CITIZENS FINANCIAL SERVICES, INC. REPORTS UNAUDITED FULL YEAR AND FOURTH QUARTER 2021 FINANCIAL RESULTS

Published: Jan. 28, 2022 at 2:55 PM CST

MANSFIELD, Penn., Jan. 28, 2022 /PRNewswire/ -- 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:

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

Ended

Ended

Ended

Ended

Analysis of the Allowance for loan Losses

December 31,

September 30,

June 30,

March 31,

December 31,

(In Thousands)

2021

2021

2021

2021

2020

Balance, beginning of period

$       17,334

$        16,931

$         16,560

$        15,815

$        15,169

Charge-offs

(65)

(7)

(138)

(4)

(276)

Recoveries

35

10

9

99

22

Net (charge-offs) recoveries

(30)

3

(129)

95

(254)

Provision for loan losses

-

400

500

650

900

Balance, end of period

$       17,304

$        17,334

$         16,931

$        16,560

$        15,815

CITIZENS FINANCIAL SERVICES, INC.

Reconciliation of GAAP and Non-GAAP Financial Measures

(UNAUDITED)

(Dollars in thousands, except share and per share data)







As of 




December 31,




2021

2020



Tangible Equity





Stockholders Equity - GAAP

$         212,492

$           194,259



Accumulated other comprehensive loss (income)

155

(2,587)



Intangible Assets

(33,003)

(33,044)



Tangible Equity - Non-GAAP

179,644

158,628



Shares outstanding adjusted for June 2021 stock Dividend

3,944,420

3,960,409



Tangible Book value per share - non-GAAP

$              45.54

$               40.05









As of 




December 31,




2021

2020



Tangible Equity per share





Stockholders Equity per share - GAAP

$              53.87

$               49.05



Adjustments for accumulated other comprehensive loss ( income)

0.04

(0.65)



Book value per share - GAAP

53.91

48.40



Adjustments for intangible assets

(8.37)

(8.35)



Tangible Book value per share - Non-GAAP

$              45.54

$               40.05














For the Three Months Ended

For the Year Ended


December 31,

December 31,


2021

2020

2021

2020

Return on Average Tangible Equity





Average Stockholders Equity - GAAP

$         210,801

$           193,117

$              205,449

$         178,789

Average Accumulated Other Comprehensive loss ( income)

1,109

(2,886)

(1,227)

(2,115)

Average Intangible Assets

(33,009)

(32,843)

(33,018)

(30,376)

Average Tangible Equity - Non-GAAP

178,901

157,388

171,204

146,298

Net Income

$              6,944

7,227

$                29,118

$           25,103

Annualized Return on Average Tangible Equity - Non-GAAP

15.53%

18.37%

17.01%

17.16%












For the Three Months Ended

For the Year Ended


December 31,

December 31,

Reconciliation of net interest income on fully taxable equivalent basis

2021

2020

2021

2020

Total interest income

$           18,505

$             18,411

$                73,217

$           70,296

Total interest expense

1,636

1,866

7,105

8,105

Net interest income

16,869

16,545

66,112

62,191

Tax equivalent adjustment

218

283

923

1,160

Net interest income (fully taxable equivalent)

$           17,087

$             16,828

$                67,035

$           63,351

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SOURCE Citizens Financial Services, Inc.

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