UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): September 30, 2024

CITIZENS FINANCIAL SERVICES INC
(Exact name of registrant as specified in its charter)

Pennsylvania
 
001-41410
 
23-2265045
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)

15 S MAIN ST
MANSFIELD, Pennsylvania
 
16933
(Address of principal executive offices)
 
(Zip code)

Registrant's telephone number, including area code (570) 662-0444

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, Par Value $1.00 Per Share
 CZFS
 NASDAQ Capital Market

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter):

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
Randall E. Black, Chief Executive Officer, recently announced the unaudited consolidated financial results for Citizens Financial Services, Inc. and susbisidaries for the third quarter 2024.
On October 30, 2024, Citizens Financial Services, Inc. issued a press release titled “Citizens Financial Services, Inc. Reports Unaudited Third Quarter 2024 Financial Results”, attached as Exhibit 99.1 to the Current Report on Form 8-K and incorporated herein by reference.  The information furnished under Item 2.02 of the Current Report on an 8-K shall not be deemed “filed” for any purpose.
Item 9.01.      Financial Statements and Exhibits.

(d)  Exhibits

 
 
 
Exhibit No.
 
Description of Exhibit
 
99.1
 
  
104
  
Cover Page Interactive Data File (embedded within the Inline XBRL document)
  


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

  CITIZENS FINANCIAL SERVICES, INC.
  
       
October 30, 2024
By:
/s/ Stephen J. Guillaume
  
    Stephen J. Guillaume
  
    Chief Financial Officer
  
       



Contact:  LEEANN GEPHART
CHIEF CONSUMER BANKING OFFICER
  
First Citizens Community Bank
570-545-6005
  
15 S. Main Street
570-662-8512 (fax)
  
Mansfield, PA 16933

citizens financial services, inc. reports unaudited third quarter 2024 financial results

MANSFIELD, PENNSYLVANIA— October 30, 2024 – Citizens Financial Services, Inc. (Nasdaq: CZFS), parent company of First Citizens Community Bank, released today its unaudited consolidated financial results for the three and nine months ended September 30, 2024.

Highlights

•
Net income for the first nine months of 2024 was $19.8 million, which was $9.6 million, or 93.1% more than net income for the nine months ended September 30, 2023 due to the one-time merger and acquisition costs and the provision for credit losses on non-purchase credit deteriorated loans (the “NPC Provision”) recorded in the second quarter of 2023. The effective tax rate for the first nine months of 2024 was 17.8% compared to 16.4% in the comparable period in 2023.

•
Net income was $7.5 million for the three months ended September 30, 2024 and 2023. The effective tax rate for the three months ended September 30, 2024 was 18.5% compared to 17.5% in the comparable period in 2023.

•
During the first quarter of 2024, the Company completed the sale of certain assets acquired as part of the HVB acquisition, which included loans and accrued interest, and software, as well as transferring certain contracts, processes and employees of a division internally known as Braavo. The proceeds from the sale totaled approximately $7.2 million and generated a pre-tax gain of approximately $1.1 million. Legal fees associated with the sale totaled approximately $201,000.

•
Net interest income before the provision for credit losses was $63.6 million for the nine months ended September 30, 2024, an increase of $5.2 million, or 8.9%, over the same period a year ago.

•
The provision for credit losses for the nine months ended September 30, 2024 was $2.6 million. The provision was significantly impacted by loans that were not sold as part of the Braavo sale that was completed in the first quarter of 2024. The provision for the nine months ended September 30, 2024, directly attributable to these loans was $1,806,000. During the three months ended September 30, 2024, a negative provision for credit losses of $200,000 was recorded. As of September 30, 2024, the Company had approximately $884,000 of Braavo loans all of which were considered performing as of September 30, 2024.

•
Return on average equity for the three and nine months ended September 30, 2024 (annualized) was 9.53% and 8.45% compared to 10.10% and 5.21% for the three and nine months ended September 30, 2023  (annualized). If the provision for the credit losses attributable to the Braavo loans and the gain on the sale of Braavo are excluded, the return on average equity for the nine months  ended September 30, 2024 would have been 8.76% (annualized) (1).

•
Return on average tangible equity for the three and nine months ended September 30, 2024 (annualized) was 14.82% and 13.39% compared to 14.37% and 6.56% for the three and nine months ended September 30, 2023 (annualized). If the provision for the credit losses attributable to the Braavo loans and the gain on the sale of Braavo are excluded, the return on average tangible equity for the nine months ended September 30, 2024 would have been 13.87% (annualized) (1).

•
Return on average assets for the three and nine months ended September 30, 2024 (annualized)  was 1.00% and 0.88% compared to 1.02% and 0.53% for the three and nine months ended September 30, 2023 (annualized). If the provision for the credit losses attributable to the Braavo loans and the gain on the sale of Braavo are excluded, the return on average assets for the nine months ended September 30, 2024 would have been 0.91% (annualized)  (1).

Nine Months Ended September 30, 2024 Compared to 2023

•
For the nine months ended September 30, 2024, net income totaled $19,835,000 which compares to net income of $10,271,000 for the first nine months of 2023, an increase of $9,564,000. Basic earnings per share of $4.18 for the first nine months of 2024 compared to $2.38 for the first nine months last year.  Annualized return on equity for the nine months ended September 30, 2024 and 2023 was 8.45% and 5.21%, while annualized return on assets was 0.88% and 0.53%, respectively. The increase in performance when comparing 2024 to 2023 was due to the one time costs associated with the acquisition of HV Bancorp, Inc., (“HVB”) and the NPC Provision recorded in 2023.

•
Net interest income before the provision for credit loss for the nine months ended September 30, 2024 totaled $63,582,000 compared to $58,405,000 for the nine months ended September 30, 2023, resulting in an increase of $5,177,000, or 8.9%.  Average interest earning assets increased $345.6 million for the nine months ended September 30, 2024 compared to the same period last year, primarily due to the HVB acquisition. Average loans increased $376.7 million while average investment securities decreased $36.9 million. The yield on interest earning assets increased 63 basis points to 5.54%, while the cost of interest-bearing liabilities increased 91 basis points to 3.02% due to the rise in market interest rates and competitive pressure. The tax effected net interest margin for the nine months ended September 30, 2024 was 3.09% compared to 3.25% for the same period last year.

•
The provision for credit losses for the nine months ended September 30, 2024 was $2,587,000 compared to $5,328,000 for the nine months ended September 30, 2023, a decrease of $2,741,000.  The provision for 2024 was impacted by the Braavo loans as previously mentioned and an increase in past due, non-accrual and classified loans during the second quarter of 2024. As a result of the HVB acquisition during 2023, 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 purchase. Excluding the impact of the acquisition from 2023, the provision would have increased $1,850,000 when comparing the nine month period of 2024 to 2023 with the increase being attributable to the Braavo loans and the increase in past due, non-accrual and substandard loans in 2024.

•
Total non-interest income was $12,062,000 for the nine months ended September 30, 2024, which is $3,946,000 more than the non-interest income of $8,116,000 for the same period last year. The primary drivers were the gain on the sale of assets associated with Braavo and activity due to the HVB acquisition. As a result of the acquisition, service charges, gains on loans sold, earnings on bank owned life insurance and other income all increased.  Earnings on bank owned life insurance also increased due to the passing of a former employee in the first quarter of 2024. During the first nine months of 2024, the Company experienced a gain on its equity investment portfolio compared to a loss during the comparable period in 2023.

•
Total non-interest expenses for the nine months ended September 30, 2024 totaled $48,918,000 compared to $48,902,000 for the same period last year, which is an increase of $16,000. Salary and benefit costs increased $4,024,000 due to an additional 47.8 FTEs as a result of the acquisition, merit increases for 2024, as well as an increase in health insurance costs due to additional headcount and claims. The increases in occupancy, furniture and fixtures, software expenses and amortization expenses was due to the HVB acquisition and additional branches as part of it. FDIC insurance expense increased $589,000 due to the Company’s increased size and the Bank’s lower leverage capital ratio during the first half of 2024 compared to 2023. Professional fees increased due to increased legal expenses, of which $201,000 was related to the sale of certain Braavo assets. Other expenses increased primarily due to the acquisition, with increases experienced in subscriptions, marketing and advertising, postage, printing, data communication expenses and FHLB letter of credit fees. Independent of the HVB acquisition, other expenses increased due to insurance reimbursement received in 2023 to cover amounts previously charged-off through expense. Merger and acquisitions costs for the HVB acquisition totaled $9,269,000 in 2023 and included professional and consulting fees, printing, travel, contract termination payments and severance-related expenses.

•
The provision for income taxes increased $2,284,000 when comparing the nine months ended September 30, 2024 to the same period in 2023 as a result of an increase in income before income tax of $11,848,000.

Three Months Ended September 30, 2024 Compared to September 30, 2023

•
For the three months ended September 30, 2024, net income totaled $7,536,000 which compares to net income of $7,548,000 for the comparable period of 2023, a decrease of $12,000.  Basic earnings per share was $1.59 for the three months ended September 30, 2024 and 2023. Annualized return on equity for the three months ended September 30, 2024 and 2023 was 9.53% and 10.10%, while annualized return on assets was 1.00% and 1.02%, respectively.

•
Net interest income before the provision for credit loss for the three months ended September 30, 2024 totaled $21,324,000 compared to $22,404,000 for the three months ended September 30, 2023, resulting in a decrease of $1,080,000, or 4.8%. Charged-off interest for three month period ended September 30, 2024 was $345,000 compared to $34,000 for the three months ended September 30, 2023. Average interest earning assets increased $39.4 million for the three months ended September 30, 2024 compared to the same period last year due to organic growth.  Average loans increased $85.0 million while average investment securities decreased $39.0 million. The tax effected net interest margin for the three months ended September 30, 2024 was 3.09% compared to 3.29% for the same period last year, which was impacted by the increase in the average cost on interest bearing liabilities of 50 basis points, to 3.06%.

•
During the three months ended September 30, 2024, there was a negative provision for credit losses of $200,000 compared to a provision for credit losses for the three months ended September 30, 2023 of was $475,000. The decrease in the provision was primarily due to changes in qualitative factors in the calculation related to inflation.

•
Total non-interest income was $3,755,000 for the three months ended September 30, 2024, which is $93,000 more than for the comparable period last year.  The primary driver was the increase in gains on loans sold. The decrease in earnings on bank owned life insurance was due to the Company receiving $195,000 of death benefits upon the passing of a former employee in the third quarter of 2023.

•
Total non-interest expenses for the three months ended September 30, 2024 totaled $16,029,000 compared to $16,444,000 for the same period last year, which is a decrease of $415,000. Salaries and benefits decreased $290,000 due to a decrease in headcount of 4.4 FTEs and commission expense for the comparable periods.  FDIC insurance expense increased $180,000 due to the Company’s increased size and the Bank’s lower leverage capital ratio. Merger and acquisition costs totaled $623,000 for the third quarter of 2023.

•
The provision for income taxes increased $115,000 when comparing the three months ended September 30, 2024 to the same period in 2023 as a result of an increase in income before income tax of $103,000 and earnings on bank owned life insurance being exempt from Federal income tax.  The effective tax rate was 18.5% and 17.5% for the three months ended September 30, 2024 and 2023, respectively.

Balance Sheet and Other Information:
•
At September 30, 2024, total assets were $3.03 billion, compared to $2.98 billion at December 31, 2023 and $2.96 billion at September 30, 2023. The loan to deposit ratio as of September 30, 2024 was 95.14% compared to 96.87% as of December 31, 2023 and 96.20% as of September 30, 2023.

•
Available for sale securities of $419.2 million at September 30, 2024 increased $1.6 million from December 31, 2023 and $1.4 million from September 30, 2023. The yield on the investment portfolio increased from 2.18% to 2.36% on a tax equivalent basis due to securities purchased during a higher rate environment and lower yielding securities maturing. During 2024, we have purchased $36.2 million of investments, which have helped to offset the $42.7 million of investments that have matured or have been called during 2024.

•
Net loans as of September 30, 2024 totaled $2.31 billion an increase of $81.6 million from December 31, 2023, due to primarily to an increase in student loans outstanding. Loans would have increased an additional $6.1 million, if not for the Braavo disposition. In comparison to September 30, 2023, loans have grown $84.6 million with increases experienced in multiple portfolio sectors.

•
The allowance for credit losses - loans totaled $21,695,000 at September 30, 2024 which is an increase of $542,000 from December 31, 2023. The increase is due to change in expected prepayment speeds, changes in economic forecasts and an increase in past due and substandard loans. The provision for credit losses on loans was $3,086,000 for the first nine months of 2024. Loan recoveries and charge-offs were $24,000 and $2,568,000, respectively, for the nine months ended September 30, 2024 with the majority of the charge-offs associated with loans acquired as part of the HVB acquisition. The allowance as a percent of total loans was 0.93% as of September 30, 2024 and 0.94% as of December 31, 2023.

•
Non-performing assets totaled $24.0 million as of September 30, 2024, an increase of $10.9 million since December 31, 2023. The increase was driven by four large commercial relationships being placed on non-accrual status during the first nine months of 2024. These loans were acquired as part of the HVB acquisition with three of the loans maturing that are still in the process of being underwritten and extended in accordance with Company policies. Of these relationships, only one required a specific reserve as of September 30, 2024, which was approximately $355,000. Accruing loans past due 30-89 days totaled $7.4 million, a decrease of $3.0 million from December 31, 2023 that was  driven by loans transferred to non-accrual status during 2024.

•
Deposits increased $128.7 million from December 31, 2023, to $2.45 billion at September 30, 2024. With the rise in market interest rates, competitive pressure for deposits continues to be at the forefront. Additionally, we have numerous state and political organization depositors with seasonal funding timelines, which resulted in an increase in balances in the first nine months of the year. We also increased the amount of outstanding brokered deposits as of September 30, 2024 in comparison to December 31, 2023. At September 30, 2024, brokered deposits totaled $141.6 million compared to $109.3 million at December 31, 2024. At September 30, 2024, the Bank estimates that balances held by customers in excess of the FDIC insurance limit ($250,000 per insured account) totaled $1.24 billion, or 50.5% of the Bank’s total deposits. Included in this balance are balances held through Intrafi, which provides customers with additional FDIC insurance, as well as deposits collateralized by securities  or letters of credit (almost exclusively municipal deposits). The total of these items was $695.0 million, or 28.4% of the Bank’s total deposits, as of September 30, 2024.

•
Stockholders’ equity totaled $298.7 million at September 30, 2024, compared to $279.7 million at December 31, 2023, an increase of $19.0 million. Excluding accumulated other comprehensive loss (AOCI), stockholders’ equity increased $13.0 million and totals $317.6 million. The increase in stockholders’ equity, excluding AOCI, was attributable to net income for the nine months ended September 30, 2024 totaling $19.8 million, offset by cash dividends for 2024 totaling $7.0 million, net treasury and restricted stock activity of $293,000. As a result of decreases in market interest rates impacting the fair value of investment securities and swaps, AOCI decreased $6.0 million from December 31, 2023.

Dividend Declared

On September 3, 2024, the Board of Directors declared a cash dividend of $0.49 per share, which was paid on September 27, 2024 to shareholders of record at the close of business on September 13, 2024. The quarterly cash dividend is an increase of 1.0% over the regular cash dividend of $0.485 per share declared one year ago, as adjusted for the 1% stock dividend declared in June 2024.

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

CITIZENS FINANCIAL SERVICES, INC.
        
CONSOLIDATED FINANCIAL HIGHLIGHTS
        
(UNAUDITED)
        
(Dollars in thousands, except per share data)
        
 
As of or For The
As of or For The
 
Three Months Ended
Nine Months Ended
 
September 30,
September 30,
 
2024
2023
2024
2023
Income and Performance Ratios
        
Net Income
 $              7,536
 $          7,548
 $          19,835
 $        10,271
Return on average assets (annualized)
1.00%
1.02%
0.88%
0.53%
Return on average equity (annualized)
9.53%
10.10%
8.45%
5.21%
Return on average tangible equity (annualized) (a)
14.82%
14.37%
13.39%
6.56%
Net interest margin (tax equivalent) (a)
3.09%
3.29%
3.09%
3.25%
Earnings per share - basic (b)
 $                1.59
 $            1.59
 $               4.18
 $            2.38
Earnings per share - diluted (b)
 $                1.59
 $            1.59
 $               4.17
 $            2.38
Cash dividends paid per share (b)
 $              0.490
 $          0.485
 $            1.460
 $          1.435
Number of shares used in computation - basic (b)
         4,749,679
      4,746,541
        4,748,988
      4,321,848
Number of shares used in computation - diluted (b)
         4,751,224
      4,746,541
        4,753,927
      4,321,848
         
         
Asset quality
        
Allowance for credit losses - loans
 $            21,695
 $        21,455
    
Non-performing assets
 $            24,045
 $        13,621
    
Allowance for credit losses - loans to total loans
0.93%
0.96%
    
Non-performing assets to total loans
1.03%
0.61%
    
Annualized net charge-offs to total loans
0.21%
0.14%
0.15%
0.05%
         
         
Equity
        
Book value per share (b)
 $              62.75
 $          55.27
    
Tangible Book value per share (a) (b)
 $              44.08
 $          36.62
    
Market Value (Last reported trade of month)
 $              58.75
 $          47.92
    
Common shares outstanding
         4,759,730
      4,706,111
    
         
         
Other
        
Average Full Time Equivalent Employees
395.7
400.1
393.0
345.2
Loan to Deposit Ratio
95.14%
96.20%
    
Trust assets under management
 $         181,052
 $      164,012
    
Brokerage assets under management
 $         388,594
 $      305,951
    
         
         
Balance Sheet Highlights
September 30,
December 31,
September 30,
  
 
2024
2023
2023
  
         
Assets
 $      3,026,468
 $   2,975,321
 $      2,959,216
  
Investment securities
             420,920
         419,539
             419,665
  
Loans (net of unearned income)
         2,331,002
      2,248,836
         2,246,396
  
Allowance for credit losses - loans
               21,695
           21,153
               21,455
  
Deposits
         2,450,149
      2,321,481
         2,335,135
  
Stockholders' Equity
             298,654
         279,666
             262,686
  
         
         
(a) See reconcilation of GAAP and Non-GAAP measures at the end of the press release
    
(b) Prior period amounts were adjusted to reflect stock dividends.
      

CITIZENS FINANCIAL SERVICES, INC.
      
CONSOLIDATED BALANCE SHEET
      
(UNAUDITED)
      
       
 
September 30,
December 31,
September 30,
(in thousands except share data)
2024
2023
2023
ASSETS:
      
Cash and due from banks:
      
  Noninterest-bearing
 $           26,780
 $         37,733
 $             25,267
  Interest-bearing
                 9,983
            15,085
                18,069
Total cash and cash equivalents
               36,763
            52,818
                43,336
       
Interest bearing time deposits with other banks
                 3,820
              4,070
                  4,566
       
Equity securities
                 1,730
              1,938
                  1,858
       
Available-for-sale securities
            419,190
          417,601
              417,807
       
Loans held for sale
               13,520
              9,379
                14,155
       
Loans (net of allowance for credit losses - loans: $21,695 at September 30, 2024;
      
    $21,153 at December 31, 2023 and $21,455 at September 30, 2023)
         2,309,307
       2,227,683
           2,224,941
       
Premises and equipment
               21,237
            21,384
                21,421
Accrued interest receivable
               10,803
            11,043
                10,327
Goodwill
               85,758
            85,758
                84,758
Bank owned life insurance
               50,084
            49,897
                49,586
Other intangibles
                 3,083
              3,650
                  3,866
Fair value of derivative instruments - asset
                 8,993
            13,687
                18,144
Deferred tax asset
               14,449
            17,339
                21,384
Other assets
               47,731
            59,074
                43,067
       
TOTAL ASSETS
 $      3,026,468
 $    2,975,321
 $        2,959,216
       
LIABILITIES:
      
Deposits:
      
  Noninterest-bearing
 $         548,218
 $       523,784
 $           542,144
  Interest-bearing
         1,901,931
       1,797,697
           1,792,991
Total deposits
         2,450,149
       2,321,481
           2,335,135
Borrowed funds
            231,732
          322,036
              316,151
Accrued interest payable
                 5,549
              4,298
                  2,726
Fair value of derivative instruments - liability
                 4,763
              7,922
                10,694
Other liabilities
               35,621
            39,918
                31,824
TOTAL LIABILITIES
         2,727,814
       2,695,655
           2,696,530
STOCKHOLDERS' EQUITY:
      
Preferred Stock $1.00 par value; authorized
      
  3,000,000 shares; none issued in 2024 or 2023
                          -
                      -
                          -
Common stock
      
  $1.00 par value; authorized 25,000,000 shares at September 30, 2024, December 31, 2023 and
    
  September 30, 2023: issued 5,207,343 at September 30, 2024 and 5,160,754 at December 31, 2023 and
  September 30, 2023
                 5,207
              5,161
                 5,161
Additional paid-in capital
            144,927
          143,233
            143,302
Retained earnings
            183,792
          172,975
            167,740
Accumulated other comprehensive loss
            (18,916)
           (24,911)
            (36,643)
Treasury stock, at cost:  447,613 at September 30, 2024 and 453,760 shares
    
  at December 31, 2023 and 454,643 shares at September 30, 2023
            (16,356)
           (16,792)
            (16,874)
TOTAL STOCKHOLDERS' EQUITY
            298,654
          279,666
              262,686
TOTAL LIABILITIES AND
      
   STOCKHOLDERS' EQUITY
 $      3,026,468
 $    2,975,321
 $        2,959,216

CITIZENS FINANCIAL SERVICES, INC.
        
CONSOLIDATED STATEMENT OF INCOME
      
(UNAUDITED)
        
 
Three Months Ended
Nine Months Ended
 
September 30,
September 30,
(in thousands, except share and per share data)
2024
2023
2024
2023
INTEREST INCOME:
        
Interest and fees on loans
 $     35,858
 $      33,772
 $   106,058
 $    80,438
Interest-bearing deposits with banks
             190
             264
             695
           462
Investment securities:
        
    Taxable
          1,736
           1,734
          5,023
         4,973
    Nontaxable
             517
             540
          1,569
         1,729
    Dividends
             388
             379
          1,179
         1,004
TOTAL INTEREST INCOME
        38,689
         36,689
      114,524
       88,606
INTEREST EXPENSE:
        
Deposits
        13,475
         10,100
        38,451
       19,519
Borrowed funds
          3,890
           4,185
        12,491
       10,682
TOTAL INTEREST EXPENSE
        17,365
         14,285
        50,942
       30,201
NET INTEREST INCOME
        21,324
         22,404
        63,582
       58,405
(Negative) provision for credit losses
           (200)
             475
          2,587
           737
Provision for credit losses - acquisition day 1 non-PCD
                 -
                 -
                 -
         4,591
NET INTEREST INCOME AFTER
        
    (NEGATIVE) PROVISION FOR CREDIT LOSSES
        21,524
         21,929
        60,995
       53,077
NON-INTEREST INCOME:
        
Service charges
          1,636
           1,692
          4,393
         4,196
Trust
             184
             172
             629
           583
Brokerage and insurance
             545
             473
          1,773
         1,429
Gains on loans sold
             752
             460
          1,648
           674
Equity security gains (losses), net
             159
               69
             127
          (223)
Available for sale security losses, net
                 -
                 -
                 -
            (51)
Earnings on bank owned life insurance
             338
             489
          1,334
           941
Gain on sale of Braavo division
                 -
                 -
          1,102
               -
Other
             141
             307
          1,056
           567
TOTAL NON-INTEREST INCOME
          3,755
           3,662
        12,062
         8,116
NON-INTEREST EXPENSES:
        
Salaries and employee benefits
          9,715
         10,005
        29,622
       25,598
Occupancy
          1,215
           1,221
          3,805
         2,870
Furniture and equipment
             260
             255
             791
           568
Professional fees
             620
             506
          2,021
         1,274
FDIC insurance expense
             555
             375
          1,589
         1,000
Pennsylvania shares tax
             226
             297
             866
           893
Amortization of intangibles
             136
             157
             432
           219
Software expenses
             500
             551
          1,508
         1,274
ORE expenses
               84
             111
             246
           126
Merger and acquisition expenses
                 -
             623
                 -
         9,269
Other
          2,718
           2,343
          8,038
         5,811
TOTAL NON-INTEREST EXPENSES
        16,029
         16,444
        48,918
       48,902
Income before provision for income taxes
          9,250
           9,147
        24,139
       12,291
Provision for income tax expense
          1,714
           1,599
          4,304
         2,020
NET INCOME
 $       7,536
 $        7,548
 $     19,835
 $    10,271
         
PER COMMON SHARE DATA:
        
Net Income - Basic
 $         1.59
 $          1.59
 $         4.18
 $        2.38
Net Income - Diluted
 $         1.59
 $          1.59
 $         4.17
 $        2.38
Cash Dividends Paid
 $       0.490
 $        0.485
 $       1.460
 $      1.435
         
Number of shares used in computation - basic
   4,749,679
    4,746,541
   4,748,988
  4,321,848
Number of shares used in computation - diluted
   4,751,224
    4,746,541
   4,753,927
  4,321,848

CITIZENS FINANCIAL SERVICES, INC.
          
QUARTERLY CONDENSED, CONSOLIDATED INCOME STATEMENT INFORMATION
        
(UNAUDITED)
          
(in thousands, except per share data)
  
Three Months Ended,
    
 
June 30,
June 30,
March 31,
Dec 31,
Sept 30,
 
2024
2024
2024
2023
2023
Interest income
 $     38,689
 $      37,902
 $      37,933
 $      38,512
 $      36,689
Interest expense
        17,365
         16,602
         16,975
         16,657
         14,285
Net interest income
        21,324
         21,300
         20,958
         21,855
         22,404
(Negative) provision for credit losses
           (200)
           2,002
               785
               200
               475
Provision for credit losses - acquisition day 1 non-PCD
                   -
                   -
                   -
                   -
                   -
Net interest income after (negative) provision for credit losses
        21,524
         19,298
         20,173
         21,655
         21,929
Non-interest income
          3,596
           3,423
           4,916
           3,410
           3,593
Investment securities  gains (losses), net
              159
               (87)
                 55
                 79
                 69
Non-interest expenses
        16,029
         16,246
         16,643
         15,920
         16,444
Income before provision for income taxes
          9,250
           6,388
           8,501
           9,224
           9,147
Provision for income tax expense
          1,714
           1,113
           1,477
           1,684
           1,599
Net income
 $       7,536
 $        5,275
 $        7,024
 $        7,540
 $        7,548
Earnings Per Share - Basic
 $         1.59
 $          1.11
 $          1.48
 $          1.59
 $          1.59
Earnings Per Share - Diluted
 $         1.59
 $          1.11
 $          1.48
 $          1.59
 $          1.59


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 September 30,
  
 
2024
2023
 
Average
  
Average
Average
  
Average
 
Balance (1)
Interest
Rate
Balance (1)
Interest
Rate
(dollars in thousands)
$
$
%
$
$
%
ASSETS
            
Short-term investments:
            
Interest-bearing deposits at banks
           18,374
              160
3.44
          24,096
               225
3.70
Total short-term investments
           18,374
              160
3.44
          24,096
               225
3.70
Interest bearing time deposits at banks
             3,820
                30
3.12
            4,579
                 39
3.38
Investment securities:
            
  Taxable
        352,377
           2,124
2.41
        386,806
            2,113
2.19
  Tax-exempt (3)
        104,342
              653
2.50
        108,959
               683
2.51
Investment securities
        456,719
           2,777
2.43
        495,765
            2,796
2.26
Loans: (2)(3)(4)
            
  Residential mortgage loans
        355,551
           5,322
5.95
        357,388
            4,925
5.47
  Construction loans
        183,521
           3,473
7.53
        166,204
            3,339
7.97
  Commercial Loans
     1,234,951
        19,522
6.29
    1,196,675
          18,983
6.29
  Agricultural Loans
        356,105
           4,816
5.38
        342,499
            4,285
4.96
  Loans to state & political subdivisions
           55,418
              553
3.97
          60,820
               611
3.99
  Other loans
        111,717
           2,282
8.13
          88,710
            1,750
7.83
  Loans, net of discount (2)(3)(4)
     2,297,263
        35,968
6.23
    2,212,296
          33,893
6.08
Total interest-earning assets
     2,776,176
        38,935
5.58
    2,736,736
          36,953
5.36
Cash and due from banks
             9,119
    
          10,696
    
Bank premises and equipment
           20,864
    
          21,401
    
Other assets
        197,275
    
        190,431
    
Total non-interest earning assets
        227,258
    
        222,528
    
Total assets
     3,003,434
    
    2,959,264
    
LIABILITIES AND STOCKHOLDERS' EQUITY
            
Interest-bearing liabilities:
            
  NOW accounts
        736,449
           4,559
             2.46
        789,513
            4,468
       2.25
  Savings accounts
        293,990
              387
             0.52
        326,452
               426
       0.52
  Money market accounts
        406,363
           3,366
             3.30
        403,628
            2,682
       2.64
  Certificates of deposit
        502,226
           5,163
             4.09
        347,783
            2,524
       2.88
Total interest-bearing deposits
     1,939,028
        13,475
             2.76
    1,867,376
          10,100
       2.15
Other borrowed funds
        319,909
           3,890
             4.84
        347,326
            4,185
       4.78
Total interest-bearing liabilities
     2,258,937
        17,365
             3.06
    2,214,702
          14,285
       2.56
Demand deposits
        393,632
    
        408,531
    
Other liabilities
           34,487
    
          37,118
    
Total non-interest-bearing liabilities
        428,119
    
        445,649
    
Stockholders' equity
        316,378
    
        298,913
    
Total liabilities & stockholders' equity
     3,003,434
    
    2,959,264
    
Net interest income
  
        21,570
    
          22,668
  
Net interest spread (5)
    
2.52%
    
2.80%
Net interest income as a percentage
            
  of average interest-earning assets
    
3.09%
    
3.29%
Ratio of interest-earning assets
            
  to interest-bearing liabilities
    
123%
    
124%
             
(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 2024 and 2023. 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 AVERAGE BALANCES, INTEREST, YIELDS AND RATES, AND NET INTEREST MARGIN ON A FULLY TAX-EQUIVALENT BASIS
(UNAUDITED)
            
 
Nine Months Ended September 30,
 
2024
2023
 
Average
  
Average
Average
  
Average
 
Balance (1)
Interest
Rate
Balance (1)
Interest
Rate
(dollars in thousands)
$
$
%
$
$
%
ASSETS
            
Short-term investments:
            
Interest-bearing deposits at banks
        29,242
              605
2.76
          21,772
               333
2.04
Total short-term investments
        29,242
              605
2.76
          21,772
               333
2.04
Interest bearing time deposits at banks
           3,898
                90
3.08
            5,540
               129
3.11
Investment securities:
            
  Taxable
      356,871
           6,202
2.32
        385,246
            5,977
2.07
  Tax-exempt (3)
      105,734
           1,986
2.50
        114,307
            2,188
2.55
Investment securities
      462,605
           8,188
2.36
        499,553
            8,165
2.18
Loans: (2)(3)(4)
            
  Residential mortgage loans
      357,089
        15,612
5.84
        268,562
          10,797
5.38
  Construction loans
      185,832
        10,331
7.43
        114,386
            5,831
6.82
  Commercial Loans
   1,240,425
        59,196
6.37
    1,039,006
          45,079
5.80
  Agricultural Loans
      348,919
        13,703
5.25
        344,079
          12,759
4.96
  Loans to state & political subdivisions
        56,116
           1,659
3.95
          60,183
            1,736
3.86
  Other loans
        96,942
           5,882
8.10
          82,405
            4,579
7.43
  Loans, net of discount (2)(3)(4)
   2,285,323
      106,383
6.22
    1,908,621
          80,781
5.66
Total interest-earning assets
   2,781,068
      115,266
5.54
    2,435,486
          89,408
4.91
Cash and due from banks
           9,379
    
            8,709
    
Bank premises and equipment
        21,068
    
          19,340
    
Other assets
      184,561
    
        126,075
    
Total non-interest earning assets
      215,008
    
        154,124
    
Total assets
   2,996,076
    
    2,589,610
    
LIABILITIES AND STOCKHOLDERS' EQUITY
            
Interest-bearing liabilities:
            
  NOW accounts
      767,406
        14,557
             2.53
        616,103
            8,052
              1.75
  Savings accounts
      298,450
           1,165
             0.52
        320,227
               897
              0.37
  Money market accounts
      389,655
           9,131
             3.13
        352,055
            5,802
              2.20
  Certificates of deposit
      460,890
        13,598
             3.94
        303,825
            4,768
              2.10
Total interest-bearing deposits
   1,916,401
        38,451
             2.68
    1,592,210
          19,519
              1.64
Other borrowed funds
      340,132
        12,491
             4.91
        318,180
          10,682
              4.49
Total interest-bearing liabilities
   2,256,533
        50,942
             3.02
    1,910,390
          30,201
              2.11
Demand deposits
      382,340
    
        380,638
    
Other liabilities
        44,303
    
          35,566
    
Total non-interest-bearing liabilities
      426,643
    
        416,204
    
Stockholders' equity
      312,900
    
        263,016
    
Total liabilities & stockholders' equity
   2,996,076
    
    2,589,610
    
Net interest income
  
        64,324
    
          59,207
  
Net interest spread (5)
    
2.52%
    
2.80%
Net interest income as a percentage
            
  of average interest-earning assets
    
3.09%
    
3.25%
Ratio of interest-earning assets
            
  to interest-bearing liabilities
    
123%
    
127%
             
(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 2024 and 2023. 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)
          
 
September 30,
June 30,
March 31,
December 31,
September 30,
 
2024
2024
2024
2023
2023
Real estate:
          
  Residential
 $         353,254
 $        354,588
 $       357,779
 $      359,990
 $      356,381
  Commercial
         1,110,548
       1,110,269
      1,115,900
      1,092,887
      1,081,123
  Agricultural
            331,734
           327,057
          318,413
         314,802
         314,164
  Construction
            178,706
           180,157
          184,506
         195,826
         175,320
Consumer
            143,064
             70,542
            53,101
           61,316
         115,753
Other commercial loans
            134,285
           130,851
          129,438
         136,168
         120,347
Other agricultural loans
              24,537
             26,247
            24,345
           30,673
           26,648
State & political subdivision loans
              54,874
             56,005
            56,177
           57,174
           56,660
Total loans
         2,331,002
       2,255,716
      2,239,659
      2,248,836
      2,246,396
Less: allowance for credit losses - loans
              21,695
             22,797
            21,598
           21,153
           21,455
Net loans
 $     2,309,307
 $    2,232,919
 $   2,218,061
 $   2,227,683
 $   2,224,941
           
Past due and non-performing assets
          
           
Total Loans past due 30-89 days and still accruing
 $             7,423
 $          20,652
 $           6,311
 $        10,457
 $          5,960
           
Non-accrual loans
 $           20,858
 $          14,949
 $         14,693
 $        12,187
 $        13,139
Loans past due 90 days or more and accruing
                    701
                  285
                 820
                 516
                     8
Non-performing loans
 $           21,559
 $          15,234
 $         15,513
 $        12,703
 $        13,147
OREO
                 2,486
               2,690
                 200
                 474
                 474
Total Non-performing assets
 $           24,045
 $          17,924
 $         15,713
 $        13,177
 $        13,621
           
           
           
 
Three Months Ended
Analysis of the Allowance for Credit Losses - Loans
September 30,
June 30,
March 31,
December 31,
September 30,
(In Thousands)
2024
2024
2024
2023
2023
Balance, beginning of period
 $           22,797
 $          21,598
 $         21,153
 $        21,455
 $        21,652
Impact of Adopting ASC 326
                         -
                       -
                      -
                     -
                     -
Charge-offs
              (1,212)
                (682)
               (674)
               (510)
               (808)
Recoveries
                      10
                      7
                     7
                     8
                   10
Net (charge-offs) recoveries
              (1,202)
                (675)
               (667)
               (502)
               (798)
PCD allowance for credit loss at acquisition
                         -
                       -
                      -
                     -
                     -
Provision for credit losses - loans
                    100
               1,874
              1,112
                 200
                 601
Provision for credit losses - acquisition day 1 non-PCD
                         -
                       -
                      -
                     -
                     -
Balance, end of period
 $           21,695
 $          22,797
 $         21,598
 $        21,153
 $        21,455

CITIZENS FINANCIAL SERVICES, INC.
        
Reconciliation of GAAP and Non-GAAP Financial Measures
      
(UNAUDITED)
        
(Dollars in thousands, except per share data)
        
         
 
As of
    
 
September 30,
    
 
2024
2023
    
Tangible Equity
        
Stockholders Equity - GAAP
 $         298,654
 $           262,686
    
Intangible Assets
            (88,841)
              (88,624)
    
Tangible Equity - Non-GAAP
            209,813
              174,062
    
Shares outstanding adjusted for June 2024 stock Dividend
         4,759,730
           4,752,700
    
Tangible Book value per share - Non-GAAP
 $              44.08
 $               36.62
    
         
 
As of
    
 
September 30
    
 
2024
2023
    
Tangible Equity per share
        
Stockholders Equity per share - GAAP
 $              62.75
 $               55.27
    
Adjustment for intangible assets
               (18.67)
                (18.65)
    
Tangible Book value per share - Non-GAAP
 $              44.08
 $               36.62
    
         
         
 
For the Three Months Ended
For the Nine Months Ended
 
September 30
September 30
  
 
2024
2023
2024
2023
Return on Average Tangible Equity
        
Average Stockholders Equity - GAAP
 $         292,315
 $           266,899
 $              286,681
 $         232,326
Average Intangible Assets
            (88,931)
              (88,743)
                 (89,123)
             (54,386)
Average Tangible Equity - Non-GAAP
            203,384
              178,156
                 197,558
            177,940
Net Income - GAAP
 $              7,536
 $               7,548
 $                19,835
 $           10,271
Annualized Return on Average Tangible Equity Non-GAAP
14.82%
16.95%
13.39%
7.70%
         
 
For the Three Months Ended
For the Nine Months Ended
 
September 30
September 30
  
 
2024
2023
2024
2023
Return on Average Assets and Equity Excluding sale of Braavo assets, net of legal fees,
provision associated with Braavo loans remaining after sale  and  merger and acquisition costs
Net Income - GAAP
 $              7,536
 $               7,548
 $                19,835
 $           10,271
After tax gain on sale of Braavo, net of legal fees
                          -
                          -
                       (712)
                        -
After tax provisision associatated with Braavo loans remaining after sale
                          -
                          -
                      1,427
                        -
After tax provision for credit losses - acquisition day 1 non-PCD
                          -
                          -
                               -
                3,627
After Tax merger and acquisition costs
                          -
                     496
                               -
                7,513
Net Income excluding merger and acquisition costs - Non-GAAP
 $              7,536
 $               8,044
 $                20,550
 $           21,411
Average Assets
         3,003,434
           2,959,264
              2,996,076
         2,589,610
Annualized Return on Average assets, Excluding sale of Braavo assets, net of legal fees, provision associated with Braavo loans remaining after sale, net of tax  and  merger and acquisition costs - Non-GAAP
1.00%
1.09%
0.91%
1.10%
         
Average Stockholders Equity - GAAP
 $         316,378
 $           298,913
 $              312,900
 $         263,016
Annualized Return on Average stockholders equity, Excluding sale of Braavo assets, net of legal fees, provision associated with Braavo loans remaining after sale, net of tax  and  merger and acquisition costs - Non-GAAP
9.53%
10.76%
8.76%
10.85%
         
Average Tangible Equity - Non-GAAP
            203,384
              178,156
                 197,558
            177,940
Annualized Return on Average Tangible Equity Excluding sale of Braavo assets, net of legal fees, provision associated with Braavo loans remaining after sale, net of tax,   and  merger and acquisition costs - Non-GAAP
14.82%
18.06%
13.87%
16.04%
         
 
For the Three Months Ended
For the Nine Months Ended
 
September 30
September 30
  
 
2024
2023
2024
2023
Earnings per share, Excluding sale of Braavo assets, net of legal fees and  merger and acquisition costs
  
Net Income - GAAP
 $              7,536
 $               7,548
 $                19,835
 $           10,271
After tax gain on sale of Braavo, net of legal fees
                          -
                          -
                       (712)
                        -
After tax provisision associatated with Braavo loans remaining after sale
                          -
                          -
                      1,427
                        -
After tax provision for credit losses - acquisition day 1 non-PCD
                          -
                          -
                               -
                3,627
After Tax merger and acquisition costs
                          -
                     496
                               -
                7,513
Net income excluding one time items - Non-GAAP
 $              7,536
 $               8,044
 $                20,550
 $           21,411
Number of shares used in computation - basic
         4,751,224
           4,746,541
              4,753,927
         4,321,848
Basic and Diluted earnings per share, Excluding sale of Braavo assets, net of legal fees, provision associated with Braavo loans remaining after sale, net of tax,   and  merger and acquisition costs - Non-GAAP
 $                1.59
 $                 1.69
 $                     4.32
 $               4.95
         
         
 
For the Three Months Ended
For the Nine Months Ended
 
September 30
September 30
  
Reconciliation of net interest income on fully taxable equivalent basis
2024
2023
2024
2023
Total interest income
 $           38,689
 $             36,689
 $              114,524
 $           88,606
Total interest expense
               17,365
                14,285
                    50,942
              30,201
Net interest income
               21,324
                22,404
                    63,582
              58,405
Tax equivalent adjustment
                    246
                     264
                         742
                    802
Net interest income (fully taxable equivalent) - Non-GAAP
 $           21,570
 $             22,668
 $                64,324
 $           59,207













v3.24.3
Document and Entity Information
Sep. 30, 2024
Cover [Abstract]  
Document Type 8-K
Amendment Flag false
Document Period End Date Sep. 30, 2024
Entity File Number 001-41410
Entity Registrant Name CITIZENS FINANCIAL SERVICES INC
Entity Central Index Key 0000739421
Entity Incorporation, State or Country Code PA
Entity Tax Identification Number 23-2265045
Entity Address, Address Line One 15 S MAIN ST
Entity Address, City or Town MANSFIELD
Entity Address, State or Province PA
Entity Address, Postal Zip Code 16933
City Area Code 570
Local Phone Number 662-0444
Title of 12(b) Security Common Stock, Par Value $1.00 Per Share
Trading Symbol CZFS
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
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