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

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

PR Newswire

MANSFIELD, Pa., July 26, 2021 /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 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, 2021 totaled $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 $1,150,000 compared 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 $20,267,000 compared 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 $254,000 due to fee income on derivative transactions for customers.
  • Total non-interest expenses for the three months ended June 30, 2021 totaled $10,320,000 compared 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 The

As of or For The


Three Months Ended

Six Months Ended


June 30,

June 30,


2021

2020

2021

2020

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)

3,944,488

3,883,734

3,946,184

3,737,759

Number of shares used in computation - diluted (b)

3,944,560

3,884,763

3,946,219

3,738,273











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 loans

1.20%

1.09%



Non-performing assets to total loans

0.77%

1.04%



Annualized net  charge-offs (recoveries) to total loans

0.04%

(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 outstanding

3,951,573

3,925,745













Other





Average Full Time Equivalent Employees

295.4

283.3



Loan to Deposit Ratio

84.11%

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,



2021

2020

2020







Assets

$ 2,003,300

$ 1,891,674

$1,800,116


Investment securities

371,150

297,120

273,063


Loans (net of unearned income)

1,415,109

1,405,281

1,363,633


Allowance for loan losses

16,931

15,815

14,827


Deposits

1,682,387

1,588,858

1,513,284


Stockholders' Equity

204,419

194,259

183,095












(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)

2021

2020

2020

ASSETS:




Cash and due from banks:




  Noninterest-bearing

$            17,403

$          16,374

$             19,543

  Interest-bearing

90,791

52,333

19,487

Total cash and cash equivalents

108,194

68,707

39,030





Interest bearing time deposits with other banks

12,266

13,758

14,256





Equity securities

2,148

1,931

703





Available-for-sale securities

369,002

295,189

272,360





Loans held for sale

5,282

14,640

17,468





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)

1,398,178

1,389,466

1,348,806





Premises and equipment

17,243

16,948

17,832

Accrued interest receivable

5,564

5,998

5,950

Goodwill

31,376

31,376

31,376

Bank owned life insurance

30,353

32,589

32,228

Other intangibles

1,705

1,668

1,421

Other assets

21,989

19,404

18,686





TOTAL ASSETS

$       2,003,300

$     1,891,674

$        1,800,116





LIABILITIES:




Deposits:




  Noninterest-bearing

$          339,414

$        303,762

$           278,612

  Interest-bearing

1,342,973

1,285,096

1,234,672

Total deposits

1,682,387

1,588,858

1,513,284

Borrowed funds

97,830

88,838

85,135

Accrued interest payable

789

1,017

888

Other liabilities

17,875

18,702

17,714

TOTAL LIABILITIES

1,798,881

1,697,415

1,617,021

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, 2020

4,389

4,350

4,350

Additional paid-in capital

78,412

75,908

75,863

Retained earnings

135,714

126,627

115,000

Accumulated other comprehensive income

1,610

2,587

2,907

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' EQUITY

204,419

194,259

183,095

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 Ended

Six Months Ended


June 30, 

June 30, 

(in thousands, except per share data)

2021

2020

2021

2020

INTEREST INCOME:





Interest and fees on loans

$      16,370

$     16,407

$      33,064

$     30,045

Interest-bearing deposits with banks

111

97

217

192

Investment securities:





    Taxable

941

1,126

1,791

2,233

    Nontaxable

547

463

1,091

852

    Dividends

106

67

207

177

TOTAL INTEREST INCOME

18,075

18,160

36,370

33,499

INTEREST EXPENSE:





Deposits

1,525

1,657

3,123

3,644

Borrowed funds

338

217

594

679

TOTAL INTEREST EXPENSE

1,863

1,874

3,717

4,323

NET INTEREST INCOME

16,212

16,286

32,653

29,176

Provision for loan losses

500

550

1,150

950

NET INTEREST INCOME AFTER





    PROVISION FOR LOAN LOSSES

15,712

15,736

31,503

28,226

NON-INTEREST INCOME:





Service charges

1,163

914

2,269

1,995

Trust

185

145

492

343

Brokerage and insurance

406

249

782

589

Gains on loans sold

311

260

814

427

Equity security gains (losses), net

29

11

216

(243)

Available for sale security gains, net

-

117

50

117

Earnings on bank owned life insurance

163

178

1,478

334

Other

449

195

840

358

TOTAL NON-INTEREST INCOME

2,706

2,069

6,941

3,920

NON-INTEREST EXPENSES:





Salaries and employee benefits

6,481

5,895

12,744

11,309

Occupancy 

711

651

1,494

1,177

Furniture and equipment

141

189

284

320

Professional fees

395

438

843

763

FDIC insurance expense

129

135

258

206

Pennsylvania shares tax

178

259

517

534

Amortization of intangibles

49

55

98

105

Merger and acquisition

-

1,803

-

2,179

Software expenses

354

246

667

493

ORE expenses

167

159

253

191

Other

1,715

1,583

3,109

3,057

TOTAL NON-INTEREST EXPENSES

10,320

11,413

20,267

20,334

Income before provision for income taxes

8,098

6,392

18,177

11,812

Provision for income taxes

1,451

1,054

3,067

1,943

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 - basic

3,944,488

3,883,734

3,946,184

3,737,759

Number of shares used in computation - diluted

3,944,560

3,884,763

3,946,219

3,738,273

 

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,


2021

2021

2020

2020

2020

Interest income

$      18,075

$       18,295

$       18,411

$       18,386

$       18,160

Interest expense

1,863

1,854

1,866

1,916

1,874

Net interest income

16,212

16,441

16,545

16,470

16,286

Provision for loan losses

500

650

900

550

550

Net interest income after provision for loan losses

15,712

15,791

15,645

15,920

15,736

Non-interest income

2,677

3,998

3,726

3,386

1,941

Investment securities gains (losses), net

29

237

238

152

128

Non-interest expenses

10,320

9,947

10,821

9,692

11,413

Income before provision for income taxes

8,098

10,079

8,788

9,766

6,392

Provision for income taxes

1,451

1,616

1,561

1,759

1,054

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,


2021

2020


Average


Average

Average


Average


Balance (1)

Interest

Rate

Balance (1)

Interest

Rate

(dollars in thousands)

$

$

%

$

$

%

ASSETS







Interest-bearing deposits at banks

121,319

28

0.09

28,182

5

0.07

Interest bearing time deposits at banks

13,016

83

2.59

14,385

92

2.57

Investment securities

352,499

1,740

1.97

260,281

1,780

2.74

Loans: (2)(3)(4)







  Residential mortgage loans

202,537

2,494

4.94

213,780

2,800

5.27

  Construction loans

50,807

521

4.11

30,296

373

4.95

  Commercial Loans

738,136

8,875

4.82

599,800

8,276

5.55

  Agricultural Loans

351,660

3,763

4.29

356,166

4,012

4.53

  Loans to state & political subdivisions

52,934

470

3.56

90,491

898

3.99

  Other loans

25,567

335

5.26

13,572

223

6.91

  Loans, net of discount (2)(3)(4)

1,421,641

16,458

4.64

1,304,105

16,582

5.11

Total interest-earning assets

1,908,475

18,309

3.85

1,606,953

18,459

4.62

Cash and due from banks

6,757



9,319



Bank premises and equipment

17,371



17,584



Other assets

75,575



79,001



Total non-interest earning assets

99,703



105,904



Total assets

2,008,178



1,712,857



LIABILITIES AND STOCKHOLDERS' EQUITY







Interest-bearing liabilities:







  NOW accounts

462,299

383

0.33

383,985

257

0.27

  Savings accounts

289,328

85

0.12

240,116

107

0.18

  Money market accounts

247,606

164

0.27

197,742

202

0.41

  Certificates of deposit

355,292

893

1.01

354,759

1,091

1.24

Total interest-bearing deposits

1,354,525

1,525

0.45

1,176,602

1,657

0.57

Other borrowed funds

95,166

338

1.42

84,092

217

1.04

Total interest-bearing liabilities

1,449,691

1,863

0.52

1,260,694

1,874

0.60

Demand deposits

339,896



261,839



Other liabilities

16,977



16,471



Total non-interest-bearing liabilities

356,873



278,310



Stockholders' equity

201,614



173,853



Total liabilities & stockholders' equity

2,008,178



1,712,857



Net interest income


16,446



16,585


Net interest spread (5)



3.33%



4.02%

Net interest income as a percentage







  of average interest-earning assets



3.46%



4.15%

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 AVERAGE BALANCES, INTEREST, YIELDS AND RATES, AND NET INTEREST MARGIN ON A FULLY TAX-EQUIVALENT BASIS

(UNAUDITED)



Six Months Ended June 30,


2021

2020


Average


Average

Average


Average


Balance (1)

Interest

Rate

Balance (1)

Interest

Rate

(dollars in thousands)

$

$

%

$

$

%

ASSETS







Interest-bearing deposits at banks

108,196

46

0.09

19,013

9

0.10

Interest bearing time deposits at banks

13,371

171

2.58

14,329

183

2.57

Investment securities

326,849

3,379

2.07

251,365

3,489

2.78

Loans: (2)(3)(4)







  Residential mortgage loans

203,235

5,047

5.01

214,809

5,643

5.28

  Construction loans

44,595

931

4.21

24,011

596

4.99

  Commercial Loans

726,077

17,938

4.98

507,490

13,809

5.47

  Agricultural Loans

355,094

7,593

4.31

358,173

8,124

4.56

  Loans to state & political subdivisions

57,698

1,068

3.73

92,306

1,837

4.00

  Other loans

26,083

682

5.27

11,517

395

6.90

  Loans, net of discount (2)(3)(4)

1,412,782

33,259

4.75

1,208,306

30,404

5.06

Total interest-earning assets

1,861,198

36,855

3.99

1,493,013

34,085

4.59

Cash and due from banks

6,569



7,791



Bank premises and equipment

17,188



16,823



Other assets

78,055



67,847



Total non-interest earning assets

101,812



92,461



Total assets

1,963,010



1,585,474



LIABILITIES AND STOCKHOLDERS' EQUITY







Interest-bearing liabilities:







  NOW accounts

442,328

703

0.32

358,026

694

0.39

  Savings accounts

278,848

175

0.13

233,050

291

0.25

  Money market accounts

243,221

339

0.28

186,018

595

0.64

  Certificates of deposit

367,971

1,906

1.04

308,019

2,064

0.35

Total interest-bearing deposits

1,332,368

3,123

0.47

1,085,113

3,644

0.68

Other borrowed funds

90,721

594

1.32

88,971

679

1.53

Total interest-bearing liabilities

1,423,089

3,717

0.53

1,174,084

4,323

0.74

Demand deposits

323,229



229,221



Other liabilities

17,775



16,277



Total non-interest-bearing liabilities

341,004



245,498



Stockholders' equity

198,917



165,892



Total liabilities & stockholders' equity

1,963,010



1,585,474



Net interest income


33,138



29,762


Net interest spread (5)



3.46%



3.85%

Net interest income as a percentage







  of average interest-earning assets



3.59%



4.01%

Ratio of interest-earning assets







  to interest-bearing liabilities



131%



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, 


2021

2021

2020

2020

2020

Real estate:






  Residential

$      202,171

$       203,273

$       201,911

$       208,084

$       210,789

  Commercial

641,633

605,547

596,255

535,456

513,598

  Agricultural

310,274

315,313

315,158

310,702

313,136

  Construction

63,065

42,651

35,404

28,656

31,744

Consumer

8,684

26,181

30,277

30,625

30,973

Other commercial loans

104,349

109,168

114,169

129,731

132,503

Other agricultural loans

33,720

41,378

48,779

40,790

44,912

State & political subdivision loans

51,213

60,890

63,328

81,835

85,978

Total loans

1,415,109

1,404,401

1,405,281

1,365,879

1,363,633

Less: allowance for loan losses

16,931

16,560

15,815

15,169

14,827

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 accruing

49

478

525

1,194

654

Non-performing loans

$          9,131

$         11,158

$         11,257

$         12,905

$         11,347

OREO

1,811

1,720

1,836

2,726

2,853

Total Non-performing assets

$        10,942

$         12,878

$         13,093

$         15,631

$         14,200




















3 Months 

3 Months 

3 Months 

3 Months 

3 Months 


Ended

Ended

Ended

Ended

Ended

Analysis of the Allowance for loan Losses

June 30,

March 31,

December 31,

September 30,

June 30,

(In Thousands)

2021

2021

2020

2020

2020

Balance, beginning of period

$        16,560

$         15,815

$         15,169

$         14,827

$         14,247

Charge-offs

(138)

(4)

(276)

(237)

(10)

Recoveries

9

99

22

29

40

Net (charge-offs) recoveries

(129)

95

(254)

(208)

30

Provision for loan losses

500

650

900

550

550

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




2021

2020



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-GAAP

169,728

147,391



Shares outstanding adjusted for June 2021 stock Dividend

3,951,573

3,964,304



Tangible Book value per share (a) 

$              42.95

$               37.18









As of 




June 30




2021

2020



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 share

51.32

45.45



Adjustments for intangible assets

(8.37)

(8.27)



Tangible Book value per share - Non-GAAP

$              42.95

$               37.18














For the Three Months Ended

For the Six Months Ended


June 30

June 30


2021

2020

2021

2020

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-GAAP

168,587

142,588

165,905

137,958

Net Income

$              6,647

5,338

$                 15,110

$             9,869

Annualized Return on Average Tangible Equity

15.77%

14.98%

18.22%

14.31%







For the Three Months Ended

For the Six Months Ended


June 30

June 30

Return on Average Assets and Equity Excluding BOLI Death Benefits

2021

2020

2021

2020

Net Income

$              6,647

$               5,338

$                 15,110

$             9,869

BOLI death benefits

-

-

1,155

-

Net Income excluding merger and acquisition costs

$              6,647

$               5,338

$                 13,955

$             9,869

Average Assets

2,008,178

1,712,857

1,963,010

1,585,474

Annualized Return on Average stockholders equity, excluding Merger and Acquisition costs

1.32%

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 costs

13.19%

12.28%

14.03%

11.90%

















For the Three Months Ended

For the Six Months Ended


June 30

June 30

Reconciliation of net interest income on fully taxable equivalent basis

2021

2020

2021

2020

Total interest income

$            18,075

$             18,160

$                 36,370

$           33,499

Total interest expense

1,863

1,874

3,717

4,323

Net interest income

16,212

16,286

32,653

29,176

Tax equivalent adjustment

234

299

485

586

Net interest income (fully taxable equivalent)

$            16,446

$             16,585

$                 33,138

$           29,762

 

Cision View original content:https://www.prnewswire.com/news-releases/citizens-financial-services-inc-reports-unaudited-second-quarter-2021-financial-results-301341220.html

SOURCE Citizens Financial Services, Inc.

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