EX-99.1 2 secondqtrpressrelease2025.htm SECOND QUARTER 2025 PRESS RELEASE

Contact:  LEEANN GEPHART, CHIEF 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 second quarter 2025 financial results

MANSFIELD, PENNSYLVANIA— July 30, 2025 – 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 and six months ended June 30, 2025.

Highlights

•
Net income for the first six months of 2025 was $16.1 million, which was $3.8 million, or 30.8% more  than 2024’s net income through June 30, 2024 due to the increase in net interest income after the provision for credit losses of $5.8 million. The effective tax rate for the first six months of 2025 was 18.7% compared to 17.4% in the comparable period in 2024.

•
Net income was $8.5 million for the three months ended June 30, 2025, which was $3.2 million more than the net income for 2024’s comparable period due an increase in net interest income after the provision for credit losses of $3.6 million. The effective tax rate for the three months ended June 30, 2025 was 18.8% compared to 17.4% in the comparable period in 2024.

•
Net interest income before the provision for credit losses was $46.7 million for the six months ended June 30, 2025, an increase of $4,392,000, or 10.4%, over the same period a year ago and was primarily due to an increase in investment income and a decrease in interest expense.

•
The provision for credit losses for the three and six months ended June 30, 2025 was $750,000 and $1,375,000, respectively compared to $2,002,000 and $2,787,000 for the three and six months ended June 30, 2024, respectively. 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 HVB in 2023 prior to the acquisition and were current as of the acquisition date in 2023.  The provision for the three and six months ended June 30, 2024, directly attributable to these loans was $1,137,000 and $1,806,000, respectively.

•
Return on average equity for the three and six months (annualized) ended June 30, 2025 was 10.88% and 10.44% compared to 7.40% and 8.67% for the three and six months (annualized) ended June 30, 2024. If the provision for the credit losses attributable to the Braavo loans and the gain on the sale of Braavo were excluded, the return on average equity for the three and six months (annualized) ended June 30, 2024 would have been 8.66% and 9.17%, respectively (non-GAAP). (1)

•
Return on average tangible equity (non-GAAP) for the three and six months (annualized) ended June 30, 2025 was 15.19% and 14.65 compared to 10.76% and 12.64% for the three and six months (annualized) ended June 30, 2024. If the provision for the credit losses attributable to the Braavo loans and the gain on the sale of Braavo were excluded, the return on average tangible equity for the three and six months (annualized) ended June 30, 2024 would have been 12.59% and 13.37% (non-GAAP). (1)

•
Return on average assets for the three and six months (annualized) ended June 30, 2025 was 1.13% and 1.07% compared to 0.72% and 0.83% for the three and six months (annualized) ended June 30, 2024. If the provision for the credit losses attributable to the Braavo loans and the gain on the sale of Braavo were excluded, the return on average assets for the three and six months (annualized) ended June 30, 2024 would have been 0.84% and 0.88% (non-GAAP). (1)


•
Non-performing assets decreased $1,236,000 since December 31, 2024 and totaled $27,376,000 as of June 30, 2025, which is $9,452,000 higher than the balance as of June 30, 2024. The increase from June 30, 2024 is due to loans acquired as part of the HVB acquisition. The Bank’s strategy during 2024 for certain acquired loans was to either improve the credit metrics of the non-performing loans or have the customers refinance the loans with another institution or sell the underlying collateral. We continue to work with these customers on their ability to return to performing status or to pay-off the loan through a refinancing. The decrease since December reflects two large relationships being placed back on accrual status due to making contractual payments for at least six consecutive months. As a percent of loans, non-performing assets totaled 1.22%, 1.24% and 0.79% as of June 30, 2025, December 31, 2024 and June 30, 2024, respectively. While non-performing assets have increased significantly as of June 30, 2025 when compared to June 30, 2024, specific reserves for these assets have decreased from $2,405,000 to $1,477,000. The decrease in the specific reserves from June 2024 is due to the amount of charge-offs recorded in the second half of 2024 that were reserved for as of June 30, 2024.

Six Months Ended June 30, 2025 Compared to 2024

•
For the six months ended June 30, 2025, net income totaled $16,084,000 which compares to net income of $12,299,000 for the first six months of 2024, an increase of $3,785,000. Basic earnings per share of $3.35 for the first six months of 2025 compared to $2.56 for the first six months last year.  Annualized return on equity for the six months ended June 30, 2025 and 2024 was 10.44% and 8.67%, while annualized return on assets was 1.07% and 0.83%, respectively. The increase in performance when comparing 2025 to 2024 was due to an increase in the net interest margin from 3.09% to 3.36% and a decrease in the provision for credit losses.

•
Net interest income before the provision for credit loss for the six months ended June 30, 2025 totaled $46,650,000 compared to $42,258,000 for the six months ended June 30, 2024, resulting in an increase of $4,392,000, or 10.4%.  Average interest earning assets increased $49.5 million for the six months ended June 30, 2025 compared to the same period last year, primarily due to an increase in taxable investments and outstanding student loans. Average loans increased $36.6 million while average investment securities increased $19.2 million. The yield on interest earning assets increased 6 basis points to 5.58%, while the cost of interest-bearing liabilities decreased 24 basis points to 2.75%. As a result, the tax effected net interest margin increased from 3.09% for the six months ended June 30, 2024 to 3.36% for the six months ended June 30, 2025.

•
The provision for credit losses for the six months ended June 30, 2025 was $1,375,000 compared to $2,787,000 for the six months ended June 30, 2024, a decrease of $1,412,000.  The provision for 2025 was due to an increase in past due loans and the annual update of loss drivers, which includes historical loss data, as well as prepayment and curtailment speeds. 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 $7,092,000 for the six months ended June 30, 2025, which is $1,215,000 less than the non-interest income of $8,307,000 for the same period last year. 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 the six months ended June 30, 2025 totaled $32,575,000 compared to $32,889,000 for the same period last year, which is a decrease of $314,000. Salary and benefit costs increased $358,000 due to additional healthcare expenses and post-employment benefits. There are 11 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 $1,118,000 when comparing the six months ended June 30, 2025 to the same period in 2024 as a result of an increase in income before income tax of $4,903,000.

Three Months Ended June 30, 2025 Compared to 2024

•
For the three months ended June 30, 2025, net income totaled $8,463,000 which compares to net income of $5,275,000 for the comparable period of 2024, an increase of $3,188,000 or 60.4%.  Basic earnings per share of $1.76 for the three months ended June 30, 2025 compares to $1.10 for the 2024 comparable period. Annualized return on equity for the three months ended June 30, 2025 and 2024 was 10.88% and 7.40%, while annualized return on assets was 1.13% and 0.72%, respectively.

•
Net interest income before the provision for credit losses for the three months ended June 30, 2025 totaled $23,648,000 compared to $21,300,000 for the three months ended June 30, 2024, resulting in an increase of $2,348,000, or 11.0%. Average interest earning assets increased $47.0 million for the three months ended June 30, 2025 compared to the same period last year, primarily due to increases in the average balance of outstanding student loans and taxable investments. Average loans increased $24.4 million, while average investment securities increased $23.1 million. The tax effected net interest margin for the three months ended June 30, 2025 was 3.47% compared to 3.15% for the same period last year. The yield on interest earning assets increased eight basis points to 5.66%, while the cost of interest-bearing liabilities decreased 27 basis points to 2.73%.

•
The provision for credit losses for the second quarter of 2025 of $750,000 was driven by the increase in past due commercial loans, which primarily related to one commercial real estate relationship in our central Pennsylvania market that totaled $14.4 million. The provision for credit losses for 2024 period 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 $3,665,000 for the three months ended June 30, 2025, $329,000 more than the comparable period last year.  The primary drivers of the increase were an increase in the gains on loans sold of $260,000 and an increase in equity security gains of $120,000 due to market conditions.

•
Total non-interest expenses for the three months ended June 30, 2025 totaled $16,147,000 compared to $16,246,000 for the same period last year, which is a decrease of $99,000, or 0.6%. Salary and employee benefits increased due to healthcare costs, profit sharing, vacation costs and other post-retirement benefits. ORE expenses decreased due to the recovery of legal fees on certain loans in the second quarter of 2025.


•
The provision for income taxes increased $840,000 when comparing the three months ended June 30, 2025 to the same period in 2024. This increase was attributable to increase in income before provision for income taxes of $4,028,000.  The effective tax rate was 18.8% and 17.4% for the three months ended June 30, 2025 and 2024, respectively.

Balance Sheet and Other Information:

•
At June 30, 2025, total assets were $2.97 billion compared to $3.03 billion at December 31, 2024 and $2.95 billion at June 30, 2024. The loan to deposit ratio as of June 30, 2025 was 97.78% compared to 97.21% as of December 31, 2024 and 99.24% as of June 30, 2024.

•
Available for sale securities of $431.6 million at June 30, 2025 increased $5.7 million from December 31, 2024 and $29.0 million from June 30, 2024. The yield on the investment portfolio increased from 2.32% to 2.89% on a tax equivalent basis due to securities purchased during a higher market interest rate environment and lower yielding securities maturing. Investment activity for 2025 has focused on replacing securities as they mature.

•
Net loans totaled $2.22 billion at June 30, 2025 and $2.29 billion at December 31, 2024, a decrease of $71.9 million. As of June 30, 2024, net loans totaled $2.23 billion. The decrease in net loans since year end and last year was due to the seasonality of the Company’s student loan portfolio. This portfolio grows during the second half of the year and then pays down during the first half of the year. This seasonal behavior corresponds to the typical college semester and year.

•
The allowance for credit losses - loans totaled $22,109,000 at June 30, 2025 which is an  increase of $410,000 from December 31, 2024 and is due to increases in past due loans and changes in expected prepayment speeds and economic forecasts. The provision for credit losses on loans was $1,137,000 for the first half of 2025. Loan recoveries and charge-offs were $54,000 and $781,000, respectively, for the six months ended June 30, 2025. The allowance for credit losses as a percent of total loans was 0.99% as of June 30, 2025 and 0.94% as of December 31, 2024.

•
Deposits decreased $89.4 million from December 31, 2024, to $2.29 billion at June 30, 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 $68.3 million due to utilizing funds until they collect their local real estate taxes in the third quarter.

•
Borrowed funds totaled $313.2 million as of June 30, 2025, a $15.5 million increase from December 31, 2024 to fund the investment growth since year-end.

•
Stockholders’ equity totaled $313.7 million at June 30, 2025, compared to $299.7 million at December 31, 2024, an increase of $13.9 million. Excluding accumulated other comprehensive loss (AOCL), stockholders’ equity increased $11.4 million and totals $334.7 million (non-GAAP). The increase in stockholders’ equity was attributable to net income for the six months ended June 30, 2025 totaling $16.1 million, offset by cash dividends for the six months ended June 30, 2025 totaling $4.6 million. As a result of decreases in market interest rates impacting the fair value of investment securities and swaps, AOCL decreased $2.5 million from December 31, 2024.

Dividend Declared

On June 3, 2025, the Board of Directors declared a cash dividend of $0.495 per share, which was paid on June 27, 2025 to shareholders of record at the close of business on June 13, 2025. This quarterly cash dividend is an increase of 2.1% over the regular cash dividend of $0.480 per share declared one year ago, as adjusted for the 1% stock dividend declared in June 2025, payable on June 28, 2024 to shareholders of record at the close of business on June 13, 2025.

Citizens Financial Services, Inc. has nearly 1,850 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
Six Months Ended
 
June 30,
June 30,
 
2025
2024
2025
2024
Income and Performance Ratios
        
Net Income
 $              8,463
 $          5,275
 $          16,084
 $        12,299
Return on average assets (annualized)
1.13%
0.72%
1.07%
0.83%
Return on average equity (annualized)
10.88%
7.40%
10.44%
8.67%
Return on average tangible equity (annualized) (a)
15.19%
10.76%
14.65%
12.64%
Net interest margin (tax equivalent) (a)
3.47%
3.15%
3.36%
3.09%
Earnings per share - basic (b)
 $                1.76
 $            1.10
 $               3.35
 $            2.56
Earnings per share - diluted (b)
 $                1.76
 $            1.10
 $               3.35
 $            2.56
Cash dividends paid per share (b)
 $              0.490
 $          0.480
 $            0.980
 $          0.961
Number of shares used in computation - basic (b)
         4,797,716
      4,796,000
        4,797,642
      4,795,596
Number of shares used in computation - diluted (b)
         4,800,384
      4,800,770
        4,800,862
      4,800,991
         
         
Asset quality
        
Allowance for credit losses - loans
 $            22,109
 $        22,797
    
Non-performing assets
 $            27,376
 $        17,924
    
Allowance for credit losses - loans to total loans
0.99%
1.01%
    
Non-performing assets to total loans
1.22%
0.79%
    
Annualized net charge-offs to total loans
0.10%
0.12%
0.06%
0.12%
         
         
Equity
        
Book value per share (b)
 $              65.25
 $          59.60
    
Tangible Book value per share (a) (b)
 $              46.88
 $          41.08
    
Market Value per share (Last reported trade of month)
 $              58.72
 $          44.94
    
Common shares outstanding
         4,807,000
      4,759,486
    
         
         
Other
        
Average Full Time Equivalent Employees
381.4
389.7
380.6
391.9
Loan to Deposit Ratio
97.78%
99.24%
    
Trust assets under management
 $         188,844
 $      174,703
    
Brokerage assets under management
 $         416,923
 $      368,379
    
         
         
Balance Sheet Highlights
June 30,
December 31,
June 30,
  
 
2025
2024
2024
  
         
Assets
 $      2,967,274
 $   3,025,724
 $      2,947,531
  
Investment securities
             433,417
         427,659
             404,231
  
Loans (net of unearned income)
         2,241,755
      2,313,242
         2,255,716
  
Allowance for credit losses - loans
               22,109
           21,699
               22,797
  
Deposits
         2,292,662
      2,382,028
         2,273,095
  
Stockholders' Equity
             313,653
         299,734
             286,470
  
         
         
(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)
      
       
 
June 30,
December 31,
June 30,
(in thousands except share data)
2025
2024
2024
ASSETS:
      
Cash and due from banks:
      
  Noninterest-bearing
 $        26,799
 $       30,284
 $          22,023
  Interest-bearing
           22,685
          11,918
             16,410
Total cash and cash equivalents
           49,484
          42,202
             38,433
       
Interest bearing time deposits with other banks
             3,820
           3,820
              3,820
       
Equity securities
             1,768
           1,747
              1,570
       
Available-for-sale securities
         431,649
        425,912
           402,661
       
Loans held for sale
           15,529
           9,607
             14,227
       
Loans (net of allowance for credit losses - loans: $22,109 at June 30, 2025;
      
    $21,699 at December 31, 2024 and $22,797 at June 30, 2024)
      2,219,646
     2,291,543
        2,232,919
       
Premises and equipment
           21,776
          21,395
             20,899
Accrued interest receivable
           10,603
          10,307
             10,782
Goodwill
           85,758
          85,758
             85,758
Bank owned life insurance
           50,770
          50,341
             49,746
Other intangibles
             2,530
           2,892
              3,244
Fair value of derivative instruments - asset
             8,272
          10,370
             13,111
Deferred tax asset
           13,913
          15,199
             17,185
Other assets
           51,756
          54,631
             53,176
       
TOTAL ASSETS
 $   2,967,274
 $  3,025,724
 $     2,947,531
       
LIABILITIES:
      
Deposits:
      
  Noninterest-bearing
 $      499,252
 $     532,776
 $        501,991
  Interest-bearing
      1,793,410
     1,849,252
        1,771,104
Total deposits
      2,292,662
     2,382,028
        2,273,095
Borrowed funds
         313,219
        297,721
           334,829
Accrued interest payable
             2,741
           4,693
              5,482
Fair value of derivative instruments - liability
             4,701
           5,817
              7,319
Other liabilities
           40,298
          35,731
             40,336
TOTAL LIABILITIES
      2,653,621
     2,725,990
        2,661,061
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 June 30, 2025, December 31, 2024 and
  
  June 30, 2024: issued 5,255,190 at June 30, 2025 and 5,207,577 at December 31, 2024
  
  and 5,207,343 at June 30, 2024
             5,255
           5,208
              5,207
Additional paid-in capital
         147,878
        144,984
           144,985
Retained earnings
         197,940
        189,443
           178,588
Accumulated other comprehensive loss
          (21,026)
        (23,521)
           (25,932)
Treasury stock, at cost:  448,190 at June 30, 2025 and 447,965 shares
      
  at December 31, 2024 and 447,857 shares at June 30, 2024
          (16,394)
        (16,380)
           (16,378)
TOTAL STOCKHOLDERS' EQUITY
         313,653
        299,734
           286,470
TOTAL LIABILITIES AND
      
   STOCKHOLDERS' EQUITY
 $   2,967,274
 $  3,025,724
 $     2,947,531

CITIZENS FINANCIAL SERVICES, INC.
        
CONSOLIDATED STATEMENT OF INCOME
      
(UNAUDITED)
        
 
Three Months Ended
Six Months Ended
 
June 30,
June 30,
(in thousands, except share and per share data)
2025
2024
2025
2024
INTEREST INCOME:
        
Interest and fees on loans
 $     35,227
 $      35,067
 $     70,783
 $    70,200
Interest-bearing deposits with banks
             132
             262
             275
           505
Investment securities:
        
    Taxable
          2,397
           1,663
          4,736
         3,287
    Nontaxable
             584
             520
          1,131
         1,052
    Dividends
             409
             390
             838
           791
TOTAL INTEREST INCOME
        38,749
         37,902
        77,763
       75,835
INTEREST EXPENSE:
        
Deposits
        11,449
         12,655
        23,743
       24,976
Borrowed funds
          3,652
           3,947
          7,370
         8,601
TOTAL INTEREST EXPENSE
        15,101
         16,602
        31,113
       33,577
NET INTEREST INCOME
        23,648
         21,300
        46,650
       42,258
Provision for credit losses
             750
           2,002
          1,375
         2,787
NET INTEREST INCOME AFTER
        
    PROVISION FOR CREDIT LOSSES
        22,898
         19,298
        45,275
       39,471
NON-INTEREST INCOME:
        
Service charges
          1,303
           1,385
          2,594
         2,757
Trust
             183
             201
             407
           445
Brokerage and insurance
             627
             563
          1,310
         1,228
Gains on loans sold
             739
             479
          1,011
           896
Equity security gains (losses), net
               33
              (87)
               22
            (32)
Earnings on bank owned life insurance
             355
             328
             701
           996
Gain on sale of Braavo division
                 -
                 -
                 -
         1,102
Other
             425
             467
          1,047
           915
TOTAL NON-INTEREST INCOME
          3,665
           3,336
          7,092
         8,307
NON-INTEREST EXPENSES:
        
Salaries and employee benefits
          9,976
           9,617
        20,265
       19,907
Occupancy
          1,182
           1,266
          2,538
         2,590
Furniture and equipment
             318
             295
             583
           531
Professional fees
             525
             698
          1,042
         1,401
FDIC insurance expense
             495
             509
             945
         1,034
Pennsylvania shares tax
             305
             330
             624
           640
Amortization of intangibles
             127
             147
             254
           296
Software expenses
             453
             494
             885
         1,008
Other real estate owned expenses
               73
             175
             192
           162
Other
          2,693
           2,715
          5,247
         5,320
TOTAL NON-INTEREST EXPENSES
        16,147
         16,246
        32,575
       32,889
Income before provision for income taxes
        10,416
           6,388
        19,792
       14,889
Provision for income tax expense
          1,953
           1,113
          3,708
         2,590
NET INCOME
 $       8,463
 $        5,275
 $     16,084
 $    12,299
         
PER COMMON SHARE DATA:
        
Net Income - Basic
 $         1.76
 $          1.10
 $         3.35
 $        2.56
Net Income - Diluted
 $         1.76
 $          1.10
 $         3.35
 $        2.56
Cash Dividends Paid
 $       0.490
 $        0.480
 $       0.980
 $      0.961
         
Number of shares used in computation - basic
   4,797,716
    4,796,000
   4,797,642
  4,795,596
Number of shares used in computation - diluted
   4,800,384
    4,800,770
   4,800,862
  4,800,991

CITIZENS FINANCIAL SERVICES, INC.
          
QUARTERLY CONDENSED, CONSOLIDATED INCOME STATEMENT INFORMATION
        
(UNAUDITED)
          
(in thousands, except per share data)
Three Months Ended,
 
June 30,
March 31,
Dec 31,
Sept 30,
June 30,
 
2025
2025
2024
2024
2024
Interest income
 $     38,749
 $      39,014
 $      39,793
 $      38,689
 $      37,902
Interest expense
        15,101
         16,012
         16,920
         17,365
         16,602
Net interest income
        23,648
         23,002
         22,873
         21,324
         21,300
Provision (release) for credit losses
              750
               625
                   -
             (200)
           2,002
Net interest income after provision (release) for credit losses
        22,898
         22,377
         22,873
         21,524
         19,298
Non-interest income
          3,632
           3,438
           3,321
           3,596
           3,423
Investment securities gains (losses), net
                33
               (11)
                 18
               159
               (87)
Non-interest expenses
        16,147
         16,428
         16,668
         16,029
         16,246
Income before provision for income taxes
        10,416
           9,376
           9,544
           9,250
           6,388
Provision for income tax expense
          1,953
           1,755
           1,561
           1,714
           1,113
Net income
 $       8,463
 $        7,621
 $        7,983
 $        7,536
 $        5,275
Earnings Per Share - Basic
 $         1.76
 $          1.59
 $          1.66
 $          1.57
 $          1.10
Earnings Per Share - Diluted
 $         1.76
 $          1.59
 $          1.66
 $          1.57
 $          1.10

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 June 30,
 
2025
    
2024
    
 
Average
  
Average
Average
  
Average
 
Balance (1)
Interest
Rate
Balance (1)
Interest
Rate
(dollars in thousands)
$
$
%
$
$
%
Interest-bearing deposits at banks
           17,879
              102
2.31
          18,353
               232
5.11
Interest bearing time deposits at banks
             3,820
                30
3.18
            3,820
                 30
3.16
Investment securities:
            
  Taxable
        381,141
           2,806
2.95
        355,321
            2,053
2.31
  Tax-exempt (3)
        102,694
              739
2.88
        105,379
               658
2.50
Investment securities
        483,835
           3,545
2.93
        460,700
            2,711
2.35
Loans: (2)(3)(4)
            
  Residential mortgage loans
        347,408
           5,212
6.08
        358,448
            5,232
5.87
  Construction loans
        165,056
           2,967
7.29
        184,103
            3,367
7.36
  Commercial Loans
     1,269,944
        19,956
6.37
    1,251,484
          20,154
6.48
  Agricultural Loans
        358,245
           4,970
5.63
        346,107
            4,482
5.21
  Loans to state & political subdivisions
           53,051
              517
3.95
          56,290
               556
3.97
  Other loans
           95,901
           1,706
7.21
          68,805
            1,383
8.08
  Loans, net of discount (2)(3)(4)
     2,289,605
        35,328
6.26
    2,265,237
          35,174
6.25
Total interest-earning assets
     2,795,139
        39,005
5.66
    2,748,110
          38,147
5.58
Cash and due from banks
             9,665
    
            9,199
    
Bank premises and equipment
           21,836
    
          21,053
    
Other assets
        184,184
    
        195,528
    
Total non-interest earning assets
        215,685
    
        225,780
    
Total assets
     3,010,824
    
    2,973,890
    
LIABILITIES AND STOCKHOLDERS' EQUITY
            
Interest-bearing liabilities:
            
  Business Interest Checking
           18,345
                45
             0.99
                    -
                    -
           -
  NOW accounts
        707,715
           3,742
             2.14
        766,142
            4,776
       2.51
  Savings accounts
        288,198
              329
             0.46
        299,318
               391
       0.53
  Money market accounts
        447,711
           3,181
             2.88
        381,377
            2,972
       3.13
  Certificates of deposit
        454,893
           4,152
             3.70
        457,570
            4,516
       3.97
Total interest-bearing deposits
     1,916,862
        11,449
             2.42
    1,904,407
          12,655
       2.67
Other borrowed funds
        329,154
           3,652
             4.50
        324,736
            3,947
       4.89
Total interest-bearing liabilities
     2,246,016
        15,101
             2.73
    2,229,143
          16,602
       3.00
Demand deposits
        390,102
    
        382,312
    
Other liabilities
           41,369
    
          49,051
    
Total non-interest-bearing liabilities
        431,471
    
        431,363
    
Stockholders' equity
        333,337
    
        313,384
    
Total liabilities & stockholders' equity
     3,010,824
    
    2,973,890
    
Net interest income
  
        23,904
    
          21,545
  
Net interest spread (5)
    
2.93%
    
2.58%
Net interest income as a percentage
            
  of average interest-earning assets
    
3.47%
    
3.15%
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 AVERAGE BALANCES, INTEREST, YIELDS AND RATES, AND NET INTEREST MARGIN ON A FULLY TAX-EQUIVALENT BASIS
(UNAUDITED)
            
 
Six Months Ended June 30,
 
2025
    
2024
    
 
Average
  
Average
Average
  
Average
 
Balance (1)
Interest
Rate
Balance (1)
Interest
Rate
(dollars in thousands)
$
$
%
$
$
%
ASSETS
            
Interest-bearing deposits at banks
        24,052
              216
1.81
          30,119
               445
2.97
Interest bearing time deposits at banks
           3,820
                59
3.11
            3,937
                 60
3.06
Investment securities:
            
  Taxable
      381,886
           5,574
2.92
        359,142
            4,078
2.27
  Tax-exempt (3)
      102,854
           1,431
2.78
        106,438
            1,332
2.50
Investment securities
      484,740
           7,005
2.89
        465,580
            5,410
2.32
Loans: (2)(3)(4)
            
  Residential mortgage loans
      349,226
        10,312
5.95
        358,472
          10,291
5.77
  Construction loans
      164,252
           5,888
7.23
        187,001
            6,858
7.38
  Commercial Loans
   1,262,225
        39,383
6.29
    1,243,546
          39,674
6.42
  Agricultural Loans
      357,561
           9,696
5.47
        345,287
            8,887
5.18
  Loans to state & political subdivisions
        53,389
           1,034
3.91
          56,469
            1,106
3.94
  Other loans
      130,147
           4,674
7.24
          89,472
            3,599
8.09
  Loans, net of discount (2)(3)(4)
   2,316,800
        70,987
6.18
    2,280,247
          70,415
6.21
Total interest-earning assets
   2,829,412
        78,267
5.58
    2,779,883
          76,330
5.52
Cash and due from banks
           9,643
    
            9,511
    
Bank premises and equipment
        21,691
    
          21,171
    
Other assets
      177,531
    
        181,792
    
Total non-interest earning assets
      208,865
    
        212,474
    
Total assets
   3,038,277
    
    2,992,357
    
LIABILITIES AND STOCKHOLDERS' EQUITY
            
Interest-bearing liabilities:
            
  Business Interest Checking
        17,995
                85
             0.95
                    -
                    -
          -
  NOW accounts
      723,673
           7,796
             2.17
        783,055
            9,999
      2.57
  Savings accounts
      290,576
              677
             0.47
        300,704
               778
      0.52
  Money market accounts
      432,891
           6,206
             2.89
        381,209
            5,765
      3.04
  Certificates of deposit
      481,272
           8,979
             3.76
        439,995
            8,434
      3.86
Total interest-bearing deposits
   1,946,407
        23,743
             2.46
    1,904,963
          24,976
      2.64
Other borrowed funds
      337,737
           7,370
             4.40
        350,354
            8,601
      4.94
Total interest-bearing liabilities
   2,284,144
        31,113
             2.75
    2,255,317
          33,577
      2.99
Demand deposits
      381,048
    
        376,632
    
Other liabilities
        42,426
    
          49,266
    
Total non-interest-bearing liabilities
      423,474
    
        425,898
    
Stockholders' equity
      330,659
    
        311,142
    
Total liabilities & stockholders' equity
   3,038,277
    
    2,992,357
    
Net interest income
  
        47,154
    
          42,753
  
Net interest spread (5)
    
2.83%
    
2.53%
Net interest income as a percentage
            
  of average interest-earning assets
    
3.36%
    
3.09%
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)
          
 
June 30,
March 31,
December 31,
September 30,
June 30,
 
2025
2025
2024
2024
2024
Real estate:
          
  Residential
 $         341,671
 $        350,221
 $       351,398
 $      353,254
 $      354,588
  Commercial
         1,151,585
       1,117,240
      1,121,435
      1,110,548
      1,110,269
  Agricultural
            331,995
           329,985
          327,722
         331,734
         327,057
  Construction
            138,307
           168,896
          164,326
         178,706
         180,157
Consumer
              46,933
           129,943
          133,207
         143,064
           70,542
Other commercial loans
            150,171
           137,529
          131,310
         134,285
         130,851
Other agricultural loans
              28,366
             28,488
            29,662
           24,537
           26,247
State & political subdivision loans
              52,727
             53,361
            54,182
           54,874
           56,005
Total loans
         2,241,755
       2,315,663
      2,313,242
      2,331,002
      2,255,716
Less: allowance for credit losses - loans
              22,109
             22,081
            21,699
           21,695
           22,797
Net loans
 $     2,219,646
 $    2,293,582
 $   2,291,543
 $   2,309,307
 $   2,232,919
           
Past due and non-performing assets
          
           
Total Loans past due 30-89 days and still accruing
 $           18,554
 $            9,632
 $           8,015
 $          7,423
 $        20,652
           
Non-accrual loans
 $           24,595
 $          23,545
 $         25,701
 $        20,858
 $        14,949
Loans past due 90 days or more and accruing
                    347
               1,393
                 276
                 701
                 285
Non-performing loans
 $           24,942
 $          24,938
 $         25,977
 $        21,559
 $        15,234
Other real estate owned
                 2,434
               2,544
              2,635
             2,486
             2,690
Total Non-performing assets
 $           27,376
 $          27,482
 $         28,612
 $        24,045
 $        17,924
           
           
           
 
Three Months Ended
Analysis of the Allowance for Credit Losses - Loans
June 30,
March 31,
December 31,
September 30,
June 30,
(In Thousands)
2025
2025
2024
2024
2024
Balance, beginning of period
 $           22,081
 $          21,699
 $         21,695
 $        22,797
 $        21,598
Charge-offs
                  (596)
                (185)
               (105)
            (1,212)
               (682)
Recoveries
                      25
                    29
                   19
                   10
                     7
Net charge-offs
                  (571)
                (156)
                 (86)
            (1,202)
               (675)
Provision for credit losses - loans
                    599
                  538
                   90
                 100
             1,874
Balance, end of period
 $           22,109
 $          22,081
 $         21,699
 $        21,695
 $        22,797

CITIZENS FINANCIAL SERVICES, INC.
        
Reconciliation of GAAP and Non-GAAP Financial Measures
      
(UNAUDITED)
        
(Dollars in thousands, except per share data)
        
         
 
As of
    
 
June 30
    
 
2025
2024
    
Tangible Equity
        
Stockholders Equity - GAAP
 $         313,653
 $           286,470
    
Intangible Assets
            (88,288)
              (89,002)
    
Tangible Equity - Non-GAAP
            225,365
              197,468
    
Shares outstanding adjusted for June 2024 stock Dividend
         4,807,000
           4,806,559
    
Tangible Book value per share - Non-GAAP
 $              46.88
 $               41.08
    
         
 
As of
    
 
June 30
    
 
2025
2024
    
Tangible Equity per share
        
Stockholders Equity per share - GAAP
 $              65.25
 $               59.60
    
Adjustment for intangible assets
               (18.37)
                (18.52)
    
Tangible Book value per share - Non-GAAP
 $              46.88
 $               41.08
    
         
         
 
For the Three Months Ended
For the Six Months Ended
 
June 30,
June 30,
 
2025
2024
2025
2024
Return on Average Assets Excluding Accumulated Other Comprehensive Loss (AOCL)
    
Average Assets - GAAP
 $      2,988,727
 $        2,945,690
 $           3,015,695
 $      2,965,049
Average AOCL
            (22,098)
              (28,200)
                 (22,581)
             (27,308)
Average Assets, Excluding AOCL - Non-GAAP
         3,010,825
           2,973,890
              3,038,276
         2,992,357
Net Income - GAAP
 $              8,463
 $               5,275
 $                16,084
 $           12,299
Annualized Return on Average Assets-GAAP
1.13%
0.72%
1.07%
0.83%
Annualized Return on Average Assets, Excluding AOCL - Non-GAAP
1.12%
0.71%
1.06%
0.82%
         
 
For the Three Months Ended
For the Six Months Ended
 
June 30,
June 30,
 
2025
2024
2025
2024
Return on Average Equity Excluding Accumulated Other Comprehensive Loss (AOCL)
    
Average Stockholders Equity - GAAP
 $         311,239
 $           285,184
 $              308,078
 $         283,834
Average AOCL
            (22,098)
              (28,200)
                 (22,581)
             (27,308)
Average Stockholder's Equity, Excluding AOCL - Non-GAAP
            333,337
              313,384
                 330,659
            311,142
Net Income - GAAP
 $              8,463
 $               5,275
 $                16,084
 $           12,299
Annualized Return on Average Stockholder's Equity-GAAP
10.88%
7.40%
10.44%
8.67%
Annualized Return on Average Stockholder's Equity, Excluding AOCL - Non-GAAP
10.16%
6.73%
9.73%
7.91%
         
 
For the Three Months Ended
For the Six Months Ended
 
June 30,
June 30,
 
2025
2024
2025
2024
Return on Average Tangible Equity
        
Average Stockholders Equity - GAAP
 $         311,239
 $           285,184
 $              308,078
 $         283,834
Average Intangible Assets
            (88,388)
              (89,119)
                 (88,479)
             (89,220)
Average Tangible Equity - Non-GAAP
            222,851
              196,065
                 219,599
            194,614
Net Income - GAAP
 $              8,463
 $               5,275
 $                16,084
 $           12,299
Annualized Return on Average Tangible Equity Non-GAAP
15.19%
10.76%
14.65%
12.64%
         
 
For the Three Months Ended
For the Six Months Ended
 
June 30,
June 30,
 
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
 $              8,463
 $               5,275
 $                16,084
 $           12,299
After tax gain on sale of Braavo, net of legal fees
                          -
                          -
                               -
                  (712)
After tax provisision associatated with Braavo loans remaining after sale
                          -
                     898
                               -
                1,427
Net Income excluding sale of Braavo assets, net of legal fees and provision associated with Braavo loans remaining after sale - Non-GAAP
 $              8,463
 $               6,173
 $                16,084
 $           13,014
Average Assets
         2,988,727
           2,945,690
              3,015,695
         2,965,049
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
1.13%
0.84%
1.07%
0.88%
         
Average Stockholders Equity - GAAP
 $         311,239
 $           285,184
 $              308,078
 $         283,834
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
10.88%
8.66%
10.44%
9.17%
         
Average Tangible Equity - Non-GAAP
            222,851
              196,065
                 219,599
            194,614
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
15.19%
12.59%
14.65%
13.37%
         
 
For the Three Months Ended
For the Six Months Ended
 
June 30,
June 30,
 
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
 $              8,463
 $               5,275
 $                16,084
 $           12,299
After tax gain on sale of Braavo, net of legal fees
                          -
                          -
                               -
                  (712)
After tax provisision associatated with Braavo loans remaining after sale
                          -
                     898
                               -
                1,427
Net income excluding one time items - Non-GAAP
 $              8,463
 $               6,173
 $                16,084
 $           13,014
Number of shares used in computation - basic
         4,797,716
           4,796,000
              4,797,642
         4,795,596
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
 $                1.76
 $                 1.29
 $                     3.35
 $               2.71
         
         
 
For the Three Months Ended
For the Six Months Ended
 
June 30,
June 30,
Reconciliation of net interest income on fully taxable equivalent basis
2025
2024
2025
2024
Total interest income
 $           38,749
 $             37,902
 $                77,763
 $           75,835
Total interest expense
               15,101
                16,602
                    31,113
              33,577
Net interest income
               23,648
                21,300
                    46,650
              42,258
Tax equivalent adjustment
                    256
                     245
                         504
                    495
Net interest income (fully taxable equivalent) - Non-GAAP
 $           23,904
 $             21,545
 $                47,154
 $           42,753