/C O R R E C T I O N -- CITIZENS FINANCIAL SERVICES, INC./
In the news release, CITIZENS FINANCIAL SERVICES, INC. REPORTS UNAUDITED FULL YEAR AND FOURTH QUARTER 2023 FINANCIAL RESULTS, issued 30-Jan-2024 by CITIZENS FINANCIAL SERVICES, INC. over PR Newswire, two earnings tables titled "CONSOLIDATED SUMMARY OF LOANS BY TYPE; NON-PERFORMING ASSETS; and ALLOWANCE FOR CREDIT LOSSES" and "Reconciliation of GAAP and Non-GAAP Financial Measures" were omitted from the release as incorrectly transmitted by PR Newswire. The complete, corrected release follows:
CITIZENS FINANCIAL SERVICES, INC. REPORTS UNAUDITED FULL YEAR AND FOURTH QUARTER 2023 FINANCIAL RESULTS
MANSFIELD, Pa., Jan. 30, 2024 /PRNewswire/ -- Citizens Financial Services, Inc. (Nasdaq: CZFS), parent company of First Citizens Community Bank, released today its unaudited consolidated financial results for the three months and year ended December 31, 2023.
Highlights
- During the fourth quarter of 2023, we continued to integrate the assets and employees acquired as part of the acquisition of HV Bancorp, Inc. ("HVB") into the Company. We continue to be excited by the opportunities these markets and individuals represent for the Company. The acquisition of HVB in the first half of 2023 contributed significant growth to net interest income in the second half of 2023. Merger and acquisitions costs for 2023 total $9.3 million. The provision for credit losses on non-purchase credit deteriorated loans (the "NPC Provision") was $4.6 million for 2023.
- Net income was $17.8 million for 2023, which is $11.3 million, or 38.7% lower than 2022's net income due to the one-time merger and acquisition costs and the NPC Provision. The effective tax rate for 2023 was 17.2% compared to 18.1% in 2022.
- Net income was $7.5 million for the three months ended December 31, 2023, which is 4.3% lower than the net income for 2022's comparable period. The effective tax rate for the three months ended December 31, 2023 was 18.3% compared to 18.8% in the comparable period in 2022.
- Net interest income before the provision for credit losses was $80.3 million for 2023, an increase of $8.1 million, or 11.3%, over 2022.
- Return on average equity for the three months (annualized) and the year ended December 31, 2023 was 9.93% and 6.52% compared to 13.58% and 12.98% for the three months (annualized) and the year ended December 31, 2022, respectively. If the death benefits received from life insurance on a former employee, the one-time costs associated with the acquisition and the NPC Provision are excluded, the return on average equity for the year ended December 31, 2023 and 2022 would have been 10.52% and 13.11%, respectively (1).
- Return on average tangible equity (non-GAAP) for the three months (annualized) and the year ended December 31, 2023 was 14.00% and 8.47% compared to 15.80% and 15.20% for the three months (annualized) and the year ended December 31, 2022, respectively. If the death benefits received from life insurance on a former employee, the one-time costs associated with the acquisition and the NPC Provision are excluded, the return on average tangible equity for 2023 and 2022 would have been 13.67% and 15.36%, respectively. (1)
- Return on average assets for the three months (annualized) and the year ended December 31, 2023 was 1.00% and 0.66% compared to 1.34% and 1.29% for the three months (annualized) and the year ended December 31, 2022, respectively. If the death benefits received from life insurance on a former employee, the one-time costs associated with the acquisition and the NPC Provision are excluded, the return on average assets for 2023 and 2022 would have been 1.07% and 1.30%, respectively (1).
2023 Compared to 2022
- For 2023, net income totaled $17,811,000 which compares to net income of $29,060,000 for 2022, a decrease of $11,249,000. Basic and diluted earnings per share of $4.06 for 2023 compares to $7.25 for 2022. Return on equity 2023 and 2022 was 6.52% and 12.98%, while return on assets was 0.66% and 1.29%, respectively. If the death benefits received from life insurance on a former employee, the one-time costs associated with the acquisition and the NPC Provision are excluded, basic earnings per share, the annualized return on average equity and average assets for 2023 would be $6.56, 10.52% and 1.07%, respectively, compared to $7.32, 13.11% and 1.30%, respectively for 2022. (1)
- Net interest income before the provision for credit loss for 2023 totaled $80,260,000 compared to $72,134,000 for 2022, resulting in an increase of $8,126,000, or 11.3%. Average interest earning assets increased $382.4 million 2023 compared to 2022, primarily due to the HVB acquisition. Average loans increased $410.7 million while average investment securities increased $3.0 million. The yield on interest earning assets increased 1.14% to 5.07%, while the cost of interest-bearing liabilities increased 165 basis points to 2.34% due to the rise in market interest rates and competitive pressure. The tax effected net interest margin for 2023 was 3.21% compared to 3.41% for 2022.
- The provision for credit losses for 2023 was $5,528,000 compared to $1,683,000 for 2022, an increase of $3,845,000. As a result of the acquisition, the Company recorded a $4.6 million provision for credit losses for loans acquired that did not have any credit deterioration at the time of acquisition. Excluding the impact of the acquisition, the provision would have decreased $746,000 when comparing 2023 to 2022 with the decrease being attributable to lower loan growth in 2023 compared to 2022.
- Total non-interest income was $11,605,000 for 2023, which is $1,867,000 more than the non-interest income of $9,738,000 for 2022. The primary driver was revenues associated with the HVB acquisition, which includes additional service charge revenue, earnings on bank owned life insurance and gains on loans sold. In addition to the earnings on bank owned life insurance obtained as part of the acquisition, the Company received $195,000 of death benefits upon the passing of a former employee.
- Total non-interest expenses for 2023 totaled $64,822,000 compared to $44,694,000 for 2022, which is an increase of $20,128,000, or 45.0%. The primary driver of the increase is the merger and acquisition costs of completing the HVB acquisition that total $9,269,000 for 2023 compared to $292,000 for 2022. Merger and acquisitions costs for the merger with HVB include professional and consulting fees, printing, travel, contract termination payments and severance-related expenses. Salary and benefit costs increased $7,153,000 due to an additional 47.8 FTEs due to the acquisition, merit increases for 2023 as well as an increase in health insurance costs of $1,093,000. The increases in occupancy and furniture and fixtures was due to the acquisition and additional branches as part of it. Due to growth that occurred in 2022 and the acquisition, FDIC insurance expense increased $799,000.
- The provision for income taxes decreased $2,731,000 when comparing 2023 to 2022 as a result of a decrease in income before income tax of $13,980,000 primarily due to the one-time merger costs.
Three Months Ended December 31, 2023 Compared to December 31, 2022
- For the three months ended December 31, 2023, net income totaled $7,540,000 which compares to net income of $7,875,000 for the comparable period of 2022, a decrease of $335,000. Basic and diluted earnings per share of $1.60 for the three months ended December 31, 2023 compares to $1.97 for the 2022 comparable period. Annualized return on equity for the three months ended December 31, 2023 and 2022 was 9.93% and 13.58%, while annualized return on assets was 1.00% and 1.34%, respectively. If the one-time costs associated with the acquisition are excluded, basic earnings per share, the annualized return on average equity and average assets for 2022 would have been $2.04, 14.08% and 1.39%, respectively. (1)
- Net interest income before the provision for credit loss for the three months ended December 31, 2023 totaled $21,855,000 compared to $19,297,000 for the three months ended December 31, 2022, resulting in an increase of $2,558,000, or 13.3%. Average interest earning assets increased $556.2 million for the three months ended December 31, 2023 compared to the same period last year as a result of the HVB acquisition. Average loans increased $572.7 million while average investment securities decreased $19.8 million. The tax effected net interest margin for the three months ended September 30, 2023 was 3.13% compared to 3.46% for the same period last year, which was impacted by the increase in the average cost on interest bearing liabilities of 172 basis points, to 2.89%.
- The provision for credit losses for the three months ended December 31, 2023 was $200,000 compared to $258,000 for the three months ended December 31, 2022, a decrease of $58,000. The decrease in the provision is due to lower loan growth in the fourth quarter of 2023 compared to the same period in 2022.
- Total non-interest income was $3,489,000 for the three months ended December 31, 2023, which is $1,178,000 more than for the comparable period last year. The primary driver was the impact of the acquisition, which increased service charge revenue, gains on loans sold and earnings on bank owned life insurance. In addition, we recognized a gain on the equity security portfolio in the fourth quarter of 2023 due to market conditions compared to a loss in the comparable period of 2022.
- Total non-interest expenses for the three months ended December 31, 2023 totaled $15,920,000 compared to $11,649,000 for the same period last year, which is an increase of $4,271,000. Salaries and benefits increased $2.5 million due to an increase in headcount of 85 FTEs as a result of the acquisition. The increases in occupancy and furniture and fixtures was due to the acquisition and additional branches as part of it. Due to the acquisition, FDIC insurance expense increased $239,000. Other expenses increased due to increases in the Delaware franchise tax, contributions, appraisal and credit bureau fees, and travel and entertainments costs associated with the southeast Pennsylvania and Delaware markets.
- The provision for income taxes decreased $142,000 when comparing the three months ended December 31, 2023 to the same period in 2022 as a result of a decrease in income before income tax of $477,000. The effective tax rate was 18.3% and 18.8% for the three months ended December 31, 2023 and 2022, respectively.
Balance Sheet and Other Information:
- At December 31, 2023, total assets were $2.98 billion, compared to $2.33 billion at December 31, 2022. The loan to deposit ratio as of December 31, 2023 was 96.87% compared to 93.54% as of December 31, 2022.
- Available for sale securities of $417.6 million at December 31, 2023 decreased $21.9 million from December 31, 2022. As part of the HVB acquisition, $79.2 million of available for sale securities were acquired, of which $76.1 million were sold prior to June 30, 2023. The yield on the investment portfolio increased from 1.90% to 2.20% on a tax equivalent basis.
- Net loans as of December 31, 2023 totaled $2.23 billion and increased $521.2 million from December 31, 2022 as a result of the acquisition. Excluding the acquisition, loans would have increased $44.0 million during 2023.
- Non-performing loans totaled $12.7 million at December 31, 2023, which is an increase of $5.6 million compared to December 31, 2022. The majority of the increase is attributable to loans acquired as part of the HVB acquisition. At December 31, 2023, $3.2 million of loans acquired as part of the HVB acquisition are considered non-accrual. The remaining increase is attributable to one commercial relationship. Loans past due 30-89 days total $10.5 million as of December 31, 2023 compared to $3.3 million as of December 31, 2023. Of the $7.1 million increase, $6.6 million relate to loans acquired as part of the HVB acquisition.
- The allowance for credit losses - loans totaled $21,153,000 at December 31, 2023 which is an increase of $2,601,000 from December 31, 2022 and is due to the acquisition and the implementation of the CECL accounting standard effective January 1, 2023. The impact of the acquisition was an increase of $6.3 million, of which $4.6 million was in provision with the remaining $1.7 million due to purchase credit deteriorated ("PCD") loans. The impact of adopting CECL was a decrease of $3.3 million in the allowance for credit losses – loans. Loan recoveries and charge-offs were $49,000 and $1,329,000, respectively, for 2023. Of the $1,329,000 charge-off, $1,104,000 was related to loans acquired as part of the acquisition that were fully reserved at the time of the acquisition. A majority of the remaining charge-off was also related to a loan acquired as part of the acquisition that filed for bankruptcy subsequent to the acquisition. A provision for credit losses – loans of $901,000 was recorded during 2023. The allowance as a percent of total loans was 0.94% as of December 31, 2023 and 1.08% as of December 31, 2022.
- Deposits increased $477.3 million from December 31, 2022, to $2.32 billion at December 31, 2023, due to the acquisition, which increased deposits by $533.4 million. Excluding the acquisition, deposits decreased $56.1 million. With the rise in market interest rates, competition for deposits has increased. Additionally, we have numerous state and political organizations as customers who utilized funds during the first half of 2023 for various projects and bond payments. At December 31, 2023, the Bank estimates that balances held by customers in excess of the FDIC insurance limit ($250,000 per insured account) totaled $1.09 billion, or 46.7% of the Bank's total deposits. Included in this balance are balances held through Intrafi, which provides customers with FDIC insurance coverage by placing customer funds with insured banks within the Intrafi network, as well as deposits collateralized by securities (almost exclusively municipal deposits), which together total $512.8 million, or 22.1% of the Bank's total deposits, as of December 31, 2023.
- Stockholders' equity totaled $279.7 million at December 31, 2023, compared to $200.1 million at December 31, 2022, an increase of $79.5 million. The increase was attributable to issuing 693,858 shares with a value of $60.1 million as part of the acquisition and net income for 2023 totaling $17.8 million, offset by net cash dividends for 2023 totaling $8.5 million, net treasury stock activity of $181,000 and an increase of $1.8 million attributable to the CECL adjustment made effective January 1, 2023. As a result of changes in market interest rates impacting the fair value of investment securities and swaps, accumulated other comprehensive loss decreased $8.2 million from December 31, 2022.
Dividend Declared
On December 5, 2023, the Board of Directors declared a cash dividend of $0.49 per share, which was paid on December 29, 2023 to shareholders of record at the close of business on December 15, 2023. The quarterly cash dividend is an increase of 3.1% over the regular cash dividend of $0.475 per share declared one year ago, as adjusted for the 1% stock dividend declared in June 2023.
Citizens Financial Services, Inc. has nearly 1,900 shareholders, the majority of whom reside in markets where its offices are located.
Note: This press release may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are not historical facts; rather, they are statements based on the Company's current expectations regarding its business strategies and their intended results and its future performance. Forward-looking statements are preceded by terms such as "expects," "believes," "anticipates," "intends" and similar expressions. Forward-looking statements are not guarantees of future performance. Numerous risks and uncertainties could cause or contribute to the Company's actual results, performance and achievements to be materially different from those expressed or implied by the forward-looking statements. Factors that may cause or contribute to these differences include, without limitation, changes in general economic conditions, including changes in market interest rates and changes in monetary and fiscal policies of the federal government; legislative and regulatory changes; and other factors disclosed periodically in the Company's filings with the Securities and Exchange Commission. Because of the risks and uncertainties inherent in forward-looking statements, readers are cautioned not to place undue reliance on them, whether included in this press release or made elsewhere periodically by the Company or on its behalf. The Company assumes no obligation to update any forward-looking statements except as may be required by applicable law or regulation.
(1) See reconciliation of GAAP and non-GAAP measures at the end of the press release
CITIZENS FINANCIAL SERVICES, INC. | ||||
CONSOLIDATED FINANCIAL HIGHLIGHTS | ||||
(UNAUDITED) | ||||
(Dollars in thousands, except per share data) | ||||
As of or For The | As of or For The | |||
Three Months Ended | Year Ended | |||
December 31, | December 31, | |||
2023 | 2022 | 2023 | 2022 | |
Income and Performance Ratios | ||||
Net Income | $ 7,540 | $ 7,875 | $ 17,811 | $ 29,060 |
Return on average assets (annualized) | 1.00 % | 1.34 % | 0.66 % | 1.29 % |
Return on average equity (annualized) | 9.93 % | 13.58 % | 6.52 % | 12.98 % |
Return on average tangible equity (annualized) (a) | 14.00 % | 15.80 % | 8.47 % | 15.20 % |
Net interest margin (tax equivalent)(a) | 3.13 % | 3.46 % | 3.21 % | 3.41 % |
Earnings per share - basic (b) | $ 1.60 | $ 1.97 | $ 4.06 | $ 7.25 |
Earnings per share - diluted (b) | $ 1.60 | $ 1.97 | $ 4.06 | $ 7.25 |
Cash dividends paid per share (b) | $ 0.490 | $ 0.475 | $ 1.941 | $ 1.882 |
Number of shares used in computation - basic (b) | 4,700,130 | 4,005,189 | 4,382,573 | 4,008,931 |
Number of shares used in computation - diluted (b) | 4,700,131 | 4,005,304 | 4,382,573 | 4,008,931 |
Asset quality | ||||
Allowance for credit losses - loans | $ 21,153 | $ 18,552 | ||
Non-performing assets | $ 13,177 | $ 7,488 | ||
Allowance for credit losses - loans/total loans | 0.94 % | 1.08 % | ||
Non-performing assets to total loans | 0.59 % | 0.43 % | ||
Annualized net charge-offs to total loans | 0.09 % | 0.00 % | 0.06 % | 0.03 % |
Equity | ||||
Book value per share (b) | $ 64.70 | $ 58.17 | ||
Tangible Book value per share (a) (b) | $ 45.71 | $ 50.03 | ||
Market Value (Last reported trade of month) | $ 64.72 | $ 76.72 | ||
Common shares outstanding | 4,706,994 | 3,971,209 | ||
Other | ||||
Average Full Time Equivalent Employees | 395.3 | 310.0 | 357.7 | 309.9 |
Loan to Deposit Ratio | 96.87 % | 93.54 % | ||
Trust assets under management | $ 167,894 | $ 150,005 | ||
Brokerage assets under management | $ 329,446 | $ 283,548 | ||
Balance Sheet Highlights | December 31, | December 31, | ||
2023 | 2022 | |||
Assets | $ 2,975,321 | $ 2,333,393 | ||
Investment securities | 419,539 | 441,714 | ||
Loans (net of unearned income) | 2,248,836 | 1,724,999 | ||
Allowance for credit losses - loans | 21,153 | 18,552 | ||
Deposits | 2,321,481 | 1,844,208 | ||
Stockholders' Equity | 279,666 | 200,147 | ||
(a) See reconcilation of GAAP and Non-GAAP measures at the end of the press release | ||||
(b) Prior period amounts were adjusted to reflect stock dividends. | ||||
CITIZENS FINANCIAL SERVICES, INC. | ||
CONSOLIDATED BALANCE SHEET | ||
(UNAUDITED) | ||
December 31, | December 31, | |
(in thousands except share data) | 2023 | 2022 |
ASSETS: | ||
Cash and due from banks: | ||
Noninterest-bearing | $ 37,733 | $ 24,814 |
Interest-bearing | 15,085 | 1,397 |
Total cash and cash equivalents | 52,818 | 26,211 |
Interest bearing time deposits with other banks | 4,070 | 6,055 |
Equity securities | 1,938 | 2,208 |
Available-for-sale securities | 417,601 | 439,506 |
Loans held for sale | 9,379 | 725 |
Loans (net of allowance for credit losses - loans: $21,153 at December 31, 2023; | ||
$18,552 at December 31, 2022) | 2,227,683 | 1,706,447 |
Premises and equipment | 21,384 | 17,619 |
Accrued interest receivable | 11,043 | 7,332 |
Goodwill | 85,758 | 31,376 |
Bank owned life insurance | 49,897 | 39,355 |
Other intangibles | 3,650 | 1,272 |
Fair value of derivative instruments - asset | 13,687 | 16,599 |
Deferred tax asset | 17,339 | 12,886 |
Other assets | 59,074 | 25,802 |
TOTAL ASSETS | $ 2,975,321 | $ 2,333,393 |
LIABILITIES: | ||
Deposits: | ||
Noninterest-bearing | $ 523,784 | $ 396,260 |
Interest-bearing | 1,797,697 | 1,447,948 |
Total deposits | 2,321,481 | 1,844,208 |
Borrowed funds | 322,036 | 257,278 |
Accrued interest payable | 4,298 | 1,232 |
Fair value of derivative instruments - liability | 7,922 | 9,726 |
Other liabilities | 39,918 | 20,802 |
TOTAL LIABILITIES | 2,695,655 | 2,133,246 |
STOCKHOLDERS' EQUITY: | ||
Preferred Stock $1.00 par value; authorized | ||
3,000,000 shares; none issued in 2023 or 2022 | - | - |
Common stock | ||
$1.00 par value; authorized 25,000,000 shares at December 31, 2023, and 2022: | ||
issued 5,160,754 at December 31, 2023 and 4,427,687 at December 31, 2022 | 5,161 | 4,428 |
Additional paid-in capital | 143,233 | 80,911 |
Retained earnings | 172,975 | 164,922 |
Accumulated other comprehensive loss | (24,911) | (33,141) |
Treasury stock, at cost: 453,760 at December 31, 2023 and 456,478 shares | ||
at December 31, 2022 | (16,792) | (16,973) |
TOTAL STOCKHOLDERS' EQUITY | 279,666 | 200,147 |
TOTAL LIABILITIES AND | ||
STOCKHOLDERS' EQUITY | $ 2,975,321 | $ 2,333,393 |
CITIZENS FINANCIAL SERVICES, INC. | ||||
CONSOLIDATED STATEMENT OF INCOME | ||||
(UNAUDITED) | ||||
Three Months Ended | Year Ended | |||
December 31, | December 31, | |||
(in thousands, except share and per share data) | 2023 | 2022 | 2023 | 2022 |
INTEREST INCOME: | ||||
Interest and fees on loans | $ 35,637 | $ 21,829 | $ 116,075 | $ 74,265 |
Interest-bearing deposits with banks | 274 | 67 | 736 | 400 |
Investment securities: | ||||
Taxable | 1,663 | 1,565 | 6,636 | 5,615 |
Nontaxable | 535 | 624 | 2,264 | 2,454 |
Dividends | 403 | 267 | 1,407 | 623 |
TOTAL INTEREST INCOME | 38,512 | 24,352 | 127,118 | 83,357 |
INTEREST EXPENSE: | ||||
Deposits | 12,180 | 2,847 | 31,699 | 7,316 |
Borrowed funds | 4,477 | 2,208 | 15,159 | 3,907 |
TOTAL INTEREST EXPENSE | 16,657 | 5,055 | 46,858 | 11,223 |
NET INTEREST INCOME | 21,855 | 19,297 | 80,260 | 72,134 |
Provision for credit losses | 200 | 258 | 937 | 1,683 |
Provision for credit losses - acquisition day 1 non-PCD | - | - | 4,591 | - |
NET INTEREST INCOME AFTER | ||||
PROVISION FOR CREDIT LOSSES | 21,655 | 19,039 | 74,732 | 70,451 |
NON-INTEREST INCOME: | ||||
Service charges | 1,443 | 1,265 | 5,639 | 5,346 |
Trust | 181 | 183 | 764 | 803 |
Brokerage and insurance | 495 | 467 | 1,924 | 1,895 |
Gains on loans sold | 778 | 17 | 1,452 | 258 |
Equity security gains (losses), net | 79 | (49) | (144) | (247) |
Available for sale security losses, net | - | (8) | (51) | (14) |
Earnings on bank owned life insurance | 313 | 217 | 1,254 | 852 |
Other | 200 | 219 | 767 | 845 |
TOTAL NON-INTEREST INCOME | 3,489 | 2,311 | 11,605 | 9,738 |
NON-INTEREST EXPENSES: | ||||
Salaries and employee benefits | 9,392 | 6,873 | 34,990 | 27,837 |
Occupancy | 1,253 | 811 | 4,123 | 3,138 |
Furniture and equipment | 254 | 149 | 822 | 565 |
Professional fees | 688 | 320 | 1,962 | 1,641 |
FDIC insurance expense | 475 | 236 | 1,475 | 676 |
Pennsylvania shares tax | (310) | (110) | 583 | 907 |
Amortization of intangibles | 154 | 36 | 373 | 156 |
Software expenses | 510 | 377 | 1,784 | 1,446 |
ORE expenses (income) | 40 | 142 | 166 | 17 |
Merger and acquisition expenses | - | 292 | 9,269 | 292 |
Other | 3,464 | 2,523 | 9,275 | 8,019 |
TOTAL NON-INTEREST EXPENSES | 15,920 | 11,649 | 64,822 | 44,694 |
Income before provision for income taxes | 9,224 | 9,701 | 21,515 | 35,495 |
Provision for income tax expense | 1,684 | 1,826 | 3,704 | 6,435 |
NET INCOME | $ 7,540 | $ 7,875 | $ 17,811 | $ 29,060 |
PER COMMON SHARE DATA: | ||||
Net Income - Basic | $ 1.60 | $ 1.97 | $ 4.06 | $ 7.25 |
Net Income - Diluted | $ 1.60 | $ 1.97 | $ 4.06 | $ 7.25 |
Cash Dividends Paid | $ 0.490 | $ 0.475 | $ 1.941 | $ 1.882 |
Number of shares used in computation - basic | 4,700,130 | 4,005,189 | 4,382,573 | 4,008,931 |
Number of shares used in computation - diluted | 4,700,131 | 4,005,304 | 4,382,573 | 4,008,931 |
CITIZENS FINANCIAL SERVICES, INC. | |||||
QUARTERLY CONDENSED, CONSOLIDATED INCOME (LOSS) STATEMENT INFORMATION | |||||
(UNAUDITED) | |||||
(in thousands, except per share data) | Three Months Ended, | ||||
Dec 31, | Sept 30, | June 30, | March 31, | Dec 31, | |
2023 | 2023 | 2023 | 2023 | 2022 | |
Interest income | $ 38,512 | $ 36,689 | $ 26,810 | $ 25,107 | $ 24,352 |
Interest expense | 16,657 | 14,285 | 8,889 | 7,027 | 5,055 |
Net interest income | 21,855 | 22,404 | 17,921 | 18,080 | 19,297 |
Provision for credit losses | 200 | 475 | 262 | - | 258 |
Provision for credit losses - acquisition day 1 non-PCD | - | - | 4,591 | - | - |
Net interest income after provision for credit losses | 21,655 | 21,929 | 13,068 | 18,080 | 19,039 |
Non-interest income | 3,410 | 3,593 | 2,405 | 2,392 | 2,368 |
Investment securities gains (losses), net | 79 | 69 | (125) | (218) | (57) |
Non-interest expenses | 15,920 | 16,444 | 20,680 | 11,778 | 11,649 |
Income (loss) before provision for income taxes | 9,224 | 9,147 | (5,332) | 8,476 | 9,701 |
Provision for income tax expense (benefit) | 1,684 | 1,599 | (1,188) | 1,609 | 1,826 |
Net income (loss) | $ 7,540 | $ 7,548 | $ (4,144) | $ 6,867 | $ 7,875 |
Earnings (Loss) Per Share Basic | $ 1.60 | $ 1.61 | $ (1.01) | $ 1.71 | $ 1.97 |
Earnings (Loss) Per Share Diluted | $ 1.60 | $ 1.61 | $ (1.01) | $ 1.71 | $ 1.97 |
CITIZENS FINANCIAL SERVICES, INC. | ||||||
CONSOLIDATED AVERAGE BALANCES, INTEREST, YIELDS AND RATES, AND NET INTEREST MARGIN ON A FULLY TAX-EQUIVALENT BASIS | ||||||
(UNAUDITED) | ||||||
Three Months Ended December 31, | ||||||
2023 | 2022 | |||||
Average | Average | Average | Average | |||
Balance (1) | Interest | Rate | Balance (1) | Interest | Rate | |
(dollars in thousands) | $ | $ | % | $ | $ | % |
ASSETS | ||||||
Interest-bearing deposits at banks | 18,507 | 239 | 5.12 | 13,464 | 21 | 0.62 |
Interest bearing time deposits at banks | 4,410 | 35 | 3.06 | 6,055 | 46 | 3.01 |
Investment securities: | ||||||
Taxable | 377,292 | 2,066 | 2.19 | 383,496 | 1,832 | 1.91 |
Tax-exempt (3) | 108,353 | 678 | 2.50 | 122,031 | 791 | 2.59 |
Investment securities | 485,645 | 2,744 | 2.26 | 505,527 | 2,623 | 2.08 |
Loans: (2)(3)(4) | ||||||
Residential mortgage loans | 358,735 | 5,120 | 5.66 | 207,644 | 2,584 | 4.94 |
Construction loans | 197,420 | 3,653 | 7.34 | 84,424 | 1,085 | 5.10 |
Commercial Loans | 1,208,249 | 19,482 | 6.40 | 929,394 | 12,347 | 5.27 |
Agricultural Loans | 339,720 | 4,302 | 5.02 | 346,378 | 4,045 | 4.63 |
Loans to state & political subdivisions | 56,710 | 562 | 3.93 | 59,470 | 536 | 3.58 |
Other loans | 130,468 | 2,627 | 7.99 | 91,307 | 1,333 | 5.79 |
Loans, net of discount (2)(3)(4) | 2,291,302 | 35,746 | 6.19 | 1,718,617 | 21,930 | 5.06 |
Total interest-earning assets | 2,799,864 | 38,764 | 5.49 | 2,243,663 | 24,620 | 4.35 |
Cash and due from banks | 11,215 | 6,873 | ||||
Bank premises and equipment | 21,446 | 17,547 | ||||
Other assets | 191,231 | 84,166 | ||||
Total non-interest earning assets | 223,892 | 108,586 | ||||
Total assets | 3,023,756 | 2,352,249 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Interest-bearing liabilities: | ||||||
NOW accounts | 816,067 | 5,344 | 2.60 | 520,932 | 1,033 | 0.79 |
Savings accounts | 312,575 | 417 | 0.53 | 324,746 | 161 | 0.20 |
Money market accounts | 400,971 | 2,910 | 2.88 | 331,023 | 967 | 1.16 |
Certificates of deposit | 401,932 | 3,509 | 3.46 | 279,025 | 686 | 0.98 |
Total interest-bearing deposits | 1,931,545 | 12,180 | 2.50 | 1,455,726 | 2,847 | 0.78 |
Other borrowed funds | 351,492 | 4,477 | 5.05 | 259,690 | 2,208 | 3.37 |
Total interest-bearing liabilities | 2,283,037 | 16,657 | 2.89 | 1,715,416 | 5,055 | 1.17 |
Demand deposits | 389,927 | 386,216 | ||||
Other liabilities | 46,888 | 18,595 | ||||
Total non-interest-bearing liabilities | 436,815 | 404,811 | ||||
Stockholders' equity | 303,904 | 232,022 | ||||
Total liabilities & stockholders' equity | 3,023,756 | 2,352,249 | ||||
Net interest income | 22,107 | 19,565 | ||||
Net interest spread (5) | 2.60 % | 3.18 % | ||||
Net interest income as a percentage | ||||||
of average interest-earning assets | 3.13 % | 3.46 % | ||||
Ratio of interest-earning assets | ||||||
to interest-bearing liabilities | 123 % | 131 % | ||||
(1) Averages are based on daily averages. | ||||||
(2) Includes loan origination and commitment fees. | ||||||
(3) Tax exempt interest revenue is shown on a tax equivalent basis for proper comparison using | ||||||
a statutory federal income tax rate of 21% for 2023 and 2022. See reconciliation of GAAP and non-gaap measures at the end | ||||||
of the press release | ||||||
(4) Income on non-accrual loans is accounted for on a cash basis, and the loan balances are included in interest-earning assets. | ||||||
(5) Interest rate spread represents the difference between the average rate earned on interest-earning assets | ||||||
and the average rate paid on interest-bearing liabilities. | ||||||
CITIZENS FINANCIAL SERVICES, INC. | |||||
CONSOLIDATED SUMMARY OF LOANS BY TYPE; NON-PERFORMING ASSETS; and ALLOWANCE FOR CREDIT LOSSES | |||||
(UNAUDITED) | |||||
(Excludes Loans Held for Sale) | |||||
(In Thousands) | |||||
December 31, | September 30, | June 30, | March 31, | December 31, | |
2023 | 2023 | 2023 | 2023 | 2022 | |
Real estate: | |||||
Residential | $ 359,990 | $ 356,381 | $ 358,025 | $ 212,793 | $ 210,213 |
Commercial | 1,092,887 | 1,081,123 | 1,080,513 | 878,972 | 876,569 |
Agricultural | 314,802 | 314,164 | 312,302 | 312,793 | 313,614 |
Construction | 195,826 | 175,320 | 156,927 | 75,745 | 80,691 |
Consumer | 61,316 | 115,753 | 42,701 | 87,101 | 86,650 |
Other commercial loans | 136,168 | 120,347 | 120,288 | 64,133 | 63,222 |
Other agricultural loans | 30,673 | 26,648 | 30,615 | 32,052 | 34,832 |
State & political subdivision loans | 57,174 | 56,660 | 61,471 | 59,886 | 59,208 |
Total loans | 2,248,836 | 2,246,396 | 2,162,842 | 1,723,475 | 1,724,999 |
Less: allowance for credit losses - loans | 21,153 | 21,455 | 21,652 | 15,250 | 18,552 |
Net loans | $ 2,227,683 | $ 2,224,941 | $ 2,141,190 | $ 1,708,225 | $ 1,706,447 |
Past due and non-performing assets | |||||
Total Loans past due 30-89 days and still accruing | $ 10,457 | $ 5,960 | $ 4,828 | $ 1,336 | $ 3,329 |
Non-accrual loans | $ 12,187 | $ 13,139 | $ 13,073 | $ 10,404 | $ 6,938 |
Loans past due 90 days or more and accruing | 516 | 8 | 139 | 48 | 7 |
Non-performing loans | $ 12,703 | $ 13,147 | $ 13,212 | $ 10,452 | $ 6,945 |
OREO | 474 | 474 | 426 | 428 | 543 |
Total Non-performing assets | $ 13,177 | $ 13,621 | $ 13,638 | $ 10,880 | $ 7,488 |
Three Months Ended | |||||
Analysis of the Allowance for Credit Losses - Loans | December 31, | September 30, | June 30, | March 31, | December 31, |
(In Thousands) | 2023 | 2023 | 2023 | 2023 | 2022 |
Balance, beginning of period | $ 21,455 | $ 21,652 | $ 15,250 | $ 18,552 | $ 18,291 |
Impact of Adopting ASC 326 | - | - | - | (3,300) | - |
Charge-offs | (510) | (808) | (4) | (7) | (7) |
Recoveries | 8 | 10 | 26 | 5 | 10 |
Net (charge-offs) recoveries | (502) | (798) | 22 | (2) | 3 |
PCD allowance for credit loss at acquisition | - | - | 1,689 | - | - |
Provision for credit losses - loans | 200 | 601 | 100 | - | 258 |
Provision for credit losses - acquisition day 1 non-PCD | - | - | 4,591 | - | - |
Balance, end of period | $ 21,153 | $ 21,455 | $ 21,652 | $ 15,250 | $ 18,552 |
CITIZENS FINANCIAL SERVICES, INC. | ||||
Reconciliation of GAAP and Non-GAAP Financial Measures | ||||
(UNAUDITED) | ||||
(Dollars in thousands, except per share data) | ||||
As of | ||||
December 31, | ||||
2023 | 2022 | |||
Tangible Equity | ||||
Stockholders Equity - GAAP | $ 279,666 | $ 200,147 | ||
Accumulated other comprehensive loss | 24,911 | 33,141 | ||
Intangible Assets | (89,408) | (32,648) | ||
Tangible Equity - Non-GAAP | 215,169 | 200,640 | ||
Shares outstanding adjusted for June 2023 stock Dividend | 4,706,994 | 4,010,418 | ||
Tangible Book value per share - Non-GAAP | $ 45.71 | $ 50.03 | ||
As of | ||||
December 31, | ||||
2023 | 2022 | |||
Tangible Equity per share | ||||
Stockholders Equity per share - GAAP | $ 59.41 | $ 49.91 | ||
Adjustments for accumulated other comprehensive loss | 5.29 | 8.26 | ||
Book value per share | 64.70 | 58.17 | ||
Adjustment for intangible assets | (18.99) | (8.14) | ||
Tangible Book value per share - Non-GAAP | $ 45.71 | $ 50.03 | ||
For the Three Months Ended | For the Year Ended | |||
December 31, | December 31, | |||
2023 | 2022 | 2023 | 2022 | |
Return on Average Tangible Equity | ||||
Average Stockholders Equity - GAAP | $ 267,232 | $ 193,950 | $ 241,124 | $ 201,523 |
Average Accumulated Other Comprehensive Loss | 36,672 | 38,072 | 32,198 | 22,432 |
Average Intangible Assets | (88,537) | (32,704) | (62,994) | (32,828) |
Average Tangible Equity - Non-GAAP | 215,367 | 199,318 | 210,328 | 191,127 |
Net Income - GAAP | $ 7,540 | $ 7,875 | $ 17,811 | $ 29,060 |
Annualized Return on Average Tangible Equity Non-GAAP | 14.00 % | 15.80 % | 8.47 % | 15.20 % |
For the Three Months Ended | For the Year Ended | |||
December 31, | December 31, | |||
2023 | 2022 | 2023 | 2022 | |
Return on Average Assets and Equity Excluding boli death benefits, | ||||
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, | 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, | 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, | 14.00 % | 16.39 % | 13.67 % | 15.36 % |
Earnings per share, Excluding boli death benefits, merger and | ||||
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 | $ 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 |
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SOURCE CITIZENS FINANCIAL SERVICES, INC.
