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/C O R R E C T I O N -- CITIZENS FINANCIAL SERVICES, INC./

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Citizens Financial Services, Inc. (Nasdaq: CZFS) reported unaudited full year and fourth quarter 2023 financial results. The acquisition of HV Bancorp, Inc. contributed significant growth to net interest income in the second half of 2023. However, net income for 2023 was 38.7% lower than 2022 due to one-time merger and acquisition costs and the provision for credit losses. The return on average equity and assets also decreased compared to 2022. The company's total non-interest expenses increased by 45.0% in 2023, primarily due to merger and acquisition costs. Despite the increase in assets, the company observed an increase in non-performing loans and loans past due 30-89 days. However, the company declared a cash dividend of $0.49 per share, reflecting a 3.1% increase over the previous year.
Positive
  • The acquisition of HV Bancorp, Inc. contributed significant growth to net interest income in the second half of 2023.
  • The company's total non-interest income was $11,605,000 for 2023, which is $1,867,000 more than 2022.
  • The company declared a cash dividend of $0.49 per share, reflecting a 3.1% increase over the previous year.
Negative
  • Net income for 2023 was 38.7% lower than 2022 due to one-time merger and acquisition costs and the provision for credit losses.
  • The return on average equity and assets also decreased compared to 2022.
  • The company observed an increase in non-performing loans and loans past due 30-89 days despite the increase in assets.

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

$           22,107

$             19,565

$                81,315

$           73,137

 

 

 

Cision View original content:https://www.prnewswire.com/news-releases/citizens-financial-services-inc-reports-unaudited-full-year-and--fourth-quarter-2023-financial-results-302048469.html

SOURCE CITIZENS FINANCIAL SERVICES, INC.

FAQ

What is the ticker symbol for Citizens Financial Services, Inc.?

The ticker symbol for Citizens Financial Services, Inc. is CZFS.

What was the net income for Citizens Financial Services, Inc. in 2023?

The net income for 2023 was $17.8 million.

What was the reason for the decrease in net income for 2023 compared to 2022?

The decrease in net income for 2023 compared to 2022 was due to one-time merger and acquisition costs and the provision for credit losses.

What was the total non-interest expenses for Citizens Financial Services, Inc. in 2023?

The total non-interest expenses for 2023 totaled $64,822,000.

What was the cash dividend declared by Citizens Financial Services, Inc. in December 2023?

The Board of Directors declared a cash dividend of $0.49 per share, which was paid on December 29, 2023.

Citizens Financial Services, Inc.

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