Citizens Financial Services, Inc. Reports Unaudited Second Quarter 2021 Financial Results

Citizens Financial Services, Inc. (OTC Pink: CZFS), parent company of First Citizens Community Bank, released today its unaudited consolidated financial results for the three and six months ended June 30, 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 $15.1 million for the six months ended June 30, 2021, which is 53.1% higher than the net income for 2020’s comparable period. The effective tax rate for the six months ended June 30, 2021 was 16.9% compared to 16.4% in the comparable period in 2020. 
  • Net income was $6.6 million for the three months ended June 30, 2021, which is 24.5% higher than the net income for 2020’s comparable period. The effective tax rate for the three months ended June 30, 2021 was 17.9% compared to 16.5% in the comparable period in 2020. 
  • Net interest income before the provision for loan losses was $32.7 million for the six months ended June 30, 2021, an increase of $3.5 million, or 11.9%, over the same period a year ago. 
  • Non-performing assets decreased $2.2 million from year end and $3.3 million since June 30, 2020 and totaled $10,942,000 as of June 30, 2021. As a percent of loans, non-performing assets totaled 0.77%, 0.93% and 1.04% as of June 30, 2021, December 31, 2020 and June 30, 2020. 
  • Return on average equity for the three and six months (annualized) ended June 30, 2021 was 13.19% and 15.19% compared to 12.28% and 11.90% for the three and six months (annualized) ended June 30, 2020. 
  • Return on average tangible equity for the three and six months (annualized) ended June 30, 2021 was 15.77% and 18.22% compared to 14.98% and 14.31% for the three and six months (annualized) ended June 30, 2020 (non-GAAP). (1) 
  • Return on average assets for the three and six months (annualized) ended June 30, 2021 was 1.32% and 1.54% compared to 1.25% and 1.24% for the three and six months (annualized) ended June 30, 2020. 
  • If the life insurance proceeds on a former employees are excluded, the return on average equity and average assets would be 14.03% and 1.42%, respectively, for six months (annualized) ended June 30, 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). As of June 30, 2021, 419 loans with a balance of $27.1 million remain outstanding under this program. From January 1, 2021 to June 30, 2021, we issued 388 loans with aggregate balances of $24.3 million. As of June 30, 2021, 44 loans that were issued under this program in 2020 remain outstanding and have a balance of $3.9 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, 372 loans, or 88.8% of the remaining PPP loans, had an original balance less than $150,000. The outstanding balance for these 372 loans as of June 30, 2021 was approximately $11.4 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 June 30, 2021, there was 1 commercial loan outstanding with a balance of $6.2 million that is 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 June 30, 2021, the Company had limited loan concentrations to these industries as follows: 
    • Hotels/Motels – $70.9 million or 5.0% of outstanding loans 
    • Restaurants – $26.7 million or 1.9% of outstanding loans 
    • Amusement/Theme parks – $9.4 million, or 0.7% of outstanding loans

Six Months Ended June 30, 2021 Compared to 2020

  • For the six months ended June 30, 2021, net income totaled $15,110,000 which compares to net income of $9,869,000 for the first six months of 2020, an increase of $5,241,000 or 53.1%. Basic earnings per share of $3.83 for the first six months of 2021 compares to $2.64 for the first six months last year. Annualized return on equity for the six months ended June 30, 2021 and 2020 was 15.19% and 11.90%, while annualized return on assets was 1.54% and 1.24%, respectively. 
  • Net interest income before the provision for loan loss for the six months ended June 30, 2021totaled $32,653,000 compared to $29,176,000 for the six months ended June 30, 2020, resulting in an increase of $3,477,000, or 11.9%. Average interest earning assets increased $368.2 million for the six months ended June 30, 2021 compared to the same period last year, 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. Average loans increased $204.5 million while average investment securities increased $75.5 million. The yield on interest earning assets decreased 60 basis points to 3.99%, while the cost of interest-bearing liabilities decreased 21 basis points to 0.53%. The yield on interest earning assets in 2020 benefitted approximately $600,000 or 10 basis points from the pay-off of a purchase credit impaired loan 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 the six months ended June 30, 2021 was 3.59% compared to 4.01% for the same period last year. 
  • The provision for loan losses for the six months ended June 30, 2021 was $1,150,000compared to $950,000 for the six months ended June 30, 2020, an increase of $200,000. 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 $6,941,000 for the six months ended June 30, 2021, which is $3,021,000 more than the non-interest income of $3,920,000 for the same period last year. The primary drivers were the earnings of bank owned life insurance, which increased $1,144,000 as the result of the passing of two former employees, gains on loans sold which increased $387,000 and an increase in equity security gains of $459,000 as a result of market performance. Other income increased $482,000 due to fee income on derivative transactions for customers. 
  • Total non-interest expenses for the six months ended June 30, 2021 totaled $20,267,000compared to $20,334,000 for the same period last year, which is a decrease of $67,000. The primary driver of the decrease was the merger and acquisition costs incurred in 2020 of $2,179,000 as a result of the MidCoast acquisition. Salary and benefit costs and occupancy costs increased compared to the same period in 2020 due to the additional headcount and branches acquired as part of the MidCoast acquisition. 
  • The provision for income taxes increased $1,124,000 when comparing the six months ended June 30, 2021 to the same period in 2020 as a result of an increase in income before income tax of $6,365,000. The effective tax rate was 16.9% and 16.4% for the six months ended June 30, 2021 and 2020, respectively. It should be noted the earnings on bank owned life insurance are exempt from Federal income tax.

Second Quarter of 2021 Compared to the Second Quarter of 2020

  • For the three months ended June 30, 2021, net income totaled $6,647,000 which compares to net income of $5,338,000 for the comparable period of 2020, an increase of $1,309,000 or 24.5%. Basic earnings per share of $1.69 for the three months ended June 30, 2021 compares to $1.37 for the 2020 comparable period. Annualized return on equity for the three months ended June 30, 2021 and 2020 was 13.19% and 12.28%, while annualized return on assets was 1.32% and 1.25%, respectively. 
  • Net interest income before the provision for loan losses for the three months ended June 30, 2021 totaled $16,212,000 compared to $16,286,000 for the three months ended June 30, 2020, resulting in a decrease of $74,000. Average interest earning assets increased $301.5 million for the three months ended June 30, 2021 compared to the same period last year as a result of the organic loan and deposit growth. Average loans increased $117.5 million while average investment securities increased $92.2 million and average interest bearing cash holdings increased $93.1 million. The tax effected net interest margin for the three months ended June 30, 2021 was 3.46% compared to 4.15% for the same period last year, which was impacted by the decrease in the average yield on interest earning assets of 77 basis points to 3.85% of which 15 basis points was due to the $600,000 recognized on the payoff of the purchase impaired loan. 
  • The provision for loan losses for the three months ended June 30, 2021 was $500,000, a $50,000 decrease to the comparable period in 2020. The decrease in the provision is attributable to the impact the COVID-19 pandemic had on the local and national economy in the second quarter of 2020. 
  • Total non-interest income was $2,706,000 for the three months ended June 30, 2021, which is $637,000 more than the comparable period last year. The primary drivers were service charges of $249,000 as a result of waiving fees in the second quarter of 2020 in response to the pandemic and brokerage and insurance commissions, which increased $157,000 due to growth in our south central Pennsylvania market. Other income increased due to $254,000due to fee income on derivative transactions for customers. 
  • Total non-interest expenses for the three months ended June 30, 2021 totaled $10,320,000compared to $11,413,000 for the same period last year, which is a decrease of $1,093,000, or 9.6%. The primary driver of the decrease was the merger and acquisition costs of completing the MidCoast acquisition that totaled $1,803,000 in 2020. Salary and employee benefit costs increased $586,000 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. 
  • The provision for income taxes increased $397,000 when comparing the three months ended June 30, 2021 to the same period in 2020 as a result of an increase in income before income tax of $1,706,000. The effective tax rate was 17.9% and 16.5% for the three months ended June 30, 2021 and 2020, respectively. 

Balance Sheet and Other Information:

  • At June 30, 2021, total assets were $2.00 billion compared to $1.89 billion at December 31, 2020 and $1.80 billion at June 30, 2020. The loan to deposit ratio as of June 30, 2021 was 84.11% compared to 88.45% as of December 31, 2020 and 90.11% as of June 30, 2020. 
  • Available for sale securities of $369.0 million at June 30, 2021 increased $73.8 million from December 31, 2020 and $96.6 million from June 30, 2020. The yield on the investment portfolio decreased from 2.78% to 2.07% 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 the first half of 2021. 
  • Net loans as of June 30, 2021 totaled $1.40 billion and increased $8.7 million from December 31, 2020 as a result of organic growth in the Delaware market offset by PPP forgiveness and a decrease in student loan balances. 
  • The allowance for loan losses totaled $16,931,000 at June 30, 2021 which is an increase of $1,116,000 from December 31, 2020. The increase is due to recording a provision for loan losses of $1,150,000 and recoveries of $108,000, offset by charge-offs of $142,000. The allowance as a percent of total loans was 1.20% as of June 30, 2021 and 1.13% as of December 31, 2020. 
  • Deposits increased $93.5 million from December 31, 2020, to $1.68 billion at June 30, 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 $35.7 million due to the PPP program and additional cash holdings by customers. 
  • Stockholders’ equity totaled $204.4 million at June 30, 2021, compared to $194.3 million at December 31, 2020, an increase of $10.2 million. The increase was attributable to net income for the six months ended June 30, 2021 totaling $15.1 million, offset by cash dividends totaling $3.7 million and net treasury stock activity of $493,000. As a result of changes in interest rates impacting the fair value of investment securities and derivative instruments, accumulated other comprehensive income, decreased $1.0 million from December 31, 2020. 

Dividend Declared

On June 1, 2021, the Board of Directors declared a cash dividend of $0.465 per share, which was paid on June 25, 2021 to shareholders of record at the close of business on June 11, 2021. This quarterly cash dividend is an increase of 3.20% over the regular cash dividend of $0.446 per share declared one year ago, as adjusted for the 1% stock dividend declared in June 2021.  The Board declared a 1% stock dividend, payable on June 25, 2021 to shareholders of record at the close of business on June 11, 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, 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 TheAs of or For The
Three Months EndedSix Months Ended
June 30,June 30,
2021202020212020
Income and Performance Ratios
Net Income $        6,647$        5,338$    15,110$     9,869
Return on average assets (annualized)1.32%1.25%1.54%1.24%
Return on average equity (annualized)13.19%12.28%15.19%11.90%
Return on average tangible equity (annualized) (a)15.77%14.98%18.22%14.31%
Net interest margin (tax equivalent)(a)3.46%4.15%3.59%4.01%
Earnings per share – basic (b)$          1.69$          1.37$        3.83$       2.64
Earnings per share – diluted (b)$          1.69$          1.37$        3.83$       2.64
Cash dividends paid per share (b)$        0.460$        0.446$      0.920$     0.989
Number of shares used in computation – basic (b)3,944,4883,883,7343,946,1843,737,759
Number of shares used in computation – diluted (b)3,944,5603,884,7633,946,2193,738,273
Asset quality
Allowance for loan and lease losses$      16,931$      14,827
Non-performing assets$      10,942$      14,200
Allowance for loan and lease losses/total loans1.20%1.09%
Non-performing assets to total loans0.77%1.04%
Annualized net  charge-offs (recoveries) to total loans0.04%(0.01%)0.00%(0.01%)
Equity
Book value per share (b)$        51.32$        45.45
Tangible Book value per share (a) (b)$        42.95$        37.18
Market Value (Last reported trade of month)$        63.00$        49.75
Common shares outstanding3,951,5733,925,745
Other
Average Full Time Equivalent Employees295.4283.3
Loan to Deposit Ratio84.11%90.11%
Trust assets under management$    155,394$    129,507
Brokerage assets under management$    262,158$    212,636
Balance Sheet Highlights June 30,December 31,June 30,
202120202020
Assets$ 2,003,300$ 1,891,674$1,800,116
Investment securities371,150297,120273,063
Loans (net of unearned income)1,415,1091,405,2811,363,633
Allowance for loan losses16,93115,81514,827
Deposits1,682,3871,588,8581,513,284
Stockholders’ Equity204,419194,259183,095
(a) See reconciliation of GAAP and Non-GAAP measures at the end of the press release
(b) Prior period amounts were adjusted to reflect stock dividends.
CITIZENS FINANCIAL SERVICES, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
June 30,December 31,June 30,
(in thousands except share data)202120202020
ASSETS:
Cash and due from banks:
  Noninterest-bearing$            17,403$          16,374$             19,543
  Interest-bearing90,79152,33319,487
Total cash and cash equivalents108,19468,70739,030
Interest bearing time deposits with other banks12,26613,75814,256
Equity securities2,1481,931703
Available-for-sale securities369,002295,189272,360
Loans held for sale5,28214,64017,468
Loans (net of allowance for loan losses: $16,931 at June 30, 2021; 
    $15,815 at December 31, 2020 and $14,827 at June 30, 2020)1,398,1781,389,4661,348,806
Premises and equipment17,24316,94817,832
Accrued interest receivable5,5645,9985,950
Goodwill31,37631,37631,376
Bank owned life insurance30,35332,58932,228
Other intangibles1,7051,6681,421
Other assets21,98919,40418,686
TOTAL ASSETS$       2,003,300$     1,891,674$        1,800,116
LIABILITIES:
Deposits:
  Noninterest-bearing$          339,414$        303,762$           278,612
  Interest-bearing1,342,9731,285,0961,234,672
Total deposits1,682,3871,588,8581,513,284
Borrowed funds97,83088,83885,135
Accrued interest payable7891,017888
Other liabilities17,87518,70217,714
TOTAL LIABILITIES1,798,8811,697,4151,617,021
STOCKHOLDERS’ EQUITY:
Preferred Stock $1.00 par value; authorized
  3,000,000 shares; none issued in 2021 or 2020
Common stock
  $1.00 par value; authorized 25,000,000 shares at June 30, 2021, December 31, 2020 and      
  June 30, 2020: issued 4,388,901 at June 30, 2021 and 4,350,342 at December 31, 2020 and  
  June 30, 20204,3894,3504,350
Additional paid-in capital78,41275,90875,863
Retained earnings135,714126,627115,000
Accumulated other comprehensive income1,6102,5872,907
Treasury stock, at cost:  437,328 at June 30, 2021 and 428,492 shares 
  at December 31, 2020 and 424,597 shares at June 30, 2020(15,706)(15,213)(15,025)
TOTAL STOCKHOLDERS’ EQUITY204,419194,259183,095
TOTAL LIABILITIES AND
   STOCKHOLDERS’ EQUITY$       2,003,300$     1,891,674$        1,800,116
CITIZENS FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
Three Months EndedSix Months Ended
June 30, June 30, 
(in thousands, except per share data)2021202020212020
INTEREST INCOME:
Interest and fees on loans$      16,370$     16,407$      33,064$     30,045
Interest-bearing deposits with banks11197217192
Investment securities:
    Taxable9411,1261,7912,233
    Nontaxable5474631,091852
    Dividends10667207177
TOTAL INTEREST INCOME18,07518,16036,37033,499
INTEREST EXPENSE:
Deposits1,5251,6573,1233,644
Borrowed funds338217594679
TOTAL INTEREST EXPENSE1,8631,8743,7174,323
NET INTEREST INCOME16,21216,28632,65329,176
Provision for loan losses5005501,150950
NET INTEREST INCOME AFTER
    PROVISION FOR LOAN LOSSES15,71215,73631,50328,226
NON-INTEREST INCOME:
Service charges1,1639142,2691,995
Trust185145492343
Brokerage and insurance406249782589
Gains on loans sold311260814427
Equity security gains (losses), net2911216(243)
Available for sale security gains, net11750117
Earnings on bank owned life insurance1631781,478334
Other449195840358
TOTAL NON-INTEREST INCOME2,7062,0696,9413,920
NON-INTEREST EXPENSES:
Salaries and employee benefits6,4815,89512,74411,309
Occupancy 7116511,4941,177
Furniture and equipment141189284320
Professional fees395438843763
FDIC insurance expense129135258206
Pennsylvania shares tax178259517534
Amortization of intangibles495598105
Merger and acquisition1,8032,179
Software expenses354246667493
ORE expenses167159253191
Other1,7151,5833,1093,057
TOTAL NON-INTEREST EXPENSES10,32011,41320,26720,334
Income before provision for income taxes8,0986,39218,17711,812
Provision for income taxes1,4511,0543,0671,943
NET INCOME$        6,647$       5,338$      15,110$       9,869
PER COMMON SHARE DATA:
Net Income – Basic$          1.69$        1.37$          3.83$        2.64
Net Income – Diluted$          1.69$        1.37$          3.83$        2.64
Cash Dividends Paid $        0.460$       0.446$        0.920$       0.989
Number of shares used in computation – basic3,944,4883,883,7343,946,1843,737,759
Number of shares used in computation – diluted3,944,5603,884,7633,946,2193,738,273
CITIZENS FINANCIAL SERVICES, INC.
QUARTERLY CONDENSED, CONSOLIDATED INCOME STATEMENT INFORMATION
(UNAUDITED)
(in thousands, except share data)Three Months Ended,
June 30,March 31,Dec 31,Sept 30,June 30,
20212021202020202020
Interest income$      18,075$       18,295$       18,411$       18,386$       18,160
Interest expense1,8631,8541,8661,9161,874
Net interest income16,21216,44116,54516,47016,286
Provision for loan losses500650900550550
Net interest income after provision for loan losses15,71215,79115,64515,92015,736
Non-interest income2,6773,9983,7263,3861,941
Investment securities gains (losses), net29237238152128
Non-interest expenses10,3209,94710,8219,69211,413
Income before provision for income taxes8,09810,0798,7889,7666,392
Provision for income taxes1,4511,6161,5611,7591,054
Net income$        6,647$         8,463$         7,227$         8,007$         5,338
Earnings Per Share Basic$          1.69$          2.14$          1.83$          2.02$          1.37
Earnings Per Share Diluted$          1.69$          2.14$          1.83$          2.02$          1.37
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 June 30,
20212020
AverageAverageAverageAverage
Balance (1)InterestRateBalance (1)InterestRate
(dollars in thousands)$$%$$%
ASSETS
Interest-bearing deposits at banks121,319280.0928,18250.07
Interest bearing time deposits at banks13,016832.5914,385922.57
Investment securities352,4991,7401.97260,2811,7802.74
Loans: (2)(3)(4)
  Residential mortgage loans202,5372,4944.94213,7802,8005.27
  Construction loans50,8075214.1130,2963734.95
  Commercial Loans738,1368,8754.82599,8008,2765.55
  Agricultural Loans351,6603,7634.29356,1664,0124.53
  Loans to state & political subdivisions52,9344703.5690,4918983.99
  Other loans25,5673355.2613,5722236.91
  Loans, net of discount (2)(3)(4)1,421,64116,4584.641,304,10516,5825.11
Total interest-earning assets1,908,47518,3093.851,606,95318,4594.62
Cash and due from banks6,7579,319
Bank premises and equipment17,37117,584
Other assets75,57579,001
Total non-interest earning assets99,703105,904
Total assets2,008,1781,712,857
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing liabilities:
  NOW accounts462,2993830.33383,9852570.27
  Savings accounts289,328850.12240,1161070.18
  Money market accounts247,6061640.27197,7422020.41
  Certificates of deposit355,2928931.01354,7591,0911.24
Total interest-bearing deposits1,354,5251,5250.451,176,6021,6570.57
Other borrowed funds95,1663381.4284,0922171.04
Total interest-bearing liabilities1,449,6911,8630.521,260,6941,8740.60
Demand deposits339,896261,839
Other liabilities16,97716,471
Total non-interest-bearing liabilities356,873278,310
Stockholders’ equity201,614173,853
Total liabilities & stockholders’ equity2,008,1781,712,857
Net interest income16,44616,585
Net interest spread (5)3.33%4.02%
Net interest income as a percentage
  of average interest-earning assets3.46%4.15%
Ratio of interest-earning assets
  to interest-bearing liabilities132%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 AVERAGE BALANCES, INTEREST, YIELDS AND RATES, AND NET INTEREST MARGIN ON A FULLY TAX-EQUIVALENT BASIS
(UNAUDITED)
Six Months Ended June 30,
20212020
AverageAverageAverageAverage
Balance (1)InterestRateBalance (1)InterestRate
(dollars in thousands)$$%$$%
ASSETS
Interest-bearing deposits at banks108,196460.0919,01390.10
Interest bearing time deposits at banks13,3711712.5814,3291832.57
Investment securities326,8493,3792.07251,3653,4892.78
Loans: (2)(3)(4)
  Residential mortgage loans203,2355,0475.01214,8095,6435.28
  Construction loans44,5959314.2124,0115964.99
  Commercial Loans726,07717,9384.98507,49013,8095.47
  Agricultural Loans355,0947,5934.31358,1738,1244.56
  Loans to state & political subdivisions57,6981,0683.7392,3061,8374.00
  Other loans26,0836825.2711,5173956.90
  Loans, net of discount (2)(3)(4)1,412,78233,2594.751,208,30630,4045.06
Total interest-earning assets1,861,19836,8553.991,493,01334,0854.59
Cash and due from banks6,5697,791
Bank premises and equipment17,18816,823
Other assets78,05567,847
Total non-interest earning assets101,81292,461
Total assets1,963,0101,585,474
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing liabilities:
  NOW accounts442,3287030.32358,0266940.39
  Savings accounts278,8481750.13233,0502910.25
  Money market accounts243,2213390.28186,0185950.64
  Certificates of deposit367,9711,9061.04308,0192,0640.35
Total interest-bearing deposits1,332,3683,1230.471,085,1133,6440.68
Other borrowed funds90,7215941.3288,9716791.53
Total interest-bearing liabilities1,423,0893,7170.531,174,0844,3230.74
Demand deposits323,229229,221
Other liabilities17,77516,277
Total non-interest-bearing liabilities341,004245,498
Stockholders’ equity198,917165,892
Total liabilities & stockholders’ equity1,963,0101,585,474
Net interest income33,13829,762
Net interest spread (5)3.46%3.85%
Net interest income as a percentage
  of average interest-earning assets3.59%4.01%
Ratio of interest-earning assets
  to interest-bearing liabilities131%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)
June 30, March 31,December 31,September 30,June 30, 
20212021202020202020
Real estate:
  Residential$      202,171$       203,273$       201,911$       208,084$       210,789
  Commercial641,633605,547596,255535,456513,598
  Agricultural310,274315,313315,158310,702313,136
  Construction63,06542,65135,40428,65631,744
Consumer8,68426,18130,27730,62530,973
Other commercial loans104,349109,168114,169129,731132,503
Other agricultural loans33,72041,37848,77940,79044,912
State & political subdivision loans51,21360,89063,32881,83585,978
Total loans1,415,1091,404,4011,405,2811,365,8791,363,633
Less: allowance for loan losses16,93116,56015,81515,16914,827
Net loans$   1,398,178$    1,387,841$    1,389,466$    1,350,710$    1,348,806
Past due and non-performing assets
Total Loans past due 30-89 days and still accruing$          1,495$          2,383$           4,120$          3,449$          4,986
Non-accrual loans$          9,082$         10,680$         10,732$         11,711$         10,693
Loans past due 90 days or more and accruing494785251,194654
Non-performing loans$          9,131$         11,158$         11,257$         12,905$         11,347
OREO1,8111,7201,8362,7262,853
Total Non-performing assets$        10,942$         12,878$         13,093$         15,631$         14,200
3 Months 3 Months 3 Months 3 Months 3 Months 
EndedEndedEndedEndedEnded
Analysis of the Allowance for loan LossesJune 30,March 31,December 31,September 30,June 30,
(In Thousands)20212021202020202020
Balance, beginning of period$        16,560$         15,815$         15,169$         14,827$         14,247
Charge-offs(138)(4)(276)(237)(10)
Recoveries999222940
Net (charge-offs) recoveries(129)95(254)(208)30
Provision for loan losses500650900550550
Balance, end of period$        16,931$         16,560$         15,815$         15,169$         14,827
CITIZENS FINANCIAL SERVICES, INC.
Reconciliation of GAAP and Non-GAAP Financial Measures
(UNAUDITED)
(Dollars in thousands, except per share data)
As of 
June 30
20212020
Tangible Equity
Stockholders Equity – GAAP$          204,419$           183,095
Accumulated other comprehensive income(1,610)(2,907)
Intangible Assets(33,081)(32,797)
Tangible Equity – Non-GAAP169,728147,391
Shares outstanding adjusted for June 2021 stock Dividend3,951,5733,964,304
Tangible Book value per share (a) $              42.95$               37.18
As of 
June 30
20212020
Tangible Equity per share
Stockholders Equity per share – GAAP$              51.73$               46.18
Adjustments for accumulated other comprehensive income(0.41)(0.73)
Book value per share51.3245.45
Adjustments for intangible assets(8.37)(8.27)
Tangible Book value per share – Non-GAAP$              42.95$               37.18
For the Three Months EndedFor the Six Months Ended
June 30June 30
2021202020212020
Return on Average Tangible Equity
Average Stockholders Equity – GAAP$          203,023$           176,397$               200,832$          167,151
Average Accumulated Other Comprehensive income(1,409)(2,544)(1,915)(1,259)
Average Intangible Assets(33,027)(31,265)(33,012)(27,934)
Average Tangible Equity – Non-GAAP168,587142,588165,905137,958
Net Income$              6,6475,338$                 15,110$             9,869
Annualized Return on Average Tangible Equity15.77%14.98%18.22%14.31%
For the Three Months EndedFor the Six Months Ended
June 30June 30
Return on Average Assets and Equity Excluding BOLI Death Benefits2021202020212020
Net Income$              6,647$               5,338$                 15,110$             9,869
BOLI death benefits1,155
Net Income excluding merger and acquisition costs$              6,647$               5,338$                 13,955$             9,869
Average Assets2,008,1781,712,8571,963,0101,585,474
Annualized Return on Average stockholders equity, excluding Merger and Acquisition costs1.32%1.25%1.42%1.24%
Average Stockholders Equity – GAAP$          201,614$           173,853$               198,917$          165,892
Annualized Return on Average stockholders equity, excluding Merger and Acquisition costs13.19%12.28%14.03%11.90%
For the Three Months EndedFor the Six Months Ended
June 30June 30
Reconciliation of net interest income on fully taxable equivalent basis2021202020212020
Total interest income$            18,075$             18,160$                 36,370$           33,499
Total interest expense1,8631,8743,7174,323
Net interest income16,21216,28632,65329,176
Tax equivalent adjustment234299485586
Net interest income (fully taxable equivalent)$            16,446$             16,585$                 33,138$           29,762

SOURCE Citizens Financial Services, Inc.

Related Links

http://www.firstcitizensbank.com

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