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8-K - FIRST QUARTER 2021 EARNINGS 8-K - CITIZENS FINANCIAL SERVICES INCfirstqtr2021earnings.htm
Exhibit 99.1


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 first quarter 2021 financial results

MANSFIELD, PENNSYLVANIA— April 23, 2021 – 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, 2021.

Highlights

The financial results of the Company continue to benefit from the acquisition of MidCoast Community Bancorp, Inc. that closed in the second quarter of 2020.

Net income was $8.5 million for the three months ended March 31, 2021, which is 86.8% higher than the net income for 2020’s comparable period. The effective tax rate for the three months ended March 31, 2021 was 16.0% compared to 16.4% in the comparable period in 2020.

Net interest income before the provision for loan losses was $16.4 million for the three months ended March 31, 2021, an increase of $3.6 million, or 27.6%, over the same period a year ago.

Non-performing assets decreased $215,000 from year end and $1,644,000 since March 31, 2020 and total $12,833,000 as of March 31, 2021. As a percent of loans, non-performing assets totaled 0.92%, 0.93% and 1.33% as of March 31, 2021, December 31, 2020 and March 31, 2020.

Return on average equity for the three months (annualized) ended March 31, 2021 was 17.25% compared to 11.48% for the three months (annualized) ended March 31, 2020.

Return on average tangible equity for the three months (annualized) ended March 31, 2021 was 20.74% compared to 13.59% for the three months (annualized) ended March 31, 2020 (non-GAAP). (1)

Return on average assets for the three months (annualized) ended March 31, 2021 was 1.77% compared to 1.24% for the three months (annualized) ended March 31, 2020.

If the life insurance proceeds on a former employees are excluded, the return on average equity and average assets would be 14.90% and 1.52%, respectively, for three months (annualized) ended March 31, 2021 (non-GAAP). (1)

Covid 19 pandemic response and loan profile

During 2021, the Company continued to participate in the Paycheck Protection Program (PPP) for loans provided under the auspices of the Small Business Administration (SBA). From January 1, 2021 to March 31, 2021, we issued 227 loans with aggregate balances of $18.5 million. As of March 31, 2021, 99 loans that were issued under this program in 2020 remain outstanding and have a balance of $9.8 million. 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, 278 loans, or 85.3% of the remaining PPP loans, had an original balance less than $150,000. The outstanding balance for these 278 loans as of March 31, 2021 was approximately $10.3 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 March 31, 2021, there were 4 commercial loans outstanding with aggregate balances of $13.9 million that are under modified terms through August 2021.

The Company tracks industry concentrations to identify risks that could lead to additional credit 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 March 31, 2021, the Company had limited loan concentrations to these industries as follows:
o
Hotels/Motels - $59.3 million or 4.2% of outstanding loans
o
Restaurants - $26.8 million or 1.9% of outstanding loans
o
Amusement/Theme parks - $13.9 million, or 1.0% of outstanding loans

Agricultural lending continues to be an area of emphasis with the Bank. As of March 31, 2021, agricultural lending comprised approximately $356.7 million, or 25.4% of total loans. Agriculture was significantly impacted in the early part of the pandemic as dairy farmers were forced to dump milk, and milk futures remain extremely volatile. Other producers experienced difficulties in getting livestock to market and reduced proceeds from sales as well as difficulty in obtaining supplies.

First Quarter of 2021 Compared to the First Quarter of 2020

For the three months ended March 31, 2021, net income totaled $8,463,000 which compares to net income of $4,531,000 for the comparable period of 2020, an increase of $3,932,000 or 86.8%.  Basic earnings per share of $2.16 for the three months ended March 31, 2021 compares to $1.27 for the 2020 comparable period. Annualized return on equity for the three months ended March 31, 2021 and 2020 was 17.25% and 11.48%, while annualized return on assets was 1.77% and 1.24%, respectively.

Net interest income before the provision for loan losses for the three months ended March 31, 2021 totaled $16,441,000 compared to $12,890,000 for the three months ended March 31, 2020, resulting in an increase of $3,551,000, or 27.6%. Average interest earning assets increased $434.2 million for the three months ended March 31, 2021 compared to the same period last year as a result of the acquisition and organic loan and deposit growth.  Average loans increased $291.3 million while average investment securities increased $58.5 million. The tax effected net interest margin for the three months ended March 31, 2021 was 3.73% compared to 3.84% for the same period last year, which was impacted by the decrease in the average yield on interest earning assets of 41 basis points to 4.15%.

The provision for loan losses for the three months ended March 31, 2021 was $650,000, a $250,000 increase to the comparable period in 2020. The increase in the provision is attributable to loans maturing that were acquired as part of the MidCoast acquisition, which were refinanced with the Company and are subject to the Company’s allowance calculation.


Total non-interest income was $4,235,000 for the three months ended March 31, 2021, which is $2,384,000 more than the comparable period last year.  The primary drivers were the earnings of bank owned life insurance, which increased $1,155,000 as the result of the passing of two former employees, gains on loans sold which increased $336,000 and an increase in equity security gains of $441,000 as a result of market performance. Other income increased due to $228,000 due to fee income on derivative transactions for customers.


Total non-interest expenses for the three months ended March 31, 2021 totaled $9,947,000 compared to $8,921,000 for the same period last year, which is an increase of $1,026,000, or 11.5%. The increase was due to the additional salary and benefit costs of employees added as a result of the MidCoast acquisition, as well as merit increases for employees, and occupancy expenses associated with the new branches acquired as part of the merger. The decrease in merger and acquisition expenses is due to expenses incurred in the first quarter of 2020 related to the MidCoast acquisition.

The provision for income taxes increased $727,000 when comparing the three months ended March 31, 2021 to the same period in 2020 as a result of an increase in income before income tax of $4,659,000.  The effective tax rate was 16.0% and 16.4% for the three months ended March 31, 2021 and 2020, respectively. It should be noted the earnings on bank owned life insurance are exempt from Federal income tax.

Balance Sheet and Other Information:

At March 31, 2021, total assets were $2.00 billion compared to $1.89 billion at December 31, 2020 and $1.45 billion at March 31, 2020. The loan to deposit ratio as of March 31, 2021 was 83.23% compared to 88.45% as of December 31, 2020 and 90.75% as of March 31, 2020.

Available for sale securities of $322.0 million at March 31, 2021 increased $26.8 million from December 31, 2020 and $64.2 million from March 31, 2020. The yield on the investment portfolio decreased from 2.82% to 2.18% 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 last three quarters of 2020 and the first quarter of 2021.

Net loans as of March 31, 2021 totaled $1.39 billion and decreased $1.6 million from December 31, 2020 as a result of PPP forgiveness and a decrease in student loan balances.

The allowance for loan losses totaled $16,560,000 at March 31, 2021 which is an increase of $745,000 from December 31, 2020.  The increase is due to recording a provision for loan losses of $650,000 and recoveries of $99,000, offset by charge-offs of $4,000. The allowance as a percent of total loans was 1.18% as of March 31, 2021 and 1.13% as of December 31, 2020.

Deposits increased $98.6 million from December 31, 2020, to $1.69 billion at March 31, 2021, primarily due to customers holding more cash due to the pandemic and government stimulus funds provided to customers. Brokered CD’s decreased $4.8 million.  Non-interest-bearing deposits increased $32.7 million due to the PPP program and additional cash holdings by customers.

Stockholders’ equity totaled $198.8 million at March 31, 2021, compared to $194.3 million at December 31, 2020, an increase of $4.5 million. The increase was attributable to net income for the three months ended March 31, 2021 totaling $8.5 million, offset by cash dividends for the first quarter totaling $1.8 million and net treasury stock activity of $510,000.  As a result of changes in interest rates impacting the fair value of investment securities, the unrealized gain on available for sale investment securities, net of tax, decreased $1.6 million from December 31, 2020.


Dividend Declared

On March 2, 2021, the Board of Directors declared a cash dividend of $0.465 per share, which was paid on March 26, 2021 to shareholders of record at the close of business on March 12, 2021. This quarterly cash dividend is an increase of 3.31% over the regular cash dividend of $0.450 per share declared one year ago, as adjusted for the 1% stock dividend declared in June 2020.  Citizens Financial Services, Inc. paid an additional $0.10 special dividend in the first quarter of 2020.

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
       
   
Three Months Ended
       
   
March 31,
       
   
2021
   
2020
       
Income and Performance Ratios
                 
Net Income
 
$
8,463
   
$
4,531
       
Return on average assets (annualized)
   
1.77
%
   
1.24
%
     
Return on average equity (annualized)
   
17.25
%
   
11.48
%
     
Return on average tangible equity (annualized) (a)
   
20.74
%
   
13.59
%
     
Net interest margin (tax equivalent)(a)
   
3.73
%
   
3.84
%
     
Earnings per share - basic (b)
 
$
2.16
   
$
1.27
       
Earnings per share - diluted (b)
 
$
2.16
   
$
1.27
       
Cash dividends paid per share (b)
 
$
0.465
   
$
0.549
       
Number of shares used in computation - basic (b)
   
3,909,887
     
3,553,818
       
Number of shares used in computation - diluted (b)
   
3,909,887
     
3,553,818
       
                       
                       
Asset quality
                     
Allowance for loan and lease losses
 
$
16,560
   
$
14,247
       
Non-performing assets
 
$
12,878
   
$
14,522
       
Allowance for loan and lease losses/total loans
   
1.18
%
   
1.30
%
     
Non-performing assets to total loans
   
0.92
%
   
1.33
%
     
Annualized net (recoveries) charge-offs to total loans
   
(0.03
)%
   
0.00
%
     
                       
                       
Equity
                     
Book value per share (b)
 
$
50.55
   
$
44.30
       
Tangible Book value per share (a) (b)
 
$
42.10
   
$
37.36
       
Market Value (Last reported trade of month)
 
$
59.65
   
$
49.00
       
Common shares outstanding
   
3,912,679
     
3,506,009
       
                       
                       
Other
                     
Average Full Time Equivalent Employees
   
297.4
     
255.3
       
Loan to Deposit Ratio
   
83.23
%
   
90.75
%
     
Trust assets under management
 
$
150,871
   
$
110,419
       
Brokerage assets under management
 
$
252,888
   
$
200,145
       
                       
                       
Balance Sheet Highlights
 
March 31,
   
December 31,
   
March 31,
 
     
2021
     
2020
     
2020
 
                         
Assets
 
$
1,995,610
   
$
1,891,674
   
$
1,464,729
 
Investment securities
   
324,085
     
297,120
     
258,437
 
Loans (net of unearned income)
   
1,404,401
     
1,405,281
     
1,093,720
 
Allowance for loan losses
   
16,560
     
15,815
     
14,247
 
Deposits
   
1,687,470
     
1,588,858
     
1,205,150
 
Stockholders' Equity
   
198,807
     
194,259
     
159,923
 
                         
                         
(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)
                 
                   
   
March 31,
   
December 31,
   
March 31,
 
(in thousands except share data)
 
2021
   
2020
   
2020
 
ASSETS:
                 
Cash and due from banks:
                 
  Noninterest-bearing
 
$
18,164
   
$
16,374
   
$
20,663
 
  Interest-bearing
   
132,664
     
52,333
     
858
 
Total cash and cash equivalents
   
150,828
     
68,707
     
21,521
 
                         
Interest bearing time deposits with other banks
   
13,509
     
13,758
     
14,506
 
                         
Equity securities
   
2,118
     
1,931
     
649
 
                         
Available-for-sale securities
   
321,967
     
295,189
     
257,788
 
                         
Loans held for sale
   
9,946
     
14,640
     
2,006
 
                         
Loans (net of allowance for loan losses: $16,560 at March 31, 2021;
                       
    $15,815 at December 31, 2020 and $14,247 at March 31, 2020)
   
1,387,841
     
1,389,466
     
1,079,473
 
                         
Premises and equipment
   
17,450
     
16,948
     
16,222
 
Accrued interest receivable
   
5,572
     
5,998
     
4,587
 
Goodwill
   
31,376
     
31,376
     
23,296
 
Bank owned life insurance
   
30,190
     
32,589
     
28,284
 
Other intangibles
   
1,696
     
1,668
     
1,294
 
Other assets
   
23,117
     
19,404
     
15,103
 
                         
TOTAL ASSETS
 
$
1,995,610
   
$
1,891,674
   
$
1,464,729
 
                         
LIABILITIES:
                       
Deposits:
                       
  Noninterest-bearing
 
$
336,438
   
$
303,762
   
$
204,489
 
  Interest-bearing
   
1,351,032
     
1,285,096
     
1,000,661
 
Total deposits
   
1,687,470
     
1,588,858
     
1,205,150
 
Borrowed funds
   
86,171
     
88,838
     
83,563
 
Accrued interest payable
   
913
     
1,017
     
906
 
Other liabilities
   
22,249
     
18,702
     
15,187
 
TOTAL LIABILITIES
   
1,796,803
     
1,697,415
     
1,304,806
 
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 March 31, 2021, December 31, 2020 and
                 
March 31, 2020: issued 4,350,342 at March 31, 2021 and December 31, 2020 and
                 
  3,938,668 at March 31, 2020
   
4,350
     
4,350
     
3,939
 
Additional paid-in capital
   
75,908
     
75,908
     
55,129
 
Retained earnings
   
133,270
     
126,627
     
113,374
 
Accumulated other comprehensive income (loss)
   
1,002
     
2,587
     
2,918
 
Treasury stock, at cost:  437,663 at March 31, 2021 and 428,492 shares
                       
  at December 31, 2020 and 413,607 shares at March 31, 2020
   
(15,723
)
   
(15,213
)
   
(15,437
)
TOTAL STOCKHOLDERS' EQUITY
   
198,807
     
194,259
     
159,923
 
TOTAL LIABILITIES AND
                       
   STOCKHOLDERS' EQUITY
 
$
1,995,610
   
$
1,891,674
   
$
1,464,729
 


CITIZENS FINANCIAL SERVICES, INC.
           
CONSOLIDATED STATEMENT OF INCOME
           
(UNAUDITED)
           
   
Three Months Ended
 
   
March 31,
 
(in thousands, except per share data)
 
2021
   
2019
 
INTEREST INCOME:
           
Interest and fees on loans
 
$
16,694
   
$
13,638
 
Interest-bearing deposits with banks
   
106
     
95
 
Investment securities:
               
    Taxable
   
850
     
1,107
 
    Nontaxable
   
544
     
389
 
    Dividends
   
101
     
110
 
TOTAL INTEREST INCOME
   
18,295
     
15,339
 
INTEREST EXPENSE:
               
Deposits
   
1,598
     
1,987
 
Borrowed funds
   
256
     
462
 
TOTAL INTEREST EXPENSE
   
1,854
     
2,449
 
NET INTEREST INCOME
   
16,441
     
12,890
 
Provision for loan losses
   
650
     
400
 
NET INTEREST INCOME AFTER
               
    PROVISION FOR LOAN LOSSES
   
15,791
     
12,490
 
NON-INTEREST INCOME:
               
Service charges
   
1,106
     
1,081
 
Trust
   
307
     
198
 
Brokerage and insurance
   
376
     
340
 
Gains on loans sold
   
503
     
167
 
Equity security gains (losses), net
   
187
     
(254
)
Available for sale security gains (losses), net
   
50
     
-
 
Earnings on bank owned life insurance
   
1,315
     
156
 
Other
   
391
     
163
 
TOTAL NON-INTEREST INCOME
   
4,235
     
1,851
 
NON-INTEREST EXPENSES:
               
Salaries and employee benefits
   
6,263
     
5,414
 
Occupancy
   
783
     
526
 
Furniture and equipment
   
143
     
131
 
Professional fees
   
448
     
325
 
FDIC insurance expense
   
129
     
71
 
Pennsylvania shares tax
   
339
     
275
 
Amortization of intangibles
   
49
     
50
 
Merger and acquisition
   
-
     
376
 
Software expenses
   
313
     
247
 
ORE expenses
   
86
     
32
 
Other
   
1,394
     
1,474
 
TOTAL NON-INTEREST EXPENSES
   
9,947
     
8,921
 
Income before provision for income taxes
   
10,079
     
5,420
 
Provision for income taxes
   
1,616
     
889
 
NET INCOME
 
$
8,463
   
$
4,531
 
                 
PER COMMON SHARE DATA:
               
Net Income - Basic
 
$
2.16
   
$
1.27
 
Net Income - Diluted
 
$
2.16
   
$
1.27
 
Cash Dividends Paid
 
$
0.465
   
$
0.549
 
                 
Number of shares used in computation - basic
   
3,909,887
     
3,553,818
 
Number of shares used in computation - diluted
   
3,909,887
     
3,553,818
 


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,
 
   
2021
   
2020
   
2020
   
2020
   
2020
 
Interest income
 
$
18,295
   
$
18,411
   
$
18,386
   
$
18,160
   
$
15,339
 
Interest expense
   
1,854
     
1,866
     
1,916
     
1,874
     
2,449
 
Net interest income
   
16,441
     
16,545
     
16,470
     
16,286
     
12,890
 
Provision for loan losses
   
650
     
900
     
550
     
550
     
400
 
Net interest income after provision for loan losses
   
15,791
     
15,645
     
15,920
     
15,736
     
12,490
 
Non-interest income
   
3,998
     
3,726
     
3,386
     
1,941
     
2,105
 
Investment securities gains (losses), net
   
237
     
238
     
152
     
128
     
(254
)
Non-interest expenses
   
9,947
     
10,821
     
9,692
     
11,413
     
8,921
 
Income before provision for income taxes
   
10,079
     
8,788
     
9,766
     
6,392
     
5,420
 
Provision for income taxes
   
1,616
     
1,561
     
1,759
     
1,054
     
889
 
Net income
 
$
8,463
   
$
7,227
   
$
8,007
   
$
5,338
   
$
4,531
 
Earnings Per Share Basic
 
$
2.16
   
$
1.85
   
$
2.04
   
$
1.39
   
$
1.27
 
Earnings Per Share Diluted
 
$
2.16
   
$
1.85
   
$
2.04
   
$
1.39
   
$
1.27
 


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,
      
       
   
2021
               
2020
             
   
Average
         
Average
   
Average
         
Average
 
   
Balance (1)
   
Interest
   
Rate
   
Balance (1)
   
Interest
   
Rate
 
(dollars in thousands)
 
$
           
$
%
   
$
           
$
%
 
ASSETS
                                           
Interest-bearing deposits at banks
   
94,523
     
19
     
0.08
     
9,538
     
3
     
0.17
 
Interest bearing time deposits at banks
   
13,730
     
87
     
2.57
     
14,272
     
92
     
2.59
 
Investment securities:
                                               
  Taxable
   
200,492
     
951
     
1.90
     
179,893
     
1,217
     
2.71
 
  Tax-exempt (3)
   
100,422
     
689
     
2.74
     
62,555
     
493
     
3.15
 
Investment securities
   
300,914
     
1,640
     
2.18
     
242,448
     
1,710
     
2.82
 
Loans: (2)(3)(4)
                                               
  Residential mortgage loans
   
203,941
     
2,553
     
5.08
     
215,838
     
2,843
     
5.30
 
  Construction loans
   
38,314
     
410
     
4.34
     
17,726
     
223
     
5.06
 
  Commercial Loans
   
713,900
     
9,063
     
5.15
     
415,199
     
5,534
     
5.36
 
  Agricultural Loans
   
358,565
     
3,830
     
4.33
     
360,179
     
4,112
     
4.59
 
  Loans to state & political subdivisions
   
62,516
     
598
     
3.87
     
94,122
     
939
     
4.01
 
  Other loans
   
26,605
     
348
     
5.30
     
9,461
     
171
     
7.27
 
  Loans, net of discount (2)(3)(4)
   
1,403,841
     
16,802
     
4.85
     
1,112,525
     
13,822
     
5.00
 
Total interest-earning assets
   
1,813,008
     
18,548
     
4.15
     
1,378,783
     
15,627
     
4.56
 
Cash and due from banks
   
6,377
                     
6,263
                 
Bank premises and equipment
   
17,003
                     
16,062
                 
Other assets
   
80,953
                     
56,983
                 
Total non-interest earning assets
   
104,333
                     
79,308
                 
Total assets
   
1,917,341
                     
1,458,091
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
                                               
Interest-bearing liabilities:
                                               
  NOW accounts
   
422,135
     
320
     
0.31
     
332,068
     
437
     
0.53
 
  Savings accounts
   
268,252
     
89
     
0.13
     
225,985
     
184
     
0.33
 
  Money market accounts
   
238,788
     
176
     
0.30
     
174,294
     
393
     
0.91
 
  Certificates of deposit
   
380,791
     
1,013
     
1.08
     
261,278
     
973
     
1.50
 
Total interest-bearing deposits
   
1,309,966
     
1,598
     
0.49
     
993,625
     
1,987
     
0.93
 
Other borrowed funds
   
86,226
     
256
     
1.20
     
93,849
     
462
     
1.98
 
Total interest-bearing liabilities
   
1,396,192
     
1,854
     
0.54
     
1,087,474
     
2,449
     
0.91
 
Demand deposits
   
306,377
                     
196,604
                 
Other liabilities
   
18,582
                     
16,082
                 
Total non-interest-bearing liabilities
   
324,959
                     
212,686
                 
Stockholders' equity
   
196,190
                     
157,931
                 
Total liabilities & stockholders' equity
   
1,917,341
                     
1,458,091
                 
Net interest income
           
16,694
                     
13,178
         
Net interest spread (5)
                   
3.61
%
                   
3.65
%
Net interest income as a percentage
                                               
  of average interest-earning assets
                   
3.73
%
                   
3.84
%
Ratio of interest-earning assets
                                               
  to interest-bearing liabilities
                   
130
%
                   
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 2020 and 2019. 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)
                             
   
March 31,
   
December 31,
   
September 30,
   
June 30,
   
March 31,
 
   
2021
   
2020
   
2020
   
2020
   
2020
 
Real estate:
                             
  Residential
 
$
203,273
   
$
201,911
   
$
208,084
   
$
210,789
   
$
216,179
 
  Commercial
   
605,547
     
596,255
     
535,456
     
513,598
     
338,490
 
  Agricultural
   
315,313
     
315,158
     
310,702
     
313,136
     
300,606
 
  Construction
   
42,651
     
35,404
     
28,656
     
31,744
     
17,926
 
Consumer
   
26,181
     
30,277
     
30,625
     
30,973
     
9,533
 
Other commercial loans
   
109,168
     
114,169
     
129,731
     
132,503
     
71,038
 
Other agricultural loans
   
41,378
     
48,779
     
40,790
     
44,912
     
46,170
 
State & political subdivision loans
   
60,890
     
63,328
     
81,835
     
85,978
     
93,778
 
Total loans
   
1,404,401
     
1,405,281
     
1,365,879
     
1,363,633
     
1,093,720
 
Less: allowance for loan losses
   
16,560
     
15,815
     
15,169
     
14,827
     
14,247
 
Net loans
 
$
1,387,841
   
$
1,389,466
   
$
1,350,710
   
$
1,348,806
   
$
1,079,473
 
                                         
Past due and non-performing assets
                                       
                                         
Total Loans past due 30-89 days and still accruing
 
$
2,383
   
$
4,120
   
$
3,449
   
$
4,986
   
$
3,159
 
                                         
Non-accrual loans
 
$
10,680
   
$
10,732
   
$
11,711
   
$
10,693
   
$
11,302
 
Loans past due 90 days or more and accruing
   
478
     
525
     
1,194
     
654
     
164
 
Non-performing loans
 
$
11,158
   
$
11,257
   
$
12,905
   
$
11,347
   
$
11,466
 
OREO
   
1,720
     
1,836
     
2,726
     
2,853
     
3,056
 
Total Non-performing assets
 
$
12,878
   
$
13,093
   
$
15,631
   
$
14,200
   
$
14,522
 
                                         
                                         
                                         
   
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)
   
2021
     
2020
     
2020
     
2020
     
2020
 
Balance, beginning of period
 
$
15,815
   
$
15,169
   
$
14,827
   
$
14,247
   
$
13,845
 
Charge-offs
   
(4
)
   
(276
)
   
(237
)
   
(10
)
   
(9
)
Recoveries
   
99
     
22
     
29
     
40
     
11
 
Net (charge-offs) recoveries
   
95
     
(254
)
   
(208
)
   
30
     
2
 
Provision for loan losses
   
650
     
900
     
550
     
550
     
400
 
Balance, end of period
 
$
16,560
   
$
15,815
   
$
15,169
   
$
14,827
   
$
14,247
 


CITIZENS FINANCIAL SERVICES, INC.
           
Reconciliation of GAAP and Non-GAAP Financial Measures
       
(UNAUDITED)
           
(Dollars in thousands, except per share data)
           
             
   
As of
 
   
March 31
 
   
2021
   
2020
 
Tangible Equity
           
Stockholders Equity - GAAP
 
$
198,807
   
$
159,923
 
Accumulated other comprehensive (gain) loss
   
(1,002
)
   
(2,918
)
Intangible Assets
   
(33,072
)
   
(24,590
)
Tangible Equity - Non-GAAP
   
164,733
     
132,415
 
Shares outstanding adjusted for June 2020 stock Dividend
   
3,912,679
     
3,544,327
 
Tangible Book value per share (a)
 
$
42.10
   
$
37.36
 
                 
   
As of
 
   
March 31
 
     
2021
     
2020
 
Tangible Equity per share
               
Stockholders Equity per share - GAAP
 
$
50.81
   
$
45.12
 
Adjustments for accumulated other comprehensive loss
   
(0.26
)
   
(0.82
)
Book value per share
   
50.55
     
44.30
 
Adjustments for intangible assets
   
(8.45
)
   
(6.94
)
Tangible Book value per share - Non-GAAP
 
$
42.10
   
$
37.36
 
                 
                 
   
For the Three Months Ended
 
   
March 31
 
     
2021
     
2020
 
Return on Average Tangible Equity
               
Average Stockholders Equity - GAAP
 
$
198,617
   
$
157,905
 
Average Accumulated Other Comprehensive Loss
   
2,427
     
(26
)
Average Intangible Assets
   
32,998
     
24,603
 
Average Tangible Equity - Non-GAAP
   
163,192
     
133,328
 
Net Income
 
$
8,463
   
$
4,531
 
Annualized Return on Average Tangible Equity
   
20.74
%
   
13.59
%
                 
                 
   
For the Three Months March 31, 2021
   
For the
Three
Months
March 31, 2020
 
Return on Average Assets and Equity Excluding Merger and Acquisition Costs and BOLI Death Benefits
 
Net Income
 
$
8,463
   
$
4,531
 
BOLI death benefits
   
1,155
     
-
 
After Tax merger and acquisition costs
   
-
     
339
 
Net Income excluding merger and acquisition costs
 
$
7,308
   
$
4,870
 
Average Assets
   
1,917,341
     
1,458,091
 
Annualized Return on Average stockholders equity, excluding Merger and Acquisition costs
   
1.52
%
   
1.34
%
                 
Average Stockholders Equity
 
$
196,190
   
$
157,931
 
Annualized Return on Average stockholders equity, excluding Merger and Acquisition costs and death benefits
   
14.90
%
   
12.33
%
                 
                 
                 
   
For the Three Months Ended
 
   
March 31,
 
Reconciliation of net interest income on fully taxable equivalent basis
   
2021
     
2020
 
Total interest income
 
$
18,295
   
$
15,339
 
Total interest expense
   
1,854
     
2,449
 
Net interest income
   
16,441
     
12,890
 
Tax equivalent adjustment
   
253
     
288
 
Net interest income (fully taxable equivalent)
 
$
16,694
   
$
13,178