EX-99.1 2 firstqtrpressrelease2024.htm FIRST QUARTER 2024 PRESS RELEASE

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 first quarter 2024 financial results

MANSFIELD, PENNSYLVANIA— April 25, 2024 – 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 ended March 31, 2024.

Highlights

•
The financial results of the Company continue to benefit from the acquisition of HV Bancorp, Inc. (“HVB”) that closed in the second quarter of 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 income was $7.0 million for the three months ended March 31, 2024, which is 2.3% more than the net income for 2023’s comparable period. The increase was driven by the gain on the sale of Braavo, which resulted in a pre-tax gain of approximately $900,000, net of legal fees. The effective tax rate for the three months ended March 31, 2024 was 17.4% compared to 19.0% in the comparable period in 2023, with the decrease being due to an increase in earnings on bank owned life insurance due to the passing of a former executive, which is not subject to income tax,  and certain merger and acquisition expenses from 2023 not being tax deductible.

•
Net interest income before the provision for credit losses was $21.0 million for the three months ended March 31, 2024, an increase of $2,878,000, or 15.9%, over the same period a year ago and was primarily due to the HVB acquisition.

•
Return on average equity for the three months (annualized) ended March 31, 2024 was 9.10% compared to 11.49% for the three months (annualized) ended March 31, 2023.

•
Return on average tangible equity for the three months (annualized) ended March 31, 2024 was 12.80% compared to 13.30% for the three months (annualized) ended March 31, 2023 (non-GAAP). (1)

•
Return on average assets for the three months (annualized) ended March 31, 2024 was 0.93% compared to 1.16% for the three months (annualized) ended March 31, 2023.

•
Non-performing assets increased $4,833,000 since March 31, 2023 and total $15,713,000 as of March 31, 2024, which is $2.5 million higher than the balance at December 31, 2023. The increase from March 31, 2023 and December 2023 is due to loans acquired as part of the HVB acquisition. As a percent of loans, non-performing assets totaled 0.70%, 0.59% and 0.63% as of March 31, 2024, December 31, 2023 and March 31, 2023.

First Quarter of 2024 Compared to the First Quarter of 2023

•
For the three months ended March 31, 2024, net income totaled $7,024,000 which compares to net income of $6,867,000 for the comparable period of 2023, an increase of $157,000 or 2.3%.  Basic earnings per share of $1.49 for the three months ended March 31, 2024 compares to $1.71 for the 2023 comparable period. Annualized return on equity for the three months ended March 31, 2024 and 2023 was 9.10% and 11.49%, while annualized return on assets was 0.93% and 1.16%, respectively.

•
Net interest income before the provision for credit losses for the three months ended March 31, 2024 totaled $20,958,000 compared to $18,080,000 for the three months ended March 31, 2023, resulting in an increase of $2,878,000, or 15.9%. Average interest earning assets increased $545.6 million for the three months ended March 31, 2024 compared to the same period last year, primarily due to the HVB acquisition. Average loans increased $563.1 million, while average investment securities decreased $30.5 million. The tax effected net interest margin for the three months ended March 31, 2024 was 3.05% compared to 3.30% for the same period last year. The yield on interest earning assets increased 92 basis points to 5.48%, while the cost of interest bearing liabilities increased 1.34% to 2.99% due to the rise in market interest rates and competitive pressure.

•
Due to the increase in non-performing loans and a change in estimated prepayment speeds on performing loans, a provision for credit losses of $785,000 was recorded in the first quarter of 2024. Due to limited loan origination activity in the first quarter of 2023, no provision was recorded for the first quarter of 2023.

•
Total non-interest income was $4,971,000 for the three months ended March 31, 2024, $2,797,000 more than the comparable 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 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 quarter of 2024, the Company experienced a gain on its equity investment portfolio compared to a loss in the first quarter of 2023, both of which were due to market conditions at the time.

•
Total non-interest expenses for the three months ended March 31, 2024 totaled $16,643,000 compared to $11,778,000 for the same period last year, which is an increase of $4,865,000, or 41.3%. Salary and benefit costs increased $2,613,000 due to an additional 80.9 FTEs as a result of the acquisition and merit increases for 2024 as well as an increase in health insurance costs of $423,000. The increases in occupancy, furniture and fixtures, software expenses and amortization expenses was due to the acquisition and additional branches as part of it. FDIC insurance expense increased $225,000 due to the Company’s increased size and the Bank’s lower leverage capital ratio. Professional fees increased due to various legal matters, 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 acquisition, other expenses increased due to insurance reimbursement received in 2023 to cover amounts previously expensed. Merger and acquisitions costs for the merger with HVB totaled $244,000 in 2023 and include professional and consulting fees, printing and travel related expenses.

•
The provision for income taxes decreased $132,000 when comparing the three months ended March 31, 2024 to the same period in 2023. This decrease was attributable to death benefits received upon the passing of a former employees and certain expenses in 2023 not being tax deductible.  The effective tax rate was 17.4% and 19.0% for the three months ended March 31, 2024 and 2023, respectively.

Balance Sheet and Other Information:

•
At March 31, 2024, total assets were $2.92 billion compared to $2.98 billion at December 31, 2023 and $2.34 billion at March 31, 2023. The loan to deposit ratio as of March 31, 2024 was 97.25% compared to 96.87% as of December 31, 2023 and 95.77% as of March 31, 2023.

•
Available for sale securities of $404.9 million at March 31, 2024 decreased $12.7 million from December 31, 2023 and decreased $38.6 million from March 31, 2023. The yield on the investment portfolio increased from 2.12% to 2.29% on a tax equivalent basis due to securities purchased during a higher rate environment and lower yielding securities maturing. Investment activity has been limited in the first quarter of 2024.

•
Net loans as of March 31, 2024 totaled $2.22 billion and decreased $9.6 million from December 31, 2023, due to a decrease in the amount of student loans outstanding and selling loans as part of the Braavo disposition. In comparison to March 31, 2023, loans have grown $509.8 million due to the HVB acquisition.

•
The allowance for credit losses - loans totaled $21,598,000 at March 31, 2024 which is an  increase of $445,000 from December 31, 2023 and is due to change in expected prepayment speeds and specific reserves on non-performing loans. The provision for credit losses on loans was $1,112,000 for the first quarter of 2024. Loan recoveries and charge-offs were $7,000 and $674,000, respectively, for the three months ended March 31, 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 0.96% as of March 31, 2024 and 0.94% as of December 31, 2023.

•
Deposits decreased $18.7 million from December 31, 2023, to $2.30 billion at March 31, 2024. With the rise in interest rates, competitive pressure for deposits has increased. Additionally, we have numerous state and political organizations as customers who withdrew funds during the first quarter of 2024 to fund various projects and bond payments.

•
Borrowed funds totaled $283.6 million as of March 31, 2024, a $38.5 million decrease from December 31, 2023.

•
Stockholders’ equity totaled $282.7 million at March 31, 2024, compared to $279.7 million at December 31, 2023, an increase of $3.0 million. Excluding accumulated other comprehensive loss (AOCI), stockholders equity increased $4.7 million and totals $309.3 million. The increase in stockholders equity, excluding AOCI, was attributable to net income for the three months ended March 31, 2024 totaling $7.0 million, offset by cash dividends for the first quarter totaling $2.3 million. As a result of changes in market interest rates impacting the fair value of investment securities and swaps, AOCI decreased $1.7 million from December 31, 2023.

Dividend Declared

On March 5, 2024, the Board of Directors declared a cash dividend of $0.49 per share, which was paid on March 29, 2024 to shareholders of record at the close of business on March 15, 2024. This quarterly cash dividend is an increase of 2.1% over the regular cash dividend of $0.48 per share declared one year ago, as adjusted for the 1% stock dividend declared in June 2023.

Citizens Financial Services, Inc. has nearly 1,900 shareholders, the majority of whom reside in markets where its offices are located.

Note: This press release may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995.  These statements are not historical facts; rather, they are statements based on the Company's current expectations regarding its business strategies and their intended results and its future performance.  Forward-looking statements are preceded by terms such as "expects," "believes," "anticipates," "intends" and similar expressions.  Forward-looking statements are not guarantees of future performance.  Numerous risks and uncertainties could cause or contribute to the Company's actual results, performance and achievements to be materially different from those expressed or implied by the forward-looking statements. Factors that may cause or contribute to these differences include, without limitation, changes in general economic conditions, including changes in market interest rates and changes in monetary and fiscal policies of the federal government; legislative and regulatory changes; and other factors disclosed periodically in the Company's filings with the Securities and Exchange Commission.  Because of the risks and uncertainties inherent in forward-looking statements, readers are cautioned not to place undue reliance on them, whether included in this press release or made elsewhere periodically by the Company or on its behalf.  The Company assumes no obligation to update any forward-looking statements except as may be required by applicable law or regulation.

(1)
See reconciliation of GAAP and non-gaap measures at the end of the press release

CITIZENS FINANCIAL SERVICES, INC.
      
CONSOLIDATED FINANCIAL HIGHLIGHTS
      
(UNAUDITED)
      
(Dollars in thousands, except per share data)
      
 
As of or For The
  
 
Three Months Ended
  
 
March 31,
    
 
2024
2023
  
Income and Performance Ratios
      
Net Income
 $              7,024
 $          6,867
  
Return on average assets (annualized)
0.93%
1.16%
  
Return on average equity (annualized)
9.10%
11.49%
  
Return on average tangible equity (annualized) (a)
12.80%
13.30%
  
Net interest margin (tax equivalent)(a)
3.05%
3.30%
  
Earnings per share - basic (b)
 $                1.49
 $            1.71
  
Earnings per share - diluted (b)
 $                1.49
 $            1.71
  
Cash dividends paid per share (b)
 $              0.490
 $          0.480
  
Number of shares used in computation - basic (b)
         4,701,853
      4,005,370
  
Number of shares used in computation - diluted (b)
         4,701,853
      4,005,375
  
       
       
Asset quality
      
Allowance for credit losses - loans
 $            21,598
 $        15,250
  
Non-performing assets
 $            15,713
 $        10,880
  
Allowance for credit losses - loans/total loans
0.96%
0.88%
  
Non-performing assets to total loans
0.70%
0.63%
  
Annualized net charge-offs to total loans
0.12%
0.00%
  
       
       
Equity
      
Book value per share (b)
 $              65.71
 $          59.85
  
Tangible Book value per share (a) (b)
 $              46.76
 $          51.73
  
Market Value (Last reported trade of month)
 $              49.20
 $          83.55
  
Common shares outstanding
         4,706,991
      3,971,049
  
       
       
Other
      
Average Full Time Equivalent Employees
394.1
313.2
  
Loan to Deposit Ratio
97.25%
95.77%
  
Trust assets under management
 $         173,716
 $      156,999
  
Brokerage assets under management
 $         362,408
 $      294,925
  
       
       
Balance Sheet Highlights
March 31,
December 31,
March 31,
 
2024
2023
2023
       
Assets
 $      2,921,103
 $   2,975,321
 $      2,335,398
Investment securities
             406,523
         419,539
             445,338
Loans (net of unearned income)
         2,239,659
      2,248,836
         1,723,475
Allowance for credit losses - loans
               21,598
           21,153
               15,250
Deposits
         2,302,881
      2,321,481
         1,799,687
Stockholders' Equity
             282,674
         279,666
             213,238
       
       
(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)
      
       
 
March 31,
December 31,
March 31,
(in thousands except share data)
2024
2023
2023
ASSETS:
      
Cash and due from banks:
      
  Noninterest-bearing
 $           14,047
 $         37,733
 $             24,249
  Interest-bearing
               15,572
            15,085
                  1,924
Total cash and cash equivalents
               29,619
            52,818
                26,173
       
Interest bearing time deposits with other banks
                 3,820
              4,070
                  6,055
       
Equity securities
                 1,658
              1,938
                  1,923
       
Available-for-sale securities
            404,865
          417,601
              443,415
       
Loans held for sale
                 8,346
              9,379
                     671
       
Loans (net of allowance for credit losses - loans: $21,598 at March 31, 2024;
      
    $21,153 at December 31, 2023 and $15,250 at March 31, 2023)
         2,218,061
       2,227,683
           1,708,225
       
Premises and equipment
               21,083
            21,384
                17,588
Accrued interest receivable
               10,596
            11,043
                  7,176
Goodwill
               85,758
            85,758
                31,376
Bank owned life insurance
               49,418
            49,897
                39,573
Other intangibles
                 3,450
              3,650
                  1,181
Fair value of derivative instruments - asset
               14,857
            13,687
                14,197
Deferred tax asset
               17,672
            17,339
                10,786
Other assets
               51,900
            59,074
                27,059
       
TOTAL ASSETS
 $      2,921,103
 $    2,975,321
 $        2,335,398
       
LIABILITIES:
      
Deposits:
      
  Noninterest-bearing
 $         523,844
 $       523,784
 $           369,658
  Interest-bearing
         1,779,037
       1,797,697
           1,430,029
Total deposits
         2,302,881
       2,321,481
           1,799,687
Borrowed funds
            283,565
          322,036
              288,059
Accrued interest payable
                 4,123
              4,298
                  1,768
Fair value of derivative instruments - liability
                 8,698
              7,922
                  8,234
Other liabilities
               39,162
            39,918
                24,412
TOTAL LIABILITIES
         2,638,429
       2,695,655
           2,122,160
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 March 31, 2024, December 31, 2023 and
    
  March 31, 2023: issued 5,160,754 at March 31, 2024 and December 31, 2023 and
    
  4,427,687 at March 31, 2023
                 5,161
              5,161
                  4,428
Additional paid-in capital
            143,227
          143,233
                80,926
Retained earnings
            177,693
          172,975
              171,629
Accumulated other comprehensive loss
            (26,620)
           (24,911)
              (26,762)
Treasury stock, at cost:  453,763 at March 31, 2024 and 453,760 shares
      
  at December 31, 2023 and 456,638 shares at March 31, 2023
            (16,787)
           (16,792)
              (16,983)
TOTAL STOCKHOLDERS' EQUITY
            282,674
          279,666
              213,238
TOTAL LIABILITIES AND
      
   STOCKHOLDERS' EQUITY
 $      2,921,103
 $    2,975,321
 $        2,335,398

CITIZENS FINANCIAL SERVICES, INC.
    
CONSOLIDATED STATEMENT OF INCOME
    
(UNAUDITED)
    
 
Three Months Ended
 
March 31,
(in thousands, except share and per share data)
2024
2023
INTEREST INCOME:
    
Interest and fees on loans
 $     35,133
 $      22,549
Interest-bearing deposits with banks
             243
               71
Investment securities:
    
    Taxable
          1,624
           1,556
    Nontaxable
             532
             617
    Dividends
             401
             314
TOTAL INTEREST INCOME
        37,933
         25,107
INTEREST EXPENSE:
    
Deposits
        12,321
           3,939
Borrowed funds
          4,654
           3,088
TOTAL INTEREST EXPENSE
        16,975
           7,027
NET INTEREST INCOME
        20,958
         18,080
Provision for credit losses
             785
                 -
Provision for credit losses - acquisition day 1 non-PCD
                 -
                 -
NET INTEREST INCOME AFTER
    
    PROVISION FOR CREDIT LOSSES
        20,173
         18,080
NON-INTEREST INCOME:
    
Service charges
          1,372
           1,211
Trust
             244
             230
Brokerage and insurance
             665
             514
Gains on loans sold
             417
               45
Equity security gains (losses), net
               55
            (218)
Available for sale security losses, net
                 -
                 -
Earnings on bank owned life insurance
             668
             218
Gain on sale of Braavo division
          1,102
                 -
Other
             448
             174
TOTAL NON-INTEREST INCOME
          4,971
           2,174
NON-INTEREST EXPENSES:
    
Salaries and employee benefits
        10,290
           7,677
Occupancy
          1,324
             835
Furniture and equipment
             236
             151
Professional fees
             703
             381
FDIC insurance expense
             525
             300
Pennsylvania shares tax
             310
             298
Amortization of intangibles
             148
               31
Software expenses
             514
             351
ORE  (income) expenses
             (13)
               26
Merger and acquisition expenses
                 -
             244
Other
          2,606
           1,484
TOTAL NON-INTEREST EXPENSES
        16,643
         11,778
Income before provision for income taxes
          8,501
           8,476
Provision for income tax expense
          1,477
           1,609
NET INCOME
 $       7,024
 $        6,867
     
PER COMMON SHARE DATA:
    
Net Income - Basic
 $         1.49
 $          1.71
Net Income - Diluted
 $         1.49
 $          1.71
Cash Dividends Paid
 $       0.490
 $        0.480
     
Number of shares used in computation - basic
   4,701,853
    4,005,370
Number of shares used in computation - diluted
   4,701,853
    4,005,375

CITIZENS FINANCIAL SERVICES, INC.
          
QUARTERLY CONDENSED, CONSOLIDATED INCOME (LOSS) STATEMENT INFORMATION
      
(UNAUDITED)
          
(in thousands, except per share data)
  
Three Months Ended,
  
 
March 31,
Dec 31,
Sept 30,
June 30,
March 31,
 
2024
2023
2023
2023
2023
Interest income
 $     37,933
 $      38,512
 $      36,689
 $      26,810
 $      25,107
Interest expense
        16,975
         16,657
         14,285
           8,889
           7,027
Net interest income
        20,958
         21,855
         22,404
         17,921
         18,080
Provision for credit losses
              785
               200
               475
               262
                   -
Provision for credit losses - acquisition day 1 non-PCD
                   -
                   -
                   -
           4,591
                   -
Net interest income after provision for credit losses
        20,173
         21,655
         21,929
         13,068
         18,080
Non-interest income
          4,916
           3,410
           3,593
           2,405
           2,392
Investment securities gains (losses), net
                55
                 79
                 69
             (125)
             (218)
Non-interest expenses
        16,643
         15,920
         16,444
         20,680
         11,778
Income (loss) before provision for income taxes
          8,501
           9,224
           9,147
          (5,332)
           8,476
Provision for income tax expense (benefit)
          1,477
           1,684
           1,599
          (1,188)
           1,609
Net income (loss)
 $       7,024
 $        7,540
 $        7,548
 $       (4,144)
 $        6,867
Earnings (Loss) Per Share Basic
 $         1.49
 $          1.60
 $          1.61
 $         (1.01)
 $          1.71
Earnings (Loss) Per Share Diluted
 $         1.49
 $          1.60
 $          1.61
 $         (1.01)
 $          1.71

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 March 31,
 
2024
    
2023
    
 
Average
  
Average
Average
  
Average
 
Balance (1)
Interest
Rate
Balance (1)
Interest
Rate
(dollars in thousands)
$
$
%
$
$
%
ASSETS
            
Interest-bearing deposits at banks
           29,184
              212
2.92
          14,129
                 27
0.78
Interest bearing time deposits at banks
             4,054
                31
3.08
            6,055
                 44
3.00
Investment securities:
            
  Taxable
        362,963
           2,025
2.23
        380,537
            1,870
1.97
  Tax-exempt (3)
        107,497
              674
2.51
        120,413
               781
2.59
Investment securities
        470,460
           2,699
2.29
        500,950
            2,651
2.12
Loans: (2)(3)(4)
            
  Residential mortgage loans
        359,720
           5,059
5.66
        212,015
            2,704
5.17
  Construction loans
        189,898
           3,491
7.39
          85,432
            1,139
5.41
  Commercial Loans
     1,236,308
        19,519
6.35
        935,212
          12,325
5.34
  Agricultural Loans
        344,468
           4,405
5.14
        344,291
            4,253
5.01
  Loans to state & political subdivisions
           56,648
              550
3.90
          59,318
               543
3.71
  Other loans
        110,140
           2,217
8.10
          97,833
            1,692
7.01
  Loans, net of discount (2)(3)(4)
     2,297,182
        35,241
6.17
    1,734,101
          22,656
5.30
Total interest-earning assets
     2,800,880
        38,183
5.48
    2,255,235
          25,378
4.56
Cash and due from banks
             9,822
    
            7,039
    
Bank premises and equipment
           21,289
    
          17,617
    
Other assets
        178,841
    
          90,409
    
Total non-interest earning assets
        209,952
    
        115,065
    
Total assets
     3,010,832
    
    2,370,300
    
LIABILITIES AND STOCKHOLDERS' EQUITY
            
Interest-bearing liabilities:
            
  NOW accounts
        799,968
           5,223
             2.63
        510,198
            1,517
       1.21
  Savings accounts
        302,091
              387
             0.52
        319,408
               206
       0.26
  Money market accounts
        381,042
           2,793
             2.95
        321,178
            1,274
       1.61
  Certificates of deposit
        422,420
           3,918
             3.73
        279,244
               942
       1.37
Total interest-bearing deposits
     1,905,521
        12,321
             2.60
    1,430,028
            3,939
       1.12
Other borrowed funds
        375,972
           4,654
             4.98
        299,119
            3,088
       4.19
Total interest-bearing liabilities
     2,281,493
        16,975
             2.99
    1,729,147
            7,027
       1.65
Demand deposits
        370,951
    
        375,003
    
Other liabilities
           49,488
    
          27,064
    
Total non-interest-bearing liabilities
        420,439
    
        402,067
    
Stockholders' equity
        308,900
    
        239,086
    
Total liabilities & stockholders' equity
     3,010,832
    
    2,370,300
    
Net interest income
  
        21,208
    
          18,351
  
Net interest spread (5)
    
2.49%
    
2.91%
Net interest income as a percentage
            
  of average interest-earning assets
    
3.05%
    
3.30%
Ratio of interest-earning assets
            
  to interest-bearing liabilities
    
123%
    
130%
             
(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)
          
 
March 31,
December 31,
September 30,
June 30,
March 31,
 
2024
2023
2023
2023
2023
Real estate:
          
  Residential
 $         357,779
 $      359,990
 $       356,381
 $      358,025
 $      212,793
  Commercial
         1,115,900
      1,092,887
      1,081,123
      1,080,513
         878,972
  Agricultural
            318,413
         314,802
          314,164
         312,302
         312,793
  Construction
            184,506
         195,826
          175,320
         156,927
           75,745
Consumer
              53,101
           61,316
          115,753
           42,701
           87,101
Other commercial loans
            129,438
         136,168
          120,347
         120,288
           64,133
Other agricultural loans
              24,345
           30,673
            26,648
           30,615
           32,052
State & political subdivision loans
              56,177
           57,174
            56,660
           61,471
           59,886
Total loans
         2,239,659
      2,248,836
      2,246,396
      2,162,842
      1,723,475
Less: allowance for credit losses - loans
              21,598
           21,153
            21,455
           21,652
           15,250
Net loans
 $     2,218,061
 $   2,227,683
 $   2,224,941
 $   2,141,190
 $   1,708,225
           
Past due and non-performing assets
          
           
Total Loans past due 30-89 days and still accruing
 $             6,311
 $        10,457
 $           5,960
 $          4,828
 $          1,336
           
Non-accrual loans
 $           14,693
 $        12,187
 $         13,139
 $        13,073
 $        10,404
Loans past due 90 days or more and accruing
                    820
                 516
                     8
                 139
                   48
Non-performing loans
 $           15,513
 $        12,703
 $         13,147
 $        13,212
 $        10,452
OREO
                    200
                 474
                 474
                 426
                 428
Total Non-performing assets
 $           15,713
 $        13,177
 $         13,621
 $        13,638
 $        10,880
           
           
           
 
Three Months Ended
      
Analysis of the Allowance for Credit Losses - Loans
March 31,
December 31,
September 30,
June 30,
March 31,
(In Thousands)
2024
2023
2023
2023
2023
Balance, beginning of period
 $           21,153
 $        21,455
 $         21,652
 $        15,250
 $        18,552
Impact of Adopting ASC 326
                         -
                     -
                      -
                     -
            (3,300)
Charge-offs
                  (674)
               (510)
               (808)
                   (4)
                   (7)
Recoveries
                         7
                     8
                   10
                   26
                     5
Net (charge-offs) recoveries
                  (667)
               (502)
               (798)
                   22
                   (2)
PCD allowance for credit loss at acquisition
                         -
                     -
                      -
             1,689
                     -
Provision for credit losses - loans
                 1,112
                 200
                 601
                 100
                     -
Provision for credit losses - acquisition day 1 non-PCD
                         -
                     -
                      -
             4,591
                     -
Balance, end of period
 $           21,598
 $        21,153
 $         21,455
 $        21,652
 $        15,250

CITIZENS FINANCIAL SERVICES, INC.
    
Reconciliation of GAAP and Non-GAAP Financial Measures
  
(UNAUDITED)
    
(Dollars in thousands, except per share data)
    
     
 
As of
 
March 31
 
2024
2023
Tangible Equity
    
Stockholders Equity - GAAP
 $         282,674
 $           213,238
Accumulated other comprehensive loss
               26,620
                26,762
Intangible Assets
            (89,208)
              (32,557)
Tangible Equity - Non-GAAP
            220,086
              207,443
Shares outstanding adjusted for June 2023 stock Dividend
         4,706,991
           4,010,258
Tangible Book value per share - Non-GAAP
 $              46.76
 $               51.73
     
 
As of
 
March 31
 
2024
2023
Tangible Equity per share
    
Stockholders Equity per share - GAAP
 $              60.05
 $               53.17
Adjustments for accumulated other comprehensive loss
                   5.66
                    6.68
Book value per share
                 65.71
                  59.85
Adjustment for intangible assets
               (18.95)
                  (8.12)
Tangible Book value per share - Non-GAAP
 $              46.76
 $               51.73
     
     
 
For the Three Months Ended
 
March 31
 
2024
2023
Return on Average Tangible Equity
    
Average Stockholders Equity - GAAP
 $         282,484
 $           207,873
Average Accumulated Other Comprehensive Loss
               26,416
                31,213
Average Intangible Assets
            (89,321)
              (32,608)
Average Tangible Equity - Non-GAAP
            219,579
              206,478
Net Income - GAAP
 $              7,024
 $               6,867
Annualized Return on Average Tangible Equity Non-GAAP
12.80%
13.30%
     
 
For the Three Months Ended
 
March 31
 
2024
2023
Return on Average Assets and Equity Excluding sale of Braavo assets, net of legal fees and  merger and acquisition costs
Net Income - GAAP
 $              7,024
 $               6,867
Boli death benefits
                          -
                          -
After tax gain on sale of Braavo, net of legal fees
                  (712)
                          -
After tax merger and acquisition costs
                          -
                     244
Net Income excluding merger and acquisition costs - Non-GAAP
 $              6,312
 $               7,111
Average Assets
         3,010,832
           2,370,300
Annualized Return on Average assets, Excluding sale of Braavo assets, net of legal fees and  merger and acquisition costs - Non-GAAP
0.84%
1.20%
     
Average Stockholders Equity - GAAP
 $         308,900
 $           239,086
Annualized Return on Average stockholders equity, Excluding sale of Braavo assets, net of legal fees and  merger and acquisition costs - Non-GAAP
8.17%
11.90%
     
Average Tangible Equity - Non-GAAP
            219,579
              206,478
Annualized Return on Average Tangible Equity  Excluding sale of Braavo assets, net of legal fees and  merger and acquisition costs - Non-GAAP
11.50%
13.78%
     
 
For the Three Months Ended
 
March 31
 
2024
2023
Earnings per share, Excluding sale of Braavo assets, net of legal fees and  merger and acquisition costs
Net Income - GAAP
 $              7,024
 $               7,875
Boli death benefits
                          -
  
After tax gain on sale of Braavo, net of legal fees
                  (712)
                          -
After Tax merger and acquisition costs
                          -
                     244
Net income excluding one time items - Non-GAAP
 $              6,312
 $               8,119
Number of shares used in computation - basic
         4,701,853
           4,005,375
Earnings per share, Excluding sale of Braavo assets, net of legal fees and  merger and acquisition costs - Non-GAAP
 $                1.34
 $                 2.03
     
     
 
For the Three Months Ended
 
March 31
Reconciliation of net interest income on fully taxable equivalent basis
2024
2023
Total interest income
 $           37,933
 $             25,107
Total interest expense
               16,975
                  7,027
Net interest income
               20,958
                18,080
Tax equivalent adjustment
                    250
                     271
Net interest income (fully taxable equivalent) - Non-GAAP
 $           21,208
 $             18,351