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CF

CITIZENS FINANCIAL SERVICES INC (CZFS)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered steady profitability: Net income $7.98M and diluted EPS $1.68, up 5.9% YoY; tax-equivalent NIM expanded to 3.26% from 3.13% YoY .
  • Net interest income rose YoY to $22.87M (+4.7%), aided by higher asset yields; provision for credit losses was zero in Q4, supporting earnings quality .
  • Credit costs for 2024 were influenced by legacy HVB/Braavo loans; non-performing assets increased to $28.6M (1.24% of loans) as several acquired commercial relationships moved to non-accrual, though some began paying under revised terms .
  • Deposit competition remained intense; deposits ended Q4 at $2.38B (+$60.5M YoY) with L/D at 97.11%; brokered CDs declined to $93.1M as management balanced funding sources .
  • No formal guidance or earnings call transcript was available in our document set; a $0.49 dividend was declared for Q4, +1% YoY .

What Went Well and What Went Wrong

What Went Well

  • Net interest income and margin: Q4 NII $22.87M (+4.7% YoY) and tax-equivalent NIM 3.26% vs 3.13% YoY, reflecting improved asset yields and disciplined liability costs .
  • Provision discipline: No provision for credit losses recorded in Q4 vs $0.2M in Q4 2023, bolstering quarterly earnings .
  • Balance sheet growth with deposit stability: Year-end deposits $2.38B (+$60.5M YoY); total assets $3.03B (+$50.4M YoY), supporting franchise scale .

Selected press release statements:

  • “Net interest income before the provision for credit loss for the three months ended December 31, 2024 totaled $22,873,000… The tax effected net interest margin… was 3.26%” .
  • “There was no provision for credit losses recorded during the three months ended December 31, 2024” .
  • “Deposits increased $60.5 million… loan to deposit ratio… 97.11%” .

What Went Wrong

  • Elevated non-performing assets: NPAs rose to $28.6M from $13.2M YoY (1.24% of loans vs 0.59% YoY), largely from acquired HVB relationships maturing and moving to non-accrual before re-underwriting; three relationships required specific reserves (~$459K) .
  • Higher operating expenses YoY: Q4 non-interest expense increased $0.75M YoY to $16.67M, including salary/benefit accruals and Pennsylvania shares tax; full-year FDIC costs were higher with larger balance sheet and earlier capital ratio pressure .
  • Non-interest income softness in Q4: Down $150K YoY on lower gains on loans sold, tempering fee momentum .

Financial Results

Quarterly P&L and KPIs

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Net Interest Income ($USD Millions)$21.855 $21.300 $21.324 $22.873
Non-Interest Income ($USD Millions)$3.489 $3.336 $3.755 $3.339
Net Revenue Proxy (NII + Non-Interest) ($USD Millions)$25.344 $24.636 $25.079 $26.212
Net Income ($USD Millions)$7.540 $5.275 $7.536 $7.983
Diluted EPS ($)$1.59 $1.11 $1.59 $1.68
NIM (Tax-Equivalent, %)3.13% 3.15% 3.09% 3.26%
ROA (annualized, %)1.01% 0.71% 1.00% 1.06%
ROE (annualized, %)11.29% 6.73% 9.53% 10.63%

Note: “Net Revenue Proxy” is defined as Net Interest Income + Non-Interest Income (for comparability).

Balance Sheet and Credit Metrics

MetricDec 31, 2023Jun 30, 2024Sep 30, 2024Dec 31, 2024
Total Assets ($USD Millions)$2,975.3 $2,947.5 $3,026.5 $3,025.7
Loans (gross) ($USD Millions)$2,248.8 $2,255.7 $2,331.0 $2,313.2
Deposits ($USD Millions)$2,321.5 $2,273.1 $2,450.1 $2,382.0
Loan-to-Deposit Ratio (%)96.87% 99.24% 95.14% 97.11%
Allowance for Credit Losses to Total Loans (%)0.94% 1.01% 0.93% 0.94%
Non-Performing Assets ($USD Millions)$13.177 $17.924 $24.045 $28.612
NPA to Total Loans (%)0.59% 0.79% 1.03% 1.24%
Non-Accrual Loans ($USD Millions)$12.187 $14.949 $20.858 $25.701
Brokered Deposits/CDs ($USD Millions)$109.3 (Dec-2023) N/A$141.6 (Sep-2024) $93.1 (Dec-2024)

Loan Portfolio Composition (Selected categories, $USD Millions)

CategoryDec 31, 2023Jun 30, 2024Sep 30, 2024Dec 31, 2024
Residential Mortgage$359.99 $354.59 $353.25 $351.40
Commercial Real Estate$1,092.89 $1,110.27 $1,110.55 $1,121.44
Agricultural Real Estate$314.80 $327.06 $331.73 $327.72
Construction$195.83 $180.16 $178.71 $164.33
Consumer$61.32 $70.54 $143.06 $133.21
Other Commercial$136.17 $130.85 $134.29 $131.31
State & Political Subdivision$57.17 $56.01 $54.87 $54.18
Total Loans$2,248.84 $2,255.72 $2,331.00 $2,313.24

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per shareQ4 2024$0.485 (Q4 2023) $0.490 (Dec 27, 2024 payment) Raised (+1.0%)
Financial guidance (Revenue/Margins/OpEx/Tax, etc.)N/ANot providedNot providedMaintained (no formal guidance)

No formal forward financial guidance was disclosed in Q4 materials .

Earnings Call Themes & Trends

No Q4 2024 earnings call transcript was available in our document set; themes below reflect quarter press releases.

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Net interest margin/asset yieldsNIM 3.15%; asset yields up; liability costs up with rate competition NIM 3.09%; cost of interest-bearing liabilities up 50 bps YoY NIM improved to 3.26% YoY; asset yields +16 bps in Q4 Improving sequentially
Deposit competitionElevated competition; deposits seasonally lower H1; L/D 99.24% Deposits up to $2.45B; higher brokered deposits; uninsured deposits ~50.5% Deposits $2.38B; brokered CDs reduced to $93.1M; uninsured deposits ~48.7% Funding mix improving
Credit quality (NPAs, Braavo/HVB)NPAs $17.9M; past due 30–89 days elevated due to acquired loans maturing NPAs $24.0M; several acquired relationships on non-accrual; specific reserve ~$355K NPAs $28.6M; eight large relationships to non-accrual; specific reserves ~$459K Deteriorated YoY; stabilization steps underway
Non-interest incomeH1 boosted by Braavo sale and higher fees Q3 fees modestly higher; gains on loans sold up YoY Q4 down $150K YoY due to lower gains on loans sold Mixed
Tax rate/creditsEffective tax rose YoY; H1 tax rate 17.4% Q3 effective tax 18.5% Q4 effective tax 16.4% due to LIHTC partnerships Beneficial in Q4

Management Commentary

  • Focus on core earnings drivers: NII growth and higher asset yields; NIM expansion supported Q4 profitability .
  • Credit normalization in acquired portfolios: Increase in NPAs primarily tied to HVB-acquired commercial relationships; re-underwriting extended timelines and some relationships resumed payments under revised terms .
  • Balance sheet optimization: Reduced brokered CDs and improved NIM while maintaining deposit franchise stability; loan growth tempered by Braavo disposal and seasonality .

Note: No direct management quotes were provided in the Q4 press release, and an earnings call transcript was not available in our document set .

Q&A Highlights

Not available. No Q4 earnings call transcript for CZFS was found in the filings/documents accessed; press releases contained financial detail but no Q&A content .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue was unavailable due to data access limitations; as a result, we cannot assess beat/miss versus consensus for this quarter. Values retrieved from S&P Global were unavailable.

Key Takeaways for Investors

  • NIM inflection is constructive: Q4 tax-equivalent NIM rose to 3.26%; continued margin stability would be a near-term support for EPS, particularly with muted provisioning in the quarter .
  • Credit watch remains prudent: NPAs climbed to 1.24% of loans; while tied to acquired relationships, trend bears monitoring until re-underwriting fully normalizes and specific reserves prove adequate .
  • Funding quality improved: Brokered CDs reduced to $93.1M by year-end while deposits grew YoY; uninsured deposits remain high but have collateralization/Intrafi coverage for a significant subset .
  • Fee volatility expected: Lower gains on loans sold weighed on Q4 non-interest income; diversified fee levers (trust, brokerage, BOLI) helped full-year non-interest income growth .
  • Operating discipline: Q4 showed manageable expense growth YoY; full-year FDIC and professional fees reflect scale and one-time activities; ongoing cost control will matter for positive operating leverage .
  • Dividend consistency: Q4 dividend of $0.49 (+1% YoY) underscores capital return within ongoing credit/funding normalization efforts .
  • Near-term trading lens: Watch subsequent disclosures on credit migrations/resolutions in HVB-acquired portfolios and any continued NIM improvements; absence of formal guidance suggests reliance on quarterly trends and balance sheet disclosures for positioning .