David Z. Richards, Jr.
Senior Executive Vice President, Director of Emerging Markets at CITIZENS FINANCIAL SERVICES
Executive
Board
About David Z. Richards, Jr.
Senior Executive Vice President and Director of Emerging Markets at First Citizens Community Bank (Bank) since 2017; elevated to Senior Executive Vice President in 2023. Age 64; director of Citizens Financial Services, Inc. (Company) and the Bank since December 2017; classified as a non‑independent director given his executive role . 2024 company performance under current leadership: net income $27.8M (+56% YoY), ROE 9.59%, ROA 0.93%; revenue (interest income) +21.4% YoY, with organic loan growth of $70.2M and deposits +$60.5M . Pay‑versus‑performance TSR index (initial $100) was 103.34 in 2024, 87.69 in 2023, 148.10 in 2022, contextualizing shareholder returns during his tenure on the board .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Nittany Bank / National Penn Bank | Chief Executive Officer / Executive Vice President | 1997–2014 | Led regional banking operations; long‑tenured leadership experience |
| S&T Bancorp, Inc. | Executive Vice President | 2014–2017 | Senior executive role at publicly traded bank; broadened regional expertise |
Fixed Compensation
| Component (USD) | 2023 | 2024 |
|---|---|---|
| Base Salary | $300,000 | $312,000 |
| Christmas Bonus | $250 | $250 |
| Non‑Equity Incentive (cash) | $56,165 | $83,265 (determined May 21, 2025) |
| Stock Awards (grant‑date fair value) | $45,109 | $24,035 |
| 401(k) Match Contribution | $21,975 | $21,975 |
| Life Insurance Premiums | $2,772 | $2,772 |
| Auto Benefits | $6,000 | $6,000 |
| Deferred Compensation Plan Award | $31,200 | $31,200 |
| Miscellaneous (dividends on RS, gifts, etc.) | $4,891 | $4,891 |
| Total Other Compensation | $62,223 | $66,838 |
| Total Reported Compensation | $463,747 | $486,388 (post bonus update) |
Performance Compensation
| Incentive Plan Element | Metric | Weighting | Target | Actual/Payout | Vesting |
|---|---|---|---|---|---|
| Annual Incentive Plan (2024) | Company/Bank metrics: ROE vs peer, efficiency ratio vs peer, net interest income growth vs peer, non‑performing assets/total assets vs peer, net charge‑offs/avg loans; regulatory rating qualifier | 50% | Target bonus 26.3% of base salary | $83,265 paid 100% in cash (May 21, 2025) | N/A (cash) |
| Annual Incentive Plan (2024) | Department/branch goals: loan/deposit growth, profitability, strategic projects | 50% | Target bonus 26.3% of base salary | Included in above $83,265 | N/A |
| Annual Incentive Plan Opportunity (Design) | Minimum / Target / Maximum | — | 17.5% / 26.3% / 35.0% of base | Design parameters | — |
| Annual Incentive Plan (2023) | Same framework; payout split policy | — | Target 26.3% | $80,236; paid 70% cash / 30% restricted stock; 557 RS shares granted at $43.15 ($24,035 FV) | RS vests in ~3 equal annual installments from June 3, 2025 |
Restricted Stock Awards and Vesting Schedule (Outstanding at 12/31/2024)
| Grant/Tranche | Shares | Vest Dates | Market Value at 12/31/2024 |
|---|---|---|---|
| Annual Incentive 2023 grant | 557 | 3 equal annual installments starting 6/13/2025 | Included in total |
| Prior awards tranche | 161 | 12/28/2025; 12/28/2026 | Included in total |
| Prior awards tranche | 240 | 6/29/2025; 6/29/2026 | Included in total |
| Prior awards tranche | 45 | 8/24/2025 | Included in total |
| Prior awards tranche | 114 | 5/19/2025 | Included in total |
| Total Unvested Restricted Shares | 1,117 | Various (see above) | $70,717 at $63.31 per share |
| RS Vesting in 2024 | Shares Vested | Value Realized |
|---|---|---|
| Multiple vest events | 486 | $23,657 |
Notes:
- Richards is not retirement‑eligible; his RS agreements provide accelerated vesting upon death, disability, retirement, change in control or involuntary termination without cause .
- Company practice generally pays 70% cash / 30% RS for non‑retirement‑eligible NEOs, but 2024 awards were paid entirely in cash to all NEOs per 8‑K update .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership | 1,469 shares as of Feb 24, 2025; includes 1,117 restricted shares with voting but not investment power; less than 1% of class |
| Pledging | No pledging indicated for Richards; table flags pledges for other directors where applicable |
| Hedging Policy | Company prohibits hedging of Company stock by officers/directors |
| Clawback Policy | Three‑year recoupment of excess incentive compensation upon accounting restatement per SEC rules |
| Director Stock Ownership Guideline | Board guideline requires each director to beneficially own the greater of three times prior year cash retainer or 1,000 unencumbered shares ; employee directors (incl. Richards) do not receive director retainers |
| Executive Stock Ownership Guideline | Company does not maintain stock ownership guidelines for executives |
| Share Withholding | Company notes employees may surrender shares to satisfy tax obligations upon RS vesting (Q3 2025) |
Employment Terms
| Agreement | Date/Term | Trigger Type | Cash Multiple/Benefits | Equity Treatment |
|---|---|---|---|---|
| Change‑in‑Control Severance Agreement (Bank; Company guarantor) | Entered Dec 31, 2024 | Double‑trigger within one year post‑CIC (also protective period pre‑close): termination by Bank not for cause or by executive for Good Reason | Lump‑sum equal to 1× current base salary; continuation of health care and long‑term disability benefits for 18 months or until comparable coverage obtained | All outstanding restricted stock awards vest upon change in control; deferred comp becomes 100% vested with lump‑sum within 30 days |
| Potential Payments Table (as of 12/31/2024) | — | CIC termination | $413,653 CIC cash severance; plus deferred comp balance $167,704; equity $70,717 | As noted |
| Other Employment Agreement | None disclosed for Richards; CEO Black has separate employment agreement (context only) |
Board Governance: Service History, Committees, and Dual‑Role Implications
- Board tenure: Director of the Company and Bank since December 2017; Class 2 nominee for term expiring 2028 .
- Committee membership: Not listed as a member of Audit & Examination, Compensation/Human Resource, or Governance & Nominating committees; those committees are fully independent and chaired by non‑employee directors .
- Independence status: Board independence excludes Black (CEO), Richards (Senior EVP), and Jones (former SVP); Richards is a non‑independent employee director .
- Board leadership and oversight: Chairman is independent; Lead Independent Director role exists; Board held four executive sessions in 2024, and independent directors met twice, reinforcing independent oversight .
- Attendance: Board held twelve regular meetings in 2024; each director attended at least 83% of Board and committee meetings .
- Director compensation: Non‑employee directors receive fees and fully vested quarterly stock grants; employee directors (including Richards) do not receive director retainers/fees or director stock awards .
Compensation Structure Analysis
- Mix and risk: Richards’ plan design retains meaningful at‑risk pay via annual incentive with clear financial/credit risk metrics and departmental goals; weights split 50% company and 50% departmental for 2024 .
- Equity usage: Company utilizes restricted stock (no options outstanding), with three‑year ratable vesting; Richards had 1,117 unvested RS as of year‑end 2024 .
- Clawback/hedging: Formal clawback and hedging prohibitions strengthen alignment and discourage risk‑taking/hedge dis‑alignment .
- Say‑on‑pay signal: 2024 say‑on‑pay approval was 67%, below typical norms; the committee retained the program design, signaling potential investor concerns but no immediate changes .
- Peer benchmarking: Compensation decisions reference a regional peer set refreshed in 2024 to align asset size; consultants engaged (Blanchard) .
Equity Ownership & Director Compensation (for context)
| Director Ownership Guideline | Detail |
|---|---|
| Requirement | Each director to beneficially own ≥ three times prior year cash retainer or 1,000 unencumbered shares |
| Director Fees/Equity (2024) | Non‑employee directors received fees and fully vested stock grants per schedule; employee directors (Richards) excluded from fees/grants |
Performance & Track Record
| Company Metric | 2023 | 2024 |
|---|---|---|
| Net Income ($M) | $17.8 | $27.8 |
| Basic EPS ($) | $4.02 | $5.86 |
| ROE (%) | 7.39% | 9.59% |
| ROA (%) | 0.67% | 0.93% |
| Interest Income Growth YoY ($M) | — | +$27.2 (+21.4%) |
| Organic Loan Growth ($M) | — | $70.2 |
| Organic Deposit Growth ($M) | — | $60.5 |
| TSR Index (Initial $100) | 87.69 | 103.34 |
Other notable disclosures in 2024: continued HVB integration, sale of a division (net negative $0.715M to net income), higher non‑performing assets due to eight loans placed on non‑accrual; dividends per share increased to $1.95 .
Employment & Deferred Compensation
| Plan | Richards’ Participation | Key Values |
|---|---|---|
| Cash Balance Pension Plan | Not eligible due to hire date | — |
| 401(k) Plan | Eligible; employer safe harbor matches; plus annual discretionary contribution | 401(k) match $21,975 (2024) |
| Executive Deferred Compensation Plan | Eligible; bank credits annual discretionary amounts; vesting accelerates upon CIC/death/disability | Registrant contributions $31,200 (2024); aggregate balance $167,704 at YE 2024 |
Risk Indicators & Red Flags
- Non‑independent director while serving as Senior EVP (potential independence/oversight considerations) .
- Say‑on‑pay at 67% in 2024 suggests investor scrutiny of pay practices .
- Change‑in‑control agreements provide accelerated vesting and 1× salary severance; while market‑standard, combined with full cash payout in 2024 may dilute long‑term equity alignment in that year .
- Hedging prohibited; no pledging indicated for Richards; mitigates alignment risks .
Compensation Committee Analysis (Context)
- Committee members: Independent directors chaired by Robert W. Chappell; meetings held 10 times in 2024; Blanchard Consulting Group engaged; peer set refreshed in 2024 .
Investment Implications
- Pay‑for‑performance alignment: Richards’ incentive plan ties payouts to ROE, efficiency, net interest growth, and credit metrics versus peers, plus departmental execution—a balanced scorecard that supports underwriting discipline; RS vesting over three years further promotes retention .
- 2024 equity signal: Full cash payout for 2024 reduces incremental equity lock‑in versus prior years; watch for future RS grant practices as incentive awards are determined annually .
- Retention and CIC economics: Double‑trigger CIC at 1× salary with 18‑month benefits and RS acceleration is modest by industry standards, limiting windfalls while still protecting continuity—neutral for dilution risk but could create event‑driven selling pressure if RS tranches accelerate .
- Governance: Dual role as executive and director introduces independence optics, but Board maintains separate independent Chairman and Lead Independent Director with regular executive sessions—mitigating oversight risk .
- Voting sentiment: The 67% say‑on‑pay result indicates ongoing investor engagement is warranted; monitor subsequent program changes and 2025 vote outcomes for potential signaling .
Overall, Richards’ compensation design emphasizes operational and credit discipline with time‑based equity vesting; the 2024 all‑cash payout is a one‑year watch item. CIC terms are moderate, with alignment tools (clawback, hedging ban) in place. Investors should track RS vesting events, any share surrenders for tax withholding, and future incentive mix to assess selling pressure and alignment durability .