EX-99.1 2 fourthqtrpressrelease2025.htm FOURTH QUARTER 2025 PRESS RELEASE
Contact:  LEEANN GEPHART, CHIEF BANKING OFFICER
FIRST CITIZENS COMMUNITY BANK
15 S. MAIN STREET
MANSFIELD, PA 16933
570-545-6005
570-662-8512 (FAX) 


citizens financial services, inc. reports unaudited full year and fourth quarter 2025 financial results

MANSFIELD, PENNSYLVANIA— JANUARY 29, 2026 – Citizens Financial Services, Inc (Nasdaq: CZFS), parent company of First Citizens Community Bank (the “Bank”), released today its unaudited consolidated financial results for the three months and year ended December 31, 2025.

Highlights

•
Net income was $36,572,000 for 2025, which is $8,754,000, or 31.5%, more than 2024’s net income due to the increase in net interest income after the provision for credit losses of $11,758,000.  The effective tax rate for 2025 was 18.9% compared to 17.4% in 2024.

•
Net income was $10,483,000 for the three months ended December 31, 2025, which was $2,500,000 more than the net income for 2024’s comparable period due to an increase in net interest income after the provision for credit losses of $2,838,000. The effective tax rate for the three months ended December 31, 2025 was 19.0% compared to 16.4% in the comparable period in 2024.

•
Net interest income before the provision for credit losses was $98,001,000 for 2025, an increase of $11,546,000, or 13.4%, over 2024 and was primarily due to an increase in investment income and a decrease in interest expense.

•
The provision for credit losses for the three months and the year ended December 31, 2025 was $500,000 and $2,375,000, respectively, compared to no provision and $2,587,000 for the three months and the  year ended December 31, 2024, respectively. The provision for the 2025 periods was driven by the current economic forecasts and specific reserves for non-accrual loans at December 31, 2025. The provision for 2024 was significantly impacted by loans that were not sold as part of the sale of a division known as Braavo that occurred in the first quarter of 2024. The vast majority of the Braavo loans that were retained after the sale were originated by Huntington Valley Bank in 2023 prior to the acquisition and were current as of the acquisition date in 2023.  The provision for 2024, directly attributable to these loans, was $1,806,000.

•
Return on average equity for the three months (annualized) and the year ended December 31, 2025 was 12.53% and 11.51% compared to 10.63% and 9.59% for the three months (annualized) and the year ended December 31, 2024, respectively. 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 year ended December 31, 2024 would have been 9.84% (non-GAAP) (1).

•
Return on average tangible equity (non-GAAP) for the three months (annualized) and the year ended December 31, 2025 was 17.01% and 15.94% compared to 15.10% and 13.84% for the three months (annualized) and the year ended December 31, 2024, respectively. 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 year ended December 31, 2024 would have been 14.19% (annualized) (1).

•
Return on average assets for the three months (annualized) and the year ended December 31, 2025 was 1.37% and 1.21% compared to 1.06% and 0.93% for the three months (annualized) and the year ended December 31, 2024, respectively. 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 year ended December 31, 2024 would have been 0.96% (non-GAAP). (1).

•
Non-performing assets increased $578,000 since December 31, 2024 and totaled $29,190,000 as of December 31, 2025. During the fourth quarter of 2025, the Bank recognized additional interest income of $878,000 from payments associated with two relationships that were previously on non-accrual status, and charged-off interest of $577,000 related to two relationships being placed on non-accrual status in the fourth quarter. As a percent of total loans, non-performing assets totaled 1.24% as of December 31, 2025 and 2024.

2025 Compared to 2024

•
For 2025, net income totaled $36,572,000 which compares to net income of $27,818,000 for 2024, an increase of $8,754,000. Basic and diluted earnings per share were $7.62 for 2025 compared to $5.80 and $5.79 per share, respectively, for 2024.  Return on equity for 2025 and 2024 was 11.51% and 9.59%, while return on assets was 1.21% and 0.93%, respectively. The increase in performance when comparing 2025 to 2024 was due to an increase in the net interest margin from 3.13% to 3.50%.

•
Net interest income before the provision for credit losses for 2025 totaled $98,001,000 compared to $86,455,000 for 2024, an increase of $11,546,000, or 13.4%.  Average interest earning assets increased $37,517,000 in 2025 compared to 2024, primarily due to an increase in taxable investments and average outstanding student loans. Average loans increased $19,425,000, while average investment securities increased $22,647,000. The yield on interest earning assets increased 10 basis points to 5.66%, while the cost of interest-bearing liabilities decreased 31 basis points to 2.69%. As a result, the tax effected net interest margin increased from 3.13% for 2024 to 3.50% for 2025.

•
The provision for credit losses for 2025 was $2,375,000 compared to $2,587,000 for 2024, a decrease of $212,000.  The provision for 2025 was driven by the economic forecasts and the annual update of loss drivers, which includes historical loss data, as well as prepayment and curtailment speeds. Additionally, the provision for 2025 was driven by specific loss reserves on two commercial real estate loans and one other commercial loan placed on non-accrual status in the fourth quarter of 2025. The provision for 2024 was impacted by the Braavo loans as previously mentioned and an increase in past due and classified loans during the second quarter of 2024.

•
Total non-interest income was $14,344,000 for 2025, which is $1,057,000 less than the non-interest income of $15,401,000 for 2024. The primary drivers were the gain on the sale of assets associated with Braavo and earnings on bank owned life insurance due to the passing of a former employee in the first quarter of 2024.

•
Total non-interest expenses for 2025 totaled $64,882,000 compared to $65,586,000 for 2024, which is a decrease of $704,000. Salary and benefit costs increased $55,000 due to additional healthcare expenses and post-employment benefits. There are 12 fewer FTEs in 2025 compared to 2024. The decrease in professional fees and software costs is due to the sale of the Braavo division in 2024.

•
The provision for income taxes increased $2,651,000 when comparing 2025 to 2024 as a result of an increase in income before income tax of $11,405,000. The effective tax rate was 18.9% and 17.4% for 2025 and 2024, respectively.

Three Months Ended December 31, 2025 Compared to 2024

•
For the three months ended December 31, 2025, net income totaled $10,483,000 which compares to net income of $7,983,000 for the comparable period of 2024, an increase of $2,500,000 or 31.3%.  Basic earnings per share of $2.19 for the three months ended December 31, 2025 compares to $1.66 for the 2024 comparable period. Annualized return on equity for the three months ended December 31, 2025 and 2024 was 12.53% and 10.63%, while annualized return on assets was 1.37% and 1.06%, respectively.

•
Net interest income before the provision for credit losses for the three months ended December 31, 2025 totaled $26,211,000 compared to $22,873,000 for the three months ended December 31, 2024, resulting in an increase of $3,338,000, or 14.6%. Average interest earning assets increased $33,040,000 for the three months ended December 31, 2025 compared to the same period last year, primarily due to increases in the average balance of investments and loans. Average loans increased $16,828,000, while average investment securities increased $17,206,000. The tax effected net interest margin for the three months ended December 31, 2025 was 3.69% compared to 3.26% for the same period last year. The yield on interest earning assets increased 12 basis points to 5.77%, while the cost of interest-bearing liabilities decreased 35 basis points to 2.59%.

•
The provision for credit losses for the fourth quarter of 2025 of $500,000 was driven by specific reserves on two commercial real estate loans and one other commercial loan placed on non-accrual status in the fourth quarter of 2025.  There was no provision for credit losses recorded during the three months ended December 31, 2024.

•
Total non-interest income was $3,398,000 for the three months ended December 31, 2025, which was $59,000 more than the comparable period last year.  The primary driver of the increase was an increase in derivative income of $75,000.

•
Total non-interest expenses for the three months ended December 31, 2025 totaled $16,173,000 compared to $16,668,000 for the same period last year, which is a decrease of $495,000, or 3.0%. Salary and employee benefits decreased due to a decrease in headcount of 11 FTEs, commission expense, profit sharing and vacation costs. The decrease in shares tax expense is due to timing and level of charitable contributions that are included in other expenses that generate tax credits utilized by Bank on its Pennsylvania shares tax return.

•
The provision for income taxes increased $892,000 when comparing the three months ended December 31, 2025 to the same period in 2024. This increase was attributable to increase in income before provision for income taxes of $3,392,000.  The effective tax rate was 19.0% and 16.4% for the three months ended December 31, 2025 and 2024, respectively.

Balance Sheet and Other Information:
•
At December 31, 2025, total assets were $3.06 billion, compared to $3.03 billion at December 31, 2024. The loan to deposit ratio as of December 31, 2025 was 98.89% compared to 97.11% as of December 31, 2024.

•
Available for sale securities of $444.7 million at December 31, 2025 increased $18.8 million from December 31, 2024. The yield on the investment portfolio increased from 2.44% to 3.06% on a tax equivalent basis due to securities purchased during a higher rate environment and lower yielding securities maturing. Investment activity for 2025 has focused on replacing securities as they mature with the exception of the purchase of $20.3 million of municipal securities in the third quarter of 2025.

•
Net loans of $2.33 billion  at December 31, 2025 increased of $36.3 million from December 31, 2024, primarily due to an increase in commercial loan activity offset by a decrease in student loans outstanding. The decrease construction loans of $74.9 million is the result of projects in our Delaware market and the southeast Pennsylvania market being completed and the related construction loans either transferring to other portfolios or being paid off.

•
The allowance for credit losses - loans totaled $22,806,000 at December 31, 2025 which is an  increase of $1,107,000 from December 31, 2024. The provision for credit losses in 2025 was based on the economic forecasts and changes in expected prepayment speeds, as well as specific reserves for loans placed on non-accrual status in the fourth quarter of 2025. The provision for credit losses on loans was $1,888,000 for 2025 compared to $3,176,000 for 2024. The provision for off-balance sheet items was $487,000 for 2025 compared to a credit of ($589,000) for 2024.  Loan recoveries and charge-offs were $77,000 and $858,000, respectively, for 2025 compared to loan recoveries and charge-offs of $43,000 and $2,673,000, respectively for 2024. For the three months ended December 31, 2025, loan recoveries and charge-offs were $6,000 and $57,000, respectively.  The allowance for credit losses as a percent of total loans was 0.97% as of December 31, 2025 and 0.94% as of December 31, 2024.

•
Non-performing assets totaled $29.2 million as of December 31, 2025, an increase of $578,000 since December 31, 2024. The increase was driven by two large commercial relationships being placed on non-accrual status during the fourth quarter of 2025, which offset significant pay-offs of non-accrual loans that occurred in the first three quarters of 2025.

•
Deposits decreased $5.0 million from December 31, 2024, to $2.40 billion at December 31, 2025. Competitive pressure for deposits remains high. Brokered CD’s have decreased $33.1 million since December 31, 2024. Additionally, a school district in our southeastern Pennsylvania market saw a decrease in their balance of $58.9 million due to the lack of state budget for parts of 2025. At December 31, 2025, the Bank estimates that deposit balances held by customers in excess of the FDIC insurance limit ($250,000 per insured account) totaled $1.16 billion, or 47.3% 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 $647.7 million, or 27.2% of the Bank’s total deposits, as of December 31, 2025.

•
Borrowed funds totaled $309.4 million as of December 31, 2025, a $11.7 million increase from December 31, 2024, due to a decrease in deposits and increases in loans and investments in 2025.

•
Stockholders’ equity totaled $338.1 million at December, 2025, compared to $299.7 million at December 31, 2024, an increase of $38.3 million. Excluding accumulated other comprehensive loss (AOCL), stockholders’ equity increased $27.2 million and totals $350.4 million (non-GAAP). The increase in stockholders’ equity was attributable to net income for 2025 totaling $36.6 million, offset by cash dividends for 2025 totaling $9.5 million. As a result of decreases in market interest rates impacting the fair value of investment securities and swaps, stockholders’ equity increased due to a decrease in AOCL of $11.1 million from December 31, 2024.

Dividend Declared

On December 2, 2025, the Board of Directors declared a cash dividend of $0.50 per share, which was paid on December 26, 2025 to shareholders of record at the close of business on December 12, 2025. This quarterly cash dividend is an increase of 3.1% over the quarterly cash dividend of $0.485 per share declared one year ago, as adjusted for the 1% stock dividend declared in June 2025.

Citizens Financial Services, Inc. has nearly 1,800 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
Year Ended
 
December 31,
December 31,
 
2025
2024
2025
2024
Income and Performance Ratios
        
Net Income
 $            10,483
 $          7,983
 $          36,572
 $        27,818
Return on average assets (annualized)
1.37%
1.06%
1.21%
0.93%
Return on average equity (annualized)
12.53%
10.63%
11.51%
9.59%
Return on average tangible equity (annualized) (a)
17.01%
15.10%
15.94%
13.84%
Net interest margin (tax equivalent) (a)
3.69%
3.26%
3.50%
3.13%
Earnings per share - basic (b)
 $                2.19
 $            1.66
 $               7.62
 $            5.80
Earnings per share - diluted (b)
 $                2.18
 $            1.66
 $               7.62
 $            5.79
Cash dividends paid per share (b)
 $              0.500
 $          0.485
 $            1.980
 $          1.931
Number of shares used in computation - basic (b)
         4,796,717
      4,797,135
        4,797,520
      4,797,258
Number of shares used in computation - diluted (b)
         4,798,194
      4,799,578
        4,800,093
      4,802,139
         
         
Asset quality
        
Allowance for credit losses - loans
 $            22,806
 $        21,699
    
Non-performing assets
 $            29,189
 $        28,612
    
Allowance for credit losses - loans to total loans
0.97%
0.94%
    
Non-performing assets to total loans
1.24%
1.24%
    
Annualized net charge-offs to total loans
0.01%
0.01%
0.03%
0.11%
         
         
Equity
        
Book value per share (b)
 $              70.32
 $          62.35
    
Tangible book value per share (a) (b)
 $              52.02
 $          43.91
    
Market value per share (Last reported trade of month)
 $              57.02
 $          63.31
    
Common shares outstanding
         4,807,080
      4,759,612
    
         
         
Other
        
Average Full Time Equivalent Employees
377.9
388.5
379.8
392.0
Loan to Deposit Ratio
98.89%
97.11%
    
Trust assets under management
 $         194,841
 $      180,710
    
Brokerage assets under management
 $         317,895
 $      395,869
    
         
         
Balance Sheet Highlights
December 31,
December 31,
    
 
2025
2024
    
         
Assets
 $      3,064,564
 $   3,025,724
    
Investment securities
             446,556
         427,659
    
Loans (net of unearned income)
         2,350,622
      2,313,242
    
Allowance for credit losses - loans
               22,806
           21,699
    
Deposits
         2,376,979
      2,382,028
    
Stockholders' Equity
             338,051
         299,734
    
         
         
(a) See reconciliation 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)
    
     
 
December 31,
December 31,
(in thousands, except share data)
2025
2024
ASSETS:
    
Cash and due from banks:
    
  Noninterest-bearing
 $        23,933
 $       30,284
  Interest-bearing
           10,358
          11,918
Total cash and cash equivalents
           34,291
          42,202
     
Interest bearing time deposits with other banks
             3,820
           3,820
     
Equity securities
             1,815
           1,747
     
Available-for-sale securities
         444,741
        425,912
     
Loans held for sale
             9,393
           9,607
     
Loans (net of allowance for credit losses - loans: $22,806 at December 31, 2025;
  
    $21,699 at December 31, 2024)
      2,327,816
     2,291,543
     
Premises and equipment
           20,998
          21,395
Accrued interest receivable
           10,698
          10,307
Goodwill
           85,758
          85,758
Bank owned life insurance
           51,501
          50,341
Other intangibles
             2,221
           2,892
Fair value of derivative instruments - asset
             6,927
          10,370
Deferred tax asset
           11,440
          15,199
Other assets
           53,145
          54,631
     
TOTAL ASSETS
 $   3,064,564
 $  3,025,724
     
LIABILITIES:
    
Deposits:
    
  Noninterest-bearing
 $      516,657
 $     532,776
  Interest-bearing
      1,860,322
     1,849,252
Total deposits
      2,376,979
     2,382,028
Borrowed funds
         309,448
        297,721
Accrued interest payable
             3,130
           4,693
Fair value of derivative instruments - liability
             4,100
           5,817
Other liabilities
           32,856
          35,731
TOTAL LIABILITIES
      2,726,513
     2,725,990
STOCKHOLDERS' EQUITY:
    
Preferred Stock $1.00 par value; authorized
    
  3,000,000 shares; none issued in 2025 or 2024
                     -
                  -
Common stock
    
  $1.00 par value; authorized 25,000,000 shares at December 31, 2025, and 2024:
  
   issued 5,255,807 shares at December 31, 2025 and 5,207,577 shares at December 31, 2024
             5,256
           5,208
Additional paid-in capital
         147,965
        144,984
Retained earnings
         213,623
        189,443
Accumulated other comprehensive loss
          (12,377)
        (23,521)
Treasury stock, at cost:  448,727 shares at December 31, 2025 and 447,965 shares
  
  at December 31, 2024
          (16,416)
        (16,380)
TOTAL STOCKHOLDERS' EQUITY
         338,051
        299,734
TOTAL LIABILITIES AND
    
   STOCKHOLDERS' EQUITY
 $   3,064,564
 $  3,025,724

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)
2025
2024
2025
2024
INTEREST INCOME:
        
Interest and fees on loans
 $     37,229
 $      36,630
 $   144,430
 $  142,688
Interest-bearing deposits with banks
             108
             156
             502
           851
Investment securities:
        
    Taxable
          2,579
           2,112
          9,910
         7,135
    Nontaxable
             811
             524
          2,626
         2,093
    Dividends
             424
             371
          1,700
         1,550
TOTAL INTEREST INCOME
        41,151
         39,793
      159,168
     154,317
INTEREST EXPENSE:
        
Deposits
        11,806
         13,875
        47,050
       52,326
Borrowed funds
          3,134
           3,045
        14,117
       15,536
TOTAL INTEREST EXPENSE
        14,940
         16,920
        61,167
       67,862
NET INTEREST INCOME
        26,211
         22,873
        98,001
       86,455
Provision for credit losses
             500
                 -
          2,375
         2,587
NET INTEREST INCOME AFTER
        
    PROVISION (RELEASE) FOR CREDIT LOSSES
        25,711
         22,873
        95,626
       83,868
NON-INTEREST INCOME:
        
Service charges
          1,377
           1,356
          5,569
         5,749
Trust
             199
             187
             792
           816
Brokerage and insurance
             556
             608
          2,627
         2,381
Gains on loans sold
             570
             596
          2,290
         2,316
Equity security gains, net
               11
               18
               67
           145
Earnings on bank owned life insurance
             369
             350
          1,433
         1,684
Gain on sale of Braavo division
                 -
                 -
                 -
         1,102
Other
             316
             224
          1,566
         1,208
TOTAL NON-INTEREST INCOME
          3,398
           3,339
        14,344
       15,401
NON-INTEREST EXPENSES:
        
Salaries and employee benefits
          9,213
           9,725
        39,402
       39,347
Occupancy
          1,441
           1,208
          5,299
         5,013
Furniture and equipment
             353
             247
          1,209
         1,038
Professional fees
             806
             578
          2,341
         2,599
FDIC insurance expense
             370
             407
          1,710
         1,996
Pennsylvania shares tax
           (315)
             248
             739
         1,114
Amortization of intangibles
             111
             132
             478
           564
Software expenses
             502
             445
          1,844
         1,953
Other real estate owned expenses (recovery)
               69
              (34)
             267
           212
Other
          3,623
           3,712
        11,593
       11,750
TOTAL NON-INTEREST EXPENSES
        16,173
         16,668
        64,882
       65,586
Income before provision for income taxes
        12,936
           9,544
        45,088
       33,683
Provision for income tax expense
          2,453
           1,561
          8,516
         5,865
NET INCOME
 $     10,483
 $        7,983
 $     36,572
 $    27,818
         
PER COMMON SHARE DATA:
        
Net Income - Basic
 $         2.19
 $          1.66
 $         7.62
 $        5.80
Net Income - Diluted
 $         2.18
 $          1.66
 $         7.62
 $        5.79
Cash Dividends Paid
 $       0.500
 $        0.485
 $       1.980
 $      1.931
         
Number of shares used in computation - basic
   4,796,717
    4,797,135
   4,797,520
  4,797,258
Number of shares used in computation - diluted
   4,798,194
    4,799,578
   4,800,093
  4,802,139

CITIZENS FINANCIAL SERVICES, INC.
          
QUARTERLY CONDENSED, CONSOLIDATED INCOME STATEMENT INFORMATION
        
(UNAUDITED)
          
(in thousands, except per share data)
Three Months Ended,
 
Dec 31,
Sept 30,
June 30,
March 31,
Dec 31,
 
2025
2025
2025
2025
2024
Interest income
 $     41,151
 $      40,254
 $      38,749
 $      39,014
 $      39,793
Interest expense
        14,940
         15,114
         15,101
         16,012
         16,920
Net interest income
        26,211
         25,140
         23,648
         23,002
         22,873
Provision (release) for credit losses
              500
               500
               750
               625
                   -
Net interest income after provision (release) for credit losses
        25,711
         24,640
         22,898
         22,377
         22,873
Non-interest income
          3,387
           3,820
           3,632
           3,438
           3,321
Investment securities gains (losses), net
                11
                 34
                 33
               (11)
                 18
Non-interest expenses
        16,173
         16,134
         16,147
         16,428
         16,668
Income before provision for income taxes
        12,936
         12,360
         10,416
           9,376
           9,544
Provision for income tax expense
          2,453
           2,355
           1,953
           1,755
           1,561
Net income
 $     10,483
 $      10,005
 $        8,463
 $        7,621
 $        7,983
Earnings Per Share - Basic
 $         2.19
 $          2.09
 $          1.76
 $          1.59
 $          1.66
Earnings Per Share - Diluted
 $         2.18
 $          2.09
 $          1.76
 $          1.59
 $          1.66

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,
 
2025
2024
 
Average
  
Average
Average
  
Average
 
Balance (1)
Interest
Rate
Balance (1)
Interest
Rate
(dollars in thousands)
$
$
%
$
$
%
ASSETS
            
Interest-bearing deposits at banks
           16,686
                78
1.85
          17,680
               126
2.84
Interest bearing time deposits at banks
             3,820
                30
3.12
            3,820
                 30
3.12
Investment securities:
            
  Taxable
        368,851
           3,003
3.26
        368,221
            2,483
2.70
  Tax-exempt (3)
        119,951
           1,027
3.42
        103,375
               664
2.57
Investment securities
        488,802
           4,030
3.30
        471,596
            3,147
2.67
Loans: (2)(3)(4)
            
  Residential mortgage loans
        345,134
           5,303
6.10
        355,108
            5,146
5.77
  Construction loans
           95,607
           1,734
7.20
        173,427
            3,276
7.51
  Commercial Loans
     1,377,802
        21,714
6.25
    1,270,978
          20,173
6.31
  Agricultural Loans
        373,964
           6,279
6.66
        355,557
            5,275
5.90
  Loans to state & political subdivisions
           51,915
              522
3.99
          55,333
               555
3.99
  Other loans
           99,512
           1,779
7.09
        116,703
            2,313
7.89
  Loans, net of discount (2)(3)(4)
     2,343,934
        37,331
6.32
    2,327,106
          36,738
6.28
Total interest-earning assets
     2,853,242
        41,469
5.77
    2,820,202
          40,041
5.65
Cash and due from banks
             9,709
    
            9,088
    
Bank premises and equipment
           21,454
    
          21,291
    
Other assets
        184,931
    
        186,815
    
Total non-interest earning assets
        216,094
    
        217,194
    
Total assets
     3,069,336
    
    3,037,396
    
LIABILITIES AND STOCKHOLDERS' EQUITY
            
Interest-bearing liabilities:
            
  Business Interest Checking
           23,910
                47
             0.78
          16,820
                 40
       0.95
  NOW accounts
        723,840
           3,863
             2.12
        742,784
            4,608
       2.47
  Savings accounts
        283,289
              333
             0.47
        289,798
               367
       0.50
  Money market accounts
        487,732
           3,455
             2.81
        422,624
            3,351
       3.15
  Certificates of deposit
        460,552
           4,108
             3.54
        544,320
            5,509
       4.03
Total interest-bearing deposits
     1,979,323
        11,806
             2.37
    2,016,346
          13,875
       2.74
Other borrowed funds
        307,378
           3,134
             4.05
        273,604
            3,045
       4.43
Total interest-bearing liabilities
     2,286,701
        14,940
             2.59
    2,289,950
          16,920
       2.94
Demand deposits
        394,474
    
        395,714
    
Other liabilities
           40,223
    
          29,545
    
Total non-interest-bearing liabilities
        434,697
    
        425,259
    
Stockholders' equity
        347,938
    
        322,187
    
Total liabilities & stockholders' equity
     3,069,336
    
    3,037,396
    
Net interest income
  
        26,529
    
          23,121
  
Net interest spread (5)
    
3.18%
    
2.71%
Net interest income as a percentage
            
  of average interest-earning assets
    
3.69%
    
3.26%
Ratio of interest-earning assets
            
  to interest-bearing liabilities
    
125%
    
123%
             
(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 2025 and 2024. 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)
            
 
Year Ended December 31,
      
 
2025
2024
 
Average
  
Average
Average
  
Average
 
Balance (1)
Interest
Rate
Balance (1)
Interest
Rate
(dollars in thousands)
$
$
%
$
$
%
ASSETS
            
Interest-bearing deposits at banks
        23,767
              384
1.62
          28,264
               730
2.58
Interest bearing time deposits at banks
           3,820
              118
3.09
            3,878
               121
3.09
Investment securities:
            
  Taxable
      378,387
        11,610
3.07
        359,724
            8,685
2.41
  Tax-exempt (3)
      109,125
           3,324
3.05
        105,141
            2,650
2.52
Investment securities
      487,512
        14,934
3.06
        464,865
          11,335
2.44
Loans: (2)(3)(4)
            
  Residential mortgage loans
      346,313
        20,841
6.02
        356,292
          20,758
5.83
  Construction loans
      135,920
           9,744
7.17
        182,714
          13,607
7.45
  Commercial Loans
   1,320,836
        84,059
6.36
    1,265,922
          80,849
6.39
  Agricultural Loans
      362,880
        21,227
5.85
        350,588
          18,978
5.41
  Loans to state & political subdivisions
        52,730
           2,071
3.93
          55,919
            2,213
3.96
  Other loans
        96,097
           6,898
7.18
          83,916
            6,717
8.00
  Loans, net of discount (2)(3)(4)
   2,314,776
      144,840
6.26
    2,295,351
        143,122
6.24
Total interest-earning assets
   2,829,875
      160,276
5.66
    2,792,358
        155,308
5.56
Cash and due from banks
           9,727
    
            9,306
    
Bank premises and equipment
        21,638
    
          21,124
    
Other assets
      180,011
    
        183,674
    
Total non-interest earning assets
      211,376
    
        214,104
    
Total assets
   3,041,251
    
    3,006,462
    
LIABILITIES AND STOCKHOLDERS' EQUITY
            
Interest-bearing liabilities:
            
  Business Interest Checking
        20,148
              179
             0.89
            8,756
                 88
      1.01
  NOW accounts
      718,185
        15,361
             2.14
        756,689
          19,117
      2.53
  Savings accounts
      287,162
           1,336
             0.47
        296,275
            1,532
      0.52
  Money market accounts
      453,545
        12,919
             2.85
        397,942
          12,482
      3.14
  Certificates of deposit
      470,285
        17,255
             3.67
        481,862
          19,107
      3.97
Total interest-bearing deposits
   1,949,325
        47,050
             2.41
    1,941,524
          52,326
      2.70
Other borrowed funds
      326,026
        14,117
             4.33
        323,409
          15,536
      4.80
Total interest-bearing liabilities
   2,275,351
        61,167
             2.69
    2,264,933
          67,862
      3.00
Demand deposits
      387,914
    
        385,702
    
Other liabilities
        40,650
    
          40,593
    
Total non-interest-bearing liabilities
      428,564
    
        426,295
    
Stockholders' equity
      337,336
    
        315,234
    
Total liabilities & stockholders' equity
   3,041,251
    
    3,006,462
    
Net interest income
  
        99,109
    
          87,446
  
Net interest spread (5)
    
2.97%
    
2.56%
Net interest income as a percentage
            
  of average interest-earning assets
    
3.50%
    
3.13%
Ratio of interest-earning assets
            
  to interest-bearing liabilities
    
124%
    
123%
             
(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 2025 and 2024. 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,
 
2025
2025
2025
2025
2024
Real estate:
          
  Residential
 $         340,972
 $               344,790
 $       341,671
 $      350,221
 $      351,398
  Commercial
         1,218,514
               1,180,655
      1,151,585
      1,117,240
      1,121,435
  Agricultural
            347,448
                  342,487
          331,995
         329,985
         327,722
  Construction
              93,965
                  107,867
          138,307
         168,896
         164,326
Consumer
              88,210
                  109,458
            22,364
         109,339
         109,505
Other commercial loans
            179,166
                  171,345
          174,740
         158,133
         155,012
Other agricultural loans
              30,247
                    27,142
            28,366
           28,488
           29,662
State & political subdivision loans
              52,100
                    51,644
            52,727
           53,361
           54,182
Total loans
         2,350,622
               2,335,388
      2,241,755
      2,315,663
      2,313,242
Less: allowance for credit losses - loans
              22,806
                    22,454
            22,109
           22,081
           21,699
Net loans
 $     2,327,816
 $            2,312,934
 $   2,219,646
 $   2,293,582
 $   2,291,543
           
Past due and non-performing assets
          
           
Total loans past due 30-89 days and still accruing
 $             9,269
 $                 13,228
 $         18,554
 $          9,632
 $          8,015
           
Non-accrual loans
 $           26,602
 $                 20,523
 $         24,595
 $        23,545
 $        25,701
Loans past due 90 days or more and still accruing
                    229
                            37
                 347
             1,393
                 276
Non-performing loans
 $           26,831
 $                 20,560
 $         24,942
 $        24,938
 $        25,977
Other real estate owned
                 2,358
                      2,434
              2,434
             2,544
             2,635
Total Non-performing assets
 $           29,189
 $                 22,994
 $         27,376
 $        27,482
 $        28,612
           
           
           
 
Three Months Ended
Analysis of the Allowance for Credit Losses - Loans
December 31,
September 30,
June 30,
March 31,
December 31,
(In Thousands)
2025
2025
2025
2025
2024
Balance, beginning of period
 $           22,454
 $                 22,109
 $         22,081
 $        21,699
 $        21,695
Charge-offs
                    (57)
                          (20)
               (596)
               (185)
               (105)
Recoveries
                         6
                            17
                   25
                   29
                   19
Net charge-offs
                    (51)
                            (3)
               (571)
               (156)
                 (86)
Provision for credit losses - loans
                    403
                          348
                 599
                 538
                   90
Balance, end of period
 $           22,806
 $                 22,454
 $         22,109
 $        22,081
 $        21,699

CITIZENS FINANCIAL SERVICES, INC.
        
Reconciliation of GAAP and Non-GAAP Financial Measures
      
(UNAUDITED)
        
(Dollars in thousands, except per share data)
        
         
 
As of
    
 
December 31,
    
 
2025
2024
    
Tangible Equity
        
Stockholders' Equity - GAAP
 $         338,051
 $           299,734
    
Intangible Assets
            (87,979)
              (88,650)
    
Tangible Equity - Non-GAAP
            250,072
              211,084
    
Shares outstanding adjusted for June 2025 stock Dividend
         4,807,080
           4,806,685
    
Tangible Book value per share - Non-GAAP
 $              52.02
 $               43.91
    
         
 
As of
    
 
December 31,
    
 
2025
2024
    
Tangible Equity per share
        
Stockholders' Equity per share - GAAP
 $              70.32
 $               62.35
    
Adjustment for intangible assets
               (18.30)
                (18.44)
    
Tangible Book value per share - Non-GAAP
 $              52.02
 $               43.91
    
         
         
 
For the Three Months Ended
For the Year Ended
 
December 31,
December 31,
 
2025
2024
2025
2024
Return on Average Assets Excluding Accumulated Other Comprehensive Loss (AOCL)
    
Average Assets - GAAP
 $      3,055,993
 $        3,015,467
 $           3,021,591
 $      2,981,322
Average AOCL
            (13,343)
              (21,929)
                 (19,660)
             (25,140)
Average Assets, Excluding AOCL - Non-GAAP
         3,069,336
           3,037,396
              3,041,251
         3,006,462
Net Income - GAAP
 $           10,483
 $               7,983
 $                36,572
 $           27,818
Annualized Return on Average Assets-GAAP
1.37%
1.06%
1.21%
0.93%
Annualized Return on Average Assets, Excluding AOCL - Non-GAAP
1.37%
1.05%
1.20%
0.93%
         
 
For the Three Months Ended
For the Year Ended
 
December 31,
December 31,
 
2025
2024
2025
2024
Return on Average Equity Excluding Accumulated Other Comprehensive Loss (AOCL)
    
Average Stockholders' Equity - GAAP
 $         334,595
 $           300,258
 $              317,676
 $         290,094
Average AOCL
            (13,343)
              (21,929)
                 (19,660)
             (25,140)
Average Stockholders' Equity, Excluding AOCL - Non-GAAP
            347,938
              322,187
                 337,336
            315,234
Net Income - GAAP
 $           10,483
 $               7,983
 $                36,572
 $           27,818
Annualized Return on Average Stockholders' Equity-GAAP
12.53%
10.63%
11.51%
9.59%
Annualized Return on Average Stockholders' Equity, Excluding AOCL - Non-GAAP
12.05%
9.91%
10.84%
8.82%
         
 
For the Three Months Ended
For the Year Ended
 
December 31,
December 31,
 
2025
2024
2025
2024
Return on Average Tangible Equity
        
Average Stockholders' Equity - GAAP
 $         334,595
 $           300,258
 $              317,676
 $         290,094
Average Intangible Assets
            (88,062)
              (88,757)
                 (88,308)
             (89,031)
Average Tangible Equity - Non-GAAP
            246,533
              211,501
                 229,368
            201,063
Net Income - GAAP
 $           10,483
 $               7,983
 $                36,572
 $           27,818
Annualized Return on Average Tangible Equity Non-GAAP
17.01%
15.10%
15.94%
13.84%
         
 
For the Three Months Ended
For the Year Ended
 
December 31,
December 31,
 
2025
2024
2025
2024
Return on Average Assets and Equity Excluding sale of Braavo assets, net of legal fees and provision associated
with Braavo loans remaining after sale
Net Income - GAAP
 $           10,483
 $               7,983
 $                36,572
 $           27,818
After tax gain on sale of Braavo, net of legal fees
                          -
                          -
                               -
                  (712)
After tax provision associated with Braavo loans remaining after sale
                          -
                          -
                               -
                1,427
Net Income excluding sale of Braavo assets, net of legal fees and provision associated with Braavo loans remaining after sale - Non-GAAP
 $           10,483
 $               7,983
 $                36,572
 $           28,533
Average Assets
         3,055,993
           3,015,467
              3,021,591
         2,981,322
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 - Non-GAAP
1.37%
1.06%
1.21%
0.96%
         
Average Stockholders' Equity - GAAP
 $         334,595
 $           300,258
 $              317,676
 $         290,094
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   - Non-GAAP
12.53%
10.63%
11.51%
9.84%
         
Average Tangible Equity - Non-GAAP
            246,533
              211,501
                 229,368
            201,063
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, - Non-GAAP
17.01%
15.10%
15.94%
14.19%
         
 
For the Three Months Ended
For the Year Ended
 
December 31,
December 31,
 
2025
2024
2025
2024
Earnings per share, Excluding sale of Braavo assets, net of legal fees and provision associated with Braavo loans remaining after sale
Net Income - GAAP
 $           10,483
 $               7,983
 $                36,572
 $           27,818
After tax gain on sale of Braavo, net of legal fees
                          -
                          -
                               -
                  (712)
After tax provision associated with Braavo loans remaining after sale
                          -
                          -
                               -
                1,427
Net income excluding one time items - Non-GAAP
 $           10,483
 $               7,983
 $                36,572
 $           28,533
Number of shares used in computation - basic
         4,796,717
           4,797,135
              4,797,520
         4,797,258
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 - Non-GAAP
 $                2.19
 $                 1.66
 $                     7.62
 $               5.95
         
         
 
For the Three Months Ended
For the Year Ended
 
December 31,
December 31,
Reconciliation of net interest income on fully taxable equivalent basis
2025
2024
2025
2024
Total interest income
 $           41,151
 $             39,793
 $              159,168
 $         154,317
Total interest expense
               14,940
                16,920
                    61,167
              67,862
Net interest income
               26,211
                22,873
                    98,001
              86,455
Tax equivalent adjustment
                    318
                     248
                      1,108
                    991
Net interest income (fully taxable equivalent) - Non-GAAP
 $           26,529
 $             23,121
 $                99,109
 $           87,446