/C O R R E C T I O N -- CITIZENS FINANCIAL SERVICES, INC./
In the news release, CITIZENS FINANCIAL SERVICES, INC. REPORTS UNAUDITED FULL YEAR AND FOURTH QUARTER 2023 FINANCIAL RESULTS, issued 30-Jan-2024 by CITIZENS FINANCIAL SERVICES, INC. over PR Newswire, two earnings tables titled "CONSOLIDATED SUMMARY OF LOANS BY TYPE; NON-PERFORMING ASSETS; and ALLOWANCE FOR CREDIT LOSSES" and "Reconciliation of GAAP and Non-GAAP Financial Measures" were omitted from the release as incorrectly transmitted by PR Newswire. The complete, corrected release follows:
CITIZENS FINANCIAL SERVICES, INC. REPORTS UNAUDITED FULL YEAR AND FOURTH QUARTER 2023 FINANCIAL RESULTS
MANSFIELD, Pa., Jan. 30, 2024 /PRNewswire/ -- Citizens Financial Services, Inc. (Nasdaq: CZFS), parent company of First Citizens Community Bank, released today its unaudited consolidated financial results for the three months and year ended December 31, 2023.
Highlights
During the fourth quarter of 2023, we continued to integrate the assets and employees acquired as part of the acquisition of HV Bancorp, Inc. ("HVB") into the Company. We continue to be excited by the opportunities these markets and individuals represent for the Company. The acquisition of HVB in the first half of 2023 contributed significant growth to net interest income in the second half of 2023. Merger and acquisitions costs for 2023 total $9.3 million. The provision for credit losses on non-purchase credit deteriorated loans (the "NPC Provision") was $4.6 million for 2023.
Net income was $17.8 million for 2023, which is $11.3 million, or 38.7% lower than 2022's net income due to the one-time merger and acquisition costs and the NPC Provision. The effective tax rate for 2023 was 17.2% compared to 18.1% in 2022.
Net income was $7.5 million for the three months ended December 31, 2023, which is 4.3% lower than the net income for 2022's comparable period. The effective tax rate for the three months ended December 31, 2023 was 18.3% compared to 18.8% in the comparable period in 2022.
Net interest income before the provision for credit losses was $80.3 million for 2023, an increase of $8.1 million, or 11.3%, over 2022.
Return on average equity for the three months (annualized) and the year ended December 31, 2023 was 9.93% and 6.52% compared to 13.58% and 12.98% for the three months (annualized) and the year ended December 31, 2022, respectively. If the death benefits received from life insurance on a former employee, the one-time costs associated with the acquisition and the NPC Provision are excluded, the return on average equity for the year ended December 31, 2023 and 2022 would have been 10.52% and 13.11%, respectively (1).
Return on average tangible equity (non-GAAP) for the three months (annualized) and the year ended December 31, 2023 was 14.00% and 8.47% compared to 15.80% and 15.20% for the three months (annualized) and the year ended December 31, 2022, respectively. If the death benefits received from life insurance on a former employee, the one-time costs associated with the acquisition and the NPC Provision are excluded, the return on average tangible equity for 2023 and 2022 would have been 13.67% and 15.36%, respectively. (1)
Return on average assets for the three months (annualized) and the year ended December 31, 2023 was 1.00% and 0.66% compared to 1.34% and 1.29% for the three months (annualized) and the year ended December 31, 2022, respectively. If the death benefits received from life insurance on a former employee, the one-time costs associated with the acquisition and the NPC Provision are excluded, the return on average assets for 2023 and 2022 would have been 1.07% and 1.30%, respectively (1).
2023 Compared to 2022
For 2023, net income totaled $17,811,000 which compares to net income of $29,060,000 for 2022, a decrease of $11,249,000. Basic and diluted earnings per share of $4.06 for 2023 compares to $7.25 for 2022. Return on equity 2023 and 2022 was 6.52% and 12.98%, while return on assets was 0.66% and 1.29%, respectively. If the death benefits received from life insurance on a former employee, the one-time costs associated with the acquisition and the NPC Provision are excluded, basic earnings per share, the annualized return on average equity and average assets for 2023 would be $6.56, 10.52% and 1.07%, respectively, compared to $7.32, 13.11% and 1.30%, respectively for 2022. (1)
Net interest income before the provision for credit loss for 2023 totaled $80,260,000 compared to $72,134,000 for 2022, resulting in an increase of $8,126,000, or 11.3%. Average interest earning assets increased $382.4 million 2023 compared to 2022, primarily due to the HVB acquisition. Average loans increased $410.7 million while average investment securities increased $3.0 million. The yield on interest earning assets increased 1.14% to 5.07%, while the cost of interest-bearing liabilities increased 165 basis points to 2.34% due to the rise in market interest rates and competitive pressure. The tax effected net interest margin for 2023 was 3.21% compared to 3.41% for 2022.
The provision for credit losses for 2023 was $5,528,000 compared to $1,683,000 for 2022, an increase of $3,845,000. As a result of the acquisition, the Company recorded a $4.6 million provision for credit losses for loans acquired that did not have any credit deterioration at the time of acquisition. Excluding the impact of the acquisition, the provision would have decreased $746,000 when comparing 2023 to 2022 with the decrease being attributable to lower loan growth in 2023 compared to 2022.
Total non-interest income was $11,605,000 for 2023, which is $1,867,000 more than the non-interest income of $9,738,000 for 2022. The primary driver was revenues associated with the HVB acquisition, which includes additional service charge revenue, earnings on bank owned life insurance and gains on loans sold. In addition to the earnings on bank owned life insurance obtained as part of the acquisition, the Company received $195,000 of death benefits upon the passing of a former employee.
Total non-interest expenses for 2023 totaled $64,822,000 compared to $44,694,000 for 2022, which is an increase of $20,128,000, or 45.0%. The primary driver of the increase is the merger and acquisition costs of completing the HVB acquisition that total $9,269,000 for 2023 compared to $292,000 for 2022. Merger and acquisitions costs for the merger with HVB include professional and consulting fees, printing, travel, contract termination payments and severance-related expenses. Salary and benefit costs increased $7,153,000 due to an additional 47.8 FTEs due to the acquisition, merit increases for 2023 as well as an increase in health insurance costs of $1,093,000. The increases in occupancy and furniture and fixtures was due to the acquisition and additional branches as part of it. Due to growth that occurred in 2022 and the acquisition, FDIC insurance expense increased $799,000.
The provision for income taxes decreased $2,731,000 when comparing 2023 to 2022 as a result of a decrease in income before income tax of $13,980,000 primarily due to the one-time merger costs.
Three Months Ended December 31, 2023 Compared to December 31, 2022
For the three months ended December 31, 2023, net income totaled $7,540,000 which compares to net income of $7,875,000 for the comparable period of 2022, a decrease of $335,000. Basic and diluted earnings per share of $1.60 for the three months ended December 31, 2023 compares to $1.97 for the 2022 comparable period. Annualized return on equity for the three months ended December 31, 2023 and 2022 was 9.93% and 13.58%, while annualized return on assets was 1.00% and 1.34%, respectively. If the one-time costs associated with the acquisition are excluded, basic earnings per share, the annualized return on average equity and average assets for 2022 would have been $2.04, 14.08% and 1.39%, respectively. (1)
Net interest income before the provision for credit loss for the three months ended December 31, 2023 totaled $21,855,000 compared to $19,297,000 for the three months ended December 31, 2022, resulting in an increase of $2,558,000, or 13.3%. Average interest earning assets increased $556.2 million for the three months ended December 31, 2023 compared to the same period last year as a result of the HVB acquisition. Average loans increased $572.7 million while average investment securities decreased $19.8 million. The tax effected net interest margin for the three months ended September 30, 2023 was 3.13% compared to 3.46% for the same period last year, which was impacted by the increase in the average cost on interest bearing liabilities of 172 basis points, to 2.89%.
The provision for credit losses for the three months ended December 31, 2023 was $200,000 compared to $258,000 for the three months ended December 31, 2022, a decrease of $58,000. The decrease in the provision is due to lower loan growth in the fourth quarter of 2023 compared to the same period in 2022.
Total non-interest income was $3,489,000 for the three months ended December 31, 2023, which is $1,178,000 more than for the comparable period last year. The primary driver was the impact of the acquisition, which increased service charge revenue, gains on loans sold and earnings on bank owned life insurance. In addition, we recognized a gain on the equity security portfolio in the fourth quarter of 2023 due to market conditions compared to a loss in the comparable period of 2022.
Total non-interest expenses for the three months ended December 31, 2023 totaled $15,920,000 compared to $11,649,000 for the same period last year, which is an increase of $4,271,000. Salaries and benefits increased $2.5 million due to an increase in headcount of 85 FTEs as a result of the acquisition. The increases in occupancy and furniture and fixtures was due to the acquisition and additional branches as part of it. Due to the acquisition, FDIC insurance expense increased $239,000. Other expenses increased due to increases in the Delaware franchise tax, contributions, appraisal and credit bureau fees, and travel and entertainments costs associated with the southeast Pennsylvania and Delaware markets.
The provision for income taxes decreased $142,000 when comparing the three months ended December 31, 2023 to the same period in 2022 as a result of a decrease in income before income tax of $477,000. The effective tax rate was 18.3% and 18.8% for the three months ended December 31, 2023 and 2022, respectively.
Balance Sheet and Other Information:
At December 31, 2023, total assets were $2.98 billion, compared to $2.33 billion at December 31, 2022. The loan to deposit ratio as of December 31, 2023 was 96.87% compared to 93.54% as of December 31, 2022.
Available for sale securities of $417.6 million at December 31, 2023 decreased $21.9 million from December 31, 2022. As part of the HVB acquisition, $79.2 million of available for sale securities were acquired, of which $76.1 million were sold prior to June 30, 2023. The yield on the investment portfolio increased from 1.90% to 2.20% on a tax equivalent basis.
Net loans as of December 31, 2023 totaled $2.23 billion and increased $521.2 million from December 31, 2022 as a result of the acquisition. Excluding the acquisition, loans would have increased $44.0 million during 2023.
Non-performing loans totaled $12.7 million at December 31, 2023, which is an increase of $5.6 million compared to December 31, 2022. The majority of the increase is attributable to loans acquired as part of the HVB acquisition. At December 31, 2023, $3.2 million of loans acquired as part of the HVB acquisition are considered non-accrual. The remaining increase is attributable to one commercial relationship. Loans past due 30-89 days total $10.5 million as of December 31, 2023 compared to $3.3 million as of December 31, 2023. Of the $7.1 million increase, $6.6 million relate to loans acquired as part of the HVB acquisition.
The allowance for credit losses - loans totaled $21,153,000 at December 31, 2023 which is an increase of $2,601,000 from December 31, 2022 and is due to the acquisition and the implementation of the CECL accounting standard effective January 1, 2023. The impact of the acquisition was an increase of $6.3 million, of which $4.6 million was in provision with the remaining $1.7 million due to purchase credit deteriorated ("PCD") loans. The impact of adopting CECL was a decrease of $3.3 million in the allowance for credit losses - loans. Loan recoveries and charge-offs were $49,000 and $1,329,000, respectively, for 2023. Of the $1,329,000 charge-off, $1,104,000 was related to loans acquired as part of the acquisition that were fully reserved at the time of the acquisition. A majority of the remaining charge-off was also related to a loan acquired as part of the acquisition that filed for bankruptcy subsequent to the acquisition. A provision for credit losses - loans of $901,000 was recorded during 2023. The allowance as a percent of total loans was 0.94% as of December 31, 2023 and 1.08% as of December 31, 2022.
Deposits increased $477.3 million from December 31, 2022, to $2.32 billion at December 31, 2023, due to the acquisition, which increased deposits by $533.4 million. Excluding the acquisition, deposits decreased $56.1 million. With the rise in market interest rates, competition for deposits has increased. Additionally, we have numerous state and political organizations as customers who utilized funds during the first half of 2023 for various projects and bond payments. At December 31, 2023, the Bank estimates that balances held by customers in excess of the FDIC insurance limit ($250,000 per insured account) totaled $1.09 billion, or 46.7% of the Bank's total deposits. Included in this balance are balances held through Intrafi, which provides customers with FDIC insurance coverage by placing customer funds with insured banks within the Intrafi network, as well as deposits collateralized by securities (almost exclusively municipal deposits), which together total $512.8 million, or 22.1% of the Bank's total deposits, as of December 31, 2023.
Stockholders' equity totaled $279.7 million at December 31, 2023, compared to $200.1 million at December 31, 2022, an increase of $79.5 million. The increase was attributable to issuing 693,858 shares with a value of $60.1 million as part of the acquisition and net income for 2023 totaling $17.8 million, offset by net cash dividends for 2023 totaling $8.5 million, net treasury stock activity of $181,000 and an increase of $1.8 million attributable to the CECL adjustment made effective January 1, 2023. As a result of changes in market interest rates impacting the fair value of investment securities and swaps, accumulated other comprehensive loss decreased $8.2 million from December 31, 2022.
Dividend Declared
On December 5, 2023, the Board of Directors declared a cash dividend of $0.49 per share, which was paid on December 29, 2023 to shareholders of record at the close of business on December 15, 2023. The quarterly cash dividend is an increase of 3.1% over the regular cash dividend of $0.475 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
As of or For The
Three Months Ended
Year Ended
December 31,
December 31,
2023
2022
2023
2022
Income and Performance Ratios
Net Income
$ 7,540
$ 7,875
$ 17,811
$ 29,060
Return on average assets (annualized)
1.00 %
1.34 %
0.66 %
1.29 %
Return on average equity (annualized)
9.93 %
13.58 %
6.52 %
12.98 %
Return on average tangible equity (annualized) (a)
14.00 %
15.80 %
8.47 %
15.20 %
Net interest margin (tax equivalent)(a)
3.13 %
3.46 %
3.21 %
3.41 %
Earnings per share - basic (b)
$ 1.60
$ 1.97
$ 4.06
$ 7.25
Earnings per share - diluted (b)
$ 1.60
$ 1.97
$ 4.06
$ 7.25
Cash dividends paid per share (b)
$ 0.490
$ 0.475
$ 1.941
$ 1.882
Number of shares used in computation - basic (b)
4,700,130
4,005,189
4,382,573
4,008,931
Number of shares used in computation - diluted (b)
4,700,131
4,005,304
4,382,573
4,008,931
Asset quality
Allowance for credit losses - loans
$ 21,153
$ 18,552
Non-performing assets
$ 13,177
$ 7,488
Allowance for credit losses - loans/total loans
0.94 %
1.08 %
Non-performing assets to total loans
0.59 %
0.43 %
Annualized net charge-offs to total loans
0.09 %
0.00 %
0.06 %
0.03 %
Equity
Book value per share (b)
$ 64.70
$ 58.17
Tangible Book value per share (a) (b)
$ 45.71
$ 50.03
Market Value (Last reported trade of month)
$ 64.72
$ 76.72
Common shares outstanding
4,706,994
3,971,209
Other
Average Full Time Equivalent Employees
395.3
310.0
357.7
309.9
Loan to Deposit Ratio
96.87 %
93.54 %
Trust assets under management
$ 167,894
$ 150,005
Brokerage assets under management
$ 329,446
$ 283,548
Balance Sheet Highlights
December 31,
December 31,
2023
2022
Assets
$ 2,975,321
$ 2,333,393
Investment securities
419,539
441,714
Loans (net of unearned income)
2,248,836
1,724,999
Allowance for credit losses - loans
21,153
18,552
Deposits
2,321,481
1,844,208
Stockholders' Equity
279,666
200,147
(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)
December 31,
December 31,
(in thousands except share data)
2023
2022
ASSETS:
Cash and due from banks:
Noninterest-bearing
$ 37,733
$ 24,814
Interest-bearing
15,085
1,397
Total cash and cash equivalents
52,818
26,211
Interest bearing time deposits with other banks
4,070
6,055
Equity securities
1,938
2,208
Available-for-sale securities
417,601
439,506
Loans held for sale
9,379
725
Loans (net of allowance for credit losses - loans: $21,153 at December 31, 2023;
$18,552 at December 31, 2022)
2,227,683
1,706,447
Premises and equipment
21,384
17,619
Accrued interest receivable
11,043
7,332
Goodwill
85,758
31,376
Bank owned life insurance
49,897
39,355
Other intangibles
3,650
1,272
Fair value of derivative instruments - asset
13,687
16,599
Deferred tax asset
17,339
12,886
Other assets
59,074
25,802
TOTAL ASSETS
$ 2,975,321
$ 2,333,393
LIABILITIES:
Deposits:
Noninterest-bearing
$ 523,784
$ 396,260
Interest-bearing
1,797,697
1,447,948
Total deposits
2,321,481
1,844,208
Borrowed funds
322,036
257,278
Accrued interest payable
4,298
1,232
Fair value of derivative instruments - liability
7,922
9,726
Other liabilities
39,918
20,802
TOTAL LIABILITIES
2,695,655
2,133,246
STOCKHOLDERS' EQUITY:
Preferred Stock $1.00 par value; authorized
3,000,000 shares; none issued in 2023 or 2022
-
-
Common stock
$1.00 par value; authorized 25,000,000 shares at December 31, 2023, and 2022:
issued 5,160,754 at December 31, 2023 and 4,427,687 at December 31, 2022
5,161
4,428
Additional paid-in capital
143,233
80,911
Retained earnings
172,975
164,922
Accumulated other comprehensive loss
(24,911)
(33,141)
Treasury stock, at cost: 453,760 at December 31, 2023 and 456,478 shares
at December 31, 2022
(16,792)
(16,973)
TOTAL STOCKHOLDERS' EQUITY
279,666
200,147
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
$ 2,975,321
$ 2,333,393
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)
2023
2022
2023
2022
INTEREST INCOME:
Interest and fees on loans
$ 35,637
$ 21,829
$ 116,075
$ 74,265
Interest-bearing deposits with banks
274
67
736
400
Investment securities:
Taxable
1,663
1,565
6,636
5,615
Nontaxable
535
624
2,264
2,454
Dividends
403
267
1,407
623
TOTAL INTEREST INCOME
38,512
24,352
127,118
83,357
INTEREST EXPENSE:
Deposits
12,180
2,847
31,699
7,316
Borrowed funds
4,477
2,208
15,159
3,907
TOTAL INTEREST EXPENSE
16,657
5,055
46,858
11,223
NET INTEREST INCOME
21,855
19,297
80,260
72,134
Provision for credit losses
200
258
937
1,683
Provision for credit losses - acquisition day 1 non-PCD
-
-
4,591
-
NET INTEREST INCOME AFTER
PROVISION FOR CREDIT LOSSES
21,655
19,039
74,732
70,451
NON-INTEREST INCOME:
Service charges
1,443
1,265
5,639
5,346
Trust
181
183
764
803
Brokerage and insurance
495
467
1,924
1,895
Gains on loans sold
778
17
1,452
258
Equity security gains (losses), net
79
(49)
(144)
(247)
Available for sale security losses, net
-
(8)
(51)
(14)
Earnings on bank owned life insurance
313
217
1,254
852
Other
200
219
767
845
TOTAL NON-INTEREST INCOME
3,489
2,311
11,605
9,738
NON-INTEREST EXPENSES:
Salaries and employee benefits
9,392
6,873
34,990
27,837
Occupancy
1,253
811
4,123
3,138
Furniture and equipment
254
149
822
565
Professional fees
688
320
1,962
1,641
FDIC insurance expense
475
236
1,475
676
Pennsylvania shares tax
(310)
(110)
583
907
Amortization of intangibles
154
36
373
156
Software expenses
510
377
1,784
1,446
ORE expenses (income)
40
142
166
17
Merger and acquisition expenses
-
292
9,269
292
Other
3,464
2,523
9,275
8,019
TOTAL NON-INTEREST EXPENSES
15,920
11,649
64,822
44,694
Income before provision for income taxes
9,224
9,701
21,515
35,495
Provision for income tax expense
1,684
1,826
3,704
6,435
NET INCOME
$ 7,540
$ 7,875
$ 17,811
$ 29,060
PER COMMON SHARE DATA:
Net Income - Basic
$ 1.60
$ 1.97
$ 4.06
$ 7.25
Net Income - Diluted
$ 1.60
$ 1.97
$ 4.06
$ 7.25
Cash Dividends Paid
$ 0.490
$ 0.475
$ 1.941
$ 1.882
Number of shares used in computation - basic
4,700,130
4,005,189
4,382,573
4,008,931
Number of shares used in computation - diluted
4,700,131
4,005,304
4,382,573
4,008,931
CITIZENS FINANCIAL SERVICES, INC.
QUARTERLY CONDENSED, CONSOLIDATED INCOME (LOSS) STATEMENT INFORMATION
(UNAUDITED)
(in thousands, except per share data)
Three Months Ended,
Dec 31,
Sept 30,
June 30,
March 31,
Dec 31,
2023
2023
2023
2023
2022
Interest income
$ 38,512
$ 36,689
$ 26,810
$ 25,107
$ 24,352
Interest expense
16,657
14,285
8,889
7,027
5,055
Net interest income
21,855
22,404
17,921
18,080
19,297
Provision for credit losses
200
475
262
-
258
Provision for credit losses - acquisition day 1 non-PCD
-
-
4,591
-
-
Net interest income after provision for credit losses
21,655
21,929
13,068
18,080
19,039
Non-interest income
3,410
3,593
2,405
2,392
2,368
Investment securities gains (losses), net
79
69
(125)
(218)
(57)
Non-interest expenses
15,920
16,444
20,680
11,778
11,649
Income (loss) before provision for income taxes
9,224
9,147
(5,332)
8,476
9,701
Provision for income tax expense (benefit)
1,684
1,599
(1,188)
1,609
1,826
Net income (loss)
$ 7,540
$ 7,548
$ (4,144)
$ 6,867
$ 7,875
Earnings (Loss) Per Share Basic
$ 1.60
$ 1.61
$ (1.01)
$ 1.71
$ 1.97
Earnings (Loss) Per Share Diluted
$ 1.60
$ 1.61
$ (1.01)
$ 1.71
$ 1.97
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,
2023
2022
Average
Average
Average
Average
Balance (1)
Interest
Rate
Balance (1)
Interest
Rate
(dollars in thousands)
$
$
%
$
$
%
ASSETS
Interest-bearing deposits at banks
18,507
239
5.12
13,464
21
0.62
Interest bearing time deposits at banks
4,410
35
3.06
6,055
46
3.01
Investment securities:
Taxable
377,292
2,066
2.19
383,496
1,832
1.91
Tax-exempt (3)
108,353
678
2.50
122,031
791
2.59
Investment securities
485,645
2,744
2.26
505,527
2,623
2.08
Loans: (2)(3)(4)
Residential mortgage loans
358,735
5,120
5.66
207,644
2,584
4.94
Construction loans
197,420
3,653
7.34
84,424
1,085
5.10
Commercial Loans
1,208,249
19,482
6.40
929,394
12,347
5.27
Agricultural Loans
339,720
4,302
5.02
346,378
4,045
4.63
Loans to state & political subdivisions
56,710
562
3.93
59,470
536
3.58
Other loans
130,468
2,627
7.99
91,307
1,333
5.79
Loans, net of discount (2)(3)(4)
2,291,302
35,746
6.19
1,718,617
21,930
5.06
Total interest-earning assets
2,799,864
38,764
5.49
2,243,663
24,620
4.35
Cash and due from banks
11,215
6,873
Bank premises and equipment
21,446
17,547
Other assets
191,231
84,166
Total non-interest earning assets
223,892
108,586
Total assets
3,023,756
2,352,249
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
NOW accounts
816,067
5,344
2.60
520,932
1,033
0.79
Savings accounts
312,575
417
0.53
324,746
161
0.20
Money market accounts
400,971
2,910
2.88
331,023
967
1.16
Certificates of deposit
401,932
3,509
3.46
279,025
686
0.98
Total interest-bearing deposits
1,931,545
12,180
2.50
1,455,726
2,847
0.78
Other borrowed funds
351,492
4,477
5.05
259,690
2,208
3.37
Total interest-bearing liabilities
2,283,037
16,657
2.89
1,715,416
5,055
1.17
Demand deposits
389,927
386,216
Other liabilities
46,888
18,595
Total non-interest-bearing liabilities
436,815
404,811
Stockholders' equity
303,904
232,022
Total liabilities & stockholders' equity
3,023,756
2,352,249
Net interest income
22,107
19,565
Net interest spread (5)
2.60 %
3.18 %
Net interest income as a percentage
of average interest-earning assets
3.13 %
3.46 %
Ratio of interest-earning assets
to interest-bearing liabilities
123 %
131 %
(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 2023 and 2022. 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,
2023
2023
2023
2023
2022
Real estate:
Residential
$ 359,990
$ 356,381
$ 358,025
$ 212,793
$ 210,213
Commercial
1,092,887
1,081,123
1,080,513
878,972
876,569
Agricultural
314,802
314,164
312,302
312,793
313,614
Construction
195,826
175,320
156,927
75,745
80,691
Consumer
61,316
115,753
42,701
87,101
86,650
Other commercial loans
136,168
120,347
120,288
64,133
63,222
Other agricultural loans
30,673
26,648
30,615
32,052
34,832
State & political subdivision loans
57,174
56,660
61,471
59,886
59,208
Total loans
2,248,836
2,246,396
2,162,842
1,723,475
1,724,999
Less: allowance for credit losses - loans
21,153
21,455
21,652
15,250
18,552
Net loans
$ 2,227,683
$ 2,224,941
$ 2,141,190
$ 1,708,225
$ 1,706,447
Past due and non-performing assets
Total Loans past due 30-89 days and still accruing
$ 10,457
$ 5,960
$ 4,828
$ 1,336
$ 3,329
Non-accrual loans
$ 12,187
$ 13,139
$ 13,073
$ 10,404
$ 6,938
Loans past due 90 days or more and accruing
516
8
139
48
7
Non-performing loans
$ 12,703
$ 13,147
$ 13,212
$ 10,452
$ 6,945
OREO
474
474
426
428
543
Total Non-performing assets
$ 13,177
$ 13,621
$ 13,638
$ 10,880
$ 7,488
Three Months Ended
Analysis of the Allowance for Credit Losses - Loans
December 31,
September 30,
June 30,
March 31,
December 31,
(In Thousands)
2023
2023
2023
2023
2022
Balance, beginning of period
$ 21,455
$ 21,652
$ 15,250
$ 18,552
$ 18,291
Impact of Adopting ASC 326
-
-
-
(3,300)
-
Charge-offs
(510)
(808)
(4)
(7)
(7)
Recoveries
8
10
26
5
10
Net (charge-offs) recoveries
(502)
(798)
22
(2)
3
PCD allowance for credit loss at acquisition
-
-
1,689
-
-
Provision for credit losses - loans
200
601
100
-
258
Provision for credit losses - acquisition day 1 non-PCD
-
-
4,591
-
-
Balance, end of period
$ 21,153
$ 21,455
$ 21,652
$ 15,250
$ 18,552
CITIZENS FINANCIAL SERVICES, INC.
Reconciliation of GAAP and Non-GAAP Financial Measures
(UNAUDITED)
(Dollars in thousands, except per share data)
As of
December 31,
2023
2022
Tangible Equity
Stockholders Equity - GAAP
$ 279,666
$ 200,147
Accumulated other comprehensive loss
24,911
33,141
Intangible Assets
(89,408)
(32,648)
Tangible Equity - Non-GAAP
215,169
200,640
Shares outstanding adjusted for June 2023 stock Dividend
4,706,994
4,010,418
Tangible Book value per share - Non-GAAP
$ 45.71
$ 50.03
As of
December 31,
2023
2022
Tangible Equity per share
Stockholders Equity per share - GAAP
$ 59.41
$ 49.91
Adjustments for accumulated other comprehensive loss
5.29
8.26
Book value per share
64.70
58.17
Adjustment for intangible assets
(18.99)
(8.14)
Tangible Book value per share - Non-GAAP
$ 45.71
$ 50.03
For the Three Months Ended
For the Year Ended
December 31,
December 31,
2023
2022
2023
2022
Return on Average Tangible Equity
Average Stockholders Equity - GAAP
$ 267,232
$ 193,950
$ 241,124
$ 201,523
Average Accumulated Other Comprehensive Loss
36,672
38,072
32,198
22,432
Average Intangible Assets
(88,537)
(32,704)
(62,994)
(32,828)
Average Tangible Equity - Non-GAAP
215,367
199,318
210,328
191,127
Net Income - GAAP
$ 7,540
$ 7,875
$ 17,811
$ 29,060
Annualized Return on Average Tangible Equity Non-GAAP
14.00 %
15.80 %
8.47 %
15.20 %
For the Three Months Ended
For the Year Ended
December 31,
December 31,
2023
2022
2023
2022
Return on Average Assets and Equity Excluding boli death benefits, merger and acquisition costs and provision for credit losses - acquisition day 1 non-PCD
Net Income - GAAP
$ 7,540
$ 7,875
$ 17,811
$ 29,060
Boli death benefits
-
-
(195)
-
After tax provision for credit losses - acquisition day 1 non-PCD
-
-
3,627
-
After tax merger and acquisition costs
-
292
7,513
292
Net Income excluding merger and acquisition costs - Non-GAAP
$ 7,540
$ 8,167
$ 28,756
$ 29,352
Average Assets
3,023,756
2,352,249
2,699,039
2,255,966
Annualized Return on Average stockholders equity, Excluding boli death benefits, merger and acquisition costs and provision for credit losses - acquisition day 1 non- PCD - Non-GAAP
1.00 %
1.39 %
1.07 %
1.30 %
Average Stockholders Equity - GAAP
$ 303,904
$ 232,022
$ 273,322
$ 223,955
Annualized Return on Average stockholders equity, Excluding boli death benefits, merger and acquisition costs and provision for credit losses - acquisition day 1 non- PCD - Non-GAAP
9.92 %
14.08 %
10.52 %
13.11 %
Average Tangible Equity - Non-GAAP
215,367
199,318
210,328
191,127
Annualized Return on Average Tangible Equity Excluding boli death benefits, merger and acquisition costs and provision for credit losses - acquisition day 1 non- PCD - Non-GAAP
14.00 %
16.39 %
13.67 %
15.36 %
Earnings per share, Excluding boli death benefits, merger and acquisition costs and provision for credit losses - acquisition day 1 non- PCD
Net Income - GAAP
$ 7,540
$ 7,875
$ 17,811
$ 29,060
Boli death benefits
-
(195)
After tax provision for credit losses - acquisition day 1 non-PCD
-
-
3,627
-
After Tax merger and acquisition costs
-
292
7,513
292
Net income excluding one time items - Non-GAAP
$ 7,540
$ 8,167
$ 28,756
$ 29,352
Number of shares used in computation - basic
4,700,131
4,005,304
4,382,573
4,008,931
Earnings per share, excluding merger and acquisition costs and provision for credit losses - acquisition day 1 non-PCD - Non-GAAP
$ 1.60
$ 2.04
$ 6.56
$ 7.32
For the Three Months Ended
For the Year Ended
December 31,
December 31,
Reconciliation of net interest income on fully taxable equivalent basis
2023
2022
2023
2022
Total interest income
$ 38,512
$ 24,352
$ 127,118
$ 83,357
Total interest expense
16,657
5,055
46,858
11,223
Net interest income
21,855
19,297
80,260
72,134
Tax equivalent adjustment
252
268
1,055
1,003
Net interest income (fully taxable equivalent) - Non-GAAP