MANSFIELD, Pa., July 31,
2023 /PRNewswire/ -- Citizens Financial Services,
Inc. (Nasdaq: CZFS), parent company of First Citizens Community
Bank, released today its unaudited consolidated financial results
for the three and six months ended June 30,
2023.
Highlights
- The acquisition of HV Bancorp, Inc.("HVB") was completed on
June 16, 2023. The acquisition
included available for sale investments of $79.2 million, loans with a fair value of
$486.1 million and deposits with a
fair value of $533.4 million. Based
on the closing price on June 16, the
deal valuation was approximately $76.7
million. Merger and acquisitions costs for 2023 total
$8.6 million through June 30, 2023. The provision for credit losses on
non-purchase credit deteriorated loans (the "NPC Provision") was
$4.6 million.
- Net income for the first six months of 2023 was $2.7 million, which was $10.9 million, or 80.0% less than 2022's net
income through June 30, 2022 due to
the one-time merger and acquisition costs and the NPC Provision.
The effective tax rate for the first six months of 2023 was 13.4%
compared to 17.8% in the comparable period in 2022.
- Net loss was $4.1 million for the
three months ended June 30, 2023,
which was $11.1 million or 160.0%
less than the net income for 2022's comparable period. The
effective tax rate for the three months ended June 30, 2023 was 22.3% compared to 17.7% in the
comparable period in 2022.
- Net interest income before the provision for credit losses was
$36.0 million for the six months
ended June 30, 2023, an increase of
$2.0 million, or 5.9%, over the same
period a year ago.
- Return on average equity for the three and six months
(annualized) ended June 30, 2023 was
(6.62%) and 2.22% compared to 12.49% and 12.48% for the three and
six months (annualized) ended June 30,
2022. If the one-time costs associated with the acquisition
and the NPC Provision are excluded, the return on average equity
for the three and six months (annualized) ended June 30, 2023 would have been 10.03% and 10.92%,
respectively (1).
- Return on average tangible equity for the three and six months
(annualized) ended June 30, 2023 was
(7.92%) and 2.62% compared to 14.68% and 14.69% for the three and
six months (annualized) ended June 30,
2022. (1) If the one-time costs associated with the
acquisition and the NPC Provision are excluded, the return on
average tangible equity for the three and six months (annualized)
ended June 30, 2023 would have been
12.00% and 12.86%. (1)
- Return on average assets for the three and six months
(annualized) ended June 30, 2023 was
(0.68%) and 0.23% compared to 1.25% for the three and six months
(annualized) ended June 30, 2022. If
the one-time costs associated with the acquisition and the NPC
Provision are excluded, the return on average assets for the three
and six months (annualized) ended June 30,
2023 would have been 1.03% and 1.11% (1).
Six Months Ended June 30, 2023
Compared to 2022
- For the six months ended June 30,
2023, net income totaled $2,723,000 which compares to net income of
$13,641,000 for the first six months
of 2022, a decrease of $10,918,000.
Basic earnings per share of $0.67 for
the first six months of 2023 compares to $3.40 for the first six months last year.
Annualized return on equity for the six months ended June 30, 2023 and 2022 was 2.22% and 12.48%,
while annualized return on assets was 0.23% and 1.25%,
respectively. If the one time costs associated with the merger and
the NPC Provision, are excluded, basic earnings per share, the
annualized return on average equity and average assets would be
$3.28, 10.92% and 1.11%,
respectively. (1)
- Net interest income before the provision for credit loss for
the six months ended June 30, 2023
totaled $36,001,000 compared to
$33,991,000 for the six months ended
June 30, 2022, resulting in an
increase of $2,010,000, or 5.9%.
Average interest earning assets increased $206.7 million for the six months ended
June 30, 2023 compared to the same
period last year, primarily due to growth that occurred in the
second half of 2022 in the Delaware market as the HVB acquisition was
completed late in the quarter ended June 30,
2023. Average loans increased $262.7
million while average investment securities increased
$23.7 million. The yield on interest
earning assets increased 97 basis points to 4.64%, while the cost
of interest-bearing liabilities increased 142 basis points to 1.83%
due to the rise in market interest rates and competitive pressure.
The tax effected net interest margin for the six months ended
June 30, 2023 was 3.23% compared to
3.35% for the same period last year.
- The provision for credit losses for the six months ended
June 30, 2023 was $4,853,000 compared to $700,000 for the six months ended June 30, 2022, an increase of $4,253,000. As a result of the acquisition, the
Bank recorded a $4.6 million
provision for credit losses for loans acquired that did not have
any credit deterioration at the time of purchase. Excluding the
impact of the acquisition, the provision would have decreased
$438,000 when comparing the six month
period of 2023 to 2022 with the decrease being attributable to a
decrease in loans in 2023.
- Total non-interest income was $4,454,000 for the six months ended June 30, 2023, which is $281,000 less than the non-interest income of
$4,735,000 for the same period last
year. The primary drivers were a loss of $292,000 in the value of equity securities during
the first half of 2023, compared to a loss of $179,000 in the first half of 2022 and a decrease
in other income associated with mortgage derivative activity due to
the HVB merger of $128,000.
- Total non-interest expenses for the six months ended
June 30, 2023 totaled $32,458,000 compared to $21,431,000 for the same period last year, which
is an increase of $11,027,000, or
51.5%. The primary driver of the increase is the merger and
acquisition costs of completing the HVB acquisition that total
$8,646,000. 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 $1,563,000 due to an additional 8.3 FTEs, which
was impacted minimally by the acquisition due to it closing on
June 16, 2023 and merit increases for
2023 as well as an increase in health insurance costs of
$374,000. Due to growth that occurred
primarily in 2022, FDIC insurance expense increased $345,000.
- The provision for income taxes decreased $2,533,000 when comparing the six months ended
June 30, 2023 to the same period in
2022 as a result of a decrease in income before income tax of
$13,451,000 due to the one-time
merger costs.
Three Months Ended June 30,
2023 Compared to June 30,
2022
- For the three months ended June 30,
2023, net loss totaled ($4,144,000) which compares to net income of
$6,901,000 for the comparable period
of 2022, a decrease of $11,045,000.
Basic (loss) earnings per share of ($1.01) for the three months ended June 30, 2023 compares to $1.72 for the 2022 comparable period. Annualized
return on equity for the three months ended June 30, 2023 and 2022 was (6.62%) and 12.49%,
while annualized return on assets was (0.68%) and 1.25%,
respectively. If the one time costs associated with the merger and
the NPC Provision are excluded, basic earnings per share, the
annualized return on average equity and average assets would be
$1.58, 10.03% and 1.03%,
respectively. (1)
- Net interest income before the provision for credit loss for
the three months ended June 30, 2023
totaled $17,921,000 compared to
$17,729,000 for the three months
ended June 30, 2022, resulting in an
increase of $192,000, or 1.1%.
Average interest earning assets increased $202.7 million for the three months ended
June 30, 2023 compared to the same
period last year as a result of growth that occurred in the second
half of 2023, and to a lesser extent, the completed acquisition.
Average loans increased $247.5
million while average investment securities increased
$774,000. The tax effected net
interest margin for the three months ended June 30, 2023 was 3.17% compared to 3.43% for the
same period last year, which was impacted by the increase in the
average cost on interest bearing liabilities of 158 basis points,
to 2.00%.
- The provision for credit losses for the three months ended
June 30, 2023 was $4,853,000 compared to $450,000 for the three months ended June 30, 2022, an increase of $4,403,000. As a result of the acquisition, the
Bank recorded a $4.6 million
provision for credit losses for loans acquired that did not have
any credit deterioration at the time of purchase. If the impact of
the acquisition is excluded, the provision would have decreased
$188,000 when comparing the three
month period of 2023 to 2022 with the decrease being attributable
to a decrease in loans in 2023.
- Total non-interest income was $2,280,000 for the three months ended
June 30, 2023, which is $24,000 less than for the comparable period last
year. The primary driver was a decrease in brokerage and insurance
commissions of $59,000. The decrease
in other income was associated changes in the fair value of
derivative instruments associated with mortgage activity related to
the HVB merger of $86,000, which was
offset by an increase in gains on loans sold of $128,000, primarily due to the HVB merger.
- Total non-interest expenses for the three months ended
June 30, 2023 totaled $20,680,000 compared to $11,200,000 for the same period last year, which
is an increase of $9,480,000. Merger
and acquisition costs totaled $8,402,000 and salaries and benefits increased
$799,000 primarily due to additional
personnel and increased health care costs as noted above.
- The provision for income taxes decreased $2,670,000 when comparing the three months ended
June 30, 2023 to the same period in
2022 as a result of a decrease in income before income tax of
$13,715,000.
Balance Sheet and Other Information:
- At June 30, 2023, total assets
were $2.89 billion, compared to
$2.33 billion at December 31, 2022 and $2.21 billion at June 30,
2022.
- Available for sale securities of $434.3
million at June 30, 2023
decreased $5.2 million from
December 31, 2022 and $28.6 million from June
30, 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 1.77% to 2.14% on
a tax equivalent basis.
- Net loans as of June 30, 2023
totaled $2.14 billion and increased
$434.7 million from December 31, 2022 as a result of the acquisition.
Excluding the acquisition, loans would have decreased $40.1 million during 2023. The decrease in
organic loans was driven by expected paydowns in student loans,
which are expected to increase over the second half of 2023.
- The allowance for credit losses - loans totaled $21,652,000 at June 30,
2023 which is an increase of $3,100,000 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 ASC 326 was a decrease of $3.3 million in the allowance for credit losses –
loans. Loan recoveries and charge-offs were $31,000 and $11,000, respectively, for the six months ended
June 30, 2023. A provision for credit
losses – loans of $100,000 was
recorded during 2023. The allowance as a percent of total loans was
1.00% as of June 30, 2023 and 1.08%
as of December 31, 2022.
- Deposits increased $421.6 million
from December 31, 2022, to
$2.27 billion at June 30, 2023, due to the acquisition, which
increased deposits by $533.4 million.
Excluding the acquisition, deposits decreased $111.5 million. With the rise in interest rates,
competitive pressure 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 June 30, 2023,
the Bank estimates that balances held by customers in excess of the
FDIC insurance limit ($250,000 per
insured account) totaled $986.4
million, or 43.5% of the Bank's total deposits. Included in
this balance are balances held through Intrafi, which provides
customers with additional FDIC insurance, as well as deposits
collateralized by securities (almost exclusively municipal
deposits). The total of these items was $577.6 million, or 25.5% of the Bank's total
deposits, as of June 30, 2023.
- Stockholders' equity totaled $263.2
million at June 30, 2023,
compared to $200.1 million at
December 31, 2022, an increase of
$63.0 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 the six months ended June 30,
2023 totaling $2.7 million,
offset by net cash dividends for the first half of 2023 totaling
$3.9 million, net treasury stock
activity of $170,000 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 $2.2 million from December
31, 2022.
Dividend Declared
On May 30, 2023, the Board of
Directors declared a cash dividend of $0.485 per share, which was paid on June 30, 2023 to shareholders of record at the
close of business on June 9, 2023.
The quarterly cash dividend is an increase of 3.0% over the regular
cash dividend of $0.466 per share
declared one year ago, as adjusted for the 1% stock dividend
declared in June 2023, payable on
June 30, 2023 to shareholders of
record at the close of business on June 9,
2023.
Citizens Financial Services, Inc. has nearly 1,925 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,
|
|
2023
|
2022
|
2023
|
2022
|
Income and Performance Ratios
|
|
|
|
|
Net Income
(loss)
|
$
(4,144)
|
$
6,901
|
$
2,723
|
$
13,641
|
Return on average
assets (annualized)
|
(0.68 %)
|
1.25 %
|
0.23 %
|
1.25 %
|
Return on average
equity (annualized)
|
(6.62 %)
|
12.49 %
|
2.22 %
|
12.48 %
|
Return on average
tangible equity (annualized) (a)
|
(7.92 %)
|
14.68 %
|
2.62 %
|
14.69 %
|
Net interest margin
(tax equivalent)(a)
|
3.17 %
|
3.43 %
|
3.23 %
|
3.35 %
|
Earnings per share -
basic (b)
|
$
(1.01)
|
$
1.72
|
$
0.67
|
$
3.40
|
Earnings per share -
diluted (b)
|
$
(1.01)
|
$
1.72
|
$
0.67
|
$
3.40
|
Cash dividends paid per
share (b)
|
$
0.480
|
$
0.466
|
$
0.961
|
$
0.930
|
Number of shares used
in computation - basic (b)
|
4,113,377
|
4,012,611
|
4,059,416
|
4,008,830
|
Number of shares used
in computation - diluted (b)
|
4,113,377
|
4,012,626
|
4,059,416
|
4,008,934
|
|
|
|
|
|
|
|
|
|
|
Asset quality
|
|
|
|
|
Allowance for credit
losses - loans
|
$
21,652
|
$
17,570
|
|
|
Non-performing
assets
|
$
13,638
|
$
8,362
|
|
|
Allowance for credit
losses - loans/total loans
|
1.00 %
|
1.10 %
|
|
|
Non-performing assets
to total loans
|
0.63 %
|
0.52 %
|
|
|
Annualized net
charge-offs to total loans
|
0.00 %
|
0.11 %
|
0.00 %
|
0.06 %
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
Book value per share
(b)
|
$
62.50
|
$
55.27
|
|
|
Tangible Book value per
share (a) (b)
|
$
43.63
|
$
47.08
|
|
|
Market Value (Last
reported trade of month)
|
$
74.47
|
$
70.00
|
|
|
Common shares
outstanding
|
4,706,768
|
3,970,153
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
Average Full Time
Equivalent Employees
|
322.2
|
312.8
|
317.7
|
308.8
|
Loan to Deposit
Ratio
|
95.44 %
|
84.92 %
|
|
|
Trust assets under
management
|
$
169,956
|
$ 143,015
|
|
|
Brokerage assets under
management
|
$
307,336
|
$ 269,744
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Highlights
|
June 30,
|
December
31,
|
June 30,
|
|
|
2023
|
2022
|
2022
|
|
|
|
|
|
|
Assets
|
$
2,891,808
|
$
2,333,393
|
$ 2,212,862
|
|
Investment
securities
|
436,164
|
441,714
|
465,192
|
|
Loans (net of unearned
income)
|
2,162,842
|
1,724,999
|
1,595,376
|
|
Allowance for credit
losses - loans
|
21,652
|
18,552
|
17,570
|
|
Deposits
|
2,266,100
|
1,844,208
|
1,878,711
|
|
Stockholders'
Equity
|
263,228
|
200,147
|
195,032
|
|
|
|
|
|
|
|
|
|
|
|
(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)
|
2023
|
2022
|
2022
|
ASSETS:
|
|
|
|
Cash and due from
banks:
|
|
|
|
Noninterest-bearing
|
$
28,740
|
$
24,814
|
$
18,306
|
Interest-bearing
|
15,969
|
1,397
|
2,366
|
Total cash and cash
equivalents
|
44,709
|
26,211
|
20,672
|
|
|
|
|
Interest bearing time
deposits with other banks
|
4,814
|
6,055
|
8,048
|
|
|
|
|
Equity
securities
|
1,849
|
2,208
|
2,309
|
|
|
|
|
Available-for-sale
securities
|
434,315
|
439,506
|
462,883
|
|
|
|
|
Loans held for
sale
|
14,940
|
725
|
1,205
|
|
|
|
|
Loans (net of allowance
for credit losses - loans: $21,652 at June 30,
2023;
|
|
|
|
$18,552 at December 31, 2022 and $17,570 at June 30,
2023)
|
2,141,190
|
1,706,447
|
1,577,806
|
|
|
|
|
Premises and
equipment
|
21,382
|
17,619
|
17,476
|
Accrued interest
receivable
|
9,283
|
7,332
|
5,874
|
Goodwill
|
84,758
|
31,376
|
31,376
|
Bank owned life
insurance
|
50,194
|
39,355
|
38,922
|
Other
intangibles
|
4,071
|
1,272
|
1,449
|
Fair value of
derivative instruments - asset
|
16,395
|
16,599
|
14,639
|
Deferred tax
asset
|
20,108
|
12,886
|
10,807
|
Other assets
|
43,800
|
25,802
|
19,396
|
|
|
|
|
TOTAL ASSETS
|
$
2,891,808
|
$
2,333,393
|
$
2,212,862
|
|
|
|
|
LIABILITIES:
|
|
|
|
Deposits:
|
|
|
|
Noninterest-bearing
|
$
553,097
|
$
396,260
|
$
382,155
|
Interest-bearing
|
1,713,003
|
1,447,948
|
1,496,556
|
Total
deposits
|
2,266,100
|
1,844,208
|
1,878,711
|
Borrowed
funds
|
318,200
|
257,278
|
110,540
|
Accrued interest
payable
|
2,256
|
1,232
|
566
|
Fair value of
derivative instruments - liability
|
9,303
|
9,726
|
9,197
|
Other
liabilities
|
32,721
|
20,802
|
18,816
|
TOTAL LIABILITIES
|
2,628,580
|
2,133,246
|
2,017,830
|
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 June 30, 2023, December 31, 2022
and
|
|
|
|
June 30, 2022:
issued 5,160,754 at June 30, 2023 and 4,427,687 at December 31,
2022 and
|
|
|
|
June 30,
2022
|
5,161
|
4,428
|
4,428
|
Additional paid-in
capital
|
143,351
|
80,911
|
80,892
|
Retained
earnings
|
162,499
|
164,922
|
153,315
|
Accumulated other
comprehensive loss
|
(30,980)
|
(33,141)
|
(26,559)
|
Treasury stock, at
cost: 453,986 at June 30, 2023 and 456,478
shares
|
|
|
|
at December 31,
2022 and 457,534 shares at June 30, 2022
|
(16,803)
|
(16,973)
|
(17,044)
|
TOTAL STOCKHOLDERS' EQUITY
|
263,228
|
200,147
|
195,032
|
TOTAL LIABILITIES AND
|
|
|
|
STOCKHOLDERS'
EQUITY
|
$
2,891,808
|
$
2,333,393
|
$
2,212,862
|
CITIZENS FINANCIAL SERVICES,
INC.
|
|
|
|
|
CONSOLIDATED STATEMENT OF INCOME
(LOSS)
|
|
|
|
|
(UNAUDITED)
|
|
|
|
|
|
Three Months
Ended
|
Six Months
Ended
|
|
June
30,
|
June
30,
|
(in thousands, except share and per share
data)
|
2023
|
2022
|
2023
|
2022
|
INTEREST INCOME:
|
|
|
|
|
Interest and fees on
loans
|
$ 24,117
|
$
17,120
|
$ 46,666
|
$
33,040
|
Interest-bearing
deposits with banks
|
127
|
156
|
198
|
272
|
Investment
securities:
|
|
|
|
|
Taxable
|
1,683
|
1,424
|
3,239
|
2,536
|
Nontaxable
|
572
|
617
|
1,189
|
1,200
|
Dividends
|
311
|
90
|
625
|
174
|
TOTAL INTEREST INCOME
|
26,810
|
19,407
|
51,917
|
37,222
|
INTEREST EXPENSE:
|
|
|
|
|
Deposits
|
5,480
|
1,356
|
9,419
|
2,631
|
Borrowed
funds
|
3,409
|
322
|
6,497
|
600
|
TOTAL INTEREST EXPENSE
|
8,889
|
1,678
|
15,916
|
3,231
|
NET INTEREST INCOME
|
17,921
|
17,729
|
36,001
|
33,991
|
Provision for credit
losses
|
262
|
450
|
262
|
700
|
Provision for credit
losses - acquisition day 1 non-PCD
|
4,591
|
-
|
4,591
|
-
|
NET INTEREST INCOME AFTER
|
|
|
|
|
PROVISION FOR CREDIT
LOSSES
|
13,068
|
17,279
|
31,148
|
33,291
|
NON-INTEREST INCOME:
|
|
|
|
|
Service
charges
|
1,293
|
1,324
|
2,504
|
2,572
|
Trust
|
181
|
184
|
411
|
433
|
Brokerage and
insurance
|
442
|
501
|
956
|
982
|
Gains on loans
sold
|
169
|
41
|
214
|
146
|
Equity security losses,
net
|
(74)
|
(134)
|
(292)
|
(179)
|
Available for sale
security losses, net
|
(51)
|
-
|
(51)
|
-
|
Earnings on bank owned
life insurance
|
234
|
212
|
452
|
419
|
Other
|
86
|
176
|
260
|
362
|
TOTAL NON-INTEREST INCOME
|
2,280
|
2,304
|
4,454
|
4,735
|
NON-INTEREST EXPENSES:
|
|
|
|
|
Salaries and employee
benefits
|
7,916
|
7,117
|
15,593
|
14,030
|
Occupancy
|
814
|
754
|
1,649
|
1,548
|
Furniture and
equipment
|
162
|
166
|
313
|
295
|
Professional
fees
|
387
|
394
|
768
|
733
|
FDIC insurance
expense
|
325
|
145
|
625
|
280
|
Pennsylvania shares
tax
|
298
|
339
|
596
|
678
|
Amortization of
intangibles
|
31
|
40
|
62
|
80
|
Software
expenses
|
372
|
358
|
723
|
699
|
ORE expenses
(income)
|
(11)
|
120
|
15
|
(247)
|
Merger and acquisition
expenses
|
8,402
|
-
|
8,646
|
-
|
Other
|
1,984
|
1,767
|
3,468
|
3,335
|
TOTAL NON-INTEREST EXPENSES
|
20,680
|
11,200
|
32,458
|
21,431
|
Income (loss) before
provision for income taxes
|
(5,332)
|
8,383
|
3,144
|
16,595
|
Provision for income
tax expense (benefit)
|
(1,188)
|
1,482
|
421
|
2,954
|
NET INCOME (LOSS)
|
$ (4,144)
|
$
6,901
|
$
2,723
|
$
13,641
|
|
|
|
|
|
PER COMMON SHARE DATA:
|
|
|
|
|
Net (Loss) Income - Basic
|
$
(1.01)
|
$
1.72
|
$
0.67
|
$
3.40
|
Net (Loss) Income - Diluted
|
$
(1.01)
|
$
1.72
|
$
0.67
|
$
3.40
|
Cash Dividends Paid
|
$
0.480
|
$
0.466
|
$
0.961
|
$ 0.930
|
|
|
|
|
|
Number of shares used
in computation - basic
|
4,113,377
|
4,012,611
|
4,059,416
|
4,008,830
|
Number of shares used
in computation - diluted
|
4,113,377
|
4,012,626
|
4,059,416
|
4,008,934
|
CITIZENS FINANCIAL SERVICES,
INC.
|
|
|
|
|
|
QUARTERLY CONDENSED, CONSOLIDATED INCOME (LOSS)
STATEMENT INFORMATION
|
|
|
|
|
(UNAUDITED)
|
|
|
|
|
|
(in thousands, except per share
data)
|
|
Three Months Ended,
|
|
|
|
June 30,
|
March 31,
|
Dec 31,
|
Sept 30,
|
June 30,
|
|
2023
|
2023
|
2022
|
2022
|
2022
|
Interest income
|
$ 26,810
|
$ 25,107
|
$ 24,352
|
$ 21,783
|
$ 19,407
|
Interest expense
|
8,889
|
7,027
|
5,055
|
2,937
|
1,678
|
Net interest income
|
17,921
|
18,080
|
19,297
|
18,846
|
17,729
|
Provision for credit
losses
|
262
|
-
|
258
|
725
|
450
|
Provision for credit
losses - acquisition day 1 non-PCD
|
4,591
|
-
|
-
|
-
|
-
|
Net interest income after provision for credit
losses
|
13,068
|
18,080
|
19,039
|
18,121
|
17,279
|
Non-interest income
|
2,405
|
2,392
|
2,368
|
2,717
|
2,438
|
Investment securities losses,
net
|
(125)
|
(218)
|
(57)
|
(25)
|
(134)
|
Non-interest expenses
|
20,680
|
11,778
|
11,649
|
11,614
|
11,200
|
Income (loss) before provision for income
taxes
|
(5,332)
|
8,476
|
9,701
|
9,199
|
8,383
|
Provision for income tax expense
(benefit)
|
(1,188)
|
1,609
|
1,826
|
1,655
|
1,482
|
Net income (loss)
|
$ (4,144)
|
$
6,867
|
$
7,875
|
$
7,544
|
$
6,901
|
Earnings (Loss) Per Share Basic
|
$
(1.01)
|
$
1.71
|
$
1.97
|
$
1.88
|
$
1.72
|
Earnings (Loss) Per Share
Diluted
|
$
(1.01)
|
$
1.71
|
$
1.97
|
$
1.88
|
$
1.72
|
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,
|
|
2023
|
2022
|
|
Average
|
|
Average
|
Average
|
|
Average
|
|
Balance (1)
|
Interest
|
Rate
|
Balance
(1)
|
Interest
|
Rate
|
(dollars in
thousands)
|
$
|
$
|
%
|
$
|
$
|
%
|
ASSETS
|
|
|
|
|
|
|
Interest-bearing
deposits at banks
|
18,193
|
82
|
1.79
|
59,943
|
91
|
0.61
|
Interest bearing time
deposits at banks
|
6,000
|
45
|
2.99
|
9,827
|
65
|
2.65
|
Investment
securities:
|
|
|
|
|
|
|
Taxable
|
388,327
|
1,994
|
2.05
|
379,060
|
1,514
|
1.60
|
Tax-exempt
(3)
|
113,674
|
725
|
2.55
|
122,167
|
782
|
2.56
|
Investment
securities
|
502,001
|
2,719
|
2.17
|
501,227
|
2,296
|
1.83
|
Loans:
(2)(3)(4)
|
|
|
|
|
|
|
Residential
mortgage loans
|
236,167
|
3,168
|
5.38
|
203,338
|
2,381
|
4.70
|
Construction
loans
|
90,635
|
1,353
|
5.99
|
69,689
|
721
|
4.15
|
Commercial
Loans
|
983,666
|
13,772
|
5.62
|
818,517
|
9,494
|
4.65
|
Agricultural
Loans
|
345,467
|
4,221
|
4.90
|
346,199
|
3,706
|
4.29
|
Loans to state
& political subdivisions
|
60,395
|
582
|
3.87
|
57,933
|
457
|
3.16
|
Other
loans
|
60,770
|
1,136
|
7.50
|
33,907
|
446
|
5.28
|
Loans, net of
discount (2)(3)(4)
|
1,777,100
|
24,232
|
5.47
|
1,529,583
|
17,205
|
4.51
|
Total interest-earning assets
|
2,303,294
|
27,078
|
4.72
|
2,100,580
|
19,657
|
3.75
|
Cash and due from
banks
|
8,386
|
|
|
6,805
|
|
|
Bank premises and
equipment
|
18,960
|
|
|
17,179
|
|
|
Other assets
|
102,155
|
|
|
83,164
|
|
|
Total non-interest earning
assets
|
129,501
|
|
|
107,148
|
|
|
Total assets
|
2,432,795
|
|
|
2,207,728
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
Interest-bearing
liabilities:
|
|
|
|
|
|
|
NOW
accounts
|
545,527
|
2,067
|
1.52
|
530,596
|
398
|
0.30
|
Savings
accounts
|
314,745
|
265
|
0.34
|
325,649
|
80
|
0.10
|
Money market
accounts
|
330,453
|
1,847
|
2.24
|
348,718
|
300
|
0.35
|
Certificates of
deposit
|
283,694
|
1,301
|
1.84
|
306,213
|
578
|
0.76
|
Total interest-bearing
deposits
|
1,474,419
|
5,480
|
1.49
|
1,511,176
|
1,356
|
0.36
|
Other borrowed
funds
|
307,523
|
3,409
|
4.45
|
78,948
|
322
|
1.64
|
Total interest-bearing
liabilities
|
1,781,942
|
8,889
|
2.00
|
1,590,124
|
1,678
|
0.42
|
Demand
deposits
|
397,084
|
|
|
375,542
|
|
|
Other
liabilities
|
3,379
|
|
|
21,134
|
|
|
Total non-interest-bearing
liabilities
|
400,463
|
|
|
396,676
|
|
|
Stockholders' equity
|
250,390
|
|
|
220,928
|
|
|
Total liabilities & stockholders'
equity
|
2,432,795
|
|
|
2,207,728
|
|
|
Net interest income
|
|
18,189
|
|
|
17,979
|
|
Net interest spread
(5)
|
|
|
2.71 %
|
|
|
3.33 %
|
Net interest income as
a percentage
|
|
|
|
|
|
|
of average
interest-earning assets
|
|
|
3.17 %
|
|
|
3.43 %
|
Ratio of
interest-earning assets
|
|
|
|
|
|
|
to
interest-bearing liabilities
|
|
|
129 %
|
|
|
132 %
|
|
|
|
|
|
|
|
(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 AVERAGE BALANCES, INTEREST, YIELDS AND
RATES, AND NET INTEREST MARGIN ON A FULLY TAX-EQUIVALENT
BASIS
|
(UNAUDITED)
|
|
|
Six Months Ended June
30,
|
|
2023
|
2022
|
|
Average
|
|
Average
|
Average
|
|
Average
|
|
Balance (1)
|
Interest
|
Rate
|
Balance
(1)
|
Interest
|
Rate
|
(dollars in
thousands)
|
$
|
$
|
%
|
$
|
$
|
%
|
ASSETS
|
|
|
|
|
|
|
Interest-bearing
deposits at banks
|
16,395
|
108
|
1.33
|
91,687
|
137
|
0.30
|
Interest bearing time
deposits at banks
|
6,028
|
90
|
3.00
|
10,389
|
135
|
2.62
|
Investment
securities:
|
|
|
|
|
|
|
Taxable
|
384,453
|
3,864
|
2.01
|
359,189
|
2,710
|
1.51
|
Tax-exempt
(3)
|
117,025
|
1,505
|
2.57
|
118,613
|
1,519
|
2.56
|
Investment
securities
|
501,478
|
5,369
|
2.14
|
477,802
|
4,229
|
1.77
|
Loans:
(2)(3)(4)
|
|
|
|
|
|
|
Residential
mortgage loans
|
224,059
|
5,872
|
5.28
|
202,095
|
4,712
|
4.70
|
Construction
loans
|
88,048
|
2,492
|
5.71
|
65,626
|
1,327
|
4.08
|
Commercial
Loans
|
959,221
|
26,097
|
5.49
|
793,313
|
18,076
|
4.59
|
Agricultural
Loans
|
344,882
|
8,474
|
4.95
|
348,479
|
7,455
|
4.31
|
Loans to state
& political subdivisions
|
59,860
|
1,125
|
3.79
|
52,489
|
824
|
3.17
|
Other
loans
|
79,199
|
2,828
|
7.20
|
30,568
|
796
|
5.25
|
Loans, net of
discount (2)(3)(4)
|
1,755,269
|
46,888
|
5.39
|
1,492,570
|
33,190
|
4.48
|
Total interest-earning assets
|
2,279,170
|
52,455
|
4.64
|
2,072,448
|
37,691
|
3.67
|
Cash and due from
banks
|
7,716
|
|
|
6,600
|
|
|
Bank premises and
equipment
|
18,292
|
|
|
17,078
|
|
|
Other assets
|
96,542
|
|
|
81,077
|
|
|
Total non-interest earning
assets
|
122,550
|
|
|
104,755
|
|
|
Total assets
|
2,401,720
|
|
|
2,177,203
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
Interest-bearing
liabilities:
|
|
|
|
|
|
|
NOW
accounts
|
527,960
|
3,584
|
1.37
|
516,129
|
717
|
0.28
|
Savings
accounts
|
317,063
|
471
|
0.30
|
321,436
|
154
|
0.10
|
Money market
accounts
|
325,841
|
3,121
|
1.93
|
347,403
|
523
|
0.30
|
Certificates of
deposit
|
281,482
|
2,243
|
1.61
|
314,494
|
1,237
|
0.79
|
Total interest-bearing
deposits
|
1,452,346
|
9,419
|
1.31
|
1,499,462
|
2,631
|
0.35
|
Other borrowed
funds
|
303,344
|
6,497
|
4.32
|
73,651
|
600
|
1.64
|
Total interest-bearing
liabilities
|
1,755,690
|
15,916
|
1.83
|
1,573,113
|
3,231
|
0.41
|
Demand
deposits
|
386,104
|
|
|
366,046
|
|
|
Other
liabilities
|
15,157
|
|
|
19,360
|
|
|
Total non-interest-bearing
liabilities
|
401,261
|
|
|
385,406
|
|
|
Stockholders' equity
|
244,769
|
|
|
218,684
|
|
|
Total liabilities & stockholders'
equity
|
2,401,720
|
|
|
2,177,203
|
|
|
Net interest income
|
|
36,539
|
|
|
34,460
|
|
Net interest spread
(5)
|
|
|
2.81 %
|
|
|
3.26 %
|
Net interest income as
a percentage
|
|
|
|
|
|
|
of average
interest-earning assets
|
|
|
3.23 %
|
|
|
3.35 %
|
Ratio of
interest-earning assets
|
|
|
|
|
|
|
to
interest-bearing liabilities
|
|
|
130 %
|
|
|
132 %
|
|
|
|
|
|
|
|
(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 2020 and 2019. 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,
|
|
2023
|
2023
|
2022
|
2022
|
2022
|
Real estate:
|
|
|
|
|
|
Residential
|
$ 358,025
|
$ 212,793
|
$
210,213
|
$ 203,673
|
$ 203,323
|
Commercial
|
1,080,513
|
878,972
|
876,569
|
857,314
|
798,528
|
Agricultural
|
312,302
|
312,793
|
313,614
|
317,761
|
313,700
|
Construction
|
156,927
|
75,745
|
80,691
|
79,154
|
71,414
|
Consumer
|
42,701
|
87,101
|
86,650
|
124,375
|
50,319
|
Other commercial
loans
|
120,288
|
64,133
|
63,222
|
66,241
|
65,772
|
Other agricultural
loans
|
30,615
|
32,052
|
34,832
|
29,509
|
32,870
|
State & political
subdivision loans
|
61,471
|
59,886
|
59,208
|
59,926
|
59,450
|
Total loans
|
2,162,842
|
1,723,475
|
1,724,999
|
1,737,953
|
1,595,376
|
Less: allowance for
credit losses - loans
|
21,652
|
15,250
|
18,552
|
18,291
|
17,570
|
Net loans
|
$
2,141,190
|
$
1,708,225
|
$
1,706,447
|
$
1,719,662
|
$
1,577,806
|
|
|
|
|
|
|
Past due and non-performing
assets
|
|
|
|
|
|
|
|
|
|
|
|
Total Loans past due
30-89 days and still accruing
|
$
4,811
|
$
1,336
|
$
3,317
|
$
2,616
|
$
2,070
|
|
|
|
|
|
|
Non-accrual
loans
|
$
13,073
|
$
10,404
|
$
6,938
|
$
7,118
|
$
7,251
|
Loans past due 90 days
or more and accruing
|
139
|
41
|
7
|
93
|
139
|
Non-performing
loans
|
$
13,212
|
$
10,445
|
$
6,945
|
$
7,211
|
$
7,390
|
OREO
|
426
|
428
|
543
|
877
|
972
|
Total Non-performing
assets
|
$
13,638
|
$
10,873
|
$
7,488
|
$
8,088
|
$
8,362
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
Analysis of the Allowance for Credit Losses -
Loans
|
June 30,
|
March 31,
|
December
31,
|
September
30,
|
June 30,
|
(In
Thousands)
|
2023
|
2023
|
2022
|
2022
|
2022
|
Balance, beginning of
period
|
$
15,250
|
$
18,552
|
$
18,291
|
$
17,570
|
$
17,556
|
Impact of Adopting ASC
326
|
-
|
(3,300)
|
-
|
-
|
-
|
|
|
|
|
|
|
Charge-offs
|
(4)
|
(7)
|
(7)
|
(14)
|
(446)
|
Recoveries
|
26
|
5
|
10
|
10
|
10
|
Net (charge-offs)
recoveries
|
22
|
(2)
|
3
|
(4)
|
(436)
|
PCD allowance for
credit loss at acquisition
|
1,689
|
-
|
-
|
-
|
-
|
Provision for credit
losses - loans
|
100
|
-
|
258
|
725
|
450
|
Provision for credit
losses - acquisition day 1 non-PCD
|
4,591
|
-
|
-
|
-
|
-
|
Balance, end of
period
|
$
21,652
|
$
15,250
|
$
18,552
|
$
18,291
|
$
17,570
|
CITIZENS FINANCIAL SERVICES,
INC.
|
|
|
|
|
Reconciliation of GAAP and Non-GAAP Financial
Measures
|
|
|
|
|
(UNAUDITED)
|
|
|
|
|
(Dollars in thousands, except per share
data)
|
|
|
|
|
|
|
|
|
|
|
As
of
|
|
|
|
June 30,
|
|
|
|
2023
|
2022
|
|
|
Tangible Equity
|
|
|
|
|
Stockholders Equity -
GAAP
|
$
263,228
|
$
195,032
|
|
|
Accumulated other
comprehensive loss
|
30,980
|
26,559
|
|
|
Intangible
Assets
|
(88,829)
|
(32,825)
|
|
|
Tangible Equity -
Non-GAAP
|
205,379
|
188,766
|
|
|
Shares outstanding
adjusted for June 2022 stock Dividend
|
4,706,768
|
4,009,362
|
|
|
Tangible Book value per
share
|
$
43.63
|
$
47.08
|
|
|
|
|
|
|
|
|
As
of
|
|
|
|
June 30,
|
|
|
|
2023
|
2022
|
|
|
Tangible Equity per share
|
|
|
|
|
Stockholders Equity per
share - GAAP
|
$
55.92
|
$
48.65
|
|
|
Adjustments for
accumulated other comprehensive loss
|
6.58
|
6.62
|
|
|
Book value per
share
|
62.50
|
55.27
|
|
|
Adjustment for
intangible assets
|
(18.87)
|
(8.19)
|
|
|
Tangible Book value per
share - Non-GAAP
|
$
43.63
|
$
47.08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
Ended
|
For the Six Months
Ended
|
|
June 30
|
June 30
|
|
2023
|
2022
|
2023
|
2022
|
Return on Average Tangible
Equity
|
|
|
|
|
Average Stockholders
Equity - GAAP
|
$
221,557
|
$
199,864
|
$
214,753
|
$
206,155
|
Average Accumulated
Other Comprehensive Loss
|
28,833
|
21,064
|
30,016
|
12,529
|
Average Intangible
Assets
|
(41,189)
|
(32,876)
|
(36,922)
|
(32,916)
|
Average Tangible Equity
- Non-GAAP
|
209,201
|
188,052
|
207,847
|
185,768
|
Net Income
(loss)
|
$
(4,144)
|
$
6,901
|
$
2,723
|
$
13,641
|
Annualized Return on
Average Tangible Equity
|
-7.92 %
|
14.68 %
|
2.62 %
|
14.69 %
|
|
|
|
|
|
|
For the Three Months
Ended
|
For the Six Months
Ended
|
|
June 30
|
June 30
|
|
2023
|
2022
|
2023
|
2022
|
Return on Average Assets and Equity Excluding
merger and acquisition costs and provision for credit losses -
acquisition day 1 non-PCD
|
Net Income
(loss)
|
$
(4,144)
|
$
6,901
|
$
2,723
|
$
13,641
|
After tax provision for
credit losses - acquisition day 1 non-PCD
|
3,627
|
-
|
3,627
|
-
|
After Tax merger and
acquisition costs
|
6,793
|
-
|
7,017
|
-
|
Net Income excluding
merger and acquisition costs
|
$
6,276
|
$
6,901
|
$
13,367
|
$
13,641
|
Average
Assets
|
2,432,795
|
2,207,728
|
2,401,720
|
2,177,203
|
Annualized Return on
Average stockholders equity, Excluding merger and
acquisition costs and provision for credit losses - acquisition day
1 non-PCD
|
1.03 %
|
1.25 %
|
1.11 %
|
1.25 %
|
|
|
|
|
|
Average Stockholders
Equity - GAAP
|
$
250,390
|
$
220,928
|
$
244,769
|
$
218,684
|
Annualized Return on
Average stockholders equity, Excluding merger and
acquisition costs and provision for credit losses - acquisition day
1 non-PCD
|
10.03 %
|
12.49 %
|
10.92 %
|
12.48 %
|
|
|
|
|
|
Average Tangible Equity
- Non-GAAP
|
209,201
|
188,052
|
207,847
|
185,768
|
Annualized Return on
Average Tangible Equity Excluding merger and
acquisition
costs and provision for credit losses - acquisition day 1
non-PCD
|
12.00 %
|
14.68 %
|
12.86 %
|
14.69 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share, Excluding merger and
acquisition costs and provision for credit losses - acquisition day
1 non-PCD
|
|
Net Income
(Loss)
|
$
(4,144)
|
$
6,901
|
$
2,723
|
$
13,641
|
After tax provision for
credit losses - acquisition day 1 non-PCD
|
3,627
|
-
|
3,627
|
-
|
After Tax merger and
acquisition costs
|
6,793
|
-
|
7,017
|
-
|
Net income excluding
one time items
|
$
6,276
|
$
6,901
|
$
13,367
|
$
13,641
|
Number of shares used
in computation - basic
|
4,113,377
|
4,012,626
|
4,059,416
|
4,008,934
|
Earnings per share,
excluding merger and acquisition costs and provision for
credit
losses - acquisition day 1 non-PCD
|
1.53
|
1.72
|
3.28
|
3.40
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
Ended
|
For the Six Months
Ended
|
|
June 30
|
June 30
|
Reconciliation of net interest income on fully
taxable equivalent basis
|
2023
|
2022
|
2023
|
2022
|
Total interest
income
|
$
26,810
|
$
19,407
|
$
37,222
|
$
36,370
|
Total interest
expense
|
8,889
|
1,678
|
3,231
|
3,717
|
Net interest
income
|
17,921
|
17,729
|
33,991
|
32,653
|
Tax equivalent
adjustment
|
268
|
250
|
469
|
485
|
Net interest income
(fully taxable equivalent)
|
$
18,189
|
$
17,979
|
$
34,460
|
$
33,138
|
View original
content:https://www.prnewswire.com/news-releases/citizens-financial-services-inc-reports-unaudited-second-quarter-2023-financial-results-301889669.html
SOURCE Citizens Financial Services, Inc.