XML 33 R24.htm IDEA: XBRL DOCUMENT v3.23.3
Acquisition of HV Bancorp, Inc. (Tables)
 9 Months Ended
Sep. 30, 2023
Acquisition of HV Bancorp, Inc. [Abstract]  
Net Assets Acquired and Consideration Transferred

The following table summarizes the purchase of HVBC as of June 16, 2023:

(In Thousands, Except Per Share Data)
            
Purchase Price Consideration in Common Stock
            
Citizens Financial Services, Inc. shares issued
    
693,858
        
Value assigned to Citizens Financial Services, Inc. common share
  
$
86.67
        
Purchase price assigned to HVBC common shares exchanged for Citizens Financial Services, Inc.
          
$
60,137
  
Purchase Price Consideration - Cash for Common Stock
                
Purchase price assigned to HVBC’s common shares exchanged for cash
            
13,112
  
Purchase Price Related to Cash Payout of Stock Options
            
3,416
  
Total Purchase Price
            
76,665
  
Net Assets Acquired:
                
HVBC shareholders’ equity
  
$
40,630
          
Adjustments to reflect assets acquired at fair value:
                
Investments
    
31
          
Loans
                
Interest rate
    
(24,097
)
        
General credit
    
(1,834
)
        
Credit - PCD Loans
    
(2,042
)
        
Core deposit intangible
    
2,770
          
Owned premises
    
67
          
Other assets
    
(193
)
        
Deferred tax assets
    
3,737
          
Adjustments to reflect liabilities acquired at fair value:
                
Time deposits
    
586
          
Borrowings
    
3,017
          
Other liabilities
    
611
          
             
23,283
  
Goodwill resulting from merger
          
$
53,382
  


The following condensed statement reflects the amounts recognized as of the acquisition date for each major class of asset acquired and liability assumed:



(In Thousands, Except Per Share Data)
            
Total purchase price
          
76,665
  
Fair value of assets acquired
              
Cash and due from banks
    
18,017
          
Investment securities
    
79,248
          
Loans held for sale
    
10,750
          
Loans
    
475,338
          
Premises and equipment
    
2,310
          
Intangible assets
    
2,972
          
Bank owned life insurance
    
10,387
          
Interest receivable
    
2,226
          
Deferred taxes
    
8,392
          
Other assets
    
18,213
          
Total assets acquired
    
627,853
          
Fair value of liabilities assumed
                
Deposits
    
533,364
          
Borrowings
    
58,647
          
Accrued interest payable
    
885
          
Other liabilities
    
11,674
          
Total liabilities assumed
    
604,570
          
Total fair value of identifiable net assets
            
23,283
  
Goodwill resulting from merger
            
53,382
  

Fair Value of Acquired PCD Loans

The following table provides details related to the fair value of acquired PCD loans (in thousands):

 
  
Unpaid
principal
balance
    
PCD Allowance for
Credit Loss at
Acquisition
    
(Discount)
Premium on
Acquired Loans
    
Fair Value of
PCD Loans at
Acquisition
  
Real estate loans:
                        
     Mortgages
  
$
2,398
    
$
(108
)
  
$
-
    
$
2,290
  
     Home Equity
    
34
      
-
      
(4
)
    
30
  
     Commercial
    
4,774
      
(39
)
    
(507
)
    
4,228
  
     Construction
    
4,278
      
(37
)
    
(293
)
    
3,948
  
Consumer
    
1,343
      
(677
)
    
(271
)
    
395
  
Other commercial loans
    
5,214
      
(828
)
    
(48
)
    
4,338
  
 
  
$
18,041
    
$
(1,689
)
  
$
(1,123
)
  
$
15,229
  
Fair Value of Acquired Non-PCD Loans

The following table provides details related to the fair value and Day 1 provision related to the acquired non-PCD loans (in thousands):

 
  
Unpaid principal
balance
    
(Discount)Premium on
Acquired Loans
    
Fair Value of Non-PCD
Loans at Acquisition
    
Day 1 Provision for Credit
Losses- Non-PCD Loans
  
Real estate loans:
                        
     Mortgages
  
$
155,799
    
$
(17,506
)
  
$
138,293
    
$
1,015
  
     Home Equity
    
2,165
      
(55
)
    
2,110
      
15
  
     Commercial
    
203,638
      
(9,226
)
    
194,412
      
1,968
  
     Construction
    
76,703
      
(1,420
)
    
75,283
      
747
  
Consumer
    
2,794
      
(222
)
    
2,572
      
159
  
Other commercial loans
    
47,753
      
(314
)
    
47,439
      
687
  
 
  
$
488,852
    
$
(28,743
)
  
$
460,109
    
$
4,591
  
Pro Forma Information

The following table presents financial information regarding the former HVBC operations included in our Consolidated Statement of Income from the date of acquisition through September 30, 2023 under the column “Actual from Acquisition Date through September 30, 2023”.  In addition, the following table presents unaudited pro forma information as if the acquisition of HVBC had occurred on January 1, 2022 under the “Pro Forma” columns.  The table below has been prepared for comparative purposes only and is not necessarily indicative of the actual results that would have been attained had the acquisition occurred as of the beginning of the periods presented, nor is it indicative of future results. Furthermore, the unaudited proforma information does not reflect management’s estimate of any revenue-enhancing opportunities nor anticipated cost savings as a result of the integration and consolidation of the acquisition.  Merger and acquisition integration costs and amortization of fair value adjustments are included in the numbers below.

 
      
Actual from Acquisition Date
Through September 30, 2023
    
Unaudited Pro Forma for
  
 
      
Three Months Ended
    
Nine Months Ended
  
 
      
September 30,
    
September 30,
  
(In Thousands, Except Per Share Data)
      
2023
    
2022
    
2023
    
2022
  
Net interest income
  
$
8,046
    
$
21,775
    
$
25,369
    
$
68,025
    
$
70,329
  
Non-interest income
    
600
      
3,797
      
4,372
      
10,502
      
14,638
  
Net income
    
3,140
      
7,061
   
9,070
      
8,008
      
22,652
  
Pro forma earnings per share:
                                        
Basic
          
$
1.31
 
$
1.93
      
1.61
    
$
4.82
  
Diluted
          
$
1.31
 
$
1.93
    
$
1.61
    
$
4.82