8-K
Citizens Financial Services Inc (CZFS)
8-K
2020-04-24
For: 2020-04-24
View Original
Added on
April 09, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): April 24, 2020
CITIZENS FINANCIAL SERVICES, INC.
(Exact Name of Registrant as Specified in Charter)
| Pennsylvania | 000-13222 | 23-2265045 |
|---|---|---|
| (State or Other Jurisdiction<br><br> <br>of Incorporation) | (Commission<br><br> <br>File Number) | (I.R.S. Employer<br><br> <br>Identification No.) |
15 South Main Street
Mansfield, Pennsylvania 16933
(Address of Principal Executive Offices, and Zip Code)
(570) 662-2121
(Registrant’s Telephone Number, Including Area Code)
Not applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ◻ | Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
|---|---|---|
| ◻ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| --- | --- | |
| ◻ | Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| --- | --- | |
| ◻ | Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
| --- | --- | --- |
| Securities registered pursuant to Section 12(b) of the Act: None | ||
| Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities<br> Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).<br><br> <br>Emerging growth company ☐<br><br> <br>If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition<br> period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ |
Item 2.02. Results of Operations and Financial Condition.
Randall E. Black, Chief Executive Officer, recently announced the unaudited consolidated financial results for Citizens Financial Services, Inc. and susbisidaries for the first quarter 2020.
On April 24, 2020, Citizens Financial Services, Inc. issued a press release titled “Citizens Financial Services, Inc. Reports Unaudited First Quarter 2020 Financial Results”, attached as Exhibit 99.1 to the Current Report on Form 8-K and incorporated herein by reference. The information furnished under Item 2.02 of the Current Report on an 8-K shall not be deemed “filed” for any purpose.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CITIZENS FINANCIAL SERVICES, INC. | ||
|---|---|---|
| Date: April 24, 2020 | By: | /s/ Stephen J. Guillaume |
| Stephen J. Guillaume<br><br> <br>Chief Financial Officer |
Contact:
Kathleen Campbell, Marketing Director
First Citizens Community Bank
15 S. Main Street
Mansfield, PA 16933
570-662-0422
570-662-8512 (fax)
citizens financial services, inc. reports unaudited first quarter 2020 financial results
MANSFIELD, PENNSYLVANIA— April 24, 2020 – Citizens Financial Services, Inc. (OTC Pink: CZFS), parent company of First Citizens Community Bank, released today its unaudited consolidated financial results for the three months ended March 31, 2020.
Highlights
| • | The acquisition of MidCoast Community Bancorp, Inc. was completed effective April 17, 2020 and the merger of computer and operating systems<br> occurred on April 18^th^. The acquisition included $231.3 million of loans and $207.8 million of deposits. Based on the closing price on April 17^th^, the deal valuation was approximately $27.0 million. Merger and<br> acquisitions costs for 2020 totaled $376,000 as of March 31, 2020. |
|---|---|
| • | Net income was $4.5 million for the three months ended March 31, 2020, which is 2.9% higher than the net income for 2019’s comparable<br> period. The effective tax rate for the first three months of 2020 was 16.4% compared to 15.7% in the comparable period in 2019. |
| --- | --- |
| • | Net interest income before the provision for loan losses was $12.9 million for the three months ended March 31, 2020, an increase of<br> $975,000, or 8.2%, over the same period a year ago. |
| --- | --- |
| • | Return on average equity for the three months (annualized) ended March 31, 2020 was 11.48% compared to 12.12% for the three months<br> (annualized) ended March 31, 2019. Excluding merger and acquisitions costs, the annualized return on average equity for the three months ended March 31, 2020 would have been 12.34%. (1) |
| --- | --- |
| • | Return on average tangible equity for the three months (annualized) ended March 31, 2020 was 13.59% compared to 14.62% for the three months<br> (annualized) ended March 31, 2019. (1) |
| --- | --- |
| • | Return on average assets for the three months (annualized) ended March 31, 2020 was 1.24% compared to 1.22% for the three months<br> (annualized) ended March 31, 2019. Excluding merger and acquisitions costs, the annualized return on average assets for the three months ended March 31, 2020 would have been 1.34%. (1) |
| --- | --- |
Covid 19 pandemic response and loan profile
| • | The Company participated in the Paycheck Protection Program (PPP) for loans provided under the auspices of the Small Business<br> Administration (SBA). As of April 16^th^, the date where Phase I funds were allocated under the PPP program, the Company received approval from the SBA for 422 loans totaling $47.2 million, which will earn interest at 1% per annum<br> for up to 24 months and will generate fee income of approximately $2.0 million. We will also be participating in Phase II of the PPP program. A portion of these loans may be forgiven by the SBA depending on the customers usage of the<br> proceeds. |
|---|
| • | Additionally, as support for our communities, we created a payment relief program, which includes the following: |
|---|---|
| o | Waiver of late fees for March, April and May |
| --- | --- |
| o | Interest-only payment options for consumers and businesses for 60 to 90 days. |
| --- | --- |
| o | Deferral of principal payments for consumers and businesses in certain industries for 60-120 days. |
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| o | Waiver of CD early withdrawal penalties through June 1. |
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| • | Through April 23, we have provided relief to customers with outstanding balances of $32.5 million, or approximately 3.0% of total loans,<br> which includes residential and commercial customers. |
| --- | --- |
| • | The Company tracks industry concentrations to identify risks that could lead to additional credit exposure. As a result of the Covid 19<br> pandemic, the Company has determined that Hotels/Motels and restaurants represent a higher level of credit risk. At March 31, 2020, the Company has limited loan concentrations to these industries as follows: |
| --- | --- |
| o | Hotels/Motels - $18.9 million or 1.7% of outstanding loans, and 87.6% pass rated |
| --- | --- |
| o | Restaurants - $13.1 million or 1.2% of outstanding loans, and 86.8% pass rated |
| --- | --- |
| • | Our agricultural relationships are also being strained by the pandemic as demand for certain products has declined and processing plant<br> issues have resulted in further strains on our customers as a result of the pandemic. Agricultural lending comprises $346.8 million, or 31.7% of outstanding balances as of March 31, 2020. |
| --- | --- |
Three Months Ended March 31, 2020 Compared to March 31, 2019
| • | For the three months ended March 31, 2020, net income totaled $4,531,000 which compares to net income of $4,405,000 for the first three<br> months of 2019, an increase of $126,000 or 2.9%. Basic earnings per share of $1.29 for first three months of 2020 compares to $1.25 for the 2019 comparable period. Annualized return on equity for the three months ended March 31, 2020 and<br> 2019 was 11.48% and 12.12%, while annualized return on assets was 1.24% and 1.22%, respectively. If merger and acquisition costs are excluded, the annualized return on average equity and average assets would be 12.34% and 1.34%,<br> respectively. (1) |
|---|---|
| • | Net interest income before the provision for loan loss for the three months ended March 31, 2020 totaled $12,890,000 compared to<br> $11,915,000 for the three months ended March 31, 2019, resulting in an increase of $975,000, or 8.2%. Average interest earning assets increased $11.3 million for the three months ended March 31, 2020 compared to the same period last year. <br> Average loans increased $21.4 million while average investment securities decreased $9.6 million. The tax effected net interest margin for the three months ended March 31, 2020 was 3.84% compared to 3.62% for the same period last year,<br> which was impacted by the decrease in the average cost on interest bearing liabilities of 23 bps, to 0.91%. |
| --- | --- |
| • | The provision for loan losses for the three months ended March 31, 2020 and 2019 was $400,000. While loans decreased in 2020 compared to<br> positive net loan growth in the first quarter of 2019, the provision for 2020 was based on the potential impact the Covid-19 pandemic may have on the local and national economies. |
| --- | --- |
| • | Total non-interest income was $1,851,000 for the three months ended March 31, 2020, which is $182,000 less than for the comparable period<br> last year. The primary driver was a decrease of $254,000 in the value of equity securities during the first quarter, compared to an increase of $11,000 in the first quarter of 2019. The decrease in our equity portfolio was consistent with<br> the decrease experienced by the stock market as a result of the pandemic. |
|---|---|
| • | Total non-interest expenses for the three months ended March 31, 2020 totaled $8,921,000 compared to $8,322,000 for the same period last<br> year, which is an increase of $599,000, or 7.2%. Salaries and benefits increased $385,000 primarily due to merit increases and increased health care costs. Expenses associated with MidCoast acquisition accounted for $376,000 of the<br> increase in expenses in the first quarter. Other expenses increased $156,000, which was primarily due to fraudulent charges on customer accounts. |
| --- | --- |
| • | The provision for income taxes increased $68,000 when comparing the three months ended March 31, 2020 to the same period in 2019 as a<br> result of an increase in income before income tax of $194,000 and certain merger and acquisition expenses being non-deductible for tax purposes. |
| --- | --- |
Balance Sheet and Other Information:
| • | At March 31, 2020, total assets were $1.45 billion, compared to $1.47 billion at December 31, 2019 and $1.45 billion at March 31, 2019. |
|---|---|
| • | Available for sale securities of $257.8 million at March 31, 2020 increased $17.1 million from December 31, 2019 and $13.4 million from<br> March 31, 2019. The yield on the investment portfolio increased from 2.69% to 2.82% on a tax equivalent basis. |
| --- | --- |
| • | Net loans as of March 31, 2020 totaled $1.08 billion and decreased $22.3 million from December 31, 2019 after several large pay-offs and<br> increased $1.6 million from March 31, 2019. The decrease in loans was driven by the early pay-offs and limited demand in the first quarter. |
| --- | --- |
| • | The allowance for loan losses totaled $14,247,000 at March 31, 2020 which is an increase of $402,000 from December 31, 2019. The increase<br> is due to recording a provision for loan losses of $400,000 and recoveries of $11,000, offset by charge-offs of $9,000. The allowance as a percent of total loans was 1.30% as of March 31, 2020 and 1.24% as of December 31, 2019. |
| --- | --- |
| • | Deposits decreased $6.0 million from December 31, 2019, to $1.21 billion at March 31, 2020, primarily due a decrease in brokered CD’s of<br> $10.2 million. Borrowed funds decreased $1.6 million from December 31, 2019 to $83.6 million at March 31, 2020. Non-interest-bearing deposits increased $696,000 from December 31, 2019 to $204.5 million at March 31, 2020. |
| --- | --- |
| • | Stockholders’ equity totaled $159.9 million at March 31, 2020, compared to $154.8 million at December 31, 2019, an increase of $5.1<br> million. The increase was attributable to net income for the three months ended March 31, 2020 totaling $4.5 million, offset by cash dividends for the first quarter totaling $2.0 million and net treasury stock activity of $1.0 million. As<br> a result of decreases in market interest rates impacting the fair value of investment securities, the unrealized gain on available for sale investment securities, net of tax, improved $3.4 million from December 31, 2019. |
| --- | --- |
Dividend Declared
On March 3, 2020, the Board of Directors declared a cash dividend of $0.55 per share, which included a $0.10 special dividend and was paid on March 27, 2020 to shareholders of record at the close of business on March 13, 2020. The quarterly cash dividend is an increase of 26.0% over the regular cash dividend of $0.441 per share declared one year ago, as adjusted for the 1% stock dividend declared in June 2019.
Citizens Financial Services, Inc. has nearly 2,000 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 non-gaap measures at the end of the press release |
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| CITIZENS FINANCIAL SERVICES, INC. | ||||||
|---|---|---|---|---|---|---|
| CONSOLIDATED FINANCIAL HIGHLIGHTS | ||||||
| (UNAUDITED) | ||||||
| (Dollars in thousands, except per share data) | ||||||
| As of or For The | ||||||
| Three Months Ended | ||||||
| March 31, | ||||||
| 2020 | 2019 | |||||
| Income and Performance Ratios | ||||||
| Net Income | $ | 4,531 | $ | 4,405 | ||
| Return on average assets (annualized) | 1.24 | % | 1.22 | % | ||
| Return on average equity (annualized) | 11.48 | % | 12.12 | % | ||
| Return on average tangible equity (annualized) (a) | 13.59 | % | 14.62 | % | ||
| Net interest margin (tax equivalent)(a) | 3.84 | % | 3.62 | % | ||
| Earnings per share - basic (b) | $ | 1.29 | $ | 1.25 | ||
| Earnings per share - diluted (b) | $ | 1.29 | $ | 1.25 | ||
| Cash dividends paid per share (b) | $ | 0.550 | $ | 0.441 | ||
| Asset quality | ||||||
| Allowance for loan and lease losses | $ | 14,247 | $ | 13,084 | ||
| Non-performing assets | $ | 14,522 | $ | 16,059 | ||
| Allowance for loan and lease losses/total loans | 1.30 | % | 1.20 | % | ||
| Non-performing assets to total loans | 1.33 | % | 1.47 | % | ||
| Annualized net charge-offs to total loans | 0.00 | % | 0.07 | % | ||
| Equity | ||||||
| Book value per share (b) | $ | 44.78 | $ | 41.23 | ||
| Tangible Book value per share (a) (b) | $ | 37.77 | $ | 34.20 | ||
| Market Value (Last reported trade of month) | $ | 49.00 | $ | 64.00 | ||
| Common shares outstanding | 3,506,009 | 3,498,834 | ||||
| Number of shares used in computation - basic (b) | 3,515,500 | 3,528,466 | ||||
| Number of shares used in computation - diluted (b) | 3,515,500 | 3,528,466 | ||||
| Other | ||||||
| Average Full Time Equivalent Employees | 255.3 | 261.8 | ||||
| Loan to Deposit Ratio | 90.75 | % | 92.32 | % | ||
| Trust assets under management | $ | 110,419 | $ | 125,342 | ||
| Brokerage assets under management | $ | 200,145 | $ | 196,840 | ||
| Balance Sheet Highlights | March 31, | December 31, | March 31, | |||
| --- | --- | --- | --- | --- | --- | --- |
| 2020 | 2019 | 2019 | ||||
| Assets | $ | 1,464,729 | $ | 1,466,339 | $ | 1,448,054 |
| Investment securities | 258,437 | 241,407 | 244,964 | |||
| Loans (net of unearned income) | 1,093,720 | 1,115,569 | 1,090,917 | |||
| Allowance for loan losses | 14,247 | 13,845 | 13,084 | |||
| Deposits | 1,205,150 | 1,211,118 | 1,181,654 | |||
| Stockholders' Equity | 159,923 | 154,774 | 142,845 | |||
| (a) See reconcilation of Non-GAAP measures at the end of the press<br> release | ||||||
| (b) Prior period amounts were adjusted to reflect stock dividends. |
| CITIZENS FINANCIAL SERVICES, INC. | ||||||||
|---|---|---|---|---|---|---|---|---|
| CONSOLIDATED BALANCE SHEET | ||||||||
| (UNAUDITED) | ||||||||
| December 31, | March 31, | |||||||
| (in thousands except share data) | 2019 | 2019 | ||||||
| ASSETS: | ||||||||
| Cash and due from banks: | ||||||||
| Noninterest-bearing | 20,663 | $ | 17,727 | $ | 16,384 | |||
| Interest-bearing | 858 | 793 | 1,450 | |||||
| Total cash and cash equivalents | 21,521 | 18,520 | 17,834 | |||||
| Interest bearing time deposits with other banks | 14,506 | 14,256 | 15,498 | |||||
| Equity securities | 649 | 701 | 527 | |||||
| Available-for-sale securities | 257,788 | 240,706 | 244,437 | |||||
| Loans held for sale | 2,006 | 815 | 182 | |||||
| Loans (net of allowance for loan losses: 14,247 at March 31, 2020; | ||||||||
| 13,845 at December 31, 2019 and 13,084 at March 31, 2019) | 1,079,473 | 1,101,724 | 1,077,833 | |||||
| Premises and equipment | 16,222 | 15,933 | 16,177 | |||||
| Accrued interest receivable | 4,587 | 4,555 | 4,769 | |||||
| Goodwill | 23,296 | 23,296 | 23,296 | |||||
| Bank owned life insurance | 28,284 | 28,128 | 27,656 | |||||
| Other intangibles | 1,294 | 1,346 | 1,547 | |||||
| Other assets | 15,103 | 16,359 | 18,298 | |||||
| TOTAL ASSETS | 1,464,729 | $ | 1,466,339 | $ | 1,448,054 | |||
| LIABILITIES: | ||||||||
| Deposits: | ||||||||
| Noninterest-bearing | 204,489 | $ | 203,793 | $ | 184,988 | |||
| Interest-bearing | 1,000,661 | 1,007,325 | 996,666 | |||||
| Total deposits | 1,205,150 | 1,211,118 | 1,181,654 | |||||
| Borrowed funds | 83,563 | 85,117 | 108,263 | |||||
| Accrued interest payable | 906 | 1,088 | 1,092 | |||||
| Other liabilities | 15,187 | 14,242 | 14,200 | |||||
| TOTAL LIABILITIES | 1,304,806 | 1,311,565 | 1,305,209 | |||||
| STOCKHOLDERS' EQUITY: | ||||||||
| Preferred Stock 1.00 par value; authorized | ||||||||
| 3,000,000 shares; none issued in 2020 or 2019 | - | - | - | |||||
| Common stock | ||||||||
| 1.00 par value; authorized 25,000,000 shares at March 31, 2019, December 31, 2019 and | ||||||||
| March 31, 2019: issued 3,938,668 at March 31, 2019 and December 31, 2019 and | ||||||||
| 3,904,212 at March 31, 2019 | 3,939 | 3,939 | 3,904 | |||||
| Additional paid-in capital | 55,129 | 55,089 | 53,102 | |||||
| Retained earnings | 113,374 | 110,800 | 102,574 | |||||
| Accumulated other comprehensive income (loss) | 2,918 | (629 | ) | (2,825 | ) | |||
| Treasury stock, at cost: 432,659 at March 31, 2020 and 413,607 shares | ||||||||
| at December 31, 2019 and 405,378 shares at March 31, 2019 | (15,437 | ) | (14,425 | ) | (13,910 | ) | ||
| TOTAL STOCKHOLDERS' EQUITY | 159,923 | 154,774 | 142,845 | |||||
| TOTAL LIABILITIES AND | ||||||||
| STOCKHOLDERS' EQUITY | 1,464,729 | $ | 1,466,339 | $ | 1,448,054 |
All values are in US Dollars.
| CITIZENS FINANCIAL SERVICES, INC. | |||||
|---|---|---|---|---|---|
| CONSOLIDATED STATEMENT OF INCOME | |||||
| (UNAUDITED) | |||||
| Three Months Ended | |||||
| March 31, | |||||
| (in thousands, except per share data) | 2020 | 2019 | |||
| INTEREST INCOME: | |||||
| Interest and fees on loans | $ | 13,638 | $ | 13,314 | |
| Interest-bearing deposits with banks | 95 | 104 | |||
| Investment securities: | |||||
| Taxable | 1,107 | 1,108 | |||
| Nontaxable | 389 | 357 | |||
| Dividends | 110 | 134 | |||
| TOTAL INTEREST INCOME | 15,339 | 15,017 | |||
| INTEREST EXPENSE: | |||||
| Deposits | 1,987 | 2,314 | |||
| Borrowed funds | 462 | 788 | |||
| TOTAL INTEREST EXPENSE | 2,449 | 3,102 | |||
| NET INTEREST INCOME | 12,890 | 11,915 | |||
| Provision for loan losses | 400 | 400 | |||
| NET INTEREST INCOME AFTER | |||||
| PROVISION FOR LOAN LOSSES | 12,490 | 11,515 | |||
| NON-INTEREST INCOME: | |||||
| Service charges | 1,081 | 1,099 | |||
| Trust | 198 | 232 | |||
| Brokerage and insurance | 340 | 293 | |||
| Gains on loans sold | 167 | 99 | |||
| Equity security gains (losses), net | (254 | ) | 11 | ||
| Earnings on bank owned life insurance | 156 | 151 | |||
| Other | 163 | 148 | |||
| TOTAL NON-INTEREST INCOME | 1,851 | 2,033 | |||
| NON-INTEREST EXPENSES: | |||||
| Salaries and employee benefits | 5,414 | 5,029 | |||
| Occupancy | 526 | 592 | |||
| Furniture and equipment | 131 | 155 | |||
| Professional fees | 325 | 442 | |||
| FDIC insurance expense | 71 | 111 | |||
| Pennsylvania shares tax | 275 | 275 | |||
| Amortization of intangibles | 50 | 66 | |||
| Merger and acquisition | 376 | - | |||
| Software expenses | 247 | 227 | |||
| ORE expenses | 32 | 107 | |||
| Other | 1,474 | 1,318 | |||
| TOTAL NON-INTEREST EXPENSES | 8,921 | 8,322 | |||
| Income before provision for income taxes | 5,420 | 5,226 | |||
| Provision for income taxes | 889 | 821 | |||
| NET INCOME | $ | 4,531 | $ | 4,405 | |
| PER COMMON SHARE DATA: | |||||
| Net Income - Basic | $ | 1.29 | $ | 1.25 | |
| Net Income - Diluted | $ | 1.29 | $ | 1.25 | |
| Cash Dividends Paid | $ | 0.550 | $ | 0.441 | |
| Number of shares used in computation - basic | 3,515,500 | 3,528,466 | |||
| Number of shares used in computation - diluted | 3,515,500 | 3,528,466 |
| CITIZENS FINANCIAL SERVICES, INC. | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| QUARTERLY CONDENSED, CONSOLIDATED INCOME STATEMENT INFORMATION | |||||||||||
| (UNAUDITED) | |||||||||||
| (in thousands, except share data) | Three Months Ended, | ||||||||||
| March 31, | Dec 31, | Sept 30, | June 30, | March 31, | |||||||
| 2020 | 2019 | 2019 | 2019 | 2019 | |||||||
| Interest income | $ | 15,339 | $ | 15,587 | $ | 15,874 | $ | 15,502 | $ | 15,017 | |
| Interest expense | 2,449 | 2,797 | 2,975 | 3,166 | 3,102 | ||||||
| Net interest income | 12,890 | 12,790 | 12,899 | 12,336 | 11,915 | ||||||
| Provision for loan losses | 400 | 525 | 400 | 350 | 400 | ||||||
| Net interest income after provision for loan losses | 12,490 | 12,265 | 12,499 | 11,986 | 11,515 | ||||||
| Non-interest income | 2,105 | 2,083 | 2,140 | 1,997 | 2,022 | ||||||
| Investment securities gains (losses), net | (254 | ) | 66 | 37 | 30 | 11 | |||||
| Non-interest expenses | 8,921 | 8,368 | 8,414 | 8,237 | 8,322 | ||||||
| Income before provision for income taxes | 5,420 | 6,046 | 6,262 | 5,776 | 5,226 | ||||||
| Provision for income taxes | 889 | 1,003 | 1,066 | 930 | 821 | ||||||
| Net income | $ | 4,531 | $ | 5,043 | $ | 5,196 | $ | 4,846 | $ | 4,405 | |
| Earnings Per Share Basic | $ | 1.29 | $ | 1.43 | $ | 1.48 | $ | 1.38 | $ | 1.25 | |
| Earnings Per Share Diluted | $ | 1.29 | $ | 1.43 | $ | 1.48 | $ | 1.38 | $ | 1.25 |
| 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 March 31, | ||||||||||||
| 2020 | 2019 | |||||||||||
| Average | Average | Average | Average | |||||||||
| Balance (1) | Interest | Rate | Balance (1) | Interest | Rate | |||||||
| (dollars in thousands) | $ | % | $ | % | ||||||||
| ASSETS | ||||||||||||
| Interest-bearing deposits at banks | 3 | 0.17 | 7 | 0.32 | ||||||||
| Interest bearing time deposits at banks | 92 | 2.59 | 97 | 2.54 | ||||||||
| Investment securities | 1,710 | 2.82 | 1,693 | 2.69 | ||||||||
| Loans: (2)(3)(4) | ||||||||||||
| Residential mortgage loans | 2,843 | 5.30 | 2,825 | 5.31 | ||||||||
| Construction loans | 223 | 5.06 | 357 | 5.09 | ||||||||
| Commercial Loans | 5,534 | 5.36 | 5,423 | 5.47 | ||||||||
| Agricultural Loans | 4,112 | 4.59 | 3,739 | 4.53 | ||||||||
| Loans to state & political subdivisions | 939 | 4.01 | 978 | 3.93 | ||||||||
| Other loans | 171 | 7.27 | 184 | 7.64 | ||||||||
| Loans, net of discount (2)(3)(4) | 13,822 | 5.00 | 13,506 | 5.02 | ||||||||
| Total interest-earning assets | 15,627 | 4.56 | 15,303 | 4.54 | ||||||||
| Cash and due from banks | ||||||||||||
| Bank premises and equipment | ||||||||||||
| Other assets | ||||||||||||
| Total non-interest earning assets | ||||||||||||
| Total assets | ||||||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||
| Interest-bearing liabilities: | ||||||||||||
| NOW accounts | 437 | 0.53 | 578 | 0.71 | ||||||||
| Savings accounts | 184 | 0.33 | 184 | 0.35 | ||||||||
| Money market accounts | 393 | 0.91 | 505 | 1.27 | ||||||||
| Certificates of deposit | 973 | 1.50 | 1,047 | 1.45 | ||||||||
| Total interest-bearing deposits | 1,987 | 0.80 | 2,314 | 0.94 | ||||||||
| Other borrowed funds | 462 | 1.98 | 788 | 2.81 | ||||||||
| Total interest-bearing liabilities | 2,449 | 0.91 | 3,102 | 1.14 | ||||||||
| Demand deposits | ||||||||||||
| Other liabilities | ||||||||||||
| Total non-interest-bearing liabilities | ||||||||||||
| Stockholders' equity | ||||||||||||
| Total liabilities & stockholders' equity | ||||||||||||
| Net interest income | 13,178 | 12,201 | ||||||||||
| Net interest spread (5) | 3.65 | % | 3.40 | % | ||||||||
| Net interest income as a percentage | ||||||||||||
| of average interest-earning assets | 3.84 | % | 3.62 | % | ||||||||
| Ratio of interest-earning assets | ||||||||||||
| to interest-bearing liabilities | 127 | % | 123 | % | ||||||||
| (1) Averages are based on daily averages. | ||||||||||||
| (2) Includes loan origination and commitment fees. | ||||||||||||
| (3) Tax exempt interest revenue is shown on a tax equivalent basis for proper comparison using | ||||||||||||
| a statutory federal income tax rate of 21% for 2020 and 2019. See reconciliation of 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. |
All values are in US Dollars.
| CITIZENS FINANCIAL SERVICES, INC. | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CONSOLIDATED SUMMARY OF LOANS BY TYPE; NON-PERFORMING ASSETS; and ALLOWANCE FOR LOAN LOSSES | |||||||||||||||
| (UNAUDITED) | |||||||||||||||
| (Excludes Loans Held for Sale) | |||||||||||||||
| (In Thousands) | |||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||
| 2020 | 2019 | 2019 | 2019 | 2019 | |||||||||||
| Real estate: | |||||||||||||||
| Residential | $ | 216,179 | $ | 217,088 | $ | 215,717 | $ | 213,014 | $ | 214,635 | |||||
| Commercial | 338,490 | 342,023 | 349,269 | 347,430 | 334,371 | ||||||||||
| Agricultural | 300,606 | 311,464 | 305,948 | 294,332 | 295,547 | ||||||||||
| Construction | 17,926 | 15,519 | 11,448 | 20,950 | 18,611 | ||||||||||
| Consumer | 9,533 | 9,947 | 9,709 | 9,854 | 9,773 | ||||||||||
| Other commercial loans | 71,038 | 69,970 | 76,785 | 76,179 | 74,323 | ||||||||||
| Other agricultural loans | 46,170 | 55,112 | 50,334 | 41,689 | 43,245 | ||||||||||
| State & political subdivision loans | 93,778 | 94,446 | 95,824 | 96,174 | 100,412 | ||||||||||
| Total loans | 1,093,720 | 1,115,569 | 1,115,034 | 1,099,622 | 1,090,917 | ||||||||||
| Less: allowance for loan losses | 14,247 | 13,845 | 13,679 | 13,304 | 13,084 | ||||||||||
| Net loans | $ | 1,079,473 | $ | 1,101,724 | $ | 1,101,355 | $ | 1,086,318 | $ | 1,077,833 | |||||
| Past due and non-performing assets | |||||||||||||||
| Total Loans past due 30-89 days and still accruing | $ | 3,159 | $ | 2,711 | $ | 2,672 | $ | 2,599 | $ | 4,470 | |||||
| Non-accrual loans | $ | 11,302 | $ | 11,536 | $ | 13,223 | $ | 12,534 | $ | 11,700 | |||||
| Loans past due 90 days or more and accruing | 164 | 487 | 103 | 175 | 64 | ||||||||||
| Non-performing loans | $ | 11,466 | $ | 12,023 | $ | 13,326 | $ | 12,709 | $ | 11,764 | |||||
| OREO | 3,056 | 3,404 | 3,497 | 3,853 | 4,295 | ||||||||||
| Total Non-performing assets | $ | 14,522 | $ | 15,427 | $ | 16,823 | $ | 16,562 | $ | 16,059 | |||||
| 3 Months | 3 Months | 3 Months | 3 Months | 3 Months | |||||||||||
| Ended | Ended | Ended | Ended | Ended | |||||||||||
| Analysis of the Allowance for loan Losses | March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||
| (In Thousands) | 2020 | 2019 | 2019 | 2019 | 2019 | ||||||||||
| Balance, beginning of period | $ | 13,845 | $ | 13,679 | $ | 13,304 | $ | 13,084 | $ | 12,884 | |||||
| Charge-offs | (9 | ) | (370 | ) | (34 | ) | (139 | ) | (214 | ) | |||||
| Recoveries | 11 | 11 | 9 | 9 | 14 | ||||||||||
| Net (charge-offs) recoveries | 2 | (359 | ) | (25 | ) | (130 | ) | (200 | ) | ||||||
| Provision for loan losses | 400 | 525 | 400 | 350 | 400 | ||||||||||
| Balance, end of period | $ | 14,247 | $ | 13,845 | $ | 13,679 | $ | 13,304 | $ | 13,084 |
| CITIZENS FINANCIAL SERVICES, INC. | ||||||
|---|---|---|---|---|---|---|
| Reconciliation of GAAP and Non-GAAP Financial Measures | ||||||
| (UNAUDITED) | ||||||
| (Dollars in thousands, except per share data) | ||||||
| As of | ||||||
| March 31 | ||||||
| 2020 | 2019 | |||||
| Tangible Equity | ||||||
| Stockholders Equity - GAAP | $ | 159,923 | $ | 142,845 | ||
| Accumulated other comprehensive (gain) loss | (2,918 | ) | 2,825 | |||
| Intangible Assets | (24,590 | ) | (24,843 | ) | ||
| Tangible Equity - Non-GAAP | 132,415 | 120,827 | ||||
| Shares outstanding adjusted for June 2019 stock Dividend | 3,506,009 | 3,533,290 | ||||
| Tangible Book value per share (a) | $ | 37.77 | $ | 34.20 | ||
| As of | ||||||
| March 31 | ||||||
| 2020 | 2019 | |||||
| Tangible Equity per share | ||||||
| Stockholders Equity per share - GAAP | $ | 45.61 | $ | 40.43 | ||
| Adjustments for accumulated other comprehensive loss | (0.83 | ) | 0.80 | |||
| Book value per share | 44.78 | 41.23 | ||||
| Adjustments for intangible assets | (7.01 | ) | (7.03 | ) | ||
| Tangible Book value per share - Non-GAAP | $ | 37.77 | $ | 34.20 | ||
| For the Three Months Ended | ||||||
| March 31 | ||||||
| 2020 | 2019 | |||||
| Return on Average Tangible Equity | ||||||
| Average Stockholders Equity - GAAP | $ | 157,905 | $ | 141,578 | ||
| Average Accumulated Other Comprehensive Loss | (26 | ) | (3,814 | ) | ||
| Average Intangible Assets | 24,603 | 24,872 | ||||
| Average Tangible Equity - Non-GAAP | 133,328 | 120,520 | ||||
| Net Income | $ | 4,531 | $ | 4,405 | ||
| Annualized Return on Average Tangible Equity | 13.59 | % | 14.62 | % | ||
| For the Three<br><br> <br>Months Ended<br><br> <br>March 31, 2020 | ||||||
| Return on Average Assets and Equity Excluding Merger and Acquisition Costs | ||||||
| Net Income | $ | 4,531 | ||||
| After Tax merger and acquisition costs | 339 | |||||
| Net Income excluding merger and acquisition costs | $ | 4,870 | ||||
| Average Assets | 1,458,091 | |||||
| Annualized Return on Average stockholders equity, excluding Merger and Acquisition costs | 1.34 | % | ||||
| Average Stockholders Equity - GAAP | $ | 157,905 | ||||
| Annualized Return on Average stockholders equity, excluding Merger and Acquisition costs | 12.34 | % | ||||
| For the Three Months Ended | ||||||
| March 31 | ||||||
| Reconciliation of net interest income on fully taxable equivalent basis | 2020 | 2019 | ||||
| Total interest income | $ | 15,339 | $ | 15,017 | ||
| Total interest expense | 2,449 | 3,102 | ||||
| Net interest income | 12,890 | 11,915 | ||||
| Tax equivalent adjustment | 288 | 286 | ||||
| Net interest income (fully taxable equivalent) | $ | 13,178 | $ | 12,201 |