Citizens Financial Services (CZFS) to Merge with HV Bancorp (HVBC) in Stock and Cash Deal

Citizens Financial Services, Inc. (NASDAQ: CZFS) (the "Company" or "CZFS"), the holding company for First Citizens Community Bank ("FCCB"), and HV Bancorp, Inc. (NASDAQ: HVBC) ("HVBC"), the holding company for Huntingdon Valley Bank ("HVB"), are pleased to jointly announce entry into a definitive agreement (the "Agreement") pursuant to which HVBC will merge with and into CZFS. Under the terms of the Agreement, the shareholders of HVBC will have the right to elect to receive for each share of HVBC common stock either $30.50 in cash or 0.400 shares of CZFS common stock, or approximately $67.4 million in the aggregate. Elections will be subject to proration procedures whereby 80% of the shares of HVBC common stock will be exchanged for CZFS common stock and 20% of the shares of HVBC common stock will be exchanged for cash.

This strategically compelling merger is expected to enhance and expand CZFS's presence in communities located in Montgomery, Bucks and Philadelphia Counties in Pennsylvania, New Castle County in Delaware, and Burlington County in New Jersey. Travis J. Thompson, currently the Chief Executive Officer of HVBC, and Robert J. Marino, currently the President of HVBC, will be employed as senior officers of FCCB.

As of June 30, 2022, HVBC had approximately $570.6 million of total assets, $388.3 million of net loans and $481.5 million of deposits. Based on financial metrics as of June 30, 2022, the combined company is expected to have over $2.78 billion in assets, $1.96 billion in gross loans and $2.36 billion in deposits upon completion of the transaction.

Randall Black, President and Chief Executive Officer of CZFS, commented, "We are pleased to announce the strategic combination of FCCB (First Citizens Community Bank) and Huntingdon Valley Bank. Our complementary business models and shared values make this partnership a natural fit," said Mr. Black. "This agreement creates great excitement, and we believe our combination will deepen our reach in providing banking services and enhanced technological offerings across our entire bank franchise. In addition, the expertise of the combined organization will enable us to invest in the future, build market share, and better serve all of our constituencies. From a broader perspective, together with the Huntingdon Valley team, we will leverage our combined strength to focus on a greater future."

"We could not be happier about becoming part of FCCB and look forward to the many benefits this strategic partnership will provide for our customers, employees, and shareholders. As 150-year-old financial institutions, we share similar core values and both believe deeply in community banking. We are confident that our customers will receive the same high-quality experience from FCCB that they have come to expect from HVB," said Travis Thompson, Chairman and Chief Executive Officer of HVBC.

The transaction has been approved by the Boards of Directors of both companies and is expected to be completed during the first half of 2023, subject to regulatory approval, approval by HVBC shareholders, and other customary closing conditions. Upon closing, one HVBC director will join each of the Board of Directors of CZFS and FCCB, and one HVBC director will join the Board of Directors of FCCB.

Janney Montgomery Scott LLC acted as financial advisor to CZFS and Hogan Lovells US LLP served as its legal counsel. The Kafafian Group, Inc. acted as financial advisor and provided a fairness opinion to HVBC and Luse Gorman, PC served as its legal counsel.

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