CITIZENS FINANCIAL SERVICES, INC. REPORTS UNAUDITED FULL YEAR AND FOURTH QUARTER 2023 FINANCIAL RESULTS

About this update from Citizens Financial Services, Inc.

MANSFIELD, Pa. , Jan. 30, 2024 /PRNewswire/ -- Citizens Financial Services, Inc. (Nasdaq: CZFS), parent company of First Citizens Community Bank , released today its unaudited consolidated financial results for the three months and year ended December 31, 2023 . Highlights During the fourth quarter of 2023, we continued to integrate the assets and employees acquired as part of the acquisition of HV Bancorp, Inc. ("HVB") into the Company. We continue to be excited by the opportunities these markets and individuals represent for the Company. The acquisition of HVB in the first half of 2023 contributed significant growth to net interest income in the second half of 2023. Merger and acquisitions costs for 2023 total $9.3 million . The provision for credit losses on non-purchase credit deteriorated loans (the "NPC Provision") was $4.6 million for 2023. Net income was $17.8 million for 2023, which is $11.3 million , or 38.7% lower than 2022's net income due to the one-time merger and acquisition costs and the NPC Provision. The effective tax rate for 2023 was 17.2% compared to 18.1% in 2022. Net income was $7.5 million for the three months ended December 31, 2023 , which is 4.3% lower than the net income for 2022's comparable period. The effective tax rate for the three months ended December 31, 2023 was 18.3% compared to 18.8% in the comparable period in 2022. Net interest income before the provision for credit losses was $80.3 million for 2023, an increase of $8.1 million , or 11.3%, over 2022. Return on average equity for the three months (annualized) and the year ended December 31, 2023 was 9.93% and 6.52% compared to 13.58% and 12.98% for the three months (annualized) and the year ended December 31, 2022 , respectively. If the death benefits received from life insurance on a former employee, the one-time costs associated with the acquisition and the NPC Provision are excluded, the return on average equity for the year ended December 31, 2023 and 2022 would have been 10.52% and 13.11%, respectively (1). Return on average tangible equity (non-GAAP) for the three months (annualized) and the year ended December 31, 2023 was 14.00% and 8.47% compared to 15.80% and 15.20% for the three months (annualized) and the year ended December 31, 2022 , respectively. If the death benefits received from life insurance on a former employee, the one-time costs associated with the acquisition and the NPC Provision are excluded, the return on average tangible equity for 2023 and 2022 would have been 13.67% and 15.36%, respectively. (1) Return on average assets for the three months (annualized) and the year ended December 31, 2023 was 1.00% and 0.66% compared to 1.34% and 1.29% for the three months (annualized) and the year ended December 31, 2022 , respectively. If the death benefits received from life insurance on a former employee, the one-time costs associated with the acquisition and the NPC Provision are excluded, the return on average assets for 2023 and 2022 would have been 1.07% and 1.30%, respectively (1). 2023 Compared to 2022 For 2023, net income totaled $17,811,000 which compares to net income of $29,060,000 for 2022, a decrease of $11,249,000 . Basic and diluted earnings per share of $4.06 for 2023 compares to $7.25 for 2022. Return on equity 2023 and 2022 was 6.52% and 12.98%, while return on assets was 0.66% and 1.29%, respectively. If the death benefits received from life insurance on a former employee, the one-time costs associated with the acquisition and the NPC Provision are excluded, basic earnings per share, the annualized return on average equity and average assets for 2023 would be $6.56 , 10.52% and 1.07%, respectively, compared to $7.32 , 13.11% and 1.30%, respectively for 2022. (1) Net interest income before the provision for credit loss for 2023 totaled $80,260,000 compared to $72,134,000 for 2022, resulting in an increase of $8,126,000 , or 11.3%. Average interest earning assets increased $382.4 million 2023 compared to 2022, primarily due to the HVB acquisition. Average loans increased $410.7 million while average investment securities increased $3.0 million . The yield on interest earning assets increased 1.14% to 5.07%, while the cost of interest-bearing liabilities increased 165 basis points to 2.34% due to the rise in market interest rates and competitive pressure. The tax effected net interest margin for 2023 was 3.21% compared to 3.41% for 2022. The provision for credit losses for 2023 was $5,528,000 compared to $1,683,000 for 2022, an increase of $3,845,000 . As a result of the acquisition, the Company recorded a $4.6 million provision for credit losses for loans acquired that did not have any credit deterioration at the time of acquisition. Excluding the impact of the acquisition, the provision would have decreased $746,000 when comparing 2023 to 2022 with the decrease being attributable to lower loan growth in 2023 compared to 2022. Total non-interest income was $11,605,000 for 2023, which is $1,867,000 more than the non-interest income of $9,738,000 for 2022. The primary driver was revenues associated with the HVB acquisition, which includes additional service charge revenue, earnings on bank owned life insurance and gains on loans sold. In addition to the earnings on bank owned life insurance obtained as part of the acquisition, the Company received $195,000 of death benefits upon the passing of a former employee. Total non-interest expenses for 2023 totaled $64,822,000 compared to $44,694,000 for 2022, which is an increase of $20,128,000 , or 45.0%. The primary driver of the increase is the merger and acquisition costs of completing the HVB acquisition that total $9,269,000 for 2023 compared to $292,000 for 2022. Merger and acquisitions costs for the merger with HVB include professional and consulting fees, printing, travel, contract termination payments and severance-related expenses. Salary and benefit costs increased $7,153,000 due to an additional 47.8 FTEs due to the acquisition, merit increases for 2023 as well as an increase in health insurance costs of $1,093,000 . The increases in occupancy and furniture and fixtures was due to the acquisition and additional branches as part of it. Due to growth that occurred in 2022 and the acquisition, FDIC insurance expense increased $799,000 . The provision for income taxes decreased $2,731,000 when comparing 2023 to 2022 as a result of a decrease in income before income tax of $13,980,000 primarily due to the one-time merger costs. Three Months Ended December 31, 2023 Compared to December 31, 2022 For the three months ended December 31, 2023 , net income totaled $7,540,000 which compares to net income of $7,875,000 for the comparable period of 2022, a decrease of $335,000 . Basic and diluted earnings per share of $1.60 for the three months ended December 31, 2023 compares to $1.97 for the 2022 comparable period. Annualized return on equity for the three months ended December 31, 2023 and 2022 was 9.93% and 13.58%, while annualized return on assets was 1.00% and 1.34%, respectively. If the one-time costs associated with the acquisition are excluded, basic earnings per share, the annualized return on average equity and average assets for 2022 would have been $2.04 , 14.08% and 1.39%, respectively. (1) Net interest income before the provision for credit loss for the three months ended December 31, 2023 totaled $21,855,000 compared to $19,297,000 for the three months ended December 31, 2022 , resulting in an increase of $2,558,000 , or 13.3%. Average interest earning assets increased $556.2 million for the three months ended December 31, 2023 compared to the same period last year as a result of the HVB acquisition. Average loans increased $572.7 million while average investment securities decreased $19.8 million . The tax effected net interest margin for the three months ended September 30, 2023 was 3.13% compared to 3.46% for the same period last year, which was impacted by the increase in the average cost on interest bearing liabilities of 172 basis points, to 2.89%. The provision for credit losses for the three months ended December 31, 2023 was $200,000 compared to $258,000 for the three months ended December 31, 2022 , a decrease of $58,000 . The decrease in the provision is due to lower loan growth in the fourth quarter of 2023 compared to the same period in 2022. Total non-interest income was $3,489,000 for the three months ended December 31, 2023 , which is $1,178,000 more than for the comparable period last year. The primary driver was the impact of the acquisition, which increased service charge revenue, gains on loans sold and earnings on bank owned life insurance. In addition, we recognized a gain on the equity security portfolio in the fourth quarter of 2023 due to market conditions compared to a loss in the comparable period of 2022. Total non-interest expenses for the three months ended December 31, 2023 totaled $15,920,000 compared to $11,649,000 for the same period last year, which is an increase of $4,271,000 . Salaries and benefits increased $2.5 million due to an increase in headcount of 85 FTEs as a result of the acquisition. The increases in occupancy and furniture and fixtures was due to the acquisition and additional branches as part of it. Due to the acquisition, FDIC insurance expense increased $239,000 . Other expenses increased due to increases in the Delaware franchise tax, contributions, appraisal and credit bureau fees, and travel and entertainments costs associated with the southeast Pennsylvania and Delaware markets. The provision for income taxes decreased $142,000 when comparing the three months ended December 31, 2023 to the same period in 2022 as a result of a decrease in income before income tax of $477,000 . The effective tax rate was 18.3% and 18.8% for the three months ended December 31, 2023 and 2022, respectively. Balance Sheet and Other Information: At December 31, 2023 , total assets were $2.98 billion , compared to $2.33 billion at December 31, 2022 . The loan to deposit ratio as of December 31, 2023 was 96.87% compared to 93.54% as of December 31, 2022 . Available for sale securities of $417.6 million at December 31, 2023 decreased $21.9 million from December 31, 2022 . As part of the HVB acquisition, $79.2 million of available for sale securities were acquired, of which $76.1 million were sold prior to June 30, 2023 . The yield on the investment portfolio increased from 1.90% to 2.20% on a tax equivalent basis. Net loans as of December 31, 2023 totaled $2.23 billion and increased $521.2 million from December 31, 2022 as a result of the acquisition. Excluding the acquisition, loans would have increased $44.0 million during 2023. Non-performing loans totaled $12.7 million at December 31, 2023 , which is an increase of $5.6 million compared to December 31, 2022 . The majority of the increase is attributable to loans acquired as part of the HVB acquisition. At December 31, 2023 , $3.2 million of loans acquired as part of the HVB acquisition are considered non-accrual. The remaining increase is attributable to one commercial relationship. Loans past due 30-89 days total $10.5 million as of December 31, 2023 compared to $3.3 million as of December 31, 2023 . Of the $7.1 million increase, $6.6 million relate to loans acquired as part of the HVB acquisition. The allowance for credit losses - loans totaled $21,153,000 at December 31, 2023 which is an increase of $2,601,000 from December 31, 2022 and is due to the acquisition and the implementation of the CECL accounting standard effective January 1, 2023 . The impact of the acquisition was an increase of $6.3 million , of which $4.6 million was in provision with the remaining $1.7 million due to purchase credit deteriorated ("PCD") loans. The impact of adopting CECL was a decrease of $3.3 million in the allowance for credit losses – loans. Loan recoveries and charge-offs were $49,000 and $1,329,000 , respectively, for 2023. Of the $1,329,000 charge-off, $1,104,000 was related to loans acquired as part of the acquisition that were fully reserved at the time of the acquisition. A majority of the remaining charge-off was also related to a loan acquired as part of the acquisition that filed for bankruptcy subsequent to the acquisition. A provision for credit losses – loans of $901,000 was recorded during 2023. The allowance as a percent of total loans was 0.94% as of December 31, 2023 and 1.08% as of December 31, 2022 . Deposits increased $477.3 million from December 31, 2022 , to $2.32 billion at December 31, 2023 , due to the acquisition, which increased deposits by $533.4 million . Excluding the acquisition, deposits decreased $56.1 million . With the rise in market interest rates, competition for deposits has increased. Additionally, we have numerous state and political organizations as customers who utilized funds during the first half of 2023 for various projects and bond payments. At December 31, 2023 , the Bank estimates that balances held by customers in excess of the FDIC insurance limit ( $250,000 per insured account) totaled $1.09 billion , or 46.7% of the Bank's total deposits. Included in this balance are balances held through Intrafi, which provides customers with FDIC insurance coverage by placing customer funds with insured banks within the Intrafi network, as well as deposits collateralized by securities (almost exclusively municipal deposits), which together total $512.8 million , or 22.1% of the Bank's total deposits, as of December 31, 2023 . Stockholders' equity totaled $279.7 million at December 31, 2023 , compared to $200.1 million at December 31, 2022 , an increase of $79.5 million . The increase was attributable to issuing 693,858 shares with a value of $60.1 million as part of the acquisition and net income for 2023 totaling $17.8 million , offset by net cash dividends for 2023 totaling $8.5 million , net treasury stock activity of $181,000 and an increase of $1.8 million attributable to the CECL adjustment made effective January 1, 2023 . As a result of changes in market interest rates impacting the fair value of investment securities and swaps, accumulated other comprehensive loss decreased $8.2 million from December 31, 2022 . Dividend Declared On December 5, 2023 , the Board of Directors declared a cash dividend of $0.49 per share, which was paid on December 29, 2023 to shareholders of record at the close of business on December 15, 2023 . The quarterly cash dividend is an increase of 3.1% over the regular cash dividend of $0.475 per share declared one year ago, as adjusted for the 1% stock dividend declared in June 2023 . 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 Year Ended December 31 , December 31 , 2023 2022 2023 2022 Income and Performance Ratios Net Income $ 7,540 $ 7,875 $ 17,811 $ 29,060 Return on average assets (annualized) 1.00 % 1.34 % 0.66 % 1.29 % Return on average equity (annualized) 9.93 % 13.58 % 6.52 % 12.98 % Return on average tangible equity (annualized) (a) 14.00 % 15.80 % 8.47 % 15.20 % Net interest margin (tax equivalent)(a) 3.13 % 3.46 % 3.21 % 3.41 % Earnings per share - basic (b) $ 1.60 $ 1.97 $ 4.06 $ 7.25 Earnings per share - diluted (b) $ 1.60 $ 1.97 $ 4.06 $ 7.25 Cash dividends paid per share (b) $ 0.490 $ 0.475 $ 1.941 $ 1.882 Number of shares used in computation - basic (b) 4,700,130 4,005,189 4,382,573 4,008,931 Number of shares used in computation - diluted (b) 4,700,131 4,005,304 4,382,573 4,008,931 Asset quality Allowance for credit losses - loans $ 21,153 $ 18,552 Non-performing assets $ 13,177 $ 7,488 Allowance for credit losses - loans/total loans 0.94 % 1.08 % Non-performing assets to total loans 0.59 % 0.43 % Annualized net charge-offs to total loans 0.09 % 0.00 % 0.06 % 0.03 % Equity Book value per share (b) $ 64.70 $ 58.17 Tangible Book value per share (a) (b) $ 45.71 $ 50.03 Market Value (Last reported trade of month) $ 64.72 $ 76.72 Common shares outstanding 4,706,994 3,971,209 Other Average Full Time Equivalent Employees 395.3 310.0 357.7 309.9 Loan to Deposit Ratio 96.87 % 93.54 % Trust assets under management $ 167,894 $ 150,005 Brokerage assets under management $ 329,446 $ 283,548 Balance Sheet Highlights December 31 , December 31 , 2023 2022 Assets $ 2,975,321 $ 2,333,393 Investment securities 419,539 441,714 Loans (net of unearned income) 2,248,836 1,724,999 Allowance for credit losses - loans 21,153 18,552 Deposits 2,321,481 1,844,208 Stockholders' Equity 279,666 200,147 (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) 2023 2022 ASSETS: Cash and due from banks: Noninterest-bearing $ 37,733 $ 24,814 Interest-bearing 15,085 1,397 Total cash and cash equivalents 52,818 26,211 Interest bearing time deposits with other banks 4,070 6,055 Equity securities 1,938 2,208 Available-for-sale securities 417,601 439,506 Loans held for sale 9,379 725 Loans (net of allowance for credit losses - loans: $21,153 at December 31, 2023 ; $18,552 at December 31, 2022 ) 2,227,683 1,706,447 Premises and equipment 21,384 17,619 Accrued interest receivable 11,043 7,332 Goodwill 85,758 31,376 Bank owned life insurance 49,897 39,355 Other intangibles 3,650 1,272 Fair value of derivative instruments - asset 13,687 16,599 Deferred tax asset 17,339 12,886 Other assets 59,074 25,802 TOTAL ASSETS $ 2,975,321 $ 2,333,393 LIABILITIES: Deposits: Noninterest-bearing $ 523,784 $ 396,260 Interest-bearing 1,797,697 1,447,948 Total deposits 2,321,481 1,844,208 Borrowed funds 322,036 257,278 Accrued interest payable 4,298 1,232 Fair value of derivative instruments - liability 7,922 9,726 Other liabilities 39,918 20,802 TOTAL LIABILITIES 2,695,655 2,133,246 STOCKHOLDERS' EQUITY: Preferred Stock $1.00 par value; authorized 3,000,000 shares; none issued in 2023 or 2022 - - Common stock $1.00 par value; authorized 25,000,000 shares at December 31, 2023 , and 2022: issued 5,160,754 at December 31, 2023 and 4,427,687 at December 31, 2022 5,161 4,428 Additional paid-in capital 143,233 80,911 Retained earnings 172,975 164,922 Accumulated other comprehensive loss (24,911) (33,141) Treasury stock, at cost: 453,760 at December 31, 2023 and 456,478 shares at December 31, 2022 (16,792) (16,973) TOTAL STOCKHOLDERS' EQUITY 279,666 200,147 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,975,321 $ 2,333,393 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) 2023 2022 2023 2022 INTEREST INCOME: Interest and fees on loans $ 35,637 $ 21,829 $ 116,075 $ 74,265 Interest-bearing deposits with banks 274 67 736 400 Investment securities: Taxable 1,663 1,565 6,636 5,615 Nontaxable 535 624 2,264 2,454 Dividends 403 267 1,407 623 TOTAL INTEREST INCOME 38,512 24,352 127,118 83,357 INTEREST EXPENSE: Deposits 12,180 2,847 31,699 7,316 Borrowed funds 4,477 2,208 15,159 3,907 TOTAL INTEREST EXPENSE 16,657 5,055 46,858 11,223 NET INTEREST INCOME 21,855 19,297 80,260 72,134 Provision for credit losses 200 258 937 1,683 Provision for credit losses - acquisition day 1 non-PCD - - 4,591 - NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 21,655 19,039 74,732 70,451 NON-INTEREST INCOME: Service charges 1,443 1,265 5,639 5,346 Trust 181 183 764 803 Brokerage and insurance 495 467 1,924 1,895 Gains on loans sold 778 17 1,452 258 Equity security gains (losses), net 79 (49) (144) (247) Available for sale security losses, net - (8) (51) (14) Earnings on bank owned life insurance 313 217 1,254 852 Other 200 219 767 845 TOTAL NON-INTEREST INCOME 3,489 2,311 11,605 9,738 NON-INTEREST EXPENSES: Salaries and employee benefits 9,392 6,873 34,990 27,837 Occupancy 1,253 811 4,123 3,138 Furniture and equipment 254 149 822 565 Professional fees 688 320 1,962 1,641 FDIC insurance expense 475 236 1,475 676 Pennsylvania shares tax (310) (110) 583 907 Amortization of intangibles 154 36 373 156 Software expenses 510 377 1,784 1,446 ORE expenses (income) 40 142 166 17 Merger and acquisition expenses - 292 9,269 292 Other 3,464 2,523 9,275 8,019 TOTAL NON-INTEREST EXPENSES 15,920 11,649 64,822 44,694 Income before provision for income taxes 9,224 9,701 21,515 35,495 Provision for income tax expense 1,684 1,826 3,704 6,435 NET INCOME $ 7,540 $ 7,875 $ 17,811 $ 29,060 PER COMMON SHARE DATA: Net Income - Basic $ 1.60 $ 1.97 $ 4.06 $ 7.25 Net Income - Diluted $ 1.60 $ 1.97 $ 4.06 $ 7.25 Cash Dividends Paid $ 0.490 $ 0.475 $ 1.941 $ 1.882 Number of shares used in computation - basic 4,700,130 4,005,189 4,382,573 4,008,931 Number of shares used in computation - diluted 4,700,131 4,005,304 4,382,573 4,008,931 CITIZENS FINANCIAL SERVICES, INC. QUARTERLY CONDENSED, CONSOLIDATED INCOME (LOSS) STATEMENT INFORMATION (UNAUDITED) (in thousands, except per share data) Three Months Ended, Dec 31 , Sept 30 , June 30 , March 31 , Dec 31 , 2023 2023 2023 2023 2022 Interest income $ 38,512 $ 36,689 $ 26,810 $ 25,107 $ 24,352 Interest expense 16,657 14,285 8,889 7,027 5,055 Net interest income 21,855 22,404 17,921 18,080 19,297 Provision for credit losses 200 475 262 - 258 Provision for credit losses - acquisition day 1 non-PCD - - 4,591 - - Net interest income after provision for credit losses 21,655 21,929 13,068 18,080 19,039 Non-interest income 3,410 3,593 2,405 2,392 2,368 Investment securities gains (losses), net 79 69 (125) (218) (57) Non-interest expenses 15,920 16,444 20,680 11,778 11,649 Income (loss) before provision for income taxes 9,224 9,147 (5,332) 8,476 9,701 Provision for income tax expense (benefit) 1,684 1,599 (1,188) 1,609 1,826 Net income (loss) $ 7,540 $ 7,548 $ (4,144) $ 6,867 $ 7,875 Earnings (Loss) Per Share Basic $ 1.60 $ 1.61 $ (1.01) $ 1.71 $ 1.97 Earnings (Loss) Per Share Diluted $ 1.60 $ 1.61 $ (1.01) $ 1.71 $ 1.97 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 , 2023 2022 Average Average Average Average Balance (1) Interest Rate Balance (1) Interest Rate (dollars in thousands) $ $ % $ $ % ASSETS Interest-bearing deposits at banks 18,507 239 5.12 13,464 21 0.62 Interest bearing time deposits at banks 4,410 35 3.06 6,055 46 3.01 Investment securities: Taxable 377,292 2,066 2.19 383,496 1,832 1.91 Tax-exempt (3) 108,353 678 2.50 122,031 791 2.59 Investment securities 485,645 2,744 2.26 505,527 2,623 2.08 Loans: (2)(3)(4) Residential mortgage loans 358,735 5,120 5.66 207,644 2,584 4.94 Construction loans 197,420 3,653 7.34 84,424 1,085 5.10 Commercial Loans 1,208,249 19,482 6.40 929,394 12,347 5.27 Agricultural Loans 339,720 4,302 5.02 346,378 4,045 4.63 Loans to state & political subdivisions 56,710 562 3.93 59,470 536 3.58 Other loans 130,468 2,627 7.99 91,307 1,333 5.79 Loans, net of discount (2)(3)(4) 2,291,302 35,746 6.19 1,718,617 21,930 5.06 Total interest-earning assets 2,799,864 38,764 5.49 2,243,663 24,620 4.35 Cash and due from banks 11,215 6,873 Bank premises and equipment 21,446 17,547 Other assets 191,231 84,166 Total non-interest earning assets 223,892 108,586 Total assets 3,023,756 2,352,249 LIABILITIES AND STOCKHOLDERS' EQUITY Interest-bearing liabilities: NOW accounts 816,067 5,344 2.60 520,932 1,033 0.79 Savings accounts 312,575 417 0.53 324,746 161 0.20 Money market accounts 400,971 2,910 2.88 331,023 967 1.16 Certificates of deposit 401,932 3,509 3.46 279,025 686 0.98 Total interest-bearing deposits 1,931,545 12,180 2.50 1,455,726 2,847 0.78 Other borrowed funds 351,492 4,477 5.05 259,690 2,208 3.37 Total interest-bearing liabilities 2,283,037 16,657 2.89 1,715,416 5,055 1.17 Demand deposits 389,927 386,216 Other liabilities 46,888 18,595 Total non-interest-bearing liabilities 436,815 404,811 Stockholders' equity 303,904 232,022 Total liabilities & stockholders' equity 3,023,756 2,352,249 Net interest income 22,107 19,565 Net interest spread (5) 2.60 % 3.18 % Net interest income as a percentage of average interest-earning assets 3.13 % 3.46 % Ratio of interest-earning assets to interest-bearing liabilities 123 % 131 % (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 2023 and 2022. 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. View original content: https://www.prnewswire.com/news-releases/citizens-financial-services-inc-reports-unaudited-full-year-and--fourth-quarter-2023-financial-results-302048469.html SOURCE CITIZENS FINANCIAL SERVICES, INC.

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