5,055
|
|
Net interest
income
|
21,855
|
22,404
|
17,921
|
18,080
|
19,297
|
|
Provision for credit
losses
|
200
|
475
|
262
|
-
|
258
|
|
Provision for credit
losses - acquisition day 1 non-PCD
|
-
|
-
|
4,591
|
-
|
-
|
|
Net interest income
after provision for credit losses
|
21,655
|
21,929
|
13,068
|
18,080
|
19,039
|
|
Non-interest
income
|
3,410
|
3,593
|
2,405
|
2,392
|
2,368
|
|
Investment
securities gains (losses), net
|
79
|
69
|
(125)
|
(218)
|
(57)
|
|
Non-interest
expenses
|
15,920
|
16,444
|
20,680
|
11,778
|
11,649
|
|
Income (loss) before
provision for income taxes
|
9,224
|
9,147
|
(5,332)
|
8,476
|
9,701
|
|
Provision for income
tax expense (benefit)
|
1,684
|
1,599
|
(1,188)
|
1,609
|
1,826
|
|
Net income
(loss)
|
$
7,540
|
$
7,548
|
$
(4,144)
|
$
6,867
|
$
7,875
|
|
Earnings (Loss) Per
Share Basic
|
$
1.60
|
$
1.61
|
$
(1.01)
|
$
1.71
|
$
1.97
|
|
Earnings (Loss) Per
Share Diluted
|
$
1.60
|
$
1.61
|
$
(1.01)
|
$
1.71
|
$
1.97
|
|
|
|
|
|
|
|
CITIZENS FINANCIAL
SERVICES, INC.
|
|
CONSOLIDATED AVERAGE
BALANCES, INTEREST, YIELDS AND RATES, AND NET INTEREST MARGIN ON A
FULLY TAX-EQUIVALENT BASIS
|
|
(UNAUDITED)
|
|
|
Three Months Ended
December 31,
|
|
2023
|
2022
|
|
Average
|
|
Average
|
Average
|
|
Average
|
|
Balance
(1)
|
Interest
|
Rate
|
Balance (1)
|
Interest
|
Rate
|
|
(dollars in
thousands)
|
$
|
$
|
%
|
$
|
$
|
%
|
|
ASSETS
|
|
|
|
|
|
|
|
Interest-bearing
deposits at banks
|
18,507
|
239
|
5.12
|
13,464
|
21
|
0.62
|
|
Interest bearing time
deposits at banks
|
4,410
|
35
|
3.06
|
6,055
|
46
|
3.01
|
|
Investment
securities:
|
|
|
|
|
|
|
|
Taxable
|
377,292
|
2,066
|
2.19
|
383,496
|
1,832
|
1.91
|
|
Tax-exempt
(3)
|
108,353
|
678
|
2.50
|
122,031
|
791
|
2.59
|
|
Investment
securities
|
485,645
|
2,744
|
2.26
|
505,527
|
2,623
|
2.08
|
|
Loans:
(2)(3)(4)
|
|
|
|
|
|
|
|
Residential
mortgage loans
|
358,735
|
5,120
|
5.66
|
207,644
|
2,584
|
4.94
|
|
Construction
loans
|
197,420
|
3,653
|
7.34
|
84,424
|
1,085
|
5.10
|
|
Commercial
Loans
|
1,208,249
|
19,482
|
6.40
|
929,394
|
12,347
|
5.27
|
|
Agricultural
Loans
|
339,720
|
4,302
|
5.02
|
346,378
|
4,045
|
4.63
|
|
Loans to state
& political subdivisions
|
56,710
|
562
|
3.93
|
59,470
|
536
|
3.58
|
|
Other
loans
|
130,468
|
2,627
|
7.99
|
91,307
|
1,333
|
5.79
|
|
Loans, net of
discount (2)(3)(4)
|
2,291,302
|
35,746
|
6.19
|
1,718,617
|
21,930
|
5.06
|
|
Total
interest-earning assets
|
2,799,864
|
38,764
|
5.49
|
2,243,663
|
24,620
|
4.35
|
|
Cash and due from
banks
|
11,215
|
|
|
6,873
|
|
|
|
Bank premises and
equipment
|
21,446
|
|
|
17,547
|
|
|
|
Other assets
|
191,231
|
|
|
84,166
|
|
|
|
Total non-interest
earning assets
|
223,892
|
|
|
108,586
|
|
|
|
Total
assets
|
3,023,756
|
|
|
2,352,249
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Interest-bearing
liabilities:
|
|
|
|
|
|
|
|
NOW
accounts
|
816,067
|
5,344
|
2.60
|
520,932
|
1,033
|
0.79
|
|
Savings
accounts
|
312,575
|
417
|
0.53
|
324,746
|
161
|
0.20
|
|
Money market
accounts
|
400,971
|
2,910
|
2.88
|
331,023
|
967
|
1.16
|
|
Certificates of
deposit
|
401,932
|
3,509
|
3.46
|
279,025
|
686
|
0.98
|
|
Total interest-bearing
deposits
|
1,931,545
|
12,180
|
2.50
|
1,455,726
|
2,847
|
0.78
|
|
Other borrowed
funds
|
351,492
|
4,477
|
5.05
|
259,690
|
2,208
|
3.37
|
|
Total
interest-bearing liabilities
|
2,283,037
|
16,657
|
2.89
|
1,715,416
|
5,055
|
1.17
|
|
Demand
deposits
|
389,927
|
|
|
386,216
|
|
|
|
Other
liabilities
|
46,888
|
|
|
18,595
|
|
|
|
Total
non-interest-bearing liabilities
|
436,815
|
|
|
404,811
|
|
|
|
Stockholders'
equity
|
303,904
|
|
|
232,022
|
|
|
|
Total liabilities
& stockholders' equity
|
3,023,756
|
|
|
2,352,249
|
|
|
|
Net interest
income
|
|
22,107
|
|
|
19,565
|
|
|
Net interest spread
(5)
|
|
|
2.60 %
|
|
|
3.18 %
|
|
Net interest income as
a percentage
|
|
|
|
|
|
|
|
of average
interest-earning assets
|
|
|
3.13 %
|
|
|
3.46 %
|
|
Ratio of
interest-earning assets
|
|
|
|
|
|
|
|
to
interest-bearing liabilities
|
|
|
123 %
|
|
|
131 %
|
|
|
|
|
|
|
|
|
(1) Averages are based
on daily averages.
|
|
|
|
|
(2) Includes loan
origination and commitment fees.
|
|
|
|
|
(3) Tax exempt interest
revenue is shown on a tax equivalent basis for proper comparison
using
|
|
|
|
|
a statutory
federal income tax rate of 21% for 2023 and 2022. See
reconciliation of GAAP and non-gaap measures at the
end
|
|
|
of the press
release
|
|
(4) Income on
non-accrual loans is accounted for on a cash basis, and the loan
balances are included in interest-earning assets.
|
|
|
(5) Interest rate
spread represents the difference between the average rate earned on
interest-earning assets
|
|
|
|
and the average rate
paid on interest-bearing liabilities.
|
|
|
|
|
|
|
|
|
|
|
|
CITIZENS FINANCIAL
SERVICES, INC.
|
|
CONSOLIDATED SUMMARY
OF LOANS BY TYPE; NON-PERFORMING ASSETS; and ALLOWANCE FOR CREDIT
LOSSES
|
|
|
(UNAUDITED)
|
|
|
|
|
|
|
(Excludes Loans Held
for Sale)
|
|
|
|
|
|
|
(In
Thousands)
|
|
|
|
|
|
|
December
31,
|
September
30,
|
June
30,
|
March 31,
|
December 31,
|
|
2023
|
2023
|
2023
|
2023
|
2022
|
|
Real estate:
|
|
|
|
|
|
|
Residential
|
$
359,990
|
$ 356,381
|
$
358,025
|
$ 212,793
|
$ 210,213
|
|
Commercial
|
1,092,887
|
1,081,123
|
1,080,513
|
878,972
|
876,569
|
|
Agricultural
|
314,802
|
314,164
|
312,302
|
312,793
|
313,614
|
|
Construction
|
195,826
|
175,320
|
156,927
|
75,745
|
80,691
|
|
Consumer
|
61,316
|
115,753
|
42,701
|
87,101
|
86,650
|
|
Other commercial
loans
|
136,168
|
120,347
|
120,288
|
64,133
|
63,222
|
|
Other agricultural
loans
|
30,673
|
26,648
|
30,615
|
32,052
|
34,832
|
|
State & political
subdivision loans
|
57,174
|
56,660
|
61,471
|
59,886
|
59,208
|
|
Total loans
|
2,248,836
|
2,246,396
|
2,162,842
|
1,723,475
|
1,724,999
|
|
Less: allowance for
credit losses - loans
|
21,153
|
21,455
|
21,652
|
15,250
|
18,552
|
|
Net loans
|
$ 2,227,683
|
$
2,224,941
|
$
2,141,190
|
$
1,708,225
|
$
1,706,447
|
|
|
|
|
|
|
|
Past due and
non-performing assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Loans past due
30-89 days and still accruing
|
$
10,457
|
$
5,960
|
$
4,828
|
$
1,336
|
$
3,329
|
|
|
|
|
|
|
|
Non-accrual
loans
|
$
12,187
|
$
13,139
|
$
13,073
|
$
10,404
|
$
6,938
|
|
Loans past due 90 days
or more and accruing
|
516
|
8
|
139
|
48
|
7
|
|
Non-performing
loans
|
$
12,703
|
$
13,147
|
$
13,212
|
$
10,452
|
$
6,945
|
|
OREO
|
474
|
474
|
426
|
428
|
543
|
|
Total Non-performing
assets
|
$
13,177
|
$
13,621
|
$
13,638
|
$
10,880
|
$
7,488
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Analysis of the
Allowance for Credit Losses - Loans
|
December
31,
|
September
30,
|
June 30,
|
March 31,
|
December 31,
|
|
(In
Thousands)
|
2023
|
2023
|
2023
|
2023
|
2022
|
|
Balance, beginning of
period
|
$
21,455
|
$
21,652
|
$
15,250
|
$
18,552
|
$
18,291
|
|
Impact of Adopting ASC
326
|
-
|
-
|
-
|
(3,300)
|
-
|
|
Charge-offs
|
(510)
|
(808)
|
(4)
|
(7)
|
(7)
|
|
Recoveries
|
8
|
10
|
26
|
5
|
10
|
|
Net (charge-offs)
recoveries
|
(502)
|
(798)
|
22
|
(2)
|
3
|
|
PCD allowance for
credit loss at acquisition
|
-
|
-
|
1,689
|
-
|
-
|
|
Provision for credit
losses - loans
|
200
|
601
|
100
|
-
|
258
|
|
Provision for credit
losses - acquisition day 1 non-PCD
|
-
|
-
|
4,591
|
-
|
-
|
|
Balance, end of
period
|
$
21,153
|
$
21,455
|
$
21,652
|
$
15,250
|
$
18,552
|
|
CITIZENS FINANCIAL
SERVICES, INC.
|
|
|
|
|
|
Reconciliation of
GAAP and Non-GAAP Financial Measures
|
|
|
|
|
|
(UNAUDITED)
|
|
|
|
|
|
(Dollars in
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
|
December 31,
|
|
|
|
2023
|
2022
|
|
|
|
Tangible
Equity
|
|
|
|
|
|
Stockholders Equity -
GAAP
|
$
279,666
|
$
200,147
|
|
|
|
Accumulated other
comprehensive loss
|
24,911
|
33,141
|
|
|
|
Intangible
Assets
|
(89,408)
|
(32,648)
|
|
|
|
Tangible Equity -
Non-GAAP
|
215,169
|
200,640
|
|
|
|
Shares outstanding
adjusted for June 2023 stock Dividend
|
4,706,994
|
4,010,418
|
|
|
|
Tangible Book value per
share - Non-GAAP
|
$
45.71
|
$
50.03
|
|
|
|
|
|
|
|
|
As of
|
|
|
|
December 31,
|
|
|
|
2023
|
2022
|
|
|
|
Tangible Equity per
share
|
|
|
|
|
|
Stockholders Equity per
share - GAAP
|
$
59.41
|
$
49.91
|
|
|
|
Adjustments for
accumulated other comprehensive loss
|
5.29
|
8.26
|
|
|
|
Book value per
share
|
64.70
|
58.17
|
|
|
|
Adjustment for
intangible assets
|
(18.99)
|
(8.14)
|
|
|
|
Tangible Book value per
share - Non-GAAP
|
$
45.71
|
$
50.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
Ended
|
For the Year
Ended
|
|
December 31,
|
December 31,
|
|
2023
|
2022
|
2023
|
2022
|
|
Return on Average
Tangible Equity
|
|
|
|
|
|
Average Stockholders
Equity - GAAP
|
$
267,232
|
$
193,950
|
$
241,124
|
$
201,523
|
|
Average Accumulated
Other Comprehensive Loss
|
36,672
|
38,072
|
32,198
|
22,432
|
|
Average Intangible
Assets
|
(88,537)
|
(32,704)
|
(62,994)
|
(32,828)
|
|
Average Tangible Equity
- Non-GAAP
|
215,367
|
199,318
|
210,328
|
191,127
|
|
Net Income -
GAAP
|
$
7,540
|
$
7,875
|
$
17,811
|
$
29,060
|
|
Annualized Return on
Average Tangible Equity Non-GAAP
|
14.00 %
|
15.80 %
|
8.47 %
|
15.20 %
|
|
|
|
|
|
|
For the Three Months
Ended
|
For the Year
Ended
|
|
December 31,
|
December 31,
|
|
2023
|
2022
|
2023
|
2022
|
|
Return on Average
Assets and Equity Excluding boli death benefits,
merger and acquisition costs and provision for credit losses
-
acquisition day 1 non-PCD
|
|
|
|
|
|
Net Income -
GAAP
|
$
7,540
|
$
7,875
|
$
17,811
|
$
29,060
|
|
Boli death
benefits
|
-
|
-
|
(195)
|
-
|
|
After tax provision for
credit losses - acquisition day 1 non-PCD
|
-
|
-
|
3,627
|
-
|
|
After tax merger and
acquisition costs
|
-
|
292
|
7,513
|
292
|
|
Net Income excluding
merger and acquisition costs - Non-GAAP
|
$
7,540
|
$
8,167
|
$
28,756
|
$
29,352
|
|
Average
Assets
|
3,023,756
|
2,352,249
|
2,699,039
|
2,255,966
|
|
Annualized Return on
Average stockholders equity, Excluding boli death
benefits,
merger and acquisition costs and provision for credit losses -
acquisition day 1 non-
PCD - Non-GAAP
|
1.00 %
|
1.39 %
|
1.07 %
|
1.30 %
|
|
|
|
|
|
|
Average Stockholders
Equity - GAAP
|
$
303,904
|
$
232,022
|
$
273,322
|
$
223,955
|
|
Annualized Return on
Average stockholders equity, Excluding boli death
benefits,
merger and acquisition costs and provision for credit losses -
acquisition day 1 non-
PCD - Non-GAAP
|
9.92 %
|
14.08 %
|
10.52 %
|
13.11 %
|
|
|
|
|
|
|
Average Tangible Equity
- Non-GAAP
|
215,367
|
199,318
|
210,328
|
191,127
|
|
Annualized Return on
Average Tangible Equity Excluding boli death
benefits,
merger and acquisition costs and provision for credit losses -
acquisition day 1 non-
PCD - Non-GAAP
|
14.00 %
|
16.39 %
|
13.67 %
|
15.36 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share,
Excluding boli death benefits, merger and
acquisition costs and provision for credit losses - acquisition day
1 non-
PCD
|
|
|
|
|
|
Net Income -
GAAP
|
$
7,540
|
$
7,875
|
$
17,811
|
$
29,060
|
|
Boli death
benefits
|
-
|
|
(195)
|
|
|
After tax provision for
credit losses - acquisition day 1 non-PCD
|
-
|
-
|
3,627
|
-
|
|
After Tax merger and
acquisition costs
|
-
|
292
|
7,513
|
292
|
|
Net income excluding
one time items - Non-GAAP
|
$
7,540
|
$
8,167
|
$
28,756
|
$
29,352
|
|
Number of shares used
in computation - basic
|
4,700,131
|
4,005,304
|
4,382,573
|
4,008,931
|
|
Earnings per share,
excluding merger and acquisition costs and provision for
credit
losses - acquisition day 1 non-PCD - Non-GAAP
|
$
1.60
|
$
2.04
|
$
6.56
|
$
7.32
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
Ended
|
For the Year
Ended
|
|
December 31,
|
December 31,
|
|
Reconciliation of
net interest income on fully taxable equivalent
basis
|
2023
|
2022
|
2023
|
2022
|
|
Total interest
income
|
$
38,512
|
$
24,352
|
$
127,118
|
$
83,357
|
|
Total interest
expense
|
16,657
|
5,055
|
46,858
|
11,223
|
|
Net interest
income
|
21,855
|
19,297
|
80,260
|
72,134
|
|
Tax equivalent
adjustment
|
252
|
268
|
1,055
|
1,003
|
|
Net interest income
(fully taxable equivalent) - Non-GAAP
|
$
22,107
|
$
19,565
|
$
81,315
|
$
73,137
|
View original
content:https://www.prnewswire.com/news-releases/citizens-financial-services-inc-reports-unaudited-full-year-and--fourth-quarter-2023-financial-results-302048469.html
SOURCE CITIZENS FINANCIAL SERVICES, INC.