Form 8-K CITIZENS FINANCIAL SERVI For: Jan 21

January 21, 2022 12:12 PM EST

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Contact:  Kathleen Campbell, Marketing Director
 
First Citizens Community Bank
570-662-0422
 
15 S. Main Street
570-662-8512 (fax)
 
Mansfield, PA 16933

citizens financial services, inc. reports unaudited full year and fourth quarter 2021 financial results

MANSFIELD, PENNSYLVANIA— January 21, 2022 – 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 and year ended December 31, 2021.

Highlights

Net income was $29.1 million for 2021, which is 16.0% higher than 2020’s net income. The effective tax rate for 2021 was 17.6% compared to 17.3% in 2020.

Net income was $6.9 million for the three months ended December 31, 2021, which is 3.9% less than the net income for 2020’s comparable period. The effective tax rate for the three months ended December 31, 2021 was 18.3% compared to 17.8% in the comparable period in 2020.

Net interest income before the provision for loan losses was $66.1 million for the year ended December 31, 2021, an increase of $3.9 million, or 6.3%, over 2020.

Non-performing assets decreased $4.3 million during 2021 and totaled $8,842,000 as of December 31, 2021. As a percent of loans, non-performing assets decreased from 0.93% at December 31, 2020 to 0.61% at December 31, 2021.

Return on average equity for the three months (annualized) and the year ended December 31, 2021 was 13.11% and 14.26% compared to 15.20% and 14.21% for the three months (annualized) and the year ended December 31, 2020, respectively.

Return on average tangible equity (non-GAAP) for the three months (annualized) and the year ended December 31, 2021 was 15.53% and 17.01% compared to 18.37% and 17.16% for the three months (annualized) and the year ended December 31, 2020, respectively. (1)

Return on average assets for the three months (annualized) and the year ended December 31, 2021 was 1.34% and 1.45% compared to 1.55% and 1.46% for the three months (annualized) and the year ended December 31, 2020, respectively.

Covid 19 pandemic response and loan profile

During 2021, the Company participated in the Paycheck Protection Program (PPP) for loans provided under the auspices of the Small Business Administration (SBA). As of December 31, 2021, 64 loans with a balance of $6.8 million remain outstanding under this program. During 2021, we originated 388 loans with aggregate balances of $24.3 million. As of December 31, 2021, 6 loans that were originated under this program in 2020 remain outstanding and have a balance of $806,000. The loans earn interest at 1% per annum and the processing fee paid by the SBA will be accreted into income over the life of the loans. The SBA has issued guidance for forgiveness with a streamlined approach for loans of $150,000 or less. Of the PPP loans outstanding, 46 loans, or 71.9% of the remaining PPP loans, had an original balance less than $150,000. The outstanding balance for these 46 loans as of December 31, 2021 was approximately $1.5 million.



Under our COVID loan modification program, during 2021 we provided relief to 19 customers with outstanding balances of $26.7 million, which includes residential, commercial and agricultural customers. As of December 31, 2021, all loans had returned to their original terms that were modified under this program.

The Company tracks industry concentrations to identify risks that could lead to additional credit risk exposure. As a result of the Covid 19 pandemic, the Company has determined that hotels/motels, restaurants, and amusement/theme parks represent a higher level of credit risk. At December 31, 2021, the Company had limited loan concentrations to these industries as follows:
o
Hotels/Motels - $82.4 million or 5.7% of outstanding loans
o
Restaurants - $17.7 million or 1.2% of outstanding loans
o
Amusement/Theme parks - $8.9 million, or 0.6% of outstanding loans

2021 Compared to 2020

For 2021, net income totaled $29,118,000 which compares to net income of $25,103,000 for 2020, an increase of $4,015,000 or 16.0%.  Basic earnings per share of $7.38 for 2021 compares to $6.53 for last year.  Return on equity for 2021 and 2020 was 14.26% and 14.21%, while  return on assets was 1.45% and 1.46%, respectively.

Net interest income before the provision for loan loss for 2021 totaled $66,112,000 compared to $62,191,000 for 2020, resulting in an increase of $3,921,000, or 6.3%.  Average interest earning assets increased $287.8 million for 2021 compared to 2020, primarily due to the assets acquired as part of the MidCoast acquisition in the second quarter of 2020 being outstanding for the entire period of 2021 and organic growth primarily in the Delaware region. Average loans increased $133.4 million while average investment securities increased $88.5 million. The yield on interest earning assets decreased 53 basis points to 3.89%, while the cost of interest-bearing liabilities decreased 15 basis points to 0.49%. The yield on interest earning assets in 2020 benefitted approximately $820,000 from the pay-off of two purchase credit impaired loans acquired as part of The First National Bank of Fredericksburg acquisition in 2015.  The decrease in the cost of interest-bearing liabilities was due to the Federal Reserve rate cuts made in response to the COVID-19 pandemic in the first quarter of 2020. The tax effected net interest margin for 2021 was 3.52% compared to 3.92% for last year.

The provision for loan losses for 2021 was $1,550,000 compared to $2,400,000 for 2020, a decrease of $850,000.  The decrease in the provision is due to less organic loan growth in 2021 compared to 2020 and improved credit metrics for the Bank in 2021.

Total non-interest income was $12,305,000 for 2021, which is $883,000 more than the non-interest income of $11,422,000 for 2020. The primary drivers were the earnings on bank owned life insurance, which increased $1,133,000 as the result of the passing of two former employees, an increase in equity security gains of $380,000 as a result of market performance and an increase in service charge income of $534,000 as a result of waiving fees in 2020 in response to the pandemic. Other income decreased $576,000 in 2021 compared to 2020 due to a decrease in  fee income on derivative transactions for customers. The gain on loans sold decreased $885,000 due to decrease in the number of loans sold in 2021 compared to 2020 due to fewer customers refinancing loans.



Total non-interest expenses for 2021 totaled $41,550,000 compared to $40,847,000 for the same period last year, which is an increase of $703,000. The primary driver of the increase was salary and benefit costs and occupancy costs, which increased compared to 2020 due to the additional headcount and branches acquired as part of the MidCoast acquisition.

The provision for income taxes increased $936,000 when comparing 2021 to 2020 as a result of an increase in income before income tax of $4,951,000. The effective tax rate was 17.6% and 17.3% for 2021 and 2020, respectively. It should be noted the earnings on bank owned life insurance are exempt from federal income tax.

Fourth Quarter of 2021 Compared to the Fourth Quarter of 2020

For the three months ended December 31, 2021, net income totaled $6,944,000 which compares to net income of $7,227,000 for the comparable period of 2020, a decrease of $283,000 or 3.9%.  Basic earnings per share of $1.76 for the three months ended December 31, 2021 compares to $1.83 for the 2020 comparable period. Annualized return on equity for the three months ended December 31, 2021 and 2020 was 13.11% and 15.20%, while annualized return on assets was 1.34% and 1.55%, respectively.

Net interest income before the provision for loan losses for the three months ended December 31, 2021 totaled $16,869,000 compared to $16,545,000 for the three months ended December 31, 2020, resulting in an increase of $324,000. Average interest earning assets increased $214.5 million for the three months ended December 31, 2021 compared to the same period last year as a result of the interest bearing cash, investments and  organic loan growth funded by deposit growth.  Average loans increased $59.8 million while average investment securities increased $107.3 million and average interest bearing cash holdings increased $49.9 million. The tax effected net interest margin for the three months ended December 31, 2021 was 3.44% compared to 3.82% for the same period last year, which was impacted by the decrease in the average yield on interest earning assets of 47 basis points to 3.77%.

No provision for loan losses  was recorded in the fourth quarter of 2021 due to improved credit metrics in the fourth quarter and limited loan activity in the fourth quarter. The provision for the fourth quarter of 2020 was $900,000 due to $39.4 million of net organic growth during that quarter. The provision for 2020 was also impacted more heavily by the COVID-19 pandemic.

Total non-interest income was $2,512,000 for the three months ended December 31, 2021, which is $1,452,000 less than the comparable period last year.  The primary drivers were a decrease in the gains on loans sold of $712,000 due to a decrease in the amount of loans sold compared to the fourth quarter of 2020 and a decrease in other income of $728,000 due to fee income on derivative transactions for customers.

Total non-interest expenses for the three months ended December 31, 2021 totaled $10,883,000 compared to $10,821,000 for the same period last year, which is an increase of $62,000, or 0.6%. The primary driver of the increase was other expenses, which increased $432,000, which was driven by a partial settlement of the Company’s pension plan in the fourth quarter due to lump sum distributions to former employees of the Company.



The provision for income taxes decreased $7,000 when comparing the three months ended December 31, 2021 to the same period in 2020 as a result of a decrease in income before income tax of $290,000.  The effective tax rate was 18.3% and 17.8% for the three months ended December 31, 2021 and 2020, respectively.

Balance Sheet and Other Information:

At December 31, 2021, total assets were $2.14 billion compared to $1.89 billion at December 31, 2020. The loan to deposit ratio as of December 31, 2021 was 78.51% compared to 88.45% as of December 31, 2020.

Available for sale securities of $412.4 million at December 31, 2021 increased $117.2 million from December 31, 2020. The yield on the investment portfolio decreased from 2.55% to 1.96% on a tax equivalent basis due to securities purchased at a discount that were called in the first quarter of 2020 and purchases made in a lower rate environment in the second half of 2020 and all of 2021.

Net loans as of December 31, 2021 totaled $1.42 billion and increased $34.8 million from December 31, 2020 as a result of organic growth in the Delaware market offset by PPP loan forgiveness.

The allowance for loan losses totaled $17,304,000 at December 31, 2021 which is an increase of $1,489,000 from December 31, 2020.  The increase is due to recording a provision for loan losses of $1,550,000 and recoveries of $153,000, offset by charge-offs of $214,000. The allowance as a percent of total loans was 1.20% as of December 31, 2021 and 1.13% as of December 31, 2020.

Deposits increased $247.3 million from December 31, 2020, to $1.84 billion at December 31, 2021, primarily due to customers holding more cash due to the pandemic and government stimulus funds provided to customers. Brokered CD’s decreased $23.8 million.  Non-interest-bearing deposits increased $54.3 million due to additional cash holdings by customers.

Borrowed funds decreased $14.9 million from December 31, 2020 to $74.0 million at December 31, 2021. The Company paid off $26.8 million of long term borrowings during the year, which were offset by a $2.1 million increase in repurchase agreements and the issuance of $10.0 million of subordinated debt in the second quarter of 2021.

Stockholders’ equity totaled $212.5 million at December 31, 2021, compared to $194.3 million at December 31, 2020, an increase of $18.2 million. The increase was attributable to net income for 2021 totaling $29.1 million, offset by cash dividends totaling $7.4 million and net treasury stock activity of $934,000.  As a result of changes in interest rates impacting the fair value of investment securities, derivative instruments and the Company’s pension plan, accumulated other comprehensive income, decreased $2.7 million from December 31, 2020.

Dividend Declared

On December 6, 2021, the Board of Directors declared a cash dividend of $0.470 per share, which was paid on December 30, 2021 to shareholders of record at the close of business on December 16, 2021. This quarterly cash dividend is an increase of 3.10% over the regular cash dividend of $0.456 per share declared one year ago, as adjusted for the 1% stock dividend declared in June 2021.


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, duration and impact of the COVID-19 pandemic; 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 financial measures at the end of the press release



CITIZENS FINANCIAL SERVICES, INC.
                       
CONSOLIDATED FINANCIAL HIGHLIGHTS
                       
(UNAUDITED)
                       
(Dollars in thousands, except share and per share data)
                       
   
As of or For The
   
As of or For The
 
   
Three Months Ended
   
Year Ended
 
   
December 31,
   
December 31,
 
   
2021
   
2020
   
2021
   
2020
 
Income and Performance Ratios
                       
Net Income
 
$
6,944
   
$
7,227
   
$
29,118
   
$
25,103
 
Return on average assets (annualized)
   
1.34
%
   
1.55
%
   
1.45
%
   
1.46
%
Return on average equity (annualized)
   
13.11
%
   
15.20
%
   
14.26
%
   
14.21
%
Return on average tangible equity (annualized) (a)
   
15.53
%
   
18.37
%
   
17.01
%
   
17.16
%
Net interest margin (tax equivalent)(a)
   
3.44
%
   
3.82
%
   
3.52
%
   
3.92
%
Earnings per share - basic (b)
 
$
1.76
   
$
1.83
   
$
7.38
   
$
6.53
 
Earnings per share - diluted (b)
 
$
1.76
   
$
1.83
   
$
7.38
   
$
6.53
 
Cash dividends paid per share (b)
 
$
0.470
   
$
0.456
   
$
1.861
   
$
1.900
 
Number of shares used in computation - basic (b)
   
3,943,334
     
3,951,217
     
3,945,299
     
3,844,241
 
Number of shares used in computation - diluted (b)
   
3,943,387
     
3,951,225
     
3,945,299
     
3,846,082
 
                                 
                                 
Asset quality
                               
Allowance for loan and lease losses
 
$
17,304
   
$
15,815
                 
Non-performing assets
 
$
8,842
   
$
13,093
                 
Allowance for loan and lease losses/total loans
   
1.20
%
   
1.13
%
               
Non-performing assets to total loans
   
0.61
%
   
0.93
%
               
Annualized net  charge-offs to total loans
   
0.01
%
   
0.07
%
   
0.00
%
   
0.03
%
                                 
                                 
Equity
                               
Book value per share (b)
 
$
53.91
   
$
48.40
                 
Tangible Book value per share (a) (b)
 
$
45.54
   
$
40.05
                 
Market Value (Last reported trade of month)
 
$
60.70
   
$
60.00
                 
Common shares outstanding
   
3,944,420
     
3,921,408
                 
                                 
                                 
Other
                               
Average Full Time Equivalent Employees
   
295.2
     
294.8
     
290.8
     
280.7
 
Loan to Deposit Ratio
   
78.51
%
   
88.45
%
               
Trust assets under management
 
$
154,840
   
$
150,348
                 
Brokerage assets under management
 
$
282,058
   
$
241,003
                 
                                 
                                 
Balance Sheet Highlights
 
December 31,
   
December 31,
                 
     
2021
     
2020
                 
                                 
Assets
 
$
2,143,863
   
$
1,891,674
                 
Investment securities
   
414,672
     
297,120
                 
Loans (net of unearned income)
   
1,441,533
     
1,405,281
                 
Allowance for loan losses
   
17,304
     
15,815
                 
Deposits
   
1,836,151
     
1,588,858
                 
Stockholders' Equity
   
212,492
     
194,259
                 
                                 
                                 
(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)
 
2021
   
2020
 
ASSETS:
           
Cash and due from banks:
           
  Noninterest-bearing
 
$
14,051
   
$
16,374
 
  Interest-bearing
   
158,782
     
52,333
 
Total cash and cash equivalents
   
172,833
     
68,707
 
                 
Interest bearing time deposits with other banks
   
11,026
     
13,758
 
                 
Equity securities
   
2,270
     
1,931
 
                 
Available-for-sale securities
   
412,402
     
295,189
 
                 
Loans held for sale
   
4,554
     
14,640
 
                 
Loans (net of allowance for loan losses: $17,304 at December 31, 2021 and
               
    $15,815 at December 31, 2020)
   
1,424,229
     
1,389,466
 
                 
Premises and equipment
   
17,016
     
16,948
 
Accrued interest receivable
   
5,235
     
5,998
 
Goodwill
   
31,376
     
31,376
 
Bank owned life insurance
   
38,503
     
32,589
 
Other intangibles
   
1,627
     
1,668
 
Other assets
   
22,792
     
19,404
 
                 
TOTAL ASSETS
 
$
2,143,863
   
$
1,891,674
 
                 
LIABILITIES:
               
Deposits:
               
  Noninterest-bearing
 
$
358,073
   
$
303,762
 
  Interest-bearing
   
1,478,078
     
1,285,096
 
Total deposits
   
1,836,151
     
1,588,858
 
Borrowed funds
   
73,977
     
88,838
 
Accrued interest payable
   
711
     
1,017
 
Other liabilities
   
20,532
     
18,702
 
TOTAL LIABILITIES
   
1,931,371
     
1,697,415
 
STOCKHOLDERS' EQUITY:
               
Preferred Stock $1.00 par value; authorized
               
  3,000,000 shares; none issued in 2021 or 2020
   
-
     
-
 
Common stock
               
$1.00 par value; authorized 25,000,000 shares at December 31, 2021 and December 31, 2020:
         
  issued 4,388,901 shares at December 31, 2021 and 4,350,342 shares at December 31, 2020
   
4,389
     
4,350
 
Additional paid-in capital
   
78,395
     
75,908
 
Retained earnings
   
146,010
     
126,627
 
Accumulated other comprehensive (loss) income
   
(155
)
   
2,587
 
Treasury stock, at cost:  444,481 shares at December 31, 2021 and 428,492 shares
               
  at December 31, 2020
   
(16,147
)
   
(15,213
)
TOTAL STOCKHOLDERS' EQUITY
   
212,492
     
194,259
 
TOTAL LIABILITIES AND
               
   STOCKHOLDERS' EQUITY
 
$
2,143,863
   
$
1,891,674
 


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)
 
2021
   
2020
   
2021
   
2020
 
INTEREST INCOME:
                       
Interest and fees on loans
 
$
16,802
   
$
16,775
   
$
66,371
   
$
63,538
 
Interest-bearing deposits with banks
   
112
     
103
     
447
     
401
 
Investment securities:
                               
    Taxable
   
955
     
878
     
3,820
     
4,090
 
    Nontaxable
   
549
     
532
     
2,201
     
1,869
 
    Dividends
   
87
     
123
     
378
     
398
 
TOTAL INTEREST INCOME
   
18,505
     
18,411
     
73,217
     
70,296
 
INTEREST EXPENSE:
                               
Deposits
   
1,292
     
1,572
     
5,837
     
6,851
 
Borrowed funds
   
344
     
294
     
1,268
     
1,254
 
TOTAL INTEREST EXPENSE
   
1,636
     
1,866
     
7,105
     
8,105
 
NET INTEREST INCOME
   
16,869
     
16,545
     
66,112
     
62,191
 
Provision for loan losses
   
-
     
900
     
1,550
     
2,400
 
NET INTEREST INCOME AFTER
                               
    PROVISION FOR LOAN LOSSES
   
16,869
     
15,645
     
64,562
     
59,791
 
NON-INTEREST INCOME:
                               
Service charges
   
1,276
     
1,114
     
4,755
     
4,221
 
Trust
   
191
     
261
     
865
     
803
 
Brokerage and insurance
   
435
     
356
     
1,625
     
1,297
 
Gains on loans sold
   
174
     
886
     
1,283
     
2,168
 
Equity security gains (losses), net
   
51
     
235
     
339
     
(41
)
Available for sale security gains, net
   
-
     
3
     
212
     
305
 
Earnings on bank owned life insurance
   
185
     
181
     
1,828
     
695
 
Other
   
200
     
928
     
1,398
     
1,974
 
TOTAL NON-INTEREST INCOME
   
2,512
     
3,964
     
12,305
     
11,422
 
NON-INTEREST EXPENSES:
                               
Salaries and employee benefits
   
6,590
     
6,779
     
25,902
     
24,190
 
Occupancy
   
744
     
666
     
2,966
     
2,557
 
Furniture and equipment
   
112
     
170
     
519
     
757
 
Professional fees
   
373
     
337
     
1,526
     
1,517
 
FDIC insurance expense
   
135
     
135
     
522
     
476
 
Pennsylvania shares tax
   
24
     
59
     
880
     
868
 
Amortization of intangibles
   
46
     
54
     
192
     
216
 
Merger and acquisition
   
-
     
-
     
-
     
2,179
 
Software expenses
   
318
     
338
     
1,321
     
1,155
 
ORE expenses
   
56
     
230
     
439
     
451
 
Other
   
2,485
     
2,053
     
7,283
     
6,481
 
TOTAL NON-INTEREST EXPENSES
   
10,883
     
10,821
     
41,550
     
40,847
 
Income before provision for income taxes
   
8,498
     
8,788
     
35,317
     
30,366
 
Provision for income taxes
   
1,554
     
1,561
     
6,199
     
5,263
 
NET INCOME
 
$
6,944
   
$
7,227
   
$
29,118
   
$
25,103
 
                                 
PER COMMON SHARE DATA:
                               
Net Income - Basic
 
$
1.76
   
$
1.83
   
$
7.38
   
$
6.53
 
Net Income - Diluted
 
$
1.76
   
$
1.83
   
$
7.38
   
$
6.53
 
Cash Dividends Paid
 
$
0.470
   
$
0.456
   
$
1.861
   
$
1.900
 
                                 
Number of shares used in computation - basic
   
3,943,334
     
3,951,217
     
3,945,299
     
3,844,241
 
Number of shares used in computation - diluted
   
3,943,387
     
3,951,225
     
3,945,299
     
3,846,082
 


CITIZENS FINANCIAL SERVICES, INC.
                             
QUARTERLY CONDENSED, CONSOLIDATED INCOME STATEMENT INFORMATION
                         
(UNAUDITED)
                             
(in thousands, except per share data)
       
Three Months Ended,
             
   
Dec 31,
   
Sept 30,
   
June 30,
   
March 31,
   
Dec 31,
 
   
2021
   
2021
   
2021
   
2021
   
2020
 
Interest income
 
$
18,505
   
$
18,342
   
$
18,075
   
$
18,295
   
$
18,411
 
Interest expense
   
1,636
     
1,752
     
1,863
     
1,854
     
1,866
 
Net interest income
   
16,869
     
16,590
     
16,212
     
16,441
     
16,545
 
Provision for loan losses
   
-
     
400
     
500
     
650
     
900
 
Net interest income after provision for loan losses
   
16,869
     
16,190
     
15,712
     
15,791
     
15,645
 
Non-interest income
   
2,461
     
2,618
     
2,677
     
3,998
     
3,726
 
Investment securities gains, net
   
51
     
234
     
29
     
237
     
238
 
Non-interest expenses
   
10,883
     
10,400
     
10,320
     
9,947
     
10,821
 
Income before provision for income taxes
   
8,498
     
8,642
     
8,098
     
10,079
     
8,788
 
Provision for income taxes
   
1,554
     
1,578
     
1,451
     
1,616
     
1,561
 
Net income
 
$
6,944
   
$
7,064
   
$
6,647
   
$
8,463
   
$
7,227
 
Earnings Per Share Basic
 
$
1.76
   
$
1.79
   
$
1.69
   
$
2.14
   
$
1.83
 
Earnings Per Share Diluted
 
$
1.76
   
$
1.79
   
$
1.69
   
$
2.14
   
$
1.83
 


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,
 
   
2021
   
2020
 
   
Average
         
Average
   
Average
         
Average
 
   
Balance (1)
   
Interest
   
Rate
   
Balance (1)
   
Interest
   
Rate
 
(dollars in thousands)
 

$
     $    

%
   

$
     $    

%
 
ASSETS
                                           
Interest-bearing deposits at banks
   
107,948
     
38
     
0.14
     
58,054
     
14
     
0.09
 
Interest bearing time deposits at banks
   
11,266
     
74
     
2.57
     
13,758
     
89
     
2.57
 
Investment securities
   
400,922
     
1,737
     
1.73
     
293,649
     
1,673
     
2.28
 
Loans: (2)(3)(4)
                                               
  Residential mortgage loans
   
202,357
     
2,402
     
4.71
     
204,095
     
2,711
     
5.28
 
  Construction loans
   
67,907
     
690
     
4.03
     
28,214
     
336
     
4.74
 
  Commercial Loans
   
758,133
     
9,301
     
4.87
     
692,745
     
8,805
     
5.06
 
  Agricultural Loans
   
345,420
     
3,757
     
4.32
     
356,317
     
3,927
     
4.38
 
  Loans to state & political subdivisions
   
46,307
     
367
     
3.14
     
76,421
     
749
     
3.90
 
  Other loans
   
27,720
     
357
     
5.11
     
30,246
     
390
     
5.13
 
  Loans, net of discount (2)(3)(4)
   
1,447,844
     
16,874
     
4.62
     
1,388,038
     
16,918
     
4.85
 
Total interest-earning assets
   
1,967,980
     
18,723
     
3.77
     
1,753,499
     
18,694
     
4.24
 
Cash and due from banks
   
6,421
                     
7,021
                 
Bank premises and equipment
   
17,142
                     
17,686
                 
Other assets
   
73,929
                     
91,806
                 
Total non-interest earning assets
   
97,492
                     
116,513
                 
Total assets
   
2,065,472
                     
1,870,012
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
                                               
Interest-bearing liabilities:
                                               
  NOW accounts
   
476,634
     
301
     
0.25
     
412,472
     
198
     
0.19
 
  Savings accounts
   
305,962
     
74
     
0.10
     
252,019
     
90
     
0.14
 
  Money market accounts
   
285,952
     
182
     
0.25
     
229,433
     
202
     
0.35
 
  Certificates of deposit
   
332,880
     
735
     
0.87
     
382,188
     
1,082
     
1.13
 
Total interest-bearing deposits
   
1,401,428
     
1,292
     
0.37
     
1,276,112
     
1,572
     
0.49
 
Other borrowed funds
   
76,970
     
344
     
1.78
     
96,565
     
294
     
1.21
 
Total interest-bearing liabilities
   
1,478,398
     
1,636
     
0.44
     
1,372,677
     
1,866
     
0.54
 
Demand deposits
   
360,645
                     
289,632
                 
Other liabilities
   
14,519
                     
17,472
                 
Total non-interest-bearing liabilities
   
375,164
                     
307,104
                 
Stockholders' equity
   
211,910
                     
190,231
                 
Total liabilities & stockholders' equity
   
2,065,472
                     
1,870,012
                 
Net interest income
           
17,087
                     
16,828
         
Net interest spread (5)
                   
3.34
%
                   
3.70
%
Net interest income as a percentage
                                               
  of average interest-earning assets
                   
3.44
%
                   
3.82
%
Ratio of interest-earning assets
                                               
  to interest-bearing liabilities
                   
133
%
                   
128
%
                                                 
(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 2021 and 2020. 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)
                                   
   
Year Ended December 31,
 
   
2021
   
2020
 
   
Average
         
Average
   
Average
         
Average
 
   
Balance (1)
   
Interest
   
Rate
   
Balance (1)
   
Interest
   
Rate
 
(dollars in thousands)
 

$
     $    

%
   

$
     $    

%
 
ASSETS
                                           
Short-term investments:
                                           
Interest-bearing deposits at banks
   
108,872
     
124
     
0.11
     
41,330
     
37
     
0.09
 
Total short-term investments
   
108,872
     
124
     
0.11
     
41,330
     
37
     
0.09
 
Interest bearing time deposits at banks
   
12,527
     
323
     
2.57
     
14,139
     
364
     
2.57
 
Investment securities:
                                               
  Taxable
   
252,470
     
4,198
     
1.66
     
188,241
     
4,488
     
2.38
 
  Tax-exempt (3)
   
104,379
     
2,786
     
2.67
     
80,131
     
2,366
     
2.95
 
Investment securities
   
356,849
     
6,984
     
1.96
     
268,372
     
6,854
     
2.55
 
Loans: (2)(3)(4)
                                               
  Residential mortgage loans
   
203,062
     
9,867
     
4.86
     
210,696
     
11,161
     
5.30
 
  Construction loans
   
56,315
     
2,292
     
4.07
     
26,343
     
1,288
     
4.89
 
  Commercial Loans
   
739,000
     
36,215
     
4.90
     
590,469
     
31,087
     
5.26
 
  Agricultural Loans
   
349,951
     
15,079
     
4.31
     
357,201
     
16,022
     
4.49
 
  Loans to state & political subdivisions
   
52,804
     
1,871
     
3.54
     
86,143
     
3,458
     
4.01
 
  Other loans
   
24,125
     
1,385
     
5.74
     
20,986
     
1,185
     
5.65
 
  Loans, net of discount (2)(3)(4)
   
1,425,257
     
66,709
     
4.68
     
1,291,838
     
64,201
     
4.97
 
Total interest-earning assets
   
1,903,505
     
74,140
     
3.89
     
1,615,679
     
71,456
     
4.42
 
Cash and due from banks
   
6,525
                     
7,487
                 
Bank premises and equipment
   
17,194
                     
17,286
                 
Other assets
   
75,410
                     
79,305
                 
Total non-interest earning assets
   
99,129
                     
104,078
                 
Total assets
   
2,002,634
                     
1,719,757
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
                                               
Interest-bearing liabilities:
                                               
  NOW accounts
   
457,189
     
1,387
     
0.30
     
383,931
     
1,102
     
0.29
 
  Savings accounts
   
290,376
     
322
     
0.11
     
241,429
     
476
     
0.20
 
  Money market accounts
   
257,937
     
684
     
0.27
     
205,142
     
1,012
     
0.49
 
  Certificates of deposit
   
351,265
     
3,444
     
0.98
     
345,397
     
4,261
     
1.23
 
Total interest-bearing deposits
   
1,356,767
     
5,837
     
0.43
     
1,175,899
     
6,851
     
0.58
 
Other borrowed funds
   
84,621
     
1,268
     
1.50
     
93,237
     
1,254
     
1.34
 
Total interest-bearing liabilities
   
1,441,388
     
7,105
     
0.49
     
1,269,136
     
8,105
     
0.64
 
Demand deposits
   
341,604
                     
257,285
                 
Other liabilities
   
15,420
                     
16,662
                 
Total non-interest-bearing liabilities
   
357,024
                     
273,947
                 
Stockholders' equity
   
204,222
                     
176,674
                 
Total liabilities & stockholders' equity
   
2,002,634
                     
1,719,757
                 
Net interest income
           
67,035
                     
63,351
         
Net interest spread (5)
                   
3.40
%
                   
3.78
%
Net interest income as a percentage
                                               
  of average interest-earning assets
                   
3.52
%
                   
3.92
%
Ratio of interest-earning assets
                                               
  to interest-bearing liabilities
                   
132
%
                   
127
%
                                                 
(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 2021 and 2020. 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 LOAN LOSSES
 
(UNAUDITED)
                             
(Excludes Loans Held for Sale)
                             
(In Thousands)
                             
   
December 31,
   
September 30,
   
June 30,
   
March 31,
   
December 31,
 
   
2021
   
2021
   
2021
   
2021
   
2020
 
Real estate:
                             
  Residential
 
$
201,097
   
$
204,853
   
$
202,171
   
$
203,273
   
$
201,911
 
  Commercial
   
687,338
     
657,485
     
641,633
     
605,547
     
596,255
 
  Agricultural
   
312,011
     
312,442
     
310,274
     
315,313
     
315,158
 
  Construction
   
55,036
     
68,408
     
63,065
     
42,651
     
35,404
 
Consumer
   
25,858
     
31,042
     
8,684
     
26,181
     
30,277
 
Other commercial loans
   
74,585
     
92,188
     
104,349
     
109,168
     
114,169
 
Other agricultural loans
   
39,852
     
28,562
     
33,720
     
41,378
     
48,779
 
State & political subdivision loans
   
45,756
     
47,928
     
51,213
     
60,890
     
63,328
 
Total loans
   
1,441,533
     
1,442,908
     
1,415,109
     
1,404,401
     
1,405,281
 
Less: allowance for loan losses
   
17,304
     
17,334
     
16,931
     
16,560
     
15,815
 
Net loans
 
$
1,424,229
   
$
1,425,574
   
$
1,398,178
   
$
1,387,841
   
$
1,389,466
 
                                         
Past due and non-performing assets
                                       
                                         
Total Loans past due 30-89 days and still accruing
 
$
967
   
$
1,482
   
$
1,495
   
$
2,383
   
$
4,120
 
                                         
Non-accrual loans
 
$
7,616
   
$
8,858
   
$
9,082
   
$
10,680
   
$
10,732
 
Loans past due 90 days or more and accruing
   
46
     
83
     
49
     
478
     
525
 
Non-performing loans
 
$
7,662
   
$
8,941
   
$
9,131
   
$
11,158
   
$
11,257
 
OREO
   
1,180
     
1,277
     
1,811
     
1,720
     
1,836
 
Total Non-performing assets
 
$
8,842
   
$
10,218
   
$
10,942
   
$
12,878
   
$
13,093
 
                                         
                                         
                                         
   
3 Months
   
3 Months
   
3 Months
   
3 Months
   
3 Months
 
   
Ended