MANSFIELD, Pa., July 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 and six months ended June 30, 2024.
Highlights
- The acquisition of HV Bancorp, Inc. ("HVB,") completed one year ago, has bolstered the Company's balance sheet growth and expanded its geographic reach into demographically attractive markets. The acquisition has resulted in positive increases to non-interest income driven by gains on loans sold and the gain on the sale of certain assets acquired through HVB's online lending platform known as Braavo. The Company executed the sale of HVB's Braavo division during the first quarter of 2024 and has been exiting the remaining lending relationships not included in the sale. The Company has experienced a modest increase in charge-offs on loans that were originated and sourced by HVB's Braavo division as it exits this business line.
- Net income for the first six months of 2024 was $12.3 million, which was $9.6 million, or 351.7% more than 2023's net income through June 30, 2023 due to the one-time merger and acquisition costs and the provision for credit losses on non-purchase credit deteriorated loans (the "NPC Provision") recorded in the second quarter of 2023. The effective tax rate for the first six months of 2024 was 17.4% compared to 13.4% in the comparable period in 2023.
- Net income was $5.3 million for the three months ended June 30, 2024, which was $9.4 million more than the net loss for 2023's comparable period due to the one-time merger and acquisition costs and the NPC Provision recorded in the second quarter of 2023. The effective tax rate for the three months ended June 30, 2024 was 17.4% compared to 22.3% in the comparable period in 2023.
- Net interest income before the provision for credit losses was $42.3 million for the six months ended June 30, 2024, an increase of $6.3 million, or 17.4%, over the same period a year ago.
- The provision for credit losses for the three and six months ended June 30, 2024 was $2.0 million and $2.8 million, respectively. The provision was significantly impacted by loans that were not sold as part of the Braavo sale that occurred in the first quarter of 2024. The vast majority of the Braavo loans that were retained after the sale were originated by HVB subsequent to the Company's initial loan due diligence procedures and were current from then until the acquisition close. The provision for the three and six months ended June 30, 2024, directly attributable to these loans was $1,137,000 and $1,806,000, respectively. As of June 30, 2024, the Company has approximately $700,000 of Braavo loans that are performing.
- Return on average equity for the three and six months (annualized) ended June 30, 2024 was 6.73% and 7.91% compared to (6.62%) and 2.22% for the three and six months (annualized) ended June 30, 2023. If the provision for the credit losses attributable to the Braavo loans and the gain on the sale of Braavo are excluded, the return on average equity for the three and six months (annualized) ended June 30, 2024 would have been 7.88% and 8.37%, respectively (1).
- Return on average tangible equity for the three and six months (annualized) ended June 30, 2024 was 10.76% and 12.64% compared to (9.19%) and 3.06% for the three and six months (annualized) ended June 30, 2023. If the provision for the credit losses attributable to the Braavo loans and the gain on the sale of Braavo are excluded, the return on average tangible equity for the three and six months (annualized) ended June 30, 2024 would have been 12.59% and 13.37%. (1)
- Return on average assets for the three and six months (annualized) ended June 30, 2024 was 0.71% and 0.82% compared to (0.68%) and 0.23% for the three and six months (annualized) ended June 30, 2023. If the provision for the credit losses attributable to the Braavo loans and the gain on the sale of Braavo are excluded, the return on average assets for the three and six months (annualized) ended June 30, 2024 would have been 0.83% and 0.87% (1).
Six Months Ended June 30, 2024 Compared to 2023
- For the six months ended June 30, 2024, net income totaled $12,299,000 which compares to net income of $2,723,000 for the first six months of 2023, an increase of $9,576,000. Basic earnings per share of $2.59 for the first six months of 2024 compared to $0.66 for the first six months last year. Annualized return on equity for the six months ended June 30, 2024 and 2023 was 7.91% and 2.22%, while annualized return on assets was 0.82% and 0.23%, respectively. The increase in performance when comparing 2024 to 2023 was due to the one time costs associated with the merger and the NPC Provision recorded in 2023.
- Net interest income before the provision for credit loss for the six months ended June 30, 2024 totaled $42,258,000 compared to $36,001,000 for the six months ended June 30, 2023, resulting in an increase of $6,257,000, or 17.4%. Average interest earning assets increased $500.7 million for the six months ended June 30, 2024 compared to the same period last year, primarily due to the HVB acquisition. Average loans increased $525.0 million while average investment securities decreased $35.9 million. The yield on interest earning assets increased 88 basis points to 5.52%, while the cost of interest-bearing liabilities increased 116 basis points to 2.99% due to the rise in market interest rates and competitive pressure. The tax effected net interest margin for the six months ended June 30, 2024 was 3.09% compared to 3.23% for the same period last year.
- The provision for credit losses for the six months ended June 30, 2024 was $2,787,000 compared to $4,853,000 for the six months ended June 30, 2023, a decrease of $2,066,000. The provision for 2024 was impacted by the Braavo loans as previously mentioned and an increase in past due and classified loans during the second quarter of 2024. As a result of the HVB acquisition during 2023, 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 purchase. Excluding the impact of the acquisition from 2023, the provision would have increased $2,525,000 when comparing the six month period of 2024 to 2023 with the increase being attributable to the Braavo loans and the increase in past due and substandard loans in 2024.
- Total non-interest income was $8,307,000 for the six months ended June 30, 2024, which is $3,853,000 more than the non-interest income of $4,454,000 for the same period last year. The primary drivers were the gain on the sale of assets associated with Braavo and activity due to the HVB acquisition. As a result of the acquisition, service charges, gains on loans sold, earnings on bank owned life insurance and other income all increased. Earnings on bank owned life insurance also increased due to the passing of a former employee in the first quarter of 2024. During the first half of 2024, the Company experienced a smaller unrealized loss on its equity investment portfolio compared to 2023.
- Total non-interest expenses for the six months ended June 30, 2024 totaled $32,889,000 compared to $32,458,000 for the same period last year, which is an increase of $431,000. Salary and benefit costs increased $4,314,000 due to an additional 74.2 FTEs as a result of the acquisition, merit increases for 2024, as well as an increase in health insurance costs of $712,000. The increases in occupancy, furniture and fixtures, software expenses and amortization expenses was due to the acquisition and additional branches as part of it. FDIC insurance expense increased $409,000 due to the Company's increased size and the Bank's lower leverage capital ratio. Professional fees increased due to increased legal expenses, of which $201,000 was related to the sale of certain Braavo assets. Other expenses increased primarily due to the acquisition, with increases experienced in subscriptions, marketing and advertising, postage, printing, data communication expenses and FHLB letter of credit fees. Independent of the acquisition, other expenses increased due to insurance reimbursement received in 2023 to cover amounts previously charged-off through expense. Merger and acquisitions costs for the merger with HVB totaled $8,646,000 in 2023 and included professional and consulting fees, printing, travel, contract termination payments and severance-related expenses.
- The provision for income taxes increased $2,169,000 when comparing the six months ended June 30, 2024 to the same period in 2023 as a result of an increase in income before income tax of $11,745,000.
Three Months Ended June 30, 2024 Compared to June 30, 2023
- For the three months ended June 30, 2024, net income totaled $5,275,000 which compares to net loss of $4,144,000 for the comparable period of 2023, an increase of $9,419,000. Basic earnings (loss) per share of $1.11 for the three months ended June 30, 2024 compares to ($1.00) for the 2023 comparable period. Annualized return on equity for the three months ended June 30, 2024 and 2023 was 6.73% and (6.62%), while annualized return on assets was 0.71% and (0.68%), respectively.
- Net interest income before the provision for credit loss for the three months ended June 30, 2024 totaled $21,300,000 compared to $17,921,000 for the three months ended June 30, 2023, resulting in an increase of $3,379,000, or 18.9%. Average interest earning assets increased $444.8 million for the three months ended June 30, 2024 compared to the same period last year as a result of the HVB acquisition. Average loans increased $488.1 million while average investment securities decreased $41.3 million. The average cost on interest bearing liabilities increased 100 basis points to 3.00%. The tax effected net interest margin for the three months ended June 30, 2024 was 3.15% compared to 3.17% for the same period last year.
- The provision for credit losses for the three months ended June 30, 2024 was $2,002,000 compared to $4,853,000 for the three months ended June 30, 2023, a decrease of $2,851,000. The provision for 2024 was impacted by the Braavo loans as previously mentioned and an increase in past due and classified loans during the second quarter of 2024. As a result of the HVB acquisition during 2023, 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 purchase. Excluding the impact of the acquisition from 2023, the provision would have increased $1,740,000 when comparing the second quarter of 2024 to the second quarter of 2023 with the increase being attributable to the Braavo loans and the increase in past due and substandard loans in 2024.
- Total non-interest income was $3,336,000 for the three months ended June 30, 2024, which is $1,056,000 more than the comparable period last year. As a result of the acquisition, service charges, gains on loans sold, earnings on bank owned life insurance and other income all increased.
- Total non-interest expenses for the three months ended June 30, 2024 totaled $16,246,000 compared to $20,680,000 for the same period last year, which is a decrease of $4,434,000. Salary and benefit costs increased $1,701,000 due to an additional 67.5 FTEs as a result of the acquisition and merit increases for 2024. The increases in occupancy, furniture and fixtures, software expenses and amortization expenses was due to the acquisition and additional branches as part of it. FDIC insurance expense increased $184,000 due to the Company's increased size and the Bank's lower leverage capital ratio. Other expenses increased primarily due to the acquisition, with increases experienced in subscriptions, marketing and advertising, postage, printing, data communication expenses and FHLB letter of credit fees. Merger and acquisitions costs for the merger with HVB totaled $8,402,000 in the second quarter of 2023.
- The provision for income taxes increased $2,301,000 when comparing the three months ended June 30, 2024 to the same period in 2023 as a result of an increase in income before income tax of $11,720,000.
Balance Sheet and Other Information:
- At June 30, 2024, total assets were $2.95 billion, compared to $2.98 billion at December 31, 2023 and $2.89 billion at June 30, 2023. The loan to deposit ratio as of June 30, 2024 was 99.24% compared to 96.87% as of December 31, 2023 and 95.44% as of June 30, 2023.
- Available for sale securities of $402.7 million at June 30, 2024 decreased $14.9 million from December 31, 2023 and $31.7 million from June 30, 2023. The yield on the investment portfolio increased from 2.14% to 2.32% on a tax equivalent basis due to securities purchased during a higher rate environment and lower yielding securities maturing. Investment activity has been limited in the first half of 2024.
- Net loans as of June 30, 2024 totaled $2.23 billion an increase of $5.2 million from December 31, 2023, due to an increase in student loans outstanding. Loans would have increased an additional $6.1 million, if not for the Braavo disposition. In comparison to June 30, 2023, loans have grown $91.7 million with increases experienced in multiple portfolio sectors.
- The allowance for credit losses - loans totaled $22,797,000 at June 30, 2024 which is an increase of $1,199,000 from December 31, 2023. The increase is due to change in expected prepayment speeds, an increase in past due and substandard loans and specific reserves on non-performing loans. The provision for credit losses on loans was $2,986,000 for the first half of 2024. Loan recoveries and charge-offs were $14,000 and $1,356,000, respectively, for the six months ended June 30, 2024 with the majority of the charge-offs associated with loans acquired as part of the HVB acquisition that were originated after the Company performed its initial loan due diligence procedures and which were current from then until the acquisition close. The allowance as a percent of total loans was 1.01% as of June 30, 2024 and 0.94% as of December 31, 2023.
- Non-performing assets totaled $17.9 million as of June 30, 2024, an increase of $4.3 million since December 31, 2023. The increase was driven by the Braavo relationships and one large commercial relationship, which was placed on non-accrual status during the second quarter of 2024. Loans past due 30-89 days totaled $20.7 million, an increase of $10.2 million from December 31, 2023. The increase was driven by loans acquired as part of the HVB acquisition that matured during the second quarter and are in the process of being underwritten and extended in accordance with Company policies.
- Deposits decreased $48.4 million from December 31, 2023, to $2.27 billion at June 30, 2024. With the rise in interest rates, competitive pressure for deposits continues to be at the forefront. Additionally, we have numerous state and political organizations with seasonal funding timelines, which results in a decrease in balances in the first half of the year. At June 30, 2024, the Bank estimates that balances held by customers in excess of the FDIC insurance limit ($250,000 per insured account) totaled $1.04 billion, or 45.7% 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 $498.0 million, or 21.9% of the Bank's total deposits, as of June 30, 2024.
- Stockholders' equity totaled $286.5 million at June 30, 2024, compared to $279.7 million at December 31, 2023, an increase of $6.8 million. Excluding accumulated other comprehensive loss (AOCI), stockholders equity increased $7.8 million and totals $312.4 million. The increase in stockholders equity, excluding AOCI, was attributable to net income for the six months ended June 30, 2024 totaling $12.3 million, offset by cash dividends for the half of 2024 totaling $4.6 million, net treasury and restricted stock activity of $165,000. As a result of changes in market interest rates impacting the fair value of investment securities and swaps, AOCI decreased $1.0 million from December 31, 2023.
Dividend Declared
On June 4, 2024, the Board of Directors declared a cash dividend of $0.49 per share, which was paid on June 28, 2024 to shareholders of record at the close of business on June 14, 2024. The quarterly cash dividend is an increase of 2.1% over the regular cash dividend of $0.475 per share declared one year ago, as adjusted for the 1% stock dividend declared in June 2024, payable on June 28, 2024 to shareholders of record at the close of business on June 14, 2024.
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 | Six Months Ended | |||
June 30, | June 30, | |||
2024 | 2023 | 2024 | 2023 | |
Income and Performance Ratios | ||||
Net Income (Loss) | $ 5,275 | $ (4,144) | $ 12,299 | $ 2,723 |
Return on average assets (annualized) | 0.71 % | (0.68 %) | 0.82 % | 0.23 % |
Return on average equity (annualized) | 6.73 % | (6.62 %) | 7.91 % | 2.22 % |
Return on average tangible equity (annualized) (a) | 10.76 % | (9.19 %) | 12.64 % | 3.06 % |
Net interest margin (tax equivalent)(a) | 3.15 % | 3.17 % | 3.09 % | 3.23 % |
Earnings (loss) per share - basic (b) | $ 1.11 | $ (1.00) | $ 2.59 | $ 0.66 |
Earnings (loss) per share - diluted (b) | $ 1.11 | $ (1.00) | $ 2.59 | $ 0.66 |
Cash dividends paid per share (b) | $ 0.485 | $ 0.475 | $ 0.970 | $ 0.949 |
Number of shares used in computation - basic (b) | 4,748,927 | 4,159,966 | 4,748,523 | 4,106,005 |
Number of shares used in computation - diluted (b) | 4,753,697 | 4,159,966 | 4,753,918 | 4,106,005 |
Asset quality | ||||
Allowance for credit losses - loans | $ 22,797 | $ 21,652 | ||
Non-performing assets | $ 17,924 | $ 13,638 | ||
Allowance for credit losses - loans to total loans | 1.01 % | 1.00 % | ||
Non-performing assets to total loans | 0.79 % | 0.63 % | ||
Annualized net charge-offs to total loans | 0.12 % | 0.00 % | 0.12 % | 0.00 % |
Equity | ||||
Book value per share (b) | $ 60.19 | $ 55.38 | ||
Tangible Book value per share (a) (b) | $ 41.49 | $ 36.69 | ||
Market Value (Last reported trade of month) | $ 44.94 | $ 74.47 | ||
Common shares outstanding | 4,759,486 | 4,706,768 | ||
Other | ||||
Average Full Time Equivalent Employees | 389.7 | 322.2 | 391.9 | 317.7 |
Loan to Deposit Ratio | 99.24 % | 95.44 % | ||
Trust assets under management | $ 174,703 | $ 169,956 | ||
Brokerage assets under management | $ 368,379 | $ 307,336 | ||
Balance Sheet Highlights | June 30, | December 31, | June 30, | |
2024 | 2023 | 2023 | ||
Assets | $ 2,947,531 | $ 2,975,321 | $ 2,891,808 | |
Investment securities | 404,231 | 419,539 | 436,164 | |
Loans (net of unearned income) | 2,255,716 | 2,239,659 | 2,162,842 | |
Allowance for credit losses - loans | 22,797 | 21,598 | 21,652 | |
Deposits | 2,273,095 | 2,321,481 | 2,266,100 | |
Stockholders' Equity | 286,470 | 279,666 | 263,228 | |
(a) See reconciliation 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) | 2024 | 2023 | 2023 |
ASSETS: | |||
Cash and due from banks: | |||
Noninterest-bearing | $ 22,023 | $ 37,733 | $ 28,740 |
Interest-bearing | 16,410 | 15,085 | 15,969 |
Total cash and cash equivalents | 38,433 | 52,818 | 44,709 |
Interest bearing time deposits with other banks | 3,820 | 4,070 | 4,814 |
Equity securities | 1,570 | 1,938 | 1,849 |
Available-for-sale securities | 402,661 | 417,601 | 434,315 |
Loans held for sale | 14,227 | 9,379 | 14,940 |
Loans (net of allowance for credit losses - loans: $22,797 at June 30, 2024; | |||
$21,153 at December 31, 2023 and $21,652 at June 30, 2023) | 2,232,919 | 2,227,683 | 2,141,190 |
Premises and equipment | 20,899 | 21,384 | 21,382 |
Accrued interest receivable | 10,782 | 11,043 | 9,283 |
Goodwill | 85,758 | 85,758 | 84,758 |
Bank owned life insurance | 49,746 | 49,897 | 50,194 |
Other intangibles | 3,244 | 3,650 | 4,071 |
Fair value of derivative instruments - asset | 13,111 | 13,687 | 16,395 |
Deferred tax asset | 17,185 | 17,339 | 20,108 |
Other assets | 53,176 | 59,074 | 43,800 |
TOTAL ASSETS | $ 2,947,531 | $ 2,975,321 | $ 2,891,808 |
LIABILITIES: | |||
Deposits: | |||
Noninterest-bearing | $ 501,991 | $ 523,784 | $ 553,097 |
Interest-bearing | 1,771,104 | 1,797,697 | 1,713,003 |
Total deposits | 2,273,095 | 2,321,481 | 2,266,100 |
Borrowed funds | 334,829 | 322,036 | 318,200 |
Accrued interest payable | 5,482 | 4,298 | 2,256 |
Fair value of derivative instruments - liability | 7,319 | 7,922 | 9,303 |
Other liabilities | 40,336 | 39,918 | 32,721 |
TOTAL LIABILITIES | 2,661,061 | 2,695,655 | 2,628,580 |
STOCKHOLDERS' EQUITY: | |||
Preferred Stock $1.00 par value; authorized | |||
3,000,000 shares; none issued in 2024 or 2023 | - | - | - |
Common stock | |||
$1.00 par value; authorized 25,000,000 shares at June 30, 2024, December 31, 2023 and | |||
June 30, 2023: issued 5,207,343 at June 30, 2024 and 5,160,754 at December 31, 2023 and | |||
June 30, 2023 | 5,207 | 5,161 | 5,161 |
Additional paid-in capital | 144,985 | 143,233 | 143,351 |
Retained earnings | 178,588 | 172,975 | 162,499 |
Accumulated other comprehensive loss | (25,932) | (24,911) | (30,980) |
Treasury stock, at cost: 447,857 at June 30, 2024 and 453,760 shares | |||
at December 31, 2023 and 456,986 shares at June 30, 2023 | (16,378) | (16,792) | (16,803) |
TOTAL STOCKHOLDERS' EQUITY | 286,470 | 279,666 | 263,228 |
TOTAL LIABILITIES AND | |||
STOCKHOLDERS' EQUITY | $ 2,947,531 | $ 2,975,321 | $ 2,891,808 |
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) | 2024 | 2023 | 2024 | 2023 |
INTEREST INCOME: | ||||
Interest and fees on loans | $ 35,067 | $ 24,117 | $ 70,200 | $ 46,666 |
Interest-bearing deposits with banks | 262 | 127 | 505 | 198 |
Investment securities: | ||||
Taxable | 1,663 | 1,683 | 3,287 | 3,239 |
Nontaxable | 520 | 572 | 1,052 | 1,189 |
Dividends | 390 | 311 | 791 | 625 |
TOTAL INTEREST INCOME | 37,902 | 26,810 | 75,835 | 51,917 |
INTEREST EXPENSE: | ||||
Deposits | 12,655 | 5,480 | 24,976 | 9,419 |
Borrowed funds | 3,947 | 3,409 | 8,601 | 6,497 |
TOTAL INTEREST EXPENSE | 16,602 | 8,889 | 33,577 | 15,916 |
NET INTEREST INCOME | 21,300 | 17,921 | 42,258 | 36,001 |
Provision for credit losses | 2,002 | 262 | 2,787 | 262 |
Provision for credit losses - acquisition day 1 non-PCD | - | 4,591 | - | 4,591 |
NET INTEREST INCOME AFTER | ||||
PROVISION FOR CREDIT LOSSES | 19,298 | 13,068 | 39,471 | 31,148 |
NON-INTEREST INCOME: | ||||
Service charges | 1,385 | 1,293 | 2,757 | 2,504 |
Trust | 201 | 181 | 445 | 411 |
Brokerage and insurance | 563 | 442 | 1,228 | 956 |
Gains on loans sold | 479 | 169 | 896 | 214 |
Equity security losses, net | (87) | (74) | (32) | (292) |
Available for sale security losses, net | - | (51) | - | (51) |
Earnings on bank owned life insurance | 328 | 234 | 996 | 452 |
Gain on sale of Braavo division | - | - | 1,102 | - |
Other | 467 | 86 | 915 | 260 |
TOTAL NON-INTEREST INCOME | 3,336 | 2,280 | 8,307 | 4,454 |
NON-INTEREST EXPENSES: | ||||
Salaries and employee benefits | 9,617 | 7,916 | 19,907 | 15,593 |
Occupancy | 1,266 | 814 | 2,590 | 1,649 |
Furniture and equipment | 295 | 162 | 531 | 313 |
Professional fees | 698 | 387 | 1,401 | 768 |
FDIC insurance expense | 509 | 325 | 1,034 | 625 |
Pennsylvania shares tax | 330 | 298 | 640 | 596 |
Amortization of intangibles | 147 | 31 | 296 | 62 |
Software expenses | 494 | 372 | 1,008 | 723 |
ORE expenses (income) | 175 | (11) | 162 | 15 |
Merger and acquisition expenses | - | 8,402 | - | 8,646 |
Other | 2,715 | 1,984 | 5,320 | 3,468 |
TOTAL NON-INTEREST EXPENSES | 16,246 | 20,680 | 32,889 | 32,458 |
Income (loss) before provision (benefit) for income taxes | 6,388 | (5,332) | 14,889 | 3,144 |
Provision (benefit) for income tax expense | 1,113 | (1,188) | 2,590 | 421 |
NET INCOME (LOSS) | $ 5,275 | $ (4,144) | $ 12,299 | $ 2,723 |
PER COMMON SHARE DATA: | ||||
Net Income (loss) - Basic | $ 1.11 | $ (1.00) | $ 2.59 | $ 0.66 |
Net Income (loss) - Diluted | $ 1.11 | $ (1.00) | $ 2.59 | $ 0.66 |
Cash Dividends Paid | $ 0.485 | $ 0.475 | $ 0.970 | $ 0.949 |
Number of shares used in computation - basic | 4,748,927 | 4,159,966 | 4,748,523 | 4,106,005 |
Number of shares used in computation - diluted | 4,753,697 | 4,159,966 | 4,753,918 | 4,106,005 |
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, | |
2024 | 2024 | 2023 | 2023 | 2023 | |
Interest income | $ 37,902 | $ 37,933 | $ 38,512 | $ 36,689 | $ 26,810 |
Interest expense | 16,602 | 16,975 | 16,657 | 14,285 | 8,889 |
Net interest income | 21,300 | 20,958 | 21,855 | 22,404 | 17,921 |
Provision for credit losses | 2,002 | 785 | 200 | 475 | 262 |
Provision for credit losses - acquisition day 1 non-PCD | - | - | - | - | 4,591 |
Net interest income after provision for credit losses | 19,298 | 20,173 | 21,655 | 21,929 | 13,068 |
Non-interest income | 3,423 | 4,916 | 3,410 | 3,593 | 2,405 |
Investment securities (losses) gains, net | (87) | 55 | 79 | 69 | (125) |
Non-interest expenses | 16,246 | 16,643 | 15,920 | 16,444 | 20,680 |
Income (loss) before provision for income taxes | 6,388 | 8,501 | 9,224 | 9,147 | (5,332) |
Provision for income tax expense (benefit) | 1,113 | 1,477 | 1,684 | 1,599 | (1,188) |
Net income (loss) | $ 5,275 | $ 7,024 | $ 7,540 | $ 7,548 | $ (4,144) |
Earnings (Loss) Per Share Basic | $ 1.11 | $ 1.48 | $ 1.59 | $ 1.59 | $ (1.00) |
Earnings (Loss) Per Share Diluted | $ 1.11 | $ 1.48 | $ 1.59 | $ 1.59 | $ (1.00) |
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, | ||||||
2024 | 2023 | |||||
Average | Average | Average | Average | |||
Balance (1) | Interest | Rate | Balance (1) | Interest | Rate | |
(dollars in thousands) | $ | $ | % | $ | $ | % |
ASSETS | ||||||
Interest-bearing deposits at banks | 18,353 | 232 | 5.11 | 18,193 | 82 | 1.79 |
Interest bearing time deposits at banks | 3,820 | 30 | 3.16 | 6,000 | 45 | 2.99 |
Investment securities: | ||||||
Taxable | 355,321 | 2,053 | 2.31 | 388,327 | 1,994 | 2.05 |
Tax-exempt (3) | 105,379 | 658 | 2.50 | 113,674 | 725 | 2.55 |
Investment securities | 460,700 | 2,711 | 2.35 | 502,001 | 2,719 | 2.17 |
Loans: (2)(3)(4) | ||||||
Residential mortgage loans | 358,448 | 5,232 | 5.87 | 236,167 | 3,168 | 5.39 |
Construction loans | 184,103 | 3,367 | 7.36 | 90,635 | 1,353 | 5.99 |
Commercial Loans | 1,251,484 | 20,154 | 6.48 | 983,666 | 13,772 | 5.62 |
Agricultural Loans | 346,107 | 4,482 | 5.21 | 345,467 | 4,221 | 4.90 |
Loans to state & political subdivisions | 56,290 | 556 | 3.97 | 60,395 | 582 | 3.87 |
Other loans | 68,805 | 1,383 | 8.08 | 60,770 | 1,136 | 7.50 |
Loans, net of discount (2)(3)(4) | 2,265,237 | 35,174 | 6.25 | 1,777,100 | 24,232 | 5.47 |
Total interest-earning assets | 2,748,110 | 38,147 | 5.58 | 2,303,294 | 27,078 | 4.72 |
Cash and due from banks | 9,199 | 8,386 | ||||
Bank premises and equipment | 21,053 | 18,960 | ||||
Other assets | 195,528 | 102,155 | ||||
Total non-interest earning assets | 225,780 | 129,501 | ||||
Total assets | 2,973,890 | 2,432,795 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Interest-bearing liabilities: | ||||||
NOW accounts | 766,142 | 4,776 | 2.51 | 545,527 | 2,067 | 1.52 |
Savings accounts | 299,318 | 391 | 0.53 | 314,745 | 265 | 0.34 |
Money market accounts | 381,377 | 2,972 | 3.13 | 330,453 | 1,847 | 2.24 |
Certificates of deposit | 457,570 | 4,516 | 3.97 | 283,694 | 1,301 | 1.84 |
Total interest-bearing deposits | 1,904,407 | 12,655 | 2.67 | 1,474,419 | 5,480 | 1.49 |
Other borrowed funds | 324,736 | 3,947 | 4.89 | 307,523 | 3,409 | 4.45 |
Total interest-bearing liabilities | 2,229,143 | 16,602 | 3.00 | 1,781,942 | 8,889 | 2.00 |
Demand deposits | 382,312 | 397,084 | ||||
Other liabilities | 49,051 | 3,379 | ||||
Total non-interest-bearing liabilities | 431,363 | 400,463 | ||||
Stockholders' equity | 313,384 | 250,390 | ||||
Total liabilities & stockholders' equity | 2,973,890 | 2,432,795 | ||||
Net interest income | 21,545 | 18,189 | ||||
Net interest spread (5) | 2.58 % | 2.71 % | ||||
Net interest income as a percentage | ||||||
of average interest-earning assets | 3.15 % | 3.17 % | ||||
Ratio of interest-earning assets | ||||||
to interest-bearing liabilities | 123 % | 129 % | ||||
(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 2024 and 2023. 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, | ||||||
2024 | 2023 | |||||
Average | Average | Average | Average | |||
Balance (1) | Interest | Rate | Balance (1) | Interest | Rate | |
(dollars in thousands) | $ | $ | % | $ | $ | % |
ASSETS | ||||||
Interest-bearing deposits at banks | 30,119 | 445 | 2.97 | 16,395 | 108 | 1.33 |
Interest bearing time deposits at banks | 3,937 | 60 | 3.06 | 6,028 | 90 | 3.00 |
Investment securities: | ||||||
Taxable | 359,142 | 4,078 | 2.27 | 384,453 | 3,864 | 2.01 |
Tax-exempt (3) | 106,438 | 1,332 | 2.50 | 117,025 | 1,505 | 2.57 |
Investment securities | 465,580 | 5,410 | 2.32 | 501,478 | 5,369 | 2.14 |
Loans: (2)(3)(4) | ||||||
Residential mortgage loans | 358,472 | 10,291 | 5.77 | 224,059 | 5,872 | 5.28 |
Construction loans | 187,001 | 6,858 | 7.38 | 88,048 | 2,492 | 5.71 |
Commercial Loans | 1,243,546 | 39,674 | 6.42 | 959,221 | 26,097 | 5.49 |
Agricultural Loans | 345,287 | 8,887 | 5.18 | 344,882 | 8,474 | 4.95 |
Loans to state & political subdivisions | 56,469 | 1,106 | 3.94 | 59,860 | 1,125 | 3.79 |
Other loans | 89,472 | 3,599 | 8.09 | 79,199 | 2,828 | 7.20 |
Loans, net of discount (2)(3)(4) | 2,280,247 | 70,415 | 6.21 | 1,755,269 | 46,888 | 5.39 |
Total interest-earning assets | 2,779,883 | 76,330 | 5.52 | 2,279,170 | 52,455 | 4.64 |
Cash and due from banks | 9,511 | 7,716 | ||||
Bank premises and equipment | 21,171 | 18,292 | ||||
Other assets | 181,792 | 96,542 | ||||
Total non-interest earning assets | 212,474 | 122,550 | ||||
Total assets | 2,992,357 | 2,401,720 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Interest-bearing liabilities: | ||||||
NOW accounts | 783,055 | 9,999 | 2.57 | 527,960 | 3,584 | 1.37 |
Savings accounts | 300,704 | 778 | 0.52 | 317,063 | 471 | 0.30 |
Money market accounts | 381,209 | 5,765 | 3.04 | 325,841 | 3,121 | 1.93 |
Certificates of deposit | 439,995 | 8,434 | 3.86 | 281,482 | 2,243 | 1.61 |
Total interest-bearing deposits | 1,904,963 | 24,976 | 2.64 | 1,452,346 | 9,419 | 1.31 |
Other borrowed funds | 350,354 | 8,601 | 4.94 | 303,344 | 6,497 | 4.32 |
Total interest-bearing liabilities | 2,255,317 | 33,577 | 2.99 | 1,755,690 | 15,916 | 1.83 |
Demand deposits | 376,632 | 386,104 | ||||
Other liabilities | 49,266 | 15,157 | ||||
Total non-interest-bearing liabilities | 425,898 | 401,261 | ||||
Stockholders' equity | 311,142 | 244,769 | ||||
Total liabilities & stockholders' equity | 2,992,357 | 2,401,720 | ||||
Net interest income | 42,753 | 36,539 | ||||
Net interest spread (5) | 2.53 % | 2.81 % | ||||
Net interest income as a percentage | ||||||
of average interest-earning assets | 3.09 % | 3.23 % | ||||
Ratio of interest-earning assets | ||||||
to interest-bearing liabilities | 123 % | 130 % | ||||
(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 2024 and 2023. 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, | |
2024 | 2024 | 2023 | 2023 | 2023 | |
Real estate: | |||||
Residential | $ 354,588 | $ 357,779 | $ 359,990 | $ 356,381 | $ 358,025 |
Commercial | 1,110,269 | 1,115,900 | 1,092,887 | 1,081,123 | 1,080,513 |
Agricultural | 327,057 | 318,413 | 314,802 | 314,164 | 312,302 |
Construction | 180,157 | 184,506 | 195,826 | 175,320 | 156,927 |
Consumer | 70,542 | 53,101 | 61,316 | 115,753 | 42,701 |
Other commercial loans | 130,851 | 129,438 | 136,168 | 120,347 | 120,288 |
Other agricultural loans | 26,247 | 24,345 | 30,673 | 26,648 | 30,615 |
State & political subdivision loans | 56,005 | 56,177 | 57,174 | 56,660 | 61,471 |
Total loans | 2,255,716 | 2,239,659 | 2,248,836 | 2,246,396 | 2,162,842 |
Less: allowance for credit losses - loans | 22,797 | 21,598 | 21,153 | 21,455 | 21,652 |
Net loans | $ 2,232,919 | $ 2,218,061 | $ 2,227,683 | $ 2,224,941 | $ 2,141,190 |
Past due and non-performing assets | |||||
Total Loans past due 30-89 days and still accruing | $ 20,652 | $ 6,311 | $ 10,457 | $ 5,960 | $ 4,828 |
Non-accrual loans | $ 14,949 | $ 14,693 | $ 12,187 | $ 13,139 | $ 13,073 |
Loans past due 90 days or more and accruing | 285 | 820 | 516 | 8 | 139 |
Non-performing loans | $ 15,234 | $ 15,513 | $ 12,703 | $ 13,147 | $ 13,212 |
OREO | 2,690 | 200 | 474 | 474 | 426 |
Total Non-performing assets | $ 17,924 | $ 15,713 | $ 13,177 | $ 13,621 | $ 13,638 |
Three Months Ended | |||||
Analysis of the Allowance for Credit Losses - Loans | June 30, | March 31, | December 31, | September 30, | June 30, |
(In Thousands) | 2024 | 2024 | 2023 | 2023 | 2023 |
Balance, beginning of period | $ 21,598 | $ 21,153 | $ 21,455 | $ 21,652 | $ 15,250 |
Impact of Adopting ASC 326 | - | - | - | - | - |
Charge-offs | (682) | (674) | (510) | (808) | (4) |
Recoveries | 7 | 7 | 8 | 10 | 26 |
Net (charge-offs) recoveries | (675) | (667) | (502) | (798) | 22 |
PCD allowance for credit loss at acquisition | - | - | - | - | 1,689 |
Provision for credit losses - loans | 1,874 | 1,112 | 200 | 601 | 100 |
Provision for credit losses - acquisition day 1 non-PCD | - | - | - | - | 4,591 |
Balance, end of period | $ 22,797 | $ 21,598 | $ 21,153 | $ 21,455 | $ 21,652 |
CITIZENS FINANCIAL SERVICES, INC. | ||||
Reconciliation of GAAP and Non-GAAP Financial Measures | ||||
(UNAUDITED) | ||||
(Dollars in thousands, except per share data) | ||||
As of | ||||
June 30, | ||||
2024 | 2023 | |||
Tangible Equity | ||||
Stockholders Equity - GAAP | $ 286,470 | $ 263,228 | ||
Accumulated other comprehensive loss | ||||
Intangible Assets | (89,002) | (88,829) | ||
Tangible Equity - Non-GAAP | 197,468 | 174,399 | ||
Shares outstanding adjusted for June 2024 stock Dividend | 4,759,486 | 4,753,357 | ||
Tangible Book value per share - Non-GAAP | $ 41.49 | $ 36.69 | ||
As of | ||||
June 30 | ||||
2024 | 2023 | |||
Tangible Equity per share | ||||
Stockholders Equity per share - GAAP | $ 60.19 | $ 55.38 | ||
Adjustment for intangible assets | (18.70) | (18.69) | ||
Tangible Book value per share - Non-GAAP | $ 41.49 | $ 36.69 | ||
For the Three Months Ended | For the Six Months Ended | |||
June 30 | June 30 | |||
2024 | 2023 | 2024 | 2023 | |
Return on Average Tangible Equity | ||||
Average Stockholders Equity - GAAP | $ 285,184 | $ 221,557 | $ 283,834 | $ 214,753 |
Average Intangible Assets | (89,119) | (41,189) | (89,220) | (36,922) |
Average Tangible Equity - Non-GAAP | 196,065 | 180,368 | 194,614 | 177,831 |
Net Income (Loss) - GAAP | $ 5,275 | $ (4,144) | $ 12,299 | $ 2,723 |
Annualized Return on Average Tangible Equity Non-GAAP | 10.76 % | -9.19 % | 12.64 % | 3.06 % |
For the Three Months Ended | For the Six Months Ended | |||
June 30 | June 30 | |||
2024 | 2023 | 2024 | 2023 | |
Return on Average Assets and Equity Excluding sale of Braavo assets, net | ||||
Net Income (Loss) - GAAP | $ 5,275 | $ (4,144) | $ 12,299 | $ 2,723 |
After tax gain on sale of Braavo, net of legal fees | - | - | (712) | - |
After tax provision associated with Braavo loans remaining after sale | 898 | - | 1,427 | - |
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 - Non-GAAP | $ 6,173 | $ 6,276 | $ 13,014 | $ 13,367 |
Average Assets | 2,973,890 | 2,432,795 | 2,992,357 | 2,401,720 |
Annualized Return on Average assets, Excluding sale of Braavo assets, net | 0.83 % | 1.03 % | 0.87 % | 1.11 % |
Average Stockholders Equity - GAAP | $ 313,384 | $ 250,390 | $ 311,142 | $ 244,769 |
Annualized Return on Average stockholders equity, Excluding sale of Braavo assets, net | 7.88 % | 10.03 % | 8.37 % | 10.92 % |
Average Tangible Equity - Non-GAAP | 196,065 | 180,368 | 194,614 | 177,831 |
Annualized Return on Average Tangible Equity Excluding sale of Braavo assets, net of | 12.59 % | 13.92 % | 13.37 % | 15.03 % |
For the Three Months Ended | For the Six Months Ended | |||
June 30 | June 30 | |||
2024 | 2023 | 2024 | 2023 | |
Earnings per share, Excluding sale of Braavo assets, net of legal fees and | ||||
Net Income (Loss) - GAAP | $ 5,275 | $ (4,144) | $ 12,299 | $ 2,723 |
After tax gain on sale of Braavo, net of legal fees | - | - | (712) | - |
After tax provision associated with Braavo loans remaining after sale | 898 | - | 1,427 | - |
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 - Non-GAAP | $ 6,173 | $ 6,276 | $ 13,014 | $ 13,367 |
Number of shares used in computation - basic | 4,753,697 | 4,159,966 | 4,753,918 | 4,106,005 |
Basic and Diluted earnings per share, Excluding sale of Braavo assets, net of legal fees, | $ 1.30 | $ 1.51 | $ 2.74 | $ 3.26 |
For the Three Months Ended | For the Six Months Ended | |||
June 30 | June 30 | |||
Reconciliation of net interest income on fully taxable equivalent basis | 2024 | 2023 | 2024 | 2023 |
Total interest income | $ 37,902 | $ 26,810 | $ 127,118 | $ 37,222 |
Total interest expense | 16,602 | 8,889 | 46,858 | 3,231 |
Net interest income | 21,300 | 17,921 | 80,260 | 33,991 |
Tax equivalent adjustment | 245 | 268 | 1,055 | 469 |
Net interest income (fully taxable equivalent) - Non-GAAP | $ 21,545 | $ 18,189 | $ 81,315 | $ 34,460 |
SOURCE CITIZENS FINANCIAL SERVICES, INC.
